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Slow down oil sands development: industry mag column

A prominent Canadian oil and gas industry publication, and one which claims to be read by "the energy sector's senior leaders and decision-makers", is running a column that calls for a "Pembina Institute-ish" slowdown to current oil sands expansion.

"The bad news is that as long as there are no meaningful limits on development, we’ll never be competitive for long," reads a recent column in Alberta Oil magazine.

Penned by University of Alberta business professor Andrew Leach, the column's logic goes as follows:

Unbridled free market oil sands investment pumps huge money into the Alberta economy. But too many construction projects at once create severe labour shortages, driving up costs, and narrowing profit margins for the entire industry. This in turn deprives the provincial government, and regular Albertans, of royalty revenues.

"The most obvious solution is orderly development," Leach writes. "That might sound pretty Pembina Institute-ish, but remember that this is exactly why we see oil sands companies talking about staging development…The projects are more valuable if they are not built at the same time."

This week's column followed an announcement by new Alberta premier Alison Redford that she will be reexamining the province's rainy-day Heritage Fund.

Set up in 1976 to save revenue from oil and gas investment, the fund was pillaged and neglected under later premiers, leaving it now worth only $15.2 billion.

One of that fund's key architects told The Tyee last April that Alberta policymakers are running the province like a "banana republic."

Geoff Dembicki reports on energy and climate issues for The Tyee.

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