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Keynote Address by
The Honourable Joe Oliver
Canada’s Minister of Natural Resources
Chicago Council on Global Affairs
“CANADA’S ENERGY FUTURE: THE UNITED STATES, AND BEYOND”
March 5, 2013
Good afternoon. And thank you very much, Marshall. Your council has done invaluable work on the Canadian–U.S. relationship, including of course energy.
It’s a real pleasure for me to be here today to address a related topic, which is of great interest to both our nations. And Chicago is of course a city that everyone loves to visit. And I’m pleased to see that the links between Chicago and Canada, Chicago and Toronto are stronger than ever.
This morning, I visited the Pipe Fitters’ Training Center in Mokena where I met with workers and saw how Canadian oil is supporting jobs on both sides of our shared border.
Many of you might not know the development of new oil sands projects will generate more jobs in Illinois than any other state, according to the Canadian Energy Research Institute. They predict that 570,000 person years of employment will be created over the next 25 years in Illinois in various sectors including construction and manufacturing.
Later today, I will be meeting with Mayor Rahm Emanuel to have a discussion about how Canadian oil represents an environmentally responsible contributor to jobs and growth in Chicago and throughout Illinois. It’s our mutual interest that this mutually beneficial relationship continues to thrive and to grow.
Last month, a Chicago Tribune editorial noted that Canada is experiencing a gold rush–style energy boom. And speaking of the proposed Keystone XL pipeline, the editorial said approval of the pipeline cannot happen soon enough. Well, I’m not sure whether any of the editors of the Tribune are here today. If so, I’d like to personally thank them for their kind words. We’ll take all the support we can get, even in a country where we know we have a lot of friends.
Ladies and gentlemen, in both world wars, in Korea and in Afghanistan, our two nations fought together. On the world stage, in support of democracy, freedom and open markets, we stand together. And Canada is and it wants to remain your most important energy partner.
So I’ve come here today to speak to you frankly and openly about a subject I and my government care deeply about: the responsible development of Canada’s natural resources. And I want to share some facts with you, facts about the environmental progress Canada is making, the economic relationship between Canada and the United States, and how our two countries can benefit from moving forward together. I’m here to give you the unvarnished goods. And let me let you make up your minds about the merits of Canadian oil for America.
Many opponents are spreading false information about the oil sands, especially its impact on the environment. I came here today because the full story of Canada’s oil sands development remains untold, because I believe the decision about whether or not to build more oil pipelines between our two countries should be based on science and facts, not conjecture, hyperbole or ideology.
So let’s talk facts. Canada’s oil sands are a remarkable success story. Like the U.S., Canada has long been a country with a zeal for the entrepreneurial spirit. This dates back all the way to the early fur trade with the establishment of North America’s very first corporation in 1670: the Hudson’s Bay Company.
Oil sands development is the latest in Canada’s long history of innovation, entrepreneurship and trade.
The fact that we are even discussing the oil reserve is in itself remarkable. A few decades ago, it would have been inconceivable to imagine a cost-effective way to extract oil sands crude from the ground. But with technological advancements, which are ongoing, the oil sands have attracted $160 billion in capital investment up to 2011, including more than 130 billion in the last 10 years. And there is a reason for all that investment.
About 80 percent of the world’s oil reserves are controlled by national governments or state-owned oil enterprises. That leaves about 20 percent that is so-called free enterprise oil, and about 60 percent of that 20 percent is found in Canada’s oil sands. And that is why so many U.S. companies have invested heavily in the oil sands.
Importing Canadian oil makes sense, and that’s why the U.S. does it. The U.S. imports more oil and petroleum products from Canada than Saudi Arabia and Venezuela combined — some 2.7 million barrels a day of which one million comes from the oil sands. Ninety-nine percent of Canadian crude oil exports go to the U.S. Our crude oil exports currently represent 28 percent of American crude imports.
Canadian oil sands have become the world’s largest technology project, driving employment for 275,000 people across Canada. We expect major oil sands expansion in the coming years, which will create more jobs, foster more innovation and technological advancement and generate billions of dollars in tax revenue.
At 169 billion barrels, the oil sands represent the third-largest proven oil reserves in the world. And we are optimistic that that number can in fact over time exceed 300 billion barrels with technological improvement.
Even with forecasts of rapid growth in domestic oil production and declining oil imports, the International Energy Agency predicts that the United States will still need to import crude oil and that would be beyond 2035. So there is great complementarity. America needs oil. Canada has an abundance of it. It makes sense to work together toward our common goals of improving the environment, growing the economy and strengthening our common security.
Environmental protection is a priority for our government and Canada is a global environmental leader. We have a great story to tell, and I’m particularly proud of the progress we’re making in our natural resource sectors and, yes, that includes the oil sands. Our government is committed to developing our natural resources while simultaneously strengthening environmental protection. We reject the notion that you can’t do both at the same time. And through our actions, we’re proving that you can. And that’s why Canada’s oil sands are subject to some of the most stringent environmental regulations and monitoring in the world.
Let me take this opportunity to put the oil sands in perspective for you. Total GHG emissions from oil sands production represent 0.1 percent, or one one-thousandth, of global emissions. This is less than half of the emissions from coal plants here in Illinois and just one-fortieth of coal emissions in the United States.
As the Chief Economist of the International Energy Agency said last November, and I quote, “Compared to the major emitting countries, this is not peanuts, it’s a small fraction of peanuts.”
It’s been estimated that the impact on climate change from the oil sands would be three percent of one degree centigrade in 300 years.
Oil sands crude transported through the proposed Keystone XL pipeline would represent less than one two-thousandths of global emissions. But that overstates it because one-quarter of the oil travelling through Keystone is expected to come from the U.S. Bakken.
Furthermore, in its August 2001 Environmental Impact Statement, the State Department found that oil sands crude transported via the Keystone XL pipeline would displace other heavy crudes with similar GHG emissions. And, as you’ve no doubt heard, last week, the State Department’s Supplementary Environmental Impact Statement found that Keystone would have no significant environmental impacts. The report also confirmed that the project would not affect the pace of oil sands development or demand for heavy crude oil in the United States.
Now that being said, Canada recognizes that every tonne of GHG emissions matters, and Canada is making progress on emissions. Between 2005 and 2010, our economy grew while Canada’s actual GHG emissions declined.
Under the Copenhagen Accord, Canada is committed to a 17-percent reduction in emissions from 2005 levels by 2020 — exactly the same as the U.S. GHG reduction goals are consistent between our two countries, and current projections show that Canada is halfway to meeting that target.
In some areas, we’re doing better than anyone else. Coal is the largest source of emissions in the world, and Canada is one of the only countries with regulations to phase out traditional coal-fired electricity. We’re also regulating emissions for passenger vehicles, light trucks and heavy vehicles — regulations that are aligned with the United States.
Measures we’re now putting in place mean Canada is one of the very few major oil producers in the world with a transparent environmental monitoring regime and regulations demanding strong environmental performance. And all these efforts produce real results.
Between 1990 and 2010, oil sands emissions per barrel have dropped by 26 percent. We’ll keep working to do better. As I said earlier, the oil sands are a technology project driven primarily by Canadian and American innovation.
We also have stringent rules requiring companies to completely remediate the land use for development and to do it back to its original state. Our efforts to protect the environment and the safety of Canadians go further.
For example, the National Energy Board inspections of oil and gas pipelines are increasing by 50 percent annually from 100 to 150 to improve pipeline safety across Canada. We’re also doubling the number of comprehensive audits of oil and gas pipelines annually to identify potential safety issues before they occur.
That is Canada’s track record, one of continual improvement.
Unfortunately, the same cannot be said for other countries exporting oil to the Gulf Coast. In fact, Canada is one of the only major suppliers of crude oil to the Gulf Coast taking concrete action to fight climate change with provincial and soon-to-be federal regulatory requirements affecting its oil and gas sector. Once the federal regulations are in place, Canada will be one of the very few oil producers in the world with national binding regulations on its oil and gas sector.
So in a future where all countries need to take action to manage GHG emissions, Canada is the environmentally responsible choice for the U.S. to meet its oil needs for years to come.
Now some concerns have been raised about the safety of the proposed pipeline. Questions about safety are important, and they deserve to be treated seriously and respectfully. But it’s worth noting that the U.S. State Department determined that Keystone XL will be safer than other typical pipelines in the United States. In the past seven years, the U.S. has laid 180,000 miles of oil and gas pipe. The U.S.-unapproved portion of Keystone will be less than half a percentage of that, or about 850 miles.
We’re proud of our environmental and safety record, but we won’t stop thriving to improve it.
The oil sands are playing an increasingly important economic role in the U.S. Right now, more than a thousand American companies are supplying goods and services to that sector. According to TransCanada, the extension of the pipeline will cost about $7 billion to build and will create 20,000 jobs during construction — 13,000 in construction and another 7,000 in manufacturing. And some of TransCanada’s suppliers include Welspun pipe from Arkansas; Cameron valves from Louisiana; Siemens pumps, motor and related control equipment manufactured in Oregon, Ohio and Indiana; and many more. TransCanada alone has contracts with over 50 suppliers across the U.S.
Also, the oil sands are the largest markets in the world for Caterpillar mining trucks, and the largest trucks are made in nearby Decatur, where the plant is undergoing a $300 million expansion.
Bottom line, the pipeline is a clear economic winner for both our countries.
So the oil sands are a vital resource for Canada and our future economic prosperity. But let there be no doubt, our future is not tied to one pipeline. Canada will continue to develop its oil sands and seek out new customers. There are currently two proposals for pipelines to move crude from the oil sands to British Columbia on Canada’s West Coast. And this would open the door to growing markets in Asia. There are also proposals to move our oil east to refineries in Quebec and Atlantic Canada.
These are opportunities Canada cannot ignore, but this does not mean we’re turning away from the United States — quite to the contrary. America imports about 10 million barrels of oil a day and will need to import oil for many, many decades to come. Canada is the environmentally responsible choice for the U.S. to meet its energy needs in oil for many years.
Our countries share the same GHG emission reduction targets. We’re both committed to environmental protection and to continually improving technology. So it is safe. It has negligible effects on emissions. It will bring significant national security benefits, jobs and revenues to government and comes from a reliable, friendly and environmentally responsible country, which explains why a strong majority of Americans favour approving Keystone XL.
Why then all the fuss? Why the demonstrations and movie stars chaining themselves to the White House gate?
Well, the answer is that some environmental and other groups see this as a symbolic issue in their larger battle against the development of hydrocarbons and specifically the oil sands. In a democratic society, they are entitled to their views but not to take liberties with the truth. The stakes are high for Canada, and I suggest for the U.S. as well. Keystone could enable a future that sees the U.S. virtually eliminate its reliance on less reliable and less environmentally responsible foreign sources. With Canada able to supply all of the U.S.’s future imported oil needs and the energy sector in the United States continually growing, together we can achieve North American energy independence by 2035 and probably before.
Our countries enjoy the single most important bilateral energy relationship in the world. We do not take it for granted. Indeed, I’m here in Chicago today because I want to see our partnership grow and expand.
Thank you for your attention.
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