April 30, 1982: Alsands collapse could signal end of megaprojects: Lougheed
Despite offers of aid from both the federal and provincial governments, the much-anticipated $13.5-billion Alsands oilsands project collapsed, the victim of an unfavourable economic and industrial climate that included a drop in oil prices.
The consortium behind the northern Alberta concept deemed it unworkable.
Premier Peter Lougheed said the Alsands collapse — and the further delays in a troubled Alaska natural gas pipeline — could well herald the end of the megaproject era for the province.
“Perhaps it’s the era of small is beautiful,” Lougheed said.
On Feb. 1, Amoco Canada and Chevron Standard Ltd. announced their withdrawal, followed 23 days later by Dome Petroleum Ltd. and Hudson Bay Oil and Gas Ltd. The following day, Shell Explorer withdrew.
The five companies represented a 50-per-cent stake in the project, leaving only Gulf Canada Ltd. and the federally owned Petro-Canada still part of the consortium.
As a result, the premier said the province would have to reassess oilsands activity in terms of surface mining, in situ activity and heavy oil upgrading.
In the book Developing Alberta’s Oil Sands: From Karl Clark to Kyoto, Lougheed was later quoted as reflecting: “The day Alsands died was a tough day. In fact, one friend of mine said the last day of April 1982 was one of the worst days politically in a rather dismal time because we’d gone through the downturn of the 1981-82 winter; we’d had a separatist chosen in a byelection in February — then came the crusher, Alsands collapsed.”
Ed Czaja, president of Alsands Energy Ltd., said it would be “very difficult for (megaprojects) to move ahead” unless both confidence and cash flow for the industry were restored.
Alsands was among the largest commercial plants yet proposed in Canada, and would have created up to 30,000 jobs across the country and a direct and indirect economic spinoff of about $20 billion over the seven-year construction period, after which it was projected to produce 137,000 barrels of oil a day.
Czaja announced the consortium’s decision to wind down the project effective July 31 despite a new offer earlier that week by the federal and Alberta governments to purchase half the equity in the oilsands plants and provide loan guarantee for 68 per cent of the private financing.