Environment Committee on May 12th, 2009

[The Vice-Chair, Liberal, Francis Scarpaleggia]

As an aside, I know that when one asks the federal government about water monitoring, they say, well, the provinces are doing it on our behalf, and they're doing a good job. Yet just a couple of weeks ago there was a story in the news where the Alberta government said it was going to cut back on water monitoring. So it seems to be a cascading devolution of responsibility.

I've gone over my own time here, so we'll move on.

Mr. Calkins, please.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Mr. Chair.

I certainly appreciate the presentation here today.

I'm just going through this master agreement, and I noticed that under “Duties of the Board”, paragraphs (a) through (s) outline the things that it can do. If you take a look under “Cost Sharing”, for all of the items listed under (a) through (s) there's a $280,000 commitment to carry out all those responsibilities.

Do you think that at the time this agreement was struck, in 1997, it was struck with any realistic intentions of carrying out any of those objectives? What needs to happen now in order to carry it through or to improve upon it? It seems to be a great start to cover off some of the issues, especially when it comes to downstream monitoring, downstream effects on the various parties involved, and especially when it comes to the balance that's met with economic development and exploration.

[J. Michael Miltenberger]

That budget hasn't changed since they signed it. So when you consider inflation and wage increases and such, there's very little money left, other than to pay wages and office space. They've been getting some other help off the books to do some things. But one of the things we've been pushing for in the Northwest Territories, at the very minimum, is to get the jurisdictions to agree to at least double that budget as a start, recognizing there's been no increase for a dozen years.

It was signed, I think, with the best of intentions. But if you think back a dozen years or so ago, water was not very high on anybody's agenda. There were other issues of the day. But it has now become a major issue. The Mackenzie River Basin Board has now been pulled out of the shadows into the political arena, and it's now getting the hot political light shone on it. There is work to do, collectively, and we're pushing to get that work started.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you. I appreciate that.

I went through your deck here, and you had recommendations on transboundary mechanisms that talk about revitalizing this agreement, an ecosystem-based approach; and then there was a second recommendation, to establish a national water strategy; and the third recommendation was science and technology, where you had a number of bulleted points.

You didn't have any bulleted points under establishing a national water strategy, so I was wondering if you could elaborate for me some of the subpoints or some of the finer details, as you see them or as the Government of the Northwest Territories would see them, as to what exactly needs to happen for the establishment of a national water strategy and what the Government of the Northwest Territories' position would be going forward to provide input on that water strategy.

[J. Michael Miltenberger]

What I would suggest is very similar to what we're suggesting with the Mackenzie River Basin transboundary agreement, that as the government of the land, it has a leadership role to play. And if you look over the whole Canadian landscape, there are overlapping issues of water tied in with climate change, tied in with resource development. The water crosses all jurisdictions. It doesn't stop because there's a political line there.

At the very least, environment ministers are now talking about the need to look at how we coordinate our efforts. We've done some things, wastewater management. We're working toward national standards.

But in terms of linking and bringing the parties together, like the Mackenzie River Basin, to get everybody around the table to talk about how the world has changed since that agreement was done and how we move forward to manage the very complex issues, often with very little information, commitments to doing the work with jurisdictions to have a national data bank that allows us to make the right decisions, we have to deal with some of the issues as they relate to other agreements we have with other countries, like the United States.

Mapping all the stuff that's happening across the land, in terms of the flows and the headwaters and the diminishing snowpack, glaciers, all the things that feed our water systems--there are enormous challenges. Sixty per cent of the water in the country flows north. Eighty per cent of the population is below the 60th parallel. There are huge national issues. If you don't have a national round table, then everybody is going to be going to their own corners, trying to look after themselves. No jurisdiction is an island entirely unto itself when it comes to water.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

When it comes to the Bennett Dam and so on--and I brought this up yesterday, as well--the Chisasibi Cree Nation on the east side of James Bay have testified before the fisheries committee, which I'm also a member of, about the disappearance of habitat, eelgrass, and fish. When the eelgrass goes, the migratory birds go. We heard department officials say that the west side isn't affected. The eelgrass is still there, and the migratory birds have changed their route and they're now going up the west side of James Bay. A lot of things were brought up as possible problems, but in terms of what has really changed on the eastern side of James Bay, it's the massive river diversions for the James Bay hydroelectric project.

Yesterday when we were in Fort Chipewyan, we heard about the massive drop in the water levels of Lake Athabasca. There were some vivid photographs, and we could see the high-water mark on the rocks on the shoreline. The reality is that the river used to be a two-way river, depending on the flow rate of the Peace River. I would surmise that that would have helped fill up Lake Athabasca. From some of the testimony I heard, it was at about the time of the hydroelectric dams, or the damming of the Peace River, that they started noticing a gradual decline of Lake Athabasca. I'm assuming it's stabilized now, because most lakes do eventually stabilize when you have multiple input rivers and one outflowing river.

What thoughts do you have on any further proposals for hydroelectric dams, given the fact that we have so little water, as you aptly pointed out? There has been pressure put on from various interest groups to sequester water, to use it for supposedly much cleaner technology than oil sands development. Yet depending on where you look, it seems to cause an equivalent amount of concern and damage to the environment.

Can you bring anything to light for this committee about problems with hydroelectric, with damming on any of these river systems? What is the position of the NWT on further development, given the fact that you have a multilateral document here and the discussion and negotiations would have to go on with everybody downstream?

[J. Michael Miltenberger]

There is going to have to be a considerable amount of technical, environmental, and scientific work done for anybody to make an informed decision.

The Government of the Northwest Territories has some of its own hydroelectric aspirations. We have one small development, but it's big for us; it could go up to 120 megawatts. We are actively pursuing mini-hydro where it makes sense in a number of communities.

When it comes to the big river, the Slave River, the concerns are going to be around the cumulative impact--Bennett Dam, Site C, Dunvegan--and what's happening in the mountains. The issue for me keeps coming back to the headwaters and what's happening in the mountains, where the water emanates from, with global warming, the shrinking glacier snowpack. Also, there's the cumulative impact going downstream with extraction or impoundment for different human activities, the increased evaporation, the warming temperatures, the changed snowfall and rain patterns.

I've been telling people that we have to get the work done so they can make an informed decision. The dam on the Slave River is going to be somewhere around a $5 billion-plus project if they were to proceed. That's a serious amount of money. The last time the Alberta government was there was in the 1980s. They looked at it, and at the time they walked away. The minister of the day was Minister Bob Bogle. He said they'd be back, and they're back. Now we have to see. The environment has changed. They have a lot of baseline data from the 1980s and a lot of work to do to fill in the gaps.

You're going to have folks like François from the Smith's Landing First Nation, which will be fighting passionately and desperately to protect their traditional lands. It's going to be a very complicated, protracted process. We have a huge World Heritage Site with the Wood Buffalo National Park, pelicans, any number of things around there. People all the way to the Arctic Ocean are going to want to know what's going to be happening. It's not going to be like last time, where they looked at it just as a regional issue. People know only too well, after the Bennett Dam, that we are all going to be affected.

[The Vice-Chair, Liberal, Francis Scarpaleggia]

Thank you.

We have time for one last question. Mr. Warawa.

[Mark Warawa, Conservative, Langley, BC]

Thank you.

Deputy Premier, I also want to thank you for the effort you've made to be here with us today and for your very enlightening testimony.

I want to bring us back to focusing on the oil sands and the direct impact the oil sands may have on water.

We've heard a number of people testify concerning the coming health impacts, and I believe those comments were indicating their concerns that the primary source of the pollution is coming from the oil sands. We've heard testimony that there are naturally occurring contaminants from the bitumen, but this has been increased dramatically, they believe, because of the oil sands activity.

There was a question in the last panel: if the oil sands were to switch to in situ instead of open pit, you would not have the tailings ponds issues. One witness felt switching to in situ would not solve the problem. In situ, of course, will be dealing with about 80% of the resource, and about 20% of the resource would be mined by using the open pit. So the vast majority of that resource would be using a different technology.

Has the Northwest Territories had input as we move to this different technology, in situ? Has the Northwest Territories been involved with the RAMP program, which is involved with monitoring with different levels of government, NGOs, aboriginals, all this input, and industry, of course?

I want your insight on what role the oil sands play in pollution. We have transboundary pollution that can move globally, and the north is impacted quite severely when it comes to mercury. What are the major sources, and what role do you believe the oil sands play in that?

Thank you.

[J. Michael Miltenberger]

To date, our involvement has tended to be writing letters of concern at the senior bureaucratic level. When development is being proposed or moving through the approval process in Alberta at a rapid pace, the citizens from the aboriginal governments whom you've heard, the people, are very concerned about what's happening in Fort McMurray.

We recognize, which is why we're getting organized with our water strategy, that we have to be able to come to the table as a collective so we have a northern voice on issues about consultation, about prior notification, about systems that engage outside the boundaries, in this case Alberta, where the federal government can trigger that with their own legislation, so there's an opportunity to raise those concerns.

Currently, of course, some of the big concerns are the massive tailings ponds. Because of the prevailing winds, the airborne pollution tends to go from west to east, which is often in our favour, but they do periodically blow toward the north, and we're not very far away. Those stacks are fairly high, so there are all the airborne issues as well through the particulate matter.

One of the big issues we're concerned about is what's happening upstream from us, and we're trying to get ourselves organized to deal with it as constructively as possible through our strategy so we can negotiate bilaterals in a very clear and effective way, get the federal government engaged, and look at how we do this because we are neighbours with Alberta. We have huge ties. They're one of our biggest trading partners.

There's a history that goes back hundreds of years, thousands if you count the aboriginal peoples' ties. It's a common trade route. So they're not the enemy; it's just that we're involved in very difficult situations as we balance the need for resource development and the protection of the environment. We want to make sure we're organized in the north, that our thinking is clear, and that we can come forward with a position.

While we're neighbours and friends, it's not going to preclude us from having hard negotiations. We want to be able to protect what we think are some critical values, and that's one of the areas where we have a concern.

[The Vice-Chair, Liberal, Francis Scarpaleggia]

We really appreciated your testimony, Deputy Premier. It sounds like water is an issue that takes up a lot of your thinking and your efforts. We really appreciated your insight. Thank you for coming.

We'll have a five-minute break, and then we'll resume with our segment on technology.

[The Vice-Chair, Liberal, Francis Scarpaleggia]

We're set to resume with the last segment of the day, dealing with technology.

We have with us Dr. Hassan Hamza, from Natural Resources Canada; Mr. Thomas Gradek, president of Gradek Energy Inc.; and of course, Dr. Kim Kasperski, whom we met in Ottawa a month or two ago.

Welcome.

We normally do ten-minute presentations, as you know.

Dr. Hamza.

[Dr. Hassan Hamza, Director General, Department of Natural Resources, CANMET Energy Technology Centre (CETC) - Devon]

Thank you, Mr. Chairman.

First of all, I have to apologize for the quality of my voice. I am struggling with a cold virus that I can't get rid of. No, I'm not spreading it, and it is not the swine flu. Don't go back to Ottawa and say I did it.

With your permission, Mr. Chair, I have a presentation here, but I'll skim through it to allow more time for questions. It shouldn't take more than five minutes. I will be discussing challenges to the oil sands development.

Page 2 of the presentation talks about why the oil sands are very important for the economy of Alberta and Canada. It is very important for the citizens economically, and also for the prosperity of future generations. You must have heard a lot about that in the last little while, so I'm not going to repeat it. But if you look at the numbers on page 2, you can see a very large number of direct and indirect jobs, and revenues to the government.

There are two methods of extracting oil sands. One of them is in situ and the other is surface mining. Both of them have their own particular challenges. They both have impacts on the land, on the air, and on the water. These impacts vary depending on the method of extraction, but they are significant and we must deal with them.

On page 4, there is a diagram showing the water use in the oil sands in surface mining. Page 5 shows it for in situ. In the diagram on surface mining, we'll start with the 100 units--whatever units you would like to use. Of these 100 units, 74 are recycled, and 26 are entrained in tailings, which makes them very difficult to get rid of under normal circumstances. We have 74 units coming back, so we must make up the 26 units from other sources. There's water that comes with the ore, which is the four units, and where it says “River” here it's a misnomer; it actually should be fresh water coming from the river, and runoff and all of that, making up 22 units. Evaporation is about four units and precipitation is about four units. So this is neutral here. The 26 units are equivalent to three to four barrels of water per barrel of bitumen.

We try to make it very succinct so that at least we're talking about the same issues.

In situ, we selected the SAGD, which, as you might have heard, is steam-assisted gravity drainage. Again, if we start with the steam, which is 100 units, the steam goes into the reservoir. Ten units stay behind, and 90 units are recycled. Sometimes you need some water treatment for that. You have to get fresh water, so you need 10 units of fresh water. This is the balance between 27.6 units of fresh and salt water...[Inaudible--Editor]...to treat it, and you lose about 17.6. So the balance is 10 units.

The 10 units are equivalent to about 0.7 barrels of water per barrel of bitumen, or many estimates say it is about one barrel for the in situ.

I refer you to page 6.

We believe that technologies are the only way you can resolve some of these challenges. We must have technologies to address water challenges in surface mining. We have to squeeze out the water in the tailings, and when this water comes out it is not in ideal condition sometimes. So you have to treat it, and improved water treatment is important.

In situ gets around the water problem by using less water, by using technologies that use this water like solvent-assisted SAGD, or air injection and combustion, and so on. Again, you need water treatment in this case.

The tailings ponds have been in the public eye for a very long time because of their enormity and because of other recent circumstances that highlighted the tailings ponds issue.

Again, at the very beginning of the mining process, the tailings ponds were estimated to be much less than that because they was based on the number of fines, the number of very fine particles, and no attention was paid at the time to the nature of the fines. The fines immobilize water around them, so a lot of water is immobilized, not based only on the size of the particles but because of the nature of the clays, and so on.

Understanding that will help a lot. It can help more if we pay more attention to it.

We put together a research consortium in the late eighties. Almost everybody in this consortium was a researcher from the provincial or federal government or the universities. They worked for five years for $25 million and they came up with a lot of conclusions that have been applied in the field.

I have a summary of these conclusions. The industry called that the silver bullet. They referred to it a lot, and I would say it focused information here that can be used. You got the companies, NRCan, and the Alberta government. We all contributed to that, and so did two universities.

This was the beginning. I think there's a lot to be done, and we should pay attention to various technologies.

Again, another issue that has recently had more attention paid to it is the volatile organic compounds, which come out from the tailings and the mine face and so on. I would say it affects both health and the environment. It has some GHG components to it. Again, some work has been done in different places on understanding what these compounds are and how to characterize them and how to look at their influence on the environment.

In summary, the oil sands are very important. We cannot abandon them. Improvements are made, but you have to keep in mind that if you have improvements in one area you have to look at other areas these improvements may impact, either positively or negatively. So we have to look at this as a whole rather than as one individual unit. It's very important, and we are committed to working toward a resolution to make it a responsible resource.

Thank you.

[The Vice-Chair, Liberal, Francis Scarpaleggia]

Thank you very much. Next will be Mr. Gradek.

[Thomas Gradek, President, Gradek Energy Inc.]

Before I start, Mr. Chair, I brought some samples with me just to show what our technology looks like so that everybody has a hands-on view in front of them. Our technology is essentially based around these organic polymer beads that are an absorbent for the hydrocarbons. This is the residual sand from our process.

In these jars.... We have one here that we haven't disturbed, but this is essentially what we could end up looking at in terms of treatment, where bitumen is on the beads and you have clear water and residual solids at the bottom, which are settled. With this one, we can go ahead and see how fast the settling is by just turning it upside down. We'll see that the settled solids in a water column do become somewhat trafficable. They settle and they've compacted. They're not moving around.

This is a solution that we are proposing. It's based on the laws of Mother Nature, which I'm going to go ahead and expose here with my documentation.

Mr. Chair and distinguished members of the committee, my name is Thomas Gradek. I am the inventor and developer of a leading Canadian technology. My small company, Gradek Energy Inc., is based out of Montreal, with operational headquarters in Calgary. Gradek Energy proposes to eliminate tailing streams from the oil sand operations and over time eliminate the existing tailing ponds at no cost to oil sands operating companies. Our objective is to reclassify oil sands production as clean oil. The key is RHS technology.

Gradek Energy is developing a hydrocarbon capture technology, called RHST, for application in any media. RHST has been proven through extensive testing in the laboratory, and Gradek Energy is designing a pilot project with oil sands operator participation to prove its performance in eliminating hydrocarbons and tailings streams that proliferate massive ponds.

Present technology of air flotation is adversely affected with fines and dissolved minerals, which alter the chemistry of water into slurry. As such, the inefficiency losses leave bitumen attached to the fines. Those fines remain in suspension in the water, hence the need to have tailing ponds for long-term settling of those fines.

The oil sands industry has invested billions of dollars into building their present production facilities and has spent decades doing it. It is of necessity that the industry focus on its production. Gradek Energy's business model takes the tailing liability off-line to build, own, and operate the tailing streams and ponds through a mediation plant, all off-line, and internally finances a profitable and sustainable enterprise, having no risk impact on the existing operations.

What is the technology? The illustration of the bitumen-coated beads in clear water with settled solids is the result that can be obtained with our technology. As you can witness with the samples that I have brought to the session, the bitumen-free fines readily settle.

How does it work? The beads are essentially a better air bubble and, as such, are more efficient in attaching the bitumen. This is an applied nanotechnology that uses the laws of nature to selectively capture the hydrocarbons. Equilibrium is reached with the hydrocarbon on the bead's surface, at which point the bitumen is at its minimum free-energy level. Afterwards, the solvent wash is used to remove the bitumen from the bead and produce a quality dilbit.

This slide shows the bitumen extraction process and demonstrates the use of fresh tailings blended with tailings pond sludge to obtain our optimum temperature of about 40° Celsius. The blended slurry is introduced into the mixer with the RHS beads, and then contact is made between the bitumen-coated particles and the beads. The bitumen migrates onto the beads. The slurry is then moved into a second compartment in which the clean water and solids are removed, and the bitumen-coated beads are directed into a solvent wash unit. There the beads are washed with a solvent to produce the dilbit. Then the beads are recovered, dried, and can be reused.

The RHST project is a planned two-phase piloting program. We are in the design stage of the first phase of the program at present. The first pilot phase will demonstrate the continuous-flow operation feasibility. The second phase will demonstrate the scalability of the process for ultimate commercial-scale operations.

This slide shows how demonstration and validation of the technology involved various institutions and facilities. The multitude of tests undertaken during the development stages have been numerous and with successful results.

The benefits of the RHS technology described in the following slides, numbers 12 through 16, are summarized as follows:

Environmental performance: RHST has the potential to reduce the environmental impact of the oil sands operations overall.

Social performance: it has the potential to provide a healthier environment by reducing the effects of effluents and their emissions.

Economic performance: it has the potential for overall improvement on operational costs by eliminating tailings management expenses and future liabilities.

Technological issues: RHST has the potential to enable the operators to achieve their bitumen recovery efficiency obligations with the ERCB.

Political issues: RHST has the potential to facilitate compliance with U.S. regulations and policy on transportation fuels.

As a result of implemention of the technology, RHST addresses the proliferation of tailing ponds by recovering the residual bitumen attached to fine particles such as clays and oxides. RHST is a no-cost solution for the industry. It results in water that can be directly treated and recycled, and soil ready for reclamation that is trafficable.

It's also a process that addresses U.S. regulations directly and completely. Reduced carbon intensity overall is in accordance with the low-carbon fuel supply act, greenhouse gas emissions are eliminated from tailing ponds in accordance with the climate change act, and waste fuel designation with a RIN value is in accordance with the renewable fuel supply act.

The oil sands present a tremendous economic opportunity for Canada constrained by an environmental impasse. Implementation of the RHS technology will help the Government of Canada and the industry balance these competing interests. Funding from government sources is essential to accelerate the piloting phases of this project. The entire country can benefit from the economic activity generated by our solution. Implementation will reduce and eventually eliminate tailing ponds, and the RHS technology promises to be an expanding and diversified export opportunity.

Mr. Chair, I thank you for the opportunity and I welcome your committee's questions.

[The Vice-Chair, Liberal, Francis Scarpaleggia]

Thank you, Mr. Gradek.

Dr. Kasperski, do you have any comments?

[Dr. Kim Kasperski, Manager, Water Management, Department of Natural Resources]

No, just the opening presentation.

[The Vice-Chair, Liberal, Francis Scarpaleggia]

Okay, so why don't we move to the first round of questioning.

Mr. Trudeau.

[Justin Trudeau, Liberal, Papineau, QC]

Thank you, Mr. Chair.

My first question is for Dr. Hamza.

The numbers you quote, $14 billion over the past while to governments, 120,000 jobs.... Obviously this is an industry that is of serious size and of serious importance to our economy and to Canadian jobs. Do you know how much has been invested in science and in research around that, all told?

[Dr. Hassan Hamza]

Actually, I don't have an exact number. But we are currently sponsoring a study that first looks at how much money is spent from all sources on oil sands research. The second part would be the outputs of this research in numbers of things--the number of people educated, the number of engineers. And the third part would be the impact: how much of this research is being used?

I should get preliminary results of that study in June. I will be very happy to share it. Actually, we're sharing it with the Alberta government. They are sharing with us some of their results in a similar direction, but not all the way, as we are going. We are also sharing it with them. We want to know that the dollars spent have a value at the end. We're not just creating jobs in research. There is a reason for doing it.

[Justin Trudeau, Liberal, Papineau, QC]

So it's excellent that we're looking at the amount of money in research and development, science, and that knowledge economy spinoff of oil sands development.

Would you be able to say if this study is going to spin off into research and science, into the impact of oil sands development on communities, individuals, ecosystems, and future results--the kind of science that monitors the actual industry? Is that in your study as well?

[Dr. Hassan Hamza]

It's part of the study--on the fringe, I would say. This is a very good point. I'll make sure to go back and see if we can get some firm numbers on that. If I do not, we may come back and say we want to extend the study. I'm very glad you're asking these questions.

[Justin Trudeau, Liberal, Papineau, QC]

Would it be fair, then, to say the emphasis around science is much more on technological and advanced research into the industry side of things, rather than on monitoring impacts? Just from your answer you--

[Dr. Hassan Hamza]

I would say that's what they expected in this study. I haven't seen the draft yet. It will be more on the science side, but even on the social side you need some science facts. You can go with anecdotes and you can go with somebody's impression, but you need the facts to be able to translate this into real numbers you can rely on.

Even if it is not focused on that last type of translation between the results we have—for example, if there's work on water, and the work is saying the inflow, outflow, etc., with numbers and how much was spent on monitoring water—it has a social impact. The social impact might be implied. As I said, I can't say for sure but I'll find out in June. It may just be implied. We may have to force it a little bit to make sure there is an element there.

We may have to extend the study a little bit to get more numbers, but the facts are very important. A lot of information is going around. How much of it is fact, based on getting the right numbers, is your guess and my guess.

[Justin Trudeau, Liberal, Papineau, QC]

That guessing is what we're trying to get away from. Obviously that's why we're out here, trying to separate fact from guesses and mythologies and misinformation, to find out where the information is coming from and how much study is being done, and how much science is being done around the impact of the industry and not just in improving the industry. Expanding the industry would be a very valuable part to fold into that study or a later study.

Thank you.