Good morning, Mr. Chair and panel.
I'd like to express our appreciation for your taking the time to listen to us, for inviting us here, and for the time you spent in Fort McMurray viewing our operations and the oil sands.
I'm Don Thompson, president of the Oil Sands Developers Group. I'd like to start by introducing our panel. Stuart Lunn is with Imperial Oil. Mr. Ian Mackenzie is with Golder Associates. Mr. Fred Kuzmic is with Shell Canada. Mr. Greg Stringham is with the Canadian Association of Petroleum Producers.
Water is clearly a critical aspect of the production process used for bitumen extraction and recovery, which we'll talk to in a bit. In reality, Canada’s oil sands use a very small percentage of available water, and the water used is highly regulated. For example, oil sands use is currently less than 1% of the mean annual flow of the Athabasca River, and there are procedures and processes in place that cap that withdrawal during low-flow periods
Regulations also do not permit the release of any untreated oil sands process-affected water, and ongoing aquatic monitoring has not shown impacts to the lower Athabasca River aquatic ecosystem associated with oil sands development.
Oil sands projects recycle a high percentage of the water they use, ranging from 80% in surface mining to over 95% in the in situ industry. In fact, the in situ side of the oil sands industry is shifting increasingly from the use of fresh water to the use of saline water, and of course none of that is from the Athabasca River.
The other reality is that pumping water, storing it, and treating it is a key cost of production. We have every incentive to minimize our water use, and that is important to the economics of oil sands production.
Recently there have been calls on both sides of the border to strike a balance between energy, environment, and economy. In my view, that balance is being struck today in the oil sands.
On the environment, local air quality is excellent and is being managed well. Greenhouse gas emissions are low and are a small percentage of Canadian and global totals. The use of water is being reduced through improved and increasing technology. As I've already mentioned, a high percentage of the water we use is recycled, and the in situ industry is moving increasingly to using non-drinkable water.
In terms of the land, minimization of impact has always been a watchword. Of the 530 square kilometres that have been disturbed over 40 years of surface mining, 65 square kilometres are currently under active reclamation. Advanced technology is being developed and innovation is being applied to all aspects of environmental management.
The reality is that the oil sands are a key strategic Canadian resource. They provide today, and will provide increasingly in the future, strong security of supply to Canada. They are a major component of this country's future energy mix.
On the economic side, oil sands economic impacts are felt across this country. Between 2000 and 2020, oil sands development has the potential to generate at least $885 billion in total economic impact, with $123 billion in royalty and tax revenues for Canada's federal and provincial governments. It's important to understand that for each permanent oil sands-related job, nine additional direct, indirect, and induced jobs are created in this country.
Yesterday I was in Drummondville, Quebec, where I met with the Quebec branch of the Canadian Manufacturers and Exporters and a number of steel metal fabricators, mining equipment providers, and the like that support this industry. In fact Suncor, which presented with me, demonstrated that they had 199 vendors in Quebec and almost $200 million of expenditures last year.
It's also important for people to realize that my members have workforces on their sites from coast to coast, from the far east to the west, and the oil sands represent people and industries coming together in Fort McMurray. The oil sands are a national endeavour.
On how oil sands fit into the future energy mix, you should know that global economic growth will require more energy of all kinds. In North America, energy use grows by about 1.5% a year, driven by population growth, lifestyle enhancements, and offset to a small degree by efficiency. Despite growth in the use of renewables and other forms of energy, oil remains an important long-term component of the global energy mix.
We will be needing all forms of energy because of growth in global population. But the reality is that oil sands resources are a vital part of the global petroleum supply. In Canada we are privileged to have the second-largest crude oil reserves in the world--second only to Saudi Arabia--at 178 billion barrels. But the reality is that 97% of those, or 173 billion barrels, are in the oil sands. Stated another way, in other countries and locations where crude oil is accessible, a full 87% of the world's known oil reserves are currently in state-owned or state-controlled locations held by countries such as members of OPEC, Russia, and the like. Only 13%, or one barrel in six, is openly accessible to international oil companies, and half of that is in Canada’s oil sands.
Our conventional production is declining by about 4.5% per year and will continue to do so. That gap has to be filled by oil sands and is being filled by oil sands. But the other reality is that the economic turmoil in recent times has flattened that line. You will see in the next forecast that the growth rate from 2008 to 2012 will flatten. So oil sands are critical to this country's future energy security. Oil sands exports will also be a key component of the balance of payments future of this country.
I know that on your tour you witnessed both kinds of oil sands production technologies, so I will not dwell on that. I'm sure you saw mining, trucking, and shovel operations; however, I draw your attention to the fact that 80% of the reserve base I spoke of must be produced by in-ground or in situ technology where there is no mine, no tailings ponds, and no water from the Athabasca River.
With that, I'll turn the floor over to Mr. Lunn, who will talk about water quantity issues.