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Notes from Flight 163, the oilsands shuttle from Toronto to Edmonton

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Shared with permission from author Stewart Muir

Stewart Muir is a Victoria-based writer who serves as executive director of the Resource Works Society.

On a recent Monday morning, I found myself on Air Canada Flight 163 from Toronto Pearson to Edmonton. As the plane loaded, I began to sense there was something not so regular about the passengers boarding the Airbus 320 for a regularly scheduled flight.

Unlike those I more typically see on my flights, nobody was in flip-flops or golf wear, or fussing with oversized or unnecessary luggage. This was a mix mostly without the easy-to-spot snowbirds, students, and first-time fliers.

The travellers this day were mostly middle-aged men, fit-looking and dressed Mark’s Work Wearhouse casual. There were some women too, and like the men they moved with familiar ease through the cabin lugging full but neatly packed backpacks or duffels. Many carried a preferred travel distraction in hand, ready for a few hours of Netflix or sudoku. I could hear the distinctive accents of the Maritimes and Quebec, and the more familiar central Canadian English, as they found their places the way transit riders enter a subway car.

It was rapidly apparent that I was witnessing a commuter routine, one not meaningfully different than the suit-filled shuttles carrying day-tripping lawyers, accountants, pharma reps, engineers and lobbyists from the same airport that morning to destinations like Ottawa, Montreal, Boston and New York.

In concentrated form, I was witnessing a typical, daily migration of the Canadian oil sands workforce, probably with some LNG and mining thrown in. They were heading to the workplace. Not for a day, but for stretches of a week or two.

Multiply this by dozens or scores, in airports across the country, usually less starkly evident than on this particular flight, and it was just a regular day in Canadian air travel as the massive energy employee base changed shift.

A few hours later, after we unloaded at the other end, I headed for the exit and my Uber. Not so most of my fellow passengers. They continued on their way to connecting flights – to destinations such as Fort McMurray, Grande Prairie, and air services flying direct to some of the big oil sands projects – in time for shift change at the work camps where they were expected.

Statistics could not convey more forcefully than this how the oil & gas economy has a singular and powerful effect on the economy. The large paycheques drawing these men and women to their jobs in the West flowed directly back to their family bank accounts in the GTA and beyond, paying mortgages, grocery bills, taxes and hockey fees.

Flight 163, multiplied many times over, represents what the energy sector, at its most direct and tangible, does for the Canadian economy.

This is what I’m thinking about while surveying a nation that is now deep into an unprecedented social and economic crisis.

Over the coming days and weeks, things that we do will affect how deep and damaging this crisis becomes.

We are seeing Green New Deal advocates pursue the thesis that the coming economic catastrophe is the perfect moment to “transition off fossil fuels”. There are plenty of signs of this thought process – “Hey guess what guys, in one stroke we could meet the Paris Agreement by dropping emissions to 30 per cent below 2005 levels – not by 2030, but by 2021!”

To put this in perspective, consider that the Conference Board of Canada recently estimated that in one of the milder transition scenarios, meeting such targets will cost Canadians $2.2 trillion and require 14 per less use of residential energy, 47 per cent less car travel, eight times the subway use, and 54 per cent less domestic air travel.

Who’s ready to make this change overnight? We couldn’t do it if we wanted to. Think for just a moment about the costs and tradeoffs required, and the difficulty of accomplishing it in the midst of a global health crisis. Clearly it makes no sense at all. Yet Canada might be the only oil-exporting country where accelerating the transition is likely to receive serious acknowledgment in senior decision-making circles.

Even without such measures, Canada is already moving in the right direction: we are a global leader in clean energy, with 80 per cent of the population living in provinces where more than 90 per cent of electricity is drawn from non-fossil fuel sources. This alone makes us the envy of the world. The prevalence of clean electricity means that wherever it is used in industry, the resulting resource commodity exports can outcompete most other similar products in climate terms, with the bonus that they can allow importing countries to reduce their own emissions.

Mere inattention could do as much damage at this time as a wrong decision. Standing back and watching the domestic oil and gas industry topple will have an effect on citizen wellbeing far in excess of what the collapse of any other industry would bring.

We would be looking at the long-term impairment of Canadian living standards – that is to say a reduction in the value of our jobs, in our quality of life, in our educational opportunities, and in our ability to help other countries while continuing as a net positive influence on the world.

The fossil fuel industry – “it is how we earn our living”

It’s hard to describe how important the energy industry is to Canada. Let me try.

Andy Calitz, the former CEO of LNG Canada who performed the herculean task of achieving a positive final investment decision (FID) for the project before moving on to his next challenge, provided a memorable image when he spoke at a small dinner of diplomats and academics I attended not long after the FID.

When the first shipload of liquefied natural gas departs from Kitimat in a few years’ time, he said, that cargo would be worth $100 million – a staggering sum. (I’ve run this figure past a couple of experienced heads in the energy field, and nobody has scoffed at it.)

In Vancouver, we go giddy each spring at the thought of cruise ship season, which last year saw 290 sailings out of the port. If, as is commonly said, one of those sailings means $1 million injected into the local economy, how does that compare with LNG?

Back of envelope math says that a single year of LNG Canada operations, with its promised traffic of one ship in and one ship out every day, will have the impact of one century of the Vancouver cruise industry. I’m not knocking the cruise industry, it’s important and we need it. But let that comparison sink in.

Here’s another one.

Back in 2017, I calculated that natural gas investments in British Columbia that year were on a scale that equated to building the behemoth Wynn hotel in Las Vegas (4,750 rooms over 215 acres) in the Vancouver area, along with a special SkyTrain extension to serve it. ( Natural gas is back: British Columbia drilling surge is behind $5+ billion in 2017 investment )

Never mind that no investor has ever come forward with such a bold plan for a new resort anywhere in Canada. And it’s actually pretty fortunate that we got the energy infrastructure rather than the casino, given the prospects for tourism in 2020.

Economist Patricia Mohr recently pointed out that Canada is “a trading nation and an ‘energy specialist’ — it is how we earn our living.” Crude oil, all by itself, generated net exports of $62 billion in 2019, up from $57.5 billion in 2018 — far above any other export category.

As Ms. Mohr stated, oil exports come in handy given that we habitually run large deficits in other areas including motor vehicles and parts, machinery, electronic equipment, and consumer goods.

During the COVID-19 crisis, it’s obvious we cannot go without lifesaving medical necessities. Unlike our abundant oil, producing them isn’t a great strength. Canada must import billions’ worth of these goods every year. If you isolate just three medical categories – vaccines, medical apparatus and breathing aids – the numbers show clearly that our own ability to manufacture these items is very limited, even as consumption grows year after year.


The current global crisis has already brought a plummeting Canadian dollar, which in turn makes the imported goods that we rely on more costly. Exports that we can sell for U.S. dollars will offset this, but only if we have products to sell and markets ready to buy them. We need to preserve the ability to produce more as more income is needed, while at the same time figuring in the unfortunate reality that many of the things we export are themselves falling in price, so that higher production volumes are required just to stay in place.

The resource economy actually turns out – despite its detractors – to be both flexible and durable as a source of national well-being. Markets for some of the commodities we produce can be expanded at will, something that cannot be said of iPhones, beach umbrellas or BMWs.

Right now in Russia, the government is starting to realize it might not have been such a good idea to enter into an oil price war with Saudi Arabia. More and more evidence suggests that for a winner to emerge will require not months but years of effort, and at the end of it the United States oil industry, resented deeply by both Russia and Saudi Arabia, could well come on top anyways.

The most chilling observation, as reported today by the Wall Street Journal, comes from Igor Sechin, head of Russia’s largest oil producer, state-controlled giant Rosneft: “If you give up your mar­ket share, you will never get it back.”

There’s a lesson in this for Canada. Those who see an “opportunity” to deliberately give up our oil market share, to encourage a fast pivot into an unknown energy future, are playing recklessly with how we as a country earn our living. If we ratchet down production by letting industry fail, and decide later that it was a mistake to do so, we will not easily be able to retrieve our market share. That’s a frightening thought. Worse still, killing off the industry will make Canadians more dependent on imported oil, which will have to be paid for using a weakened loonie.

Doing what’s necessary

In 2018, the federal government announced an export diversification strategy that would increase Canada’s overseas exports by 50 per cent by 2025. Even before the combined oil/pandemic crisis, it seemed an unlikely ambition.

“Investing in infrastructure to support trade” was one of the ways Ottawa deemed it could aid this ambitious goal, and credit is due for supporting projects such as the so-far-incomplete Trans Mountain and Coastal GasLink pipelines.

Other forces are holding us back. The Canada Infrastructure Bank, for example, is forbidden from investing its $35 billion of capital in fossil fuel projects, even if those investments could lead to lower energy use and emissions in the oil & gas upstream.

Meanwhile, our national infrastructure minister seems physically incapable of uttering the phrase “energy infrastructure” let alone the p-word (pipelines). Even our minister of natural resources has been placed in the uncomfortable position of carrying out a mandate letter requiring him to making finding alternative employment for oil and gas workers and communities a central task.

Now is the time to save, not strangle, an oil and gas industry that is frantically signalling the need for intervention .

Prime Minister Justin Trudeau’s Quebec lieutenant Pablo Rodriguez yesterday promised Bombardier : “Our government is taking the necessary steps to get you financial help as quickly as possible.” A stock analyst opined that the Canadian and Quebec governments were “likely to offer support if Bombardier gets close to the edge.” (See Globe and Mail story .)

If a single company controlled by a wealthy clan, making luxury jets for billionaires, is to be given this treatment, then there should be no hesitation all in backing the industry that convincingly represents the foundational strength of our entire nation.

Trudeau has always found it difficult to make strong gestures of support to the Canadian oil patch. This time, finding it within himself to say those words of support matters more than ever. There is a very serious risk that Canada’s long term prosperity in both an absolute and a relative sense will be impaired by what occurs in the coming hours, days and weeks. Ahead of us, economic success will only come through determination and political commitment to put people and jobs first.

Stewart Muir is a Victoria-based writer who serves as executive director of the Resource Works Society.

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Calgary man who admitted to participating in terrorism activity to be sentenced

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CALGARY — A man who admitted to terrorism-related acts with the militant group Islamic State is to be sentenced today in a Calgary courtroom.

Hussein Borhot, who is 36, has pleaded guilty to one count of participating in terrorism group activity between May 9, 2013, and June 7, 2014, as well as to kidnapping for a terrorist group while in Syria.

RCMP arrested him in July 2020 after a seven-year investigation.

An agreed statement of facts read in court last month said Borhot travelled to Syria through Turkey to join the Islamic State.

The statement said he signed up as a fighter, received substantial training and excelled as a sniper, but did not tell his wife or father before the trip.

Court heard that Borhot revealed much of the information to an undercover officer after he returned to Canada.

This report by The Canadian Press was first published May 26, 2022.

The Canadian Press

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Alberta

Cheese not on the table in Canada-U.K. trade talks as Britain seeks market access

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OTTAWA — The British foreign secretary has often been mocked for her preoccupation with cheese. It started eight years ago when Liz Truss expressed outrage in a speech to her party’s annual conference. 

“We import two thirds of our cheese,” she raged. “That is a disgrace.”

Now Truss is facing another battle over cheese, this time with Canada. 

Britain wants greater access to Canadian markets for more than 700 varieties of cheese including Stilton, Cheshire, and Wensleydale, a crumbly variety originating from Yorkshire. 

But Ottawa has made it clear it does not want to see more British cheddar, let alone artisan varieties such as stinking bishop, renegade monk and Hereford hop, on Canadian fridge shelves. 

During the first round of negotiations of the U.K.-Canada trade deal, Canada told Britain that a larger quota for British cheese is not on the negotiating table.

When it was a European Union member, Britain was part of the Comprehensive Economic and Trade Agreement with Canada, giving it some access to Canada’s cheese market. 

After the U.K. left the EU, a “continuity agreement” with Canada was swiftly put in place to maintain the CETA arrangement until a bilateral trade deal could be struck. 

Ralph Goodale, Canada’s high commissioner to the U.K., said if Britain wants more access to Canadian markets for its cheese as part of a bilateral free-trade agreement, it will have to knock on Brussels’ door and get its part of the dairy quota back. 

“The point is we have already provided that volume in the EU deal and the British left it there without taking it with them,” he said in an interview. “That’s an issue they need to resolve with the Europeans because the Europeans have their quota.” 

Goodale said the U.K.’s request for extra access for British cheese — on top of the access given to the EU — is “what the Canadian negotiators consider to be pretty much a dead end.”

“You are talking about a double concession — one we have already made to the EU and the request is being made by the U.K. for yet another one on top of that,” he said. 

The high commissioner said Canada values its trading relationship with the U.K., adding that he is confident that a mutually-beneficial trade deal will be reached.

But if Canada allows the British to export more of their cheese it would involve “a major commitment of compensation to dairy producers” in Canada to make up for lost incomes.  

In 2018, after the United States-Mexico-Canada Agreement gave the U.S. fresh access to the Canadian dairy market, Prime Minister Justin Trudeau said he would compensate Canadian dairy farmers.

Canada’s dairy industry was worth over $7 billion in 2020, according to the Canadian Dairy Commission’s annual report. 

There are over 10,000 dairy farms in Canada — most of them in Quebec and Ontario — with an average of 92 cows per farm, it said. 

Until at least the end of next year, Britain will be able to keep exporting its cheese to Canada under the trade continuity agreement, the U.K.’s trade department said. 

This allows U.K. cheese exporters to access the Canadian market tariff-free under the EU portion of Canada’s World Trade Organization cheese tariff rate quota. 

As part of the 1995 WTO agreement on agriculture, Canada established tariff rate quotas for cheese and other dairy products. The quotas set out quantities of dairy that could enter Canada with little or no duty. 

For Britain, a fully fledged free trade deal with Canada is crucial after Brexit left it looking for fresh tariff-free markets.

“We want to negotiate an ambitious and comprehensive new agreement with Canada that will strengthen our close and historic bilateral trade relationship,” said a U.K. government trade spokesman in a statement, adding the relationship was worth about $34.5 billion in 2021.

In March, U.K. Trade Secretary Anne-Marie Trevelyan flew to Canada to announce with Canada’s Trade Minister Mary Ng that bilateral negotiations had officially begun. 

In a speech in the House of Lords in London earlier this month, Goodale reported on progress in the talks, saying that “both sides are optimistic that, as good as CETA and the continuity agreement were, we can do better still when Canada and the U.K. negotiate a deal face-to-face, directly with each other.” 

Like Goodale, Ng said Canada is confident a free-trade deal with Britain will be reached, enhancing co-operation in a number of areas, including on renewables, sustainability and the digital economy.  

“Canada values the relationship with the United Kingdom. They are … an important trading partner and a trade agreement with the U.K. will be very good for Canadian businesses,” she said in a phone interview from Thailand last weekend.

But she was also firm about the need to protect Canada’s dairy producers, and that means keeping more British cheese out. 

“I have been very clear, our government has been very clear, that we will not provide access to our supply-managed sector,” she said. “We have been clear about that from the get-go.” 

The Canadian dairy sector now produces 1,450 varieties of cheese, including ewe, goat and buffalo varieties, as well as the cheese curds used in the Québécois dish poutine.

At least half of Canada’s cheese is made in Quebec, which is home to a number of artisan varieties including bleu l’ermite, or blue hermit, and Oka, a popular semi-soft rind cheese.

Pierre Lampron, president of the Dairy Farmers of Canada, has made it clear he will fiercely protect Canadian cheese from British interlopers.

Lampron said he had “validated that the issue of access to the Canadian dairy market was not on the agenda of these trade talks.”

Canada’s protectionist stance toward its dairy industry may have pleased farmers. But it has caused some tension with close allies. 

Earlier this month, New Zealand launched a formal trade dispute against Canada, accusing the federal government of breaking promises to give access for dairy imports under the Trans-Pacific Partnership agreement.

The Biden administration also recently said it was asking for a second dispute settlement panel under the U.S.-Mexico-Canada Agreement to review a trade dispute with Canada over dairy import quotas.

This report by The Canadian Press was first published May 26, 2022. 

Marie Woolf, The Canadian Press

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