Bill C-30 (39th Parliament, 1st Session) Committee on Feb. 20th, 2007

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

When the government ratified Kyoto, it was looking at a certain prediction for oil sands production. We're going way above that by now, I would think.

[Gordon Lambert]

Yes, ratification of Kyoto happened in—

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

In 2002.

My next question is this. Do you see the price of oil going up significantly in the future, or do you see it going down? Do you see the oil sands at all at risk of having to slow down their development because of dropping petroleum prices?

[Gordon Lambert]

I can predict with 100% certainty that I can't predict the price of oil.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

With growing demand worldwide that is skyrocketing, which we hear about every day, and as you said at the beginning of your testimony, since there are no real alternatives right now—we're wedded to oil—and we have China and India coming on stream, do you see the price softening?

[Gordon Lambert]

We sure don't see demand globally softening. What we don't have a clear picture of is the supply side of the equation. I would say that oil sands strategically in the world is a critically important resource.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

A critically important resource in a tight market. What's your marginal profit on a barrel of oil sands oil?

[Gordon Lambert]

I mentioned previously that in terms of cash cost per barrel we're in the $20 to $30 range.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

How much are you selling it for?

[Gordon Lambert]

Capital costs, I should also say, are under very severe upward pressure right now, which is the other limitation as to how aggressively that resource could be developed.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

I just hear that everything is going well, the market's strong, our profits are good, but leave us alone. That's the message I hear from a lot of industry sectors, especially from the oil industry. It's as if we can't do anything, unless we are giving you money to develop technology.

[Gordon Lambert]

We just completed the largest ethanol production facility in Canada and commissioned it in June this past year. We're currently building our fourth wind farm. Suncor Energy, and that's the company I'm here today to represent, is creating Canada's energy future, and not just in the hydrocarbon energy realm. It's investing real money in creating jobs and opportunities for Canadians across Canada.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Shell said it can reduce its emissions by 50% by 2010 and that it's prepared to buy some credits to do that. Why can't Suncor do that?

[Gordon Lambert]

The climate change plan. Our focus primarily is first and foremost on our internal energy efficiency. Second are renewable energy investments, which we are making in Canada as an alternative to purchasing credits. Third are new technologies, which includes the CO₂ capture and geological sequestration. We're working with a consortium, and this is tough, hard work. The engineering designs of these projects, or these opportunities, have tremendous complexities to them. I also mentioned deep geothermal. We're not standing still or playing defence on this issue at all.

[The Chair, Conservative, Laurie Hawn]

Thank you.

We'll move on to Mr. Watson for five minutes, please.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Mr. Lambert, you talk about new technologies being a key part of moving forward on deep domestic reductions. Some have suggested around this table over the course of our hearings that the Kyoto target and timelines be enshrined in Bill C-30 as the short-term target. I want to focus on that scenario in the short term. Can carbon sequestration be widely applied and immediately deployed in your sector to achieve measurable reductions in order to meet that type of a target in the short-term window?

[Gordon Lambert]

I'd cite the national round table study as showing carbon capture and sequestration being one of the largest opportunities that Canada has for material reductions.

[Jeff Watson, Conservative, Essex, ON]

So in the next four years, that could be widely applied for measurable reductions.

[Gordon Lambert]

The question came up earlier on timeframe. We'd probably look at more like a decade to have that fully up and functional and different sources being tied in over time.

[Jeff Watson, Conservative, Essex, ON]

So it's more like a decade. Fair enough.

You've said that the clean development mechanism is the easy way to comply. Would that be a lower-cost option than putting in carbon sequestration, for example, in the short-term window?

[Gordon Lambert]

Yes, and it's important, as we talk about emissions markets, to understand what they don't do. They are not a substitute for foresight. They are an easy-to-use instrument. But with the technologies we're talking about, you require longer lead times, and you're not going to make these investments based on the short-term price of CO₂ in a market. These have to be taken as a public-private imperative, and we have to really look at them from that point of view.

[Jeff Watson, Conservative, Essex, ON]

If the Kyoto target is four years and carbon sequestration requires ten years, would the industry be more likely to go for carbon sequestration or credits?

Mr. Cleland, you may want to jump in on that.

[Gordon Lambert]

If we get into a punitive mode we'll be pushed into a box where least-cost compliance is going to be success, and least-cost compliance is not going to be the mindset necessary for the long-term solutions we're talking about today.

[Michael Cleland]

Timeframe is critical, and in the very short timeframe of the next four to five years, for most industries the only option is some sort of offset or external credit, because you can't make the physical reductions--

[Jeff Watson, Conservative, Essex, ON]

Would you be concerned in that scenario about the capital outflow in the short term, when Canada should be investing in long-term reductions?