Notes for a Keynote Address
The Honourable Joe Oliver, P.C., M.P.
Minister of Natural Resources
2012 Energy and Mines Ministers Conference
Canada's Natural Resources - Canada's Opportunity
September 10, 2012
Thanks very much for the kind introduction, Wes (The Honourable Wes Sheridan, Prince Edward Island’s Minister of Finance, Energy and Municipal Affairs).
I don't need to offer any more words of official welcome, but I do want to reiterate my thanks to Wes for being our host — and what a superb host he is — by making sure we all have a clear understanding of what is meant by "island hospitality." We appreciate the opportunity to get to know this beautiful part of Canada a little better.
Already, this conference is off to a great start. This morning there were fruitful and interesting discussions on the future of the energy and mining sectors, which I know we will build on over the next two days.
The opportunity to gather as ministers responsible for energy and mines from every province and territory reflects an important fact about our nation. I say it because natural resources form a thread woven through every part of our economy and society.
They can be traced to the very origins of Canada, of how and even why our nation was established. No other sector has done more to define Canada, to ourselves and the world.
There is not a region or community in this country untouched by the wealth generated by our natural resources.
Here in Prince Edward Island, we see the growing importance of energy innovation.
We see the role of the offshore in energizing the economies of Newfoundland and Labrador and Nova Scotia. In New Brunswick, a $1.6-billion investment by Potash Corporation will more than double production at its operations outside Sussex.1
The exploration and development of Quebec’s northern region, Ontario’s Sudbury Basin and Manitoba’s far north will greatly help unleash the resource potential.
Saskatchewan’s potash reserves are bringing great wealth to the province and Alberta continues to expand its oil sands operations.
In British Columbia, there is enough shale gas in the northeastern part of the province to feed export markets for decades to come. 2
Of course, one of the most exciting places in Canada is the North, which has enormous natural resource potential — a reality underscored by the Prime Minister last month during his annual trip.
As a cornerstone of our economy that creates jobs and growth for all Canadians, the resource sectors underpin a standard of living and quality of life envied around the world.
In 2011, natural resources accounted for 15% of our nominal gross domestic product, or GDP.
Add in the impact on other industries — construction, manufacturing, business and professional services, and the many others that provide goods and services to the sector — and natural resources account for close to 20% of the nominal GDP. Nearly a fifth of our entire economy.
Now as you know, there are a few naysayers out there. They claim the strength of the natural resource sectors is driving up our dollar and hurting manufacturers.
The so-called “Dutch Disease” is contradicted by economic history and we don’t buy it. And neither does Mark Carney, the Governor of the Bank of Canada, who recently said in a speech, I quote: "The logic of Dutch Disease requires that we undo our successes in order to depreciate our currency. Taken to its natural conclusion, this logic dictates that we shut down the oil sands, abandon our resource wealth, have high and variable inflation, run large fiscal deficits and diminish our financial sector." End of quote.
Clearly, it makes no sense to apply a harmful prescription derived from a faulty diagnosis. The sensible course of action is to discredit the naysayers and get on with the business of ensuring we realize the full potential of Canada's vast wealth of natural resources.
Canada’s energy, minerals and metals sectors account for 50% of Canadian exports, representing $104 billion in capital investments and more than half of the carloads and international cargo handled at Canadian ports.
In Canada, natural resources mean jobs. Close to 800,000 people are employed directly in the resource sectors and almost the same number again indirectly. Altogether, close to 1.6 million jobs are linked to natural resources. Jobs in every province, every region of Canada.
Just two weeks ago, I toured the Aecon plant in the city of Cambridge, in southern Ontario. Aecon fabricates and assembles piping modules for an oil sands project in Alberta and employs 550 people in well-paying, high-quality skilled jobs. The company also has three facilities making those products for the oil sands in Nova Scotia, where 200 Atlantic Canadians are working good jobs building products for Alberta’s oil sands.
This is just one example of what I mean when I say our abundant natural resources benefit all Canadians from coast to coast to coast.
As we all know, revenues from the resource sectors underpin the fiscal plans of our governments.
The energy, mining and forestry industries provide over $30 billion a year in revenue to governments — money that supports critical social programs like health, education and public pensions. That $30 billion is equal to half of all spending by governments on hospitals in Canada last year.
Our natural resource wealth is quite simply a defining feature of Canada — part of our national DNA and a legacy for all Canadians.
Today, our responsibility as stewards of this legacy has never been greater.
As crucial as this legacy has been, we are at the brink of an opportunity unparalleled in our nation's history — an opportunity to secure and grow our place as a global leader, creating jobs and wealth for all Canadians.
At this moment, there are well over 600 major resource projects underway or planned across Canada — projects that represent potential investment of close to $650 billion over the next 10 years.
Imagine the impact this will have in communities large and small. It promises jobs, opportunity and better lives for Aboriginal Canadians, for young people looking to start a career in the skilled trades, for small businesses that support the development of our natural resource sectors.
It is that potential which makes our gathering this year especially significant.
Fundamental shifts are happening in the global economy, with emerging economies fuelling demand for our resources — from energy to metals to fertilizer.
The Asia–Pacific region is home to the world’s fastest-growing economies. China and India in particular will see rapid and significant middle-class growth, demanding more goods, products, infrastructure and automobiles that all require minerals and metals.
Fortunately, we are well positioned to take advantage of this global opportunity. As one of the leading mining nations in the world, we produce more than 60 minerals and metals and rank at the top of the global production of many key commodities such as potash, uranium, nickel, zinc and gold.
Energy is another immense opportunity.
In forecast after forecast, the International Energy Agency has underscored that oil and gas will continue to dominate the world's energy markets for decades to come, with China the world’s biggest consumer.
Canada has ample energy resources to feed those markets. Our proven oil reserves are the third-largest in the world — about 174 billion barrels in 2011. Technology could allow the recovery of billions more.
The United States will continue to be our biggest and best energy customer but not our only customer. But after 35 years of decline, U.S. oil production is now on the rise — and its dependence on imported oil is waning.
Not only is there less U.S. appetite for our oil, but we are selling it at a much lower price than we would get overseas.
The natural gas scenario is similar, in that U.S. production is increasing thanks to shale gas, so American reliance on Canadian imports will continue to decline.
China, meanwhile, represents 29% of global energy consumption and is expected to more than double its natural gas consumption within the next five years, with India not far behind. 3
So with our traditional market stagnating or shrinking, and an inability to get top dollar for our product, market diversification is not just an opportunity — it is a necessity.
Within our own borders, energy security is a continuing preoccupation.
While proposals for pipelines running west and south have attracted a great deal of attention, the industry is also exploring moving western Canadian crude to Quebec and New Brunswick for refining and export.
The promise of jobs and economic growth matters greatly to all Canadians.
When we gathered in Kananaskis a year ago, we committed to turn this promise into reality. We recognized that only by working together can we achieve the shared objective of strong natural resource sectors that benefit all regions and all Canadians. Leveraging our resource endowment is a collective responsibility calling for a partnership that is respectful of jurisdiction, mindful of the benefits to our nation.
And such a partnership involves us all: federal, provincial and territorial governments, First Nations, industry and academic and research institutions.
Responsible Resource Development: pressing Canada's advantage
As we move forward from a position of strength, Canada has a great deal to offer beyond its natural wealth.
Our nation weathered the global downturn far better than most and our economy continues to be among the most stable in the world. Forbes magazine calls Canada the best place in the world to do business.
But we can and must become stronger. Our competitors are not standing still. Other countries like Australia have already jumped on the chance to secure long-term resource supply contracts.
Our plan for Responsible Resource Development recognizes that Canada must adapt if we are to take advantage of the new global reality.
Simply put, either we have our own regulatory house in order, or we do not compete successfully. If we do not rise to this challenge, all the potential — the hundreds-of-billions in investment and the hundreds-of-thousands of jobs it represents to Canadian middle class families — will slip through our fingers, our resources stranded, a legacy lost.
That’s why we have undertaken significant efforts to streamline our regulatory system, including important legislative change that enhances environmental protection and improves efficiency while maintaining the rigour of the process. We are aiming for a “one project, one review in a defined period of time.”
Our Government believes that we do not need to choose between economic development and environmental protection. We can — we must — do both. Canadians deserve and expect nothing less from their government.
We are taking every possible measure to reduce the risks associated with resource development and transportation.
I was in Vancouver last week to discuss the importance of safety and the environment and to highlight what we are doing to ensure a strong marine and pipeline safety system in which Canadians can have the utmost confidence.
The federal government has strict rules and regulations governing the development and shipment of products like oil to safeguard public health and the environment.
Strict legislation and regulations also apply to resource development and pipeline safety on land under the National Energy Board Act.
The Board subjects proposals to develop pipelines to extensive regulatory review to ensure that pipelines are safe and to protect the environment and the public. Permits are only granted once environmental issues and First Nations’ concerns have been considered.
The NEB reviews and audits company pipeline safety programs, conducts pipeline inspections and can order companies to implement measures to improve the safe operation of pipelines. Its enforcement authority covers all aspects of pipeline planning and operations.
Industry has perhaps the most important role to play on safety as it handles the day-to-day extraction and transport of natural resources from every region of the country.
Industry must continue to do better — by making continuous improvements in safety management systems and practices, by investing in new technology and constantly innovating to improve safety performance, by informing Canadians about that performance and what is being done to improve it. In short, industry must be held to high standards, and it must be held to account.
One of the most important pillars of our Responsible Resource Development plan ― which goes further than that of any government before ― is strengthening environmental protection.
As just one example, Economic Action Plan 2012 provides $13.5 million over two years to the NEB to increase the number of oil and gas pipeline inspections by 50% annually, and double the number of annual comprehensive audits to identify potential issues and prevent incidents from occurring.
Financed by $35.7 million, our plan also proposes further measures to enhance the marine safety regime.
These changes will occur in tandem with the other three elements of Responsible Resource Development — making project reviews more predictable and timely, reducing the duplication of overlapping project reviews and enhancing Aboriginal consultation.
Our plan achieves the right balance to unleash the potential of Canada’s resource sectors to create high-value jobs from coast to coast to coast while also ensuring strong environmental protection.
Our plan also makes it very clear that our Government is serious about respecting the unique rights of Aboriginal Canadians.
We recognize the key role resource development play in the economic and social well-being of hundreds of remote Aboriginal communities across Canada.
The mining sector is the largest private employer of Aboriginal people — 7.5% of its workforce is Aboriginal. Furthermore, Aboriginal people represent 4.3% of the workforce in the energy sector ─ in the oil sands, it’s 10%.
Our Government continues to work to ensure Aboriginal Canadians have meaningful opportunities to participate in the natural resource industries in Canada.
Responsible Resource Development is also a significant step toward eliminating duplication in major project reviews, by allowing a provincial review to substitute for a federal review, when federal requirements are met.
I am confident that we can continue to move forward on our regulatory priorities, from facilitating equivalency to improved Aboriginal consultation. But this will require continued focus and collaboration by federal, provincial and territorial governments.
While continued progress on regulatory reform is essential, we cannot lose sight of other key priorities.
It is critical, for example, that we foster innovation and boost productivity. Industry and governments are making substantial investments to support a range of new technologies. Carbon capture and storage is just one example illustrating where Canada is at the vanguard of innovation and leading-edge technologies.
Just last week I took part in the announcement by Shell Canada of the next phase of its Quest carbon capture and storage project in Alberta, which Lorraine Michelmore mentioned this morning. The project, which is receiving $120 million dollars from Natural Resources Canada’s Clean Energy Fund, will help demonstrate the potential of this technology in the oil sands, while supporting high-quality well-paying jobs.
My colleague Scott Armstrong will be making an announcement regarding the Clean Energy Fund and our Government’s commitment to renewable energy at the Ocean Renewable Energy Group’s annual conference in Halifax in a couple of days.
A great example of collaborative innovation is our $100-million Geo-mapping for Energy and Minerals program, better known as GEM. We are working with provincial and territorial counterparts to modernize geological methods and techniques to map Canada’s northern resource potential.
GEM is not just fuelling current exploration activity — it is laying a robust, modern foundation for years of future exploration, development and land-use planning.
Our partnership with the provinces and territories is also reflected in the Intergovernmental Geoscience Accord, which we hope to renew at this Conference.
Energy efficiency is another area where our partnership has delivered impressive results. For example, we are working together to implement the new 2011 National Energy Code for Buildings, which provides a model that is 25% more stringent than the previous code. This will ensure that energy performance is more visible in all sectors of the economy through labelling, benchmarking, training and sharing information with Canadians.
As our natural resource sectors continue to grow and expand, the need for skilled workers to support resource development continues to grow. We must examine what more we can do to ensure we have the right people in the right place at the right time, including increased Aboriginal participation.
Shortages of skilled workers and professionals are impacting project costs and are expected to grow as Canada’s energy, mining and forest sectors are estimated to need more than 300,000 cumulative hires in the next ten years.
We need to engage at the federal, provincial and territorial level and with industry in solutions to tackle labour market imbalances.
At the federal level, we have the Temporary Foreign Worker Program, the Federal Skilled Worker Program, the Skills and Partnership Fund and Aboriginal Skills and Employment Training — just to mention a few.
While we have accomplished a lot, there is a lot more to do.
As we begin our deliberations, we need to set our expectations high and deliver through concrete action.
We must build on the progress made since last year’s meeting. And throughout our discussions, we must be mindful of the value, indeed the necessity of continued partnership at this time of unparalleled opportunity.
Success will happen if together we create a competitive investment environment, streamline our regulatory system, enhance environmental protection, invest in innovation and energy efficiency, diversify our markets and finally, create efficient labour markets, which include Aboriginal participation.
Canadians expect and deserve nothing less. They must be engaged and made aware of Canada’s opportunities as a responsible supplier of natural resources.
We have been appointed the custodians of a vital national trust. Our responsibility and our duty to Canadians is clear.
As leaders and as governments, we must define our role in advancing the growth and environmental performance of our mining and energy industries.
The world is changing. Tremendous opportunities await. No country is better positioned to seize those opportunities than Canada.
I am confident that, working together, we can ensure that for Canada, the best is yet to come.
1 canadiansailings.ca, Potash expansion brings huge benefits to province, 30 May 2012: http://www.canadiansailings.ca/?p=2307
2 Canadian Society for Unconventional Gas, report commissioned to Petrel Robertson Consulting, 2010.
3 International Energy Agency, IEA report sees bright future for natural gas over next 5 years, News Release, 5 June 2012