nvironmentalists E tend to believe that, ecologically speaking, things are getting worse and
worse. Bjorn Lomborg, once deep green himself, argues that they are wrong in almost every
particular ECOLOGY and economics should push in the same direction. After all, the eco
part of each word derives from the Greek word for home, and the protagonists of both
claim to have humanity's welfare as their goal. Yet environmentalists and economists are
often at loggerheads. For economists, the world seems to be getting better. For many
environmentalists, it seems to be getting worse. These environmentalists, led by such
veterans as Paul Ehrlich of Stanford University, and Lester Brown of the Worldwatch
I nstitute, have developed a sort of li tany of four big environmental fears: Natural
r esources are running out. The population is ever growing, leaving less and less to eat.
Species are becoming extinct in vast numbers: forests are disappearing and fish stocks are
collapsing. The planet's air and water are becoming ever more polluted. Human activity is
t hus defiling the earth, and humanity may end up killing i tself in the process.The litany
of environmental fears is not backed up by evidenceThe t rouble is, the evidence does not
back up this li tany. First, energy and other natural resources have become more abundant,
not less so since the Club of Rome published The Limits to Growth in 1972. Second, more
food is now produced per head of the world's population than at any time in history. Fewer
people are starving. Third, although species are indeed becoming extinct, only about 0.7% of
t hem are expected to disappear in the next 50 years, not 25-50%, as has so often been
p redicted. And finally, most forms of environmental pollution either appear to have been
exaggerated, or are t ransientassociated with the early phases of industrialisation and
t herefore best cured not by restricting economic growth, but by accelerating i t. One form of
pollutionthe release of greenhouse gases that causes global warmingdoes appear to be a
long-term phenomenon, but i ts total impact is unlikely to pose a devastating problem for
t he future of humanity. A bigger problem may well turn out to be an inappropriate response
t o it. Can things only get better? Take these four points one by one. First, the exhaustion of
natural resources. The early environmental movement worried that the mineral resources
on which modern industry depends would run out. Clearly, there must be some limit to the
amount of fossil fuels and metal ores that can be extracted from the earth: the planet, after
a ll, has a finite mass. But that limit is far greater than many environmentalists would have
people believe. Reserves of natural resources have to be located, a process that costs money.
T hat, not natural scarcity, is the main limit on their availability. However, known reserves
of all fossil fuels, and of most commercially important metals, are now larger than they were
w hen The Limi ts to Growth was published. In the case of oil, for example, reserves that
could be extracted at reasonably competitive prices would keep the world economy running
for about 150 years at present consumption rates. Add to that the fact that the price of solar
energy has fallen by half in every decade for the past 30 years, and appears likely to
continue to do so into the future, and energy shortages do not look like a serious threat
either to the economy or to the environment. The development for non-fuel resources has
been similar. Cement, aluminium, iron, copper, gold, nit rogen and zinc account for more
t han 75% of global expenditure on raw materials. Despite an increase in consumption of
t hese materials of between two- and ten-fold over the past 50 years, the number of years of
available reserves has actually grown. Moreover, the increasing abundance is reflected in
an ever-decreasing price: The Economist's index of prices of industrial raw materials has
d ropped some 80% in inflation-adjusted terms since 1845. Next, the population explosion is
a lso tu rning out to be a bugaboo. In 1968, Dr Ehrlich predicted in his best selling book,
The Population Bomb, that the battle to feed humanity is over. In the course of the 1970s
t he world will experience starvation of t ragic proportionshundreds of millions of people
w ill starve to death.That did not happen. Instead, according to the United Nations,
agricultural production in the developing world has increased by 52% per person since 1961.
T he daily food intake in poor count ries has increased from 1,932 calories, barely enough for
survival, in 1961 to 2,650 calories in 1998, and is expected to r ise to 3,020 by 2030.
L ikewise, the proportion of people in developing count ries who are starving has dropped
f rom 45% in 1949 to 18% today, and is expected to decline even fur ther to 12% in 2010 and
j ust 6% in 2030. Food, in other words, is becoming not scarcer but ever more abundant. This
is reflected in i ts price. Since 1800 food prices have decreased by more than 90%, and in
2000, according to the World Bank, prices were lower than ever before. Modern Malthus.
M althus was wrong: population growth has not been exponential Dr Ehrlich's prediction
echoed that made 170 years earlier by Thomas Malthus. Malthus claimed that, if
u nchecked, human population would expand exponentially, while food production could
i ncrease only linearly, by bringing new land into cultivation. He was wrong. Population
g rowth has tu rned out to have an internal check: as people grow r icher and healthier, they
have smaller families. Indeed, the growth rate of the human population reached i ts peak, of
more than 2% a year, in the early 1960s. The rate of increase has been declining ever since.
I t is now 1.26%, and is expected to fall to 0.46% in 2050. The United Nations estimates that
most of the world's population growth will be over by 2100, with the population stabilising
a t just below 11 billion (see chart 1). Malthus also failed to take account of developments in
agricultural technology. These have squeezed more and more food out of each hectare of
l and. I t is this application of human ingenuity that has boosted food production, not merely
i n line with, but ahead of, population growth. I t has also, incidentally, reduced the need to
t ake new land into cultivation, thus reducing the pressure on biodiversity. Third, that
t hreat of biodiversity loss is real, but exaggerated. Most early estimates used simple island
models that linked a loss in habitat with a loss of biodiversity. A rule-of-thumb indicated
t hat loss of 90% of forest meant a 50% loss of species. As rainforests seemed to be cut at
a larming rates, estimates of annual species loss of 20,000-100,000 abounded. Many people
expected the number of species to fall by half globally within a generation or two. However,
t he data simply does not bear out these predictions. In the eastern United States, forests
were reduced over two centuries to fragments totalling just 1-2% of their original area, yet
t his resulted in the extinction of only one forest bird. In Puerto Rico, the primary forest area
has been reduced over the past 400 years by 99%, yet only seven of 60 species of bird has
become extinct. All but 12% of the Brazilian Atlantic rainforest was cleared in the 19th
century, leaving only scattered fragments. According to the rule-of-thumb, half of all its
species should have become extinct. Yet, when the World Conservation Union and the
B razilian Society of Zoology analysed all 291 known Atlantic forest animals, none could be
declared extinct. Species, therefore, seem more resilient than expected. And t ropical forests
a re not lost at annual rates of 2-4%, as many environmentalists have claimed: the latest UN
f igures indicate a loss of less than 0.5%. In London, air pollution peaked around 1890
Fourth, pollution is also exaggerated. Many analyses show that air pollution diminishes
w hen a society becomes r ich enough to be able to afford to be concerned about the
environment. For London, the city for which the best data are available, air pollution
peaked around 1890 (see chart 2). Today, the air is cleaner than i t has been since 1585.
T here is good reason to believe that this general picture holds t rue for all developed
count ries. And, although air pollution is increasing in many developing countr ies, they are
merely replicating the development of the industrialised count ries. When they grow
sufficiently r ich they, too, will start to reduce their air pollution. All this contradicts the
l i tany. Yet opinion polls suggest that many people, in the r ich world, at least, nur ture the
belief that environmental standards are declining. Four factors cause this disjunction
between perception and reality. Always look on the dark side of life One is the lopsidedness
built into scientific research. Scientific funding goes mainly to areas with many problems.
T hat may be wise policy, but i t will also create an impression that many more potential
p roblems exist than is the case. Secondly, environmental groups need to be noticed by the
m ass media. They also need to keep the money rolling in. Understandably, perhaps, they
sometimes exaggerate. In 1997, for example, the Worldwide Fund for Nature issued a press
r elease entitled, Two-thirds of the world's forests lost forever. The t ruth tu rns out to be
nearer 20%. Environmental groups are much like other lobby groups, but are t reated less
skeptically Though these groups are run overwhelmingly by selfless folk, they nevertheless
share many of the characteristics of other lobby groups. That would matter less if people
applied the same degree of scepticism to environmental lobbying as they do to lobby groups
i n other fields. A t rade organisation arguing for, say, weaker pollution controls is instantly
seen as self-interested. Yet a green organisation opposing such a weakening is seen as
a lt ruistic, even if a dispassionate view of the controls in question might suggest they are
doing more harm than good. A third source of confusion is the attitude of the media. People
a re clearly more curious about bad news than good. Newspapers and broadcasters are there
t o provide what the public wants. That, however, can lead to significant distortions of
perception. An example was America's encounter with El Nio in 1997 and 1998. This
climatic phenomenon was accused of wrecking tourism, causing allergies, melting the skislopes and causing 22 deaths by dumping snow in Ohio. A more balanced view comes from a
r ecent article in the Bulletin of the American Meteorological Society. This t r ies to count up
both the problems and the benefits of the 1997-98 Nio. The damage i t did was estimated at
$4 billion. However, the benefits amounted to some $19 billion. These came from higher
w inter temperatures (which saved an estimated 850 lives, reduced heating costs and
d iminished spring f loods caused by meltwaters), and from the well-documented connection
between past Nios and fewer Atlantic hur r icanes. In 1998, America experienced no big
A tlantic hur r icanes and thus avoided huge losses. These benefits were not reported as
w idely as the losses.The fourth factor is poor individual perception. People worry that the
endless r ise in the amount of stuff everyone throws away will cause the world to run out of
p laces to dispose of waste. Yet, even if America's t rash output continues to r ise as i t has
done in the past, and even if the American population doubles by 2100, all the rubbish
A merica produces through the entire 21st century will still take up only the area of a
square, each of whose sides measures 28km (18 miles). That is just one-12,000th of the area
of the entire United States. Ignorance matters only when it leads to faulty judgments. But
fear of largely imaginary environmental problems can divert political energy from dealing
w ith real ones. The table above, showing the cost in the United States of various measures
t o save a year of a person's life, illustrates the danger. Some environmental policies, such as
r educing lead in petrol and sulphur-dioxide emissions from fuel oil, are very cost-effective.
B ut many of these are already in place. Most environmental measures are less cost-effective
t han interventions aimed at improving safety (such as installing air-bags in cars) and those
i nvolving medical screening and vaccination. Some are absurdly expensive. Radically
cutting carbon-dioxide emissions will be far more expensive than adapting to higher
t emperatures. Yet a false perception of r isk may be about to lead to errors more expensive
even than controlling the emission of benzene at tyre plants. Carbon-dioxide emissions are
causing the planet to warm. The best estimates are that the temperature will r ise by some
2-3C in this century, causing considerable problems, almost exclusively in the developing
world, at a total cost of $5,000 billion. Getting r id of global warming would thus seem to be
a good idea. The question is whether the cure will actually be more costly than the ailment.
Despite the intuition that something drastic needs to be done about such a costly problem,
economic analyses clearly show that it will be far more expensive to cut carbon-dioxide
emissions radically than to pay the costs of adaptation to the increased temperatures. The
effect of the Kyoto Protocol on the climate would be minuscule, even if i t were implemented
i n full. A model by Tom Wigley, one of the main authors of the reports of the UN Climate
Change Panel, shows how an expected temperature increase of 2.1C in 2100 would be
d iminished by the t reaty to an increase of 1.9C instead. Or, to put i t another way, the
t emperature increase that the planet would have experienced in 2094 would be postponed to
2100. The Kyoto agreement merely buys the world six years So the Kyoto agreement does
not prevent global warming, but merely buys the world six years. Yet, the cost of Kyoto, for
t he United States alone, will be higher than the cost of solving the world's single most
p ressing health problem: providing universal access to clean drinking water and sanitation.
Such measures would avoid 2m deaths every year, and prevent half a billion people from
becoming seriously ill. And that is the best case. If the t reaty were implemented
i nefficiently, the cost of Kyoto could approach $1 t r i llion, or more than five times the cost of
worldwide water and sanitation coverage. For comparison, the total global-aid budget today
is about $50 billion a year.To replace the li tany with facts is crucial if people want to make
t he best possible decisions for the future. Of course, rational environmental management
and environmental investment are good ideasbut the costs and benefits of such
i nvestments should be compared to those of similar investments in all the other important
a reas of human endeavour. I t may be costly to be overly optimisticbut more costly still to
be too pessimistic.
Global warming stopped? Surely not. What heresy is this? Havent we been told that the
science of global warming is settled beyond doubt and that all thats left to the so-called
sceptics is the odd errant glacier that refuses to melt? Arent we told that if we dont act now
r ising temperatures will render most of the surface of the Earth uninhabitable within our
l ifetimes? But as we digest these apocalyptic comments, read the recent IPCCs Synthesis
r eport that says climate change could become i r reversible. Witness the drama at Bali as
news emerges that something is not quite r ight in the global warming camp. With only few
days remaining in 2007, the indications are the global temperature for this year is the same
as that for 2006 there has been no warming over the 12 months. But is this just a blip in
t he ever upward t rend you may ask? No. The fact is that the global temperature of 2007 is
s tatistically the same as 2006 as well as every year since 2001. Global warming has,
t emporarily or permanently, ceased. Temperatures across the world are not increasing as
t hey should according to the fundamental theory behind global warming the greenhouse
effect. Something else is happening and it is vital that we find out what or else we may
spend hundreds of billions of pounds needlessly.In principle the greenhouse effect is simple.
Gases like carbon dioxide present in the atmosphere absorb outgoing infrared radiation
f rom the earths surface causing some heat to be retained. Consequently an increase in the
a tmospheric concentration of greenhouse gases from human activit ies such as burning
fossil fuels leads to an enhanced greenhouse effect. Thus the world warms, the climate
changes and we are in t rouble. The evidence for this hypothesis is the well established
physics of the greenhouse effect i tself and the correlation of increasing global carbon dioxide
concentration with r ising global temperature. Carbon dioxide is clearly increasing in the
Earths atmosphere. I ts a straight line upward. I t is currently about 390 parts per million.
P re-industrial levels were about 285 ppm. Since 1960 when accurate annual measurements
became more reliable i t has increased steadily from about 315 ppm. If the greenhouse effect
is working as we think then the Earths temperature will r ise as the carbon dioxide levels
i ncrease.But here it starts getting messy and, perhaps, a lit t le inconvenient for some.
Looking at the global temperatures as used by the US National Oceanic and Atmospheric
A dministration, the UKs Met Office and the IPCC (and indeed Al Gore) i ts apparent that
t here has been a sharp r ise since about 1980. The period 1980-98 was one of rapid warming
a t emperature increase of about 0.5 degrees C (CO2 rose from 340ppm to 370ppm). But
since then the global temperature has been f lat (whilst the CO2 has relentlessly r isen from
370ppm to 380ppm). This means that the global temperature today is about 0.3 deg less
t han it would have been had the rapid increase continued. For the past decade the world
has not warmed. Global warming has stopped. I ts not a viewpoint or a sceptics inaccuracy.
I ts an observational fact. Clearly the world of the past 30 years is warmer than the
p revious decades and there is abundant evidence (in the northern hemisphere at least) that
t he world is responding to those elevated temperatures. But the evidence shows that global
warming as such has ceased. The explanation for the standstill has been att ributed to
aerosols in the atmosphere produced as a by-product of greenhouse gas emission and
volcanic activity. They would have the effect of reflecting some of the incidental sunlight
i nto space thereby reducing the greenhouse effect. Such an explanation was proposed to
account for the global cooling observed between 1940 and 1978. But things cannot be that
simple. The fact that the global temperature has remained unchanged for a decade requires
t hat the quantity of reflecting aerosols dumped put in our atmosphere must be increasing
year on year at precisely the exact rate needed to offset the accumulating carbon dioxide
t hat wants to drive the temperature higher. This precise balance seems highly unlikely.
O ther explanations have been proposed such as the ocean cooling effect of the Interdecadal
Pacific Oscillation or the Atlantic Mul tidecadal Oscillation. But they are also difficult to
adjust so that they exactly compensate for the increasing upward temperature drag of r ising
CO2. So we are led to the conclusion that either the hypothesis of carbon dioxide induced
g lobal warming holds but its effects are being modified in what seems to be an improbable
t hough not impossible way, or, and this really is heresy according to some, the working
hypothesis does not stand the test of data. I t was a pity that the delegates at Bali didnt
d iscuss this or that the recent IPCC Synthesis report did not look more in detail at this
r ecent warming standstill. Had it not occurred, or if the f latlining of temperature had
occurred just five years earlier we would have no talk of global warming and perhaps, as
happened in the 1970s, we would fear a new Ice Age! Scientists and politicians talk of
f uture projected temperature increases. But if the world has stopped warming what use
t hese projections then? Some media commentators say that the science of global warming is
now beyond doubt and those who advocate alternative approaches or indeed modifications
t o the carbon dioxide greenhouse warming effect had lost the scientific argument. Not so.
Certainly the working hypothesis of CO2 induced global warming is a good one that stands
on good physical principles but let us not pretend our understanding extends too far or that
t he working hypothesis is a sufficient explanation for what is going on. I have heard it said,
by scientists, journalists and politicians, that the t ime for argument is over and that fur ther
scientific debate only causes delay in action. But the wish to know exactly what is going on
is independent of politics and scientists must never bend their desire for knowledge to any
political cause, however noble. The science is fascinating, the ramifications profound, but we
a re fools if we think we have a sufficient understanding of such a complicated system as the
Earths atmospheres interaction with sunlight to decide. We know far less than many think
we do or would like you to think we do. We must explain why global warming has stopped.
A report that just came online in the Proceedings of the National Academy of Sciences should
make warm reading for Al Gore. The former next president, like many black-clad greens gracing
the cover of Vanity Fair, relies on firms that promise to plant trees to offset their clients' fuelintensive lifestyles, allowing the affluent to ignore their effluence and claim to be CO2 free. Mr.
Gore also points to windmills and other energy alternatives when pleading carbon-neutral to
charges his jet-setting contributes to global warming.
But where do Mr. Gore's green woodlands grow? Canada? Scotland? Patagonia? Alaska?
Siberia? Does he really know? Carbon offsets are sold by the ton, not by the acre, and don't come
with return addresses.
He'd better find out -- before Earth Day. The research reported by Govindasamy Bala of
Lawrence Livermore National Laboratory and colleagues at the Carnegie Institution's
Department of Global Ecology compared the climate effects of planting and clearing forests at
latitudes high and low. Their computer simulations yielded some disturbing results.
Saving the tropical rain forest is well and good, for cutting down trees in the tropics means less
long-term water transfer from soils to the atmosphere, leading to fewer clouds and a warmer
planet. But planting trees where none exist in northern areas may actually hasten global
warming. Northern tree plantations can trap heat -- they both absorb solar energy and shade sun
reflecting snow. This, say the scientists, can apparently overpower the cooling effects of trees
soaking up carbon dioxide and storing carbon in growing biomass. Take away the trees in the
long-running climate model, and high latitude areas become 0.8 degrees Celsius cooler by the
year 2100, when compared to a standard model of North Woods forest density. Carbon-offset
plantings there could send the tree line north, worsening global warming.
Atmospheric scientist Govindasamy Bala of Lawrence Livermore says, on the other hand, that
tropical reforestation efforts could slow global warming -- low latitude regions that the model
left treeless until 2100 increased in average temperature by 0.7 degrees. That's a warming trend
as large as the planet saw in the 20th century.
Climate scientist Victor Brovkin of Germany's Potsdam Institute for Climate Impact Research
told Science magazine, which is edited by Mr. Gore's friend Donald Kennedy (former president
of Stanford University), that while the new study serves as an important warning against planting
trees in the far north, planting trees in temperate regions probably has little or no net regional
effect. Comparing models of reforestation and deforestation of areas in the temperate zone shows
temperatures shifting just 0.04 degrees Celsius -- an impact even smaller than the predicted .07
degree effect of the Kyoto treaty. So Mr. Gore can't very well wag a finger at that hatchetwielding Arbor Day delinquent, George Washington, for chopping the Little Ice Age down in its
prime, or snip at the energetic brush cutting of Presidents Bush and Reagan.
The inconvenient truth -- that ill-placed "carbon offset" reforestation schemes can backfire could
give rise to a legal climate of fear. Will environmental lawyers chasing tree surgeons'
ambulances become the next big thing in torts? The climate modeling game affords few
certainties, but it seems likely that carbon-offset lawsuits will sprout like kudzu from this fertile
new research field. As it grows, will the green state attorney generals who took the EPA to the
Supreme Court end up inviting the former next president back for an encore?
FORT MCMURRAY, Alberta -- In February, engineers from French oil giant Total SA fired
u p colossal drum boilers to generate steam that will be pumped to a depth of 300 feet under
t he frozen ground here. If all goes well, by May, the steam will marinate a tar-like mix of oil
and sand until the crude begins to f low. Nearby, Total will go after the oil-soaked sands
closer to the surface, scraping away an ancient forest of spruce and poplars and shoveling
t he black soil into two-story dump t rucks. Fully loaded, the t rucks weigh as much as a
Boeing 747. Total will then use indust rial versions of giant washing machines to remove the
oil, generating enough liquid waste to create vast toxic lakes. Heavy-duty oil-extraction
p rojects like these are tu rning Fort McMur ray into the first great oil boom town of the 21st
century. A Florida-size section of sandy soil beneath the boreal forest in this sparsely
populated area of Northern Canada is loaded with bottom-of-the-barrel petroleum. These
deposits were once dismissed as "unconventional" oil that couldn't be recovered
economically. But now, thanks to r ising global oil prices and improved technology, most oilindustry experts count oil sands as recoverable reserves. That recalculation has vaulted
Venezuela and Canada to fi rst and third in global reserves rankings, although Venezuela's
holdings in extra-heavy crude are a rough guess. Saudi Arabia is No. 2. Not including the
oil sands, Canada would fall to No. 22. Led by Total, nearly every major Western oil
company as well as their Chinese and Indian brethren are gearing up to go after the
deposits here. In all, they plan to spend more than $70 billion in the next decade unlocking
t he oil from the sand.The surging interest in Canadian oil sands is stark evidence that the
world isn't about to run out of oil. Instead, it is running low on readily accessible light,
sweet crude -- oil that f lows like water, has few impur ities and can be easily tu rned into
gasoline. As the good stuff gets scarce, Big Oil is turning its attention and pouring money
i nto extra-heavy crude, such as the giant deposits near Fort McMur ray and another similar
one in Venezuela. But heavy oil has big economic and environmental drawbacks. I t costs
more to produce and takes more energy to tu rn into gasoline than t raditional light oil.
Recovering and processing Fort McMur ray's heavy crude releases up to three t imes as much
g reenhouse gas as producing conventional crude. And upgrading it into refined products,
such as gasoline or diesel, will require a gigantic investment to retool global refineries."The
l ight crude undiscovered today is getting scarcer and scarcer," says Jean-Luc Guiziou,
p resident of Total's Canadian operations. "We have to accept the reality of geoscience, which
is that the next generation of oil resources will be heavier."Total is making the biggest bet
on heavy crude of any of the half-dozen international Western oil giants. Nearly one-fifth of
i ts commercial reserves are in heavy-oil belts, according to oil consultant Wood Mackenzie,
a l arger portion than any of its Western r ivals. I ts stockpile of heavy-oil reserves is second
only to that of Exxon Mobil Corp., a company that is more than twice as large. Total has
spent years developing the complex technology needed to extract oil from tar sands in the
f rigid environment of Northern Canada. So much heat is required to separate the oil from
t he tar that Total briefly f loated the idea of building a nuclear-power plant there.The rush
i nto the oil sands also has tu rned a longstanding belief about fossil fuels and the
environment on its head. For years, environmentalists have argued that higher gasoline
p rices would be good for the Earth because paying more at the pump would promote
conservation. Instead, higher energy prices have unleashed a bevy of heavy-oil projects that
w ill increase emissions of carbon dioxide, suspected of causing global warming. "As oil
p rices have gone up, you get this increased desire to get out onto the new frontiers of oil,"
says Marlo Raynolds, executive director of the Calgary-based Pembina Institute, an energy
and environment think tank. "We're now getting into the dir t iest sources of oil anywhere."
To be sure, r ising energy prices have spawned more interest in renewable fuel sources, but
t hose investments pale in comparison to what's going on here. Canada, which exports more
oil to the U.S. than any other country, already is having t rouble meeting i ts pledge to cut
CO2 emissions largely because of its mushrooming heavy-oil production. By 2015, Canada's
Fort McMur ray region, population 61,000, is expected to emit more greenhouse gases than
Denmark, a country of 5.4 million people. Canada's northern forest contains at least 174
b illion barrels of recoverable heavy oil, equivalent to five years' supply for the planet,
according to the Alberta Energy and U tili ties Board. Venezuela has perhaps even more in
t he Orinoco River delta. By comparison, Saudi Arabia has about 260 billion barrels of more
t raditional crude, or 8 years' global supply, according to the Energy Information
A dministration, the statistical arm of the federal Department of Energy. Heavy oil also is
being produced in the M iddle East, the Caspian Sea, Brazil and even in California's San
Joaquin Valley. In northern Alberta, the oil-sands boom is remaking the landscape. The
m ining operations have clear-cut thousands of acres of t rees and dug 200-foot-deep pits. The
r egion is dotted with large man-made lakes filled with leftover waste from the mining
operations. To chase off migratory birds, propane cannons go off at random intervals and
scarecrows stand guard on f loating barrels. Alberta's energy minister, Greg Melchin, says
oil-sands development creates a minimal environmental disturbance that is outweighed by
t he opportunities and jobs created. "It's worth it. There is a cost to it, but the benefits are
substantially greater," he said. Environmental groups are increasingly critical of the
government's reluctance to regulate the oil sands. "The pace of development is outstripping
our ability to manage the environmental issue," says Mr. Raynolds of the Pembina Institute.
"Our unwri t ten energy policy is dig it up and sell it as fast as possible."The remarkable
p roperties of Fort McMur ray's oil sands have been known for centuries. Native t r ibes mixed
t he tar-like substance with t ree sap to waterproof their canoes. In the 1960s, companies
now known as Suncor Energy Inc. and Syncrude Canada L td., a consortium of oil
companies, opened oil-sands mines in the area. Both operations stumbled through periods
of low oil prices but are now rapidly expanding. When oil was t rading at $12 a barrel in the
l ate 1990s, Big Oil had li t t le interest in oil sands. But surging energy prices have made
heavy-oil investments significantly more attractive. I t costs about $25 a barrel to produce
c rude from Canada's oil sands, an acceptable cost when oil is t rading for $60 a barrel. By
comparison, it can cost as lit tle as about $5 a barrel to produce crude in the M iddle East
and $15 in the deep waters of the Gulf of Mexico. For Paris-based Total, the world's fifthlargest publicly t raded energy company by market capitalization, the oil sands play to its
s trengths. Total had i ts roots as a refiner rather than an exploration and production
company. Oil sands were easy to find but hard to process. Total's first foray into heavy oil
was in Venezuela's Orinoco belt. In 1997, the company's giant $4.2 billion Sincor project
t here began producing market-grade crude. Sincor, which Total owns with Norway's Statoil
ASA and Petrleos de Venezuela SA, now produces 180,000 barrels of oil a day.The same
year, Total opened an office in Calgary to determine if a similar investment was warranted
near Fort McMurray. I t was soon clear to Total engineers brought in from Sincor that
Canadian oil sands were more technically difficult than Venezuela's heavy-oil belt. The key
d ifference: The heavy oil in Venezuela was quite warm and f lowed easily, albeit slowly,
w hile in Canada the oil-sand mixture had the look and consistency of tar-like Play-Doh. But
Canada was attractive because i t offered a haven from politically unstable oil hotspots. In
November 1999, Total teamed up with the financially struggling Gulf Canada Resources
L td. on a promising project called Surmont. Gulf Canada was later acquired by Conoco Inc.
and is now part of Houston-based ConocoPhillips. For Total, sorting out the mechanics of
p roducing this heaviest of oils fell on the shoulders of Mr. Guiziou, a French earth scientist
w ho had worked his way into management from his first assignment studying the geology of
A rgentina. In 2001, when he was being considered for the Canadian job, he f lew into Fort
M cMur ray to see what the oil sands were about. Having worked in the industry for years,
he was accustomed to the look and feel of oil fields. But when he visited Syncrude's mine,
w here giant cranes scooped up the oil-soaked earth in buckets capable of carrying 100 tons,
he was f labbergasted. "It was another world," the 44-year-old Mr. Guiziou says.In some
p laces near Fort McMurray, the oil sands are close to the surface and can be mined. But at
Surmont, located southeast of Fort McMurray, the oil sands are 1,200 feet underground, far
t oo deep for a mining operation. The partners in the venture needed to find a way to get the
oil. The solution was steam. In 1978, Roger Butler, an engineer with Imperial Oil L td., an
i ndependent company majority-owned by Exxon Mobil, hit on the idea of drilling two wells
t hat start off vertically, then slowly bend until they are horizontal and located one on top of
t he other. The top well would pump steam into the reservoir while the other pumped oil out.
Surmont was to be Total's and Conoco's first venture with the technology, so in late 1997
t hey started small with a 1,000-barrel-a-day pilot. They pumped steam down a pipe laced
w ith millions of t iny slits, each no wider than the thickness of a piece of paper. The init ial
r esults were encouraging but expanding into a full-scale project took several more years.
O ne pressing issue: Several companies, including Paramount Resources L td., were
p roducing natural gas from a shallow underground zone above the oil sands. Total and its
partner convinced an Alberta regulatory body that the gas project threatened the much
l arger oil deposit. The theory was that if the gas were allowed to be pumped out, the steam
chamber would lose pressure and Surmont would have to be scrapped. In a landmark
r uling, an Alberta regulatory body ordered 146 gas wells shut off in 2000.In December
2003, Total and ConocoPhillips decided to build the first phase of Surmont. The steaming is
slated to begin later this year, with production expected to grow to 27,000 barrels a day next
year. Future expansions could bring it to 200,000 barrels a day -- a good-size oil field but
not the biggest in the area. At Surmont, Total was merely an investor with ConocoPhillips
and its predecessor companies operating the project. Last year, the French company went
f rom being an investor to a full-f ledged participant in the oil-sands boom. In September, it
bought Deer Creek Energy L td. for $1.6 billion, acquiring its only significant asset: a giant
oil-sands project called Joslyn north of Fort McMur ray. Once fully developed, Joslyn is
expected to yield 200,000 barrels a day for decades. Total plans to produce oil from Joslyn
by both mining and by shooting steam underground. Becoming an operator, Mr. Guiziou
needed to confront environmental problems as Total expanded its heavy-oil holdings in
Canada. M ining oil sands generates enormous volumes of liquid waste that are stored in
toxic lakes that have concentrations of naturally occur ring naphthenic acid, an odorless
l iquid used to help paint dry quickly. The prospect of cleaning up these lakes is "daunting,"
t he Canadian National Energy Board, a federal regulatory body, noted in a 2004 report.
" There is currently no demonstrated means to reclaim f luid fine tailings," it said. Since the
l akes are likely to be around for years to come, Mr. Guiziou is working on a plan that will
r esult in smaller lakes. He hopes to install a new technology at Joslyn that will suck out
water and leave a smaller volume of waste laced with metals before it is dumped in the
l akes. But he said the technology "needs to be proved at the industrial scale." Total expects
t o conduct a test later this year at a neighboring facility. Total is also t rying to figure out
ways to curb greenhouse-gas emissions at its Fort McMur ray facilit ies by using pure oxygen
i nstead of air in i ts combustion engines. The company is running a pilot project in Lacq,
F rance, to capture carbon dioxide in exhaust f lues more effectively. If the technology proves
workable, it could be used in Fort McMurray as well. Despite the environmental concerns,
t here is a strong economic incentive for Alberta's free-market-oriented government to let oilsands development gallop ahead. Alberta added nearly 26,000 jobs in resource extraction in
t he past two years. That 25% jump helped drive the province's unemployment rate down to
3.1%, a 30-year low, according to the government. For the first t ime, every Albertan received
a 400 Canadian-dollar ($340) check from the government earlier this year from an
u nexpected fiscal surplus.Total and other oil companies are continuing to announce new oilsand projects and shovel money into the region. Earlier this month, Chevron Corp. said i t
p lanned to spend "billions" to turn 75,000 acres into a 100,000-barrel-a day field. And last
week, Royal Dutch Shell PLC said it had spent nearly $400 million to lease 219,000 acres
west of Fort McMurray, shattering records for public-land leases. In February, Total moved
quickly to file the regulatory permit for Joslyn to move to the front of a growing queue of
p rojects. With all the development, everything is in short supply, including steel, energy to
power the projects, fresh water and skilled construction workers. Some projects could end
u p being delayed for years. "I t's like you've got one door frame and the Three Stooges t rying
t o get through at the same time," said Tom Ebbern, executive managing director of Tristone
Capital, a Calgary-based investment adviser. "Without a doubt, we can become the next
Saudi Arabia but it will take 10 years longer than the market thinks."