Natural Resources Committee on Nov. 21st, 2006

[Jim Carter]

I think what I said, and I may be corrected, is that for things like sequestration we need some support from governments to kick-start that notion and to develop the technology, the transportation systems that are necessary, and get some mechanisms in place that make it advantageous for conventional oil producers to use carbon sequestration as a way of enhancing their oil recovery. If we do that and put it together in a package, then it would start to get attractive for the industry to pursue and follow.

We've been studying this. It's not new, and it's not an idea we're just sitting back and waiting for someone to do something on. We've been studying it and working on it at the Alberta Chamber of Resources level, and it's going to take that kind of support from both levels of government to make it happen and to move it forward.

Can I just make one other comment? There's an important point here that we need to take into account. One way of reducing the CO₂ emissions from the oil sands would be to sell bitumen only and not upgrade it. It's on the upgrading side where we make most of our CO₂. We take natural gas and we knock the carbon out of it; we take the hydrogen and use it in converting the heavy oil into light oil that we send to market. We add value to it by doing that. This is where we get the value-added from the upgraders.

Our expansion, which you witnessed yesterday, was an $8.5 billion capital expenditure, and $1.5 billion of that was directed at environmental initiatives. One of them was to reduce our SO₂ levels. Nobody has asked about SO₂ today, but we've reduced that dramatically. We've added 100,000 barrels a day of crude oil production and we've reduced our SO₂ on an absolute basis by fifteen tonnes a day.

We've also improved that product so it's more amenable to refineries to meet the California diesel spec. The California low sulphur diesel spec requires a better crude oil going into the upgraders or into the refineries to do that. We've upgraded the product we make at Syncrude so that the refineries that are trying to make California diesel have a better chance of doing that. When we do that we make more CO₂.

I guess we could avoid making the CO₂ by not trying to satisfy that requirement or by shipping a lower-grade product. We've taken the position that we don't want to pipeline those jobs down to the United States, because that's essentially what we'd be doing.

[Mark Shaw]

There's one more piece I'd like to say, sir, if I could.

One of the things we recognize, and it's why we're working cooperatively with the provincial government and the federal government on the CO₂ capture and sequestration network, is if we were to do it just for Suncor, the pipeline that I would build would not satisfy these two gentlemen or their companies. That may or may not create a competitive advantage for us; it depends on how you look at it.

It would certainly be an added cost, but we would then deal with a solution that would not be the best for the country or for the province, because I won't build a pipeline. This is not a money-making venture; it's a net cost added to us. That's why we believe it's important that from an industry perspective, if we're going to be able to do this, we need to do it in a responsible manner and build one pipeline, not five or six. That's one of the concerns why this needs to be done cooperatively with governments as well as industry.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

You are telling us that to be responsible, you are shovelling the cost over into the government's yard. If it pays you, you will take the money, but you do not want your profits to drop. And what is unbelievable is that you are producing a superior product that you can therefore sell for a better price, but you do not want to cut into this product in order to reduce greenhouse gases. It seems to me that there is something missing here. You no longer are like the investors of yesteryear, who were people who felt a responsibility towards society. If the government does it, then fine, but if you are forced to do it and to incur a slight reduction in your profits, then you refuse. This is unfortunate.

[The Chair, Conservative, Lee Richardson]

I'm not sure that was a question, but it is over time. I probably should give you time to rebut that, but I'm not sure it's required.

If you could be brief, Mr. Carter, thank you.

[Jim Carter]

I would say we are being responsible. The amount of money the oil sands industry in Alberta pays to the Government of Alberta in the form of royalties and what we pay in taxes, payroll taxes that go to both levels of government...that's responsibility.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

It is a tremendous responsibility vis-à-vis your children.

[The Chair, Conservative, Lee Richardson]

I think that's a philosophical question we're not going to resolve here today, no matter what the answers.

Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

I want to thank you for hosting yesterday. It seems to me we used just about every conceivable means of transportation to get around the site, except for the bicycle that we saw him driving. It was very good, and it was enlightening for me, because we've asked a number of questions over the last number of weeks with people. It was really good to see. I commend you for the work that is being done there.

I want to ask two questions, if I have time.

Mr. Clarke, first, it was very enlightening for me to go there, and I see that the Polaris Institute document was presented to us by you and Mr. McCullum. Were you both up there to do this study, or who actually did the study?

[Tony Clarke]

Mr. McCullum was up there many times. I was up there part-time.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay.

I'm a little bit troubled by some of the stats you gave when you started going through the ones for water. You said--and based on what we heard yesterday, I thought I had some clarification, but now I'm all confused again--somewhere between 4.5 to seven barrels of water, but we talked about 2.5 yesterday. Then there was a statement made about 66% of the Athabasca River, and I'm sure that's not quite what you meant, when in fact 4% of low flow--I think that was the number--is what we heard yesterday. That's a little bit confusing to me. Finally, you talked about tailing ponds being huge lakes. Well, that's not really true because you're driving on them out there now. Maybe you could kind of square that circle for me.

[Tony Clarke]

First of all, on the Athabasca River, I didn't say that 66% was being used. I said that government policy—this is Alberta—is to allocate up to 66% of the Athabasca River flows or sources to the oil sands development. I was making a comparison between 37% of all fresh water sources in Alberta being allocated for oil and gas development in general. I was saying that the Athabasca River is a huge amount of that; it is allocated up to that amount. That doesn't say it's all being used now--of course not; that's over a long period of time. I'm just saying that's the way I was using that figure.

As for the figures with regard to the barrels of water for barrels of oil, 4.5 is the average that the Pembina Institute had worked out. Other institutes have worked out--these are independent of the industry and independent of government--as high as seven, so that's why they range between 4.5 and seven.

Mr. Carter says they have it down to two barrels of water per barrel of oil, or something to that effect. I'm assuming that's for 2006.

[Jim Carter]

That's from 2005 to 2006. It was on the way in 2004.

[Tony Clarke]

Our figures from 2004 to 2005, again from independent sources, and again from the Pembina Institute, show that 6.2 barrels of water were being used by Syncrude for production of each barrel of oil. Obviously there are some differences of opinion there. Obviously there needs to be some sharing of the stats and where the stats came from, etc.

I'm sorry, what was the third question you asked?

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

That was on the tailing ponds being huge lakes, when they're really not. We see a tremendous amount--18 times--the recovery of the water. We're seeing a lot of recovery of that water. Of course, we saw a lot coming out of the tailing ponds into the settling pond yesterday, and they're actually driving on these things now. The one situation they talked about was a recovery of the land, where there was going to be a man-made lake, if you will, which is going to be somewhere around fifteen or five metres deep or something like that, or whatever it happens to be. That was the one thing I saw that was a lake, but the tailing ponds were not. I guess I'm having trouble with the statement that these are all lakes, because they're not really.

[Tony Clarke]

I'm sorry. I may have used the word “lake” in the wrong sense there. I was talking about tailing ponds as if they were lakes. They're huge repositories of contaminated water that now need to be processed and brought back to life again, if they can be. We're hearing about new technologies that are being developed for that. I'm glad to hear that more progress has been made. I was there in 2005 and in 2004. Maybe more progress has been made in the last six or eight months.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay.

I could ask more and more, but I'd like to give Brad a chance, because the time is almost up.

[The Chair, Conservative, Lee Richardson]

We have a vote, so we're going to hear a bell in a second.

Mr. Trost, do you have a quick one?

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

The one thing that hasn't really been addressed today is the big problem up there with human resources, getting enough people up there. The problem depends on which side of the philosophical line you are on, both inside and outside this committee.

From the companies' perspective, I'm very curious about what human resource programs have been most successful in terms of getting people up there with the necessary skills. We're going to have to make some recommendations, be they immigration or otherwise. We're talking about training and immigration. If there are programs that have worked, I'd like to hear about them, because we're going to make recommendations for things to change, etc., in order to help the human resource stresses up there. Coming from Saskatoon, I know it's spreading all throughout the Prairies.

[Jim Carter]

Maybe I'll take a stab at that, and others will want to jump in, no doubt.

Some of the things we've been doing for the last ten years we would want to continue doing, like the apprenticeship programs we have for training apprentices. We've been very successful in being able to hire aboriginal people. With you being from Saskatoon, you probably know that's a concern. It's a growing area of our population in Alberta, Saskatchewan, and Manitoba.

All of us in this industry have put a lot of things in place in order to hire aboriginal people and put them to work. They're all getting trades now and they're moving up through the system. Those are the kinds of things that will continue to be helpful. Anything the government can do to support advancing education in the aboriginal communities is a key point. We put in a requirement in 1985 to have grade 12 equivalent for our applicants at Syncrude, and all the others in the industry are doing that now. That has helped to elevate the education level of the aboriginal people and make them more employable.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'm sorry to ask, but please give quicker, more general points, because we're coming up to a vote here.

[Jim Carter]

Okay.

The other one would be that immigration is something that is important. At Syncrude, we've been fortunate in that we've been able to satisfy our hiring needs within Canada for the most part, but with the growth in the industry going forward, we see that immigration is going to be a critical success factor to that.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Are there any particular programs that have worked or not worked? There are two other industry players here. Are there any other comments about what human resources recommendations you would make, for us to essentially make?

[Rob Seeley]

Mr. Carter has covered it.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Fair enough.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Trost.

Could I please get one clarification? Because of some of the questions Mr. Cullen was asking of officials and people we've met with along the way, two things occurred to me yesterday that sorted out my mind on this water question. I just want to clarify whether I'm correct on data that's a little bit older and current data.

There were two things. One was the comment you made in your remarks today about recycling the water. From some of the data we heard from Pembina and recent witnesses, it occurred to me that there was a likelihood that they were counting the same water twice in terms of the use of water in developing a barrel of oil, and that this is in fact recycled water. It's the same water used eighteen times, and it's counted by previous data eighteen times in measuring the amount of water you're using. It's all the same water. It's just used over and over again.

This has been more frequent recently because you've been able to use the water from the tailings ponds, since it has settled out now, whereas you weren't able to use that water for many years. It takes a while until you are able to use it. This is something that will change the perspective considerably, too, because you're able to recycle that water and use that water over and over for a lot of uses. Is that correct, or have I misunderstood things?