:
Good afternoon, Mr. Chairman and members of the committee. I'm certainly pleased to speak with you today on behalf of Alberta's oil sands industry.
I would like to introduce two industry colleagues who have joined us for this meeting. Mark Shaw is the vice-president of oil sands sustainability for Suncor Energy, and Rob Seeley is vice-president of sustainable development and regulatory affairs for Albian Sands Energy.
As you know, the economic, environmental, and social impacts of oil sands development has become a topic of much public discussion lately.
We were pleased to have your committee in Fort McMurray yesterday, so you could see firsthand what exactly is going on in the oil sands. I hope you enjoyed your visit to Alberta's vast oil sands resource, and indeed your visit to Syncrude Canada.
I understand you have also heard from the Canadian Association of Petroleum Producers and the Mining Association of Canada on these topics. I am pleased to complement those presentations by offering the direct view of oil sands operators to you today.
As you witnessed in Fort McMurray, while there is indeed a tremendous amount of activity under way, which is bringing many pressures to bear, it is our view that the positive outcome generated by our industry far outweighs the challenges we face. In the interest of time, I will focus my remarks today on economic contributions and environmental stewardship.
Let's deal with the economics first. As you know, the oil sands are a unique resource. They are quite unlike conventional oil and gas deposits, both in formation, recovery, and in the extraction methods as well. Because of this, a generic royalty regime was proposed by the National Oil Sands Task Force to recognize the special circumstances presented by oil sands investment and the operating environment we operate in.
Some key differences include the fact that higher capital expenditures are required to establish or expand oil sands projects than are needed to drill an oil well. This is especially true for oil sands surface mines and upgraders that tend to require capital in the order of many billions of dollars. I'm sure you had the sense of that on your tour yesterday.
Once built, the unit operating costs are also significantly higher than conventional oil and gas. Likewise, sustaining capital costs to maintain these complex facilities, which have a typical lifespan of about 50 years, are also higher. Because of the longevity of our projects and the significant commodity price fluctuations that can occur, we are exposed to a higher variance in economic performance over the life of an oil sands project.
Compounding this issue is the fact that once built, an oil sands plant operates on a continuous basis and cannot be shut down during times of low crude oil prices. In fact, if anything, the opposite is true. When crude oil prices go down, we try to maximize our volumes so we can get a lower unit cost and try to maintain positive cashflow. As a result, oil sands developers must take a long-term view to resource development.
The generic royalty regime was established to recognize these unique aspects of oil sands development and provide a fair and equitable balance between risk and reward. In fact, this regime was established to encourage the development of the oil sands and overcome the barriers presented by high capital costs in the face of an uncertain long-term fiscal regime. It has taken nearly ten years to begin to attract this large-scale capital investment. I believe we must maintain this stable fiscal regime or investor confidence will most certainly be shaken.
We recognize that there are many challenges in developing these deposits. Labour and material supply are probably two of the most pressing challenges at this particular point in time. Importantly, these challenges speak to how the industry will pace development in an appropriate manner. If project operators are unable to secure the people, supplies, and the services they need, then they will voluntarily take appropriate action to manage that situation. In fact, this has already been demonstrated to be the case. That is why we believe the market economy should prevail.
Just to elaborate on that a little bit, as the supply of labour becomes shorter, the costs of that labour go up, and the costs of materials go up. All of that gets fed into the economic evaluation of the projects. As those prices go up, people tend to take longer to make their decisions. We've already seen some of the projects move out to the right in time, so the marketplace is really prevailing there, and if crude oil prices fell and those costs continued to go up, then those decisions would be made based on the merits of the economic evaluation at the time.
The Alberta government receives royalties according to a pre-payout and post-payout formula. Currently, more than 50% of the oil sands projects that are in production are at the higher rate of early payout, so there are more than half that are now at the full rate. In 2005, the Alberta government collected about $827 million in royalties from oil sands development. This number will more than double to a projected $1.8 billion in 2006. Several major projects, including Syncrude's UE1 expansion, which you saw yesterday, and Suncor's Millennium Cogeneration Project came into full payout.
The industry's royalty contribution to the people of Alberta will continue to climb dramatically over the next several years as more oil sands projects come online.
In addition to royalties, governments receive corporate and personal taxes from oil sands companies and their employees. If we look ahead to 2008, if we assume a crude oil price of U.S. $50 a barrel, royalties for that period could be projected at $2 billion. There will be almost an additional $1 billion collected in an Alberta corporate tax, so it's about $3 billion for the province between royalties and corporate tax. As well, the federal government will benefit handsomely, with a take that is even greater than that of the Province of Alberta.
In the longer range, we project that the provincial government will take in between $5 billion and $7 billion per year in tax and royalty payments by about 2015. Therefore, we submit that any comparison of royalty regimes with other jurisdictions needs to consider both the unique aspects of oil sands development and the total financial benefit to governments over the life of these projects. The significant direct and indirect economic activity and job growth created by the oil sands should also be considered. In 2005, for example, the $8 billion that was invested in the oil sands created jobs and worked for stability and increased economic activity from one end of the country to the other.
Our industry forecasts that capital expenditures over the next five years will annually range between $8 billion and $12 billion, for a total of about $54 billion. Importantly, this figure does not include the billions more that will be spent on sustaining capital and operating expenses on these facilities after they go into operation, post the construction period.
About 40¢ of every dollar spent by an oil sands developer goes beyond Alberta's borders, and this constitutes a significant contributor to the Canadian economy. It ensures that all Canadians ultimately benefit from oil sands development through job creation and manufacturing opportunities. This flow-through effect has been verified by the Canadian Energy Research Institute as well as by external independent studies.
These days, it is clear to pretty well every Canadian that the oil sands generate thousands of jobs, everything from trades to professional and technical positions, and while fabrication and manufacturing opportunities are being felt primarily in the Edmonton region, other areas across Canada benefit as well through subcontracting. One need only consider the number of direct flights that have been added between Fort McMurray and other parts of Canada over the past few years to gauge the economic impact of oil sands across the entire country.
We anticipate that the $54 billion on capital investment projected over the next five years will create 26,000 direct jobs by 2011. For each of these, studies indicate a further three jobs are created in the service and support sectors, resulting in a total of 100,000 jobs created.
Our industry does a very thorough job in generating projections for both spending and job creation. Oil sands companies participate in surveys so that we can produce activity forecasts and provide highly detailed information that is then shared with local and provincial stakeholders to facilitate their planning for development. Nowhere else in Canada is there such a comprehensive projection done, along with the analysis of potential socio-economic impacts and the benefits to the region, the province, and to the country as a whole.
Having provided you with some background and facts about oil sands development, let me now turn to our industry's vision for the future. We see a tremendous wealth of resource and opportunity at our doorstep that can be and should be responsibly developed for the benefit of all Canadians. This requires a collaborative effort between government, industry, and community stakeholders if it is to be accomplished in a manner that manages and respects the environment, while generating a positive legacy of opportunity for future generations.
We envision a secure economic future for Canada, with oil sands development as one of the pillars of that future. We also see a country that is a centre of excellence for innovation, for technological advancement, and for environmental stewardship. Through investment and research and development, industry and government can continue to lead the way with a sustainable oil sands industry, one that continuously improves in its environmental mitigation and conservation efforts.
These innovations will no doubt assist in developing the oil sands resource, but they will also foster further projects of a broader social good. On this, I would like to point to the work of the Alberta Chamber of Resources, which has really done an excellent job of laying out a technology vision in its oil sands technology road map. The road map describes many of the internal and external challenges that must be addressed to achieve the industry's growth vision in a manner that is economically, environmentally, and socially responsible. It notes that investments in technology development for the industry must be dedicated and sustained, and that governments and industry need to develop a collaborative, long-term strategy. Importantly, while many gains have been made in organized research and development, and indeed in operational practices, we still need fresh approaches and a diligent focus on this task.
I could give you a litany of examples of environmental process improvements that have been enabled by research and development, but that's not why we're here today. We're here to discuss how we can move the oil sands forward in a responsible manner, one that protects the environment while also protecting the very significant economic benefits that come from the development of this resource.
Now all of this is to say that we know what our environmental challenges are and we are committed to dealing with them, and we have been dealing with them, whether it pertains to water use, to energy use, to tailings management, to land reclamation, air quality, greenhouse gas emissions, or other issues. In fact, just as technology development has been a driving force in achieving improved economics for the oil sands industry over its first 40 years of commercial operation, cooperative technology development will be the key that helps us to meet our increasing environmental challenges as well.
Over the last decade or so, there has been a significant amount of R and D coordination and work taking place in organizations like the Canadian Oil Sands Network for Research and Development, the Petroleum Technology Alliance Canada, the CANMET Energy Technology Centre, near Edmonton, the Alberta Energy Research Institute, the Alberta Research Council, the National Research Council, here in Ottawa, and any number of universities. This indicates that the need for a renewed approach to a technology development plan does not start from zero. There is already a significant knowledge base.
In fact, there's an excellent research base to build on if industry takes a leading role in funding and encouraging further research and development, with the support of our governments and the research institutes. Collaboration will facilitate long-term funding and it will help produce more all-encompassing and more effective outcomes. Admittedly, some of this is relatively uncharted territory, but I do believe we have more to go on than just a wing and a prayer on this. We have significant bodies of scientific knowledge that did not exist, for example, when Syncrude first commenced operation.
So because crude oil will continue to be a primary energy source well into the foreseeable future and because we have this vast resource right in our own backyard, we should use oil sands development as the bridge between the hydrocarbon era and future energy forums--and we should reap the benefits while we can; otherwise the opportunity will be lost forever.
In conclusion, let me reiterate the opportunity for industry, governments, and various R and D providers to reinforce our current R and D efforts, to coordinate a wider technology development agenda, and to generate the outcomes that we all want to see. We currently do much good, but we could do better, and we recognize that our licence to operate comes from society. So let's recognize the great distance that we've already travelled on that road towards a more sustainable oil sands industry. Let's build on all the work that we've already done and the cooperative R and D structures that are already in place by dedicating adequate resources to meeting these very compelling challenges. Obviously, this will be a joint venture among industry, governments, and society, and it will certainly require substantial commitment on all of our parts. Where there is the will, there is also, most certainly, the way.
For these reasons, Mr. Chairman, we believe oil sands development can proceed in a manner that is compatible with the public interest. We feel strongly that this resource can create significant and sustained value for all citizens of Canada and that our issues can be responsibly and appropriately managed if there is the will among all stakeholders to do so.
With that, I thank you for hearing from us today. We would be pleased to entertain your questions.
Thank you.
:
I will speak very briefly today. I won't take a great deal of time.
My name is Tony Clarke, and I am from the Polaris Institute. Together with the Parkland Institute in Alberta and the Canadian Centre for Policy Alternatives, we have been engaged in monitoring and watching the developments that have been taking place in the Alberta tar sands or oil sands.
We recently conducted a review and study of what was happening and produced a report called Fuelling Fortress America, looking at the Athabasca tar sands and its implications for Canada's energy policies. This work we carried out was done through a series of little teams moving in and having conversations with various people in the industry, various people who were working in various parts of what was happening, and also with aboriginal peoples, first nations peoples, plus environmentalists and a number of groups in society at large.
Through this process we were able to come up with a series of observations, part of which I'll briefly share with you today, along with some recommendations and proposals for where we might go in the future.
I want to concentrate my comments--in spite of the fine remarks we've just heard from the industry itself--on the deep concerns that exist on just how haphazard the model of development is that's occurring. To a large extent, permits are being granted all over the place without any reference to a clear set of criteria or a clear model of development itself. Certainly the whole question of coherence with regard to both criteria and model of development is really of deep concern. This is a form of haphazard resource extraction that does need to be brought under some measure of control. So that's one thing.
The second thing is that I think we need to recognize the extent to which we are dealing with the dirtiest form of petroleum production. We therefore have to take real care in terms of the environmental implications and understand what the environmental or ecological costs are in the long run.
In that regard, we felt it necessary to go into a number of topics, although I'll only cover a few here today. The first of those topics has to do with greenhouse gas emissions.
I think everybody realizes that when we're talking about the oil sands or tar sands, we're talking about the production of carbon and the production of greenhouse gas emissions, which are three times those from conventional oil and gas production. Under any circumstances, but especially in the current climate, this is something we need to give very serious consideration to.
The whole role of Canada internationally on this is very much at stake. The fact that we are unable to maintain our Kyoto commitments--or even come close to measuring up to our Kyoto commitments--is of deep concern, I think, to many people in the country in terms of the implications of the tar sands and the oil sands development that have taken place thus far.
We're dealing with a situation where, according to the National Energy Board, for every barrel of synthetic oil that is produced from the tar sands, an estimated 125 kilograms of carbon dioxide are released into the atmosphere. The Athabasca tar sands will be making the single largest contribution to Canada's greenhouse gas emissions by 2010. According to a report by the Natural Resources Defence Council and the Sierra Club of Canada in 2002, the greenhouse gas emissions in Canada will grow to 827 million tonnes in 2010. That's 44% beyond what Canada is permitted under the Kyoto Protocol.
All of these are I think dimensions of the issue that need to be looked at very seriously. The fact that there are no clear-cut targets with regard to greenhouse gas emissions from the tar sands themselves and the fact that we still have not developed the kinds of technologies that are going to help us substantially reduce those greenhouse gas emissions from the tar sands do raise some profound questions. I think this committee in particular and the federal government as a whole need to take full responsibility for addressing these issues.
The second point has to do with water depletion and contamination. Once again, I think the extent to which the oil sands production does require a great deal of fresh water to produce the oil and the in situ process of getting the petroleum separated from the bitumen are things that have been largely overlooked. I think you probably saw examples of how this is done during your visit to Fort McMurray.
It's important to keep in mind I think that according to our studies and estimates and investigations of this in a variety of different ways, between 4.5 and seven barrels of water are required for the production of every barrel of crude oil out of the tar sands. When we look at that, I think that it is of profound disproportion, especially in an area that is somewhat fragile with regard to future water sources. If we look at Alberta as a whole, 37% of all the fresh water sources in Alberta have been allocated for oil and gas production. If you take the Athabasca River itself, up to 66% has been allocated for the tar sands production alone.
I think we have to put this over and against the kinds of predictions that water scientists have been putting forward about just how serious things are getting in the prairies these days with regard to sources of water. Dr. David Schindler has been showing how the drop in the levels of the Saskatchewan, the Athabasca, the Bow, and other rivers throughout the 20th century has been very serious. They've been going down and down. When you look at the melting of the Arctic glaciers that affect, for example, the water flows into the Bow River, you can see that there are some serious warning signs on the horizon with regard to water use and water demands.
I think in this case we need to take a hard look at this and understand what is happening. Again, the technologies do not seem to be there, unless new ways of fueling and processing the oil sands are in play and are going to overcome the major problems of water depletion and contamination that are in front of us. With regard to contamination, the tailing ponds that have been produced--over up to I think something like 15 square kilometres--are becoming huge lakes made up of liquid that is not really usable again or is not being transformed and cleansed so that it can be used as water in the long run. I know there are different things that are being done by the companies on this, but I want to point out the fact that there are some serious challenges in dealing with the contamination of the waters that are already used.
The third point I want to draw your attention to is the fact that we are at a point of transition, I believe, with regard to energy and energy futures. With the tar sands and the oil sands, it's more than just dealing with the question of what kinds of oil and gas reserves we have for the future; we also need to take a hard look at what is on the horizon with regard to matters dealing with things like peak oil itself.
I think many parts of the world are waking up to this. They realize that a major transition needs to take place. If you go to Sweden and other parts of Europe, you see very clear strategies being pursued for energy alternatives. Not to play around with puns or anything, but we will be sticking our heads further in the sand if we do not use this moment and this time to start to make a transition to energy alternatives.
By that I simply mean that we need a new energy strategy that looks forward and starts to plan for the fact that even though the oil sands provide a great white hope for the United States at this time, it is not a great white hope that will last forever. Unless we start to make some serious transitions, we will be in some serious trouble ourselves, not the least of which is because we are exporting so much of the oil being produced from the oil sands and tar sands to the United States itself.
We are below the 10% mark in conventional oil reserves and natural gas reserves. If the natural gas that's used to fuel the tar sands continues apace, we will find ourselves in even more dire straits with our natural gas reserves. We need to recognize that and understand that we need to plan much more for the next 20 to 25 years and the kind of transition that needs to take place toward renewable energy alternatives.
We also need to take a hard look at things that continue to propel us in this direction. We have dropped the policy we once had where it was essential that we maintained 25% of our oil and gas reserves intact. We have gone well below that now--and that's for conventional reserves. Furthermore, there is a proportional sharing clause built into the North American Free Trade Agreement, and if we were to put a quota or a ban on the export of either oil or gas because of our own energy security needs, there would be a serious economic and legal retaliation.
As a result of this, I think we need to take a hard look at where we are right now, what kinds of changes we need to make in existing policy instruments, and what it means to actually take the step forward to develop a made-in-Canada energy strategy and policy.
As noted in our report, we feel it is essential at this time to look at what it means to create the space to develop these kinds of strategies for the future. In order to do so, a moratorium should be put on future development of the tar sands--not on existing projects, but on future permits and expansion of tar sands development--in order to provide the necessary time to make the kinds of reasonable and thoughtful decisions about this valuable resource and its implications for the environment and society at large.
So we call for a moratorium, and in that context, that means providing the time and space to actually develop a made-in-Canada energy strategy and policy that we so desperately need.
Thank you.
:
Let me begin by saying a couple of things.
First of all, our industry has worked very diligently at trying to reduce our emissions per barrel of production. It's something we've all done over the years that we've been working in this industry. It's actually one of the steps that has helped to make it competitive, because it costs money to consume energy to make oil, drive your car, or whatever.
We've been reducing the energy consumed per barrel. In fact, if you look at what the industry has accomplished since 1990, we reduced it by about 17% on a basis of per unit of production. We think when going forward we'll see another 17% by 2010-2012. We'll be at about a 30% reduction per unit of production.
We've done it by implementing new technology. You witnessed some of the technology yesterday, where we actually mix the oil sand with water and pipeline it into the extraction plant. We've been able to reduce the transportation costs of moving the oil sands to the extraction facility.
We've also been able to lower the temperature of the process. We've gone from 80 degrees Celsius down to about 40 degrees. As a consequence, we've reduced the energy input for extracting a barrel of bitumen out of the sand by about 40%.
That's one thing we're doing. We continue to strive to try to find ways to reduce the energy consumed.
In terms of the opportunity for sequestration, we see it as something that has some promise. The industry has been working with the provincial Government of Alberta, through the Alberta Chamber of Resources, for some time now on a process that would enable us to take the almost pure CO2 that we make in the oil sands.
It primarily comes from our hydrogen plants, because essentially what we're doing is taking natural gas, CH4, or methane, and converting it into hydrogen, which we then add to the oil. We sell it at a much higher price, by the way, than the value of natural gas. This is secondary and I would even argue it's tertiary manufacturing that we're doing.
When we do it, we make a lot of carbon dioxide. The carbon dioxide is amenable to then be used for enhanced oil recovery. The dilemma is the transportation costs to get it from Fort McMurray to the conventional fields in Swan Hills, or wherever in the southern part of Alberta, where the enhanced oil recovery techniques are being used.
We see it as a promising opportunity. We need to somehow get the economics to line up. If there was an old pipeline that had been used for some other purpose and could be converted into this, and if the royalty arrangement on conventional crude oil required for enhancing for recovery could be revisited, we think there's a really good chance this could be done.
:
Thank you, Mr. Chairman.
Thank you very much for your presentation.
I enjoyed the visit to Syncrude, in Fort McMurray. I learned a great deal, but I came away from the visit with several questions in my mind.
Every day the newspapers tell us that today's planetary challenge, namely climate change and its effects on the entire planet, is important. As parliamentarians, and as elected representatives, it behooves us, in the context of our study on the oil sands, to adopt not a short-term approach, but one that looks out onto the next thirty years. We must, given all of the development activity going on at present in Alberta, ask ourselves what is going to happen in Quebec, in the other provinces and in Canada.
Alberta can choose to risk seeing its groundwater polluted or choose to cut its trees: these are areas that fall under its jurisdiction. However, what is having an effect on everyone, throughout Canada and all across the planet, are the greenhouse gases that are spewed out into the atmosphere.
A Shell Canada representative, by the name of Janet, I believe, told us that CO2 captation and sequestration technology already exists, but that it is not being applied because it is not economical. This same representative stated that, in her view, this technology might become operational around the year 2012.
I would obviously like you to explain to me exactly what this woman was implying when she stated that this technology is not economical. Given the profits that are flowing to the oil companies that are active in the oil sands, as taxpayers, we are somewhat shocked to hear say that technology that would allow for a considerable reduction in greenhouse gas emissions is not being used because it is not economical.
Mr. Seeley might be able to answer my question.
:
Thank you. If you allow me, I will answer in English.
[English]
With respect to carbon capture technology, Mr. Shaw has made some reference to this already, but there is technology existing for the capture of carbon dioxide from our upgrading components, which Mr. Carter has also referred to. With oil sands production we're talking about mining operations, producing raw bitumen, and then we have a secondary component called upgrading, where we add hydrogen, crack the materials, and make light synthetic crude oil that is sent to the markets in Canada and the U.S.
It's in those upgraders where we have the opportunity to capture the carbon dioxide in our hydrogen complex. Different operators have different models. I know Suncor and Syncrude both have their upgraders attached to their mines in Fort McMurray. In fact, Shell has its upgrader near Edmonton in Fort Saskatchewan. So we've actually separated the mine from the upgrader. Our upgrader is in Fort Saskatchewan just outside of Edmonton. If we capture the CO2 at our upgrader in Edmonton, it is in fact very close to sequestration points in central Alberta, the Pembina and Swan Hills oil fields, which are aging oil fields. There's an opportunity to capture the CO2, pipe it out, and inject it. However, the capture of the CO2 is very expensive. We would have to spend hundreds of millions of dollars for the infrastructure to capture it, and then hundreds of more millions of dollars for the pipelines to the fields where it could either be injected or sold to third parties for use in enhanced oil recovery. Clearly, although the technology exists, Shell is not going to implement this technology and put itself at a significant disadvantage to its competitors that have chosen not to, for example, for whatever good reasons.
With respect to this technology and the need for infrastructure, there are two solutions. One is to enable the technology through some partnership for the investment in the infrastructure--the pipelines from these upgrading hubs, whether it's Fort McMurray or Fort Saskatchewan, to the fields. So partnering on infrastructure is one.
Two, as the government goes forward and makes regulation with respect to greenhouse gases, it should consider what we would call market mechanisms in these regulations. The regulations need to be appropriate, but at the end, I think industry is preferable to what we call market mechanisms that would have emissions trading, and therefore reductions in CO2 could be considered as offsets. It's another way of funding or financing these kinds of investments.
We would look for a stable fiscal regime around greenhouse gases that would allow major investments. These are major investments as well. Without some incentive or regulation that's fair to all, industry won't take these on a voluntary basis. It will put us at a competitive disadvantage to our competition, which happens to be the imported crude to North America, as I mentioned. We're displacing imported crude, so we would be at a disadvantage to our competitors.
What would it mean for Canada if we were to cease production of oil from the oil sands? Let me frame it that way, and I think that's where you're coming from with your question. This year, for the first time—I guess for the second year now—oil production from the oil sands will exceed conventional crude oil production in Canada. We'll be at about 1.2 million barrels a day this year, versus about 985,000 from the conventional crude oil fields in the country. What is happening is that the western Canada sedimentary basin is declining in its production and the oil sands production is stepping in to take its place. The same thing is happening in the United States, and therefore we have this opportunity for export of crude oil.
If we hadn't had the foresight.... And by the way, I should say that this is a Canadian success story of the highest order. We're talking here about research and development that's been done right here in Canada. This is homegrown stuff, the mining and the extraction of the bitumen from the sand and the turning of it into a viable product that we can put into the marketplace. If we hadn't done that thirty years ago, we would be in dire straits today in terms of our crude oil supplies.
Our company alone, Syncrude, now produces about 15% of Canada's crude oil requirements, and our friends down the street, Suncor, which Mark represents, are at about 13% to 14%. Shell is coming along as well. We're doing this just at the right time, really, for our energy consumption.
We had John Snow, the Secretary of the Treasury from the United States, visit the oil sands a year ago this past June. We flew him around the facility you have had a chance to see. He got off the helicopter and turned to me and said, “Jim, this is a fantastic thing that you are doing in Canada, that you Canadians have accomplished here. You've continued; you've persevered. You've figured out how to get oil out of this sand and turn it into a marketable resource, and we haven't done anything near that in the United States. We had our oil shales in Colorado and were looking at them in the early 1980s, and we abandoned them; we walked away from them. You guys have done it and you've shown us how it can be done”.
So I think we're very fortunate; we're the pioneers. I can tell you from my own personal experience.... I've spent 28 years with Syncrude Canada, every day of it living in Fort McMurray, and the first 15 years that we worked in this business, we were toiling in obscurity. People didn't believe it could be done. They didn't believe we could actually make this into a viable business; they treated it as an R and D curiosity. Through that effort and energy, the development has occurred, and we've continued to invest in R and D. We continue to develop new ways of doing things: more energy efficient ways of doing things, better ways to reclaim the land, better ways to store tailings, better ways to capture the water out of the tailings while it's still warm, so that we can get the energy back out of it.
I think Canada would be in a far less enviable position today if the oil sands had not been developed—and that's all of Canada. A lot of our product goes to the Edmonton area refineries, but it also comes to Sarnia, and it goes over the mountains to the west coast as well. This product goes across the country, and it is really helping to secure our energy security in the country.
:
Yes, the big trucks too.
I think what you've done there is quite amazing, and I'm glad I went to see it. You should be proud of the technical and the managerial way it's been put together.
My concern personally is not so much what's going on today but in looking forward. We were told there are something like 18 projects in the pipeline that have some agreement to proceed, and there are another 27 beyond that in the feasibility or advanced feasibility stage.
You've heard about the tragedy of the commons, the story many centuries ago in England of the sheep farmers who all had a bit of private land and there was a common pasture. Well, what happened was the sheep were all put in the common pasture and the common pasture was obliterated. It doesn't take a rocket scientist to figure out why it happened.
You have a certain interest, it seems to me, in what are public goods. You're responsible corporate citizens, but there are clearly limits that you will go to. You have returns to shareholders, and you have an enterprise that you have to maintain and operate. We as parliamentarians have a responsibility for the public good as well, and I'm concerned.
When I talk about public good, I'm talking about CO2 production. I'm talking about climate change and greenhouse gases. I'm talking about water. I think everybody you talk to knows there are water problems looming in the oil sands.
I'm also worried about the infrastructure in Fort McMurray and the rate of growth there. I know you are concerned about it as well.
You talked about capturing carbon and sequestering carbon, and we heard about the technologies for water recycling. We know water is being recycled, but a lot of it is going into tailings ponds. There's certainly a lag time or a lead time, and some of the water in the tailings will never make it back into the river systems. I think it's an issue.
If you could all agree among yourselves that these were going to be the objectives, there'd be no new projects unless the water recycling achieved the rate of 70% or 80%. I don't know what the number is. The CO2 would only be permitted up to a certain point and would have to be essentially captured and sequestered.
Oil is a commodity product internationally. If you're all on a level playing field or on the same footing, as long as you can make a return to your shareholders, is it the level playing field you're looking for, or do the economics go beyond that?