Natural Resources Committee on Oct. 24th, 2006

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thanks very much.

[The Chair, Conservative, Lee Richardson]

Thanks, Mr. Harris.

We're going to have to move on quickly. I'm going to go to Mr. Russell.

[Todd Russell, Liberal, Labrador, NL]

Thank you very much.

We certainly understand the impacts of the oil sands, even in the smallest communities in the north, in Labrador, where a lot of our expertise is being sucked out, not only from the NEB, I guess, in Calgary, but even in communities smaller than 100 in population. It's amazing how far this reaches. But that's not my question.

This question is to the NEB. I'm very keen on this, because we're talking about energy transmission in Labrador, Lower Churchill, and of course across interprovincial boundaries, and maybe even into international markets and that type of thing.

If I have an energy project that falls under your mandate, what steps do I have to take? I know I have to go through the federal government under the CEA Act and under the provincial government, provincial regulations. I'd have to go to you as well, wouldn't I?

[Jim Donihee]

Depending on the nature of the project, sir.... Again, if it's a pipeline that transits across provincial or territorial boundaries, ultimately the NEB is the decision-maker, and we would certificate the project with a recommendation to the GIC that it be permitted to proceed.

[Todd Russell, Liberal, Labrador, NL]

You would actually grant a permit to proceed?

[Jim Donihee]

That's correct.

[Todd Russell, Liberal, Labrador, NL]

How do you arrive at granting that permit?

[Jim Donihee]

The application is structured. There are guidelines as to how the application would be structured. The application is made to the National Energy Board. All of the elements that relate to the environment would be dealt with by CEAA and the provisions that exist within it. Then all of the engineering aspects, all of the operational aspects, some of the physical aspects of environmental considerations are brought before the board.

We consult broadly through a very open hearing process to hear the views of all Canadians, both the proponent and those who would not be supportive of the project for whatever reason, and then eventually come to a determination—having heard all of those views and considered the risk, the environmental issues, legal issues, economic issues—as to whether permitting that project is deemed to be in the best interests of Canadians.

That permit then goes to government, and it has the final say on actually endorsing that recommendation from the board.

[Todd Russell, Liberal, Labrador, NL]

So it is a recommendation; the government can either abide by it or not abide by it.

[Jim Donihee]

In practice, the government has demonstrated great confidence in how the board has conducted its duties, throughout the full lifetime of its existence, and to my knowledge has never overturned that recommendation. But it does go to GIC for their final sanction of the recommendation.

[Todd Russell, Liberal, Labrador, NL]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

I found that interesting as well. Thank you, Mr. Russell.

We're going to wrap it up in about five minutes.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chairman.

I'll go back to the carbon sequestration issue, because it seems to be a hot topic.

The commissioner gave us a report a few weeks ago saying the program that was sponsored by Natural Resources Canada was expected to return 3.5 megatonnes of carbon capture and they were reporting only 0.08 megatonnes. Do you understand why that program was such a failure in terms of the carbon dioxide reduction that came from the investment Canada made in it? It was 3% of the target.

[George Eynon]

I'm not aware of the report you're referring to.

[Dennis Bevington, NDP, Western Arctic, NT]

It was the commissioner's report on the greenhouse gas programs that the government undertook from 2000 on. It really did bring a question to my mind about how successful this carbon sequestration is to date. There were supposed to be five projects. They only reported on one. I've only ever heard of one that's actually up and running in Canada. Has industry made any effort to push this forward?

[Bill Wall]

There are five projects that involve carbon dioxide for enhanced oil recovery. This may be somewhat different from sequestering carbon dioxide without the additional benefit of the oil recovery.

I'm really not familiar with what NRCan has been doing with respect to that program or its success, so I really can't comment on that.

[Dennis Bevington, NDP, Western Arctic, NT]

The Weyburn project was mentioned in this report as the one project that had gotten money from Natural Resources Canada. It was up and running, yet they were reporting these very low numbers for the carbon dioxide reductions that were encompassed by the program. I was just curious whether you could answer. Obviously you can't.

I know there is the dynamic right now between removing carbon and adding hydrogen to the oil sands product. Is there any sense of which is the better of those two for carbon dioxide intensity, or are they a saw-off?

[Bill Wall]

I'm really not sure. I suspect the idea of adding hydrogen would probably be a better idea, in that the yield from it is about 100%, whereas with a delayed coking operation the yield is maybe 81%.

I'm really not sure, though. I just intuitively feel that hydrogen addition is a better way to go.

[Dennis Bevington, NDP, Western Arctic, NT]

So when you make hydrogen, you're using natural gas. That's been a bit of a problem because the price has gone up. So then coking became more popular because of the pricing issues.

But is there any sense that we could look at the development of hydrogen from clean energy, rather than through using natural gas? Could you use perhaps electric, perhaps wind, perhaps some other forms of energy that would provide some kind of carbon dioxide relief to this very valuable resource we have in the tar sands?

[Marwan Masri]

I'll just make a general comment on that. It is possible, technically, to produce hydrogen via electrolysis, whereby the electricity is generated from a zero-emission source. It's really an economic question more than a technical question at this point. There's a loss of efficiency as well in going from converting twice to electricity and then to hydrogen. The technology does exist, but the economics do not favour producing hydrogen from a renewable resource at this point.

[Dennis Bevington, NDP, Western Arctic, NT]

And have you done a comparative analysis? I know one of the reasons we were looking at nuclear power in the tar sands was to make electricity so that we could use that for hydrogen addition. So that was kind of a renewable source. What's the formula for the price of natural gas versus electrical costs? That should be a fairly simple formula for you guys.

[Marwan Masri]

Actually, it's not. I was speaking from my general experience using wind or solar to electrolysis, not nuclear. Nuclear is something we are proposing to look at as well in the oil sands as a source of hydrogen, steam, and electricity. It's a proposed project that we are putting together now to study. But we have not done that yet.

[Dennis Bevington, NDP, Western Arctic, NT]

Okay. There were some previous studies done in the early 1990s on that work, when natural gas was at $1.25 a gigajoule. And those were done by Alberta oil sands research at the time. So I'd say that there is some base of information about this. And I would assume you would have some sort of--

[George Eynon]

The work that was originally done was back in the 1990s, as you said. The conditions and the costs and the supply and demand are all changing, and this is exactly the reason we're looking at the economics of nuclear use in the oil sands for a broad spectrum of things, including hydrogen generation, and looking at it as an alternative fuel to reducing the energy intensity, in terms of carbon and so on. That's exactly why I wanted to look at it, and we'll be doing that over the next number of months, we hope.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you.