Evidence of meeting #56 for Natural Resources in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was innovation.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

James Cameron  Chaiman, Climate Change Capital
Bob Bleaney  Vice-President, External Relations, Canadian Association of Petroleum Producers
Dan Wicklum  Chief Executive, Canada's Oil Sands Innovation Alliance, Canadian Association of Petroleum Producers
Mark Salkeld  President and Chief Executive Officer, Petroleum Services Association of Canada
Tim Weis  Director, Renewable Energy and Efficiency Policy, Pembina Institute
Greg Stringham  Vice-President, Markets and Oil Sands, Canadian Association of Petroleum Producers
Wally Kozak  Engineer Chief, Global Services, Calfrac Well Services Ltd., Petroleum Services Association of Canada
Mark Bentsen  President and Chief Executive Officer, Cathedral Energy Services Ltd., Petroleum Services Association of Canada

November 20th, 2012 / 11:45 a.m.

Conservative

Mike Allen Conservative Tobique—Mactaquac, NB

Thank you very much, Mr. Chair.

Thank you to all our witnesses for being here.

I'd like to start at a bit higher level with the folks from the Canadian Association of Petroleum Services and the Canadian Association of Petroleum Producers. I'd like to understand where we are on the timeline on the innovation right now.

To the services folks, you talked about holographic imaging, you talked about directional drilling, you talked about wellbore integrity. There was an interesting statistic. In 70% of the 11,400 bores, there's going to be horizontal drilling, which I found quite interesting.

I'd like to start, generally, at a high level as the first question. You've given some examples, and I'd ask CAPP to do the same thing. Over the last five years, what have been some of the major technological innovations? Then take me five years out. I would like to go 10 years, but I don't think anybody could speculate on that right now. What would you see as the most promising technologies, in your view right now, for the next five years?

11:45 a.m.

Vice-President, External Relations, Canadian Association of Petroleum Producers

Bob Bleaney

I agree. Trying to go more than five years out may be a challenge. That's a thing we don't yet know.

In terms of specifics around examples in our sector, in the CAPP area, I will deflect this question to Greg Stringham. He's very close to some of the technological advances that have been made within CAPP's group.

11:45 a.m.

Conservative

The Chair Conservative Leon Benoit

Mr. Stringham, go ahead, please.

11:45 a.m.

Greg Stringham Vice-President, Markets and Oil Sands, Canadian Association of Petroleum Producers

Thank you. I'll take the opportunity to comment on it.

Over the last five years, from the oil and gas sector, some of the major innovations have been both on the recovery and on the environmental side of things. Let me start with a few of them, just to give you examples.

For example, to both reduce the amount of energy going in and thus have an impact on greenhouse gas emissions and also to increase recoveries in the whole area of drillable oil sands—or what we call the in situ—there has been a massive change from using just heat in the past, or just steam going underground, to putting some light hydrocarbons in with that steam, light propanes and butanes.

That actually increases recovery, but it also then reduces the amount of steam that's needed, which of course then generates back to less gas being used to generate that steam. It not only increases the economics but also reduces the environmental footprint by having less greenhouse gas. That's been a really major thrust, I would say, over the last three years, and it's not yet mature. It's still being developed very strongly.

Another one, probably over the last three years, as well, in that same area—and then I'll broaden out to some of the other ones—is what we call infill drilling in the oil sands. If you're putting two horizontal wells down to warm up the ground underneath, there's this little space between those two that actually gets warmed up, but you can't get the oil out of it.

Many companies, over the last three to five years, have been drilling—what they call infill drilling—a well right down the middle of the two. There, you don't have to put in any steam, because you've already warmed the underground resource, so you're getting oil out of the oil sands without any additional steam or heat at all. Of course, that really helps the overall project with its recoveries, but it also reduces the environmental footprint on a greenhouse gas basis.

Those are just a couple of examples.

A third one I would give from across the whole sector, as mentioned earlier, is the concept of cogeneration. If we're going to need steam anyway to develop the oil on the oil sands, then companies have been very strong at putting in cogeneration. They're using the heat from the natural gas they're burning more than once, and they're using cogeneration to generate electricity to put on the grid. As you well know, here in Alberta we still have a significant amount of coal on our grid as well, so it helps supplement that by at least burning natural gas for the grid and then using the steam that comes out of the back end of that to go underground to warm up the oil and get the oil out.

I'll look out five years on that to some examples that are really just starting now, then I'll ask the services companies to talk about some of the things there.

One of the real keys is looking at things like waterless recoveries. Can we actually get into the extraction of this oil and gas without using water at all? Again, it's very leading-edge. It's at a bench scale, at a test tube and beaker scale right now. As you know, in our industry it's always hard to make the jump from that scale up to the commercialization scale. That's where some of the things are being looked at over the next five years. Waterless recovery is a big one that's going on.

Again, we're already using an awful lot of solar power in the conventional oil and gas business because we have these remote facilities, as was mentioned by Pembina—the remote towns. We have remote facilities everywhere. We're actually one of the largest users of solar panels throughout western Canada, because we need power at our remote well sites. That's another area that's being developed heavily by our industry. They're not connected to the grid. As we go more and more into the unconventional tight oil, tight gas, and shale gas areas, we are going to be in remote locations.

There are some examples to get started with. I'll turn the time over to the petroleum services group.

11:50 a.m.

Wally Kozak Engineer Chief, Global Services, Calfrac Well Services Ltd., Petroleum Services Association of Canada

I'll speak for my subsector, which is pumping services and stimulation. Mark said there were 17 subsectors, and we're just one of them.

11:50 a.m.

Conservative

The Chair Conservative Leon Benoit

You're Mr. Kozak, is that correct?

11:50 a.m.

Engineer Chief, Global Services, Calfrac Well Services Ltd., Petroleum Services Association of Canada

Wally Kozak

I am, yes.

11:50 a.m.

Conservative

The Chair Conservative Leon Benoit

Okay, good. I just wanted to make sure we identified you.

Go ahead, please.

11:50 a.m.

Engineer Chief, Global Services, Calfrac Well Services Ltd., Petroleum Services Association of Canada

Wally Kozak

One of the innovations that's going on very actively today is the reduction of regulated, or WHMIS-controlled, materials in our chemicals. There are ongoing efforts to minimize what are seen to be regulated materials that appear on MSDS sheets.

We are also improving our fluid systems' capabilities of using non-potable water. We recognize that fresh water is a precious and costly resource, and we're doing everything we can to maximize our use of other sources of water so as not to compete with others for that resource.

The nature of our industry has changed. Our equipment used to travel on the roads for 8 to 10 hours a day, show up at a customer's location, and perform services for two hours. The world has turned around. Our equipment goes down the road and it may remain on a customer's well pad for weeks, if not a couple of months, at a time, so we are reconfiguring our equipment to become transportable, rather than simply portable. This equipment would require fewer returns to base for maintenance and repair. We're also trying to reduce our impact on roads and improve our productivity.

Another example is fuelling. With equipment remaining on a site for weeks at a time, we are hauling diesel fuel to that equipment. We are exploring other fuelling sources for that equipment and trying to reduce the impacts and hazards associated with transporting the fuel.

I hope that—

11:50 a.m.

Conservative

The Chair Conservative Leon Benoit

Thank you very much.

Thank you, Mr. Allen, for your questions. You may get a chance to answer some questions later.

Mr. Julian is next.

11:50 a.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

My thanks to all our presenters today. It's hard to know where to start. We have a lot of good information that's been put on the table, so thank you for being here.

Mr. Cameron and Mr. Weis, first, with respect to climate change and mitigating greenhouse gas emissions, do you not feel it's important for all governments to take climate change seriously? Of course, that's a debate in the Canadian Parliament. We feel the government isn't taking it seriously. The government feels that they can make up stuff about the opposition rather than addressing what is a serious concern. Do you not feel it's important for governments to take action on this issue?

Second, there's the whole issue of the green energy market. You touched on it, Mr. Cameron, when you talked about the clean technology funds. Mr. Weis, you've touched on it as well. To what extent is Canada missing out? We have a substantial hydroelectric sector, but in wind power, we're behind our major competitors, and in other sectors, such as geothermal, tidal, and solar, we're non-existent. To what extent is the international market going to evolve from now till 2020, and what are the opportunities Canada is missing if we don't have in place an innovation agenda that includes a green energy sector and all of these new technologies?

11:50 a.m.

Chaiman, Climate Change Capital

James Cameron

Your first question provides me with an opportunity to say something I think is blindingly obvious, namely, that all governments everywhere must make climate change a priority issue, even if it's difficult to do in times of economic hardship, even if it requires cooperation with other governments that might be hard to manage, and even if there's little feedback on progress in the lifetime of a Parliament or a politician or a CEO of a large company.

This problem is large. It appears intractable. It's frustrating. You can hardly feel any reward for making progress in it, but it defines what government is for. It doesn't make any difference what a government's politics is: climate change has nothing to do with left or right. How you respond to it does, but understanding the issue does not.

I've been working on this for over 20 years, and I remember vividly the United Nations General Assembly on Global Environment in November 1989, when Margaret Thatcher said that climate change science is so clear, the need to act so obvious, that we shouldn't be squabbling over who pays for it.

11:55 a.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

Sorry, Mr. Cameron, it's just that we have limited time, so could you answer the second question around the green energy sectors?

11:55 a.m.

Chaiman, Climate Change Capital

James Cameron

I think the best way to figure it out is to have a look at how the marketplaces in growing economies are forming around resource efficiency and clean energy. This is not an either/or strategy. There's still plenty of opportunity to sell fossil fuels for a generation, but if you look at China's five-year plan, it makes it very plain that they want to grow their economy on a more resource-efficient basis. They have told you very clearly what technologies they are looking for. The five or six sectors they have picked up to grow are dominated by environmental technologies.

Their targets for energy efficiencies are demanding, severe, and difficult to implement, but already they are creating the largest renewable energy market in the world. They are bound to create the largest resource efficiency market in the world, just because of the sheer necessity of delivering demand to 1.4 billion people in a way that doesn't damage their economic growth prospects.

So I think if you take China—

11:55 a.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

Thank you, Mr. Cameron. I'll move on to Mr. Weis. Thank you very much.

11:55 a.m.

Chaiman, Climate Change Capital

James Cameron

It's a pleasure.

11:55 a.m.

Conservative

The Chair Conservative Leon Benoit

Mr. Weis is next, please.

11:55 a.m.

Director, Renewable Energy and Efficiency Policy, Pembina Institute

Dr. Tim Weis

Thanks for the question. I appreciate the question. I think I can answer the two questions at the same time.

Yes, obviously, we need all levels of government to be involved, but I think there is a particularly important role for the federal government because, as I suggested in my presentation, one of the struggles of the clean energy sector in Canada is that we have 10 different markets, or 13 if you include the territories. It is difficult for companies investing in wind or solar or these other emerging technologies to navigate that.

I think what we do need are federal targets, we do need federal programs, and I think carbon pricing is probably the one place to start. It certainly isn't the only area that we could be investing in, but I think we need that federal leadership, which then helps to broaden that playing field for investment.

The one thing I do want to point out, though, is that although Canada has actually not done too badly when it comes to renewable energy, we are at risk of not seeing that industry through. There's been a fair bit of development. We're in the top 10 in wind energy. We're getting there in solar energy, but we're looking at a cliff in the next few years.

Are we going to continue that development? Are we going to be able to coordinate that and grow those industries, or is it ultimately going to be a boom-and-bust cycle in the country? I think that's where decisions need to be made in the next few years to make sure that the gains we've made, the employment we've created, and the capacity we've developed stay in Canada and ultimately become a strong export opportunity for us.

11:55 a.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

Mr. Weis, what are the initiatives that the federal government needs to put in place so that we don't go over that cliff that you've mentioned so eloquently?

11:55 a.m.

Director, Renewable Energy and Efficiency Policy, Pembina Institute

Dr. Tim Weis

There are three things we could be doing in the short term. One, and I'm harping on it again, is some sort of carbon price or some sort of signal that there will be a price on carbon. I don't think anyone.... Most people won't argue about that being probably the best place to start.

The other two areas—

11:55 a.m.

NDP

Peter Julian NDP Burnaby—New Westminster, BC

There are only 167 Canadians who would argue with you, and they sit on the other side of the House of Commons.

11:55 a.m.

Director, Renewable Energy and Efficiency Policy, Pembina Institute

Dr. Tim Weis

The other two areas that I think are key opportunities, at least in the short term, would be around investments and power storage.

This is going to be an exciting area for development. Canada actually stands in an interesting place, because we do have some difficulties in integrating not only renewables but also traditional sources. We're having problems with too much nuclear in Ontario, for example, so having the capacity to store power would be an important area. I think that could be a key area for the government to leverage in the way that the government has helped push things like wind energy forward in the past.

The last area is again a small area, but I think it does have some of those key innovative opportunities. I spoke of largely about it in my presentation, and that's recognizing our remote and northern communities. They all too often just get left out of these discussions and forgotten about.

Noon

Conservative

The Chair Conservative Leon Benoit

Thank you very much, Mr. Weis. Thank you, Mr. Julian.

We'll go now to Mr. McGuinty for up to seven minutes.

Noon

Liberal

David McGuinty Liberal Ottawa South, ON

Thank you very much, Mr. Chair. Thank you to all of the witnesses who are here in person and coming in by video and audio.

Mr. Cameron, it's really good to see you again.

Mr. Chair, Mr. Cameron is far too modest in his presentation. He is one of Britain's top barristers, a distinguished professor at the University of London, and a senior partner in a number of very major international law firms. He is a very accomplished individual, so I wanted to make sure everyone understood how delighted I am to have him here testifying today.

Mr. Cameron, I will go back to a couple of your comments. You were just getting into full flight, so to speak, with the situation in China and where the Chinese were going. It raises a question I think most Canadians don't really know the answer to, if there is an answer: what are we talking about when we talk about a clean economy?

Could you help us understand what that means? As well, is there a race on internationally to become the cleanest economy, and what's that race all about?

Noon

Chaiman, Climate Change Capital

James Cameron

Well, it's nice to see you again, David, too.

I feel the starting point for this is to do with competitiveness. Much of our debate on competitiveness is being based around the idea that labour productivity, the standard definitions of competitiveness between nations, do not include resource depletion, environmental externalities, investments in the future. They're largely static and backward-looking.

My own view is that economies, wherever they are in the world, will compete on resource efficiency. The numbers really tell you that. There are spectacular needs for a very large group of humanity that is yet to be born. The growth in our population, the aspirations of the middle class of the emerging economies, the phenomenal growth in the emerging economies over the last ten years.... Simply think of China alone. China has grown tenfold in 15 years. China's produced three new Chinas, in economic terms, in the last three years. Similar demographics are available in India.

A clean economy, I think, is almost synonymous with a resource-efficient economy. There are certain quality of life aspects, certain qualitative ways of reviewing what clean means—human well-being, how you live in harmony with your surroundings—but at base, in brute economic terms, it's about resource efficiency. It's about how you get economic output from more efficient use of inputs, particularly energy inputs. To do that, you have to innovate. Business as usual, the current resources, won't do that for you. The current modes of business won't do that for you.

If you look around the world, you see that the race has absolutely begun. It has begun in those economies that are either very populous or those economies that expect huge demands that they cannot meet from indigenous resources. It clearly involves open trade systems as well. It involves business entrepreneurship and connecting communities across political divides too.

A lot of this can be done without the intervention of governments, through better social organization of entrepreneurs and problem-solvers who can now communicate so much more clearly on social networks.