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2011/02

Notes for a Speech by

The Honourable Christian Paradis, P.C., M.P.
Minister of Natural Resources

8th Canadian Oil Sands Summit

February 2, 2011
Calgary AB

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Introduction

Thank you very much for the opportunity to speak today.

Let me start by saying congratulations.

In the space of a little more than 40 years, the oil sands have become an important part of Canada's economy.

Canadian resources such as the oil sands will play a crucial role in maintaining North American and global energy security for some time.

You — the people in this room, and many others like you — are to be commended for your work in this field.

You had the vision, the innovative ideas and the spirit to make the oil sands into the tremendous generator of energy and of the jobs and prosperity that we enjoy today and will enjoy for many years to come.

Economic impact of the oil sands

The economic events of the past two years have underlined the importance of this industry.

The impact of the worst downturn since the Great Depression is still being felt, very deeply, in many countries.

Here in Canada, many people have felt the impact in a very personal way.

And today — though we must still be cautious as our economy is fragile — we can say with confidence that Canada is a leader in terms of the economic recovery. 

There are a number of reasons for that.

First, Canada was in a strong position when our economy slipped into a recession.

Thanks to prudent fiscal management in the past, our government was able to respond with a timely and targeted Economic Action Plan for Canada.

Our Economic Action Plan investments, together with those of our partners, continue to keep Canadians working. We are protecting Canadian families and businesses from the worst impacts, and we are strengthening the foundation for greater prosperity in the future.

And we must recognize that the economic activity generated by the oil sands also played a key part in maintaining the stability of Canada's economy during a very difficult time.

The positive impact of the oil sands in Canada — and North America, for that matter — is massive in both dollars and jobs.

In 2009, Canada exported $43 billion in crude oil — more than 10 percent of our total exports. Half of Canada's crude oil production comes from the oil sands, and that share will increase as conventional oil production declines.

Right now, the Canadian Energy Research Institute (CERI) estimates that the oil sands contribute to the jobs of some 144,000 people in Canada.

The benefits go to virtually every sector of our economy — equipment manufacturing, construction, engineering, the financial sector — everywhere.  

Projections for the next 25 years indicate the oil sands will contribute up to $1.7 trillion to Canada’s GDP and create another 457,000 jobs in Canada.

Future for oil

Those are very large benefits to Canada and Canadians, and CERI can make those projections because we know that demand for oil will continue.

There are growing economies to fuel — not just our own, but the rapid economic expansion we see in China, in India and in developing regions around the world.

The International Energy Agency (IEA) anticipates that, by 2035, global energy demand could be 36 percent higher than it was in 2008 in a scenario where countries follow through on their commitments to reduce greenhouse gas emissions and phase out fossil energy subsidies. In this scenario, China alone accounts for more than a third of the increase.  

In fact, in 2009, China passed the United States and is now the world's number-one energy user. 

And this is the reality we face. We all look forward to a lower-carbon future, but for many years to come, the world will rely on oil to meet a large share of its energy needs.

Even though the world supply of renewable energy is expected to triple over the next 25 years — and even with the most stringent policies to curb global GHG emissions — the IEA projects that oil will remain the dominant source of energy for years to come.

So the world will need to find significant new sources of oil. The IEA anticipates that so-called unconventional sources — like our oil sands — will be an increasingly important part of the global supply and an even-greater contributor to global energy security. 

To put it as simply as possible, it will be years — many years — before we are able to replace the energy now provided by oil and other fossil fuels.

Challenges

In the meantime, as we develop our cleaner-energy resources, we must become ever-cleaner producers and consumers of our fossil fuel resources.

We are all aware that oil sands development presents some challenges in this regard. The environmental impacts are a legitimate and serious concern.

GHG emissions are one of these concerns. While the oil sands account for only five percent of total Canadian GHG emissions, government and industry can work together to reduce those emissions further still.

The development of carbon capture and storage technology is one part of a broad suite of measures that the Government of Canada is implementing to reduce GHG emissions and limit the environmental footprint of the oil sands.

An example of these measures is the $120 million that we are investing through the Clean Energy Fund to demonstrate CCS at Shell Canada's Scotford oil sands upgrader.

Addressing these concerns is a matter of environmental responsibility. It is also a matter of assuring the long-term prosperity and brand of this industry and this country, and the contributions both can make to long-term global energy security.

Progress

We are well aware that some of the criticism directed at the industry is founded on mistaken facts or analyses.

In fact, the criticism often ignores the very real progress that is being made in addressing the environmental challenges. But let me stress that this does not make the concerns over emissions, air quality, water use, land use and tailings any less valid.

We know from experience that developing the technologies that will make a difference is difficult, complex work. It takes vision, investment and time — and again, I believe the industry should be commended for its efforts. However, these efforts must be sustained.

I'm very proud of the role our government is playing in these efforts.

Our CanmetENERGY laboratory in Devon is leading a number of research projects to find ways to reduce water consumption; to reduce the accumulation of tailings ponds; and to speed up the reclamation of existing ponds. 

Reducing water use would lead to a reduction in the volume of tailings produced. In turn, that would lead to reduced land use. Recovering more water from tailings ponds would also mean less water from other sources, such as the Athabasca River. 

The frothing technology first developed at Natural Resources Canada is now the basis for a billion-dollar Shell Canada development. This process uses less water and less energy. Shell estimates the technology will cut energy consumption by 10 percent, with a similar reduction in GHG emissions.

NRCan scientists in Devon are also working with oil sands developers to test new tailings technologies aimed at producing consolidated tailings, or dry, stackable tailings, to support faster and more effective land reclamation.

More and more water is being recycled, and we are seeing some very promising work in reducing the oil-to-steam ratio at in-situ operations.

A number of companies — Suncor, Imperial Oil and Cenovus to name a few — are testing solvents as a way to mobilize the bitumen.

These technologies offer a win-win situation — less steam means less water is consumed and fewer GHGs are generated, while potentially increasing bitumen recovery and lowering costs.

Petrobank Energy and Resources has been piloting the combustion of bitumen in the ground — this, too, could reduce air emissions and water use, with the added benefit of a bitumen that comes out already partly upgraded.

We're also seeing pilot projects for other promising technologies for managing tailings. For example, Canadian Natural Resources Limited is experimenting with CO2; Syncrude is working on processes to extract water from mature fine tailings; and Suncor is testing new methods for enhanced drying.

Researchers in my department, in provincial governments, in universities, in companies throughout the industry — we're all working hard to develop and bring these and other technologies forward.

And I'm not sure all Canadians fully appreciate the significance of the announcement in December that seven major oil sands players have agreed to work together on tailings.

These are companies that compete with one another but collaborate when it comes to making environmental progress.

Anytime competitors agree to share technical and research findings with one another; when they agree to set aside the monetary and intellectual property barriers that stand in the way of better environmental technologies — well, that's a significant development, and worth noting.

It shows me and it shows Canadians that you take your responsibility to the environment seriously.

I would like to commend the Government of Alberta for its recently announced plan to establish a modern, efficient regulatory system that will maintain the province’s strong commitment to environmental management.

At the federal level, we have taken similar steps to advance a balanced, system-wide approach to regulatory reform through the Major Projects Management Office. These efforts will ensure we are well positioned for long-term growth and job creation, while strengthening environmental protection.

Telling the story

We do have to recognize that minimizing and mitigating the environmental impacts of the oil sands is not something that we're going to achieve overnight — but we must and we will.

That's a very important message — a message I deliver everywhere I go.

In the past year, I've been to China. I've been to Japan. I've been to the United States. At the World Energy Congress in Montreal last fall, I met with my counterparts from a number of countries. I continue to talk with Canadians right across the country.

And no matter where I am, I tell it like it is.

We know we have challenges, and I'm frank about that. I am just as frank when I talk about the efforts and the progress being made to address these challenges.

I make sure that everyone I meet knows that together, government and industry are investing literally billions of dollars to overcome those challenges. I make sure everyone knows that we are making progress, in everything from reducing emissions to monitoring water quality.

And I also make sure they hear that the oil sands are not just another oil reserve.

The oil sands are potentially the biggest oil reserve in the world — and its economic and strategic importance should not be underestimated.

Conclusion

It’s my job to ensure Canada and Canadians get the maximum benefit from our natural resources.

But it is also my job to ensure our resources are developed as sustainably and responsibly as possible.

That is why the message I have for you today is one of congratulations for your success and strong encouragement to go further in the lessening and mitigating environmental impacts of this industry.

The growing criticism of the oil sands is a concern to the industry, our economy and our energy security.

We are upfront about the challenges we face, and we are actively trying to find solutions.

We are making a significant contribution to global energy security and economic stability.

And it is up to all of us to continue to prove by our actions that our contribution is not only significant, but responsible as well — that we can, and we will, balance prosperity and stewardship.

Thank you again for the opportunity to speak today, and my best wishes for a successful conference.