Natural Resources Committee on Dec. 11th, 2012

[Glenn Scott]

Actually, on the first question, I can say that industry, in total, by permit, is allocated and allowed to withdraw from the Athabasca River 3% of its annual flow. Today industry collectively withdraws less than half of that allocation, so it's 1.5%. I could get you an estimate of what Kearl expects to withdraw, but it will be a fraction of that.

Could you repeat your second question?

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

It was about having the same life cycle GHG emissions as some crude oils coming from the U.S. We'd be interested in seeing more information in that regard. The other was on the cost of reclamation, which I don't expect you to have with you.

[Glenn Scott]

On the life cycle greenhouse gas emissions for Kearl, IHS CERA, recently put out a study, I believe in November 2012, in which they compared an oil sands mine that uses a paraffinic froth treatment, which doesn't require an upgrader, to a basket of crude oil refined in the U.S. We could provide you with a reference for that study. It compares Kearl, or a Kearl equivalent, and its paraffinic froth treatment to any number of crudes and can give you a direct comparison on life cycle greenhouse gases.

With respect to the cost of reclamation, in terms of the funding of technology, industry, through COSIA, has collectively contributed about a billion dollars towards faster reclamation. I can't tell you exactly what various projects are spending on actual reclamation. I can tell you that Syncrude, in which we own a 25% interest, is spending hundreds of millions of dollars on reclamation.

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

That's not the question I'm asking. I've been to some of those reclamation sites. I've been asking what the cost of this reclamation site and getting it through to just before certification is.That question has yet to be answered. I don't expect that you can answer it today, either. It is something we're very interested in, because for public policy purposes, it's extremely important to know how much the reclamation costs are.

I have, I think, a little bit of time left. I'd like to pass it to Monsieur Gravelle.

[The Chair, Conservative, Leon Benoit]

Actually, Mr. Gravelle, Mr. Julian's time is finished and then some.

We'll go now to the Liberal member here today, Mr. Andrews. Welcome to our committee, and go ahead for up to seven minutes.

[Scott Andrews, Liberal, Avalon, NL]

Thank you.

Mr. Scott, you mentioned you did some work on the east coast. What exactly did you do while you were on the east coast?

[Glenn Scott]

While I was there for about four years, I managed ExxonMobil Canada's offshore projects—Sable, our interest in Hibernia, our interest in Terra Nova—and I also began to help support movement of Hebron, to get the development under way.

[Scott Andrews, Liberal, Avalon, NL]

Much of the discussion around research and development has been on the oil sands in Alberta, but as you know, the east coast is a powerhouse in its own right when it comes to the energy sector. What kind of innovation do we need to see on the east coast to bring the potential there to the next level? I think we've done a lot of research and those projects that you just mentioned are all moving along nicely, but what do we need to do to bring it to the next level on the east coast?

[Glenn Scott]

That's a tall order. I will say that there has been a history of innovation to date on the east coast as well as in the oil sands. Hibernia is an example that. When it was initially developed, it was estimated to be around a half a billion barrels of recoverable oil. Today it's estimated to be more than double that.

For Cold Lake, back in Alberta, you asked how we determine where we put our money. Initially, we thought Cold Lake would recover about 15% of the resource. This is a field that's produced a billion barrels already. We're estimating that we'll exceed 40% of the resource, and in some areas we're actually getting up towards 50% to 60% recovery.

The industry is continuously motivated to increase the recovery of these known resources that are in place. There are programs in place that help attract that research money to an activity being done in Canada as opposed to other jurisdictions. In my previous role, I chaired Petroleum Research Atlantic Canada. That too was a consortium made up of industry proponents, and there we were really looking at the challenge of how we extract greater resource, how we deal with ice and recycling produced water.

But I don't have an exact answer for you in terms of how we reach the next level.

[Scott Andrews, Liberal, Avalon, NL]

How do we go after the unknown resources? I guess that would be the technology in trying to improve finding the resources on the ocean floor. There's a lot of drilling going on there and traditional drilling to find resources. Is there a way we can improve that?

[Glenn Scott]

Absolutely. Industry is constantly looking at different ways to identify resources without drilling. Data management technology—the ability to handle larger and larger data sets on a single machine—has enabled 3-D seismic surveys to come a long way and see formations that we wouldn't necessarily have seen years ago. There are other non-invasive technologies that are being looked at today that, it is hoped, can further our understanding of the subsea opportunities.

[Scott Andrews, Liberal, Avalon, NL]

What role can government play in that?

[Glenn Scott]

I think markets should work for themselves in the base case, and the industry is incented to go out and pursue hydrocarbons, and has been doing so over time. The programs in Canada help attract those dollars to be spent in Canada as opposed to spending them with affiliates, maybe, in another region of the world. Create a stable fiscal environment similar to the one for these other industries you hear about. If we have stability and a known tax and royalty regime, that gives us certainty to make big investments up front.

[Scott Andrews, Liberal, Avalon, NL]

Is Imperial on the east coast now? Does it have any investments on the east coast?

[Glenn Scott]

Imperial operates a refinery in Dartmouth, Nova Scotia. Imperial has a 9% working interest in Sable. Imperial has a couple of refineries in Ontario. That's pretty much the extent of our current business in the east.

[Scott Andrews, Liberal, Avalon, NL]

Would you elaborate on the refinery in Dartmouth? I understand there are some issues there, whether that refinery will continue on. Is there anything that we can...? Where's Imperial going with the Dartmouth refinery?

[Glenn Scott]

The economics of a refinery on the east coast—in particular, Dartmouth—are challenging. We have evaluated options for how to deal with that. One option that we're considering and we are in the process of evaluating is whether there would be interested buyers of that facility. We're currently in the process of discussions with potential candidates.

[Scott Andrews, Liberal, Avalon, NL]

What type of oil are you refining in Dartmouth?

[Glenn Scott]

Most of the oil that would be refined at Dartmouth would be brought in by ships. Some of that comes from Hibernia, as an example, up in Newfoundland and Labrador. Some of it is imported from other regions of the world.

[Scott Andrews, Liberal, Avalon, NL]

Okay. That's much like Come By Chance. There's a lot of oil from Saudi Arabia at the refinery there. I know that's not Imperial, but Come By Chance refines very little Hibernia oil. That's why I was wondering if....

[Glenn Scott]

Yes, and I apologize: I'm not sure what Come By Chance imports, but historically Dartmouth has refined some of Hibernia's crude.

[Scott Andrews, Liberal, Avalon, NL]

Ms. Joseph, in talking about the green funding projects and all of that, have you looked at measuring outcomes from these green projects to see what the successes and failures were in that particular program? Most of these were with municipalities. Have municipalities been able to monitor the success or to monitor if they have been more efficient? Exactly how have these projects made out?

[Shannon Joseph]

Yes. As part of the requirements for receiving our funding, communities are required to report on their environmental performance following the receipt of funds. One year after their project is completed, they report back on GHGs saved, energy savings, water treated, if it's—

[Scott Andrews, Liberal, Avalon, NL]

Just one year?

[Shannon Joseph]

We require a report in the first year. Yes.