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2011/87

Notes for a Speech by

The Honourable Joe Oliver, P.C., M.P.
Minister of Natural Resources

Canada and the U.S.: Charting our Secure Energy Future

United States Energy Association

Washington, DC
October 4, 2011

Check against delivery


Thank you and good afternoon.

It’s an honour to speak to the United States Energy Association. For years, your organization has helped to broaden our perspectives and to build our understanding of important energy issues, not only here in the U.S., but also in Canada and around the world.

As Canada’s Natural Resources Minister, I oversee a portfolio that encompasses everything from forestry to earthquake preparedness, even the Atlas of Canada. Energy is a critical part of that portfolio. 

This past summer, I travelled across Canada and the United States spreading the word about the key role Canada’s immense energy resources can play in future energy security.

My message is constant and consistent wherever I go. Canada is open for investment. We are a safe, market-based, responsible and reliable supplier.

Today I want to talk to you about three topics:

  • first, how energy in Canada and the United States are interconnected;
  • second, how Canada can help secure your energy needs for the future;
  • third, why you should be doing more business with us.

The United States and Canada share the world’s longest border, a rich history, closely integrated economies and similar values that can be found from the family farm to the factory floor.

Because our determination and work ethic flows from a similar belief in values and a willingness to defend them, it’s hardly surprising that we have developed such a broad-based and close-knit relationship. Over $1.6 billion worth of goods and services cross our border each and every day. This vast amount of trade, the world’s largest trade partnership, keeps eight million Americans working.

For our part, Canada has a skilled workforce, an innovative spirit and a dynamic oil and gas sector. We are ready, willing and able to provide energy security to North America and the world.

Our trading relationship is an example to all, but the bonds that tie us together are even tighter than the numbers attest. Anywhere I travel in the U.S., but particularly in the northern tier states, I meet people everywhere who have family and friends in Canada.

Like all families, from time to time we have our differences, but for the most part our collective cultures flow from like backgrounds of self-reliance and the freedom of individuals to pursue their own dreams.

In addition to being your northern neighbour, Canada has been your best friend and staunchest ally for generations. In 1940 Prime Minister Mackenzie King and President Franklin Delano Roosevelt met on railway car near Ogdensburg, New York, and agreed to create the Permanent Joint Board on Defence, one of the first significant continental initiatives between our two nations. When the Distant Early Warning radar line was built in the 1950s, your technology in our high Arctic kept all of us safe. Canadian and American military personnel have for decades jointly commanded NORAD, based in Colorado’s Cheyenne Mountain. The North American Free Trade Agreement, which came into force in 1994, not only covered a wide range of goods and services but also guaranteed you secure access to Canadian energy.

On Feb 4, Prime Minister Harper and President Obama released a Declaration on Perimeter Security and Economic Competitiveness, which focused on four areas of cooperation: addressing threats early; facilitating economic growth and jobs; integrating cross border law enforcement; and improving critical infrastructure and cyber-security.

This is just one more instrument among the many in the orchestra in which our countries participate together.

Today, Canada and the United States have the closest energy relationship of any two countries in the world. We operate within a common energy market, a market that is reinforced by a seamless network of pipelines serving businesses and communities on both sides of the border.

Most important, the overwhelming majority of our citizens want our two countries to work closely together on energy issues. A poll conducted in August by Nanos Research and the State University of New York at Buffalo found that 80%of Canadians and 90% of Americans see the importance of developing an integrated energy policy.

In Canada, as is the case in the United States, energy policy is rooted in the principles of the open market and shaped by a commitment to develop our energy resources in an environmentally and socially responsible way.

We believe that the free market is the most efficient and cost-effective means to ensure the proper allocation of resources for the development and supply of energy.

How different the situation is elsewhere. About 80% of the world’s oil reserves are controlled either by national governments or state oil companies. The remainder of the world’s oil reserves is held in countries that are open, have a free market and respect the rule of law.

Approximately 60% of that oil comes from Canada’s oil sands. And we are not members of OPEC, the Organization of the Petroleum Exporting Countries.

Canada has been blessed with an abundance of energy resources. Our nation has the world’s second largest deposits of uranium; we rank third in terms of proven oil reserves right after Saudi Arabia and Venezuela; and we are the third-largest producer of natural gas and hydroelectric power.

More than 97% of our 174 billion barrels of reserves are found in the oil sands of Western Canada. As technology evolves, those reserves could grow to as much as 315 billion barrels.

Here’s the best news of all: we’re right next door. And  our oil reserves are  eight times larger than those of the U.S. . Given that the United States has less than 2% of the world’s oil reserves, it then explains why, you are very reliant on imported oil, nearly 12 million barrels a day.

Given the longstanding strength of the Canada-U.S. relationship and the richness of our nation’s energy endowment, it is not surprising that Canada is the number one supplier of all forms of energy to the United States.

More than 20% of your oil imports come from Canada. You import more oil every day from Canada than you do from Mexico and Saudi Arabia combined, your two next largest oil suppliers. Canadian hydroelectric power is crucial to the northeastern United States. We also supply 22% of the uranium for your nuclear power stations.

While most of my focus today is on the oil sands, you should also know that Canada is the world’s third-largest producer of natural gas – 14.2 billion cubic feet per day in 2010. We are the fourth-largest exporter of natural gas, nearly nine billion cubic feet per day last year, worth $15.6 billion. Among those exports Canada supplies 14% of the U.S. natural gas market.

Let the word go out; we’d be happy to sell you more!

So far, I have been talking about where we’ve been and what we’ve done. But what comes next? Well, as George Allen said when he came to Washington to coach the Redskins, “The future is now.” In order for Canada to continue to deliver reliable energy in the growing amounts demanded, we need major investments in infrastructure.

Which brings me to the Keystone XL pipeline, a private sector proposal that has the full support of the Canadian Government. As planned, the $7 billion Keystone pipeline will stretch nearly 2,000 miles from Alberta to the Gulf of Mexico and supply bitumen from our oil sands to refineries in Texas.

Numerous regulatory bodies at both the state and the federal level have already reviewed Keystone. Recently, the U.S. State Department released its final and very positive Environmental Impact Statement, a key step in the approval process.

The Canadian Government is committed to the toughest possible standards for projects such as Keystone. So we were pleased when the Environmental Impact Statement declared that Keystone, and I quote: “would have a degree of safety greater than any typically constructed domestic pipeline system.” I think that phrase bears repeating: “A degree of safety greater than any typically constructed domestic pipeline system.”

Keystone has triggered protests on Capitol Hill and Parliament Hill. Celebrities are making headlines and getting arrested. They see energy’s integral part in the economy as somehow being a problem. Some people would rather complain than seek or support solutions.

To my mind, Keystone is not a problem, it’s a solution … and it’s the right solution. Let me set out three reasons why the United States should approve Keystone and embrace this transportation of tomorrow.

First, national security. This pipeline will add half a million barrels a day of commercial capacity to the amount of Western Canadian crude that Canada can ship south, thereby replacing some of what comes from far less reliable sources.

This very point, a safer and more secure supply from friendly hands, was driven home recently when … due to supply disruptions in the Middle East … the International Energy Agency released 60 million barrels of strategic reserves, with 30 million of those barrels coming from the U.S.

If approved, the Keystone pipeline would deliver, every 60 days, 30 million barrels of oil to the U.S. That’s the exact amount of the recent one-time release from the U.S. strategic petroleum reserve.

To be sure, there could come a time when renewable energy will replace our reliance on fossil fuels. But until that day arrives we need to maintain and expand our exploration and exploitation of oil and gas.

The best source for that is Canada’s oil sands. They represent the largest industrial development project in the world, with approximately $137 billion of investment to date. Those oil sands are only 600 miles from the U.S.–Canada border, about the same distance as from Washington, D.C. to Atlanta, Georgia.

The second reason Keystone should go ahead is jobs. According to the Canadian Energy Research Institute, Keystone will create 20,000 construction jobs in the U.S. Over the next 25 years, oil sands development will support, on average, an estimated 93,000 jobs per year in the United States. If the Keystone pipeline gets approved, employment is forecast to grow to 160,000 U.S. jobs per year. 

During that same 25-year period, oil sands development will pump an average of $8.4 billion per year into the U.S. economy. If Keystone is approved, you can expect that amount to grow to $14.4 billion per year.

This leads me to the third reason Keystone should have everyone’s support … the critical need for economic growth. Keystone is expected to add about $20 billion to the U.S. economy during construction and then provide an average increase in gross domestic product of $6 billion per year over the next 25 years.

In addition to the future economic impact of Keystone, it’s important to remember the Canadian oil sands already produce a powerful and positive economic ripple effect throughout Canada and the U.S.

The stimulus effects of that spending are well and widely distributed. A study by the Canadian Association of Petroleum Producers found that more than one thousand American companies are already part of the oil sands supply chain. These firms sell everything from tires and valves to software and corrosion monitoring systems. Their number is expected to grow exponentially over time.

You’ll also be interested to know that Keystone has garnered support from a wide range of groups all the way from numerous unions to the U.S. Chamber of Commerce.

In response to those who would look elsewhere for energy, here’s what Energy Secretary Steven Chu said last month: “Having Canada as a supplier for our oil is much more comforting than to have other countries supply our oil.”

With the International Energy Agency forecasting that world energy demand will grow  by 36% in the next 25 years, the oil sands are poised to play an increasingly important role in terms of energy security, even under the most stringent environmental conditions.

Let me take a moment to talk about the environment. Protection of the environment through socially responsible development is a fundamental principle that guides the policy of the Canadian Government.

Oil sands development is subject to rigorous regulatory review and prudent monitoring. The industry is increasingly employing drilled, or in situ, projects – where no tailings ponds are created.

In addition, companies are required to remediate and reclaim 100% of affected land. I recently visited a forest north of Fort McMurray, Alberta, that had been remediated. You would never know it had once been a mining site. There is also a former Syncrude site that is now the bucolic home to 300 bison grazing on restored land.

At the same time, we should keep the scope and impact of the Canadian oil sands in perspective. The total area that has been affected by surface mining is only one-tenth of 1% of Canada’s total boreal forest.

You might also be interested to know that when it comes to greenhouse gas emissions, the oil sands account for the same low number, about one-tenth of 1% of global greenhouse gas emissions. By comparison, electricity plants powered by coal in the U.S. generate almost forty times more greenhouse gas emissions (GHG) than Canada’s oil sands. The state of Wisconsin alone, with its coal-fired electricity plants, equals the entire GHG emissions of the oil sands.

Meanwhile, we’re committed to reducing total GHG emissions by some 17% below 2005 levels by 2020, the same target as the U.S.

Action on that front comes in many forms. Two years ago, Prime Minister Harper and President Obama launched the Canada-U.S. Clean Energy Dialogue. Through this initiative, both of our nations are committed to collaboration on the development of clean energy technologies.

For example, Canada, the United States and Mexico are developing an atlas of major carbon dioxide sources, potential CO2 storage reservoirs, and estimates of storage capacity. Canada and the U.S. are also working on next generation carbon capture and storage technologies that will be vital to making these technologies more efficient and cost-effective over the medium to long term.

In conclusion, may I say again that Canada is a safe, responsible and reliable supplier of energy. Our interconnected energy relationship is already the tireless engine that powers the economies of Canada and the United States. The economic and strategic importance of the oil sands cannot be underestimated.

In the years ahead, I believe we can create even more jobs, propel additional economic growth and further strengthen energy security – on both sides of the border. It was the Scottish writer Thomas Carlyle who said, “Our main business is not to see what lies dimly at a distance, but to do what lies clearly at hand.”

What lies clearly at hand are two undeniable facts about our energy relationship:
First, the United States will continue to need oil to fuel its economy. Second, Canada is the nation that is best positioned to supply your needs in a safe, secure and reliable way … and we are eager to do so.

The choice couldn’t be more clear.

You can continue to import oil from far-off sources or you can expand imports from your neighbor, friend and ally.

The abundant reserves in Canada’s oil sands are North America’s best energy investment.

Now, more than ever, Canada can be your essential partner in energy security.
We believe Keystone XL would be integral to this partnership.

Thank you for your kind attention.