Energize Alberta March/April 2011

Coming clean

Heartland debate

Divided they stand

Terminator champions green energy

Proposed project proving divisive

Proposed well-spacing changes create controversy

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page 9

page 16

Upstream Dialogue: Canadian Association of Petroleum Producers’ Special Section, pages S1–S8 March/April 2011

where energy, the economy, and the environment intersect

John McNaughton is a big believer in the importance of STARS.

Shining bright STARS and Alberta’s energy industry form beneficial partnership STARS can provide is very important—not only to industry, but to all Albertans. It’s a means of getting to where you need to go hen Calgarian John if you’re in an incident.”

McNaughton lost part of his As Mark Salkeld, president and chief arm in an industrial accident executive officer of the Petroleum Services several years ago, the Shock Trauma Air Association of Canada (PSAC) puts it: “If Rescue Society (STARS) gave him the best there is an accident, the helicopter can chance possible for recovery by getting lock in and get there as quickly as possible. him to a hospital in Calgary—fast.

That’s huge. They save lives.”

McNaughton, an engineer who works in The energy industry has been a major the oil and gas industry, was 23 years old supporter of STARS since the organizain 2003 and fresh out of university. During tion’s earliest days. field training just outside High River, Alta., Founded more than a quarter century he was cleaning a machine at the end of the ago, STARS provides an essential service, workday when his coveralls got wrapped not only to industry, but also to anyone who up in a spinning augur and his left arm got might end up needing emergency rescue. caught in the machine.

“It’s not just limited to “I fell back and yelled the oil and gas industry “As far as STARS and our membership, it’s for help,” he says, recalling how other workers pulled for the general public as goes, they gave him away to a safe spot well,” Salkeld says. “So any me the best and a first-aid worker took kind of support to help chance to have the them expand their operover, making sure he was stable and trying to stop ations is appreciated. They arm re-attached the bleeding. “They covered are a highly respected with their quick me up, put pressure on the professional operation response. They arm and called in STARS.” providing a service to all An ambulance sped Albertans and beyond. I were very him to Black Diamond, can’t say enough good professional, trying just where STARS airlifted him about them and what they to get me calm and do for us.” to the Foothills Hospital in Calgary. Surgeons were For its part, PSAC—the everything else.” hopeful they could renational trade association — John McNaughton attach his forearm, but representing the service, when McNaughton woke supply and manufacturup the next the day he found the surgery ing sectors of the upstream petroleum hadn’t been successful. industry—is one of STARS’ key industry “As far as STARS goes, they gave me the partners. This past January, PSAC’s 17th best chance to have the arm re-attached annual STARS & SPURS Gala, attended by with their quick response. They were very more than 1,000 people, raised a record professional, trying to get me calm and $544,000 in support of the organization. everything else,” says McNaughton, who Over the past 17 years, PSAC has raised works as a technical specialist in fracturabout $4.6 million for STARS. ing with Trican Well Service.

The Canadian Association of Oilwell “Especially in Alberta with the oil and Drilling Contractors (CAODC) is another gas industry, where people are always strong supporter. CAODC president Don working with hazards, day in and day out, Herring says STARS “provides invaluable ❯❯ continued on page 2 to have the kind of response time that Jacqueline Louie Energize Alberta

Photo: STARS/Mark Mennie

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March/April 2011 • Energize Alberta

Continued from page 1

Shining bright service for us by providing medical support to remote worksites.”

“Drilling and service rig contractors don’t work near established medical facilities, and in the event of a serious accident we’ve called on STARS to assist us in evacuating injured workers to hospitals. We strongly believe in the service that STARS provides.

It’s unique in Western Canada.”

STARS is a vital link in a life-saving “chain of survival” that includes first responders, ground and fixed-wing ambulances, fire, police, search and rescue, and hospital teams. Currently, STARS operates out of three bases in Calgary, Edmonton and Grande Prairie and is able to serve about 94 per cent of Alberta’s population, as well as locations in northeastern and southeastern British Columbia.

STARS is also currently working with the Saskatchewan government to open two bases in that province in 2012.

“The partnership with the energy industry is absolutely key to keeping us in the air,” says Dan Knapp, business development manager for the STARS Emergency Link Centre. “They have been our main supporters in terms of major capital requirements.”

For example, it was largely the energy industry that helped raise $25 million for two new state-of-the-art AgustaWestland AW139 helicopters. STARS plans to have the first of these two aircraft in operation, based out of Edmonton, later this year.

“It’s a marvelous tool to help enhance emergency preparedness in the field,” Knapp says.

In the world of STARS, time is of the essence

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ust 15 minutes could mean the difference between life and death.

That’s why STARS plays a critical role in helping Albertans who are out working in remote locations.

“From an industry perspective, STARS plays a crucial role. It also helps us immensely in attracting the right type of workforce who want this type of assurance—that should something happen, everything can be done quickly and responsibly,” says Hugh Bolton,

PEOPLE INNOVATION TECHNOLOGY

It was the energy industry that provided the impetus and initial funding for the STARS Emergency Link Centre, which was established in 1996 with funding received from the Canadian Association of Petroleum Producers (CAPP). The money was also used to set up STARS’ industry site registration program, which helps support a more rapid response to any medical emergency situation.

When Knapp came on board with STARS a few years later, he became one of the program’s champions. And he continues to spread the word.

“The program was set up, but there was nobody to take it to the streets. That’s one of the key things that STARS president and CEO Dr. [Greg] Powell wanted me to do when I came here—to get the word out,” Knapp recalls.

And the initiative has been wildly successful. The main user of the site registration program is the energy industry—oil, gas and power. A handful of others, including the logging and mining industries and members of the general public, use it as well.

A total of 60,000 sites, the vast majority of them temporary, are registered each year. That number includes approximately 2,000 facilities such as gas plants, compressor stations and oil batteries that are registered under the program as permanent sites.

Almost all of the medical emergency calls that STARS receives from registered industry sites each year—approximately 100—come from the oil and gas industry.

Trauma calls make up 55 per cent, while the remaining 45 per cent are medical calls.

Members of the public also benefit from the industry site registration program. As just one example, late one November afternoon last year, a hunter out in dense bush

a member of STARS’ board of directors and chairman of the board of EPCOR Utilities.

Although the oil and gas sector is by far the biggest user of the service, the power industry is also one of the benefactors of the STARS industry site registration program. This includes the Capital Power (formerly EPCOR Power) generating stations of Genesee and Keephills 3 west of Edmonton, which are registered with STARS. “These remote worksites registered with STARS are extremely important to us because of the potential for

Photos: Torin Segstro

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STARS pilot James Roach (above) is flanked by Calgary Stampede royalty as they check out one of the STARS helicopters. Below, PSAC board chair Brian Coston, PSAC president Mark Salkeld and gala chairman Mike Edmonds present a cheque for $544,096 to STARS CEO Dr. Greg Powell. accidentally stabbed himself in the thigh, severing an artery. Bleeding profusely, he used his cellphone to call 911. The dispatcher patched the call into the STARS Emergency Link Centre, which determined in seconds that the injured man was within one kilometre of a STARS registered industry site.

A paramedic who happened to be at the industry site that day arrived on the scene within half an hour of the accident, and she was able to help control the bleeding and assisted with the landing of the STARS helicopter, which then flew the hunter to a nearby hospital for medical treatment.

“This is neighbour helping neighbour,” Knapp says. “It really serves the public as well as industry people.”

life-saving action should it be needed,” Bolton says.

As part of the site registration process, he explains, an organization must provide detailed information, including a site’s precise location, the nearest town and hospital, the number of workers on site, the type of work being carried out and where a helicopter can land, “so that STARS can get there with a minimum of bureaucracy and red tape.”

“Because time is life-saving and capturing this information in advance eliminates confusion and saves precious time with ‘red’ patients.”

Others in the power industry are also deeply appreciative of STARS. “We use the STARS Emergency Link Centre to ensure the safety of AltaLink employees out in the field,” says Jim Hill, transmission line crew foreman for the Alberta-based electric transmission utility company.

“The transmission line crews and substation crews use the Emergency Link Centre as part of their safe work planning and emergency response plan.

It’s always a very good feeling to know there are people in the background to help us in the event of an emergency.”

At ATCO Electric, part of the ATCO Group, employees chose STARS as their charity of choice last year.

They raised $143,000 for the cause in 2010 through ATCO’s EPIC (Employees Participating in Communities) fundraising campaign.

“Our partnership with STARS has a long history, dating back to 1989,” says ATCO Electric operations president Bobbi Lambright.

“STARS is an integral service to the remote areas of this province, where many of our customers are located and our employees are working.”

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533906-55 Savanna Energy Services Corp. www.savannaenergy.com Quarter page horizontal · qph · 4c SAVANNA ENERGY SERVICES CORP. twitter.com/energizealberta

Energize Alberta • March/April 2011

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Schwarzenegger champions clean energy Hollywood icon and former California governor discourages fossil fuel use during Calgary talk

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here are few if any political leaders who can come to Calgary boasting about bringing in policies to discourage the use of fossil fuels and lower emissions, and still be welcomed enthusiastically by more than 2,000 of the city’s business elite.

But that’s what happened when Arnold Schwarzenegger took the podium at the Telus Convention Centre in January for his first public presentation since finishing two consecutive four-year terms as California’s governor, he received a rousing ovation. Some attendees, who paid up to $400 each to hear the “Governator” speak, even stood and cheered, no doubt ardent Arnold fans honouring arguably the greatest action-movie hero of his generation.

Although appearing in Canada’s energy capital, Schwarzenegger made only passing reference in his prepared 40-minute speech to the landmark environmental policies he brought in as California’s governor, some of which irk Albertans who feel they unfairly discriminate against this province’s oilsands industry.

Instead, he spoke about his secrets of success, delivering a passionate and inspirational message about taking risks in life and not fearing failure. He spoke of how his hard work and determination resulted in the success he has enjoyed as an athlete, actor and politician, citing his environmental accomplishments as just one recent example.

“I said to the people of California, ‘I want to work to protect the environment and to protect the economy at the same time.’ They said, ‘It can’t be done. It won’t

happen.’ You know something, that’s exactly what we did. I didn’t listen to the naysayers,” he said.

“We went out and started building the hydrogen highway, the million solar roofs initiative, the low-carbon fuel standards, the 33 per cent renewable energy standard [for utilities] and the reduction of greenhouse gases by 25 per cent…. It went on and on and on,” he added.

“And now in this economic crisis, the green jobs are growing 10 times faster than in any other sector. So we’ve proven that yes, we can protect the environment and protect the economy at the same time. Again, we did not listen to the naysayers.”

In 2006, Schwarzenegger signed the bill that will create America’s first cap-and-trade system for greenhouse gas emissions, reducing the amount of emissions allowed from utilities, refineries and factories to 1990 levels by 2020. State utilities must also produce a third of their power from renewable sources by the same year.

Schwarzenegger also initiated California’s Low Carbon Fuel Standard Program, which calls for a reduction of at least 10 per cent in the “wells-to-wheels” carbon intensity of transportation fuels sold in the state within a decade.

With dozens of states pursuing similar fuel standards, oilsands producers fear such widespread policies will effectively bar access to key American markets.

So it was no surprise when moderator Frank McKenna’s first serious question to Schwarzenegger after his speech was whether he would be willing to travel to Fort McMurray to see the oilsands operations up close, just as his former director from the blockbuster Terminator movies, James Cameron, did last year.

“I love to explore different areas, things I don’t know about,” replied the former governor. “That’s one of the areas I don’t know that much about. I’d like to see it.”

Schwarzenegger went on to explain that his energy policies weren’t specifically targeting the oilsands, but rather petroleum in general.

“The key thing, I think with energy, is that we figure out this century how we can get off fossil fuels, and how we slowly change over to renewable energy. We’ve got an abundant amount of sun,

off fossil fuels. Not just because of that, but because we want to become energy independent,” Schwarzenegger.

“We rely too much on oil from the Middle East. And it doesn’t make any sense to send a trillion dollars over to the Middle East, to people who hate us and want to blow us up. That to me doesn’t make any sense, so we have to get off of it.”

Schwarzenegger said it’s time for the United States as a whole to emulate California by creating a national energy plan that will

photo: tinePublic Inc.

Byron Chu Energize Alberta

Former California governor Arnold Schwarzenegger (second from left) flanked by event organizers Andy McCreath and Christian Darbyshire of tinePublic; and on the right, Frank McKenna, former premier of New Brunswick. we’ve got an abundant amount of wind and we’ve got ocean energy,” he said.

“We’ve learned now over the last hundred years of using fossil fuels that it was very helpful for our industries to grow and become what they are today.”

But the former governor noted that mankind also learned that fossil fuels have “tremendous negative side effects” when it comes to health. He said 100,000 people die of pollution-related illnesses every year in America.

“In California alone, 19,000 people. So in California, we have made a good effort to get slowly

slowly replace foreign oil with renewable energy.

“Not abruptly, because that will hurt business and the economy. We’ve got to do it sensibly and smartly, and slowly move over to that. Everyone needs to work together.”

McKenna, the former premier of New Brunswick and former Canadian ambassador to the United States, asked Schwarzenegger how he rationalized his greenhouse gas policies in light of the fact that two-thirds of California’s own onshore oil is heavy—so heavy, that a study from the University of California,

Berkeley suggests it is more carbon intensive to extract than crude from Alberta’s oilsands.

In spite of that, the Low Carbon Fuel Standard assigns a lower carbon emission rating to California’s heavy oil than to crude from Alberta’s oilsands, but the former governor didn’t acknowledge or defend what critics argue is a discriminatory policy. Instead, he just reiterated that the fuel standard will reduce the state’s reliance on fossil fuels, and he believes technology will be the key to achieving that goal.

“For instance, now in California, a company produces algae fuel.

And the navy just signed a contract to fuel ships and planes with algae fuel. That’s the direction we have to go. I think in the end technology will save us all,” he said.

“That’s why I’m a big believer in giving as much tax cuts and as much help from government to the private sector, so they can explore new ways of creating energy, not just do the old things and keep the status quo.”

Schwarzenegger noted that it has not been easy to promote renewable energy in California, pointing to the seven years it took to obtain the federal permits necessary to start building 10,000 megawatts of solar power capacity in the Mojave Desert.

“We couldn’t even build a transmission line because environmentalists wouldn’t allow us to build a transmission line for renewable energy. So what sense does it make when you have solar in the desert when you can’t get it to the grid?” he said.

“You need energy to come to the grid so people can use it, but they wouldn’t give me the permission. So it’s sometimes frustrating, but that’s the way it is in a democracy.”

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Energize Alberta • March/April 2011

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Junior in name only Small oil and gas companies make big impact Jacqueline Louie Energize Alberta

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lberta’s junior oil and gas sector is as much a symbol of the province’s free spirit and can-do ways as the iconic cowboy. In fact, the entrepreneurs who operate smaller entities in the petroleum industry play a vital role in maintaining Alberta’s economic well-being.

The roots of the junior oil and gas sector reach back nearly a century to the Turner Valley natural gas strike of 1914, according to Gary Leach, executive director of the Small Explorers and Producers Association of Canada.

Legacy established “It was an important beginning that established a legacy of risk taking and entrepreneurialism in the Alberta oilpatch that persists to this day,” Leach says.

“The Alberta oilpatch has its deepest roots in the days when locally based, locally financed companies started up and tried to make a go of it, to the point where today, almost 50 per cent of the publicly traded oil and gas companies in the world are based here in Alberta.”

Leach notes that in the ensuing decades since the Turner Valley strike those involved in the province’s oilpatch—most notably the juniors—have developed a unique business culture “that is probably the defining characteristic” of the Canadian oil and gas industry.

“Alberta has been a unique place, from a global perspective, for Albertans to participate in their own oil and gas industry—whether it’s wanting to start their own oil and gas company, a drilling or service sector company, or a financial boutique that specializes in raising money for the oil and gas industry.”

The junior sector has always been the backbone of the industry in Alberta, according to Alberta Energy Minister Ron Liepert.

“Usually 100 per cent of their expenditures happen within Alberta, and their shareholders are almost all Alberta citizens.

The economic spinoff of every dollar is

seen right here and across the province,” he told Energize Alberta.

Vital to the economy And that economic impact shouldn’t be underestimated. According to government statistics, the oil and gas sector as a whole makes approximately $25 billion to $30 billion in new investment in Alberta each year, with the junior sector drilling about a third of all new wells and contributing anywhere from $7 billion to $8 billion each year.

In terms of direct employees, the junior sector’s numbers are small. But its impact extends everywhere from the downtown Calgary offices of lawyers and investment bankers, to the drilling and service supply companies that are based in small cities and rural areas across the province.

Where the junior sector’s spending has a big impact, Leach notes, is in the thousands of Albertans the industry retains to supply such things as consulting engineering services, advisory services and more.

The junior oil and gas sector is a significant contributor to Alberta’s economy, far beyond the number of people it employs directly.

“For every well we drill, we employ an additional 100 people elsewhere in Alberta.

And that’s not even counting all the motels and restaurants that are used. These jobs are not in Calgary, they’re all in the rural area,” says Brian McLachlan, president and chief executive officer of Yoho Resources, a Calgary-based junior explorer with a market capitalization of about $120 million.

The junior sector’s importance to the overall health and well-being of the province’s economy is not lost on Ben Brunnen, Calgary Chamber of Commerce chief economist and director of policy and government affairs.

“These are the organizations that create a large proportion of the jobs for the Alberta economy,” he says.

“They help support local economies, particularly in rural regions of the province, bringing in crews to stay in hotels and eat at the restaurants. They are a

Gary Leach, executive director of SEPAC significant contributor to economic prosperity across the province.”

Challenging times But the industry has been hit hard in the past few years by such things as the worldwide economic crisis and a steep drop in gas prices. The biggest challenge, according to Leach, is commodity price volatility. “In particular, natural gas is facing some very stiff headwinds in terms of prices.”

All of which puts many junior companies in Alberta in a tough predicament, as a good portion of them are focused on natural gas. But from tough times, opportunity often arises.

“The way we overcome that is by getting more creative on the types of projects we go after, and applying all of the new technology that’s available to the industry,” McLachlan says.

Technology has changed substantially over the last five years, he explains, allowing industry to access reservoirs that had previously been uneconomic. In the past 18 months, the industry has shifted its focus from natural gas to prospects containing a high liquids content—in other words, oil—since oil fetches a much higher price than natural gas.

For its part, the Alberta government is open to ideas from industry on how the provincial government can help.

“We need to work with the folks in the gas business to see what it is we could do to help them over this period,” Liepert says.

“They are a resilient bunch. I believe we

will weather this low-price era, and will continue to be a hotbed for the smaller oil and gas companies.”

Opportunity knocks According to Leach, companies that see opportunities to re-orient their capital spending are focusing on oil targets as opposed to natural gas and investigating opportunities to recover oil from some of Alberta’s mature oil plays.

And, in tandem with the capital spending shift from natural gas to oil, they’re doing their best to get operating costs under control while also prioritizing which natural gas opportunities—most often those with high liquids content—they can best exploit.

“I think the junior sector has a very bright future in Alberta. It’s an adapter of new ideas and new technologies. There are lots of opportunities in the province to start and grow companies, and it has really stamped the province with ideas about entrepreneurship—and risk taking—that exemplify the Alberta character,” Leach says.

McLachlan, too, sees a promising future for the province’s junior oil and gas sector.

“It would be nice if people could heat their houses and drive their cars on love, but the world doesn’t work that way. We still need energy, and our industry does a darn good job of producing it efficiently and without a lot of impact,” he says.

“Our industry is one of the most regulated, clean and environmentally conscious oil and gas sectors of anywhere in the world.”

DID YOU KNOW? The first natural gas well was drilled in 1883 in a field near Medicine Hat, Alberta

Alberta’s total marketable natural gas production, including coalbed methane, was 4.4 trillion cubic feet in 2009. 28 per cent of the gas produced in Alberta was used locally, with the remainder being shipped to other Canadian provinces and the United States

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Premier Ed Stelmach talks oilsands at a recent King’s University College event.

Oil’s well in Alberta?

Oil Things Considered conference explores issues behind oilsands Kevin Ma Energize Alberta

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http://twitter.com/energizealberta

Discover more online at energizealberta.com

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heck out energizealberta.com for additional stories, polls, a link to the Energy IQ quiz and a searchable archive of past editions. You can also comment on our stories and forward them to friends. In addition, the site houses a directory of key players on the energy literacy stage.

ow many liquid slaves did you use today?

That was one of the many questions raised during a recent conference on the oilsands at Edmonton’s King’s University College.

Some 500 students and area residents gathered for two days of talks about oilsands development, including one by Premier Ed Stelmach.

The oilsands are a complex, global issue, Stelmach told the gathering, and Albertans need to be part of the debate on how to use them.

“Those who seek to reduce this discussion to a slogan on a banner or a catchphrase do us all a great injustice.”

The oilsands aren’t the environmental demon they’re sometimes made out to be, he said, noting that Alberta’s oilsands produce fewer greenhouse gas (GHG) emissions per barrel than California heavy oil for example, and comparable amounts to those produced by oil from Iraq, Nigeria and Venezuela.

“Can anyone say that these nations take their environmental and, most importantly, social obligations as seriously as Alberta does?”

Stelmach questioned.

But not all in attendance were on the same page as the premier, who only days after his speech at the conference announced his intention to resign.

Wayne Groot, a Sturgeon County potato farmer who spoke on the effects of oilsands development at

“Can anyone say that [Iraq, Nigeria and Venezuela] take their environmental and, most importantly, social obligations as seriously as Alberta does?”

— Premier Ed Stelmach

the conference, said Stelmach’s argument was troubling. “Just because they’re bad and we’re a little less bad doesn’t make it right.”

The two-day conference was part of the Christian college’s interdisciplinary studies program. Roy Berkenbosch, program director, said that the oilsands have been called everything from ethical oil to dirty tar, and the conference was meant to help people pick apart the assumptions behind those labels.

Global energy demand is projected to rise 30 per cent in the next 20 years as nations like China and India develop, Stelmach said, and about 80 per cent of that growing demand would be filled by fossil fuels.

“We need energy and we’d be foolish to turn our backs on the secondlargest proven oil reserve in the world,” the premier noted.

But how much energy do we need?

Most Canadians use 24.7 barrels of oil of energy a year, said noted journalist and oilsands critic Andrew Nikiforuk, equivalent to 204 years of slave labour. China gets by on four barrels of “liquid slaves” per person each year, while Europe uses about 16.

“How much oil are we entitled to?” Nikiforuk asked.

Alberta is reducing its GHG per barrel of oilsands oil, said Stelmach, who went on to acknowledge that those reductions had been offset by greater oil production.

He raised carbon capture technology as a way to further reduce emissions.

But according to Nikiforuk, carbon capture is too energy intensive to offset oilsands emissions, and conservation and renewable power could greatly reduce global demand for oil.

“Are we preparing for [that future] or are we putting all our eggs in one basket?”

Nikiforuk called on the government to follow Norway’s lead by saving its oil revenues instead of spending them. “Easy money encourages bad behaviour in industry just as it does in government, and that’s why it has to be put aside,” he said.

Norway now has a $500-billion fund to draw on when its oil runs out. Alberta has just $14 billion.

— Courtesy of the St. Albert Gazette

www.energizealberta.com

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March/April 2011 • Energize Alberta

Exercising a ‘generation’ choice

Ashok Dutta Energize Alberta

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espite coal being the prime mover in Alberta’s electricity generation mix, Calgarybased ENMAX Corporation is doing its bit to bring about a change in the ways Albertans generate power while also significantly reducing their carbon footprint.

Enter Generate Choice, a homegrown project focused in a major way on renewables.

“It is a grassroots movement in which we want to create awareness and make users think about the choices they have in terms of using solar and wind in a totally benign way,” says Doug Sullivan, ENMAX’s vice-president of distributed generation.

“A maximum of 1,800 kilowatt hours of energy can be generated each year through this process. This is the equivalent of the average load of a home for a three-month period.”

The genesis of the initiative can be traced back to late 2008 when ENMAX employees were given an option to sign up for the program.

Last May, Edmonton-based Climate Change and Emissions Management Corporation committed—in principle—to $14.5 million in funding in recognition of the program.

While creating critical mass in terms of generating interest was a start-off point, at present nearly 100 ENMAX employees have taken advantage of Generate Choice and already installed solar facilities in their homes.

Looking ahead, the prospects are encouraging, with 28,000 people visiting the Generate Choice program’s website since November 2009 (www.generatechoice.ca).

“Nearly 9,000 have provided their contact information and we communicate with them on a regular basis. Besides, 3,600 prospective users have also expressed desire for their house evaluation. Of this, 2,200 are for solar and the remaining 1,400 prefer wind power facilities,” Sullivan notes.

As part of the program, ENMAX offers savings on the installation cost of nearly $10,000, which is taken care of by the company.

“For solar power, we charge $1,500 upfront in addition to a monthly fee of $30 and an administration cost of $10. We are still in negotiations with equipment suppliers and manufacturers for wind power, and the numbers are being crunched out,” Sullivan says.

So far, Generate Choice has elicited positive reactions from users.

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and it was thus a wake-up call for them,” Sullivan says.

Another challenge, which is more technical in nature, is related to wind power.

“Wind is location-specific and is most suited to farms in southern Alberta, while solar has a wider geographical spread,” Sullivan says.

On the commercial front, ENMAX also has to deal with the risk of recovering its initial investment.

“We make money by signing longterm agreements with customers.

People move houses [every] four to five years, and it is a risk if the new owner does not agree to sign up,” Sullivan said.

ENMAX is moving ahead undaunted, with the aim of installing facilities in 9,000-10,000 sites by 2015.

Undeniably, there will be several benefits accruing from Generate

Members of Energize Alberta’s advisory board come from many energy “walks of life.” This group, with its collective insight and expertise, works closely with the editorial team to suggest areas of coverage that will engage and educate all Albertans about our energy future.

Alice Murray Stakeholder/Community Affairs Coordinator Stakeholder/Shell Bruce Edgelow VP, Energy Group Alberta Treasury Branch Carol Howes Media Relations, Corporate Communications Encana Caroline Grover Executive Director Economic Development Alliance of Southeast Alberta David Huggill Western Canada Policy Manager Canadian Wind Energy Association (CanWEA) Evelyn Ferchuk Manager, Oil Sands Communications Canadian Association of Petroleum Producers (CAPP) Gail Poon Senior Manager, Corporate Communications Epcor

Photo: ENMAX

ENMAX shines light on renewable power initiative

“In recent years, I have had a growing concern for the environment and the damage we humans are causing to it,” says David Barry, a user.

“I know how wasteful and inefficient a traditional coal-fired electricity generating plant still is.

Centralized power generation is essentially the same today as was first used during the industrial revolution in the 19th century. Close to 70 per cent of the heat goes up the stack and is wasted. Photovoltaic [PV] is a better way to produce electricity.”

Barry adds that the benefits of solar power are many and varied.

“PV uses the sun, which we have an abundance of over 300 days per year on an average. PV systems are inconspicuous, silent, have no moving parts and require little maintenance,” he says.

advisory board

Gary Redmond Executive Director Synergy Alberta Greg Gilbertson Operations Leader Energy Resources Conservation Board (ERCB)

ENMAX is offering Albertans the option to generate their own solar and wind power at home through the Generate Choice program.

“The catch is that at the moment my own PV system would require me to find an upfront investment of between $8,000 and $10,000, and I could not justify that. Generate Choice took away that major hurdle.”

Another user, Colin Dumais, says that his goal is to reach 100 per cent renewable on-site power.

“Once you start making some of your own power, it feels liberating and you start thinking about generating more and more on site.

Generating your own power finally makes electricity worth thinking about, something even high electricity prices in 2000 did not seem to do,” he says.

The program will not be without its share of challenges and risks, however.

“Education is a major hurdle. As a society, we always adopt things that are cheaper. Many were under the impression that renewable was cheaper compared with coal fired,

Choice. But, one significant aspect will be reducing the carbon footprint by 600,000 tonnes over the 40-year life of the facilities.

“Generating some of the electricity my family needs using solar PV at home is the right thing to do. I am convinced more people will feel the same way, given the facts and opportunity to choose,” Barry says.

He adds that generating his own power removes the need to use extra cables and eliminates the costs charged by transmission and distribution companies, which typically are between 2.5 and three cents per kilowatt hour, on top of the eight cents per kilowatt hour for electricity itself.

“Most importantly, I reduce the environmental impact caused by generating additional energy required to overcome the losses associated with transporting electricity over great distances,” Barry says.

Ian Todd VP, Government & Media Relations Enmax Corporation Karin Gashus Utilities Consumer Advocate Government of Alberta Kym Fawcett Manager, HSE, Regulatory & Stakeholder Relations Enerplus Resources Lynzey MacRae Public Relations Specialist Direct Energy

Mike Doyle President Canadian Association of Geophysical Contractors (CAGC) Mike Finn VP, Exploration Trident Exploration Corporation Nancy Malone Manager, Economic Analysis Canadian Assoc. of Oilwell Drilling Contractors (CAODC) Natalie Falk Business Development Officer Economic Development Alliance of Southeast Alberta Natika Sunstrum Manager, Corporate Communications Enmax Corporation Nicole Collard Public Affairs Specialist Penn West Energy Patricia Poulton Community & Aboriginal Relations Advisor TransCanada Paul Paynter Business Development Manager, Energy Calgary Economic Development Scott Schreiner Director, Consultation & Communications AltaLink Sean McCarry President Sage Planning Group Ltd Stacey Ballash Executive Assistant to the President & CEO Trident Exploration Corporation Tracy Grills President Canadian Heavy Oil Association (CHOA)

Matthew Burns Associate Director (Calgary) University of Alberta

Travis Davies Public Affairs Advisor, Media Relations Canadian Association of Petroleum Producers (CAPP)

Michelle Chidley Event & Communications Director Small Explorers & Producer Assoc. of Canada (SEPAC)

Trevor Williams Chair, Energy & Utilities Sector Relations Olds College - School of Business

Mike Dawson President Canadian Society for Unconventional Gas (CSUG)

Ulrike Kucera Media Relations Officer Canadian Wind Energy Association (CanWEA)

Energize Alberta • March/April 2011

The heart of the matter Graham Chandler Energize Alberta

T

he proposed Heartland Transmission Project has been a polarizing issue in Alberta and an upcoming public hearing is sure to feature some high-voltage dialogue.

Starting the morning of April 11, those that are registered and who want their voice to be officially heard can show up at the Edmonton EXPO Centre. There’ll be breaks, but this public hearing could last as long as four weeks and involve over 200 individuals, companies, institutions and governments.

“For” and “against” will square off— presenting their cases and cross-examining each other. For those closer to the action, community hearing sessions will be held at Spruce Grove, Sherwood Park, Morinville, Bon Accord, Fort Saskatchewan and south Edmonton during the month, too.

The hearings are the final phase of a lengthy process before the Alberta Utilities Commission approves an option.

It’s a process that got started a couple of years ago when the Alberta Electric System Operator (AESO), the entity charged with the province’s electrical power planning and operations, completed its biannual needs forecast.

“Our 2009 Long-Term Transmission System Plan included many projects, totalling $14.5 billion,” says Dawn Delaney, AESO spokeswoman. “Under the Electric Utilities Act, the province designated four of these ‘critical transmission infrastructure’ [CTI]—one was the Heartland Transmission Project.”

Alberta’s Industrial Heartland—which is located in the northeast quadrant of the greater Edmonton region—is home to several billion dollars worth of major projects: Shell Canada’s upgrader expansion, North West Upgrading’s bitumen upgrader and refinery, and the Aux Sable off-gas processing facility, to name but a few.

Delaney is quick to point out that the Heartland Transmission Project is not only about serving the needs in the Industrial Heartland region.

“The Heartland project is required to reinforce the entire backbone of the transmission system,” she explains. “It will form the foundation for the supply of electricity into all of northeast Alberta, supporting oilsands development, local demand in the Heartland area and strengthening the entire provincial network.”

She says demand in northeastern Alberta has been growing and will

continue to grow, “increasing by over 1,200 megawatts since 2002, a growth equivalent to the approximate size of the city of Edmonton.”

Forecasting growth AESO’s 2009 forecast foresees that growth rate continuing by over 1,970 megawatts, or 95 per cent, by 2019. Delaney says that aligns solidly with the Canadian Association of Petroleum Producers June 2010 oilsands production forecast, “which actually now shows more growth potential in the oilsands sector than was used in [our] forecast.”

The province agreed it was critical.

“The existing system in the Heartland area is near its capacity,” says Jay O’Neill, Alberta Energy spokesman. “It takes a lot longer to build new transmission lines than to build a new cogeneration facility, refinery or upgrader, so it is important to build now in order not to delay industrial development.”

He says there is still significant growth expected in both Fort McMurray, with cogeneration projects looking to connect into the grid, and in the Heartland area as a result of development. “Even with some delays in upgraders, the Heartland project must be completed as soon as possible to meet the needs of even the lowest growth scenario.”

Handling the expected load for the Heartland and northeast region demanded significant new infrastructure. What’s proposed is one double-circuit 500-kilovolt line AC transmission facility connecting to the existing 500-kilovolt system on the south side of Edmonton, and a new substation in the Gibbons-Redwater region.

Assigned to the job are two regulated utility companies: AltaLink and EPCOR. Under the Electrical Utilities Act, a CTIdesignated project is assigned by either

the minister of energy or AESO to an appropriate transmission facility operator, or TFO, who applies to build and/or operate the facility, in this case bypassing the competitive process.

“Historically, the assignment was based on geographic areas, and this was the case for the Heartland project,” explains O’Neill.

However, he adds, AESO is developing a competitive process by this fall for critical transmission projects. “Once the AUC approves the new process, all critical transmission projects will be awarded this way,” he says. “However, the process will not apply to projects that are already well underway, as this would add extra costs and significant time delays.”

And AltaLink and EPCOR were considered geographically appropriate TFOs for the Heartland project.

“The line could route through the transmission operating territories of AltaLink and EPCOR,” explains Guy Bridgeman, EPCOR senior vice-president of strategic planning and development and spokesman for the Heartland Transmission Project.

“EPCOR’s transmission operating territory includes the city of Edmonton, while AltaLink’s includes the area surrounding the city of Edmonton.”

As TFOs, AltaLink and EPCOR were required to undertake consultations with affected landowners along their proposed route options as well as address potential environmental impacts.

“We conducted one of the most extensive public consultation programs in Alberta,” says Bridgeman. “The intent was to provide stakeholders with opportunities to ask questions, express concerns and raise issues regarding the project and have those addressed.”

He says they made more than 200,000 contacts with affected residents; over 4,000 of those were one-on-one

Graphic source: RETA, Illustrator - Jeremy Seeman

Despite being deemed critical infrastructure by the Alberta government, the proposed Heartland Transmission Project still has its share of critics

This schematic shows the size of the proposed double-circuit 500 kilovolt structure in relation to existing Edmonton landmarks—the Enbridge and EPCOR buildings. The small tower replicates the size of the existing towers that can be found in the Edmonton area.

9

consultations. A range of concerns were discussed during the process including health, property values and visual impacts.

“We had two rounds of open houses and one set of information sessions specifically related to tower configurations [in total, 20 events],” says Bridgeman. “In addition, we maintained information centres throughout the project region and made numerous presentations to interested groups, businesses, local, regional and provincial government representatives, associations and industry.”

Results were used to assist the team in developing recommended routing, says Bridgeman. From four original options, one preferred and one alternate route were selected.

“The preferred east TUC [transportation utility corridor] route[see map on page 10] runs along the south of Edmonton near Anthony Henday [Drive] before turning north and running through a designated TUC and then north again across the river and into the industrial Heartland,” he says.

“The alternate west route runs from a point on the existing high-voltage line west of Edmonton, running north near Spruce Grove and then east along a route north of Edmonton’s boundaries into the Heartland industrial region.”

Bridgeman adds that there is a third possible option. “In response to community input, the facility application includes a stakeholder-requested option for burying the lines in the section closest to major residential areas—that is, along the TUC.” Documents provided by the Heartland Transmission Project indicated reasons for the two choices.

“In developing the preferred route, as the line goes north of the TUC, we selected the segment option that had the least number of residences within 150 metres of the centre line,” the documents state.

Other significant considerations include the fact that this route is both the shortest and lowest costing, at an estimated $361 million for the transmission line only.

Also, only about half of the line will be on private land (34 kilometres out of a total 65 kilometres).

Bridgeman reckons utilizing the TUC makes a lot of sense. “The TUC was established by the provincial government starting in the 1970s and is designated for uses such as ring roads, major power lines, pipelines and municipal utilities,” he says.

According to the summary, the west route was chosen as the alternate since its potential overall impact is lower than the eliminated routes. The route offers a relatively small number of homes within 150 metres of the line and the lowest number of residences within 800 metres of the right-of-way, as well as the lowest potential impact on sensitive wetlands in the area, such as sloughs, ponds and seasonally occurring water.

At the same time, this route would require the most private land for the right-of-way, and could potentially impact the largest amount of farmland among all the considered routes. ❯❯ continued on page 10

www.energizealberta.com

10

March/April 2011 • Energize Alberta Diagram: Heartland Transmission Project

Continued from page 9

The heart of the matter The complete record of information was filed in the project’s facility application to the Alberta Utilities Commission on Sept.

27, 2010. While the application has been reviewed since then, before rendering its decision the AUC will hold public hearings on the application where landowners or other affected parties can make their cases known.

That’s the process that is to commence at the EXPO Centre on April 11.

Fight the power The hearings are a final stage of the process and those who have registered will be presenting their cases. RETA (Responsible Electricity Transmission for Albertans) is one of them. Claiming a membership of 8,000, RETA has been on record since 2009 with criticisms of the Heartland Transmission Project, amongst other provincial electrical transmission initiatives.

Its mission, according to its website, “is to ensure that no new high-voltage transmission lines are run above ground by homes and schools. If new transmission lines are to be run by schools, homes, daycares, hospitals and environmentally sensitive areas, they must be buried.”

In the event that a decision is made to run new transmission lines above ground near homes and businesses, RETA advocates homeowners and landowners having the option to sell their property to the utility company or government at a price equivalent to replacement value.

The organization also questions the need for much of the proposed new infrastructure, in light of recently changed economic realities.

RETA, who say they are not a NIMBY (“not in my back yard”) organization, unfortunately couldn’t meet the Energize Alberta press deadline for interview.

However, the group has publicly pressed for the underground option for the transmission line.

They quote several studies that have found statistical correlations between higher incidences of leukemia (especially during childhood) and prolonged ELF-EMF (extremely low frequency electromagnetic field) exposures. They say similar links have been demonstrated with other cancers, Alzheimer’s disease, suicide and depression, as well as birth defects.

“While power companies continue to state that there is no irrefutable proof that there are adverse health effects, the overwhelming consensus by the medical and scientific experts around the world, including the International Commission for Electromagnetic Safety, is that there are very serious health effects of overhead high-voltage power lines,” RETA states.

It seems the jury is still out. According to EPCOR’s Bridgeman, after more than 30 years of research that includes thousands of studies, “no health agency, including the World Health Organization and Health Canada, has concluded that exposure to EMF at the levels associated with power lines causes any long-term adverse affect on human, plant or animal health.”

twitter.com/energizealberta

Public exposure to magnetic fields should remain below 833 milligauss (mG), according to the International Commission on Non-Ionizing Radiation Protection.

But, he says, the Heartland project team “recognizes that some people may still be concerned about EMF, and we treat those concerns very seriously. Our approach to EMF is guided by the conclusions of [these] national and international health agencies, which periodically review the large body of research on EMF,” Bridgeman says, adding that the project’s proponents will provide this information to concerned parties.

The underground option does entail drawbacks. “Burying such lines poses some technical challenges, as there are only a couple of examples of 500-kilovolt underground lines in the world,” explains Bridgeman. “Underground is also costly compared to overhead lines. As an example, the preferred east TUC route is estimated to cost $580 million. That cost increases to an estimated $1.09 billion if 20 of the line’s 66 kilometres are underground.”

Moreover, he says, if there is an outage, repairs to an overhead line can be relatively quick compared to underground lines, which could take substantial time and resources.

“However, we should note that the Heartland Transmission Project team, that is EPCOR and AltaLink, have experience in burying high-voltage transmission, although not at 500 kilovolts. In 2009, EPCOR completed a 10-kilometre underground 250-kilovolt line from north Edmonton to downtown.”

In any event, it is the AUC which will make the final decision as to whether the line is entirely aerial or portions of it are underground.

RETA has some backing for the underground line from county and municipality sources. Strathcona County council was reported to have approved a $95,000 contribution to the group to help the fight to get the Heartland line buried.

This will help support representations at the April hearings.

Edmonton city council strongly supports the underground option, too.

Although things could change before the April AUC hearings, a motion was passed that the city intervene, advocating “that all 500-kilovolt transmission lines related to the Heartland Transmission Project within the city of Edmonton be buried, and if the lines are not buried that the lines go through the areas with the least impact to residents,” says Mark Young, head of litigation at the city’s law branch.

He says the City of Edmonton is among the approximately 200 individuals, groups, companies and municipalities that have been granted standing to make representations at the hearing regarding the routing decision.

Three Key Points to Ponder

1.

The Alberta Electric System Operator says that electricity demand in northeastern Alberta has grown by 1,200 megawatts since 2002—roughly equivalent to the energy use of the city of Edmonton. By 2019, the AESO forecasts demand to grow by another 1,970 megawatts.

2. The project prefers a route that runs east of Edmonton, and then north to the Industrial

Heartland. The route is the shortest of the available options, and has the lowest cost and the smallest number of residences within 150 metres of the line.

3. There is also an option to bury the line, which many affected residents support. The project

counters that this approach would significantly increase project costs and make the line more difficult to maintain.

Proposed Routes – Preferred and Alternate

West Alternate Route East TUC Preferred Route Existing 1202L transmission line Map source: AltaLink and EPCOR

Players on the Stage 1. EPCOR (www.epcor.ca) 2. AltaLink (www.altalink.ca) 3. Alberta Utilities Commission (www.auc.ab.ca) 4. Alberta Electric System Operator (www.aeso.ca) 5. Responsible Electricity Transmission for Albertans (retasite.wordpress.com) Going Broader, Deeper 1. Notice of hearing and application status for Heartland Transmission Project (www.auc.ab.ca/items-of-interest/heartland-transmission-project/Pages/default.aspx) 2. Heartland Transmission Project (www.heartlandtransmission.ca/new/index.asp) Feedback Do you think the Heartland Transmission Project is necessary?

Email yourenergy@energizealberta.com and let us know.

Energize Alberta • March/April 2011

11

Byron Chu Energize Alberta

O

rganizers of an inaugural conference and show to be held in Calgary this November are touting it as an international event that will add an entirely new dimension to the city’s energy focus.

Stampede Park will host the Global Clean Energy Congress and Exhibition from November 1-3, featuring high-profile speakers from Canada and abroad, as well as demonstrations to global technology firms of the latest clean energy technologies that have been developed by small inventors.

Organizers expect to draw 4,000 attendees, up to 1,000 delegates and some 200 exhibiting companies from around the world.

“Demand for clean energy technologies is increasing worldwide,” said Calgary Economic Development chief executive officer Bruce Graham. “Between 2000 and 2008, wind energy grew by 24 per cent per year, 31 per cent was the growth factor for biodiesel and solar grew by 53 per cent.

That’s just the renewable component of what we call clean technology.”

Graham believes Alberta is the perfect host for the Global Clean Energy Congress and Exhibition, as the province has more potential for developing hydro, wind and solar power than anywhere else in Canada.

Calgary in particular has a “critical mass”

of head offices and decision makers in the energy sector, said Graham, who pointed out that many of the large oil and gas companies have already begun diversifying into renewable and alternative forms of energy.

“We have a natural leadership position and now is the time to take advantage of that.”

The conference will cover a wide range of topics from supply and demand, fuels, power generation, infrastructure and supply chain optimization. As well, health and environmental benefits, policy mechanisms, growth strategies, risk management, and investment and financing will also be discussed.

“Certainly the way the electricity business and the oil and gas business are converging, to come together as one large industry to solve some of our environmental problems is going to be a key feature of this conference,” said former ENMAX chief executive officer Gary Holden.

The power utility, which is owned by the City of Calgary, is one of six key stakeholders of the congress.

The exhibition will also feature an interactive technology zone, where visitors will be able to see and touch new technologies on display to witness how simple many of them are to use and implement. Exhibition passes will be available at “an affordable price” to the general public, although exact pricing has yet to be determined.

Photo: Byron Chu

Event to showcase clean energy

When it comes to clean energy, Bruce Graham, chief executive officer of Calgary Economic Development, believes that Alberta has a “natural leadership position and now is the time to take advantage of that.”

“We want to have this as a regular event in Calgary to show the benchmark of the growth of clean energy technology and the clean energy industry as a whole,” said Anouk Kendall, the Canadian president of the World Alliance for Decentralized Energy, a co-organizer of the event.

“In the near- to mid-term future, we will be seeing that Alberta as a whole currently relies on an aging centralized infrastructure. What we will be seeing is the integration of these decentralized

energy systems, the on-site energy generation that’s going to compliment the existing centralized infrastructure,” she added.

“By hosting the event here, we’re bringing leaders from around the world with the most advanced technologies.

Calgary can be benchmarking and showcasing the implementation of those technologies in Calgary and around the province on a regular basis to show our growth, to show our progress, to show how those things are changing.”

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March/April 2011 • Energize Alberta

Renewal time Edmonton task force wants renewables to provide 20 per cent of the city’s energy needs by 2020 Graham Chandler Energize Alberta

I

n April 2009, the Pembina Institute completed and published a full update of its comprehensive study Greening the Grid: Powering Alberta’s Future with Renewable Energy. The 100-page document found that the province’s renewable energy sources had the potential to provide most of its needs within 20 years—provided appropriate government support. Any further spending on coal or inefficient gas they viewed as a setback.

In order to trace out the path, Pembina recommended the province form a Renewable Electricity Task Force, with representation from each renewable sector. A year later that hadn’t materialized, despite urging from six or seven communities. One was Edmonton.

“At the time, Mayor [Stephen] Mandel was saying this is important, so we should be looking at the local level,” recalls Mark Brostrom, director of the city’s environment office. “We promptly agreed, and set up a task force.”

Brostrom now heads up the city’s Renewable Energy Task Force, which was set up by city council in 2010.

Its general mandate is to develop and deliver a report to the city that examines the opportunities, barriers and potential technical, economic and policy solutions to the generation and use of renewable energy in Edmonton.

The board currently has 15 members, broadly based.

Choosing them “was a bit of a challenge,” admits Brostrom. “We pull in different areas of expertise, but it is

still fluid. There are different technologies and different aspects of each.” He likens it to a 3-D matrix.

Not all are industry and government. One of the group’s members represents the Pembina Institute: Tim Weis, director of renewable energy and efficiency policy, who co-authored the aforementioned report. He explains what Pembina brings to the task force.

“Most of the others are Edmonton-focused,” he says.

“Hopefully what we can bring is a broader context of what other provinces, other cities, other jurisdictions are doing—provincially, nationally, globally—because that’s what we do. We follow these trends.”

Weis says that outlook is broadened by bringing in outside experts.

“We have pretty big networks of groups, so we brought in some leading speakers from the United States, for example the former mayor of Gainesville, Fla., to talk about their solar program,” he says, adding that Pembina’s role is also “to make sure what comes out of the task force is as environmentally aggressive as possible.”

Weis has his finger on several trends already. “On a broader level, there are a couple of big issues,” he says. “It’s a big city, spread out—longTim Weis, Pembina term sustainability and costs are significant issues. From my personal point of view, it’s still the dependence of the city on coal that’s the biggest concern.

Being one of the main load centres in the province, Edmonton is responsible for a huge amount of the coal burned.”

He believes solar power could provide a quarter of Edmonton’s residential electrical power needs within a decade. “Solar is one of the biggest opportunities,” he says. “But getting there is a challenge.”

Brostrom more or less agrees. At this point, these figures are just potential. “That’s the first thing we are looking at—what potential we have of generating renewable energy within the city,” he says.

He reckons the potential is roughly 20 per cent over the next 10 years. “We get different reactions to this,” he says.

“Some say it’s a lot; others say, ‘Is that all?’”

As Brostrom notes, the task force’s mandate is more about looking at opportunities and barriers ahead than recommending a specific target.

“The task force is actually part of an overall project we are doing on energy itself,” he explains. “It was stated from the beginning that there are a lot of pieces other than renewable. A key one is looking at energy efficiency and conservation. The task force itself is focused on where the renewable opportunities are.”

Brostrom uses residential solar photovoltaic technology as an example.

“You need to have a grid connection, or storage, to take advantage of solar. At this point, the infrastructure is in place to a certain level—we can feed a good amount of solar into the grid at least until the system can handle it,” Brostrom says.

“Once you get to a certain penetration, however, it gets more challenging. These are some of the things we are getting a handle on in our recent meetings.”

Recommendations from the task force are expected to be presented to city council by mid-year.

Players on the Stage 1. City of Edmonton (www.edmonton.ca) 2. Pembina Institute (www.pembina.org) Going Broader, Deeper 1. City of Edmonton Renewable Energy Task Force (www.edmonton.ca/environmental/planning/renewableenergy-task-force.aspx) 2. Greening the Grid: Powering Alberta’s Future with Renewable Energy (pubs.pembina.org/reports/greeningthegrid-report.pdf) 3. Solar Energy Society of Alberta (www.solaralberta.ca) Feedback Do you see opportunities for renewable energy in your own community? Send your ideas to yourenergy@energizealberta.com.

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S1

Get the facts on Canada’s oil sands...

Upstream

Canadians want a balanced discussion about energy, the economy and the environment.

The Canadian Association of Petroleum Producers (CAPP) has designed this insert to provide fast, easy access to oil sands facts that will help you get in on the discussion. Facts are sourced from credible third parties or are developed using CAPP data that is checked against other data sources, including government reports.

Dialogue

THE FACTS ON:

O il Sands

To order the booklet version of The Facts on Oil Sands – email your request to upstreamdialogue@capp.ca.

The Resource

The facts Upstream Dialogue toolkit Upstream.Dialogue.started.in.2008.as.the.Canadian.

Association.of.Petroleum.Producers’.(CAPP).e-newsletter.

–.providing.broad.industry.information.and.stories.in.an. easy-to-read,.non-technical.format..

The.Upstream.Dialogue.toolkit.is.expanding.to.include. resource-specific.fact.books..The Facts on Oil Sands is. the.first.of.these.fact.books..

If.you.would.like.to.receive.the.e-newsletter,.email.your. request.to.upstreamdialogue@capp.ca Handy and credible CAPP.is.the.voice.of.Canada’s.upstream.oil.and.natural.gas. industry.–.representing.companies.that.produce.about.90%.. of.Canada’s.oil.and.gas..

Our.research.indicates.that.Canadians.want.a.balanced. discussion.about.energy,.the.economy.and.the. environment..This.pocket.book.is.designed.to.give.you.fast,. easy.access.to.oil.sands.facts.that.will.help.you.get.in.on. the.discussion.

Facts.are.sourced.from.credible.third.parties.or.are. developed.using.CAPP.data.that.is.checked.against.other. data.sources,.including.government.reports.

Dig deeper We.couldn’t.cover.it.all.in.this.little.book!.So.we.have. provided.links.to.various.sources.at.the.end.of.this.insert..

Go.ahead,.dig.deeper..

UNIT 1

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More facts?

Are.you.curious.about.facts.that.aren’t.covered.here?.

Send.your.questions.to.upstreamdialogue@capp.ca...

We.will.respond..We.will.also.consider.your.input.when. developing.future.fact.books...

Updates The.facts.provided.in.this.insert.are.current.as.of.February.

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To.order.more.printed.copies.of.The Facts on Oil Sands,. email.upstreamdialogue@capp.ca

wHAT ARE OIL SANDS?

S2 S2

The Resource

Oil.sands.are.a.natural.mixture.of.sand,.water,.clay.and.bitumen.

Bitumen

Canada.has.the.third. largest.oil.reserves. in.the.world..97%.of. these.reserves.are.in. the.oil.sands..

Bitumen.is.oil.that.is.too.heavy.or.thick. to.flow.or.be.pumped.without.being. diluted.or.heated..A.small.amount.is. found.close.to.the.surface.but.the. majority.is.deeper.underground.

Oil.sands.are.recovered.using.two.main.methods:.mining. and.drilling.(in.situ)..The.method.used.depends.on.how. deep.the.reserves.are.deposited..

At 10o C bitumen is as hard as a hockey puck.

Surface Wellhead

Steam Assisted Gravity Drainage drilling (in situ) method

Location

20%.of.the.oil.sands.reserves.are.close.enough.to.the. surface.to.be.mined.using.large.shovels.and.trucks.

ATHABASCA AREA

Mining shovels dig into sand and load it into huge trucks.

COLD LAKE AREA

Source:.IEA.2010....*Growth.from.2008.to.2035,.Current.Policies.scenario.

Unconventional All.sources.of.energy,.developed.responsibly,.will.be.needed. to.meet.growth.in.global.demand..With.conventional.oil. supply.declining,.the.need.for.unconventional.resources,.. like.oil.sands,.will.increase..

Global Primary Energy Demand (Current.Policies.scenario) 20000

Million tonnes oil equivalent

18000 16000 14000 12000

Source:.IEA.2010 Other renewables Biomass and waste Hydro Nuclear Natural gas Oil Coal

Oil Sands deposits

6000 4000 2000 1990 .

2008

2020

. . . Outlook 2010 Source: IEA World Energy . .

2030

3

Fueling North America Canada’s.oil.sands.are.uniquely.positioned.to.contribute.to. meeting.the.growth.in.energy.demand..In.North.America,. oil.sands.production.provides.secure.and.reliable.supply,. reducing.reliance.on.foreign.imports.and.providing.economic. growth.in.both.Canada.and.the.U.S..

Energy.supply

M

Trusted.neighbours

Ca we so

Canada.is.the.largest.supplier.of.crude.oil.and.petroleum. products.to.the.U.S. U.S. imports of crude oil and petroleum products by country of origin

#1

..

2,500

Production Over.the.past.30.years,.Canadian.crude.oil.production.has. increased.by.1.4.million.barrels/day.due.to.the.growth.in. supply.from.oil.sands.

Ca ac

O

Vanc

2,000

1,500 Petroleum Products Crude Oil

1,000

Wash

Source:.EIA.2011

500 0

Canada

Mexico

Saudi Arabia

Nigeria Venezuela Russia

Algeria

Iraq

Angola

Colombia Brazil

Canadian Production: Barrels/day 2010 2.8 million

2025 4.3 million

1.5 million

3.5 million

Source:..

CAPP.2011

Security.of.supply Supplying.energy.to.Canada.and.beyond.generates. economic.benefits.across.the.country..For.global.partners,. importing.energy.from.Canada.makes.sense..Canada.is. politically.stable,.infrastructure.is.robust.and.environmental. standards.are.high..

Responsible Today, just over Canada’s.oil.sands.industry.operates.within. half of Canada’s some.of.the.most.stringent.and.comprehensive. crude oil production regulations.for.resource.development.anywhere. is from the oil in.the.world. sands.

Oil sands help supply oil energy needs.

8000

Energy.supply

Year 1980 Crude Oil 1.5 million (incl. oil sands) Oil Sands 0.1 million

10000

Hot water i the oil sand transported hydrotransp the extracti

Mining method

thousand barrels per day

Global.demand.for.energy.is.expected.to.increase.47%*. by.2035.as.economies.in.both.developed.and.emerging. countries.continue.to.grow.and.standards.of.living.improve...

Trucks take oil sands to crushers, where it is prepared for extraction.

Ste injec into rese

Lloydminster

Energy

Global Needs

Adv com to.w surf

Steam Injection

20%.mined

SASKATCHEWAN

2

demand

80% so.a Drill dist

Oil

1

Energy

80

the.oil

Steam Chamber

Canada’s.oil.sands.

ALBERTA are.found.in.three. deposits.–.the.

Fort Athabasca,.Peace.

McMurray River.and.Cold.

Peace River Lake.deposits.

PEACE RIVER AREA in.Alberta.and.

Saskatchewan..

Edmonton The.oil.sands.are. at.the.surface.near.

Fort.McMurray.but.

Calgary deeper.underground.. in.the.other.areas.

7

The Resource

Oil.sands

Recovering

In.20 2.mill

2035

8

Ex

9

Source

S3 S3

The Resource

The Resource

80%.drilling.(in.situ) 0%.drilling.(in.situ)

The.oil.sands.. are.a.vital.energy. source.for..

Canada.and.. the.world..

Cyclic Steam Stimulation Cyclic Steam Stimulation drilling (in situ) methoddrilling (in situ) method

Steam Injection

Stage 1 Steam Injection

Oil

eam cted ohe. the ervoir

Energy

Stage 2 Soak Phase

Stage 2 Soak Phase

Stage 3Stage 1 Steam Production Injection

Steam Heated oil Steam and are groundwater and waterinjected into pumped to thethe heat the surfacereservoir viscous oil

Oil sands that lie more than 70 metres (200 feet) below theoilground Heated Steam and groundwater and water are pumped to theusing heat theare recovered surface viscous oil drilling methods.

Bitumenare is extracted The tailings pumped from the oil sands in to the settling basin, thethe separation vessels. where water is recycled and reused in the process.

Bitumen is extracted Hot water is added to fromthe theoil oilsands sandsand in then the separation vessels. transported via hydrotransport to the extraction plant.

ushers, is added to traction. ds and then d via port to ion plant.

Stage 3 Production

Oil sands that lie more than 70 metres (200 feet) below the ground are recovered using drilling methods.

Canada’s

energy Our energy future The.world.relies.on.an.energy.mix.that.includes.oil,.coal,. natural.gas,.hydro,.nuclear.and.renewables..All.forms. of.energy.production.must.increase.to.meet.growing. demand..Canada.is.uniquely.positioned.to.provide.an. abundance.of.safe,.secure.energy..

Energy

80%.of.oil.sands.reserves.are.too.deep.to.be.mined.. %.of.oil.sands.reserves.are.too.deep.to.be.mined.. so.are.recovered.in.place,.or.in.situ,.by.drilling.wells... are.recovered.in.place,.or.in.situ,.by.drilling.wells...

Drilling.(in.situ).methods.create.minimal.land. ling.(in.situ).methods.create.minimal.land. disturbance.and.do.not.require.tailings.ponds. turbance.and.do.not.require.tailings.ponds. ing.

Advanced.technology.is.used.to.inject.steam,. w. vanced.technology.is.used.to.inject.steam,. combustion.or.other.sources.of.heat.into.the.reservoir. mbustion.or.other.sources.of.heat.into.the.reservoir. to.warm.the.bitumen.so.it.can.be.pumped.to.the. warm.the.bitumen.so.it.can.be.pumped.to.the. surface.through.recovery.wells.. face.through.recovery.wells..

170.billion.barrels Canada.has.175.billion.barrels.of.oil.that.can.be. recovered.economically.with.today’s.technology..Of.that. number,.170.billion.barrels.are.located.in.the.oil.sands..

Source:.ERCB.and.Oil.and.Gas.Journal

Technology

New.technology.and.innovation. are.critical.to.developing. the.oil.sands.and.improving. environmental.performance..

The tailings are pumped to the settling basin, where the water is recycled and reused in the process.

Canada has the third largest oil reserves in the world.

Investment

The.majority.(78%).of.world.oil.reserves.are.owned.or. controlled.by.national.governments..Only.22%.of.total. world.oil.reserves.are.accessible.for.private.sector. investment,.52%.of.which.are.found.in.Canada’s.oil.sands..

Source:.CAPP.2011

4

5

Economic

Markets Markets

Offshore

hington

Western Washington Canada

Western Canadian Supply Western Canada

Rockies

Rockies Mid West

U.S. Gulf Coast

East Coast

Mid West

East Coast

$1,700,000,000,000 Oil.sands.development.is.expected.to.contribute.over.. $1.7.trillion.dollars.to.the.Canadian. $1.7 trillion is economy.over.the.next.25.years.–. more than about.$68.billion.per.year...

Source:.CERI.2009

Canada’s 2009 GDP. (approximately $1.5 trillion)

$1.=.$8 North.American. benefits

U.S. Gulf Coast

rs,.

Much.of.the.oil.sands.economic.impact.is.generated.outside.

Alberta.–.in.the.rest.of.Canada,.the.U.S..and.around.the.world...

According.to.the.Canadian.Energy.Research.Institute.(CERI). almost.every.region.in.Canada.has.been.stimulated.by.oil.sands. development.through.job.creation.and.economic.activity..

xports Exports

tal.

010,.average.Canadian.crude.oil.exports.were..

In.2010,.average.Canadian.crude.oil.exports.were.. lion.barrels/day... 2.million.barrels/day...

Source:.EIA.2011

Canada’s.oil.sands. industry.provides. economic.benefits.. to.Canada.and.across.

North.America..

Source:.CERI

Brazil

e:.EIA.2011

contribution

Every.dollar.invested.in.the.oil.sands.creates.about.. $8.in.total.economic.impact.over.25.years...

Ontario

Ontario

Economy

Economy

couver

Western Vancouver Canadian Supply

Energy

um

Energy

Canada.has.the.infrastructure.to.export.crude.oil.from. anada.has.the.infrastructure.to.export.crude.oil.from. western.Canada.to.eastern.Canada,.the.U.S..and. estern.Canada.to.eastern.Canada,.the.U.S..and. ome.offshore.markets..some.offshore.markets.. m.

Canada’s.oil.sands.industry.continues.to.explore. anada’s.oil.sands.industry.continues.to.explore. access.to.new.markets.in.the.U.S..and.Asia. ccess.to.new.markets.in.the.U.S..and.Asia.

Offshore

6

10

11

12

S4 S4

Jobs In.addition.to.paying.significant.royalties.and.taxes,.the. oil.sands.industry.is.a.major.employer.and.creates.jobs. throughout.North.America..

The.oil.sands.currently.affects.the.jobs.of.144,000*.people. across.Canada..This.is.expected.to.grow.to.over.590,000*. jobs.over.the.next.25.years.with.103,000*.jobs.being. sourced.from.provinces.other.than.Alberta..Source:.CERI The.goods,.materials.and.services.used.to.construct.and. operate.in.situ.oil.sands.projects,.mines.and.upgraders. come.from.across.North.America..Many.of.the.components.

–.tires,.trucks,.gauges,.valves,.pumps.etc..–.are.produced. in.central.and.eastern.Canada..

$170.billion It.is.estimated.that.the.oil.sands.industry.will.purchase. roughly.$170.billion.in.supplies.and.services.from..

Canadian.provinces.outside.Alberta.over.the.next..

25.years.–.about.$7.billion/year..Source:.CERI

13

7% $10 billion

Most.of.the.oil.sands.are.located.in.the.Athabasca.area..

Fort.McMurray.is.the.largest.community.in.the.area.which. also.includes.smaller.and.Aboriginal.communities..

27% $45 billion

27%

$45 billion British Columbia

8% $11 billion

12%

$1912% billion Saskatchewan

8%

14%

14%$23 billion

$11 billion

$19 billion

$23 billion

Manitoba

32% 32% $55 billion

Quebec

$55 billion Ontario

Canada’s.oil.sands. industry.continues.. to.reduce.GHG. emissions.intensity.

Fort.McMurray.is.one.of.the.fastest.growing.communities. in.North.America.with.compound.population.growth.of. approximately.9%.from.2002.–.2009..Source:.OSDG

Other: 7% $10 billion (Includes New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Yukon)

Employment (% of total jobs created outside Alberta)

Economic benefits Source: CERI 2009

Local.jobs In.2008,.approximately.12,000.people.were.directly. employed.in.oil.sands.operations.jobs.in.Fort.McMurray...

Source:.OSDG

Alberta

$170 billion was the approximate GDP contribution of Canada’s manufacturing industry in 2008.

Source: Statistics Canada

Job.creation For.every.permanent.operations.job.in.the.oil.sands.industry. in.the.Fort.McMurray.area.and.surrounding.communities,. approximately.three.additional.jobs.are.created.locally.and. six.more.created.nationally..Source:.OSDG

14

o

Soli crea

$

In.2 $81 own

Jo

Ther perm

C

In.2 sup

15

GHG.emissions Canada,.with.0.5%.of.the.world’s.population,.produces..

2%.of.global.greenhouse.gas.(GHG).emissions..

GHG.emissions

Oil.sands.account.for.5%.of.Canada’s.GHG.emissions.and.

0.1%.(1/1000th).of.global.GHG.emissions.

Carbon.dioxide.(CO2).is.a.GHG..

CO2.is.emitted.into.the.air.by.burning. fossil.fuels.for.electricity.generation,. industrial.uses,.transportation.and.. for.heat.in.homes.and.buildings..

Canada’s GHG Emissions by Sector – 2008 Transportation 22% Manufacturing & Heavy Industry 15%

Agriculture 10%

Electricity 16% Service Industries 8% Oil Sands 5%

Other Fossil Fuel 5% Conventional Oil & Gas Production 12%

Intensity Oil.sands.crude.has.similar.CO2.emissions.to.other.heavy. oils.and.is.6%.more.intensive.than.the.U.S..crude.supply. average.on.a.wells-to-wheels.basis.

Environment

Source:.Environment.Canada.2010

37.2.megatonnes Oil.sands’.total.GHG.emissions.in.2008. were.37.2.megatonnes.

Source:.Environment.Canada.2010.

About 75% of oil-related CO2 comes from combustion – including automobile exhaust.

Wells-to-Wheels Measuring.CO2.emissions.from.the.start.of.oil.production. (wells).through.to.combustion.(wheels).is.called.a.wells-towheels.or.life-cycle.analysis.

Residential 7%

Wells-to-Wheels CO2 emissions from various sources of crude Saudi Medium (ave)

Production, refining and oil transportation

Mexico – Maya

End-use combustion

Venezuela – Bachaquero

AIR

37.2 megatonnes is equivalent to 2% of 2008 emissions from the U.S. coal fired power generation sector.

Oil Sands – In situ

Source: CERA 2010

Oil Sands – Mining Upgraded Nigeria Light California Heavy 0

19

A

Sourc

Although.Alberta.receives. about.90%.of.the.economic. benefits.from.oil.sands,.the. economic.impact.across.

Canada.is.significant.

*Jobs.are.direct,.indirect.and.induced.

Air

Growth

Economy

590,000.jobs

Local.benefits

Economic benefits and employment generated over next 25 years – provinces outside Alberta

20

21

100

200

300

400

500

kg CO2e per barrel of refined products

600

G

39

Sinc of.oil

Sourc

R

The.G imple 2007 Ame reduc secto lieu.(

C

The.F appr leade Indus the.c

Sourc

S5 S5

Industry.in.action Bayzik Oilsands Electric

Aboriginal Aboriginal

opportunities opportunities

a.. ch.

Solid.relationships.with.Aboriginal.communities.have. id.relationships.with.Aboriginal.communities.have. created.employment.and.business.opportunities.. ated.employment.and.business.opportunities..

es.

In.2009,.oil.sands.companies.contracted.more.than..

2009,.oil.sands.companies.contracted.more.than.. $810.million.for.goods.and.services.from.Aboriginal10.million.for.goods.and.services.from.Aboriginalowned.businesses..Source:.OSDG ned.businesses..Source:.OSDG

obs

Economy

Economy

$810.million $810.million Jobs

Canadian Natural Resources Limited During.the.construction.phase.of.the.Horizon.Oil.Sands. project,.Canadian.Natural.hired.350.Ontario.companies. and.paid.them.$770.million..The.company.also.employed.

1,334.workers.from.Quebec.and.awarded.55.contracts. worth.more.than.$450.million.to.Quebec.businesses..

Thirty-three.contracts.worth.more.than.$427.million.were. awarded.to.businesses.in.Newfoundland,.Nova.Scotia.. and.New.Brunswick..

There.were.about.1,600.Aboriginal.employees.in. y... re.were.about.1,600.Aboriginal.employees.in. permanent.jobs.in.the.oil.sands.industry.in.2009.. manent.jobs.in.the.oil.sands.industry.in.2009..

ce:.OSDG

Source:.OSDG

Community Community

ustry.

In.2009,.oil.sands.companies.provided.$10.6.million.to.

2009,.oil.sands.companies.provided.$10.6.million.to. s,. support.Aboriginal.community.programs..

Source:.OSDG pport.Aboriginal.community.programs..

Source:.OSDG nd.

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16

17

Air.quality

s

39%.better 9%.better

Since.1990,.GHG.emissions.associated.with.every.barrel. ce.1990,.GHG.emissions.associated.with.every.barrel. of.oil.sands.crude.produced.have.been.reduced.by.39%.. l.sands.crude.produced.have.been.reduced.by.39%.. bile

Regulated Regulated

Since 2007, these regulations have resulted in GHG reductions equivalent to taking 3.4 million cars off the road.

refining portation

mbustion

Data.collected.over.the.past.10.years.at.monitoring.stations. across.Alberta.indicate.an.improving.or.static.trend.in.air. quality.across.the.province..Source:.WBEA.and.CASA

No.deterioration

Industry.in.action

The.Caterpillar 797.is.one.of.the.world’s.largest.trucks.with. the.capacity.to.haul.up.to.400.tonnes.per.load..As.of.2009,.

200.of.these.trucks.had.been.purchased.for.use.in.Canada’s. oil.sands,.giving.an.economic.boost.to.four.U.S..states..

• Engine made in Indiana

truck Oil Sands mining

• Cab is fabricated and engine installed in Illinois • Largest frame component is cast in Louisiana • Giant Michelin® tires made in South Carolina

18

Industry.in.action

Source:.WBEA.and.CASA

ce:.Alberta.EnvironmentSource:.Alberta.Environment

22

23

Air quality in Fort McMurray is better than North American cities – including Toronto, Edmonton and Seattle – benchmarked by the Alberta Clean Air Strategic Alliance (CASA) and WBEA.

Oil Eddie Lui, Imperial e ntr Ce h rc sea Re

Imperial Oil Limited Generating.steam.for.the.drilling.(in.situ).process.creates. greenhouse.gases..In.2005,.Imperial’s.Calgary.research. centre.developed.Liquid.Addition.to.Steam.for.Enhanced.

Recovery..This.new.technology.makes.the.process.more. efficient,.reducing.GHG.emissions.by.25%..

Canadian Natural Resources Limited At.Canadian.Natural’s.Horizon.mining.facility,.CO2.is.being. injected.into.tailings.before.they.reach.the.storage.ponds..

The.CO2.helps.tailings.settle.faster.and.accelerates.the. water.recycling.process..Not.only.does.this.reduce.the. size.of.Canadian.Natural’s.tailings.pond.but,.when.capture. facilities.are.installed,.it.is.expected.to.eliminate.over.

200,000.tonnes.of.CO2.emissions.every.year.

AIR

Based.on.analysis.of.average. concentrations.of.common. air.pollutants,.air.quality.has. generally.not.deteriorated.. in.the.Wood.Buffalo.region. even.with.an.increase.in. emissions-associated.activities. and.population.growth....

AIR

AIR

The.Federal.and.Provincial.governments.are.investing.

Federal.and.Provincial.governments.are.investing. approximately.$3.billion.to.help.make.Canada.a.global. roximately.$3.billion.to.help.make.Canada.a.global.

A 2010 leader.in.carbon.capture.and.storage.(CCS).technology.. er.in.carbon.capture.and.storage.(CCS).technology..

Industry.and.government.are.cooperating.to.demonstrate. stry.and.government.are.cooperating.to.demonstrate. the.commercial.and.technical.viability.of.CCS.in.Canada.. commercial.and.technical.viability.of.CCS.in.Canada..

Source:.CERI

Environment

CCS CCS

Improving.or.static Environment

ude

Environment

2007.(the.first.jurisdiction.in.North.

7.(the.first.jurisdiction.in.North.

America.to.do.so).requiring.a.mandatory.12%. erica.to.do.so).requiring.a.mandatory.12%. vy. reduction.in.GHG.emissions.intensity.for.all.large.industrial. ction.in.GHG.emissions.intensity.for.all.large.industrial. y. sectors.including.existing.oil.sands.facilities,.or.a.payment.in. ors.including.existing.oil.sands.facilities,.or.a.payment.in. lieu.(current.carbon.price.is.$15/tonne).. (current.carbon.price.is.$15/tonne)..

The.demand.for.U.S..goods.and.services.will.climb.between.

2015.and.2025,.adding.an.estimated.$34.billion.to.U.S..

GDP.in.2015,.$40.billion.in.2020.and.$42.billion.in.2025..

The.Wood.Buffalo.Environmental.Association.(WBEA). monitors.the.air.in.the.oil.sands.region.in.and.around.Fort.

McMurray.–.24.hours.a.day,.365.days.a.year..WBEA’s.air. quality.monitoring.network.is.one.of.the.most.extensive.in.

North.America..Air.monitoring.information.is.available.in. real.time.at.www.wbea.org.

d m

Since 2007, these regulations have resulted in GHG n. reductions equivalent toThe.Government.of.Alberta.

Government.of.Alberta. to taking 3.4 million implemented.GHG.regulations.in. emented.GHG.regulations.in. cars off the road.

$Billions

24.hours/365.days

GHG reductions GHG reductions

Source:.Environment.Canada ce:.Environment.Canada

As.investment.and.production.of.the.oil.sands.ramps. up.in.Canada,.the.demand.for.U.S..goods.and.services. will.increase..This.will.create.tens.of.thousands.of.highly. skilled.and.well.paying.jobs.in.the.U.S..(manufacturing,. engineering,.construction.etc.)........

Economy

During.his.19.years. of.employment.at.

Syncrude,.Aboriginal. businessman.Tyrone.

Brass.was.supported. in.his.development. and.encouraged.to. earn.his.electrical.and. instrumentation.journeyman.

Tyrone Brass, tickets..In.2005,.Brass.

Bayzik Oilsands started.his.own.company..

Electric Bayzik.Oilsands.Electric.now. has.28.employees.and.a.gross.annual.income.of.more.. than.$6.million..Brass.continues.to.do.contract.work.. for.Syncrude.

U.S. benefits Jobs

*For.more.information.on.tailings.ponds.see.page.40.

Read more Industry in Action stories: www.capp.ca/innovation

24

S6 S6

Water..

use

Water Canada’s.oil.sands. industry.recycles.water. and.continues.to.look. for.ways.to.reduce.fresh. water.use.

0.5.barrels Drilling.(in.situ).currently.requires. an.average.0.5.barrels.of.fresh. water.for.every.barrel.of.oil. produced..Source:.CAPP.2009

Water.use

2.–.4.barrels Mining.currently.requires.between..

2.–.4.barrels.of.fresh.water.for.every.barrel.. of.oil.produced..Source:.CAPP.2009

Each.sector.applies.for.their.water.needs.and.the. government.allocates.water.based.on.these.applications..

For.example,.in.2009.irrigation.and.agriculture.represented.

44%.of.the.total.provincial.allocations,.the.oil.sands. industry.7%..But.not.all.of.that.water.was.actually.used..

The.oil.and.gas.industry.uses.less.than.1/3.of.its.total. water.allocation.per.year.

80.–.95% Environment

Oil.sands.producers.recycle..

80.–.95%.of.water.used..

Source:.Alberta.Environment.

179.million.m3 Source:.CAPP.2009

179 million m3 is just over 1/3 of the City of Toronto’s 2008 water consumption.

25

26

Water.quality

Alberta Water Allocations - 2009

Alberta Water Allocations – 2009 Municipal 11%

27

Assessment

– Alberta Environment

Source:.The Royal Society of Canada Expert Panel: Environmental and Health Impacts of Canada’s Oil Sands Industry .

31

Wapisiw.Lookout.is.Suncor’s.first.tailings.pond,.put.into.service. at.the.company’s.mining.project.in.the.1960s..Formerly.known. as.Pond.1,.the.area.is.the.first.tailings.pond.to.be.reclaimed.to. a.solid.surface..It.is.currently.undergoing.reclamation.and.will. include.both.wetland.and.dry.landscapes.

Imperial Oil Limited Imperial’s.Cold.Lake.drilling.(in.situ).operation.has.reduced.its. per.barrel.water.use.from.3.5.barrels.in.1985.to.0.5.barrels. today.by.recycling.more.than.95%.of.the.water.it.uses..

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32

In.2 wat Rive abo

.

W

Sour

Nor ope abo sup alon

9

An Mo rep Ath res

Sou

1

Sin ap foo by. by. to.

Sou

WATER

“Current.evidence.on. water.quality.impacts. on.the.Athabasca.River. system.suggest.that.oil. sands.development.activities. are.not.a.current.threat.to.aquatic. ecosystem.viability”.

Suncor Energy Environment

Results

Devon’s.Jackfish.drilling.(in.situ).project.doesn’t.use.any. water.suitable.for.human.consumption.or.agriculture.for. steam.generation..100%.of.water.used.is.drawn.from.deep. formations.and.is.too.salty.to.be.used.for.other.purposes..

More.than.80%.of.the.water.is.recycled.back.through.the.process..

0 .

Source: Alberta Environment

Canada’s.oil.sands. industry.is.committed. to.reducing.its. footprint,.reclaiming. all.land.affected. by.operations.and. maintaining.biodiversity..

Devon Canada

The san

Source:..

Alberta.Environment

Commercial 30%

Land Devon, water ities recycling facil

A

Sour

Industry.in.action

Alberta.Environment.prohibits.the.release.of.any.water.that. does.not.meet.water.quality.requirements..

“Contaminant levels in other rivers in the area with absolutely no industrial oil sands activity have been found to be higher than those adjacent to oil sands projects.”

Irrigation/Agriculture 44%

Conventional Oil & Gas 2%

Regulated

In.2010,.the.Royal.Society.of.Canada.commissioned.an.

Expert.Panel.of.Canadian.Scientists.to.review.and.assess. evidence.relating.to.several.perceived.environmental. impacts.of.the.oil.sands,.including.the.impact.of.the.oil. sands.on.regional.water.supply..The.complete.panel. findings.are.found.in.The Royal Society of Canada Expert Panel: Environmental and Health Impacts of Canada’s Oil Sands Industry (www.rsc.ca).

Other 6%

Oil Sands 7%

WATER

Oil.sands.fresh.water.use.in..

2009.was.approximately..

179.million.m3...

Strict

regulations The.Alberta.Government.closely.regulates. restrict water the.use.of.water..Large.water.users.must. apply.to.divert.fresh.water.from.its.original. withdrawal when river flow source..The.amount.of.water.allocated.is. is low. based.on.sustaining.Alberta’s.groundwater. and.surface.water.

33

S7 S7

Tailings.ponds Tailings After.the.oil.sands.have.been.mined,.oil.is.separated.from. the.sand.and.sent.for.further.processing..“Tailings”.are.the. leftover.mixture.of.water,.sand,.clay.and.residual.oil..

Athabasca. river..river..

Athabasca.

ns

e.Athabasca.River.is.the.main.source.of.water.for.oil.

The.Athabasca.River.is.the.main.source.of.water.for.oil. ater nds.mining.projects.. sands.mining.projects.. when

Tailings ponds 2 Tailings.ponds.are.large. engineered.dam.and.dyke.

The.total.area.of.existing. systems.designed.to.contain. tailings.ponds.is.170.km2. and.settle.the.water,.sand,.

Source:.ERCB fine.clays,.silts,.residual. bitumen.and.other.byproducts.of.the.oil.sands.mining.and.extraction.process..

170.km

w

0.5% 0.5% .

3 3 2009,.the.oil.sands.industry.withdrew.3.4.m .of.

In.2009,.the.oil.sands.industry.withdrew.3.4.m .of.

3 3 s.. ter/second.(total.of.107.million.m ).from.the.Athabasca. water/second.(total.of.107.million.m ).from.the.Athabasca. nted. er..This.is.0.5%.of.average.total.river.flows.and..

River..This.is.0.5%.of.average.total.river.flows.and.. out.3.4%.of.the.lowest.weekly.winter.flow... about.3.4%.of.the.lowest.weekly.winter.flow... . rce:.Alberta.Environment Source:.Alberta.Environment

94%

Perspective bubble:

28

Water for reuse

Oil sands operators are investing more than $1 billion in tailings reduction technology.

Low-grade oil sands

Source:.Shell

29

30

94%0.02% 0.02%

Oil Sands Land Use

35

City proper 684 630 606 454

Greater metropolitan 9,418 7,125 28,164 8,900

The size of England?

Some organizations claim the oil sands are destroying an area the size of England (approximately 130,000 km2). In fact, the total mining footprint covers an area about 0.5% the size of England and 10% of that land has been or is being reclaimed. The total area that could be impacted by mining is about 4% the size of England.

Source:.Alberta.Environment

Land

Land

Land

34

97% of the oil sands surface area covers reserves that are too deep to be mined.

Source:.Alberta.Environment

Source:.CAPP.2010

How big is 662 km2? .

Environment

3% of the oil sands surface area could be mined

Canada’s Boreal Forest: 3,200,000 km2 Canada’s Oil Sands: 140,200 km2 Alberta Protected Areas: 90,464 km2 Oil Sands Mineable Area: 4,802 km2 Area (km2) 602 km2 Mining Area Under Development:

Edmonton, Alberta Toronto, Ontario Chicago, Illinois Oslo, Norway

Oil Sands Land Use

Environment

Environment

Source:.CAPP.2010

Active.mining.footprint.(662.km2)

The.remaining.reserves.that.underlie.97%.of.the.oil.sands. surface.area,.are.recoverable.by.drilling.(in.situ).methods. which.require.very.little.surface.land.disturbance.(drilling. (in.situ).facility.shown.in.above.image)..

y..

In.Alberta.alone,.approximately..

In.Alberta.alone,.approximately..

2 km2 90,000 90,000.km .(or.about.24%).of.

90,000.km2.(or.about.24%).of. is about the.boreal.forest.is.protected.from. the.boreal.forest.is.protected.from. the size of development.(includes.National.. development.(includes.National..

Portugal.

Parks,.etc.)

Parks,.etc.)

Land.that.could.be.impacted.by.mining.(4,802.km2)

Alberta’s.oil.sands.lie.under.142,200.km2.of.land..Only. about.3%,.or.4,802.km2,.of.that.land.could.ever.be. impacted.by.the.mining.method.of.extracting.oil.sands..

10%

2 2 90,000.km 90,000.km

Land.covering.the.oil.sands.(142,200.km2)

impacts

nce.operations.began.in.the.1960s,.

Since.operations.began.in.the.1960s,. pproximately.10%.of.the.active.mining. approximately.10%.of.the.active.mining. otprint.has.been.or.is.being.reclaimed.. footprint.has.been.or.is.being.reclaimed.. .industry..Reclaimed.land.will.be.certified. by.industry..Reclaimed.land.will.be.certified. .government.when.it.can.be.returned.. by.government.when.it.can.be.returned.. .public.use. to.public.use.

urce:.Alberta.Environment Source:.Alberta.Environment

Canada’s.boreal.forest.(3,200,000.km2)

Land

urce:.Alberta.Environment Source:.Alberta.Environment Source:.Alberta.Environment Source:.Alberta.Environment

90,000 km2 is about the size of Portugal.

Coarse sand

Dyke wall

Seepage collection ditches

n.Alberta.Biodiversity. An.Alberta.Biodiversity.

0.02%.of.Canada’s. 0.02%.of.Canada’s. onitoring.Institute.(ABMI). boreal.forest.has.been. boreal.forest.has.been.

Monitoring.Institute.(ABMI). port.states.that.the.Lower. disturbed.by.oil.sands. disturbed.by.oil.sands. report.states.that.the.Lower. habasca.region’s.living. mining.operations.over. mining.operations.over.

Athabasca.region’s.living. sources.are.94%.intact.. the.past.40.years.. resources.are.94%.intact.. the.past.40.years..

10%

Birds Residual.oil.can.be.found.floating.on.the.surface.of.most. tailings.ponds..This.poses.a.threat.to.waterfowl.that.land. on.the.pond..Several.mechanisms.are.in.place.to.deter. birds.from.landing,.including.cannons.and.radar/laser. deterrent.systems.

WATER

Perspective bubble:

Groundwater monitoring wells

Fine tailings

Reclamation As.of.2009,.the.ERCB.requires.all.oil.sands.operators.to. have.plans.in.place.to.convert.fine.tailings.to.reclaimable. landscapes..This.will.speed.up.the.process.of.reclaiming. new.and.existing.tailings.ponds.

Environment

ment

88% of water allocation demand.

Bird deterrent systems in place

Fine tailings After.separation,.the.middle.layer.has.the.consistency. of.yogurt..This.combination.of.water.and.clay.can.take. up.to.30.years.to.separate.and.dry.out..New.technology. accelerates.this.drying.time.to.months.instead.of.decades. which.speeds.up.reclamation.

WATER

88% of water allocation demand.

rce:.Alberta.Environment Source:.Alberta.Environment

WATER

All river All river rthern.Alberta,.where.oil.sands.

Northern.Alberta,.where.oil.sands. basins south of basins south of erations.occur,.accounts.for. operations.occur,.accounts.for. the Athabasca River the Athabasca River out.85%.of.Alberta’s.water. about.85%.of.Alberta’s.water. together account for together account for 15% of Alberta’s water15% of Alberta’s water pply.−.the.Athabasca.River. supply.−.the.Athabasca.River. supply and support supply and support ne.accounts.for.17%... alone.accounts.for.17%...

In.addition.to.acting.as.storage.facilities,.tailings.ponds.are. settling.basins.that.enable.water.to.be.separated,.recycled. and.used.over.and.over..Oil.sands.producers.recycle..

80–95%.of.water.used,.reducing.use.of.fresh.water.from. the.Athabasca.River.and.other.sources..

Environment

Environment

.

Water.supply Water.supply

Recycling

Seepage Several.methods.are.used.to.limit.and.manage.seepage. from.tailings.ponds..For.example,.ditches.around.tailings. facilities.capture.seepage.that.is.pumped.back.into.the. tailings.ponds..

36

S8 S8

Industry.in.action

Land

reclamation Law

Syncrude, Bill’s Lake

Alberta.law.requires.all.lands.disturbed.by.oil.sands. operations.be.reclaimed..All.companies.are.required.. to.develop.a.reclamation.plan.that.spans.the.life.. of.the.project..

Syncrude Canada Ltd.

Certification

Process

37

It can take up to 80 years for a conifer tree to grow to maturity.

Trees.take.a.long.time.to.grow.from.seed..A.really. long.time..ConocoPhillips’.Faster.Forests.program.is. speeding.up.the.reforestation.of.oil.sands.mining.sites..

Based.on.recommendations.from.a.University.of.Alberta. study,.the.company.is.planting.spruce,.birch.and.aspen. seedlings.with.a.10.cm.plug.of.soil.and.established. roots..The.program.started.in.2009.and.continues.to. evolve.with.plans.to.include.other.types.of.vegetation..

Several.companies.are.piloting.similar.aggressive. reclamation.programs.

Read more Industry in Action stories: www.capp.ca/innovation

Syncrude Canada Ltd.

Find out more about Canada’s oil sands: Canadian Association of Petroleum Producers (CAPP) www.capp.ca www.canadasoilsands.ca Centre for Energy www.centreforenergy.com Oil Sands Developers Group (OSDG) www.oilsandsdevelopers.ca Alberta Chamber of Resources www.acr.alberta.com Alberta Energy www.energy.alberta.ca U.S. Energy Information Administration (EIA) www.eia.doe.gov

Cambridge Energy Research Associates (CERA) www.cera.com Wood Buffalo Environmental Association (WBEA) www.wbea.org Clean Air Strategic Alliance (CASA) www.casahome.org Regional Aquatics Monitoring Program (RAMP) www.ramp-alberta.org Alberta Biodiversity Monitoring Institute (ABMI) www.abmi.ca World Energy Outlook www.worldenergyoutlook.org

International Energy Agency (IEA) www.iea.org

Inside Education www.insideeducation.ca

Energy Resources and Conservation Board (ERCB) www.ercb.ca

Canadian Energy Research Institute www.ceri.ca

Canadian Energy Research Institute (CERI) www.ceri.ca

Cambridge Energy Research Associates www.cera.com

Alberta Environment www.environment.alberta.ca

Land

The.reclamation.process.involves.. monitoring,.seeding,.fertilizing,.tree.. planting,.seed.collecting,.topsoil.. salvaging.and.replacing...It.also.. involves.significant.landform.creation.. and.contouring...Source:.OSDG

ConocoPhillips Canada Environment

Reclamation.is.an.ongoing.process.during.the.life.of.a. project..Companies.apply.for.government.reclamation. certification.when.vegetation.is.mature,.the.landscape.is. self-sustaining.and.the.land.can.be.returned.to.the.Crown. for.public.use.

In.2008,.Syncrude.received.the.first.reclamation.certification. in.the.Canadian.oil.sands.industry.for.the.104-hectare.area. known.as.Gateway.Hill..This.area.was.planted.in.the.early.

1980s..To.date,.Syncrude.has.reclaimed.22.per.cent.of.its. total.disturbed.land,.including.Bill’s.Lake.shown.in.the.. above.image..

38

The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP’s member companies produce more than 90 per cent of Canada’s natural gas and crude oil. CAPP’s associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together CAPP’s members and associate members are an important part of a $100-billion-a-year national industry that provides essential energy products.

CAPP’s mission is to enhance the economic sustainability of the Canadian upstream petroleum industry in a safe and environmentally and socially responsible manner, through constructive engagement and communication with governments, the public and stakeholders in the communities in which we operate.

To order the booklet version of The Facts on Oil Sands – email your request to upstreamdialogue@capp.ca

Community Matters …to all of us. We take pride in our reputation and for being good neighbours in your community because our families live here too.

Stronger communities are built by the strength of their members and by our ability to communicate with one another. That’s why we’ve established a program called “Community Matters” which encourages people to come together to exchange ideas and information about the things we all care about—the safety and well being of our friends and family, stewardship of the land, and having respect for our neighbours.

If you have questions or concerns about operations in your community, or would like more information about Penn West, we invite you to contact us at 1-877-454-8844. To learn more about us, please visit our website at www.pennwest.com

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www.pennwest.com

For Community Matters, call 1-877-454-8844

14

March/April 2011 • Energize Alberta

By the numbers

Alberta’s electricity generation mix

A

ccording to the Alberta government, in 2009 there was a net addition of 443 megawatts of generation capacity in the province, which increased total capacity to 13,007 megawatts. About 14 per cent of that total was from renewable sources.

The province currently has more than 21,000 kilometres of transmission lines. Together, this system continuously delivers electricity to homes, farms and businesses in every corner of the province.

Roughly 45 per cent of Alberta’s electricity generation capacity is from coal and almost 40 per cent from natural gas. Alberta also uses water, wind, biomass and waste heat as forms of electricity generation.

Alberta currently has 723 megawatts of wind-powered generation, with enough capacity, when wind is blowing, to serve over 600,000 homes.

Across all fuel types, in 2009 there was 3,895 megawatts of cogeneration (30 per cent of the total generation capacity) compared to 881 megawatts in 1998 (10 per cent of the total generation capacity).

Cogeneration makes more efficient use of the input fuel by creating both electricity and steam/heat for industrial processes.

Livestock manure is currently being used for biomass power generation at one facility in the province.

The Alberta legislature building has a solar power system that can provide enough power to light 70 compact fluorescent light bulbs for approximately five hours per day, or almost half the power used by an average household in a year.

Electricity Generation Sources

Source: Alberta Energy

1998

2009

Generating capacity megawatts*

Coal

5,636

5,971

Natural Gas

1,878

5,149

Renewables (hydro, wind, biomass)

1,112

1,814

Waste Heat

0

63

Fuel Oil

6

10

8,632

13,007

Total

* Note: Totals may not add up up due to rounding. Compiled by Alberta Energy based on the Energy Resources Conservation Board, Alberta Electric System Operator and industry information.

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Energize Alberta • March/April 2011

Talking energy talk

billion barrels

How are oil and gas reserves calculated?

A

lberta is blessed with an abundance of oil and gas reserves—in fact, by most expert accounts our oil reserves rank among the largest in the world.

That certainly sounds impressive, but what does it really mean? First, let’s look at what ”reserves” actually are.

Essentially, reserves are a term of measurement that refers to the estimated volume of oil and gas in the ground.

Different parts of the world have slightly different definitions of reserves, but in Canada reserves are defined as the “estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date.”

As the word estimate implies, the determination of reserve volumes is an interpretive science, keeping in mind that most sciences fall into this category.

Remaining quantities means that none of the production up to the date of the estimate is included.

A known accumulation means that the reservoir has been drilled into and

15

tested by one or more wells, so we know it’s there, and the given date is usually the end of the year, although the estimate could be performed at any time.

A team of engineers, geologists and geophysicists work together to analyze multiple sources of data to determine a reserve volume that they think is realistic.

This analysis can take place on something as small as a single well, or as large as an entire reservoir (a group of wells all producing from the same accumulation). The more wells, tests and other data that is available, the more accurate the estimate becomes.

Government agencies estimate and maintain records of reserves within their jurisdictions. While these estimates can vary in accuracy, it is the comparison of these estimates that leads to the conclusion that Alberta is near the top of the class when it comes to reserves.

Prepared by Douglas S. Ashton, P.Eng. and vice-president, engineering, for Calgary-based AJM Petroleum Consultants.

0

50

100

150

200

250

Saudi Arabia

260

Venezuela

211

Canada

175

Iran

137

Iraq

102

Abu Dhabi

92

Russia

60

Libya

Kazakhstan

Global Crude Oil Reserves by Country

115

Kuwait

Nigeria

300

46 37 30

Qatar

25

China

20

United States

19

Accessible Oil Reserves State owned or controlled 78% Accessible

Canada’s Oilsands

52%

Other Accessible 48% Reserves

World Oil Reserves Graphs Courtesy: Canadian Association of Petroluem Producers

or controlled

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16

March/April 2011 • Energize Alberta

Photo: Joey Podlubny

Some rural landowners are concerned that proposed well density rules could compromise their land holdings, and “will allow the oil companies to literally drill under every inch of your land.”

Density debate Proposed changes to well-spacing rules a divisive issue Jim Bentein Energize Alberta

A

nger among some rural landowners over a new directive from Alberta’s energy industry regulator over well spacing has entered the political arena, with the leader of the Wildrose Alliance Party and one of her MLAs both joining the debate, even though energy industry observers say it should have little impact on landowners.

In fact, the proposed change, which the Energy Resources Conservation Board (ERCB) had sought comment on by a Jan. 21 deadline and which received widespread mainstream media coverage in Alberta, will have no impact on landowners, according to the Calgary-based Canadian Association of Petroleum Landmen (CAPL).

“In the judgment of the CAPL, the proposed changes should not have a material effect on the existing rights of surface landowners or occupants,” says Dalton Dalik, president of the group. “They will still have the existing right to work closely with the operator [the energy company] to achieve a mutually satisfactory surface wellsite location or to file an objection with the ERCB for any well licence application.”

The ERCB directive, Bulletin 2010-39, was aimed at seeking input regarding a new provincewide framework for the spacing of wells in conventional and unconventional oil and natural gas reservoirs.

ERCB spokesman Bob Curran says the changes are necessary “to respond to the changing

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nature of oil and gas development” and to deal with the existing “complex and difficult to understand” regulatory approach regarding well spacing.

Changes Proposed The ERCB is proposing four changes to existing well-spacing rules, the most important of which include removing any controls over well densities in areas of coalbed methane (CBM) or shale gas development (companies now have to apply if they want to drill up to four wells per section), increasing well densities from one well to two for conventional gas reserves, and streamlining regulations overall.

The regulator is also saying it is investigating increasing the density of oil wells from one drilling spacing unit to two.

Curran says the changes are necessary and reflect the fact that “Alberta is a mature basin” where more intensive drilling is often necessary. The increasing trend towards horizontal drilling reflects that trend, with multiple wells being punched from a single pad, he adds.

According to Curran, the changes would likely lead to more wells being drilled on the surface, but will also likely lead to less surface impact overall “because you’re concentrating more wells in a given area.”

Technological advances in such areas as horizontal drilling led partially to the proposed changes, he explains.

“It’s driven by economics and by companies that want to reduce their footprint,” Curran says. “It’s a natural evolution.”

Curran notes that the rights of surface landowners would be

maintained, since it is aimed at giving energy companies more ability to access subsurface resources economically.

“Landowners still will negotiate with oil and gas companies, so that doesn’t change, and the ERCB has an obligation to see that unacceptable impacts do not occur. Any suggestion that this will reduce landowner rights is simply not the case.”

“What if I want to drill a geothermal well or a water well?

I don’t know where the bloody gas wells are.”

— Don Bester, President, Alberta Surface Rights Group The standard is already in place in about 20 per cent of the province, having been implemented in southeastern Alberta in 2006. It has led to no increase in complaints from landowners, Curran says.

Vocal opposition But that’s not the way Don Bester, a land-rights advocate who farms near Innisfail, Alta., sees the directive. Bester, president of the Alberta Surface Rights Group, sees it as just the latest move by the ERCB to favour the economic interests of the energy industry over rural landowner rights.

“Why would they even introduce it if it was business as

usual? This will allow the oil companies to literally drill under every inch of your land and use high-pressure hydrofraccing every 10 metres,” Bester says.

He says the ERCB ignores plans farmers might have in the future for accessing the subsurface.

“What if I want to drill a geothermal well or a water well?”

Bester says. “I don’t know where the bloody gas wells are.”

Bester believes that past attempts by the government and agencies like the ERCB to consider the interests of rural landowners were largely lip service.

For instance, he was a member of a multi-stakeholder advisory committee looking at CBM development from 2003 to 2009. The committee recommended limits on the number of CBM wells that could be drilled, but those recommendations were essentially ignored by the ERCB, he says.

“Why should I have any confidence now in the ERCB?” Bester said the ERCB directive is just the latest in a long list of Conservative government actions that threaten the rights of rural property owners, and his group has elected to take the political route, having organized a rally in Trochu, Alta., on February 1 that attracted about 300 people.

The keynote speaker at that rally was Rob Anderson, now a member of the Wildrose and a former provincial Tory. He’s the MLA for Airdrie-Chestermere.

Ironically, he didn’t even speak about the new directive at the meeting, but he did speak about a number of recent pieces of legislation which his party claims have reduced the rights of property owners.

“This government is obsessed about taking people’s land without recourse to the courts or adequate compensation,” Anderson says. “Rural Albertans are fed up.”

He said his party would repeal all three pieces of legislation if it forms the government, which polls show it might.

Balancing act Wildrose Leader Danielle Smith says she is mindful of the “fine line” regulators need to walk in balancing the interests of the energy industry with those of farmers and other rural landowners.

“It’s one of those issues I can see from both sides,” she says.

But Smith adds that she is concerned about the “cumulative impacts” of resource development on rural land.

She says the ERCB should look at the issue of cumulative impacts, adding that farmers like Bester have a legitimate concern about the overall impact of energy development on their property rights.

According to Smith, it’s time for the Surface Rights Act to be

rewritten to allow for additional compensation to landowners as a result of cumulative impacts.

Government spokespersons have responded to the claims about the legislation.

Jay O’Neill, a spokesman for Alberta Energy, says Bill 50, the Electric Statutes Amendment Act, does not provide government with any new power over private property, or remove any legislative protection of landowners.

“Landowners continue to have the right to have their concerns heard and have impacts mitigated to the extent possible.

Landowners also have the right to receive fair compensation for transmission facilities located on their property.”

About Bill 24, he says: “Pore space ownership had never been defined before this law. The law does not in any way change the ownership of mines and mineral resources. And, to be clear, the act does not give government the right to access your land whenever it wants for whatever purpose.

The companies who will be injecting carbon dioxide underground will need injection wells to do so. Those companies will have to negotiate with landowners for access, as they would with any other well, and determine financial compensation for use of the land.”

Dave Ealey, a spokesman for Sustainable Resource Development, says of Bill 36: “Some critics have interpreted the Alberta Land Stewardship Act [formerly Bill 36] as an attack on property rights [and] nothing could be further from the truth. Albertans’ property rights are found in common law and legislation, like the Expropriation Act and the Municipal Government Act.” He points out that all laws that provide for appeals remain in place.

Meanwhile, in addition to the landmen group, others involved in the energy industry say Bester and the Wildrose are confusing the issue, trying to include a benign proposed shift in well spacing requirements in the larger issue over property rights.

Granger Low, president of Calgary-based Proven Reserves Exploitation, a reservoir engineering consulting firm, adds that the proposed changes “simply reduce government red tape” and “won’t significantly impact surface owners, ranchers and farmers.”

He points out that oil and gas companies will still need to negotiate with surface rights owners to get surface leases and well licences.

Low says he fails to see what the fuss is about, since the directive would only impact natural gas drilling at this point.

“I’m not convinced this proposed change will make much difference.”

Advocate’s Corner

Slicing the pie

Energize Alberta • March/April 2011

Northeastern Alberta communities fighting for fair share of revenue Jim Bentein Energize Alberta

A karin gashus

Energy contracts— the best option really depends on you

I

n Alberta, you have options for how you buy electricity and natural gas. You can sign a contract with a competitive energy retailer at an agreed contract price or you can choose to buy energy at the regulated rate. If you currently receive electricity or natural gas and have not entered into a contract for those services, you are purchasing energy at the regulated rate.

One of the questions we hear most frequently from consumers is, “What’s the best option? Should I sign a contract or just stay with the regulated rate?” Well, the answer really depends on what’s right for you.

Individual needs will be different based on the type of consumer you are (residential, farm or commercial/ industrial), where you live (urban or rural), your preference for either a fixed or variable rate, and if you are buying energy for a short or long term.

With the regulated rate, your electricity or natural gas provider depends on where you live. These rates are regulated by the Alberta Utilities Commission and can change month to month. For some consumers in certain rural areas, the regulated rate may be the only option.

If you decide to sign a contract, you can choose to purchase your electricity and natural gas energy from a variety of retailers. You and the retailer of your choice may enter into a contract which defines the price you pay for your energy, cancellation penalties and any other agreed upon services.

Energy contracts are very similar to mortgages—you can lock in at a fixed rate or choose a rate that changes.

Before making a decision, there are several factors you should consider. As with fixed-rate mortgages, locking in your rate can provide stable prices over the length of the contract. Fixed-price contracts may protect you against short-term price spikes resulting from natural events such as floods, wildfires and winter storms.

Depending on the terms of your contract, however, you could remain locked in at that price for the term of the contract even if the rates drop. Some retail offers include early exit fees if you want to get out of a contract before the term is up. You should be aware how early exit fees are calculated, as they can amount to several hundred dollars depending on the remaining term on the contract.

If you decide to go with an energy contract, it’s best to shop around and compare prices and contract terms to get the best deal based on your individual needs. Our website has a comparison of the different options available to Albertans.

Visit www.ucahelps.alberta.ca to get more information on contracts and regulated and competitive energy retail providers, or call the Utilities Consumer Advocate helpline at 310-4-UCA (310-4822).

larm bells are ringing in oilsands boom towns and cities throughout northeastern Alberta. It appears likely the provincial government will grant a request from the commander of Canadian Forces Base (CFB) Cold Lake and the City of Cold Lake for the financially strapped city to share in tax revenue from the federal government that now flows to nearby Lac La Biche, whose mayor says the change could render it insolvent.

“It is $17 million a year, which is half of our revenue,” says Peter Kirylchuk, mayor of Lac La Biche County, which includes the former town of the same name, located about 220 kilometres northeast of Edmonton. “We would no longer be sustainable if that should happen.”

If it loses that revenue, he says it might set off a chain reaction.

The county, with a population of about 9,500, would need to appeal to the provincial government for a share of property tax and other energy revenues flowing to the Regional Municipality of Wood Buffalo, which includes the oilsands boom city Fort McMurray and the major oilsands mining projects. Lac La Biche would focus its efforts on the Conklin area 70 kilometres north, which currently sends its revenue to Wood Buffalo. (There’s a cluster of thermal oilsands operations near Conklin, including Devon Energy’s Jackfish projects, Cenovus Energy’s Christina Lake project, Petrobank Energy and Resources’ Whitesands project and Statoil Canada’s Leismer project.)

If Lac La Biche gained energy revenue from the Conklin area— thought to be more than $17 million, although Wood Buffalo officials would not provide that information—then Wood Buffalo would need to be compensated. Municipal officials in northeastern Alberta say the provincial government would probably give that municipality Crown land near Fort McMurray to make up for the loss.

Compensation required Lac La Biche has responded to expectations of bitumen project expansions and anticipated growth.

It has recently opened a $48-million recreational complex and has built new schools and other facilities to prepare for expected dramatic population growth.

“We have taken on $55 million in debt, and that was based on [provincial funding] and the air weapons range revenue,” says Kirylchuk.

“We have been assured [in a meeting the council held with Alberta Treasury board president and Finance Minister Lloyd Snelgrove and Municipal Affairs Minister Hector Goudreau] we will be looked after.”

Battle of Alberta Goudreau says the government is aware of the implications of the conflict, but is far from making a decision on how to respond.

“We’re not going to jump in,” he says. “We’ll make sure the M.D. [of Bonnyville], Lac La Biche and Wood Buffalo are all taken into consideration.”

According to Goudreau, this battle is one of

many occurring across the province between rural and urban municipalities.

“Are they [the Cold Lake area] unique, because of their growth?” he says. “I have 359 special and unique municipalities across the province.

Every one of them wants to provide for their citizens.”

However, he acknowledges that some areas, such as those where oilsands development is occurring, face issues dealing with that growth and some form of revenue sharing may be necessary.

“No doubt, we’ll have to look at revenue sharing as well as cost sharing. It requires a review of the Municipal Government Act. It has not been reviewed for a number of years.”

He says several rural municipalities and towns and cities in Alberta have struck deals to share the cost of maintaining services, such as garbage collection or sewer and water services. That’s a model he would like to see further adopted.

But he acknowledges that many rural municipalities in Alberta, which receive the lion’s share of energy and other industry-related revenues, don’t always volunteer to share those revenues.

That means cities like Cold Lake, Grande Prairie, Peace River and others

17

that face energy industry-related growth pressures often don’t have the financial ability to provide services.

Domino theory The dominos were set into motion

by Col. David Wheeler, commanding officer of 4 Wing Cold Lake, the military name of CFB Cold Lake, Canada’s largest jet fighter base.

In an unprecedented move for a Canadian military officer, Col. Wheeler took what amounts to a political stand on where to direct a grant in lieu of $10 million annually in taxes paid by the Department of National Defence (DND) for use of the 11,600-square-kilometre air weapons range. That money, along with $7 million to $10 million in energy-related taxes, now goes to Lac La Biche, even though virtually all of the almost 2,000 military personnel and 550 civilian employees at the base live in Cold Lake.

Although Col. Wheeler declined a request for an interview, he and the city submitted a letter in mid-January to Snelgrove and Goudreau asking to re-align the city’s boundaries to include the air weapons range.

That would mean the federal grant money would flow to the city, along with the millions of dollars a year paid by pipeline companies in the area, as well as Cenovus, which is operating its Foster Creek bitumen project on the southern part of the range, and Canadian Natural Resources, which has some operations on the range as part of its Primrose and Burnt Lake projects.

Provincial officials would not reveal how many total dollars are involved.

The residential and operations portion of the base, located in an area called Medley, became a part of the City of Cold Lake about 14 years ago, after the former towns of Cold Lake and Grand Centre merged to form the new entity, which now has a combined population of about 14,000.

But in the letter, Col. Wheeler makes it clear that he is not happy with the inability of the cash-strapped city to maintain roads and other infrastructure for his personnel, signalling that something has to change.

“The Department of National Defence (DND) pays a significant amount of payment in lieu of taxes to the City of Cold Lake,” he says. “We need to see further enhancement to services to the [base] and better value for the funding that is being provided to the city.”

DND now pays $3 million in grants to the city, in compensation for the inclusion of Medley into the city boundaries, with the remaining $10 million going to Lac La Biche.

The commander has also expressed his concerns about the ability of his base to upgrade its facilities to host Canada’s new F-35 fighter jet, which will replace its aging fleet of CF-18s. The federal government has said CFB Cold Lake and CFB Bagotville in Quebec will split models of the new Lightning II stealth fighter, with each housing >> continued on page 18

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March/April 2011 • Energize Alberta

Slicing the pie 24 planes starting in 2016, with another 17 training aircraft models likely to be located at the Alberta base. Ottawa is spending from $9 billion to $16 billion on the jets.

Cry for help Cold Lake has repeatedly made appeals to the province for funding help and last year applied to dissolve itself and become part of the neighbouring Municipal District of Bonnyville.

That request was rejected and the government instead appointed a consultant to study the issue and to make a recommendation, which included an appeal to area municipalities to come up with a solution.

One of those solutions, offered by Bonnyville, was to share of its more than $22 million a year in industrial tax revenues, which come from Imperial Oil’s Cold Lake project and other bitumen-related plants. Bonnyville, which has financial reserves of more than $24 million, offered about $1 million a year to Cold Lake.

The city rejected that offer, saying it was insufficient.

Cold Lake Mayor Craig Copeland says the city is “unsustainable” and can’t absorb any more population growth. Although it collects most of its revenue from residential taxes that are among the highest in Alberta, the city has a debt of about $30 million and needs Cold Lake Mayor new arenas, sewCraig Copeland age facilities and other infrastructure improvements that would cost $120 million.

He says the city is considering not allowing any new residential development, which would mean workers from oilsands plants as well as military personnel and civilian employees could not live there.

“The base commander is saying, ‘This isn’t right,’” Copeland says.

Aside from the fact the military base uses the range for its flight

training, the military controls all access by the energy industry to the range, which holds oilsands reserves as well as large natural gas deposits.

Although Snelgrove’s department isn’t commenting on the city’s initiative and its implications, Goudreau hints at what ultimate solution the province might adopt, pointing to the Regional Municipality of Wood Buffalo as an example of an area where several former independent municipalities combined to become one.

“Everyone likes their independence as a municipality, but I can see some strong advantages of moving toward regional government,” he says.

The minister expects a decision on Cold Lake’s request to annex the weapons range sometime in the next two months.

Problem solved?

But municipal officials in the area say they have already been told what the solution will be.

Bonnyville Reeve Ed Rondeau says he has heard that the government will likely approve a request that the funds going to Lac La Biche be redirected to the City of Cold Lake and that its annexation of the weapons range be approved.

“My understanding is Snelgrove has told Lac La Biche they can have the revenue from the Conklin area and, in return, Wood Buffalo will be given some provincial lands,” he says.

“If we got nothing in return, they would have to give us money,” Rondeau says.

Genia Leskiw, the Conservative MLA for the Bonnyville-Cold Lake constituency, says she believes there will be a solution to the region’s cascading financial problems, but it can’t include “robbing Peter to pay Paul”—by taking energy revenue from one area and giving it to another without compensation.

However, she adds that it is logical for the City of Cold Lake to receive tax dollars paid for the use of the military base and for Lac La Biche to receive the Conklin resource revenues.

Mike Evans, executive director of stakeholder relations for the Regional Municipality of Wood Buffalo, says if the municipality loses the tax revenues from the Conklin area, it

would likely seek financial compensation from the province.

He says being given Crown land near Fort McMurray as compensation would not be acceptable, since the municipality can basically annex land adjacent to the city now at minimal cost. Meanwhile, it would lose far more than the $17 million transferred to Lac La Biche from the weapons range.

“That’s why we’re talking about equilibrium,” he says, meaning the municipality would want to be equally compensated.

Cenovus spokeswoman Rhona DelFrari says the company pays $10 million a year in property taxes and other fees for use of the weapons range, all of which goes to Lac La Biche County. However, the bulk of the 430 permanent Cenovus employees and 2,000 permanent contract employees live in Cold Lake, with some also living in the town of Bonnyville, about 35 kilometres west.

The company will be hiring another 50 full-time employees this year at the Foster Creek project, where it produces 120,000 barrels daily and has plans to expand that to 210,000 barrels per day.

Cenovus works with base personnel to control access to and operations by the energy industry on the weapons range.

Aside from Cenovus, Canadian Natural Resources produces about 130,000 barrels daily at its Primrose and Burnt Lake projects (partially located on the range), with regulatory approval to expand by another 35,000 barrels a day. Also, Husky Energy has plans to develop its Caribou Lake lease on the range.

“Our Caribou lease, which is located on the [weapons range] between Foster Creek and [Canadian Natural’s] leases, has discovered reserves of 3.5 billion barrels, and we have future plans to develop it,” Husky spokesman Graham White says.

Imperial Oil’s Cold Lake project, located just south of the weapons range, produces 140,000 barrels per day now, and the company plans a 30,000-barrel expansion. It now employs over 1,000 company and contract workers there, most of who live in Cold Lake. It pays about $14 million a year in taxes to Bonnyville.

Wildrose leader ‘sympathizes’ over inequities

T

he leader of the Wildrose Alliance Party says she sympathizes with the plight of the City of Cold Lake and other towns and cities in Alberta faced with rapid growth, but lacking the tax base to deal with it—and her party has some solutions.

Danielle Smith says her party would place a high priority on dealing with the issue. “A large number of rural municipalities have large [energy industry-related] tax assessments, while the adjacent urban municipality is dealing with growth pressures, without access to that energy industry tax revenue,” she says. “Our party would deal with that if we formed a government.”

She says her party continues to study the issue, but has already come up with a series of proposals to help financially hard-pressed towns and cities, such as Cold Lake, Peace River, Grande Prairie and others in Alberta.

One step it would take is to allow all municipalities to keep 100 per cent of local property taxes. As it is, almost half of locally generated property taxes go to the provincial government.

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She says that would generate hundreds of millions of dollars a year for municipalities across the province.

The Wildrose Alliance also proposes shifting one per cent of provincial energy royalty revenues to municipalities impacted by energy industry-related growth.

Royalties have declined in the last few years, as a result of lower natural gas prices.

However, overall royalties still generated about $11 billion last year, which means over $100 million would flow to towns and cities affected by such development.

The party also proposes that the province share some personal tax revenues with communities coping with energy booms, which she said would see millions of dollars flowing to them.

She says her party would conduct a review of the total funding model to ensure that municipalities are treated fairly.

“It’s up to the provincial government to find a more appropriate funding model.”

Each edition of Energize Alberta contains a listing of 10 topical energy stories—key trends, events and initiatives—that are shaping the province’s energy future.

1

Drilling upswing

Modest increases in drilling activity are expected for Canada in 2011.

The Petroleum Services Association of Canada (PSAC) forecasts 8,390 wells will be drilled in Alberta this year, up three per cent from last year. That’s a significant chunk of the total 12,750 wells the association predicts for the entire country— up from the 12,158 wells drilled in 2010.

Why it matters? PSAC says the higher forecast reflects strengthening crude prices, as well as new technological innovations.

At the same time, the association suggests skilled labour shortages will be a continuing drag on drilling numbers, preventing the industry from reaching its full output capacity.

Photo: Joey Podlubny

Continued from page 17

Image: North West Upgrading

18

Keeping it in the family

2

A new $5-billion refinery is set to be built near Redwater in Alberta’s Industrial Heartland. With an expected completion date of mid-2014, the project will refine bitumen provided by the province and Canadian Natural Resources to primarily produce low-sulphur diesel, as well as naphtha and diluent. The refinery will also capture CO2, which can then be used in conventional oil recovery projects in central Alberta.

Why it matters? As Ian MacGregor, chairman of North West Upgrading, explains, the refinery is “keeping jobs, taxes and revenues in Alberta and creating opportunities for other petrochemical industries.” By using captured CO2 in enhanced oil recovery projects, the refinery will also help increase recovery rates from conventional oilfields.

Energize Alberta • March/April 2011

3

19

California bound Alberta’s wind-energy industry has received a major boost thanks to California’s Pacific Gas and Electric, which has agreed to a 20-year agreement to purchase 450 megawatts of power from two wind farms currently in development in the province.

Greengate Power’s 150-megawatt Halkirk project is expected to be online by 2012, while its 300-megawatt Blackspring Ridge project should be in operation by 2013. California laws require that utilities source 20 per cent of their power from renewable energy—a quarter of which can be purchased out of state.

Photo: Joey Podlubny

Why it matters? In Alberta’s energy market, renewable power sources like wind have a tough time competing against cheaper energy generated from coal and natural gas. Thanks to legislated renewable energy requirements, California offers a viable alternative market. “We needed an innovative way to proceed, and this will contribute to significant short-term growth in the Alberta wind energy market,” says Dan Balaban, president and chief executive officer of Greengate Power.

4

One-stop regulatory shop

The Alberta government plans to establish a single regulatory body for upstream oil and gas activity. The regulator would streamline the process by making all the decisions required to issue an oil and gas approval. Currently, this duty is shared between the Energy Resources Conservation Board, Alberta Environment and Alberta Sustainable Resources Development.

Why it matters? According to David Collyer, president of the Canadian Association of Petroleum Producers, a single regulator “will help both government and industry in terms of cost savings over the longer term.” The move should address the regulatory duplication that has built up over the years and hampers the approval process.

David Collyer, CAPP president

Bracing for the shale gas tsunami Thanks to its increasing shale gas supplies, the United States could become self-sufficient in natural gas, eliminating the need for Canadian imports. “The shale gas tsunami really is a sea change for the industry as a whole,” explains Simon Mauger, director of gas services at Ziff Energy Group. “It’s going to change direction for pipeline flows.” Mauger points to two developments, the Bison pipeline in North Dakota and the Ruby pipeline in the U.S. Northwest, that will reduce the American market for Canadian gas.

5

Why it matters? Growing consumption in the oilsands and power sectors may help provide new demand for the struggling Canadian gas market. By the end of the decade, gas demand in oilsands production and processing is expected to grow by two billion cubic feet per day. With new projects, that number could go as high six or Shale Gas seven billion cubic feet per day.

That would essentially replace all of the gas exports on the TransCanada pipeline system, Mauger says. Canadian gas producers can also expect to find a New Plays: market in the power generation inShale Gas dustry, thanks to the slow growth in renewable energy sources and the long & Other lead times required to bring new nuclear and coal-fired plants online.

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Conventional Gas Tight Gas Coalbed Methane

Graph: Ziff Energy Group

Remaining North American resource: 2,000 trillion cubic feet Permission to reprint is allowed as long as proper credit and citation is given to Ziff Energy Group.

To See the Rest of the top 10, visit energizealberta.com North American Remaining Resource, 2,000 Tcf www.energizealberta.com 101469_UCA_Energize-AD_AUG18outlined.indd 1

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Energize Alberta • March/April 2011

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Opinions of experts vary on how to shape Canada’s energy future Paul Wells Energize Alberta

D

iscussion over whether Canada needs a national energy policy and how best to achieve the optimum strategy were front and centre at a recent roundtable event in Calgary.

However, consensus from some of Canada’s “thought leaders” was not on the agenda.

While most of the participants—who ranged from the political and academic elites to environmentalists and energy industry leaders—agreed that a national policy is required, what its focus and priorities should be was a matter of debate.

Policy required “I personally think this is very much needed in this country. I think we need an energy policy— not a national energy program but a policy and strategy in regard to energy in Canada,” said Pat Daniel, president and chief executive officer of Enbridge.

“By gathering ideas from some very interesting thought leaders in the country—some of the very best leaders I think in energy—the environment and the economy in Canada, and by trying to engage a lot of Canadians in this process, we’re hoping to build a very bold, innovative approach to developing an energy strategy, something that aligns not only energy, but the environment and the economy at the same time.”

Sponsored by Enbridge and presented by Corporate Knights, which bills itself as Canada’s “clean capitalism” magazine, the roundtable was the third of four that will be held across Canada.

Preston Manning, president and chief executive officer of the Manning Centre for Building Democracy and former leader of the official opposition, said there are many key principles in creating a viable energy strategy, not the least of which is proper measurement of the environmental performance of all industry, not just the oilsands.

“The first principle should be proper measurement of the environmental impacts of all our major energy sources, not just oilsands within the petroleum sector. There’s an old saying: ‘If it matters, measure it.’ I don’t think we measure the environmental impact right across the board to the degree that we need to,” Manning said.

“One way of doing that is to develop national ecological accounts that are parallel to the national economic accounts… and getting to full cost accounting as applied in the petroleum industry. I don’t think it’s been applied to the same rigor to hydro, wind, solar or nuclear.”

To make his point, Manning said that while oilsands operations are rightfully scrutinized for their direct impact on the environment and land, the hydro industry is not held up to the same standards.

“Oilsands are going to tear up several hundred square kilometres of forest in northern Alberta, and we realize that’s a problem and we have to do something about it,” he said, noting that hydro companies have “flooded forests” on a scale that would rival the size of Lake Ontario, but are not under the same watchful eye as oilsands operators.

“So, you’ve got a carbon tax to deal with and mitigate and

Panelists at the Corporate Knights E3 Canadian Roundtable event in Calgary included (left to right): Preston Manning, David Keith, Marlo Raynolds, Eric Axford, Roger Gibbins and Eric Miller. avoid the negative environmental consequences of petroleum extraction, [but] where’s the reservoir tax on hydro?”

Manning added that any national energy policy should strive for a better balance between the reliance on regulatory and market mechanisms.

“I think there’s a place for regulation, but I think there would be a lot better [success] in harnessing market mechanisms to deal with environmental consequences, not just regulation,” he said. “So, more action and more experimentation in harnessing market mechanisms—pricing systems—to deal with environmental problems [is needed].”

By using market mechanisms, Canadians would eventually be forced to buy in, he added.

“How do you get Canadians to hurry? You don’t get it by lecturing them. They will only change when they have to,” Manning said.

Stuck in the 20th century Marlo Raynolds, senior advisor to the Pembina Institute, said a national energy policy has to directly confront the effects of fossil-fuel-dominated energy sources on the environment.

“I do think it has to focus and hit the greenhouse gas emissions head on…. I don’t see why we would move into strategy discussions around energy without

really addressing the need for deep reductions,” he said.

“I think much of the world is ahead of us in actually starting to think about this and prepare their economies for renewable energy, for energy efficiency, for electric vehicles. We really do not score well policy-wise in any of those areas. We need to decide if we’re going to be part of this transition or if we’re going to sit on the sidelines.”

In fact, Raynolds contends that Canada’s continued reliance on fossil fuels as primary energy sources could become its economic undoing.

“I see Canada sort of stuck in a bit of a 20th century mindset around energy. We’re still very much focused on coal and oil and I don’t think the 21st century is going to be very friendly to those resources,” he said.

“I think we really have to question just how much we build our economy around these resources versus trying to really think about where the puck is going.”

Raynolds contends that any national energy policy would have to institute a stringent regulatory stance on oilsands operations in an effort to curb their environmental impact.

“You can’t talk about energy in Canada without talking about the oilsands. I and the Pembina

Photo: Janet St. Germain, Corporate Knights

‘Thought leaders’ ponder energy policy

Institute have consistently said we see a role for the oilsands in an energy strategy in Canada, but we have to be clear about how we define that role,” he said.

“I don’t see unfettered, uncapped development. I think we have to develop the resources within clearly defined environmental limits. I would argue no politician, no executive, can say we’re developing this resource responsibly if we have not defined absolute limits on environmental impacts.”

Better, stronger, greener While he agreed that a national energy policy is required, president and chief executive officer of the Canada West Foundation Roger Gibbins said that a national energy policy must focus on what Canada has and what it does best—that being an abundance of natural resources and expertise in extracting them. The country just needs to do it better.

“I think we have a rough consensus going forward that we are on a trajectory towards a more carbon-constrained energy future. The points of disagreement are how quickly we should be on that path and what the destination is. Is it a no-fossil-fuel destination or a limited-fossilfuel destination, with renewables a bigger part of the mix?” he said. ❯❯ continued on page 22

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March/April 2011 • Energize Alberta

Continued from page 21

Thought leaders “I’m convinced that in the foreseeable future, hydrocarbons will remain an important part of our energy mix.”

As such, a national strategy must recognize Canada’s “unique energy endowment” and strive to create a climate whereby environmental improvement in extracting and consuming fossil fuels takes precedence.

“Our competitive advantage comes from hydro and it comes from hydrocarbons. Therefore, the prescription going forward is very simple, alarmingly simple. That is, we have to continue doing what we do best, only do it better, and much better, going forward,” Gibbins said.

“Our contribution comes not only in terms of how we change the consumption of hydrocarbons, but how we change the production of hydrocarbons. That’s our unique role and that’s where we have a competitive advantage and that’s where we’ve got to work,” he added.

“Our role going forward is not to figure out how to transition away from hydrocarbons—the world will be working on that.

What we have to do is figure out how to get better—much better—at the green production of hydrocarbons.”

David Keith, director of the ISEEE Energy and Environmental Systems Group at the University of Calgary, was the only panelist to dispute the merits of a national energy policy. Rather, he said the country should focus on environmental policy first, as all aspects of energy generation and consumption inevitably fall under the umbrella of environmental concern.

“It’s not completely obvious to me that we need a national energy policy. I want to spend some time questioning the assumption that the way we go after this is to come up with a single energy policy,” Keith said.

“In particular, I think it hides what is in fact the central driver for why you actually need to implement a national energy strategy, which I’m going to argue is climate.”

He argued that the reason Canada needs a climate strategy is that “cutting emissions has zero benefit right now.”

“It has benefits to your great-great-grandkids, enormous benefits. Indeed, by putting all that carbon in the atmosphere, using it as a big free dump, you’re passing on enormous uncertain costs to your grandkids,” he said.

Corporate Knights will collect the ideas from the various roundtables along with those submitted online and then present them to the Energy Policy Institute of Canada for consideration as it develops its recommendations for a Canadian energy strategy.

Players on the Stage 1. Corporate Knights (www.corporateknights.ca) 2. Energy Policy Institute of Canada (www.canadasenergy.ca) Going Broader, Deeper 1. Standing Senate committee on energy, the environment and natural resources (www.canadianenergyfuture.ca) Feedback What kind of national energy policy do you envision for Canada?

Send your ideas to yourenergy@energizealberta.com.

Tweet your thoughts

A

Canadian Senate committee that is examining the current and future state of Canada’s energy system is hoping the social network platform Twitter can be utilized to get Canadians engaged in helping plan a roadmap toward the country’s energy future.

The standing Senate committee on energy, the environment and natural resources, which last June released a discussion paper entitled Attention Canada!

Preparing for our Energy Future with the purpose of contributing to the current national energy dialogue taking place in Canada, believes that the country needs a strong energy strategy. And the sooner, the better.

Committee chairman David Angus says, “The message is clear: there is urgent need for a national discussion on energy. Canada requires a comprehensive Canadian sustainable energy strategy now.”

In its report—which did not include recommendations—the committee notes that as a major producer, exporter and consumer of energy, Canada cannot idly watch from the sidelines.

“There are just too many jobs, resources and wealth at stake. Canadians are amongst the world’s highest consumers of energy on a per-capita basis in part because of the cold climate and the vastness of the country, and there is little or no likelihood that our energy demands will diminish as we go forward,” the report concludes.

“Transitioning to a lower-carbon economy will require a strategic examination of not only our consumption and production of hydrocarbons, but all our energy sources. All possible solutions need to be on the table.”

The Senate committee is now embarking on the next phase of its efforts and it’s hoping that by embracing Twitter it can convince more Canadians to participate in the discussion on Canada’s energy future. In a press release, the committee says it started tweeting in October 2010 and the “feedback was extremely positive.”

“As the first Canadian parliamentary committee on Twitter, we are working towards finding better ways to engage with Canadians about Canada’s energy future,” the group says.

In February 2011, the committee started asking Canadians to submit questions they would like senators to ask witnesses during public hearings.

Questions can be tweeted to @SCEENR_SAYS or emailed with the word Twitter in the subject line to SCEENR-CSEERN@sen.parl.gc.ca

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“ We knoW What Was here before, What’s here noW, and What We need to do before We leave.”

I grew up in a town called Big River, surrounded by lakes.

From a young age I knew I wanted to do something with the environment. As a biologist in the oil sands, it’s my job to understand the water chemistry of the lakes and streams around our oil sands drilling site, so we don’t affect it. It’s a matter of frequently collecting samples, and monitoring the plants, soil and animals, including rare species like Arctic Grayling and

430961-18 CAPP Finding innovative ways to limit environmental impacts is key to meeting our energy needs fullresponsibly. page · fp · 4c Woodland Caribou. Everyone I work with loves

the outdoors. The last thing we want to do is harm it.

Get the real story at capp.ca/oilsands

Megan Blampin Devon

A message from Canada’s Oil Sands Producers The Canadian Association of Petroleum Producers (CAPP) represents member companies that produce more than 90 per cent of Canada’s natural gas and crude oil, including Canada’s Oil Sands Producers.