Natural Resources Committee on Nov. 29th, 2012

[Thomas Gradek]

The incentives would be to attract investors in the public domain to relieve some of the risk exposure of implementing a new technology for the first unit. This could be easily achieved in using CRCE, which is the Canadian renewable and conservation expenses program, put in place in 1984, whereby we're able to go ahead and recover waste heat. Because the tailings streams coming out of the plant are warm and they're exiting at about 85 to 90 degrees Celsius, we'd be able to recover that heat at approximately 85% of that heat value.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

This is very interesting, but I will be cut off in a minute or so. I just want to get an understanding of what kind of financial incentives you're looking for. For the pilot project itself, how much would it cost to set this up?

I certainly understand; you've been very eloquent about the benefits, but how much are you looking for? How much money?

[Thomas Gradek]

The pilot plan cost is about $17,000 per flowing barrel per day in terms of capital expenditure, so you're looking for a 500-tonne unit, which is about $85 million. That is the total cost.

The water is able to be recycled back within 15 minutes of operation, completely free of bitumen, and it's suitable for agriculture. It could be used not only for reuse in their process, but it could be used for agriculture. We've done tests with hydroponic studies and we've had extremely good results.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

How much of that $85 million would you be asking for from the federal government?

[Thomas Gradek]

That would be 20% in terms of a CRCE project.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian.

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

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair.

Thank you, witnesses.

My first question is to Mr. Sadamori. Clearly one of the most interesting developments—and it's a rather recent development—has been the move of the United States from energy dependency to a potential of energy self-sufficiency, with possibly even the potential to energy export.

Up until now the public policy has been to provide heavy subsidies to green technologies. In light of these developments, do you anticipate that the move to green technologies will actually be under pressure or be diminished, or that the subsidies will be removed?

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Sadamori.

We can't hear you again, Mr. Sadamori. Could you turn the mike on?

[Keisuke Sadamori]

Can you hear me?

[The Chair, Conservative, Leon Benoit]

Now we can hear you. Go ahead, please.

[Keisuke Sadamori]

I'm sorry.

It's a somewhat difficult question because it's up to the U.S. government what they will do with respect to the current subsidy to renewable energy and various projects for sustainable energy use.

Also, you are right that they will see an increase in the production of gas and oil, fossil fuels, so yes, there may be pressure for more use of fossil fuels instead of building up the renewable capacities. That might be a matter of concern, but I would like to refrain from making any comments on the possible U.S. renewable energy policy. It's up to the U.S. government.

Thank you.

[John McKay, Liberal, Scarborough—Guildwood, ON]

It does seem, intuitively at least, that the enthusiasm for green technologies may well be diminished in the short term. Given that a buck is a buck is a buck and cheap gas is cheap gas, why bother with windmills, solar farms, and things of that nature, which are all heavily subsidized at the cost of taxpayer dollars?

Thank you for that. It was an invitation to speculate.

Turning to Mr. Nelson, I won't pretend to understand your process, but it strikes me as a very interesting process to get all of this stuff out.

What frequently happens in Canada is that we have some very formidable brains—such as yours, possibly—who invent these technologies, but then they run into a brick wall to move it from what is really an interesting kind of technology to a market-based solution for the technology.

I can see that Mr. Gradek is nodding his head.

Can you give me some details? What is the market part of this wall? Is it Canadian investors? Is it foreign investors? Where is your wall at this point?

[Scott Nelson]

The wall is the oil sands industry—the operators. We've been very successful in raising financing for this project publicly. We're a public company. We raised more than $50 million, which is a lot of money in the research world when you don't have any revenues and it's high-risk stuff.

I have been in Asia seven times. I can certainly get investors in that part of the world to invest in Canada to access our minerals. In Australia, there are minerals companies, which I have brought over, that are very interested in this new resource because of its huge size and length. The barrier at this point is just getting the oil sands industry moving on something like this.

[John McKay, Liberal, Scarborough—Guildwood, ON]

What is the hesitation? Is it purely financial, is it a cultural mentality, or is it that they need a swift kick in a regulatory framework?

[Scott Nelson]

I could observe that not a lot happened with oil sands tailings at the pace it is now occurring until directive 074 came out a few years ago. Now, literally hundreds of millions of dollars are being spent.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So it's a regulatory gun to the head.

[Scott Nelson]

We'd rather not do it that way. This took years to develop. We see a win-win-win situation here for ourselves, the oil sands industry, and the public. We'd like to see it move ahead more rapidly than that.

[John McKay, Liberal, Scarborough—Guildwood, ON]

As you've described it, it is a potential win-win-win, but one of the wins is not moving.

[Scott Nelson]

Yes. They're just a little distracted right now. Our job here was to communicate this to, we felt, everyone in Canada. We had our head down for about seven years; we put it up when we were very confident that we had a solution, and everyone we work with is confident that we have a solution.

Now, maybe we did ourselves a disservice, because here it is, ready to go, and it's not happening as quickly as it should, so we're thinking that stakeholders' being aware of it is our number one priority. I've met with Minister Oliver and with everyone in Alberta, right up to the Premier, and everyone thinks it's a good idea, so let's get together and get it done.

[John McKay, Liberal, Scarborough—Guildwood, ON]

On your wish list, what would you want Mr. Oliver to do in terms of prodding the industry?

[Scott Nelson]

This has to be made a priority in the discussions that occur between Alberta, the Canadian government, and the oil sands industry. We'd certainly be happy to be a part of them.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Gradek, I assume that you basically endorse what Mr. Nelson has just said. I assume that you too have run into a wall of some kind or other. What's your wall, where is it, and who is it?

[Thomas Gradek]

The oil sands industry has a prerogative, which is production. That's the only thing that is on stream. Everything else is off stream, it's offline. All of their efforts are geared to increasing production. That's the revenue stream.

If you look at their R and D expenditures over the last 20 years, you'll notice that it hasn't been geared towards environmental issues; it's geared towards production.

[John McKay, Liberal, Scarborough—Guildwood, ON]

But your model isn't just purely environmental issues. You're not just some sort of left-wing social flake.

[Some hon. members]

Oh, oh!