Subcommittee on Canadian Industrial Sectors committee  I mentioned earlier, I think before you were in the room, that the most recent year for which statistics are published by Statistics Canada is 2006. I don't have the exact numbers in front of me, but I can tell you that the oil and gas industry led all industries in Canada by a wide margin in terms of not only capital investment on environmental protection and mitigation measures but energy efficiency improvement technology.

Subcommittee on Canadian Industrial Sectors committee  You can't have a functioning cap-and-trade system. The whole premise of a cap-and-trade system requires somebody, usually a government, to put a price on CO2 emissions or the equivalent of CO2 emissions. The Europeans had a rather chaotic genesis to a cap-and-trade system in Europe.

Subcommittee on Canadian Industrial Sectors committee  Canada will be the hardest hit of any significant oil and gas region in the world for declining investment. Some forecasters say that this year investment in Canada is down as much as 36%, in the United States it's down 30%, and internationally it's down about 7%. The global average is down about 17% in terms of CAPEX in the oil and gas industry around the world.

Subcommittee on Canadian Industrial Sectors committee  The oil and gas industry is very capital intensive. As I mentioned, once you've sold a barrel of oil down the pipeline, you have to find another one to replace it. For small and medium-sized oil and gas producers, it's been a very challenging market. Those are the first companies to feel the chill when the equity markets get nervous.

Subcommittee on Canadian Industrial Sectors committee  I agree with that. I think the direction Canada is taking deserves to be applauded. It is important for us to be a competitive nation in terms of corporate tax rates to attract investment. I would add that the smaller and medium-sized oil and gas companies don't pay a lot of corporate tax because they invest all their cashflow back into developing oil and gas reserves.

Subcommittee on Canadian Industrial Sectors committee  Canada is in a very enviable position from the perspective of the oil and gas world. Being a G-7 country, we are one of probably only two or three countries in the world that can contemplate increasing their crude oil production in the next few years while almost every other country in the world that is currently a major oil and gas producer is looking at declines.

Subcommittee on Canadian Industrial Sectors committee  No, I wouldn't share that view. Perhaps that's the answer you expected. Hydroelectricity requires massive capital investments up front, and then it tends to be self-renewing. In terms of the oil and gas industry, every time you sell a barrel of oil down the pipeline, you have to replace it.

Subcommittee on Canadian Industrial Sectors committee  Maybe I'll speak first. The oil and gas industry is not helped by rapid increases and rapid declines in the price of oil and natural gas. We also would be happier with a more stable price environment. I can tell you that the rapid run-up in prices is typically influenced by the belief that the supply is not going to be sufficient to meet demand.

Subcommittee on Canadian Industrial Sectors committee  A number of years ago, Canada signed the Kyoto Protocol. Ever since, the direction of the country in regard to climate change has been uncertain. Are we going to comply with Kyoto or not? Will something else replace Kyoto? Will we see a continental cap-and-trade regime with the arrival of the Obama administration?

Subcommittee on Canadian Industrial Sectors committee  Globally speaking, if you look to 2030, even with the rapid pace of development in biofuels, solar, and wind, those three sources will contribute only 2% to global energy demand in 25 years. Fossil fuels, natural gas, crude oil, and coal will still contribute about 80%, which is about what these sources contribute today.

Subcommittee on Canadian Industrial Sectors committee  Thank you, Mr. Chairman. I welcome the opportunity to present our perspective on the current economic situation and its impact on Canada's oil and gas sector. SEPAC bills itself as Canada's oil and gas entrepreneurs. Our association comprises small and medium-sized independent oil and gas exploration and production companies.