Thank you, Mr. Chairman, and good morning committee members and fellow witnesses.
My name is Ron Watkins and I'm the president of the Canadian Steel Producers Association, which represents virtually all of the primary steel production and major steel pipe producers in Canada. We generate some $13 billion to $14 billion in annual shipments of high-quality steel products for domestic and export markets.
Our members employ some 20,000 Canadians with steel manufacturing in all provinces from Alberta through to Quebec. Sister companies and other parts of the broader steel industry, such as steel fabricators, are active throughout Canada. Our industry is an integral part of three major supply chains, automotive, energy, and construction, which represent a very large proportion of our business collectively.
CSA welcomes the committee's inquiry into the cross-Canada benefits of developing the oil and gas industry. Previous testimony has discussed at length the oil and gas industry itself, looking at matters related to development, processing, transportation, and direct economic impact. In my remarks I aim to add another dimension to the benefits picture for the committee's consideration.
The development and distribution of oil and gas reserves is very significant to us in two basic ways. Most importantly, the energy sector has grown to become a major customer segment for our industry such that it now rivals automotive as an end-use for Canadian steel products. We estimate that each of these sectors, each of these supply chains, is approximately one-third of the demand for our products.
Also, energy enables manufacturing and it particularly enables steel making. We are major industrial users of natural gas and other energy forms, so competitive and reliable domestic energy supplies are important to the competitiveness of steel producers. I'm unaware of any other industry that is simultaneously such a major customer and supplier for the oil and gas industry.
Today I'd like to focus on our energy supply chain relationships in Canada. Our product, steel, is the most important material input to the development, processing, and distribution of oil and gas resources. There are four steel-intensive components to our supply chain relationships. Surface transportation and equipment is required to transport workers and equipment to development sites, to house the workforce, and to build physical infrastructure, including roads, bridges, and water and sewage systems. Much of this is steel based.
In the exploration and development phase, reserves are extracted either through underground drilling, or in the case of the oil sands, a combination of underground and surface extraction. Both methods require specialized advanced technology steel tubular products, equipment, and structures, all made of steel.
Once extracted, oil and gas reserves are processed in large industrial complexes, including refineries, upgraders, pressure vessels, separators, storage tanks, piping, and more. Again, it's all steel based.
Finally, transporting oil and gas products to markets in Canada and abroad relies on thousands of kilometres of steel pipeline, rail tanker cars, truck transport, and related facilities. All these modes are built with steel.
Given the focus of these hearings, I'd like to highlight how this steel demand translates into benefits across Canada when Canadian steel is used. I'll use two examples from the steel pipe and tube part of our business.
First, an underground project using the steam-assisted gravity drainage, or SAGD, technology in the oil sands requires highly engineered seamless casing and speciality connections to join each pipe section in the well. Those pipe products might be manufactured in Sault Ste. Marie and threaded in Alberta with proprietary technologies using steel originally melted in Sorel-Tracy, Quebec. Other pipe products might be made in Alberta, Ontario, or Saskatchewan using steel produced at mills in Hamilton also with iron ore from Quebec and metallurgical coal from British Columbia.
Thus, in this example, iron ore originally mined in Quebec, for example, is transformed through a series of advanced manufacturing stages combining capital investment, skilled steel workers, technology, energy, other materials and transportation services. This is a value chain that adds value and jobs in several regions and communities across the country.
A second example is EVRAZ North America, which makes large diameter pipeline and other steel products. It produces its steel in Regina by re-melting more than a million tonnes of scrap steel every year that come from recycling operations from British Columbia through to Ontario. Not only does this add economic value and create necessary and valuable products for the oil and gas industry, and over 1,000 jobs in Regina alone, but it also contributes to steel's environmental record as the most recycled product in Canada. We recycle over seven million tonnes of steel per year in Canada.
Let me add a final comment regarding our own supply chain. We asked our members to quantify their supply base, and the result was some 10,000 suppliers of goods and services, large and small, that do billions of dollars of business annually with us. So our success obviously pulls an additional supply chain element.
Mr. Chairman, in closing, the key point I want to emphasize in these opening remarks is that when oil and gas developments use Canadian steel products, it's more than an input. Our products embody cross-Canada supply chain relationships that add value and jobs in multiple phases in several regions, and for multiple uses. We see additional growth opportunity for Canadian industry to contribute to and benefit from the further development of Canada's energy resources. So we look to work with the oil and gas industry, with steel fabricators, with our steel supply chain partners, and with government policy-makers to increase our value-added contribution in the development of Canada's energy and other resources.
I'll end there. Thank you, Mr. Chairman and members of the committee.