Natural Resources Committee on Nov. 20th, 2012

[Dr. Tim Weis]

I'm not sure I can fairly answer the first question. I think CAPP might be in a better position to comment on some of the technologies that might have been exported. I want to say that important gains have been made, including in oil sands development, but as well in conventional oil and gas development, particularly on the energy efficiency side of things. We sometimes overlook those things and we need to give credit where credit is due.

One key area in which there has been some investment from oil and gas development but that I think we probably could push further forward is geothermal energy development. We're very good at drilling in Canada. This is an area using expertise that we've highly developed, particularly in western Canada. It's an important technology that is going to be an important part of the renewable energy mix going forward and it could be an area for Canada to be a leader in, and an innovator. Some of the early investments we've seen from the oil and gas industry with respect to geothermal have started along that path, but we really haven't seen major, successful geothermal projects yet, and I think that's an area we could be focusing on.

Perhaps I can defer to CAPP to comment on the question about technology that has been developed in Canada and ultimately exported.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Weis.

I think we'll go first to Mr. Salkeld, and then if there is time we'll go to CAPP for further response to that.

Go ahead, please, Mr. Salkeld.

[Mark Salkeld]

Thank you very much.

To respond to your question with respect to $12.8 billion being generated in revenue, based on Canadian companies, Canada has a unique environment in which there is a high level of collaboration between the producers, the CAPP member companies and PSAC member companies. This collaboration, as well as the formations we work in and the use of our resources, gives them a good opportunity to develop leading-edge technologies, which are sought after.

There isn't an oil patch in the world in which you won't find a Canadian worker who is travelling back and forth and learning from Canadian technologies as well as learning from these other oil fields, and then coming back here and experimenting and testing, as I said. Then we develop it, and then we export it.

It's not just the directional drilling equipment itself or our use of saline waters in our production processes, but it's these kinds of technologies that we can export and that are sought after. It's Canadians who are going along with that technology who are teaching it.

I've travelled around the world; I've worked in a number of oil fields. Canadians are highly respected around the world for their knowledge and safety. This all comes back to us in questions and foreign investment with respect to what we can deliver.

It's just a unique environment: the formations, a high level of collaboration, and how we manage our resources in the course of our jobs.

[The Chair, Conservative, Leon Benoit]

Thank you for your responses, and thank you, Ms. Grewal, for your questions.

Now, we have Mr. Bevington. You have up to five minutes, please.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chair.

I want to touch briefly with Mr. Weis on the question of those 300 communities in northern Canada.

Would you say that it's safe to say of those 300 communities—many of which are aboriginal communities on reserves, many within the three northern territories—that a very high percentage of the cost of operation of those communities is addressed through transfers from the federal government?

I'm trying to make a point here that there's a net benefit gain to the federal government in improving the energy efficiency of those communities.

[The Chair, Conservative, Leon Benoit]

Mr. Weis, go ahead.

[Dr. Tim Weis]

Absolutely. Particularly the cost of diesel fuel ultimately is in federal dollars, and as the member eloquently put it about improving efficiency, this is obviously another important area in these communities.

However, on the renewable energy side as well, the policy that we've put forward would, we think, ultimately save the federal government about twice as much as it would cost, because it's ultimately the aboriginal and northern affairs department that ends up being responsible for the diesel costs. At the end of the day I think it's a win-win situation, and in some ways it's frustrating that we haven't moved faster in this area.

[Dennis Bevington, NDP, Western Arctic, NT]

Now I'm just going to move to—

Actually, I hope Mr. Bleaney can answer some of these questions, because I was very interested in the upstream work that's being done on energy efficiency; it was a fabulous presentation.

However, I'm really interested in upgraders. What percentage of the greenhouse gas emissions in the average barrel of synthetic oil comes from the upgrading process?

[Bob Bleaney]

I'm afraid I'm not up on the specifics of that particular background, so again I wonder whether Mr.—

[Dennis Bevington, NDP, Western Arctic, NT]

Could you give that information to the committee, then?

[Bob Bleaney]

I was just going to ask whether Mr. Stringham might be aware of it.

[The Chair, Conservative, Leon Benoit]

Mr. Stringham, can you answer that question?

[Greg Stringham]

It depends on the source of the upgrading technology, but we certainly can pull out for you the scientific studies that have been done most recently by Jacobs Consultancy, which have that information.

[Dennis Bevington, NDP, Western Arctic, NT]

Can you give us just an idea?

[Greg Stringham]

Of the greenhouse gas emissions for the full wells-to-wheels, as you know, about 70% to 80% actually comes out of the tailpipe of the vehicle that is driving it. Of the remaining 20% to 30%—

[Dennis Bevington, NDP, Western Arctic, NT]

But on the production side....?

[Greg Stringham]

On the production side, the remaining 20% to 30% depends on the nature of the upgrader. If it's integrated with a refinery, then actually there's no loss in reheating of the fuel, so it's a smaller percentage, but I don't have the exact number for you. I would guess it's probably about a third, but that's just a guess. I can get you the scientific information.

[Dennis Bevington, NDP, Western Arctic, NT]

Are the companies moving more towards hydrogen addition or to coking these days in the upgrading?

[Greg Stringham]

In Canada right now, we upgrade about 60% of the bitumen into light oil. In that 60% right now, just about half and half are using a combination of both coking on one side and hydrogen addition on the other side. In fact, some facilities use both. Remember, the hydrogen addition takes the hydrogen out of the natural gas and has some CO₂ impacts as well.

[Dennis Bevington, NDP, Western Arctic, NT]

Do you think that our technology in Canada for upgrading is better than the technology existing on the Gulf Coast of Texas in those upgraders that were used for Venezuelan heavy oil?

[Greg Stringham]

The technology that's being used is pretty well generally used around the world and is very similar. There have been modifications to deal with what's going on with the direct oil sands feed, but the technologies themselves are quite similar. It depends upon when they were built. As you know, the newer the technology, the newer the information that's put into it, and it's the higher quality of technology that advances over time.

[Dennis Bevington, NDP, Western Arctic, NT]

I can see this in the case of the machinery. Isn't it also a result of the different kinds of bitumen or heavy oil that needs to be upgraded? Are these plants capable of handling these different streams without change?

I'm trying to find out whether there are efficiency improvements that can be made to upgrading as well in Canada so that we can be more competitive in expanding that industry. The upgrading has been losing ground in Canada over the last five years.

[Greg Stringham]

As we look at the opportunities for adding additional upgrading capacity, there are several of them that are planned, as you know. The North West upgrader is one. It was just announced in the last couple of weeks that it is moving ahead, and there are also expansions to existing facilities on the production side that have upgraders associated with them.

It is moving ahead, then, but it requires the synergy that we have seen happen down on the Gulf Coast. The efficiency here, I would say, is a combination of that upgrader with the upstream segment so that steam and electricity can be shared across or with the downstream refining segment, as we have in Fort Saskatchewan, or with the North West upgrader, whereby you can combine an upgrader with a refinery and then you're sharing the heat. You're not having the heat losses. You're sharing the utilities, and that's really where the efficiency gains can allow us to be competitive.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Bevington.

We will go now to Mr. Anderson, followed by Mr. Allen.

Go ahead, Mr. Anderson.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I think we'll share.

Gentlemen, this is for CAPP and PSAC, I guess. I'd like someone to address this.

We haven't talked much today about hydraulic fracking. There is a lot of concern out there.There seems to be a lot of misinformation intended to scare people about it. I wonder if you can tell us first of all if it is safe, and then give us a little bit of history. Where does it come from? Where it is today, and where do you see it going in the future?

This information is going into a report that we'll make, so I'm interested in your perspective on that.