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2011/85

Notes for a Speech by

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

Canada’s Emergence as a Global Energy Superpower

World Affairs Council
San Francisco, California

September 14, 2011

Check against delivery


Introduction

Good afternoon, ladies and gentlemen.

For the past few days I’ve been at APEC’s energy and transportation conference on the Asia–Pacific region. I also met legislators, think tanks and business people.

Canada is very keen to showcase its energy products to this huge emerging market. That’s why I am out talking to my counterparts in key markets.

But, I believe it’s even more important to deepen longstanding relationships like that of Canada and the United States.

Canada and the United States share the world’s longest border, a rich history, a highly integrated economy and common values.

All these factors, especially our shared values, are crucial to our highly successful relationship. 

So I’m delighted to be here to talk about Canada’s energy relationship with America to the World Affairs Council. I can’t tell you how inspiring it is to address such an audience of curious and positive-minded community participants.

I commend the Council’s activities over the decades of engaging global affairs leaders on issues of international importance. And I salute your objective to not only deepen our common understanding of these issues, but to actually search for solutions. How refreshing.

My central message for you today is this:

Our energy relationship is an important engine driving the economies of our two great nations.

I believe that we can create even more jobs, stimulate even more growth, and further strengthen energy security — on both sides of the border.

And I assure you that Canada will pursue these goals in an environmentally and socially responsible manner.

So, let me share some fundamentals about our trade partnership that are not widely known.

A mutually beneficial relationship

Just as the United States is Canada’s most important market for exports, America sells more to Canada than you do to Japan, or Mexico, or China, or all the countries of the European Union combined.

Every day, thanks to NAFTA and our strong bilateral relationship, our countries send more than a billion and a half dollars of goods and services across the border. Every day. This staggering amount of trade keeps eight million Americans working.

A significant portion of this economic activity is right here in this state. Small wonder, when you consider how much Canada and California have in common, the minor differences in our climate not withstanding.

We have the same population size, skilled workers, world-class education and the curiosity and talent to develop smart technologies. Indeed, we collaborate on cutting edge R&D through mechanisms like the Canada–California Strategic Innovation Partnership.

For these reasons, we’re able to leverage our comparative advantages and generate wealth on both sides of the border.

At last count, two-way trade between Canada and California surpassed $US28 billion. That makes us one of your biggest trading partners. And it creates work for more than 930,000 people in the Golden State.

Our trade in energy is an important part of the mix. Canada provides 19% of California’s natural gas, and about 7% of its crude oil imports. Our scientists are also working together on clean energy solutions that reduce our collective greenhouse gas emissions.

As I look to Canada’s future, and see the phenomenal energy resources we’re developing, I think our country can play a much larger role in meeting the energy security needs of California and, indeed, of the United States as a whole.

So let me turn to how Canada’s energy resources can provide both energy security and economic benefits to America.

Canada — an emerging energy superpower

Let’s start with a few facts.

  • Canada is the world’s sixth-largest producer of oil with proven reserves the third-largest in the world.
  • We are the third-largest producer of both natural gas and hydroelectric power.
  • And we are the second-largest producer of uranium.

Oil. Gas. Hydro. Nuclear.

These are the resources that help drive our economy, representing about 7% of our Gross Domestic Product.

These are the resources that have created hundreds of thousands of direct and indirect jobs across our country.

These are the resources that have sharpened our global competitiveness and secured our high standard of living.

That said, we are also determined to bring new sources of clean energy into the mix. After all, we have more than five-and-half million square miles of land, including more than 124,000 miles of coastline. That makes us ideally suited to expand the use of renewable energy sources — everything from solar power to tidal energy, biofuels and wind.

Our Government's investments have contributed to some truly innovative projects. For example, the Fundy Ocean Research Centre for Energy will allow us to harness power from the incredible tides in the Bay of Fundy, on Canada's Atlantic coast — tides greater than all the rivers in the world.

Since 2006, the Government of Canada has invested more than $10 billion to reduce greenhouse gas emissions and build a more sustainable environment. This includes investments in green infrastructure, energy efficiency, clean energy technologies and the production of cleaner energy and fuels.

While the benefits of previous investments continue, the approach moving forward will focus on a combination of standards and regulations, innovative technology R&D, and targeted investments.

For Canada, energy efficiency is one of the fastest, greenest and most cost-effective ways to reduce greenhouse gas emissions, save energy and increase energy security. Apart from creating a greener environment for all Canadians, our investments are also creating green jobs.

The Government of Canada just announced additional funding to improve energy efficiency in Canada's buildings, homes, industries, vehicles and equipment. This includes more funding for our popular retrofit program, which helps homeowners make their homes more energy-efficient and reduce the burden of high energy costs.

Canada already has one of the cleanest electricity systems in the world. More than 75% of our electricity comes from non-emitting sources, including 60% from hydro. Canada's existing hydropower capacity represents the largest source of clean and renewable power on the North American electricity grid.

Last month, we proposed regulations to make our electricity system even cleaner.

The regulation will establish a greenhouse gas emissions performance standard that will apply to new coal-fired electricity generation units. 

Economic benefits of the oil sands

We all want low-carbon technologies to play a more dominant role in the global energy mix. And we are moving toward that goal.

In the meantime, global oil demand is expected to grow from 89 million barrels a day in 2011 to 94 million barrels per day in 2015.

Twenty years from now — even under the most optimistic scenario for alternatives — fossil fuels will still be needed to meet almost 70% of world energy demand, according to the International Energy Agency.

Oil is here to stay for the foreseeable future. We cannot ignore this fact. Our challenge, then, is to develop oil resources to meet growing demand, and to do so in a socially and environmentally responsible manner.

As I said a few minutes ago, Canada is blessed with the third-largest proven oil reserves in the world, at 174 billion barrels. Of these, 170 billion barrels, or more than 97%, are in the oil sands of Western Canada. And, as technology evolves — and the oil sands are basically a technology project — these reserves could grow as high as 315 billion barrels.

When you consider that close to 1,000 American companies from virtually every sector already supply the oil sands, you can imagine the ripple effect on the U.S. economy.

Here in California, for example, 73 companies are supplying everything from industrial welding machinery and valves used in oil pipelines to software and corrosion monitoring systems.

Energy benefits of the oil sands

Apart from their economic impact, the oil sands stand to make a huge difference to U.S. energy security, given the overarching fact that America is heavily reliant on imported oil. Compared to the U.S., Canada holds more than eight times the volume of proven oil reserves. Eight times.

As a result, 21% of U.S. oil imports — about 2.5 million barrels per day of crude oil and petroleum products — already come from Canada. Put another way, Canadian oil is fueling one in eight cars on U.S. roads.

That makes us your biggest supplier of crude oil and petroleum products. Beyond that, Canada is by far the largest supplier of all your energy needs. Crucially, we are also your most reliable supplier.

Look around the world: 80% of known oil reserves are state controlled or managed by national oil companies. That’s not the case in Canada.

The state does not run our oil sector. We are not members of the Organization of the Petroleum Exporting Countries. And of the 20% of world oil supply that is accessible to market-based development, 60% comes from Canada’s oil sands.

According to a recent study for the U.S. Department of Energy, by 2030 America can substantially reduce its dependence on oil from foreign suppliers from the Middle East and Africa. How? By continuing to improve fuel efficiency and importing more oil from Canada.

Canada has always been a secure and reliable supplier of oil, and we will continue to be.

Support for Keystone XL Pipeline and Northern Gateway

Ladies and gentlemen, the best way to build America’s energy security is to look north. Canada delivers the oil, and the U.S. can reap economic benefits. What a great partnership. To achieve this goal, however, we need major investments in oil infrastructure.

That’s why Canada is investing in the oil sands, and that’s why we strongly support the construction of the Keystone XL pipeline.

Between 2010 and 2035, oil sands development will support, on average, an estimated 93,000 jobs per year in the United States. If the Keystone XL pipeline gets approved, employment is forecasted to grow to 160,000 U.S. jobs per year. I don’t have to dwell on the importance of generating employment in the current economic environment.

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

To put it mildly, the Keystone XL pipeline project has received a lot of attention recently. So let me try to set the record straight about the Keystone XL project.

Fact: pipelines are recognized as the safest way to transport large volumes of crude oil or petroleum products.

To carry the same amount of crude oil over land would take 2,500 tanker trucks per day. Obviously, this is neither a practical nor a safe alternative. Think of the traffic. And think of all those trucks pumping out even more greenhouse gas emissions.

Some people are concerned about the type of oil to be carried in the proposed pipeline.

Fact: there is no evidence to suggest an increased risk of internal corrosion in the pipeline from the transport of blended oil sands crude, or upgraded crude oil, as opposed to similar, traditionally produced oil.

Indeed, the recently released State Department final Environmental Impact Statement on the Keystone XL project said — and here I am quoting — the project “would have a degree of safety greater than any typically constructed domestic pipeline system.”

The EIS is a key step in the approval process.

The Government of Canada believes the project is an important plank in building continental energy security. But, of course, we respect the American permit process, and we look forward to a final decision by year end.

Canada also has stringent regulations for energy development. As I speak, an independent panel is examining the merits of the Northern Gateway Pipelines Project, which would open access to the Asia–Pacific Rim for Canadian crude oil producers.

As part of its mandate, the panel will examine the impact of the proposed pipeline on the rights and interests of Aboriginal peoples. That’s another aspect of Canada’s commitment to environmentally and socially responsible energy development.

A commitment to environmentally and socially responsible energy development

The Governments of Canada and Alberta share that commitment. We are working hard to ensure that we have a world-class regulatory system to protect the environment.

Recently, for example, Canada announced an integrated monitoring plan for the oil sands area that covers air, water and biodiversity.

Still, like the Keystone XL project, there are some misconceptions about the environmental impact of the oil sands, and I would like to clear them up.

First, there’s the impact on land from surface mining.

Fact: companies are required by law to remediate and reclaim 100% of affected land, which constitutes only two-thousandth (2/1000) of Canada’s boreal forest. In this way, the land is able to sustain vegetation and wildlife as it had before.

Last July, I stood in a boreal forest in Alberta that’s been remediated. You would never know it was once a mining site.

Second, there’s the impact on water.

Most water used in oil sands development is recycled — up to 85% for mining and up to 90% for drilled, or in-situ, projects. 

Yes, new water is needed to make up for water losses. Mining operations require three to four barrels of new water to produce a barrel of oil sands crude. However, in-situ projects, which comprise 80% of the extraction process, only require a single barrel of water to produce one barrel of crude.

In-situ projects, in fact, rely largely on groundwater and use an ever increasing amount of brackish water, which is not fit for human consumption.

No water used in oil sands production is returned to the river. Instead, it’s transferred to tailings ponds and then recycled into the production process.

Finally, let me say a few words about the important subject of greenhouse gas emissions.

Canada is committed to reducing its total emissions by 17% from 2005 to 2020, identical to the target here in the U.S. And, as I said earlier, we’re investing billions of dollars to help us reach that target.

Few people know that the oil sands account for 0.1% (one-tenth of one percent) of global emissions, or one in a thousand.

Electricity plants powered by coal in the U.S. generate almost 40 times more greenhouse gas emissions than Canada’s oil sands.

Closer to home, you should know that on a per-barrel basis, California heavy crude emits more GHGs than the average oil sands crude.

So to single out the oil sands for special attack is inaccurate, unfair and, let’s face it, frequently political.

Coal-fired electricity plants in Texas alone account for three times the greenhouse gas emissions of Canada’s oil sands.

Between 1990 and 2009, the industry reduced emissions per barrel by 29%. And our investments in new technologies are striving to make those numbers even better.

Recently, the Governments of Canada and Alberta, and Shell, committed financial resources to support the development of a carbon capture-and-storage system in a plant in Alberta that will help reduce emissions by 40%.

My department, Natural Resources Canada, is working with industry to improve oil sands production by developing technology such as dry stackable tailings. That promises to cut water consumption in half. It will also reduce the time needed to dry up tailings ponds and to reclaim the land to a natural state.

These are just a few examples of how Canada is working nationally and, with its provincial counterparts, to reduce emissions.

Of course, we also work on a bilateral level with our closest neighbours to address climate change.

Over the past two years, Canada and the U.S. have embarked on a Clean Energy Dialogue.

This process has deepened our existing collaboration on innovative clean-energy technologies. We’re seeing some solid advances in important areas such as carbon capture-and-storage, smart grid technologies and energy efficiency. And I’m working with Secretary Chu to advance the second phase of this Dialogue.

This kind of bilateral dialogue makes a lot of sense given the highly integrated nature of the North American economy — especially in the transportation sector.

That’s why we worked closely together to set common standards for emissions from new light-duty vehicles. And we are building on this success to do the same on the heavy-duty side.

In short, Canada is committed to develop its energy resources, including the oil sands, in a socially and environmentally responsible way. And we are proud to collaborate, wherever possible, with our American friends.

The importance of working together on energy issues is recognized on both sides of the border. A recent poll conducted this August found that almost nine out of ten Americans and eight out of ten Canadians see developing an integrated energy policy as important. Views on this have remained strong and relatively unchanged.

Conclusion

Ladies and gentlemen, there are two undeniable facts about our energy relationship:

America will need oil in the years ahead.

Canada has oil, and we can meet your growing needs in a secure and reliable way.

Oil will be an inevitable part of our energy future, and we must continue to develop existing energy resources. I believe the abundant reserves in Canada’s oil sands are North America’s best energy investment.

In the coming years, together we can create even more jobs, propel even more economic growth and strengthen energy security — on both sides of the border.

Thank you. I would be happy to take questions.