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An oilfield pumpjack works on an oil well, belonging to Cenovus Energy, near Brooks, Alberta. The Canadian Press Images/Larry MacDougal

LARRY MACDOUGAL/The Canadian Press

Alberta Premier Jason Kenney is determined to hunt down the foreign villains who he says are bad-mouthing the oil sands.

Someone should tell him it’s way too late for that.

The province’s oil sector is facing something much more dangerous than environmental activism: economics.

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Investors are continuing to shun the sector, unconvinced that Alberta’s costly and high-carbon oil reserves will ever get fully tapped in a world of low prices, excess supply, pipeline bottlenecks and stricter emission rules.

Several large multinational energy companies voted with their dollars, leading an exodus from the oil sands in 2017.

The fallout continues today as many investors fret about what the future holds for the oil sands.

Investment bankers are pushing Calgary-based Cenovus Energy, which has acquired assets as foreigners fled, to buy back billions of dollars worth of its own shares to boost its languishing stock price.

Other oil sands players, including Suncor and Canadian Natural Resources, have already gone that route, with mixed results.

Industry players have faith that the oil sands is still a growth story.

Investors, particularly foreigners, aren’t buying it. The TSX’s energy stock index is down roughly 60 per cent since 2014, when the price of oil headed south.

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Oil sands producers have been scrambling to cope with the new economic reality − by lowering costs and reducing their carbon footprint with new, more efficient ways of extracting oil.

Production from the oil sands has doubled in the past decade to about three million barrels a day. It’s on course to reach 3.4 million barrels a day in 2020.

What happens in the years beyond is a lot less certain as the industry struggles to do more with less. Investment in the oil sands has tumbled by two-thirds since 2014.

The danger is that Alberta becomes littered with stranded oil-production facilities − projects that are either too high-cost or unable to meet tougher emission standards.

To be fair, the Canadian industry is not alone in this challenge. Around the world, oil and gas companies have invested US$50-billion since 2018 in major projects that will only be economically viable if countries exceed their Paris climate-treaty emission targets, according to a recent report by Carbon Tracker, a London-based think tank. Among those is ExxonMobil’s US$2.6-billion Aspen oil sands project in Alberta.

The report warns that this and other projects will be “deep out of the money in a low-carbon world.”

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The Aspen project, for example, will need an oil price of more than US$80 a barrel to generate a 15-per-cent return.

In essence, companies are betting that the world will ignore the Paris targets.

The deep discount on Canadian oil sands stocks suggests a lot of investors may be making a very different economic calculation − namely, that the oil sands growth story is over.

Mr. Kenney, the Alberta Premier, however, seems much more preoccupied with image than economics.

This summer, he made good on an election pledge by launching the Public Inquiry into Anti-Alberta Energy Campaigns. His stated goal is to counter the “defamation” of the oil sands by environmental groups that receive money from U.S. charitable foundations and trusts.

Going after the anti-oil groups may satisfy some Albertans. But it’s just a diversion. It won’t help solve the fundamental economic challenges facing the industry.

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If Mr. Kenney is serious about ensuring a future for the oil sands, he would commit his government to a massive effort to reduce the industry’s carbon footprint. So far, he’s tilting in the opposite direction. He scrapped the provincial carbon tax and launched a constitutional challenge of the federal tax that took its place. He’s also abandoning the previous NDP government’s pledge to get out of the business of burning coal to produce electricity by 2030.

Until investors feel confident that oil sands producers can thrive in a low-carbon environment, they’ll resist buying into their story.

The sooner Mr. Kenney realizes his foe is economics, not environmental activism, the better.

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