NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 24, 1998

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[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Good morning, colleagues, witnesses, and guests in the gallery. I'm pleased to call the March 24 meeting of the Standing Committee on Natural Resources and Government Operations to order. We are continuing our study of the knowledge-based and high-tech sectors that have evolved out of the natural resources industry.

For the record, I'd like to say that while most Canadians still think of the natural resources sector as the primary extraction of minerals, timber, oil, or natural gas, a lot of good new stories have evolved over the decades, in which innovative Canadians have created high-technology and advanced knowledge in support of and in service to the natural resources sector. This knowledge goes toward making our own industries more competitive, safer, and more environmentally aware, while at the same time giving Canadians a leading position in many ways in exporting this knowledge around the world.

In continuing our study, we have with us today representatives of the energy sector. We have witnesses from the Canadian Association of Petroleum Producers, the Canadian Gas Association, the Canadian Coal Association, and the Petroleum Services Association of Canada. They are prepared to talk to us about what has happened in their sectors and hopefully about what governments can do to make sure Canada maintains or attains leadership in these around the world.

I believe we're going to start, if it's okay, with the Canadian Gas Association, Dr. Rahbar and Mr. Carella. I'm hoping to finish the presentations, if I could go in order, and then we'll go into questions after. If we can try to do them in about eight or ten minutes each, if that's possible, that will allow lots of time for questions and comments.

Either of you from the Canadian Gas Association, would you start us off, please?

Mr. Bruno Carella (Vice-President, Policy and Administration, Canadian Gas Association): Thank you.

Good morning, Mr. Chairman, honourable members, ladies and gentlemen. My name is Bruno Carella and I'm the vice-president of policy and administration at the Canadian Gas Association. I'm here with Dr. Shahrzad Rahbar, CGA's vice-president of operations and technology.

Before we begin, I'd like to thank you for inviting CGA to be part of your deliberations. I will first be introducing the Canadian Gas Association, the gas industry's impact on the Canadian economy, and its role in meeting Canada's climate change targets. Dr. Rahbar will then expand on the role of the natural gas industry in technology development, zero in on the issues faced by the gas industry with technology development, and conclude with CGA's recommendations for your committee.

The Canadian Gas Association is the national trade organization for Canada's multi-billion-dollar natural gas industry. Our 270 corporate members cover a broad spectrum of the industry, including Canada's major natural gas distribution companies, transmission companies, the larger energy marketers, gas brokers, service suppliers, and a significant portion of the manufacturing sector.

The larger marketers are a growing force in the industries and are represented on CGA's board of directors, with the executives of other traditional sectors.

The energy industry in Canada is in a tremendous state of change, as many services that are currently regulated are moving to more competitive entities. We ask you please to consider the transitional state of our industry in evaluating the recommendations we make at the end of this presentation.

Natural gas is important to the Canadian economy. The gas industry has annual revenues of over $14 billion and accounts for about 2.5% of the Canadian GDP. Our industry makes a substantial contribution to Canada's balance of trade. In 1996 exports to the U.S.A. amounted to around $7 billion.

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In terms of employment, gas and oil production activities account for 50,000 direct jobs; 9,000 people are employed in the natural gas transmission sectors and 13,000 in local gas distribution. Manufacturing of appliances, equipment, service and supply accounts for tens of thousands of other jobs.

The natural gas industry also contributes to rural economic development through rural gasification programs, cogeneration projects, development of advanced gas-fired technologies for crop drying, the pulp and paper industry, and farm machinery—activities that result in direct job creation as well as substantial energy savings.

The gas industry is a dynamic business. The Canadian natural gas industry has enjoyed an unprecedented rate growth in the past decade, making it one of the country's greatest business success stories.

First, we've seen a tripling of the natural gas market in Canada. Natural gas now represents 31% of total energy consumption in Canada, serving five million customers.

Secondly, Canada has substantially increased its export to the United States. Over 50% of our total production is exported to the U.S., supplying about 14% of that market.

Thirdly, total production is at record highs. As this committee is no doubt aware, east coast offshore gas on Sable Island will soon be brought to market.

Natural gas is part of the solution to climate change. In Kyoto, Canada made some major commitments to reduce greenhouse gas emissions. The two largest emitters of greenhouse gases in Canada are coal-fired electricity generation and the transportation sector, from oil-based fields. Natural gas contributes 27% of all greenhouse gas emissions. Natural gas is the least carbon-intensive of the fossil fuels, and as a result has the lowest emissions of greenhouse gases such as carbon dioxide.

Natural gas is a viable energy solution to address climate change today. Moreover, emissions for the natural gas industry are on a decline on a per-unit-of-production basis. We are proud of these improvements, given that the gas industry has expanded at a rapid rate.

CGA strongly believes natural gas, in concert with conservation and renewables, is part of Canada's solution to climate change. These emissions could be rapidly reduced to the extent that natural gas can be used to replace coal in electricity generation and oil in the transportation sector.

We are cognizant that other technologies such as fuel cells and electric vehicles will one day make significant contributions. However, we view these as longer-term technology solutions.

To help meet Canada's greenhouse gas emission reduction targets, CGA fully supports a voluntary challenge and registry and is working with the Ministers of the Environment and Natural Resources on market-based mechanisms to ensure that the emission reduction targets in Kyoto are met.

Dr. Rahbar will now take us through the more specific concern of technology.

The Chairman: I hope you're not going to read the whole thing, because we'll be half an hour at a minimum.

Mr. Bruno Carella: No.

The Chairman: We appreciate the great effort you've made. We can all read the details.

Dr. Shahrzad Rahbar (Vice-President, Technology and Operations, Canadian Gas Association): The point I'm making is that natural gas relies on advanced technology to prosper. The market expansion we have seen in the past decade would not have been possible without the investment and commitment to new technology. Our members have developed a technological edge that has required state-of-the-art technologies for safe and reliable transmission over long distances, distribution, and utilization.

Our focus today is going to be on delivery and utilization technology issues. The know-how developed in the areas of infrastructure maintenance and utilization has allowed our industry to build a cost-effective system, one of the most cost-effective systems in the world, and has allowed our members to export this know-how internationally and generate revenue for Canada.

I have in my presentation more explanation of mechanisms by which our industry develops its technology. I will just mention these and then move to the issues.

We use a mix of mechanisms for developing technologies. Public research is there. We understand you heard from Natural Resources Canada last week. We greatly value the work of the national laboratories and the universities here. Our industry has been active in sponsoring independent research. There are a number of independent research houses in Canada; the Canadian Gas Research Institute and the Natural Gas Technology Centre are but two.

In 1992 the gas industry created Gas Technology Canada to manage voluntary consortia-funded research and development activities. In 1995 CGA developed a natural gas technology development plan that outlines our technology priorities. I've left with the clerk copies of our technology development plan.

Our members are also involved in collaborative research with other international bodies: the Gas Research Institute, the Pipeline Research Council, the British Gas Research Centre.

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In addition to the individual activities of our member companies, CGA acts as a champion for technology transfers through our involvement in a number of international activities. We manage the consortium for an Internet natural gas technology database and we hold targeted workshops on leak detection technology. We had a workshop last year that focused on state-of-the-art technologies for managing the detection of leaks from transmission distribution lines using state-of-the-art laser-based aerial technology. We brought experts from pretty much all over the world to Toronto to look at this issue.

I'd like to focus on telling you the aim of our technology issues. There are a few, and in order of priority we look first at enhanced safety and reliability. Our prime concern is to get the resource to our members safely and ensure safe utilization. Our support, as well as the federal government's support, for safety standards in both transmission distribution and utilization is key and remains key for our industry.

Emissions reduction is the second point we value greatly and are devoting our resources to. Sophisticated knowledge-based technologies have been developed and implemented in Canada. There's energy conservation, renewables and export of Canadian know-how. Again, you can find more detail in the report.

We do face a number of technology issues that I want to bring to the attention of the committee. In order for natural gas to realize its potential as a solution to climate change we need to focus science and technology research efforts on developing enabling technologies to accelerate emissions reduction.

We face a number of issues that require joint industry and government action. The first thing I want to mention under this topic is insufficient R and D investment. There are tables on pages 6 and 7 of the submission that outline total expenditure in Canada on gas-related research, development and deployment and also compare Canada to other gas-consuming nations. The points to note here are that although the federal government is a player in research, development and deployment funding, its contribution is only around 11% of the total.

Moreover, NRCan's funding for natural gas research, development and deployment is less than 10% of its annual science and technology budget. We believe the pie of expenditure on RD&D should grow and a larger share of the public money devoted to research should be aimed at looking at the solutions to climate change.

Our gas industry is composed of a multitude of constituent businesses. We are in a state of transformation. Depending on where in the spectrum from non-regulated to regulated entity our members are, there is a varying level of appetite for research and development and varying levels of business interest in innovation and technology. This sectoral fragmentation adds complexity to an industry-wide technology development program. Moreover, the restructuring of the energy industry in the U.S. and Canada has thrown the gas industry into a major transformation phase that in the near term puts further strain on industry collaboration on technology development.

There is a need for more industry and government consultation. If Canada accepts that natural gas is a significant part of the Canadian solution to climate change, a gas industry and government senior consultative body, composed of senior officials from our industry as well as the industry, natural resources, environment and finance departments should work together to frame the activities within Canada. We believe the instruments government uses should provide clear business incentives.

I wish to leave you with a number of recommendations. The federal government has a key role to play in building the framework for identifying the technology enablers that will utilize natural gas in the transportation and power generation sectors, among others, to meet Canada's international environment commitments. We have five directional recommendations. One is that government leadership is required. We believe government has a key facilitation role to play.

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The Chairman: Maybe you could summarize just the first part of those five, because I am sure we are going to get into those in our questions. I just want to make sure we have time for questions.

Dr. Shahrzad Rahbar: Industry and government collaboration is a must. Government should be cognizant of the market drivers and barriers. International opportunities must be recognized. Lastly, the scope of government science and technology programs should encompass environmental technologies and allow for market innovation and high-risk RD&D.

Mr. Chairman, I thank you for your attention. We would be glad to answer any questions.

The Chairman: Thank you. We want to be sure to have lots of time for questions and answers after. It is pretty clear government has a role to play, even though this is private sector driven.

Are we able to go back to our first witness, the Canadian Association of Petroleum Producers? As with the last panel, we will allow the witnesses to have their say and we can ask questions of any or all of them afterwards.

Mr. Chris Pierce (Vice-President, Strategic Planning, Canadian Association of Petroleum Producers): Thank you, Mr. Chairman. I have just a few slides here and a brief overview leading to questions of technology and the role of technology in the upstream oil and gas industry.

I am pleased not to be addressing you on climate change. I will say nothing on that point today, but I certainly would want to come back and talk to you about that when the committee takes that issue up specifically.

The first slide is to show you just where technology was in the industry. It's a picture of a spring log looking for oil slightly beneath the surface in the late 19th century in southwestern Ontario. This is to point out that we have come a long distance in not even 100 years of searching for oil and gas in Canada.

As an outline of what I will talk about today, it will be just a little on the tools and knowledge used as technology in the oil and gas industry, how they have changed, how we look for and find oil and gas, how we drill wells, how we complete and service wells, on which Roger Soucy will no doubt speak more specifically later, and what the economic and environmental benefits of technology are.

First, on tools and knowledge, as a result of the fact that the production of oil and gas is absolutely technologically driven, you find within the oil and gas industry and areas of Canada affected by the production of oil and gas a remarkably highly educated workforce. Education and training infrastructure develops.... In western Canada, for instance, you now have the Northern Alberta Institute of Technology and the southern Alberta equivalent SAIT giving a petroleum industry technology training service which is funded by industry to train people within the industry. It's now developing applications for offshore oil and gas production because of the activity on the east coast.

Canadian oil and gas producers and developers are world leaders in high-tech exploration in cold climates especially, and now in offshore operations, the development of resources that are not unique but certainly of rare occurrence in the world, oil sands...how we process gas and upgrade heavy oil, which of course is coming to be an even more predominant commodity in western Canada, and the types of controls and technologies we use in control and computer technology to measure what we are taking out and how we are taking it out.

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As just an anecdotal example of the training that is required and that the industry creates, Calgary has the highest concentration of post-secondary education in Canada with over 58% of the adult population having some post-secondary training. I think our fundamental message is that the resource industry in Canada is not a sunset raw commodity industry. It is absolutely a driver of high technology in this country. Western Canada is also one of the highest users of computer technology in Canada today, and the technology that we produce through the search for and development of oil and gas we export to the world.

Despite the lay-offs that happened in Calgary for most upstream oil and gas companies during the 1980s and 1990s, the unemployment rate in Calgary remained among the lowest in the country because a number of those people who were laid off became self-employed and are exporting their skills and knowledge to the rest of the world.

We can now briefly go over the three stages of production: finding and production, drilling, and then servicing and completion.

How has technology changed the way we find and produce petroleum? As a result of developments, especially in the field of seismic work, we are far better able to precisely locate and identify producing formations. These are developments such as three-dimensional seismic, which allows a rounded view of what's down there, and multichannel digital recording and high-speed data processing, which help to interpret the results of seismic work and better reduce the number of dry holes that are drilled, of course, and allow the better and more accurate picturing of what's underneath.

It's important to remember that oil doesn't occur in some sort of cave and pool; it's porous rock that you're trying to find locations of hydrocarbons within. And despite what you might think intuitively, you also have cost reductions that are associated with this technological development so that now the cost in shooting and interpreting some types of seismic data has dropped 80% in just a decade.

This is an image that does not re-create too well with the lighting. I'm sorry. But this is just seismic work, trucks shooting down the seismic signals into the rock formations and those waves returning with picturing resulting as to what's down there. Interpretation of seismic data is a pretty important component of oil and gas exploration in western Canada, especially today and increasingly on the offshore.

This is a global positioning system pack on the back of a seismic worker. This is showing you the extent to which technological development also goes along with less and less environmental disturbance, because as a result of this type of positioning system you don't have to clear straight lines miles and miles long through the woods, catlines, for seismic work to be done because with satellite positioning the workers can be positioned exactly as to where they are, so there's only periodic clearing of some trees when absolutely necessary. So this is a clear application of the most advanced technology in the world for natural resources development.

Now this—you can't see on this image and that's the clue that you're not supposed to be able to see it—is the catline running out from the surveyor, which just shows how much smaller and less expansive is the need for things like cutting down trees in the search for oil and gas today because of technological innovation.

In terms of the drilling of wells, drilling is now far more efficient because of developments in the technology of drill bits, which has affected the time that's needed to drill wells. The fact that we can now horizontally and directionally drill, reducing the number of wells that are needed to be drilled and yet increasing the amount of recovery from each well, and the improvement of commodities associated with drilling like drilling muds, which improve the performance of each episode of drilling....

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Again, this is to show you directional drilling and horizontal drilling. On the left is a conventional vertical well, going straight down. The next one is a directional drilling operation. You can see it's not a straight line. The next is horizontal drilling.

Obviously, with each of these latter two, you're able to get into areas where environmentally you would not be able to drill but for the development of technology. With the horizontal well, you're able to get far more out of the producing formation than you would with one well otherwise, because the horizontal line of the well is running through that portion of the rock that has within it the oil and gas, decreasing markedly the numbers of wells you need to drill and of course the surface disturbance associated with that.

These are remarkable developments that are unbelievably useful in terms of our exploitation of the resource at home and are clearly exportable to the world as well.

Offshore is the same story. This shows you the type of drilling going on as the water gets deeper and deeper, from one just based on piles at a shallow depth to those that are still sitting on the bottom at 100 metres—the jack-up, the third one along—to semi-submersibles and floating platforms in deeper water.

The Hibernia platform is of course a bottom-founded unit in about 100 metres of water, drilling about 3,000 metres below the surface.

Technology for completion and servicing and the measuring equipment and computer technology, again, allow far better exploitation of the resource by being able to constantly observe what portion of the resource is being taken out and how the extent of drilling is affecting the ability to exploit the resource.

Hibernia, with its recent slowdown in its early production—that's a reaction to how they're seeing the drilling they're doing so far in terms of the long-term benefit of getting as much as possible out of that resource, able to track that type of thing far better.

What does technology mean in terms of economic impact? More than $5 billion in annual revenues and 20,000 jobs; that's what we can attribute directly to technology. The indirect economic impact, of course, is steel-making—you saw that horizontal drilling and the flexible steel that manages to turn corners thousands of metres underground—and the construction equipment involved, no doubt. There's also the service equipment—and Roger will be talking about companies like Fracmaster—able to enhance recovery beneath by breaking open the porous formations down far beneath the surface, and the helicopters being used in the industry for heliportable seismic, and on and on.

Again, all of this technology is available to be used at home and is also exportable.

It's clear that most of the technology is also involved in reducing environmental impact, from the amount of surface area that needs to be disturbed to non-toxic muds to the more efficient energy drilling that reduces the amount of energy used and—this will be my only mention of it—reduces greenhouse gas emissions.

This is an example of a helicopter transporting seismic equipment. No longer does it need to be all carted in by trucks after cats have gone through and levelled the surface.

Finally, all of the technology developed by the industry is of course developed according to the standards set for safety and environmental protection by provincial and federal authorities, and by industry. Best practices are a clear and important part of the oil and gas industry in Canada.

In view of what's happening on the offshore, it wouldn't be appropriate to have a presentation on technology without showing you an offshore installation—not Hibernia, I might add—a clear and growing part of the consequences of technology in the oil and gas industry in Canada.

Thanks very much, Mr. Chairman.

The Chairman: So are we world leaders, or are we first or second or third or...?

Mr. Chris Pierce: Clearly, we're world leaders.

The Chairman: Just to let everybody know, we're having a working lunch today. There will be sandwiches and what not brought in a little bit later.

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With everybody's indulgence, since we're doing oil, we'll go to the Petroleum Services Association and then to the Canadian Coal Association.

Is that okay, Don?

Mr. Don Downing (President, Canadian Coal Association): Yes, sir.

The Chairman: Okay.

I want to remind witnesses to try to keep their remarks to five to ten minutes so that we have lots of time for questions and discussion.

Mr. Soucy.

Mr. Roger Soucy (President, Petroleum Services Association of Canada): Thank you, Mr. Chairman. Members of the committee, ladies and gentlemen, thank you for the opportunity to offer my comments on this important subject matter.

In these kinds of presentations to government and others, the service industry usually follows the producing companies and our sister association, CAP, so we've learned to streamline our presentations, because most of the time they end up talking about a lot of the things we'd want to talk about. So I'll avoid a lot of duplication today.

The Petroleum Services Association of Canada, which was established in 1981, represents 200 companies involved in a wide array of activities in the conventional oilfield service and manufacturing area, providing products and services to the oil and gas producers. We are the ones who get dirty. These companies represent about 80% of the employment in this industry sector, over 20,000 people, and roughly 75% to 80% of the business volume, more than $8 billion.

Canada has the second-largest petroleum activity area in the world today. Only the United States has greater field activity. In 1997 the U.S. drilled approximately 26,200 wells, while in Canada we drilled 16,500. To contrast this, in 1985, which was the peak period in the last cycle, the U.S. drilled 70,800, while in Canada we drilled 12,000 wells.

The petroleum industry in Canada as a whole has changed dramatically in the last 15 years. I have often commented that if we drilled wells in the same manner we did in the early 1980s, we wouldn't have much of an industry today. The reason for this is that finding and producing oil and gas is relatively expensive in Canada compared to a country such as Saudi Arabia, where basically you put a stick in the ground and get oil. A significant aspect to the changes has involved technology.

Historically, major petroleum companies were the main initiators of technological development. Although they continue to be involved, in particular with regard to oil-sands development, the large producing companies have reduced their presence on the conventional side of this activity, and the emphasis has shifted to the service sector. This has taken place on the employee front, with the producing companies having reduced their own internal technical personnel, and service companies are now expected to provide the expertise as part of their functions.

At the equipment and processing end, service companies are much more likely to develop and manufacture new generations of products on their own than was the case in the past. It should be noted, however, that collaboration with others, including their customers, the producing company, still takes place.

Perhaps the most significant partnership effort in the industry in recent times has been the development of the Petroleum Technology Alliance Canada. PTAC is a non-profit association formed to encourage collaboration in the development of technology in the upstream conventional oil and gas industry. PTAC provides a structure that facilitates joint effort on technological development. It brings stakeholders together to help identify areas where technology makes a difference, identifies research projects to address these problems, and promotes industry participation in the resulting research.

The oilfield service sector has been involved in the international marketplace for many years. However, it generally was on the strength of individuals and their skills, as opposed to significant corporate efforts. The circumstances are beginning to change at the corporate level. More are now seeing the merit of being in multiple markets to help alleviate the high and low cycles of our own market. In addition, when contemplating the potential for growing the companies, it requires that at some point one consider other markets.

Since Canadian service companies are not large by international standards, they seldom want to get into bidding wars in new markets with larger, established entities. They tend to look for opportunities and niche areas where their skills or technology give them the advantage. Technology developed to meet Canadian circumstances and conditions is often found to be very useful and desirable in other countries. Canadian companies are also predisposed to work with local entities and, where appropriate, transfer their technology locally under terms that are mutually beneficial.

The industry does not have an extensive record when it comes to soliciting assistance from federal government programs. However, as they venture internationally, companies are investigating the benefits offered by agencies such as CIDA and EDC and programs such as PEMD and others.

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On the domestic front, one of the more useful programs for helping small and medium-sized companies develop their technologies is the National Research Council's Industrial Research Assistance Program, or IRAP. This is a hands-on program administered by local industry specialists who understand technology and its applications. The industrial technology advisers are able to do a lot of hand-holding for those who need it, and the program is also relatively simple to administer from the company standpoint.

In conclusion, Canada has world-class capability in the petroleum service sector. It needs to maintain and even expand that capability in order to be able to keep producing oil and gas that is commercially viable.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Soucy.

We'll move to the Coal Association of Canada, and Don Downing. They may have been sabotaged by the petroleum association. They can't get their slides out.

Mr. Don Downing (President, Coal Association of Canada): It wouldn't be the first time, Mr. Chairman.

Thank you for the opportunity to address the committee once again. In a fashion similar to that of the petroleum producers, we don't have any comments on climate change today. It's a technology-oriented presentation, but I really would welcome the opportunity to come back to talk about climate change, at which time I'll take issue with some of the points put forward by the gas association.

The Chairman: We have plans to come back to that issue, so we'll certainly invite you back.

Mr. Don Downing: History records the use of local coal in the maritime provinces as early as the 1600s. Production and use of coal in Canada has continuously played a significant role in the Canadian economy ever since.

Over its long history, the industry has been characterized by profound changes, many of which have been linked to technological change and innovation. Early in the century coal was used mainly for domestic heating, rail and marine transportation, heating industrial boilers of all types, and in steelmaking. Shortly after the middle of the century, though, coal was essentially eliminated from use in all of these applications except steelmaking.

Canadian production and use of coal followed this trend, with domestic production peaking at 18 million tonnes in 1950, and consumption peaking at 44 million tonnes that same year. Both production and consumption fell dramatically after 1950; however, beginning in the late 1960s, a new era began for Canadian coal as large-scale, coal-fired electricity generating stations were built, and as a new market for high-quality metallurgical coal emerged in Asia.

Setting records has become an annual event for the Canadian coal industry. In 1997, 78.5 million tonnes of coal were produced—we have more than quadrupled production in the last forty years—55 million tonnes of coals were consumed in Canada, and almost 38 million tonnes were exported, mainly off the west coast. There are also some imports of coal into southern Ontario and New Brunswick at the present time.

This background provides a context for the brief discussion of knowledge- and technology-based industries in natural resources, and specifically coal. I'm going to confine my remarks to the upstream part of the industry, mining and transportation. There's a lot happening in coal utilization in electricity and steelmaking, but I will not be addressing those things today.

Looking at coal mining, the evidence of technological advancement in the industry lies in the trends in productivity and cost per tonne of coal produced. Since 1990, there has been a significant drop in current and real dollars per tonne.

The next slide would be the cost of energy per tonne of coal produced in Canada. Looking at the total cost per tonne also, just in the last seven years, there has been a significant drop in both current and constant dollars. This is a trend that was actually established over twenty years ago.

The next slide shows that production has been growing. Productivity has been growing as well. And if you look at the Canadian industry taken as a total, at that level of over 8,000 tonnes a person, that puts us in a group with the United States and Australia, at the very top of the heap. If you look at western Canadian mines only—B.C., Alberta and Saskatchewan taken together, as you can see on the next slide—it's at over 10,000 tonnes per person, however. For Alberta and Saskatchewan taken together, it's 15,000 tonnes a person. That would be tops in the world in terms of a major producing region and in terms of productivity.

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The Canadian developments in geosystems, the computer-based geology, mine design and planning programs, are among the very best in the world. Canadian offerings in these areas compete against U.S., Australian and U.K. products and services. The Canadian programs are used extensively in Canada. They form the basis of the engineering program at the University of Alberta at the present time.

Canadian companies are also leading in development of satellite-based global positioning systems for use in mines. GPS of course has a wide application in many aspects of transportation around the world, but Canadian companies are in the lead in terms of developing GPS systems for Canadian open pit mining. The GPS developed in Canada has been utilized for automating drills and shovels and for truck dispatching.

Heavy duty equipment—like the large trucks—now typically comes equipped with electronic monitoring devices. This slide shows one of the larger shovels in operation in western Canada. These machines are about four stories high. They are about the largest types of equipment in the world.

The challenge for the mines has been to capture on-line monitoring data, communicate it and analyse it. Canadian developments in data communication in mines are world leaders, like this type of installation now being installed in all this heavy equipment. In fact, the largest mines are developing local area networks—LANs—that link their equipment to each other and to offices, even to head offices in Calgary, Vancouver or Edmonton, for example.

The coal mines are involved in the development of local area networks for data transmission from operating equipment to analysts in offices, although I must admit that the oil-sands mines are in leadership positions in this at the moment. This slide shows somebody looking at on-line data.

Canadian companies are also involved in joint development contracts with equipment manufacturers. Although most of this heavy-duty mining equipment like the trucks and the shovels is manufactured outside Canada, prototyping and specialization is taking place within Canada. Equipment manufacturers like O & K, Caterpillar, P & H and Haulpac, which are North American and European manufacturers, all have joint development contracts, which leads to new equipment models especially suited for Canadian conditions.

And it's the size of the heavy equipment fleet in Canada that has led to these opportunities. The existing population and the prospects for growth in open pit mining mean that the manufacturers are willing to let technology development occur in Canada. And I will also admit in this regard that the potential growth in oil-sands mining is something that the other open pit mining operations in Canada will no doubt benefit from, because it's that potential growth in the mining fleet that is attractive to the manufacturers.

Other mine-related research is taking place in wear materials and the development of abrasion-resistant materials for mine equipment. This research is aimed at improving the operating life and performance of truck bodies, shovel teeth and tires. Canadian companies are working with the National Research Council and the Natural Sciences and Engineering Research Council of Canada in this effort.

Coal mining companies are also working in collaboration with each other on areas of neutral interest. One such group is the surface mining and research technology group—SMART—and is essentially made up of coal mining companies and the oil-sands mining companies, together with the Iron Ore Company of Canada from the east. The coal companies are also working collaboratively with universities and equipment manufacturers, and technology transfer is being accomplished.

Much of Canada's coal production and all of our export coal requires some treatment prior to shipment. This slide shows a typical coal preparation plant at a western Canadian mine. Process control is the integral operating area for optimizing product recovery and product specification as well as optimizing energy management and lowering costs.

Developments in this area are occurring in programmable logic controller—PLC—and direct digital control—DDC—systems. These applications are leading the progression towards fully automated plants and are used for a sequential start-up, shutdown and restart schemes and for monitoring and control of processes. Process control in the coal flotation circuit is using nuclear ash monitoring systems. Ash is the term used to refer to impurities in coal.

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At least one mine has acted in collaboration with the provincial government, CANMET, which is the federal lab, and equipment designers to implement process-control systems that integrate online ash monitoring using the nuclear ash monitoring system with overall plant operating systems. This type of system integration would be world-leading. Canadian designs are also emerging from this work.

Looking quickly at transportation, bulk commodities and railways have a strong reciprocal dependence. We rely on the most modern transportation technology available. General Electric, which is located in London, Ontario, is a major supplier of these brand new, large locomotives.

In addition, the latest traffic management and dispatching systems utilize Canadian expertise. CP Rail recently opened a world-leading facility in Calgary, which illustrates the state of the art.

I'd like to touch on the area of training with equipment of this size. We have seen the use of simulation technology emerge, which, as you may be aware, is used in aeronautics and flight training. It has now been extended to heavy-equipment training by Canadian companies. These applications lead to safer operations and lower operating costs.

Most of the applications we've talked about are similar to the types of developments in computerized and digital technology that the petroleum producers utilize. The application of these things to mines though is where we see Canadian leadership. Interestingly enough, most of these developments and applications are coming out of small and medium-sized Canadian firms. I think that's probably the hotbed in terms of the innovation and creativity in this area.

The Chairman: Thank you, Mr. Downing.

We'll turn to questions from Mr. Stinson. I'm sure he or some of my colleagues will ask about where some of the equipment in any of the sectors is manufactured, and whether Canada is keeping up in terms of training, etc. Mr. Stinson, please.

Mr. Darrel Stinson (Okanagan—Shuswap, Ref.): I'll go to the Canadian Gas Association first, if I could.

In your brief you go into the details about R and D as compared with that of other countries. You say Canada is outspent by a factor of four in the U.S., 10 in Britain, 15 in France, and 25 in Japan. What is Canada's production level compared to that of these countries?

Dr. Shahrzad Rahbar: In production levels, Canada is the second-largest producer of natural gas. Japan has no gas production whatsoever at all.

Mr. Darrel Stinson: They outspend us by that much in R and D. This is what you're saying here.

Dr. Shahrzad Rahbar: Yes. The reason is that they are major consumers. In the case of the Japanese, they realize that although they don't have the resource, they are using it and spending money to bring it in, so they want to be efficient in its usage. Yes, they don't have any of the resources, and they are spending the money.

Mr. Bruno Carella: Mr. Chairman, if I could add something, that's the reason we stressed end-use demand and technologies in our presentation. We figured that would drive the upstream market.

Mr. Darrel Stinson: I can understand that. Are you saying that government or the industry itself should become more involved?

Dr. Shahrzad Rahbar: It should be a collaboration. The downstream side of our industry has been pretty active. Look at table 1, which shows how much of a contribution each sector puts in. The case we are making is that if the end-use applications or utilizations are to expand, there is the requirement for a cash injection both from industry and government. We're suggesting that a consultative body between industry and government is required.

I went through something further down in the presentation outlining the transformations in our industry that are currently putting some strain on collaborative end-use technology development because of the potential competitive nature of the business.

Mr. Darrel Stinson: That leads me into my next question then. In almost the same paragraph, you go on to state, for example, that the decision by the National Energy Board prohibiting transmission companies such as TransCanada PipeLines and West Coast Energy to participate in market-related research and development has seriously reduced the possibility of coordinating centrally funded programs. Going further into what you are saying here, I'm almost coming to the conclusion that what you're saying is that it's almost like a turf war in government overlaps, or regulation overlaps.

• 1155

Dr. Shahrzad Rahbar: Not at all. What we are seeing is that because this natural resource has enjoyed an unprecedented market growth there is somewhat of a dilemma as to who is directly responsible for growing the end-use market, basically. We have seen the distribution companies show some interest in growing the end-use market. The small to large Canadian manufacturing companies are actually selling the appliances or the utilization technology to the extent that they can contribute to the innovation, but we are outlining in our presentation that there is a potential negative impact from fragmentation within our industry and that the upstream side of the business tends not to see utilization and growth in utilization as directly applicable to their business.

The Chairman: Roy Cullen, please.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you, presenters.

When a couple of you preface that this is not about climate change, it's about technology, I assume you don't see the issues as unrelated. I hope not. Sometimes the technology is perhaps oversold in terms of the solutions, but it has to be part of the solution.

When we look at research and development, one of the things we know is that in Canada we have some of the most progressive tax policies in the world when it comes to R and D, yet the private sector doesn't really take up on it as much as it might. I wonder if you have any comments on that.

Let me start with the Gas Association. The question of emissions trading has become more topical. I think most of us around the table understand the concept of emissions trading. I wonder if you could comment on how emissions trading will be implemented in Canada. What are your views domestically and internationally? What is needed to move this agenda item forward from a concept to a reality?

On oil and gas exploration off Vancouver Island, it's becoming, as I understand it, more of an issue, or it could be a topic, whether exploration should be undertaken off the west coast for oil and gas. I wonder if you could educate certainly me on whether that's an issue or a topical item and what your views are on that.

Mr. Bruno Carella: I can handle your first two items. First, on tax policy, I would just like to offer that we have met with Finance on this issue, because Finance has asked us why we as an industry don't take advantage of a lot of the CCA rates that are out there. Our members find those rates awkward. They are not being utilized because they don't give them a business return they are looking for. We've established this with Finance about two months ago, and we're going to be working with them over the course of the year to make some modifications, we hope, for the next budget, with CCA rates that can be used in a business environment.

On emissions trading, I guess the short answer is recognition for early action by industry. Credit trading is seen by most people here, I believe, as a solution. Obviously the proper consultative process, including industry at both ends, the early stage and the ministerial level, is important, but the first step, I believe, is to give recognition to early action by industry. Some actions industry is doing right now may not be wise business solutions, so to speak, but it's doing them because they save energy. Also, if you give recognition, I think you will see a lot more reductions starting to take place and a lot more efforts in that regard. I think that's the key to that.

• 1200

Mr. Chris Pierce: To respond to your first point, Mr. Cullen, absolutely, in terms of climate change, we believe that efforts that the federal government and Canadians can take will be led by technology, along with the actions of all of us as individuals to cooperatively improve energy efficiency. I only wanted to refer to the fact that in these six or eight minutes today, this is more a window generally on technology.

In terms of spending, I would want to underline the fact that one of the remarkable things about the oil and gas industry is that it spends enormously on technological development. It's just that most of the time it's not using government money to further that process.

As Roger pointed out, too, pretty much all of the developments in oil and gas are technology-led and the industry is the largest source of capital investment in the country, next to private housing. There's an enormous amount of spending going on in the industry and it's intimately involved with technology at every step of the way as we try to increase production from oil and gas reservoirs from 25% of the reservoir—which historically is the level—to closer to 50% with application of modern technologies now.

In terms of emissions trading, we are certainly in favour of a discussion of international emissions trading. We think it is really important—and the government seemed to recognize this in the federal budget—that Canada not get into an early discussion of domestic emissions trading, because when you're talking about a domestic system of emissions trading, you're really talking about a cap over Canada.

A cap over Canada will do us no good except to stunt economic growth in this country. We need to figure out how we could play in an international system of emissions trading that, as Bruno mentioned, will give us credit for some of the things that we export, technology and raw commodity, that help to reduce greenhouse gas emissions elsewhere in the world.

In terms of Vancouver Island, the Premier of B.C. has spoken recently about the notion of development off the coast of B.C. Lord knows, the industry has been willing to explore wherever that opportunity has been opened up to it.

We've got a process going off George's Bank off the east coast right now to figure out whether a moratorium on exploration activity in that part of the world will come off. We certainly know that off Vancouver Island there will no doubt be issues around the environmentally sensitive nature of the area and all of that. So while that may well be something that could be taken up, it's probably a long-term venture.

Mr. Roy Cullen: Thank you.

Cogeneration is one of my little pet peeves. I've looked at it mostly from the aspect of the forest products industry using biomass and creating some cogeneration possibilities, but gas-fired cogeneration projects have a very useful role as well, it would seem to me.

I'm wondering how receptive have the public utilities been to cogeneration projects in your dealings across Canada. Are different utilities more receptive than others, or have they been very accepting of cogeneration as an approach to sort of marginal increase in production capacity?

Dr. Shahrzad Rahbar: I believe up until now cogeneration has been dabbled in but not explored. We're seeing that there's a very serious force to converge gas and electricity into one energy commodity. With this convergence we see tremendous growth for cogeneration for a number of economic reasons; one is that the payback is short-term, and the investment is relatively small compared to other forms. So we do anticipate that to grow.

Among our membership we have the larger manufacturers who supply the equipment, and my understanding from them is that they hear a lot of talk but not many orders. By the same token, they don't actually expect to see a whole lot of orders before 2002 because there's still excess power there. But they're all gearing up and the expenditure we're seeing on the part of the manufacturing community on developing the technology is tremendous.

We have companies like Pratt & Whitney that spend close to 17% of their revenues—and their revenues are hefty—on making cogeneration technology more robust. While they offer advantages, comparatively speaking they're reasonably delicate at this point in time, but a whole lot of private sector money is going into strengthening those. So we do see in the short-term future a growth. Today we're not seeing a major jump, but we're seeing demonstrations across the country.

• 1205

Mr. Chris Pierce: I think cogeneration is intimately tied up with electrical deregulation, and the faster we can see greater electrical deregulation then the more small-scale cogeneration projects will come to be more and more viable. You have Canadian product, Canadian natural gas, being supplied to cogeneration operations in the United States because deregulation is a little ahead of us down there. Certainly in our sector there are things like the amount of natural gas that's flared right now in western Canada. One of the clear ways out of that is going to be allowing small-scale generation of electricity that will increase efficiencies and reduce things like carbon dioxide as well.

Mr. Donald Downing: I think I'd like to remind speakers that you can cogenerate steam using other fuels as well, and there are many well-positioned coal-fired generating stations as well that are near industrial sites. One needs to take into account the demand for electricity and the demand for industrial steam as well. I think an estimate at the moment in Alberta, for example, would be you could only have about 800 megawatts of additional electricity, and if that were all cogeneration you would probably have filled the demand for industrial steam in Alberta.

It will depend very much, even in a North American context, on the regional demand for industrial steam and the demand for electricity in that area as well. The way it's used currently at some of the wood products is probably very site-specific in terms of the burning of biomass and the use of steam, but in some areas the generation of electricity is going to be a complication for industrial sites. What do you do with it? Can you sell it into a marketplace competitively if that market has become deregulated?

One of the things we found, too, was was that once the mould is broken on regulated electricity we don't know yet how generators are going to compete on the basis of cost. We believe that in Alberta, for example, the cost of the coal-fired base will likely go down dramatically if generators are faced with stiff competition, because never having faced competition before, those plants have not optimized their operations. That will complicate the demand for new electricity generated by using gas.

The Chairman: Next is Bruno, and then maybe we'll move on.

Mr. Bruno Carella: If I may tie the cogeneration issue to your comment about the tax system, we are concerned that the tax system in Canada may not be favourable, so you might have a cogeneration facility being set up in Washington state rather than the province of British Columbia because of the tax laws. A lot of that has to do with the awkward language and the rules around the steam host, which are critical and which we'd like to work on with Finance Canada.

The Chairman: Maybe we can come back to you, Roy.

Mr. Roy Cullen: Sure.

The Chairman: We're going to go to Pierre next, but let's take five minutes just to grab a sandwich and a drink or something, after which we're going to come back to the table.

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• 1215

The Chairman: With everybody's indulgence, we'll start, and we'll continue with a power lunch.

[Translation]

Mr. de Savoye.

Mr. Pierre de Savoye (Portneuf, BQ): When we talk about fuel, we think about greenhouse gases, which, as several of you have already mentioned, could be the topic of another debate. It is however difficult not to raise the issue here today.

Moreover, several of you have mentioned the importance of partnerships with the government, and I would like to raise my questions from that angle. But first of all, I would like to congratulate Mr. Pierce who realized that many members of Parliament are francophone, in fact one quarter of all federal MPs are francophone, and at one point, a third of the members around this table were francophone. You chose to respect that fact and I congratulate you for having done so.

I would also like to point out to the others that it is always possible to send your brief ahead of time to the House of Commons translation service to have it translated if you do not have the means to do so yourself. But I see that in this case, the Canadian Association of Petroleum Producers had the means to do so.

Having said that, I have three questions. I will address the first one to the Canadian Association of Petroleum Producers, the second one to the Canadian Gas Association, and the last one to the Canadian Coal Association. I will ask the three questions and then you can answer them one after the other.

First of all, partnerships with the government were mentioned. I would like to know if the Hibernia project is currently profitable and if it will be so in the future.

Secondly, I have a question for the Canadian Gas Association on the Sable Island pipeline as well as other research conducted on Sable Island. To a certain extent, Canadian taxpayers funded this research on gas. At present, some people are under the impression that the Americans are the only ones who are benefiting from this research. What position are the Canadian taxpayers in? What is the Canadian government getting out of these investments in Sable Island?

Finally, I have a question for the Coal Association. Since coal pollutes more than other fuels, what future does it have in the Canadian economy?

The Chairman: Mr. Pierce.

Mr. Chris Pierce: Thank you, Mr. de Savoye, for your compliment on the translation. I would like to point out that a Franco-Albertan did the translation.

Mr. Pierre de Savoye: My father is Franco-Albertan.

Mr. Chris Pierce: Really? Perhaps he is Mr. Chrétien's cousin.

But I think that it would be better if I spoke English.

Mr. Pierre de Savoye: Whatever you think is best.

[English]

Mr. Chris Pierce: With respect to Hibernia, it's important to look at it in the context of one project, but also to look at it in the context of an industry. In 1979, when people first started talking about Hibernia, who could have known whether in the end it would be a viable project or not? But there is absolutely no doubt now for anyone who visits Newfoundland that not only will Hibernia itself make money—and note the federal government's decisions about whether or not to sell its interest, because that interest is going to continue to accumulate value now....

Not only will the project itself make money, even in the current pricing environment, which we don't think will be sticking around for long, but more than that, they now clearly have in Newfoundland an industry. Now projects such as Terra Nova are real, projects such as White Rose are not far behind, and a new season of seismic and exploration activity is just about to take place off of Newfoundland.

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Newfoundland and its economy are going to change, and we really think that change is going to be of revolutionary size in the context of economic activity in that province. So you can't look at it purely and simply as one project, we would say.

Similarly, before passing over, we would say the same is true of Sable Island. Sable is one project that is going to benefit the Government of Nova Scotia in terms of revenues, as well as those parts of Nova Scotia that will obtain service, in terms of both industrial and ultimately, I'm sure, residential users. But more important, if Sable establishes the platform for further exploration and development activity off of Nova Scotia, then similarly you'll see an industry, and not just one project, develop in Nova Scotia.

Mr. Bruno Carella: Thanks, Chris. I agree with your points.

I have to preface my comments by saying that as an industry we favoured a proper approach to the Sable Island projects, and we're confident that the joint public review board did what its mandate was to do.

In terms of residential and market expansion, as Chris mentioned, there are reports, as you no doubt have seen, of distribution systems to be set up in Nova Scotia and New Brunswick. But specifically on the technology on Sable Island, Chris is probably closer to the upstream elements of it and the production technology. Unfortunately we're not in a position to comment on those technologies, but I think Chris probably answered that question well for us.

[Translation]

Mr. Pierre de Savoye: Thank you.

[English]

Mr. Don Downing: And addressing the future of coal, as I indicated in my presentation, the two main uses of coal in modern economic society have to do with the generation of electricity and use in steel-making.

Looking at the Canadian steel industry first, the use of blast furnace technology in an integrated steel mill produces a range of products that is not possible using other technologies at the moment. So it's likely that coal in the blast furnace technology will remain important to Canadian steel-making and worldwide steel-making for some time. There are advances in technology within the steel industry, which is a very competitive industry in its own right, and undoubtedly the environmental impacts of steel-making will continue to be reduced as they have been over the last several decades.

Looking at the use of coal to generate electricity, as electricity markets deregulate in North America and around the world, coal will retain its place. Undoubtedly the pressure will remain that there be fewer and fewer emissions from the firing of coal. We have addressed particulate matter, we have addressed sulphur dioxide, and ultimately we'll address carbon dioxide from the combustion of coal in one form or another, but the technologies to improve the utilization of coal are making strides every year.

The newest large generating stations in Canada—in Nova Scotia, New Brunswick, Saskatchewan, and Alberta—are coal-fired. They just started up in the mid-1990s. Undoubtedly those stations will be working for another 30 or 40 years, but if the marketplaces are competitive for electricity, they'll have to maintain high environmental standards and they'll have to be economically competitive as well.

[Translation]

Mr. Pierre de Savoye: Thank you, Mr. Chairman. You will have to excuse me, but I have another meeting.

The Chairman: You are excused. Thank you, Pierre.

[English]

Ovid, please.

Mr. Ovid Jackson (Bruce—Grey, Lib.): Mr. Chairman, I heard that there are some strides being taken in order to clean up some of the contaminants, whether it's sulphur or other types of contaminants that may come out of tailpipes or stacks as a result of either using up the fossil fuel or taking it out of the ground.

I have a number of questions. I would like to know if you've established a benchmark as to what kinds of contaminants are now being produced as a result of exploration, both oil and coal, and if you have some standards to reduce them. Are you doing any research and development in order to reduce the greenhouse gases produced as a result of mining activity?

• 1225

Another question I'd like to ask is about a report that was in the Toronto Star not too long ago. It had more to do with Ontario, and it was talking about refineries that were using refining techniques that were actually archaic. The fuel that we were selling in Canada was not as clean as that in some other countries. In fact, it was one of the reasons the contaminants were so high and why we were having photochemical smog and other problems in the bigger cities. Is there any research being done in order to find newer ways of cracking the fuel, of taking out serious contaminants that are obviously causing environmental problems?

And as one last one, we've had the MMT conflict. MMT, of course, is an additive that's added to gasoline, the same as they used to use lead in the old days to improve the octane rating and the compression ratio in order for our engines to produce more power. Are there any substitutes for MMT that would perhaps work properly with the on-board diagnostics?

We talk a lot about technology. In order to use technology, when we have on-board diagnostics that become plugged up, they can't communicate properly. Of course this would render them useless within very short periods of time, and the stuff coming out of the tailpipe would be in bad shape. I'm wondering if there are any replacements that would help in this direction.

Mr. Chris Pierce: First of all, in terms of the production of oil and gas, Mr. Jackson, I can certainly say that when you speak of contaminants associated with emissions from oil and gas, the oil and gas industry is certainly one of the most—if not the most—environmentally regulated industries in the country today. That isn't something the industry complains about, other than to say we should try to avoid duplication so that the same thing isn't being regulated by two or three levels of government. But in terms of the challenge of being environmentally responsible in producing oil and natural gas, that's something we rise to quite willingly.

In terms of contaminants, we are part of a variety of both federal and provincial multi-stakeholder processes to monitor air pollutants and reduce them. In Alberta there is the Clean Air Strategic Alliance, a multi-stakeholder group that is, most notably right now, looking specifically at flaring, at what elements are emitted into the air, what the effects of those elements are, and what can be done to reduce those that are harmful.

In terms of greenhouse gases, I think it's really important to remember that CO² itself is not a contaminant, but it's the pre-eminent greenhouse gas, if you will. The only issue with CO² is its concentration in the atmosphere, but the notion is that it's a generically bad thing to emit CO². There's nothing dangerous about the product itself. The public has a real confusion around the issue of CO² emissions and the extent to which it is the same issue as NOx or VOCs or the types of things you mention in southwestern Ontario.

Finally, as we do spend and devote significant resources to reducing contaminants and emissions, it's important that we recognize that there are no simple trade-offs. For instance, there are perhaps some effects through banning MMT. On the other hand, using the alternatives to it probably involves more CO² emissions. A company like Suncor in Alberta has spent hundreds of millions of dollars, among other things, reducing SO² emissions from its activity in northern Alberta, but reducing SO² emissions necessarily increases CO² emissions a bit.

It's important that we look at these issues around emissions and environmental issues holistically. We can't figure that there will be simple solutions to one that might not have implications for the other. But in terms of the challenge of grappling with those difficult trade-offs, we are ready and willing, we will continue to do so in a variety of multi-stakeholder forums, and we do expend significant resources on that challenge every year.

Mr. Don Downing: To comment on the emissions from mining, generally speaking, where the coal is of a type in which there's a lot of in-place methane, which is mainly in eastern Canada, we find methane collection. The Cape Breton Development Corporation has a process to collect methane and then pipe that over to a nearby Nova Scotia Power generation station. That prevents the emission of methane, which is a stronger, if you like, greenhouse gas than carbon dioxide is.

• 1230

Mines themselves are mainly working on lowering their unit costs, which has the effect of lowering emissions on a unit-of-output basis. Certainly in the competitive part of the business that's a real necessity. The charts I showed earlier indicate the extent to which companies continue to lower their energy costs on a unit-of-production basis.

About burning coal, I think air quality standards are generally high in Canada. The allowable sulphur dioxide emission limits will go down in the future. Either technology or lower-sulphur fuels will help address that problem.

But I will echo a comment the Association of Petroleum Producers made. There are trade-offs in addressing CO₂ in the combustion of fossil fuel. Sometimes carbon dioxide is increased. That's because limestone is often the material used to capture the sulphur. So there's a trade-off there, and it has to be addressed in the short run as well.

Generally the electric utilities are marching ahead of the regulatory process in controlling emissions of all kinds.

The Chairman: Would you mind allowing me a supplementary on that point? Does the Coal Association membership invest R and D dollars in your own interest in cooperation with the electric utilities so the effluent from those plants minimizes the impact of the coal inputs? Where is your research effort in your industry? Is it on the mining side or do you work with the utilities on the effluent side?

Mr. Don Downing: The Coal Association encompasses both utility and mining companies in its membership. The utilities have tended to focus their research programs and planning in the Canadian electricity association. Where we have the close relationship between mining companies and utilities is specifically in western Canada, where the miners are actually contracted by the utilities to do the mining. It's a unique situation. There you have a lot of collaborative research between the two sets of organizations to mine specific qualities of coal, and that has an impact on the efficiency of the burning, the ash disposal problem, and the constituents in the emissions. So something is going on there.

Mr. Ovid Jackson: I am still trying to get my mind around it. For instance, some countries apparently have coal that doesn't have a lot of sulphur in it. I understand, for instance, the Americans buy a lot of coal from Colombia because of that fact. How do our coal and gas compare on sulphur content?

The question again is, are we doing something? Is there some scientific way of removing it so notwithstanding the fact that we have large quantities of it we're using some kind of research and development to make sure it is comparable with what our competitors are doing and we could actually use it?

Mr. Don Downing: I'll look at the coal first. Western Canadian coal, because of its age, because of the geological way it was created and so on, is low sulphur. It would be lower in sulphur than the Colombian coal, as an example. It would be among the world's lowest-sulphur coals.

In eastern Canada, in Ontario and New Brunswick, they use imported coal. It can be higher-sulphur. The New Brunswick Electric Power Commission has a particular type of generating station which can capture sulphur. It's a fluidized bed technology. It uses limestone injection right into the combustion process. The sulphur is captured right there. Then it can be taken out and put in a tailings pond. It's not emitted into the atmosphere.

• 1235

In southern Ontario, the large plants use either low-sulphur coal, by mixing Canadian coal and U.S. coal, or a scrubbing technology, which is mechanical equipment that takes the sulphur dioxide right out of the flue gas. That's then disposed of in a solid form beside the station.

So there are technological fixes. They're pretty well known. They've been used for a long time. We also have Canadian low-sulphur coal that can be used.

Mr. Ovid Jackson: One of the big technological fixes is to just make the stack higher so that it disperses further and then you're not breathing in as much.

Mr. Donald Downing: Yes, for some time that was the approach. We have the tallest stack in the world in Sudbury. At the time it was thought to be a meaningful solution. It didn't last that long.

Mr. Ovid Jackson: It was spread around the country.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Jackson. Mr. Chatters, please.

Mr. David Chatters (Athabasca, Ref.): Thank you, Mr. Chairman. I have many questions. It's unfortunate that the groups today are here together, because I think there are some real issues to each group.

It seems everybody is tending to move today towards the emissions subject despite the fact that we're talking about the development of technologies and how it affects rural Canada. I think we've wandered away from that topic, perhaps.

I have a couple of questions that may be a little more general. It seems to me that in the natural resource industries, the fossil fuel industries, we have used and developed tremendous technology, but that technology more than anything else has been directed at improving the efficiency and the competitiveness of the industries in the world. Their impact on rural Canada has been generally a reduction of the jobs in rural Canada, simply because in mining technology, the use of some of the equipment we've seen certainly can move thousands of tonnes of product much quicker and with less manpower than ever before. Even in oil and gas exploration and development we don't employ the numbers we used to. So I think there's a concern there I'd like you to touch on.

Certainly for the oil and gas exploration upstream, if you will, we've been in Canada for some time in a steady decline in the production of conventional oil. I just wonder where the future is taking us.

Is there technology coming down the pipes somewhere that will allow a higher-percentage extraction from the formations? Is that decline in production going to at some point level off and stay level for some years? I want you to address that.

Third, I was disappointed that none of you responded to the comment from the Bloc member with reference to Sable Island and what it's going to do for Canada, and the reference to the fact that this gas being routed to the markets in the northeastern U.S. is somehow robbing benefits from Canadians.

I was disappointed that none of you made the point that for every barrel or every cubic foot of gas produced in Canada, that resource belongs to Canadians, and a hefty royalty is paid on every unit of production. In fact, the industry is employing Canadians in a big way, and I didn't hear anybody say that. I was disappointed with that.

That's probably enough.

The Chairman: I think you've made a good point.

Mr. David Chatters: I wanted it on the record. I think it's important to note that wherever that gas is piped to, it's Canadian gas, and it's benefiting Canadians.

The Chairman: Mr. Soucy.

Mr. Roger Soucy: There was one point that wasn't touched on in the last member's comment regarding sulphur from gas. In fact, natural gas is stripped of sulphur, virtually all of it. It's a secondary product. Canada is the first- or second-largest producer of sulphur for fertilizer use in the world. So natural gas is stripped of virtually all its sulphur, as best as can be done. The sulphur is actually sold as a byproduct, so there's a benefit added there.

With regard to the question of jobs, this really affects the service industry, because that's where the jobs are in the upstream side of it—the conventional industry, anyway.

• 1240

Unlike the producing companies—I could be out on my numbers—they probably have 80% of their employees working in office towers in downtown Calgary and 20% in the field. In the service industry, the ratio is reversed: 80% of our people work in the field. So out of 25,000 or 30,000 people working in the service industry, maybe 5,000 are in office towers. The rest are scattered across primarily western Canada for the time being, from southwestern Manitoba through to northeastern British Columbia.

We are almost at a point of recovering all of the jobs—at least we were in 1997—that were lost in the 1986 downturn. The year 1985 was the peak of employment in the oilfield service industry in western Canada and we have virtually recovered all of those jobs. The initial technological advantages that we had, as you correctly indicated, did result in reducing jobs. But with the volume of wells that are now being drilled—in 1992 we drilled around 4,500 wells, and last year we drilled 16,500—we are now at a point where we can't find enough people to fill the jobs we have.

Mr. David Chatters: That's simply because of an increase in activity, though. Your manpower or your job creation per barrel of oil or per cubic foot of gas has to be going down. We have an oil company in Calgary that operates their entire operation in northeastern Alberta by remote control from Calgary, from the office tower in Calgary. They can shut in their wells, they can change the level of production without a man in the field. How many jobs is that eliminating?

Mr. Roger Soucy: If we didn't do that, we wouldn't have a business, period, because we're competing against Middle East oil that costs $2 or $3 to produce, or in some cases less than that, and our production costs are quite a bit higher. So we need to make up in volume for what we can't do in price, and we have to do it in a much more technologically based manner. That's what has led Canada to have some of the best technology for the conventional industry: we've had to do it just to stay in business.

However, I think it's safe to say that given the high levels of activity now, we've even been able to recapture most of the employment that we had in the previous peaks.

Mr. Chris Pierce: I think it's really important to follow that up, Mr. Chatters, with the fact that it is absolutely technology that is letting the industry go where it was not economic to go before. But for this pricing environment we've had the last month or so, you've had increased activity in heavy oil in areas of Saskatchewan, for instance, where it was just not economically feasible to go before.

Through enhanced oil recovery, the use of steam heat to release oil that before wouldn't flow to wells and so on, the jobs per barrel may not be increasing, but the number of barrels that we're able to get to that we were not able to get to before is increasing. As well, the jobs are generally more and more highly trained jobs.

Roger, for instance, has championed for the past while the notion of recognizing the skill set level that is required in his sector, the service sector, and that it's not the unskilled binder twine type of approach that may have been the case some time in the past.

In terms of the Bloc, I'm sorry if I didn't say so clearly enough, but when I said “money de Nova Scotia”, that's what I meant, and industry in Nova Scotia being built by that one project as well.

Dr. Shahrzad Rahbar: I'm actually going to make a point about the last question. Thank you for clearing up the fact that gas is stripped of its sulphur. But we've also looked at where our emissions are, where emissions come from in our industry. More than 70% of the emissions from the gas industry are on the utilization side. That's why we were making a case that we need to start looking at utilization and reducing emissions on the utilization side.

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On the production side, we did air emissions inventories in 1990 and 1995, and on a unit-of-production basis, on the production transmission and distribution side, our members have reduced their emissions on unit per production by 17%. But that is a small part of the emissions equation when you look at natural gas. Sulphur isn't an issue, but carbon dioxide is an issue, and utilization is there as the key sector for reducing emissions for natural gas, although we do comparatively well when compared to other fossil fuels.

There are activities under way and there is good Canadian expertise in place. Some of our universities have excellent programs. The Centre for Advanced Combustion Technology in Kingston does great work on industrial burners that use low-NOx technology to reduce carbon dioxide and NOx emissions without giving a penalty by increasing carbon dioxide or carbon monoxide as the result of reducing NOx.

There's good work going on within British Columbia at UBC. Private laboratories like the Canadian Gas Research Institute in Toronto and the Natural Gas Technology Centre in Quebec have done great work in end-use technologies that improve efficiency. High-efficiency furnaces used in many of our homes today were developed by the gas industry some 15 years ago.

Mr. Bruno Carella: If I could just make a general comment on the last question, the gas industry has been very active in rural gassification programs over the years and it took advantage of some infrastructure money a few years back. The expansion of the gas utilities or distribution companies to rural Canada offers an opportunity to deliver cheaper, lower-priced energy to areas in Canada that all of a sudden could have the introduction of foreign investment of new plants and new opportunities that, with the cheaper production cost, may be able to introduce new industries to Canada. It's a very broad comment, but I think it's important that we have delivery of cheap, efficient, clean energy to all parts of Canada.

The Chairman: Roger.

Mr. Roger Soucy: I have one last point to address. I've been in the industry since 1978, and ever since I got into the industry people have been forecasting the demise of the conventional oil and gas industry. I'm still waiting for that to happen. And I don't think it will happen when my kids go out to work in it.

We are producing as much oil and gas today as we ever have conventionally. People get confused in the numbers because there's a lot of synthetic oil being produced now, and that's growing. So the percentage of the conventional industry vis-à-vis the total that's produced is diminishing, but that's only because of the increase in the amount of synthetic oil-sands type of production.

There's no question we have to work extremely hard today to maintain those production levels, and eventually they'll start coming down. But I'm still waiting for that to happen, and it's been almost 20 years.

Mr. David Chatters: You're saying the production of conventional oil is not in decline in Canada.

Mr. Roger Soucy: Not yet. We're producing almost 2.5 million barrels per day.

Mr. Chris Pierce: It's confusing, because you have these various categories of proven reserves and probable reserves, but the reason our production is at the level it's at or has increased over the recent past is because we've figured out better technological ways to get more out of that reservoir. The predictions that were made years ago about when the industry would decline were based on the notion that we could only get 25% of the oil out of any reservoir. Now with better technology we can get closer to 50% of the oil out of there. But it's still only about 50%, so there's far more ground to be made.

Mr. David Chatters: I saw you nod when I said with upcoming technologies we could even pass 50%. We've done wonderful things in horizontal drilling and gas injection and all of the rest of the things, but what's coming down? How are we going to increase that from 50% to 70%?

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Mr. Chris Pierce: The marvellous thing about the industry, which I think is great for a committee like this to be taking up, is that it is endlessly creative. We cannot predict today what the technologies of tomorrow will be, just as the fellows on the spring pole 100 years ago would have had no idea of what the industry would be doing today. As Roger says, if we were using the technology we were using when he came into the industry, the industry would be dead now. What does the industry respond to? It responds to market forces. So when those market forces are allowed to let the creativity happen then technological innovation happens, and we get more from the resource and at the same time we do things like reduce emissions along the way.

The Chairman: Roy, you had a supplementary you want to come back to?

Mr. Roy Cullen: Thank you, Mr. Chairman.

When I was in Russia in 1990 on forest industry business I was told that in the oil industry there, there was more lost from the pipelines.... The volumes were staggering. I gathered that they hadn't done much with technologies like horizontal drilling. The thought occurred to me that there must be some enormous opportunities here for oil and gas technologies in Canada. The other side of my brain asked how would you put those deals together, because ultimately it is a commodity that is going to be in the market competing with Canadian producers. How does the industry put those deals together? Is it done as part of a sale of technology, or is it done in terms of a joint venture with some interest in the production capacity? How are those typically done?

Mr. Chris Pierce: In terms of things like natural gas pipelines.... I know Jack Jenkins is here from TransCanada PipeLines Ltd. That is the great thing about Canadian skill and expertise: you have Canadian pipelines involved in projects whether it is in South America taking natural gas to Santiago and helping to reduce their urban air problems....

We do get involved in joint ventures generally. With something like natural gas, it is not affecting the competitiveness of our commodity because natural gas right now is a North American market, so we don't export that commodity globally anyhow. But if we can export the technology that will help improve the environmental performance of production elsewhere in the world, it is a great new story for our economy and we think for the environment as well.

Mr. Roy Cullen: That is oil; this is petroleum in Russia.

Mr. Chris Pierce: The same goes for our oil production, with our companies becoming more and more active elsewhere in the globe, not just the big companies, but smaller Canadian companies that are becoming active elsewhere. Russia of course presents its own difficulties just because of the state of law and a rules-based economy there. There is danger about western corporate interests just not being able to grapple with those concerns right now. But the Canadian oil industry is also one that is marching forth to other parts of the world.

The Chairman: Mr. Soucy.

Mr. Roger Soucy: The service industry plays a particular role in this. In fact it led the Canadian oil industry into the international marketplace well ahead of the Canadian producers. They have been able to adapt to the market they are in. Specifically, in Russia a real Canadian success story is Canadian Fracmaster Ltd., who were one of the first companies into that market and developed what was really the first production-sharing arrangement for an oilfield service company, probably in the world.

Mr. David Chatters: So they are taking oil as payment?

Mr. Roger Soucy: That is right. That is how they started. More and more of the services they are offering now in Russia are starting to go into the fee-for-service area, which is typically the way it is done in the service industry. Fracmaster and others are also doing the same thing in China, where they introduce their technology to the country on the basis of saying give us a producing field as a demonstration project, with x number of wells; we've looked at it and determined that we can increase the production that is there and we will take a piece of the incremental production that is there until you are satisfied that this stuff actually works and you are prepared to pay us for the service, in hard dollars as opposed to production.

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It goes from that to the traditional fee-for-service types of arrangements. Companies have also franchised operations in the Middle East, for instance, where they've gone to a local company in the Middle East and said: You need our technology; we're prepared to give it to you on a franchise basis. You know the customers. You know the area. You use our technology. Pay us a royalty and we'll be happy with that.

So there's a wide variety of opportunities for providing services, and actually Canadian companies are very good at trying to fit into whatever the circumstance requires.

The Chairman: Mr. Carella.

Mr. Bruno Carella: I think I agree. There have been a lot of good Canadian success stories, whether it be large companies or small companies, and government-led trade missions do help. Perhaps what we need is some type of mechanism that delivers a turnkey Canadian solution where we'd be able to deliver a package right from the production, transmission, the supplier, distribution, to the manufacturers of equipment, furnaces, and so on, deliver that package to other countries. So that might be something that could be considered.

Mr. Roy Cullen: Yes. Thank you.

My own intuitive sense is that we should be selling and licensing these technologies. I know it was an issue we looked at in putting a pulp mill in Russia. To make it work, we had to sell for the first eight years about 80% of the production offshore to develop the hard currency, and that pulp that was going offshore was going into the world commodity markets. So I think it sounds like there's an enormous amount of work to do in countries like that to increase their technological expertise.

Coming to the Petroleum Services Association, you answered my question somewhat. But when I read your brief, it says that the Petroleum Services Association of Canada is involved in a wide array of activities. In terms of your mission, what are you trying to do? You talk about this alliance, Petroleum Technology Alliance Canada, and you've alluded to the fact that clearly you've led the way in terms of developing export markets. If you look at your chart, there are a lot of different services, and so on, involved, but is your main mission an advocacy mission, or is it to help take these Canadian companies and market their services domestically and abroad?

Mr. Roger Soucy: We do both those roles. The Petroleum Services Association itself has a primary role of advocacy. Our international marketing arm is called Petro-Trade, Petroleum Services Trading Association of Canada. It's a separate entity. It's a sister organization, but it is separately incorporated as a not-for-profit. Its mandate is to market Canadian companies internationally. So we do both roles, but we're quite separate in the way we do that so we don't conflict.

Mr. Roy Cullen: Would that sister organization be part of Team Canada missions? Have they been?

Mr. Roger Soucy: I just came back from Trinidad the week before last, from a large Canadian mission in Trinidad, in fact the largest mission of any country, ever, that went to Trinidad. It was an oil and gas mission. My cohort who heads up Petro-Trade was in the last trade mission to South America and Mexico as well. So we do accompany those missions as well.

Mr. Roy Cullen: Right, and have you had any success? Team Canada has been to South America and over to the Far East. Do you typically participate, and how successful have they been for you?

Mr. Roger Soucy: Success is measured internationally. Typically success is measured in very small increments. It takes a long time to develop.

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In my comments I also mentioned that the Canadian oilfield service industry is relatively small by international standards. The largest Canadian service companies we have, companies such as Fracmaster, have—I'm guessing here—roughly 1,200 people around the world, with revenues of $700 million or $800 million. By international standards those are not large companies. They have to pick their markets with a rifle as opposed to a shotgun. They have to be very diligent about what they are going to get involved in and how they are going to do it. It takes a great deal of time and effort to develop the core expertise.

Mr. Roy Cullen: In the world, who would be the leading edge in directional and horizontal drilling? Would that be a Canadian company?

Mr. Roger Soucy: You've going to have all kinds of debates on that. We didn't invent horizontal drilling, but we mastered it in western Canada.

We are great at innovating, very much like the Japanese, in many cases. Part of that comes from the fact that because they are small companies, the people who tend to start them are tinkerers. They know intuitively there's a better way of doing something and they putter around with something until they make it work better. That's how it started. It's a little more sophisticated than that today.

So much advancement is going on that it's hard to say who has the advantage. Certainly the Americans can't be discounted in this equation, because they bring so much horsepower to the game that if they don't lead in something they won't let somebody else have it for too long. If they can't make their own, they will buy it. Often that's what happens.

Mr. Chris Pierce: As with all things Canadian, there's room for us, with our bit of a smaller profile than that of some large American companies, and there is the Canadian dividend when Canadian companies go abroad and try to take advantage of niches and maybe are seen in a little more benevolent or friendly a light than some others who are coming to the door. All those same advantages can be had within our industry.

Mr. Roy Cullen: That has been my experience in places such as Russia and China.

I have a question for anyone who would like to have a shot at this. The kind of energy and research resources you applied to energy conservation or energy efficiency.... If you look at Ontario Hydro, in the past they have mounted huge programs to encourage energy conservation, but I suspect it's in their interest to do so because they are looking at avoidance of increased capacity, perhaps. Maybe there's an altruistic motive, but....

For your own industry, whether it's oil, gas, or coal, maybe you could just talk about that. How do you see energy conservation, energy efficiency? It seems to me in Canada and throughout the world we lose a lot of energy and heat. The more efficient we can be at that the better, but it may not be in your best commercial interests. Maybe you could convince us otherwise.

Dr. Shahrzad Rahbar: If I may take this from the gas industry's point of view, it does sound paradoxical. We ship gas, yet by conserving energy we don't want to ship gas; but there's actually a very good business interest in conserving industry. In the case of the gas industry, our members on the downstream don't make their money by selling gas. They make their money by transporting and distributing the gas.

With gas being mainly for heating purposes, there's a large profile difference between summer load and winter load. The pipe is quite full in the winter, or even doesn't quite meet demand. It's reasonably empty in the summer. The more we can shave off the peak load and do the balancing....

From a demand side management point of view there's a very real business interest in conserving energy. Hence the developments on the downstream end which our industry has been involved with, such as high-efficiency furnaces, developed back in the 1970s, before the environment and reduction of emissions were so big an issue. Now, of course, there's renewed business interest from an emissions reduction point of view.

So on the gas distribution side there is a real business reason for wanting to conserve energy.

Mr. Chris Pierce: The same goes for the upstream sectors. To the extent that the upstream industry uses less energy in getting the product out of the ground it spends less money. So energy efficiency usually relates to cost efficiency as well.

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In terms of conservation or efficiency efforts beyond the well-head, if you will, CAPP, for instance, has been a part of the heat challenge in Canadian schools across the country for the last five years, which has been trying to get kids to go home to do energy audits of their homes with their parents so as to reduce the usage of energy.

There's no sense in the oil and gas industry to encourage the profligate use of hydrocarbons as a means of economic growth. Economic growth can go along with better and more efficient uses of energy. That's not what the growth in global demand has been all about. So we are certainly in favour of efforts that promote the efficient use of energy.

Mr. Roy Cullen: I know everyone wants to go home. Could I just ask one more? If anyone else has one, that's fine.

There would be some who would say that given the Kyoto targets that have been set that as a federal government, if we look at tax incentives, economic instruments, that we should kind of rebalance that between renewable and non-renewable resources. There are various tax provisions now with respect to flow-through shares, accelerated CCA, and a host of other tax policies that have evolved largely, as I understand it, to line up with the non-renewable sector.

I wondered if you could comment. Is that something that our government should be doing? I guess to put it another way, what's your take on that? Is that a good public policy move? What would be the obstacles or the negatives to it?

Mr. Chris Pierce: We don't have any objection to extending some of the same treatments that have allowed the development of oil and gas resources in Canada to things like renewable sources of energy.

The most wildly optimistic projections of the growth of renewables might put it at 5% of our energy needs at some point in the future. It's really important that we come to recognize that the responses to things like Kyoto are not either hydrocarbons or renewables. All we're talking about is what the energy mix of the future will be. That energy mix is going to include a significant place for oil, natural gas, and coal. Similarly, it's going to include a place for things like renewable energy.

It's just we would not want to see that notion gain prominence that frankly your fellows in the environment committee put forth that there is a raft of “subsidies” that are laid over the oil and gas industry.

That's not what it's about. What has happened is that there's a tax treatment that allows the development of a resource that's different from a manufacturing plant. It's the development in a joint partnership or venture with the owner of that resource—it's the provincial government usually, or it's federal and provincial in terms of the offshore resource—to allow that product to be produced. But we certainly differ with the notion that there are a series of subsidies that are available to the oil and gas industry.

Mr. Bruno Carella: We favour favourable tax treatment for energy-efficient equipment. We at the Canadian Gas Association have directly built alliances with the wind and solar groups to attempt to work with them, introduce them to our CEOs, and really have them describe and reach business-case solutions to some of the environmental problems.

As you know, fossil fuels offer a price advantage, reliability, renewability, and cleanliness. Between the two, you can develop a hybrid possibly down the road, whether it's through technology or rates. It would be some type of hybrid of these until the longer-term solution is reached. So we fully support that type of initiative.

Mr. Don Downing: I want to comment on that. I think if the federal and provincial governments see benefits in promoting any particular energy technology, we would hope that it's placed within an overall strategic framework for the whole country in terms of understanding the total investment that might be made in alternative energy and how that balances the environmental risk we're facing. That needs to be taken into account in the overall economic planning for the country.

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Additionally, our economy, as a market-based economy, would have to be respected. It's dangerous for the government to be pointing fingers and selecting firms or sectors that will be winners or losers in the years ahead. I don't think that's been successful in the past and I don't think that would be successful going forward.

The Chairman: Thank you, Mr. Downing.

Dave, did you have a comment?

Mr. David Chatters: Yes, I have just one more comment.

It seems there's a real good-news story to tell in each one of your sectors. I don't think there are industries anywhere in the world that have invested more heavily in research and developing new technologies for their industry than the natural resource industries. Yet generally in the public eye, and I think even in government's eyes, the natural resource industries are the environmental bad boys; that's the impression you always have.

You spoke about the government picking and choosing. They introduced subsidies into the ethanol industry. The industry exists on an eight-cent excise tax subsidy. They're now buying wind power at something like three times the going rate, as some kind of window-dressing. What are your industries going to do about the image that you seem to have inherited from somewhere and that you don't seem to be able to shake off?

You've spent billions of dollars on technology to become more efficient and cleaner. I worked for 20 years in the oil exploration industry. The technological advances are amazing, with horizontal drilling, the satellite technologies, the fluid-driven drill bits, and all of those things.

As for the coal industry, anybody who has an image of the coal industry as a black-faced miner coming out of the ground with a light on his hat should visit EPCOR, Edmonton Power's new utility plant at Genesee. You never see anything coming out of a stack. It's burning clean and it's efficient. It's just amazing what they've done with coal. Yet you don't seem to be able to shake the image that you are the environmental bad boys in this world.

Mr. Bruno Carella: We're trying. We run this ad, but it's more than just writing advertisements. It's constant communication with government committees and government people. Also the special interest groups are key stakeholders, and through the associations we talk quite a bit. There are conferences, workshops, and groups that CERI runs. I know Chris was there; they were well attended. We just continue to strive to try to improve. We're definitely making the effort.

Mr. Chris Pierce: Yes, and it's important to note that we did a national public opinion survey last year that we're just in the process of updating right now, and we'd love to come back to the committee with the results of that. It may be particularly germane to your climate change discussions.

The Canadian public believes there is a whole bunch of technology at work in the oil and gas sector, and our early impressions are that over the past year, when a number of us have been involved in some public information campaigns, opinion of the public towards the industry has actually improved. They're small steps, absolutely, and you're exactly right that there is an image in certain quarters to be overcome, but we're certainly committed to doing everything we can to help that happen.

The Chairman: Is that it, David?

Mr. David Chatters: Yes.

The Chairman: Thank you. Those were good questions from all our colleagues.

As I bring this meeting to a close, I want to make a comment. Clearly, to varying degrees, government is involved with your industry. Whether it's just on the export side or whether it's R and D here domestically, there obviously is interaction that needs to be at its best in order that all Canadians benefit in terms of job creation.

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Part of our job in this committee is to see what government policies need to be changed or improved to help you help us create jobs for the country. It doesn't have to cost any money to think smarter or to work smarter. I understand from listening to you that there is some degree of cooperation within your sectors to share and to work together. I noticed that in our minerals and metals panel last Thursday, there is this fragmentation there as well, but there is some limited exchange of ideas and whatnot. I hope that, to the extent you can, you will promote that as well—more exchange of ideas, more cooperation—because at the end of the day, we're all going to benefit.

With that, I want to thank you for participating today. We'll be coming to the climate change issue either in May or early June or in the fall, and we look forward to having some or all of you back at that time.

With that, we'll adjourn, and we'll be here Thursday with the forestry sector.