Only the board of directors and senior executives of Vancouver-based Teck Resources Ltd. can provide the real story on why the company’s Frontier oilsands project was pulled Sunday.
But there are many tea leaves to read.
The two-page letter from Teck President and CEO Don Lindsay to federal Environment and Climate Change Minister Jonathan Wilkinson withdrawing the application, days before the cabinet was to decide on whether it could proceed, is a master class in telling the Justin Trudeau government – and, for that matter, the provinces – that Canada hasn’t got its act together.
Lindsay is a grounded, plain-spoken, world-class executive of a firm that isn’t risk-averse. He doesn’t indulge in dramatic language. His letter is frank: investors and customers of oil are looking for sources from places that have a “framework” that reconciles resource development and climate change to produce “the cleanest possible products.”
This is what his company wants, but he laments: “This does not yet exist here today.” Instead, as the debate grows on how the country balances the two objectives, Teck finds itself “at the nexus of much broader issues that need to be resolved.” And, he concludes: “There is no constructive path forward for the project.”
Nearly five years after it assumed office, it is evident that the Trudeau government has not been able to take control of the resource questions at the heart of Canada’s economy, our relationship with Indigenous peoples and, for that matter, with the planet. His problem has been in raising expectations without explaining the sacrifices and trade-offs necessary to achieve climate change targets and nation-to-nation reconciliation; these behemoths don’t come quietly or subtly or with virtue signals. Just note: we are off target for 2030 greenhouse gas emissions, we cannot corral provinces into support for carbon pricing, and our infrastructure has been buckled by blockades. We now have the most rigorous review process in the oil-producing world for such projects.
Really, who would want to invest here in such a morass?
Teck cleared every major hurdle for the massive Frontier project, amassing Indigenous support and earning the benefit of some doubts in an environmental review – and by massive, let’s remember it’s a $20 billion project, delivering more than 7,000 jobs to construct and 2,500 to operate, pumping 260,000 barrels a day and emitting 4.1 megatons of emissions for the next four decades. The project would deliver tens of billions of dollars to federal coffers. It is true that Frontier was anticipating a resurgence in the price of oil that many analysts found head-scratching: $95 a barrel, not seen since 2014. But Teck appeared prepared to proceed, even though many felt there might be delays to more prudently capitalize on world markets.
Now the company will take a $1.13 billion writedown and has pretty much signaled it’s out of the oilpatch.
For that matter, Lindsay notes, no one else will find it possible to do what even it did until there is resolution of the resource development dilemma. This volleys the ball back to Trudeau, who has found the file anything but pleasant in recent weeks. Lindsay’s letter makes clear that Teck’s decision perhaps takes some heat out of the debate to allow some light into it. At the very least, Frontier ought not to be this week’s reason for protests.
Naturally, the political forces aligned with the Frontier project – namely, Alberta Premier Jason Kenney and Conservative leader Andrew Scheer – were out of the gate quickly with condemnation Sunday of Trudeau’s handling. But I doubt Lindsay would want to exempt them from shouldering some of the responsibility for the juvenility of the debate in Canada about the opportunities of a constructive, middle path.
Lindsay did, after all, say the problem belonged to “governments” in Canada.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.