Excellent.
Starting on page 2, we note that this natural resource is not only important in economic terms but indeed is strategic, given its position in a politically stable part of the world. Established reserves are estimated at 174.5 billion barrels, but in fact the ultimate resource is likely to be significantly larger than that. Just to put that in context, 174.5 billion would make these the second-largest reserves in the world, after Saudi Arabia.
As I mentioned at the start, there are some important issues raised by the development of the oil sands--perhaps most importantly, the environmental footprint, but also what it might mean for natural gas markets, and whether the pipeline capacity is adequate, whether there is enough labour, and so on.
Slide 3 shows you the scale of the oil sands deposits. It really is enormous. It takes in roughly half of northern Alberta. There are oil sands deposits in other countries. I am told that upwards of 70 countries have oil sands deposits. The largest are in Canada and Venezuela. Canada is the only area in the world where these reserves are being commercially exploited.
I think there is some interest in Saskatchewan, where there are also oil sands reserves. I believe there is actually exploration going on there. It's a matter of great interest to the Government of Saskatchewan.
Here I do want to acknowledge--I don't think I need to do this, but I want to for the record--that it is of course the Province of Alberta that owns the resource. Since the government of Mr. Mulroney dismantled the national energy program, respect for jurisdiction has been a very important principle underlying the energy policy of all governments. That certainly continues today.
Slide 4 tells you that the big area we saw on the previous slide is 141,000 square kilometres, or about twice the size of New Brunswick; so we now know how big New Brunswick is. They're reserves of different deposits. The ones that were exploited first were the ones that could be mined, the ones closest to the surface, but there is work going on now on some of the deeper stuff. There's interest in the kind of middle area in between, where I think we don't yet have the technologies but where a large part of the deposit lies.
Slide 5 explains a little bit about the physical properties of the resource. I am now going to exhaust my knowledge of chemistry by saying that the deposits there are bitumen, very long chains of hydrocarbons, which means a lot of carbon and not too much hydrogen. That presents some challenges. In addition, it's mixed with sand. So there are really two sets of challenges that need to be overcome.
On page 6 we have a picture of the trucks that bring out the six-year-old in all of us. Initially long conveyor belts were used in the mines, but it was found that the trucks were more efficient and more reliable. There are commercial developments going on now using what they call steam-assisted gravity drainage. That technology injects steam to liquefy the bitumen and make it flow, and then it's pumped out and exploited. There are other technologies being experimented with. Toe-to-heel air injection actually involves underground combustion to generate heat to make it flow. Vapex involves the injection of chemical diluents.
Slide 7 is a representative projection. I think this one actually came from the Canadian Association of Petroleum Producers...or no, from the oil sands technology program. But no matter which projection you look at, whether it's from us or from industry or from the National Energy Board, people would see synthetic crude and bitumen from the oil sands growing in importance in terms of Canada's oil production. By 2030, perhaps as much as 5 million barrels a day could be extracted from the oil sands. In context, that's about twice Canada's total production at the moment.
On slide 8 we can see the very large number of projects proposed, some of them from very well-financed companies with very solid engineering behind them, and others perhaps more speculative. The total investment announced for between now and 2015 is $125 billion.
I think most observers would not expect all of that investment to actually happen. Some of it's quite speculative, and some of it may be deferred as a result of cost increases and so on. Nonetheless, an extremely large amount is going to be invested.
Slide 9 talks a bit about what our responsibility is. I mentioned that the provincial government has ownership of the resource, but the federal government has important environmental responsibilities as a result of our responsibilities for navigable waters and fisheries. And there's certainly an interest in Ottawa in making those processes no less effective, but perhaps more efficient, than they currently are. The federal government has important responsibilities in terms of the overall policy framework, including the macro-economic policy framework ensuring a stable place to invest. And we do have a long-standing involvement in technology development in the oil sands and other areas of energy. Dr. Hamza can tell you a bit more about those.
Slide 10 goes one level below that and talks about our role. We're the centre of expertise under the Canadian Environmental Assessment Act and we have, much to my surprise, responsibility under the Explosives Act. But I would say that perhaps our key involvement in the oil sands is through Dr. Hamza's institution, the Canada Energy Technology Centre in Devon, Alberta, just south of Edmonton.
Slide 11 recapitulates some of the issues we flagged earlier: what does expanded production mean and what issues or problems need to be solved? As you can see, market access is certainly an issue, as are natural gas availability and pricing, and pipeline capacity, and so on.
So if we turn to those, the first question is whether there are markets out there for bitumen. The answer to that is undoubtedly yes. The United States is of course the world's largest market for energy in general, and crude oil in particular. There are near-term capacity constraint questions about whether the pipelines will get the crude to the areas where it needs to go. Because of those constraints, and because bitumen and synthetic crude tend to be marketed in a limited area, they often do trade at quite a significant discount to west Texas intermediate, which is the benchmark, of course.
Slide 13 asks the question, what about natural gas? As most people are aware, natural gas is used to fuel the oil sands production. People sometimes overestimate the importance of Fort McMurray and the oil sands in terms of North American consumption. The oil sands today represent about 1% of total North American consumption, and that's projected to remain pretty much stable over the next 15 years or so. So 1% is a non-trivial amount of North American product, but it isn't an amount that makes or breaks the natural gas market. I think it's also clear that going forward, there will be much more interest in other fuels, in particular in gasifying what they call the bottoms, the very sticky residue, turning that into a synthetic natural gas and using that for fuelling.
Slide 14 shows you the key links in the North American pipeline network. At the moment, most of our bitumen and synthetic crude are marketed in Chicago and to a lesser extent in Colorado and Washington State. For this to be economic and the producers to reap the maximum economic return, the market needs to be diversified a bit within the United States. So new pipelines are probably needed. There are a very large number of pipeline projects on the drawing board that have been announced. They will not all get built, because if they were, pipeline capacity would be something in the order of twice as much the amount of marketable bitumen synthetic crude available. So some of those will fall out for competitive reasons.
On refinery capacity, I think this is not an issue per se, but there is an issue about whether the refineries are equipped to handle bitumen and synthetic crude. There are some projects under way in the United States at the moment, and perhaps will be in Canada in the future, to convert the refineries to be capable of carrying more and ensure they are able to handle larger amounts of product from the oil sands.
Labour availability is probably the biggest problem facing the oil sands in the short term. Canada as a whole is probably at full employment—and you have to work pretty hard to be unemployed in western Canada at the moment. So this is not a problem unique to the oil sands, but you tend to see it more directly there because of the very large numbers of people involved in very large projects. The federal government is doing what it can to help. For example, the Department of Citizenship and Immigration has opened what they call “temporary foreign worker units” in Calgary and Vancouver, as a pilot project to help ease those constraints.
Certainly it is true that at the moment there aren't the skilled people needed to do all the jobs that have to be done.
We have talked a bit about technology, and I'm sure there'll be questions on this. CETC, the western research centre in Devon, has been a major player in this for a long time. It currently has a number of projects under way to improve the economics and reduce the environmental footprint of oil sands production.
In conclusion, this is a resource of great strategic importance to North America. It's hugely important to the economics of Canada. It's been a benefit not just to Alberta, but to all Canadians. Certainly, there are some short-term challenges that we and the Government of Alberta are working with industry to overcome.
Those are my introductory remarks, and I'll be happy to take questions.
