The “new” MacLean’s, as skippered by Editor-in-chief Ken Whyte, is really flexing its muscles. Detractors may call it a reincarnation of the old National Post, or worse, a reanimation of the extinguished Alberta Report. The latter is really unfair given the breadth of perspective in the magazine – and the covers that I won’t let my young daughters look at – but some articles in the new mag definitely wouldn’t have been published under the old regime.
One such article
was in last week’s edition, dealing with the hunt for deep oil around the world. The timing couldn’t be better, given the current furor over high gasoline prices. The latter set me off on a long auto-rant to MrK
What the article emphasized were the amazingly high-tech methods used by industry to extract oil and gas, from ever deeper, complex strata – up to 12,000 metres – in the deep, open ocean. The sub-salt Gulf of Mexico and off-shore Brazil were mentioned, where new technical frontiers are being crossed.
An untold aspect of this story is that there actually was at least one Canadian company right in there with the big boys of deep water drilling over the last 10 years. That was PanCanadian. PanCanadian was part of the Tahiti discovery in the deep Gulf, found the Buzzard pool in the North Sea, and was well-positioned in off-shore Brazil. Around the same time I had the good fortune to work on PanCanadian’s Deep Panuke discovery off the coast of Nova Scotia. The company also partnered on deep sub-salt wells off the Scotian Shelf.
Development costs for these projects are enormous – Deep Panuke about $1B and Tahiti $3.5B, which reflect the enormous technical difficulties involved in bringing these resources to market. MacLean’s quotes an estimate of the industry’s invest in R&D over the last 15 years at almost $800B. This helps add context to the discussion over high gas prices.
Media also reported this week on the U.S. Congress’ investigation of the increases in gasoline prices. The emphasis has been, as always, on the “windfall profits” of the large corporations. Senators were playing this for full effect, asking ExxonMobil executive J.S. Simon how much he made last year, including deferred income, etc. “Twelve million dollars”, he answered, to the chagrin of his interrogators.
That is a lot of money. But if executives are routinely making $3.5B calls on projects, what level of compensation is fair? Off the top of my head, I’d say seven figures sounds about right, maybe eight is generous, but seven for sure.
It’s also worth looking at the letter
Simon submitted to the committee, where he mentions the $355B ExxonMobil has spent on new energy projects in the last 25 years, and the $125B they plan to spend in the next five. A hundred billion here, a hundred billion there and soon you’re starting to talk real money. He also estimates that a total investment of $22 trillion will have to be made up to 2030 to meet the world’s energy demand.
This is staggering – just one of the many facts unknown to the public when discussing gas prices or industry profits. If your investments are hundreds of billions, what should your profits be? Secondly, as MrK mentioned last night when he got a word in, less than 20% of world production is in the hands of “Big Oil”. The rest is held by companies owned by states under varying levels of authoritarianism.
Why is it then that the public is completely ignorant of the massive investments of money and know-how made by industry to, as we used to say, get the molecules to the gas pump? The average consumer these days appears to view gasoline as a commodity like water, to be dispensed at almost fixed rates. This is congruent with the view that Albertans simply go into their back yards and fetch it with buckets.
I believe the fault rests squarely with industry. They have done an abysmal job
of explaining themselves to the public over the last 30 years. Forget about climate change. Just allowing people to assume that gasoline effortlessly flows from some remote region to their neighbourhood has disconnected the public from reality. It makes it almost impossible for them to have informed opinions about energy policy and or make their decisions on their own consumption of the product.
As MacLean’s observes, getting oil out of the ground is getting harder and requires a lot more time, effort and money. But this is no excuse for largely ignoring public attitudes toward the industry and making only token efforts to correct misconceptions. To employ a vintage Stupidism: those cows are now coming home to roost.