Natural Resources Committee on Nov. 30th, 2010

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Coutu.

[Marcel R. Coutu]

I'll give you an overarching statistic that is current. The Canadian Energy Research Institute published a report less than a year ago. That report said that over the next 25 years, the oil sands industry will provide $1.7 trillion to the Canadian economy. That is a tremendous amount if you string all those zeros out. But I can translate that into the number of jobs, and those are jobs across the country. That translates to 500,000 jobs for Canadian workers, and those would be spread across the provinces. I won't go into the numbers by province. Obviously most would be in Alberta, but quite a significant number would be in the east as well, including in Ontario and Quebec.

[Devinder Shory, Conservative, Calgary Northeast, AB]

On these jobs, I heard the representative from the Alberta Federation of Labour. Mr. McGowan mentioned that the total amount of bitumen being refined in Alberta has dropped from 70% to 63%. However, the actual quantity of bitumen being refined has increased. In my opinion, the drop in overall refining does not necessarily indicate a real loss of jobs in Alberta.

So in this regard, Mr. Coutu, can you please comment on what the expansion of the oil sands means in terms of job gains for my province of Alberta and for Canada at large as well?

[The Chair, Conservative, Leon Benoit]

Mr. Coutu.

[Marcel R. Coutu]

I'm not sure I have your question right, but the gist of your point is that although less bitumen on a percentage basis is being upgraded here--you are correct--more bitumen has been upgraded. In fact, I'll just comment about Syncrude. Syncrude, which is the largest mining project, does not sell a single barrel of bitumen. We upgrade every single barrel that we sell. Suncor is very close to that kind of status, as is Canadian Natural, as is Shell. So the mining projects, by and large, upgrade most of their production; and when I say most, it's 90% or more, and some of those are very new projects. So it has increased on an absolute-barrel basis.

So as bitumen has increased its flow into the U.S. and into U.S. upgraders, we have not lost any jobs in the province. In fact, all of the production that has been growing has increased jobs in general.

What I would agree with is that we certainly would have more jobs in Canada if there were more upgrading happening here, but I think the money you would spend to create those jobs would exceed the benefit of actually paying those workers. So I think the right economic decision is being made during this period of time when the differentials, the price for an upgraded barrel versus the price for bitumen--which is the real driver in this----are very close.

So there's not much profit to be made in upgrading, which is why people don't want to get into that business. If that differential changed and went back to historic levels, you would see upgraders built in Canada again in the future, and that's what really drives that economic choice.

[Devinder Shory, Conservative, Calgary Northeast, AB]

I have one more quick question.

Mr. Coutu, recently I have seen that oil sands operations have raised a number of environmental concerns, and I can see Ms. McEachern using tar sands instead of oil sands, even though on the other hand you said we are fortunate to have this wealth or treasure in Canada. The question is how does the industry plan to further reduce the total greenhouse gas emissions from oil sands operations?

[Marcel R. Coutu]

Greenhouse gases are a tremendous challenge for all of us. I think, so that everybody's on the same page, greenhouse gases are created by the consumption of energy in any form. We consume primarily natural gas energy, and there is consumption of the off-gases from upgrading the fuel.

We continue to improve that ratio of consumption versus production of oil by applying new technologies and more capital investment. As an industry, we have reduced that greenhouse gas footprint by 40% in the last 20 years. I think that is three or four times better than the improvement in natural gas consumption or in carbon dioxide emissions or gas consumption by the automotive sector, which has been working to improve its gas mileage. So we're all in this together in terms of efficiency of energy and carbon dioxide production. We are spending probably more than any other industry and having greater improvements than any other industry, and we continue to do so.

[Devinder Shory, Conservative, Calgary Northeast, AB]

I'll throw this question out to everyone.

Last year, I believe it was, I heard some politicians suggesting or recommending that we should the stop the expansion of the oil sands totally. The question is--and anybody can answer this--would stopping the expansion of oil sands help Canada in any manner whatsoever economically?

[Marcel R. Coutu]

Stopping the oil sands in any rapid way would be extremely complicated, because there is a lot of capital that has been invested in the oil sands that has not yet come to fruition in terms of production.

It's like any contract. We have attracted capital to the country and capital continues to be invested. Production grows. If you were thinking about stopping the oil sands you would probably only start doing it 20 or 30 years from now if you want to honour the contracts that are in place.

Growth in the oil sands--I would put it to you this way--is not phenomenal growth. I think people quote a lot of numbers about production doubling within 10 or 15 years. I think that is a huge challenge. We will be fortunate if we're able to grow at the rate that we have grown historically.

And I think the growth continues to be more and more responsible. Growth on the mining side, which is the area that is the most focused, because visually it is not as appealing as the conventional drilling industry.... But the priority in growth over the next 20 to 30 years is going to be drilling, because 80% of the resource needs to be extracted by drilling technologies. We can no longer mine outside of the envelope that we're in today, because the reservoir is too deep and non-economic--

[The Chair, Conservative, Leon Benoit]

Mr. Coutu--

[Marcel R. Coutu]

So I think we should let the mines play out and be very careful in watching how the drilling industry continues to exploit this resource as they have for years--

[The Chair, Conservative, Leon Benoit]

Mr. Coutu, I have to cut you off there. Mr. Shory's time is more than up.

I know you have to go. I just want to thank you very much for appearing by teleconference as a witness today. Thank you.

[Marcel R. Coutu]

It was my pleasure. I'm happy to be here.

Goodbye to everybody.

[The Chair, Conservative, Leon Benoit]

We go now to the second round, and four minutes each is all we'll have time for.

We start with Mr. Tonks, and possibly Mr. Andrews if Mr. Tonks keeps his questions short.

[Alan Tonks, Liberal, York South—Weston, ON]

That's a challenge. Thank you, Mr. Chairman.

My question is directed at comments that Ms. McEachern made. We've been sort of under the illusion that the issue around the tailing ponds was one that was related to the leaching and the leaking into the water tables of those toxic chemicals that are in the ponds. Ms. McEachern talked about what happened in Hungary, and we all have that as a graphic illustration of what could happen. Is the suggestion that this is the scale, that there could be a disaster up in the area of the oil sands?

Second, is there the equivalent of a remedial action plan? It's on the heels of Mr. Cullen's questions. That is, a remedial action plan that could gauge what is being done, the analysis and nature of the danger, and a documented and chronological accountable plan that has to be submitted.

[Gillian McEachern]

To answer your last question first, no, there isn't. But I'll step back a bit. The issue of leaching from the tailings ponds is definitely a big one, so I'm not discounting that. We took industry's own data, their estimates of how much is leaking out each day, to compile it, and it amounts to 11 million litres each day. That's based on industry's estimates. So that's a large concern.

As for the possibility for a breach, the volume of liquid that's held back by the dams in the tar sands tailings ponds is much greater than what we saw in Hungary. Right now, almost a billion cubic metres of toxic waste is being stored on the landscape in various ponds.

So I can't say what volume would get released, but some of these ponds are 300 feet deep, so it's a very large volume of liquid. Because we've seen similar types of dam structures fail in other parts of the world, we can't discount that this will never happen here. It would be foolish to.

The federal government has no emergency response plan. The Alberta government has no emergency response plan. It's downloaded to industry. They do not release those emergency response plans because they claim it's proprietary. So the public, the federal government, has no way to assess how prepared those individual companies are. That's the concern. The federal government has a clear role because of the potential for trans-boundary impacts and the Fisheries Act impacts.

[The Chair, Conservative, Leon Benoit]

Mr. Andrews, you have a minute and a bit.

[Scott Andrews, Liberal, Avalon, NL]

My question is to Mr. McGowan, on a related topic that hasn't come up here today.

We talk about representing the Alberta Federation of Labour. Where are we with training, lodging, expertise in the oil sands? Do we have a training gap? I know a lot of workers are working across the country in this, and I don't know if you want to touch on within Alberta. As a country, do we have skilled workers training in place in relation to the oil sands?

[The Chair, Conservative, Leon Benoit]

Mr. McGowan, go ahead.

[Gil McGowan]

The best way to answer this question is in the context of an issue that hasn't been touched on but I think is central to the development of the oil sands, and that has to do with pace.

Until this point, projects have proceeded whenever the energy companies developing them have requested it. So they participate in a land sell, they make an application for development, and they're almost always approved. There's no regulation of pace or one after the other.

Our former premier Peter Lougheed suggested that to manage development both in terms of the environment and the economy, it might make better sense to approve only one major project at a time. That hasn't happened.

It's almost like those old Three Stooges movies where all the stooges get caught in the door because they're trying to go through at the same time.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. McGowan. I'm sorry.

Ms. Gallant, up to four minutes.

[Gil McGowan]

I was getting to training. We can do it if we pace development. That's my point.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

I'll be sharing my time with Mr. Allen, if there's any time left.

I have the latest WikiLeak. We might well call it a Wikipedia leak. According to Wikipedia, the word “tar” is used to described natural bitumen deposits. The use of that word is a misnomer, since chemically speaking tar is a man-made substance produced by the destructive distillation of organic material, usually coal. Coal gas as a fuel has been almost completely replaced by natural gas. Coal tar, as a material for paving roads, has been replaced by the petroleum product asphalt. So naturally occurring bitumen is chemically more similar to asphalt than to tar, and the term “oil sands” is more commonly used in the producing areas than “tar sands” because synthetic oil is manufactured from the bitumen.

This is a serious committee. It's a standing committee in our nation's House of Commons. As such, we want to be accurate. So unless we're trying to make a juvenile slur, I would ask that we refer to the oil sands as such.

The witnesses mentioned they're not for profit. Through you, Mr. Chairman, I would like to know exactly where they get their funding from.

[The Chair, Conservative, Leon Benoit]

Starting with Ms. McEachern, where do you get your funding?

[Gillian McEachern]

I would direct Ms. Gallant to our annual report on our website. I could send a link to the committee. It outlines our funders.