Natural Resources Committee on Dec. 7th, 2006

[Dennis Bevington, NDP, Western Arctic, NT]

So it's quite a big investment in that direction now.

I was very interested in your declining natural gas supplies. Certainly Natural Resources Canada has something similar to what you're saying, but this is pretty dramatic. To a natural resources committee, I think this is almost a disaster in the making if we don't look at this more carefully--the supply of natural gas in Canada. We're talking about ourselves as an energy superpower, yet you're saying we're not even going to be able to meet the export commitments that we have under NAFTA within the next five to ten years.

[Wayne Henuset]

We didn't make these numbers up.

[Dennis Bevington, NDP, Western Arctic, NT]

I know. We do have a serious situation with natural gas.

[Wayne Henuset]

You guys have seen these numbers before. There is an issue.

[Dennis Bevington, NDP, Western Arctic, NT]

That's good, because CAP came in here about a month and a half ago to tell us we had lots of natural gas and don't worry about it. This was a statement that came from that outfit. I think we've heard some different evidence here today.

[Wayne Henuset]

The producers in the tar sands are now looking at alternative measures for fuel. They have to find an alternative measure, because they have these numbers themselves. With natural gas being so unstable, they have to have a stable fuel source, and that's why they're going to the different fuel sources in order to substantiate their development.

It's like buying a car and knowing you're not going to have gas for it in 10 years. Those guys are building cars up there, and they're not going to have any way of getting them out in ten years, with their demand requirements and the depletion rate they're looking at.

[Dennis Bevington, NDP, Western Arctic, NT]

I'll go on to Dr. Bruneau, who suggests we don't have an energy issue; we just have a pollution issue in our energy use.

Also, Dr. Keith spoke to the sense that we could go with energy intensity rather than limiting industry's size. Maybe I'll get you to comment on those with this evidence.

[Dr. Angus Bruneau]

Let me speak to the energy intensity thing.

The problem we're trying to deal with when we're dealing with greenhouse gases is a global problem. Some of you will have seen recently that Alcan has decided to build a million-tonne-a-year aluminum refinery in South Africa, because of the power contract they could write with Eskom, the big utility—bigger than Ontario Hydro. I don't know what it is today, but 10 years ago it produced 85% of all the electricity produced on the continent of Africa. They do this with dirty coal.

If the world wants another million tonnes of aluminum a year, and if you do it in Canada and supply half, two-thirds, or all of it from a new hydro source, the Canadian economy is very much more energy intensive, but you've dealt with the international problem.

Canada should never apologize for being energy intensive. The things we do that make us an energy-intensive country are things that we do better than most other people on the planet, and we do it with less greenhouse gas burden on the environment.

When you look at the country, if you're really trying to deal with a global problem, then you have to look at what you're doing in a global context. Deciding to make the aluminum powered by dirty coal in South Africa is a step backwards, not a step forward in the cause.

[Dennis Bevington, NDP, Western Arctic, NT]

Right now I'm more concerned about heating our homes with natural gas in 2015, if these are the numbers we have in front of us.

[Dr. Angus Bruneau]

People are not drilling because the price of gas isn't high enough to justify the drilling.

[Dennis Bevington, NDP, Western Arctic, NT]

The price of gas is four times higher than it was a decade ago.

[Dr. Angus Bruneau]

I can remember a speech when a guy said, if the price of gas ever got to $1 Canadian for 1,000 cubic feet, Alberta would collapse because it couldn't sustain the cost.

[Dennis Bevington, NDP, Western Arctic, NT]

We drilled 15,000 wells in Alberta last year.

[Dr. Angus Bruneau]

It was 22,000.

[Dennis Bevington, NDP, Western Arctic, NT]

Fifteen thousand gas wells in Alberta last year, and where did we go with that?

[Dr. Angus Bruneau]

They would have drilled a lot more. I'm on the board of a petroleum company, and we're not going to run out of gas. Cost is going to reshape how we use it.

[Dennis Bevington, NDP, Western Arctic, NT]

These figures are based on our going to two billion cubic feet of coalbed methane by 2010 and four billion cubic feet by 2025. Those are significant issues as well. If you want to start drilling and developing that much coalbed methane in southern Alberta, I think you had better start the permitting process pretty quickly.

[Dr. David Keith]

I really share Angus's view that a shortage of energy is not our problem. It is important to take a historical view. We began to have serious conversations in Pittsburgh about running out of oil in 1880, about twenty years after the oil industry began. Consistently over the last hundred years, we've seen reserve-to-production ratios that have been roughly flat, and we've seen people continuously thinking they're going to run out of resources in twenty or thirty years. There are some long-run reasons why we haven't, and we're not going to this time. We have a serious environmental problem of climate change. We don't have a serious problem of running out of fuel.

[Dennis Bevington, NDP, Western Arctic, NT]

I'm not talking about oil. I'm talking about natural gas. These are the figures that have been presented to us. If you question the figures, please let me know.

[Dr. David Keith]

I certainly do question the figures. I was just questioning them.

[Dennis Bevington, NDP, Western Arctic, NT]

But Natural Resources Canada has similar figures showing that we're going to be into a natural gas crunch within a decade.

[Dr. David Keith]

Understood. And they had similar figures twenty and forty years ago.

[Dennis Bevington, NDP, Western Arctic, NT]

Forty years ago, we maintained a 25-year reserve of natural gas in Canada. We did not have a crisis in natural gas.

[Dr. David Keith]

So you're convinced that we do, but in general, most people I know in the energy world are not convinced we have a crisis and are running out of energy. We have enormous reserves of various fuels and we have ways to turn one fuel into another. You ask how to heat our homes. If climate wasn't an issue, we'd have lots of ways to do it. You can turn coal into synthetic gas at costs that are roughly competitive with today's gas prices.

There are plenty of different routes that we have with energy supply. We have to supply the fuels that we need to run our society. The problems that dominate our energy system, given the extraordinary resources that we have, are the environmental consequences of using those fuels, not the availability of the fuels. There are systematic reasons, well understood, for why forecasts by central governments underestimate the long-run conversion of resources to reserves, and those are that central governments don't account for the change of technology.

Unconventional gas reserves—either tight gas, hydrates, etc.—are not assumed to exist until they're turned into reserves, which means things that are economic. There are plenty of people sitting beside me in my department who are thinking very seriously about how to produce unconventional gas reserves from Mackenzie Delta or from offshore, and most assuredly those things are going to go. Whether production in Alberta goes up or down in the next little while I can't really predict, and I don't think it's really my job to predict. But in the long run, I think the idea that we're going to run ourselves out of gas is wrong. We're going to run ourselves out of atmosphere before we run ourselves out of gas.

[The Chair, Conservative, Lee Richardson]

Thank you, Dr. Keith. I think we got the answer to that question.

Thanks, Dr. Bruneau.

We do have to move on to Mr. Trost.