Thank you very much, everybody.
Ladies and gentlemen, thank you for inviting me to appear before the committee this afternoon.
It's a pleasure to be here. We're delighted that we could be among the first speakers for your new study on this particular subject, which is extremely important to Canada.
We've circulated a presentation that has a lot of information in it. We felt that providing it would be helpful as you start the study. I don't intend to speak to every single slide, but I'll focus on several key ones and try to stay within the timeframe. We can then make ourselves available for your questions.
I'll start with slide 1. We really wanted to outline the importance of energy market diversification to Canada. It's without a doubt a significant, if not the most significant, part of the economy that's under way today. It's certainly one that's growing and continues to grow.
What's more, Canada is a global energy leader. In comparison with other countries, worldwide, we have tremendous resources.
Certainly, when you look at the list, you see it: we're third in natural gas, fifth in oil, third in hydroelectric power, second in uranium, including with our domestic nuclear technology in CANDU. With 75% of our electricity generation being non-emitting, Canada's energy assets and energy context are extraordinary by any standard, so much so that in many international fora the conversation on energy security for Canadians is one that seems almost to be a non-question. We speak to the market-based principles and to the issues of energy from the vantage point of being extremely blessed, which is not something that is shared around the world.
In slide 4, we can see that those energy assets and Canada's energy activities are of significant benefit to Canada's economy. We're looking at close to 10% of the gross domestic product, over 300,000 direct jobs, and a significant number of spinoff jobs. Those jobs are spread throughout the country. Alberta, which is not on the list, has 136,000, and there are 60,000 in Ontario, 33,000 in Quebec, and 22,000 in B.C. The numbers are quite significant and impressive.
It's also an important part of Canada's merchandise trade, with $120 billion in exports, or 27% of it. Those numbers relate to the price of commodities as well as the volumes of energy that are produced and traded. At the same time, the activities in energy bring in significant payments to governments. Over the last five years, those have averaged about $25 billion.
Those benefits are across the country. Those jobs continue to grow, as does that economic growth. It's forecast that natural resources projects represent about $650 billion worth of investment over the next decade, or well over 100 projects in energy. If we take the oil sands alone, the Canadian Energy Research Institute projects over the next 25 years an average of 630,000 total jobs, indirect, direct, and induced. These are fairly significant numbers.
At the same time, global energy demand, as indicated on slide 6, continues to grow. According to the International Energy Agency, global energy demand will increase by 35% by 2035. Those increases will come in natural gas, in renewables, and in oil. At the same time, even in the most optimistic projections looking at the scenarios given the climate implications and emissions profiles, by 2035 oil and gas will continue to consume about 47% of global energy demand.
As I said, Canada is blessed but at the same time is positioned well to diversify and grow in that growing global market. That market is certainly one in which we see both crude oil production and natural gas having tremendous opportunities; however, we will move to slide 8.
Owing to North America's inability to reach world markets, its prices are well below global benchmarks. Here we're talking about crude oil and natural gas. In the energy sector, Canada is facing a growing problem as far as low prices go, and that represents not only a major challenge, but also a decrease in revenue. Those effects extend to governments as well as the private sector, not to mention the country as a whole.
In slide 9, if we look at diversification as our opportunity to realize growing benefits, we'll see that those benefits, as the chair has pointed out, certainly would be much larger if we were to reach more markets than the current markets we serve. Predominantly we serve the United States for 100% of natural gas, 100% of electricity, and 99% of our oil exports.
In terms of those costs and discounts, however you might call them—people reference them as discounts, as revenues lost, as opportunity cost loss—Canadian energy products are sold at less than global prices. That brings less revenues to the economy, and that brings less growth and less revenues to government, however you slice it. There are different ways of looking at that, and we can certainly talk to those and address questions on that front.
Turning now to slide 10, the push to reach new and diversified markets is one in which infrastructure plays the most critical role. That infrastructure is really looking at market-based responses to reach new markets. Those involve new pipeline proposals, increasing the movement of energy products by rail, increased infrastructure development for electricity, and natural gas exports via liquefied natural gas projects.
Slide 11 is fairly complicated. It outlines all of the different projects that exist in the country with respect to moving crude oil east, west, and south, each trying to reach new markets or to tidewater—tidewater being the ability for an energy producer or an energy customer to load energy products onto a ship to be able to reach markets throughout the world.
There are a number of projects. Looking at the west, there's the Enbridge Northern Gateway project, which is under regulatory review, at 525,000 barrels a day. There's the Trans Mountain expansion, which looks at 590,000 proposed barrels per day. That would be expanded. That project has not yet applied for regulatory review. There is the Enbridge Bakken project in central Canada that would move actually Bakken crude from the United States to Canada's pipeline network, and move that crude then to markets in eastern United States and eastern Canada.
This demonstrates an important facet of our energy infrastructure in North America, that it's integrated across the continent. Energy flows between Canada and the United States in both directions. Although the direction moving from Canada to the United States is of much more significant volume, there are exchanges that occur in all of the energy commodities.
There has recently been the announcement of the TransCanada project moving east, which would propose to convert a natural gas pipeline that exists in the Canadian mainline to crude oil transport. That would involve some new build that would allow that project to reach eastern Canadian markets as far as Saint John, New Brunswick, as well as Montreal and Quebec City.
There is the project of Keystone XL, which I think is well known, well publicized, to reach the United States gulf coast market. The southern portion, of course, has been approved and is proceeding. The northern portion is awaiting regulatory approval from the United States government.
Looking across, there is the additional project from Enbridge called the oil market access project, which would expand an existing pipeline referred to as the Alberta Clipper. That would increase the throughput and volume that would reach the midwest United States, and then would be added to an extension project that would reach the southern gulf market.
There of course is the reversal of the Line 9 projects in Ontario and Quebec, in which Enbridge proposes to move crude from today's east to west, to become west to east. At this point the project has been approved from Sarnia to just outside of Hamilton, to Nanticoke, to serve the Nanticoke refinery. There is an application before the NEB that would see that project get further reversed to reach Montreal. That is under regulatory review by the National Energy Board.
These are the main projects that we speak to when we speak to the market-based responses in which you see efforts under way by different participants to reach east, south, and west.
At the same time, there are substantial projects under way that move crude and energy by rail. Those projects have been increasing at a fairly rapid clip. Rail offers tremendous opportunities and flexibilities for producers in that, often, without building the infrastructure of a fixed nature and using existing infrastructure through rail lines and railcars, smaller volumes and smaller-scale projects can reach markets much more quickly, and have done so at a fairly rapid clip. A total of 180,000 barrels a day of rail transportation of fuel oil and crude occurred in 2012, up 66%. In the United States, that number has been rising even more rapidly, approaching a million barrels a day of movement by rail.
I'll now turn to slide 13.
Export terminals are being proposed in order to take advantage of global LNG, or liquefied natural gas, prices. We're looking at the projects. There are five on the west coast of British Columbia and one in Nova Scotia. Another project involves an LNG importing facility in New Brunswick.
These projects are of such a nature that Canada's natural gas resources would be produced and shipped by pipeline to the coast, at which point companies would be developing liquefied natural gas terminals and plants so it would be loaded onto liquefied natural gas tankers and then brought to new markets. To put things into context, the liquefied natural gas price globally hovers between $10 and $12 to $15 in Europe and between $16 and $20 in Asia. In Canada, natural gas, the same molecules, sell for about $3 to $3.50 but have an immense amount of fixed cost as well. So we will be able to speak to the differential that actually demonstrates that there is an opportunity there to reach new markets and to reach new revenues.
In conclusion, we do have a market-based energy policy, one in which market actors take actions to develop new markets and to move forward through significant investments. The government welcomes investments by foreign companies and countries who wish to be active participants in Canada's energy economy so long as they behave according to market principles. We have investment frameworks which Industry Canada controls to support those. The government certainly supports the efforts of industry to diversify, as long as the projects are applicable and meet all the applicable regulatory and environmental requirements on which the independent regulatory bodies make decisions.
In conclusion, we will continue to be an export-based economy, and certainly energy is a significant part. Our energy production is forecast to continue to grow. Diversification is certainly a means for us to become and continue to be a global player and to attract better revenues and better opportunities for our energy products, and certainly those energy opportunities are tied to infrastructure and the need for us to attract the capital and to continue to do well with our development in a responsible way.
Thank you, Mr. Chair.
