Natural Resources Committee on Dec. 7th, 2010

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

We're here today, of course, to continue our study on energy security in Canada, including looking at what the federal role may be in unconventional oil and gas development, such as deep-water offshore drilling, shale gas exploration, and oil sands development; regional economic impacts of oil and gas development; and the National Energy Board's role in the development and export of unconventional resources. So we're continuing our study on that.

We have two panels today, the first from eleven until noon, and the second from noon until one.

On the first panel, from Edmonton, Alberta, by video conference we have, from the Oil Sands Developers Group, Don Thompson, president. Welcome, Mr. Thompson.

[Don Thompson, President, Oil Sands Developers Group]

Thank you for having me.

[The Chair, Conservative, Leon Benoit]

We have, from the Athabasca Chipewyan First Nation, Lionel Lepine, traditional environmental knowledge coordinator, industry relations. Welcome, Mr. Lepine.

And we have, as an individual, Ezra Levant.

We'll take the presentations in the order listed on the agenda--up to seven minutes, if you could, with your presentations--starting with Mr. Thompson, from the Oil Sands Developers Group.

Go ahead, please, Mr. Thompson.

[Don Thompson]

Thank you, Mr. Chairman.

I trust my presentation materials made it here and they're in front of you. I've no intention of going over them in detail. I wanted to give you the highlights.

First of all, to introduce Oil Sands Developers Group, we began in 1997. You can see from our committee structure, on the first page, that we are primarily focused on local issues impacting oil sands, but we will deal with issues wherever they exist with respect to our industry.

I think the first thing people should know is that there are two things driving the need for energy, whether around the world or in fact in Canada: the number of people and their lifestyles. They are growing in all dimensions. I think I want to see improvements in people's lifestyles all around the world, including in Canada.

Our population continues to grow. Therefore energy demand continues to grow, as shown on page 3. You will note that it particularly grows in non-OECD nations.

Even including oil sands, the global energy picture requires that about 64 million barrels a day of new capacity be found by 2030. Global depletion rates are in the order of four million barrels per day per year. Finding rates are about half of that.

In the global energy mix dominated by oil, Canada has a slightly different energy mix, primarily because hydroelectric power, which we happen to be blessed with in certain regions of Canada, has offset coal. But you will notice that our requirements for oil are not dissimilar to other countries around the world, with some 32% of our energy mix being from oil.

Page 7 I think is instructive, in that it lays out reserves positioned around the world. You will note that Canada, at 178 billion barrels, is second in terms of global oil reserves. You should note that 95% of those, or 170 billion barrels, are in fact oil sands.

The question you should ask yourselves is this: If we did not have the oil sands, from where would we be getting our oil? I draw your attention to Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela. These are the places to which we would be turning if we did not have oil sands.

Leaving aside the issues that I'm sure Mr. Levant will talk about, you also should know that increasingly, these countries are turning to the non-OECD nations for their markets, since they are closer and have a higher net back. Interestingly enough, Saudi Arabia's shipments to North America seem to be dwindling in favour of those other markets. That is certainly true for Venezuela.

I want to draw your attention to two things. First, only 20% of the resource in the oil sands is minable. This is the resource that is less than 70 metres deep. This is the resource that was initiated first, because the technology was available. It has only been about 12 or 13 years since the bulk of the oil sands, that being the in situ portion--80% of the resource is too deep to be mined--was in fact commercialized.

If you look at the existing and proposed projects, right now operating projects have a capacity of 1.7 million barrels a day. Last year that capacity expressed itself in the production of 1.4 million barrels. A number of new projects were not fully ramped up. Under construction there are another 600,000 barrels. Those that have regulatory approval or are under regulatory review have sufficient capacity to take us into the range of three and a half to four million barrels a day.

The oil sands is a huge driver of Canada's economy. I need not underscore that. The bottom line, from the Canadian Energy Research Institute, shows that it contributes about $1.7 trillion of GDP and 456,000 jobs across all markets in Canada.

We value, as an industry, development of strong business relationships. One of our objectives is to increase participation locally, and certainly with aboriginal businesses. When we first were formed, we did a survey--this was in 1997--showing that our members did about $80 million a year in aboriginal business. We have almost increased that by a factor of ten. Last year it was $711 million. Similarly, on direct employment with my members, we have moved from 80 in 1998 to over 1,600 self-reporting aboriginals who are now employed directly by my members, and of course there are many more in those businesses.

This is an industry that donates substantial amounts to the community for hospitals, recreation, and cultural education.

Page 13 shows this is an industry that by any measure has world-class environmental monitoring and management. I know of no other air monitoring network as large in terms of scope or in terms of geographic extent as the Wood Buffalo Environmental Association. You may take a look at their website and see the air quality from any area in the region.

Similarly, the aquatics monitoring program, $4 million a year spent on monitoring chemical, physical, and biological properties of the river, and all the cumulative effects, management frameworks developed and recommended through the cumulative environmental management association....

Benchmarked by Cambridge Energy Research Associates, this is also an industry that has world-class regulatory processes in place, including agencies from the Government of Alberta, quasi-judicial regulatory agencies from Alberta, and from Canada.

On page 15, I draw your attention to the fact that technology development will continue to be a key enabler of growth. That 170 billion barrels of reserves is USSEC-qualified, which is to say that it is produceable with today's economics and technology. It is about 10% to 17% of the geological resource. Particularly in the in situ, but also in the mining area, new technologies are coming aplenty. The focus in the in situ business is to drive down the energy and water use and drive up recovery. We can explore a tremendous range of new technologies, but not in seven minutes, so if you have questions, I'd be pleased. The mining area of research focuses particularly on tailings use--moving, of course, toward drier tailings--and on minimization of water use, not to say there aren't other focuses.

On slide 16 I get to the recommendations, my comments.

First of all, in terms of what the OSDG members will continue to do with respect to advancing responsible development in the oil sands, we will do what we do best, which is to continue to seek and develop economic investments, and then operate the facilities we have in a safe, reliable, and environmentally responsible manner. That is our primary contribution to the energy security and economic prosperity of both our province and our nation.

Secondly, we will continue to communicate and discharge our responsibility for consultation, particularly with respect to aboriginal consultation.

Thirdly, we will continue to focus on technology development and innovation, primarily to increase the proportion of the resource that can be produced, and also to improve our environmental performance. I would draw your attention to the fact that I have at least four members who have their own internal research priorities and who fund that to the tune of over $100 million a year. There are also many very entrepreneurial in situ companies who are pushing the technology envelope very hard.

We will continue to work with the regional municipality and the province to ensure the physical and social infrastructure is in place to support the requirements of our industry. In that regard, we particularly focus locally on transportation, infrastructure, housing, health care, and the like. That is evident in the structure of our organization.

We will continue to contribute to the ongoing development of the communities we operate in: donations and support of our employees; educational, recreational, and cultural facilities. Similarly, we will continue to develop the workforce of the future. We have created and supported many organizations to do so. I particularly draw your attention to CAREERS: The Next Generation, and also to funding in support of things like Keyano College, NAIT/SAIT--Northern Alberta and Southern Alberta Institute of Technology--and apprenticeship programs. We will continue to ensure that monitoring and reporting in the region is state of the art and transparent.

Finally, we will continue to engage and contribute to the ongoing dialogue in Canada about energy and environmental policy generally, and the oil sands specifically.

In terms of what I think governments should have as their key elements going forward, I would say, first and foremost, leading and contributing to honest conversations about energy and the environment. The fact is, we all need to be willing to be transparent about the real-world choices that are available and the timeframes within which these choices may be operative. We need to make sure that people understand the impacts and implications of these different policy choices and how they will impact energy consumers across Canada.

I seek a policy environment for Canada that recognizes our specific geographic and energy circumstances. We are a nation founded on an export-based economy. It is not warm in Edmonton today; I don't know what it is like in Ottawa. We also have a country with a low population density, large distances, and the like. We need energy policy that not only advances but balances the three key dimensions of our interests: firstly, economic interests; secondly, energy security and reliability of supply; and thirdly, of course, environmental performance.

We need a policy environment that maintains open borders and trade with, and market access to, our largest trading partner, the United States, but also offshore markets. And we need a policy environment that is founded on economy-wide solutions, ensuring competitiveness and stimulating investment particularly in the use of technology and innovation.

Mr. Chairman and members of the committee, I thank you for your time. I look forward to your questions.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Thompson.

We now go directly to Mr. Lionel Lepine from the Athabasca Chipewyan First Nation.

Go ahead, please, for up to seven minutes.

[Lionel Lepine, Traditional Environmental Knowledge Coordinator, Industry Relations, Athabasca Chipewyan First Nation]

Thank you, Mr. Chairman, for giving the Athabasca Chipewyan First Nation the opportunity to address this committee on this important topic, which concerns our people today. I am honoured to come here and tell you about some of the pressing issues that may severely affect energy security in Canada.

As you may know, the Athabasca Chipewyan First Nation's traditional territories cover much of the minable and non-minable oil sands in the Athabasca region of northern Alberta.

On his famous voyages, guided by the Dene people, Alexander Mackenzie used one of those same tar sands, exposed along the shores of the Athabasca River, to waterproof his canoes, as did the Dene people.

Now, some 230 years later, estimates put the oil reserves in the tar sands at hundreds of billions of barrels, making it the second-largest deposit of oil in the world next to Saudi Arabia. Although estimates may vary, there is certainly enough oil to meet Canada's foreseeable security needs and allow significant exports of oil as well. These reserves are so attractive that companies and governments from all corners of the world are rushing to Alberta, especially to ACFN's traditional territory, to participate in this bounty of petroleum wealth. This rush of activity has been called the largest and most destructive industrial project in the world. The lands torn apart are clearly visible from space with the naked eye.

You might think this is all good and economically safe. Unfortunately, it is obvious that this greed for oil has created huge impacts in the region and, more importantly, impacts on our aboriginal and treaty rights to continue the use of our traditional territory.

Now there are proposals to double or triple again the number of oil sand projects in our area, which will significantly increase the impacts and erase our ability to practise our treaty rights granted to us 100-plus years ago.

Unlike previous debates, we have enough oil to meet our oil security demands. Instead, the problem is the safe, proper, and fair development and production of existing oil reserves. The question is, what environmental and human cost must Canadians pay for this oil, and will this price be excessively loaded on the backs of the ACFN and other first nation peoples of the area?

Our governments cannot tell you the answers to these questions because they simply do not know the answers. The Alberta government is taking a minimalist approach with respect to our treaty rights to securely use our traditional territory. As a result, the ACFN's rights are being eroded and the Government of Canada has been standing back and allowing this breach to occur.

Face-to-face consultation with governments on oil sands impacts is non-existent, leaving ACFN little choice but to mount challenges such as court actions and media campaigns.

As we speak, recent technical reports have shown large holes in the existing monitoring processes for chemical exposure, and no resolution of the cumulative impacts is being sought.

The honour of the crown is at stake here. Instead of making absurd legal arguments, the provincial and federal crown representatives have a duty to properly engage the ACFN with proper face-to-face, government-to-government consultation, which must include mitigation and accommodation of environmental and economic impacts.

If proper consultation is not undertaken, oil sands projects may be threatened and the resulting oil production put in question. If proper consultation is not undertaken, the negative environmental impacts may be irreversible and ultimately devastating to the aboriginal communities in northern Alberta and up into the Northwest Territories.

If you ask what the energy security issues are in the Canadian oil sands, the answer is dealing with the huge impacts on aboriginal rights and on the environment.

Currently, the consultation support process is in a dividing line. The provincial government is attempting, with success, to delegate its responsibilities to consult with industry, even on regional issues, even on issues that involve regional non-specific effects.

Despite continuous appeals to both levels of government, there has been no direct crown consultation. As a result of this lack of consultation, ACFN rights are being eroded and our ability to use the lands is completely impaired; Athabasca River water testing has come under a lot of scrutiny because of questionable monitoring practices; human health impacts, particularly with respect to high cancer rates in Fort Chipewyan, have become a crucial issue; and endangered species, wildlife habitat, and their food sources are now threatened without mitigation processes.

Lack of consultation will result in more court battles, such as the West Moberly First Nations case in our Treaty 8 area, where a coal mining project has been stopped due to lack of consultation with respect to endangered caribou. Woodland caribou are now threatened, and they're on the verge of extinction in northern Alberta. It is very important to the ACFN in the oil sands area, as that is traditionally part of our main subsistence diet.

In summary, the ACFN submits that oil energy security is not a matter of having enough oil, but a matter of the proper development of huge existing reserves.

Canada's energy security is challenged by the failure of the crown to properly consult on the massive impacts of the largest industrial project in the world. This development is in our backyards. It's in the ACFN's front yard and backyards. This is the type of intensive development that the Supreme Court of Canada referred to when it required the crown to consult intensively with aboriginal peoples.

We are asking that the governments of Canada and Alberta live up to those constitutional responsibilities. If they did, they would also protect the security of Canadian energy.

I'd like to thank you for this time to allow me to speak.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Lepine, for your presentation.

We go finally to Mr. Ezra Levant. Go ahead, please, Mr. Levant.

[Ezra Levant, As an Individual]

Thanks for the invitation to be here.

One day we might discover a fuel source with no environmental side effects that's affordable and practical; but until that day comes, we need oil. It's not just for us, but for the United States, to whom we sell 1.4 million barrels of oil sands oil every day.

Last year, for the first time, more cars were sold in China than in the U.S., and they all want to be two-car families too. The same goes for India and the rest of the developing world.

So the choice isn't oil sands oil versus some fantasy fuel of the future. It's oil sands oil versus the oil that comes from other places, mainly OPEC countries. I don't know what God was thinking when he was handing out oil, but he gave it to all the world's bastards—Saudi Arabia, Iran, Venezuela, and Nigeria. Out of the top ten countries ranked by oil reserves, Canada is the only western liberal democracy on the list.

That doesn't matter if all you care about is driving your car; it all burns the same. But what about the ethics of oil? In my book Ethical Oil—which I'd be happy to give everyone a copy of afterwards, courtesy of my publisher—I suggest four liberal values by which we should judge the morality of a barrel of oil: respect for the environment; peace; fair wages for workers; and human rights. I compare oil sands oil with OPEC oil using these four measures. I come to the conclusion that oil sands oil is the fair trade coffee of the world's oil industry.

Take the environment. Greenpeace propaganda pictures make the oil sands look like something out of the Land of Mordor in The Lord of the Rings. But in only 2% of the area, where there is 20% of the resource, is the oil close enough to the surface for it to be mined that way. The rest of it has to be obtained underground, or in situ, with methods that don't tear up the surface. They don't use any river water, and even the 2% that's mined has to be reclaimed afterwards. Already more than 60 square kilometres have been. Compare that with the 2,000 unremediated toxic oil spills in Nigeria that will never be cleaned up.

Then there's carbon dioxide. Using the Obama administration's well-to-wheels analysis, oil from the oil sands has the same carbon footprint as oil from Nigeria or Iraq, because the latter waste so much natural gas. But we have a lower carbon footprint than U.S. imports from Venezuela, and much less carbon than oil from Nancy Pelosi's own state, which is actually called “California heavy” for a reason.

So if you're concerned about carbon emissions, shouldn't we replace higher carbon oil from Venezuela and California with our lower carbon oil from the oil sands? Since 1990, the carbon footprint of the average barrel of oil from the oil sands has fallen by 38%. I can hardly wait to see where it's going to be ten years from now.

But the environment is not the only measure of ethics. What about peace?

Canada invented peacekeeping. Saudi Arabia invented 9/11. Iran is using its oil profits to build a nuclear bomb. Sudan uses its oil profits to buy weapons to prosecute the genocide in Darfur. If you multiply 300,000 murders in Darfur by 185 ounces of blood per human body, and you divide it into the number of barrels of oil exported by Sudan over the same period of time, it works out to 6.5 millilitres of blood in every damn barrel. That would fill a lipstick tube.

What about fair wages, though? Fort McMurray is Canada's wealthiest city—and the most generous, according to the United Way. The working poor there, the lowest quartile, have 77% more purchasing power than in other cities, like Edmonton. Compare that to Saudi Arabia, which uses poorly paid migrant labourers who have no civil rights; or Nigeria, where over $300 billion has been stolen by dictators from bureaucrats, leaving the country one of the poorest on earth.

Then there are human rights. The mayor of Fort McMurray is a young woman named Melissa Blake. How many women mayors are there in Saudi Arabia? There are none. It's against the law. In Iran, women are stoned to death if they're accused of adultery. Ahmadinejad says there are no gays in Iran, and you know, he's not lying, because when he finds them he kills them.

Then there's the fact that the oil sands are Canada's largest employer of aboriginal people, not only providing 2,000 direct jobs but also billions of dollars to aboriginal-owned businesses.

If you don't care about morality, then buy oil from Iran or Sudan. It's just as good as Canadian oil. But if you believe in making the world a better place, then the moral imperative is to replace unethical OPEC oil with Canadian green oil, conflict-free oil, fair wage oil, human rights oil.

The leader of the opposition says it's important to increase trade with China and India. I agree. Right now those countries are forced to buy terrorist oil, dictatorship oil, Darfur oil, because we only let Americans buy our oil right now. I love our American neighbours, but it's dangerous to have just one customer for our product. We're at the mercy of protectionism and taxes, and sometimes we're taken for granted. That's why the pipeline to the west coast makes so much strategic sense. It makes us an independent country with options.

I find it very irritating that so many of the anti-oil-sands activists are taking their funding from U.S. lobby groups like the Tides Foundation. Of course it's in America's interests that no other customers are able to buy our Canadian oil, but it's in Canada's interests that we are able to sell it to whomever we choose, and if you care about industrial ethics, it's in the world's interests too.

A lot of people are watching how Canada is handling the oil sands—not just Canadians, the American ambassador is watching too. He hopes the pipelines shut down so he can have the oil all to himself. The Saudi ambassador is watching too. Maybe they're watching together, I don't know. He also hopes the pipeline is killed, so he doesn't lose any market share in Asia, the way he's lost in the United States. But for those who love Canada, expanding the oil sands is the right thing for our country and for those who think globally and act locally, because every barrel of oil sands oil we can sell to Asia or the United States is one less barrel sold by the world's terrorists and dictators.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you for your presentation, Mr. Levant.

We've heard the presentations. We will go directly to questions or comments.

Monsieur Coderre.

[Denis Coderre, Liberal, Bourassa, QC]

I love Canada, I'll build a pipeline. All right.

[Roger Pomerleau, Bloc, Drummond, QC]

That's about the size of it. Oh, oh!

[Denis Coderre, Liberal, Bourassa, QC]

Oui.

I want to be nice, because you might say bad things like you said about Julian Assange in the Toronto Sun. I might have a contract on my head.

Mr. Thompson, it is a serious issue, a strategic resource. Before asking questions, I felt it was appropriate for me to visit Fort McMurray. I spoke to most of the stakeholders, including the first nations. There is an issue of perception. There is a lack of inclusiveness, or, as some people think, a lack of monitoring. I saw all your numbers. I heard about your numbers.

Why do you think that some people might feel that your figures regarding the toxicity and all that are not accurate? Is there something more that you should have done? When I spoke to the first nations, they said they're not part of the deal. The answer from your group is, “Well, we hire more aboriginal people and they're a part of it”. They talk about Fort McKay and all that.

It is clearly a strategic resource, but you cannot do it at any cost. The environment is also important. It's not a menu à la carte, it's a one-two punch. What do you feel, for the sake of our study, that the industry should do better to make sure that from coast to coast to coast people might think it is important to expand?

[The Chair, Conservative, Leon Benoit]

Mr. Thompson, go ahead.

[Don Thompson]

I think the number one thing is that we need to communicate much more broadly. It's fair to say that while we were developing the technology, while we were making it robust and investable, we did not spend much time talking to our stakeholders, particularly stakeholders beyond Fort McMurray. Into that void leapt others. I will continue to work on that issue myself. I made over a hundred speeches across North America last year on the topic of oil sands reputation and educating people on what we do, and when they find out about things like the Wood Buffalo Environmental Association, they are impressed.

I can take credit for it, because one of my colleagues at Suncor and I began the Wood Buffalo Environmental Association many years ago, and we did so with a couple of primary points. One, we wanted to combine what was then two separate air-monitoring networks, with me at Syncrude and him at Suncor. Two, we wanted to make it much more inclusive and transparent. So we formed an organization, and we invited stakeholders to participate. In those days, as it is today, all stakeholders in the region could participate, including first nations. That is also true of the regional aquatics monitoring program. In fact, first nations can participate in the water monitoring programs in the region.

So these two organizations are very inclusive. The same goes for the Cumulative Environmental Management Association. First nations have been and continue to be members. And when it comes to influencing programs, that's also true.

So I think what it comes down to is that people either don't wish to learn or don't understand what's going on there. I cannot anywhere in North America find a trio of broader monitoring management organizations.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Thompson, there are some issues, though. Some are scientific. I think it's in the interest of the industry to address some of these points. I'm trying to understand. Dr. Schindler provides some other numbers, and there are experts who disagree with you. Do you believe we need better monitoring? There is the issue of toxicity, and there's also the issue of water. You said we addressed that. How would you perceive the role of the federal government? There's already a convention between the Government of Canada and the Government of Alberta, which is doing its own monitoring. Do you believe that we should have a better role to play? What should we do as a government?

[Don Thompson]

The federal government has been a member of the regional aquatic monitoring program since day one and has influenced its scope and its study since day one. What we have is a paper by Dr. Schindler, which is narrow in terms of time and geography. We have that versus 13 years, 2.5 million data points, and the regional aquatic monitoring program, which is broad in terms of scope and geography.

We also have two panels looking into it right now. If we need to change as a result of the recommendations from those panels, we will do so.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Lepine, obviously I wanted to ask him the question first so you would be able to react, because this is an important issue. Inclusiveness and transparency demand that the first nations would also be part of it. Now some of the people in the industry say they're doing what it takes. You don't. How would you react to what Mr. Thompson just mentioned?

[Lionel Lepine]

He mentioned RAMP, which is the regional aquatics monitoring program at CEMA. ACFN was at one time a member of those organizations, but we have since pulled out, because in our opinion the results that were coming back to us were inadequate.

Where I come from, the elders live off the land, and they see the changes out there. There are fish coming out of that lake and fish coming out of the river that are deformed. The animals are getting sick. The medicinal plants are getting sick. So our whole traditional way of living is becoming pretty--

[Denis Coderre, Liberal, Bourassa, QC]

I don't have a lot of time left, but the issue of cancer is clearly a sensitive one for me.

[Lionel Lepine]

Yes, that's a big issue.

[Denis Coderre, Liberal, Bourassa, QC]

We're saying there's more cancer. Do we have some monitoring? Do we have some numbers that prove that?

[Lionel Lepine]

Right now the only proof we have, aside from RAMP, is David Schindler's report. His study is, in my opinion, one of the most thorough investigations that were done. I think we need more of that. Right now we can't point fingers at oil sands development or anybody else. Right now, because the cancer rate has gone up so much in the last 20 years, it's only obvious that it's coming from directly south of us, which is the oil sands development area.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Lepine. Thank you, Monsieur Coderre.

We go now to Madame--

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Point of order, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

On a point of point of order, Mr. Cullen.