Natural Resources Committee on Jan. 29th, 2013

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Hsu.

We go now to Mr. Calkins to start the five-minute round. Go ahead, sir.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you very much, Mr. Chair. It's certainly a pleasure to hear from the witnesses today.

I'm going to start with Mr. Wamboldt. Can you come back to TRO? I'm very interested in this. How much time do you think is going to be saved when we go to reclamation? Because in the past with the mature fine tailings and some of the issues that have surrounded that, we were looking at a project start-up through to a final reclamation certificate being quite broad, several decades until those permits were signed off, and that's with the provincial government. What do you expect will happen in terms of that window closing or narrowing until you get that final reclamation certificate? How much do you expect that the area, once you get to the full implementation of the TRO technology...what percentage of reduction do you expect to see in tailings ponds sizes? How long until we can see those results of full implementation?

[Bradley Wamboldt]

Okay, first let me say that every situation is quite different in terms of the operation and it gets rather complicated quite quickly with respect to running mine plans on your operation. What we did with our existing operation was to compare a mine plan using the existing technology at the time, which was consolidated tailings, and compared that time between what you might call tree-to-tree. The first tree that's harvested is compared to the first tree that's planted in reclamation. That mine plan was in the neighbourhood of 30 or 40 years. That's consistent with our reclamation on pond one, if you look at 1967 to 2007. When we rerun the mine plan using both our sand dumping technology as well as the TRO technology, which work hand in glove, we anticipate that we're able to go to a tree-to-tree type of number of more like 10 years. This is where the one-third number comes from in the prepared notes.

That's the best way that I can think of to answer that question. It is very specific to various mines. Of course, when it comes to certification there are a number of issues with that as well with respect to location of the reclaimed land and the certification process itself.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I want to congratulate you and your partners in the consortium working together to do this. We had Mr. Julian just say that the number one issue facing us now is the ability to do value-added. It looks as if you've taken the environmental issue off the number one chaser for some of these organizations looking at the oil sands. Well done.

Mr. Gray, I'm going to move over to you. It's good to have a chance to speak with you. We had a chance to meet at an environment committee meeting in Edmonton several years ago. I asked you then what we could expect in the next five years—and I think that was about five years ago—and you've come up with this non-aqueous extraction and these catalysts for the upgrading process. What's the current pace to get these things into the marketplace?

[Dr. Murray R. Gray]

Our expectation, working with our partners at Imperial Oil, is that they will start construction of a major pilot plant next year for the non-aqueous extraction technology. It will take about a three-year cycle to build that, prove the technology, and see whether it's ready for large-scale commercialization. If it is, then it would take another three to four years to go through construction and commissioning. So for a major industrial technology, you're looking at somewhere between six and eight years to go from lab conception through to full operation. Our new catalysts are a little further away. They're a great curiosity on the lab bench. We're probably looking at five to eight years before we really know the potential there; it's longer term.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

That's great. Very quickly, I'm running out of time, you said that NSERC wasn't focused on the oil sands in the 1990s when it came to their granting process. Did I hear that right, that they were more interested in C0₂?

[Dr. Murray R. Gray]

You're almost right. NSERC had a range of programs that we were able to use very effectively. Their research partnerships program was a general enabling program. The centre of excellence program is not run by NSERC. It's run by a different secretariat and the centre of excellence program has never particularly focused on oil sands throughout its history. The one exception, as I mentioned, is a new centre of excellence that is now working on carbon dioxide emissions broadly, not just in the oil sands industry.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Calkins. We're out of time.

I'll go to your colleague, Mr. Anderson, for up to five minutes.

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

Thank you, Mr. Chair.

I want to thank our witnesses for being here today. I think we're getting some great information, and it has been an interesting study.

I want to come back to upgrading. Three of my colleagues have already talked about that a little bit.

Both Mr. Wamboldt and Dr. Gray, I'd like you to talk a little bit about the innovation in upgrading. You've mentioned the catalysts. What other innovations will we see in upgrading? We've heard lots about extraction, various changes in the extraction processes, but how do you see innovation impacting upgrading over the next 10 years if you say it takes eight years to bring something online? What changes do you see coming there?

I'm going to ask SDTC if they have some projects they are working on in that area as well.

Dr. Gray, maybe you want to start.

[Dr. Murray R. Gray]

The history we see in upgrading is that the technology has developed very slowly. The first plant that Suncor started in 1967 and an expansion they did in 2000 used basically the same suite of technologies. We've seen incremental improvements in upgrading, but we haven't seen major breakthroughs.

My hope personally is that some of the work we're doing in the lab and work that's going on in a number of innovative small companies and large companies will result in some very different upgrading technologies within the next decade, but it has been slow to develop. I certainly acknowledge that.

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

Are you willing to share some of the directions that might go in?

[Dr. Murray R. Gray]

What we're most excited about I think in the upgrading area is our new, very high activity catalysts. These materials are unprecedented, which actually raises a challenge in terms of getting them to commercialization. If those are successful it would dramatically cut the cost of producing high-quality synthetic crude oil from oil sands, probably by a third.

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

Mr. Wamboldt, do you have anything to add to that?

[Bradley Wamboldt]

No. I'm afraid I don't have any background in the upgrading technology.

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

That's fine.

SDTC, are you involved in this?

[Rick Whittaker]

Absolutely. I can't resist. Thank you for the question.

The areas we see or the areas we have put investments in are in situ upgrading, again focusing in on some areas where you can create a big impact. One example would be in situ upgrading to avoid having to add a whole bunch of diluent. What that does is allow you to ship your oil to multiple refineries. It creates a bigger market. That's one technology that's well along, and well developed, and coming through our process.

The other side of it is providing other ways of producing hydrogen for hydrocracking. All the work and all the investment that has gone into the hydrogen economy up until now is shifting direction for it to say how can we produce hydrogen more efficiently to apply to the oil sands. That's something we've started to do.

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

Thank you.

I want to change the direction quite a bit here and ask you another question. You talked a little bit about innovation and financing, your technology adoption, and the follow-on financing. Is that what the two programs are called?

What do you see as innovation that's going to be taking place in terms of financing over the next few years? We were talking about energy innovation. I'm interested in whether you have new products coming on market in terms of being able to finance innovation.

[Rick Whittaker]

What's going to become available? I guess one of the interesting things that both the Jenkins study and now, more recently, the aerospace study focused on was the ability to leverage more government procurement. That may actually provide a source of financing for a number of these initiatives. By being able to leverage the obligations to Canada managed through Industry Canada's IRB program, it may be an opportunity that provides additional capital from the private sector.

This isn't just theory. We have actually been implementing this now since 2009 with investments from the aerospace and defence prime contractors into our projects. We're seeing that as a supplemental source of financing for sure.

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

I'd like to switch over to Mr. Levy.

We've had some other folks in here talking about different electrical technologies, but can you talk a little bit about battery technology in terms of wind power. One of the issues you have, of course, is not having a steady supply of energy.

I'm wondering how are you dealing with this issue, and can you talk about new battery technology we might see over the next few years.

[Tom Levy]

Sure. I'd say that study after study and experience show that right now at the levels we're at in Canada we don't need storage. Our system is interconnected enough and the tools are available to manage our existing supply of variable sources without need for battery. But we certainly need to—

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

Is that accurate in rural and remote areas as well? You were talking about the Northwest Territories. Is that an—

[Tom Levy]

Those are often interconnected with diesel systems, so there is some very sophisticated switching that goes on between them. It depends on the scenario, really. If you are talking about a house or a cabin in the woods, you are going to need a diesel generator and some batteries. But in terms of large-scale commercial applications of batteries within a large transmission system—not a remote system, but ones we have in the bulk of North America—we don't need battery storage at the present time. But we certainly need to start thinking about it if we want to get to those levels of penetration of renewables that will receive 30%, 40%, 50%, 60%, or 70%. There's a lot of innovation going on right now as utilities prepare for that time when they will need it.

Storage can take on many different aspects. Batteries are one, and there are a lot of different chemicals. I'm not an expert in storage to that level of granularity. But there are other options out there. There are flywheels. There's compressed air. There's pumped hydro, and so on. Jurisdictions in Quebec that enjoy significant amounts of stored water have storage already as an inherent part of their system.

I would say that utilities in Ontario are starting to look at these areas of innovation and research as preparation for such time as they will need storage.

[The Chair, Conservative, Leon Benoit]

Thank you, and thank you, Mr. Anderson.

We go now to Mr. Nicholls, for up to five minutes.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair. Just to continue on from Mr. Julian's question to SDTC, your direct public funding is fully allocated. Is that correct? There is no more funding to be given at the present moment.

Okay, thank you. That's very interesting. It shows maybe the interest the government takes in sustainable development technology.

I was reading a speech by Roger Gibbins last night. He's the outgoing president and CEO of the Canada West Foundation. He was talking to young graduates at the University of Calgary and he says that the challenge of the past was securing a national voice for the west. He says that nowadays, this has been largely achieved. He says that today's challenge is finding a prosperous and respected place for Alberta within the global economy. And he raises some interesting questions. He asks what those challenges are. He says:

Simply put, although there is nothing simple about it, how will we take a provincial economy that is still heavily dependent on resource extraction and position it for success in the knowledge-based global economy? How will we ensure that Alberta's economy is tomorrow's economy, and not yesterday's economy? How will we ensure that Alberta will truly be “next year country"?

My colleagues from the wild rose country will know what “next year country” means. I've heard a lot of testimony here about the knowledge void as well as the commercialization gap, but I don't want to get into that.

Mr. Levy, you mentioned, for instance, that you need to have the basic information, basic indicators, in order to increase efficiency. Mr. Gray, there are two prominent researchers, Mr. Moore and Mr. Majorowicz, at your institution who are looking at geothermal and have suggested geothermal for pre-heating at in situ sites. Mr. Wamboldt, TransAlta's Poplar Creek cogeneration plant has increased efficiencies.

My question to you would be this: What's the next generation?

Generally, to all of you gentlemen, where can the federal government play a role in engaging and supporting the knowledge economy, particularly innovation in the energy sector?

It sounds to me as if just basic information is needed as a first step for us to move forward into the future, rather than continuing the regressive ways of the current government. Can you address the question, gentlemen, starting with Mr. Levy?

[Tom Levy]

I'm sorry. I'm not sure what the question was.