Good morning, Mr. Chairman and members of the committee.
My name is Bob Bleaney. I am the vice-president of external relations of the Canadian Association of Petroleum Producers, or CAPP, here in Ottawa. We represent Canada’s upstream oil and gas sector, and our members find and develop about 90% of Canada’s petroleum resources. Our industry is the largest private sector investor in Canada, investing over $50 billion each year and employing well over half a million Canadians.
With me today by video conference is Greg Stringham, CAPP's vice president of markets and oil sands, as well as Dan Wicklum, the CEO of COSIA. CAPP and COSIA are co-sharing this opportunity to present to you today.
It is important to develop and grow Canada’s resource sector for the benefit of all Canadians, providing jobs, economic growth, and revenue to Canadian governments. Canada is advantaged by having a vast endowment of petroleum resources, ranking number three in world oil reserves with 174 billion barrels of oil, and number three in natural gas production. With this endowment, technology development and innovation remain fundamental to our industry’s future.
Canada’s oil and gas resources are increasingly unconventional in nature and more difficult to develop and produce. Canadian costs are high by international standards, and we are challenged by competitiveness issues such as scale, geographic location, and the size of market. Competitiveness is key to attracting the investment capital required to continue to grow and access new international market opportunities, and we need to continuously improve on environmental and social performance. Technology and innovation must largely drive this improvement and are key to informing and grounding public policy and regulation as it applies to our sector.
Some key barriers we see are as follows. Most of our industry’s R and D takes place in large industrial environments that are not dependent upon direct federal funding. Innovation in our industry is largely in the form of improvements to existing technology, often developed through field testing to prove out research hypotheses. Improvements in technology can deliver very significant benefits in large-scale developments, but it can be challenging to fund the pilot project work and the field testing that is critical to evaluate such technology.
The most important vehicle to support this R and D has been the federal scientific research and experimental development program, or SR and ED. The recent changes to SR and ED, removing the eligibility of capital expenditures and reducing the general rates and allowances, will serve to erode capacity for innovation. Instead we should be increasing accessibility and eligibility in order to enhance the pace of innovation deployment and commercialization.
There is a need for greater collaboration and networking on the technology development side as well, both within our industry and with stakeholders, driven by the competitive nature of industry and the fragmentation of effort among industry, academia, governments, and research institutions. We are making significant improvements in some areas, as you’ll hear from my COSIA colleague, but we'll need to focus more broadly on the more specific innovation needs across Canada’s upstream petroleum sector.
Notwithstanding these challenges, our industry has delivered considerable innovation success. The oil sands industry has continuously advanced technology to improve access to Canada’s immense oil resources and to improve our production, energy efficiency, and environmental performance. Horizontal drilling and hydraulic fracturing technology to access unconventional gas, and more recently, tight oil resources, are also game changers. Our industry has been successful in applying and enhancing this breakthrough technology in Canadian applications.
To conclude, we must continue to grow Canada’s resource sector for the benefit of all Canadians, and as an industry we have made significant steps forward and are committed to innovation and performance improvement in order to ensure our global competitiveness, our access to international markets and investment capital, and our social licence to operate. We should focus support for innovation and technology development in areas where we can best leverage Canada’s competitive advantage: its vast endowment of oil and gas resources. It's through greater focus, collaboration, and more accessible SR and ED support that Canada can best lever this advantage.
I’d now like to turn the presentation over to COSIA.