Thank you, Chairman.
Good morning, and thank you for the opportunity to speak to the committee today on innovation and responsible development of the Canadian oil sands. I've had the opportunity to work for Imperial Oil and Exxon Mobil affiliates in various parts of the world for 26 years, including more than six years in Canada with assignments on Canada's east coast and in my current role in Calgary.
Today, I'll highlight the innovation at work in our oil sands projects and the ways in which we're continuously improving our environmental performance through research and new technology. These things are vital, given the critical role Canada's oil sands will play in helping secure the world's long-term energy future.
I'd like to start by providing you with a perspective on long-term energy trends. As you know, energy powers our economies and modern life, and demand for energy is growing. The International Energy Agency projects that global energy demand will rise by 40% between 2009 and 2035, and that demand growth will come primarily from developing economies where reliable and affordable energy supply is a key force in lifting people out of poverty. While oil and natural gas will continue to provide close to 60% of global energy needs in the coming decades, the world will need to pursue all economically competitive sources of energy to meet long-term demand.
Not only does Canada have the good fortune of world-class resources to support global demand, we also have an effective regulatory framework and an industry that's collaborative and committed to continuous improvement. To help us unlock these huge resources, our industry is investing substantially in research and technology, which is also helping us to increase safety and minimize our environmental footprint.
Let me provide a few examples. In March of this year, our industry launched Canada's Oil Sands Innovation Alliance. Better known as COSIA, this group acknowledges the oil sands industry's collective responsibility and our joint commitment to responsible development of Canada's oil sands. It was founded by 12 companies that represent over 80% of oil sands production in Canada. Through COSIA we'll share our knowledge and, just as importantly, we'll share our current operating practices related to the four environmental priority areas: GHG emissions, water, tailings, and land impacts. On a global scale, this collaborative investment in innovation is unique to Canada.
Imperial has been in the energy business for over 130 years. As an integrated energy company, we explore for, produce, refine, and market petroleum products. More than three-quarters of Imperial's current daily production comes from the oil sands through two methods: either surface mining or in situ, which means in-place technologies. In situ extraction is used when the resources are too deep for mining techniques, which is the case for around 80% of the oil sands resource. Imperial has more than three decades of successful oil sands innovation under its belt. We've patented the two key in situ recovery technologies in use by our industry today: cyclic steam stimulation and steam-assisted gravity drainage, or SAGD.
As a company, we're spending about $100 million a year in Canada on research related to oil sands and heavy oil development. We also have access to more than $1 billion a year of industry-leading research through our majority shareholder, Exxon Mobil.
Our researchers are focused on two things: enhancements to existing mining and in situ technologies, and new technologies that will produce a step change in environmental performance. The results are encouraging. An example of this is an innovative and proprietary process at Kearl, our next generation oil sands project, called paraffinic froth treatment, that removes enough fine clay particles and water from the bitumen to produce a diluted bitumen suitable for pipeline transport. As a result, Kearl will be the first oil sands mining operation that does not require an upgrader to make a saleable crude oil. That means we're significantly reducing greenhouse gas emissions per barrel, because the oil Kearl produces will be refined once, not twice.
We plan to lower GHGs even further at Kearl by using cogeneration, an efficient and cleaner way to simultaneously produce electricity and steam for our operations. Through this combination of paraffinic froth treatment technology and on-site cogeneration, diluted bitumen produced at Kearl will have about the same life cycle GHG emissions as do many crude oils refined in the U.S. today.
At Kearl, we're also focusing on responsible care of water, tailings, and land.
By using an on-site water storage system, we'll be the first oil sands mine that can completely stop water withdrawals from the Athabaska River, protecting the aquatic ecosystem during low winter flow periods.
Kearl's approach to mining and tailings management minimizes surface tailings areas and allows for progressive reclamation. By intercepting and treating fine tailings from the process, we'll reduce the surface area of our tailings pond. Our mine plan was developed to allow us to return the tailings to mined-out areas as early as possible. As a result, the surface tailings pond will be reclaimed much earlier.
We’re also taking a progressive approach to land reclamation at Kearl. This means we'll reclaim mined-out sections as the mine face advances, rather than waiting until the end of mining operations to reclaim land. In fact, we've already begun reclamation prior to producing the first barrel of oil.
Looking ahead, Imperial is working on other game-changing technologies for oil sands mining. One of the most significant is a process called non-aqueous extraction that will reduce overall water use in the bitumen extraction process by more than 90%, and produce dry, stackable tailings, resulting in faster reclamation and the elimination of wet tailings ponds.
On the in situ side, we're also continuously improving the technologies we use today while we pursue other game-changing technologies. Our ultimate aim is to create an extraction technology that doesn't require water or heat, which would significantly lower energy consumption, GHG emissions intensity, and water use. We're now piloting this extraction method at Cold Lake. A non-thermal recovery process in in situ operations would have the potential to reduce the overall GHG emissions intensity down to levels near those of conventional oils.
The broad economic message for Canada arising from the growth of the oil sands is also impressive. The Canadian Energy Research Institute estimates that new oil sands development will contribute $2.1 trillion to the Canadian economy by 2035. That's $84 billion a year. Over the next 25 years the oil sands industry is expected to employ about 900,000 Canadians and purchase billions of dollars worth of goods and services from companies in Ontario, British Columbia, Quebec, Saskatchewan, and Manitoba.
Through royalties and taxes, our industry also funds public services and infrastructure, maintaining the standard of living Canadians enjoy today. For example, the oil sands industry will pay an average of $12.4 billion dollars in taxes annually over the next 25 years. This figure represents about 46% of the annual Canadian health transfer payments in the 2011-12 fiscal year. In other words, oil sands development is delivering social benefits to all Canadians.
As I said at the outset, Canada has a great economic opportunity in the oil sands, but it's an opportunity that can be realized only if the oil sands are developed responsibly.
We also need to increase the access of Canada's energy supply to new and existing markets. Canada's importance as a stable and reliable supplier of energy is predicated on this access. Despite current criticism, pipelines remain the safest, most dependable method of transporting crude oil and natural gas.
Imperial is committed to collaborate and share information to ensure the safety of our operations, to further enhance energy efficiency, and to continually improve our environmental performance at every level. I hope this information about continuous improvement in the responsible development of Canada's oil sands has enhanced your understanding of the opportunities and challenges facing our industry, and I look forward to your questions.
Thank you.