Thank you, Mr. Chairman, for extending the invitation to us to present before this committee.
As you mentioned, my name is Richard Sendall. I am the chair of the In Situ Oil Sands Alliance, and I am also the senior vice-president of strategy and government relations at MEG Energy. I have with me Pat Nelson, our vice-chair of the In Situ Oil Sands Alliance, and also Alexandra Taylor, who is going to help us run the slide presentation.
Before I get started, I would like to recognize those still dealing with the Fort McMurray wildfire and reconstruction efforts now under way. The support from Canadians across the country has meant a great deal to the residents of the area working through this difficult time. IOSA members are assisting their local and indigenous communities, and together, we will come back stronger than ever. We will rebuild Fort McMurray.
IOSA is an alliance of Canadian oil sands developers dedicated to responsible development of our country's oil sands using in situ technologies. “In situ” means “in place”. Our members remove the oil using low-impact drilling and production processes while leaving the sand in place.
IOSA members manage the development of over 30 billion barrels of oil resources. We fund our operations and innovation through financial markets rather than from internally generated cash flows. As we are reliant on those financial markets, we represent the barometer upon which to judge investor confidence in our sector. Successful investment in innovation and the development of the oil sands are key factors in maintaining investor confidence. As we are land-locked to a single U.S. market, it remains crucial that we access higher-value markets for our products. We must reach tidewater from which we can distribute our products worldwide.
Our members are environmentally responsible, committed to Canada, cost-effective, and leaders in innovation. Our low-impact drilling technology accesses oil deep underground, leaving 85% to 90% of the land undisturbed. The water we use is sourced from deep non-potable sources, and over 90% is recycled within our operations. We are focused on meeting the greenhouse gas emissions challenge at every stage of our operations. In Situ members are Canadian companies focused on local job creation. We believe that the solid relationships we have built with our local and indigenous communities are a key component in the successful development of the resource. We are invested in Canadian resource development. Our livelihoods are based here. We are here for the long term.
In situ projects can be developed in smaller, incremental stages, relative to traditional mining operations, providing lean project execution and corporate cost structures.
Our industry is built on research, development, and commercialization of technology. IOSA members are technology companies focused on finding innovative solutions to improve efficiencies, enhance oil recovery, and reduce greenhouse gas emissions. Small to medium-sized companies, like the IOSA members, are critical to fostering further innovation for a lower-carbon future. For us to continue innovating, we need certainty that investments in technology today will be deployed and the resulting production will reach global markets.
Canada has a world-leading resource. We have the third largest oil reserve globally, 97% of which is in the oil sands. In fact, because the oil sands are open to private sector investment, they represent 50% of the world's free enterprise oil.
Canada also has world-leading environmental regulations. Of the top oil reserve holders, only Canada is covered by world-class, stringent environmental regulations and oversight. It is the only major oil-producing jurisdiction with comprehensive greenhouse gas regulations. As the world demand continues to grow, Canada’s environmental and socially responsible production will be an important source of supply; the world needs more Canadian energy.
The future of the oil sands is in situ production. Eighty per cent of the oil sands resource will be developed through advanced drilling technologies. Steam-assisted gravity drainage, or SAGD, is a primary recovery technology used for in situ production. It is a low-pressure process that extracts oil while leaving the sand in place. With SAGD, the landscape remains intact with no tailings ponds. The process uses non-drinkable water, 90% of which is recycled. SAGD innovation continues beyond initial SAGD; we now use infill wells and non-condensable gas injection to increase the efficiency of resource extraction while reducing the energy required for production.
The innovation doesn’t stop at the resource extraction stage. Our operators use the latest technologies for better environmental outcomes in water recycling, air emission controls, and heat integration within our facilities. Producers have also integrated cogeneration technology to further increase efficiencies and reduce greenhouse gas emissions.
Cogeneration produces two energy products, electricity and the steam we require for resource extraction, from one energy source: clean natural gas. Cogen is the most efficient use of a fossil fuel. Electricity from oil sands cogeneration produces one-third of the greenhouse gas emissions of Alberta’s electrical grid. Excess electricity that is not consumed on site is offered to the power grid. This electricity helps coal-fired power plants retire sooner while supporting renewables. It also lowers electricity prices for consumers. Canada is a leading jurisdiction worldwide on the use of cogeneration to curb greenhouse gas emissions.
Combining in situ production with cogeneration results in one of the greenest barrels globally. With cogeneration, emissions per barrel of production are below the range of common imports to the U.S. and eastern Canada.
IOSA members are also integrating other technologies to reduce greenhouse gas emissions, such as the application of solvents and electromagnetic heating. These technologies further reduce emissions per barrel of production. This innovation also extends to upgrading, the stage where our product is prepared for refining. MEG Energy’s HI-Q technology reduces greenhouse gas emissions by a further 20% from traditional upgrading processes. We are committed to a low-carbon future. Further innovation will be driven by small and intermediate companies like the members of IOSA.
To enable innovation our investors require confidence, and in turn require certainty that the regulatory systems will provide clarity of conditions to be met in a predictable and timely approval process. Additional costs such as taxation and environmental levies must consider our competitiveness with respect to other top oil-producing jurisdictions. The cumulative cost of these policies needs to be taken into account.
Ensuring further innovation also requires new transportation infrastructure to tidewater. The economics of both production and further innovation improve as Canada gains access to tidewater and higher global pricing. A predictable and timely regulatory process for pipelines is essential for the industry and Canada’s prosperity.
Thank you, Mr. Chairman, for the opportunity to discuss in situ technology and the future of the oil sands.