The Age of Extreme Oil: "This Used to Be a Forest?"

The region now resembles the Sahara – fine sand left behind by evaporated tailings ponds stretching into a treeless horizon.

One grey Thursday at the end of April, a plane touched down in Fort McMurray, Alta., carrying four Achuar Indians from the Peruvian Amazon. They had flown 8,000 kilometres from the rain forest to beseech Talisman Energy Inc., the Calgary-based oil and gas conglomerate, to stop drilling in their territory. Talisman's annual general meeting was coming up, and the Achuar were invited to state their case to chief executive officer John Manzoni in front of the company's shareholders.

But first, they wanted to see a Canadian oil patch for themselves, and meet the aboriginal people who lived there.

Their host in Fort McMurray was Gitzikomin Deranger, Gitz to his friends – a 6-foot-4 Dene-Blackfoot activist who lives in a comfortably cluttered duplex with his parents and a revolving assortment of relatives. Many of them crowded in to meet the Achuar, who relaxed on Mr. Deranger's leather couch with surprising ease for people who live in palm huts. He had welcomed them to Alberta with a smudge – having set a small pile of sage to smoulder in a miniature cast-iron pan, he fanned smoke over his guests with an eagle feather.

"Did you kill the bird to get it?" asked Peas Peas Ayui (PAY-us PAY-us AY-wee), the group's leader, a taciturn man in his mid-40s with gold-capped upper teeth.

"No," Mr. Deranger said, "we only use feathers that are given. If you find a feather on the ground, it means the eagle put it there for you, maybe even gave up its life for you." The Achuar talked this over briefly and, for the first time since landing, their lips curled into smiles.

"Condor feathers are sacred for us too, but we never pick them off the ground," Mr. Ayui explained. "To do so is an omen that your wife is preparing to leave you." The group's female representative, a butterfly of a woman named Puwanch Kintui Antich, giggled her affirmation.

That was the first of many same-but-differents that the South and North American natives would discover about each other through the weekend. But few of the lessons to follow would end in laughter.

Over the course of three days spent visiting reserves, band offices and the vast sand dunes left behind by the bitumen-scrubbers surrounding Fort McMurray, the Achuar confronted a reality that may one day be their own. And they didn't much like what they saw.

This encounter was born of a new dynamic: the age of extreme oil. Gone are the days of sweet Texas crude and boundless Arabian oil fields, when petroleum lay so near the surface that all a company had to do was prick the Earth's crust and let the black gold gush. To the environmentalists who worry about reaching "peak oil" (and a subsequent decline in fossil fuels), critics can point out accurately enough that the world is flush with new hydrocarbon reserves. They are less quick to acknowledge the epic complexity and risks of most of these new finds.

Alberta's oil sands are the obvious example: Here, on average, two tonnes of earth must be strip-mined and seven barrels of water heated to steam in order to produce a barrel of oil. It takes a barrel's worth of energy to produce just three barrels of oil; 30 years ago it would have been 100.

But extreme oil isn't just a Canadian phenomenon: In 1985, only 6 per cent of the oil from the Gulf of Mexico came from wells drilled in water more than 300 metres deep. By 2009, it was 80 per cent, including BP's Deepwater Horizon rig, which delved 1,500 metres underwater and then another four kilometres below the sea floor before exploding into history in its accident on April 20, 2010.

Brazil's much-vaunted offshore deposits are just as deep. So are the Arctic deposits that Big Oil is eyeing now. Shell, for instance, has spent $4-billion preparing to explore off the shores of Alaska, without yet producing a single barrel. Further north, the federal government opened the bidding this week on 905,000 hectares of the Canadian Arctic sea floor, adding to the leases being explored in the Beaufort Sea by companies that have already spent billions in a region once thought forever out of reach.

These extremes go a long way to explaining why oil is at $100 a barrel, which in turn helps explain why Talisman is now keen to start pumping in Peru's Amazon. The Achuar who visited Alberta have the mixed fortune to live above 41 million barrels of light crude, six kilometres beneath their feet. At that depth, it takes 200 days and up to $80-million just to drill a single exploratory well, which may not find its mark. The quantity is globally slight – the world goes through 41 million barrels every 10 hours – but the $4-billion it's worth at today's prices makes it significant indeed to a mid-level energy corporation from Calgary.

"Big money, big problems"

On Friday, Mr. Deranger took the Achuar to Gregoire Lake Reserve, half an hour south of Fort McMurray, where his friend Brian Bird lives, along with 500 Cree in houses of various states of decay. It was snowing, but Mr. Ayui insisted on keeping the window rolled down for the entire drive, for an unobstructed view of the brown surroundings.

A hardened patch of ice coated the earth in front of Mr. Bird's house, and Ms. Antich, who had never seen snow, spent a few minutes stomping over it. But soon the cold overcame her wonder and everyone went inside.

"You know how they say 'big money, big problems'?" said Mr. Bird, a father of 10 with a boxer's build and a shaven head, after the introductions. "That's what happened here. Fifteen years ago, when there were only two oil plants, moose would wander into the front yard and the lake was full of fish. Now, there are 20 oil plants and everyone has a job, but there are no more fish in the lakes and we haven't seen a moose here in years."

"How do you eat?" asked Jiyucam Irar Miik (he-YOU-cam ear-ARE Meek), who founded the 44-village federation that Mr. Ayui now leads. He's now in his 50s.

"We go to the store."

"Has your economic situation improved?"

"Money is there," Mr. Bird said, "but we fight over it non-stop. ... Nobody trusts each other."

"Do your children get a better education?"

"Good enough to work for the oil companies."

This is the conundrum for native people around Fort McMurray: Most of them work for the oil sands, even as they complain about the impacts. To some people, that's hypocrisy. To Mr. Deranger, it simply confirms their role as economic hostages.

"Everyone has to eat," he said. "If you look at the history of first nations here and everywhere in Canada, we've been marginalized to the point of starvation for generations. The land and water around Fort McMurray is so contaminated we can't hunt or fish any more. If you starve someone long enough, even crumbs will seem nourishing."

Before the Achuar left, Mr. Bird showed them the water drum he had made from a round of cottonwood, its hollow bowl half-filled with water he had collected on a trip to the Sonora desert. They listened, rapt, as he explained how the skin represented the animal kingdom, the wood represented plants and the water that beaded up when he struck it symbolized rain. The sound it made was thunder.

Thumping the drum's moist skin, he sang a Cree song composed by a veteran of the Vietnam War. "He was the only one in his battalion who survived the war," he said afterwards, "so he wrote this song about how beautiful it is to be alive."

From there, it was a short drive to the Fort McMurray First Nation band office, where chief Ron Kreutzer was waiting to give the Achuar some advice.

"You're never going to stop the oil companies," he said. "So you've got to try to get the best deal you can out of them."

"What kind of future do you see for your people?" Mr. Ayui asked.

"It's not very bright," Mr. Kreutzer said in a low voice, "but we've gotten used to it. We recognize that the oil will never stop. If we have to relocate in the future, then that's just what we'll do."

The battle for Block 64

"I have said repeatedly that we will not work where we do not have majority community support," John Manzoni, Talisman's CEO, insisted at the company's annual meeting on May 1. He was responding to the four Achuar, who showed up wearing headbands of toucan feathers (killed, not found) and bead vests draped over their shoulders like ammunition belts.

One by one, they stood during the question period to demand that the company leave their land. Their complaints were translated by Gregor MacLennan of Amazon Watch, the San Francisco-based organization that sponsored their journey.

"We respect your right to deny oil production on your territory," Mr. Manzoni replied. "But we ask you to respect others' rights who have pro-actively asked for us to work with them in their territory."

This is where things get tricky enough to warrant a brief history: In 1995, the Peruvian government took out a map and delineated Block 64, a 760,000-hectare patch of rain forest along the northern border with Ecuador, between two rivers in the Achuar heartland.

Oil rights were first leased to Arco, a U.S. oil company, without a word to the Achuar; Arco did nothing with its lease, and in 2000, Block 64 passed into the hands of another American company named Occidental, commonly known as Oxy.

As every Peruvian in the Amazon knew, Oxy had been pumping oil since 1972 on a lease beside another river; in three decades, Oxy had dumped one million barrels of contaminated tailings into the waters, poisoning the food supply of Achuar fishermen with heavy metals. Thankfully, before Oxy could do it all over again next door, it sold Block 64 to Talisman in 2007.

"I don't think the industry showered itself in glory in the past," Mr. Manzoni allowed in a press conference after the meeting. "But Talisman has cleaned up a lot of that."

Talisman is probably the best oil company an Amazon Indian could ask for, in both environmental and social terms. It has built medical clinics, donated boats, paid university tuitions and installed satellite phones in 66 indigenous communities with which it has signed "good neighbour" agreements, at a price of $3.7-million from 2008 to 2011.

This year, it allocated $30-million more to a fund for the villages to spend as they see fit. In exchange, the 66 communities signed off in support of Talisman's bid to pump $4-billion worth of oil from their land.

Unfortunately for Talisman, most of those communities are outside Block 64; most aren't even Achuar. Its Peru corporate-affairs manager, Gonzalo Delgado, acknowledged as much when pressed. But every one of the 44 communities that sent Mr. Ayui to Canada lives in the concession.

Nevertheless, in the five years since Talisman bought the rights to Block 64 and set about earning "free, prior and informed consent" of "every community directly impacted," the company has wrapped up its exploration; it knows exactly where the oil is, and how much, and it is poised to move into production. According to plan, oil will be flowing by 2015. The wells that will bring it up from six kilometres beneath the Morona will include reinjection facilities that dump contaminated tailings underground rather than into the river, quadrupling each well's price tag.

This "is the latest technology," Mr. Delgado said. The company is betting that it's good enough.

"Where are all the birds?"

From Fort McMurray, Mr. Deranger took the Achuar to visit the Fort McKay First Nation, half an hour north. The drive took them past the oldest oil-sand facility, operated by Suncor Energy Inc. since 1967. They pulled over by the highway for a look.

"This used to be a forest?" Mr. Achui asked. The region now resembles the Sahara – fine sand left behind by evaporated tailings ponds stretching into a treeless horizon.

"Where are all the birds?" asked Mr. Miik, genuinely bewildered.

Mr. Deranger explained that the cannons they heard every few seconds were designed to scare birds off, to prevent them landing in the oily ponds that settled like mirages between the dunes.

If the Achuar had believed in hell, this would have been it. It made little difference to them that Block 64's oil is light crude instead of bituminous sand – the risks they saw were just as great.

Their world, unlike Alberta, is composed of running water: Block 64 is two days by river from the nearest town, and days farther from the nearest major port where barges with serious cleanup capacity can moor. A major spill would spread far and fast.

This was no idle concern: Just across the border in Ecuador, oil production by Texaco and Chevron over the 1980s and 1990s saturated local waterways with billions of gallons of toxic sludge, leading an Ecuadorean court to rule, last January, that Chevron owes $18-billion in damages. (It has so far refused to pay.)

"All human technology fails," said another of the visitors, Ampush Ayui Chayat, his long black hair tied back. "Talisman has insisted their new technology will change everything. But if this is how Canadians let oil companies operate in their own land, how can we trust them in ours?"

Even if Talisman's safeguards prove effective, the pipeline it plans to build to transport the oil to market will almost certainly attract more oil companies to a region studded with deposits. The Achuar homeland would become a hub for oil exploration.

Three days in Fort McMurray, which epitomizes everything known about boom towns, was enough to convince the visitors it was not a model to emulate.

The other side of the river

The Achuar were no more heartened by seeing Fort McKay, their final stop before their return to Calgary for the Talisman meeting. Mr. Deranger had a friend there named Cecilia Fitzpatrick, the granddaughter of the chief who signed over the band's land with a treaty in 1899.

"The government initially put us on the other side of the river," Ms. Fitzpatrick told the Achuar, gesturing across the Athabasca from her porch. "But it's bog land over there, totally uninhabitable, so we moved here. Our people lived here as squatters for the early years, until the government gave in."

She offered the group some bottled water, apologizing that the tap water was undrinkable.

"There are 22 companies operating all around us," she went on. The local leadership kept making concessions, while the companies provided annual payments to every resident. "But we'll probably have to move again soon, since the only land we have left to sell is right below our houses."

Ms. Fitzpatrick sighed. "It seems like we're always waiting, and I wonder what we're waiting for. We think it's going to get better, but it never does."

Everyone fell quiet for a long moment. The Achuar stared out at the Athabasca, where the last chunks of winter ice were melting against the banks. The river and the land, Mr. Ayui had said earlier, were dead; therefore, in his eyes, the people were dead.

"I wish you luck with your struggle," Ms. Fitzpatrick said at last. "Just remember, once you let one company in, the rest will be quick to follow."

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