Environment Committee on June 16th, 2008

[Colleen Killingsworth]

I know they are looking at how to do that. I can't say specifically whether they have or have not. I will follow up in writing.

[John Godfrey, Liberal, Don Valley West, ON]

This is part of the challenge for us, and I think this goes to Mr. Chastko as well; we always are looking at the bigger picture. All the benefits can be seen, but at what cost? Our job as legislators--as historians as well sometimes, I think--is to try to balance out the good versus the bad here.

It seems to me, from listening to the presentation we heard from our first guest, from Natural Resources Canada, that in some ways the improvements in technology are being exceeded by increases in production. In other words, the pollution is gaining on us despite any improvements we might make in energy intensity or pollution reduction.

So we are now stuck with the problem of, for example, 50 square kilometres of Alberta being covered by tailings ponds. We don't yet have a solution, and those tailings ponds are growing. As I understand it, 20% of the entire reserves are still going to be reclaimed using mining techniques. That's a large number, as we were told by one of our earlier witnesses.

To either of our guests, but perhaps Dr. Chastko, how do we as a society balance out the costs to society of poisoning ourselves--by air pollution, by increased GHG production, by what we're doing to water and to soil--versus the great gains that are clearly being made? What will be the judgment of history on all of that, Dr. Chastko?

[Dr. Paul Chastko]

Well, Mr. Godfrey, we can always use more historians, and in this sense I prefer to quote Mark Twain, who was very fond of saying that history doesn't repeat itself, but it does rhyme.

You're quite right to point out that when oil sands development began, how much of a concern was the environment? The sad answer is, not very much. The very first oil sands companies that came into existence.... For example, when we look at Great Canadian Oil Sands, when they began production, there was no environmental impact statement done. In fact, if we take a look at when the first assessments were done on the environmental impacts of the oil sands or on oil sands development in the Fort McMurray region, they weren't completed until after there had been two oil spills in the region. So it wasn't until the 1970s that we began to see environmental protection legislation really beginning to influence the development of the oil sands.

You ask a very important question: what will the judgment of history be on the way in which we proceed today? I think part of my answer is more philosophical. In my presentation, I indicated to you that, quite literally, when oil sands development began, if we were to go back to 1950, with the provincial administration of Ernest Manning, when he began going forward with oil sands development, there was no market for Alberta's oil sands. Quite literally, you could not sell a barrel of oil sands oil to anyone in the world. It was a fringe resource existing on the margins. Then, when we take a look at when the province began the process of putting together the first proposals, two-thirds of every barrel of oil drilled in Alberta was kept in the ground. There was no market. In short, it was a leap of faith by Premier Manning and J. Howard Pew of Sun Oil.

I guess what I'm trying to drive at, Mr. Godfrey, is that we talk about leadership, and I would suggest to you that this is a tremendous opportunity, as well, for us to take a look at the environmental concerns we have today and to see—

[The Chair, Conservative, Bob Mills]

Dr. Chastko, Mr. Godfrey has other questions that he'd like to ask you, or Mr. McGuinty would like to ask—

[John Godfrey, Liberal, Don Valley West, ON]

Sorry, Dr. Chastko, but I'm going to turn it over to Mr. McGuinty for the remaining questions. I'm sorry to interrupt.

[The Chair, Conservative, Bob Mills]

We're starting to run out of time here.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks very much, Mr. Chair.

Ms. Killingsworth, I'd just like to ask you two pointed questions.

Can you first tell us if any of the first nations and Métis people of the region have taken any equity positions whatsoever in any of these investments?

[Colleen Killingsworth]

I don't have that information at my fingertips. I will respond to you and the committee in writing on that.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks very much.

Secondly, you have a slide here that talks about government revenue from oil sands, and you break it down by percentages. Can you tell us how much money, in dollar terms, will be accruing this fiscal year to the Province of Alberta from its 36% share of the government revenues, how much money will be accruing to the Government of Canada, and how much money will be accruing in net profits to the oil companies involved?

[Colleen Killingsworth]

Again, I will need to respond to that question in writing. I don't have that at my fingertips.

[David McGuinty, Liberal, Ottawa South, ON]

You don't have that at your fingertips. Okay. It's a really hard number to get. I put the same question to the head of CIRI just last week, and he couldn't answer it either. I'm just wondering if you can get that to us sooner than later. It's a number that just never seems to materialize in briefings about the oil sands.

In particular, if you can, could you help us understand, as Canadians, how much of the net profit from the companies operating in the oil sands is being repatriated outside this country?

[Colleen Killingsworth]

I will add that to the questions, yes.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you very much.

[The Chair, Conservative, Bob Mills]

Are you all done?

Okay, Monsieur Bigras.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chairman.

I have three questions—two for Ms. Killingsworth and one for Mr. Chastko.

First of all, Ms. Killingsworth, you dispelled one myth right from the beginning of your presentation, in a way, when you said that the problem is not that the reserves are being depleted, but rather that we are not able to fully develop them. You said that we are only developing about 10% of available reserves. Personally, I have read that only 30% of the world's reserves are being developed.

Are you saying that the problem is not the reserves, but rather our capacity? That is my first question.

Second, in your opinion, is carbon sequestration and storage technology a way of increasing our capacity to develop the oil sands in Canada?

[Colleen Killingsworth]

To answer your first question, what I said was that only about 10% of Alberta bitumen resource is considered economically recoverable with current technology.

To answer your second question, I do believe carbon capture and storage, the development of that technology, is a way to reduce the greenhouse gas emissions produced during the production of the oil sands.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

I understand that the government and a number of companies are selling that technology in order to reduce greenhouse gas emissions, but would it also enable us to increase our current capacity? Could an environmental measure become a measure enabling us to increase oil sands production in Canada?

[Colleen Killingsworth]

That's a very good question. It's one I'd like to take back to my technology advisors and, again, respond to you in writing.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

My final question is addressed to Mr. Chastko, who is concerned about the oil industry, as well as globalization, as he himself mentioned when introducing himself.

I understand that under the free trade agreements between Canada and the United States, Canada has an obligation to export 66% of its production to the United States. I am wondering whether you are able to confirm that.

[Dr. Paul Chastko]

Thank you, Mr. Bigras, for your question.

I do not have the exact statistic in front of me right now, but I can confirm that the free trade agreement between Canada and the United States does contain a provision regarding the amount of energy that must be exported by Canada to the United States.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

If such an obligation exists, that means that, if we are to ensure energy security for Canada, particularly in negotiations on the Security and Prosperity Partnership, and in light of our export obligations, we will have to considerably increase our oil production from the oil sands and elsewhere, in order to ensure that we can meet our international commitments to our southern partners, as well as our commitments to Canadians, in terms of ensuring energy security. Are you able to confirm that?

[Dr. Paul Chastko]

I'm not sure I quite understand your question. Could you please rephrase?

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

I will repeat my question. You confirmed that there is an obligation on the part of Canada to export a percentage of its energy production to the United States. The figure I have is 66%. If we want to meet our international commitments to our southern partners and ensure energy security for Canada, we will have to considerably increase domestic energy production in Canada, particularly in the oil sands.

[Dr. Paul Chastko]

I guess that the answer would be yes. In this respect, if we take a look at the overall capacity of the oil sands, in terms of what it is we're looking at with that resource, the Alberta Energy and Utilities Board.... Taking a look at the size of the reserve itself plus figuring in current rates of consumption, if the oil sands were to provide exclusively for the rest of Canada, we have enough oil, essentially, in the oil sands for the next 370 years.

At current rates of consumption, even considering all of North America, that would be enough oil to provide for all of North American oil consumption, without touching another drop, for about 47 or 50 years.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

In order to meet our international commitments to our southern partners and ensure energy security for Canada, given our limited extraction capacity, which is about 10%, based on what Ms. Killingsworth said, how many additional barrels of oil will we have to produce in the coming years?

Has any assessment been made based on our international commitments, our domestic needs and our limited production and extraction capacity? What should that represent in terms of production in the coming years?