canadian energy and the u.s. - a mutually beneficial partnership: economics, security and the...

CANADIAN ENERGY AND THE U.S. - A MUTUALLY BENEFICIAL PARTNERSHIP:ECONOMICS, SECURITY AND THE ENVIRONMENT

Oil Sands, Keystone Pipeline and the Environment

David McLaughlin,President and CEONational Round Table on the Environment and the Economy

February 21, 2012

TABLE OF CONTENTS

• About the NRT• Canada-U.S. energy / emissions

relationship• Oil sands & pipelines• Canada-China• Oil sands image and risks

Finding Sustainable Pathways 3

NRT: BRINGING THE ENVIRONMENT AND THE ECONOMY TOGETHER

Through the development of innovative research and considered advice,

our mission is to help Canada achieve sustainable development solutionsthat integrate environmental and

economic considerations to ensure the lasting prosperity and well-being of our

nation.

“

”


MELTDOWN


CONVENE

We convene opinion leaders and experts from across Canada around our table to share their knowledge and diverse perspectives. We stimulate debate and integrate polarities. We create a context for possibilities to emerge.

RESEARCH

We rigorously research and conduct high quality analysis on issues of sustainable development. Our thinking is original and thought provoking.

ADVISE

We generate ideas and provide realistic solutions to advise governments, Parliament and Canadians. We proceed with resolve and optimism to bring Canada’s economy and environment closer together.

THE NRT PROCESS


CANADA’S OIL RESERVES


CANADA AS AN ENERGY SUPPLIER

Source: CAPP(2011) Canada’s Oil Sands: Creating U.S. jobs and business opportunities. Pg 6. ANDNRCan (2011) Oil Sands: A Strategic Resource for Canada, North America and the Global Market

“Canada is the largest supplier of crude oil and petroleum products to the U.S., safely delivering 2.5 million barrels per day in 2010, making up 21 percent of U.S. imports” (NEB)


ENERGY, ECONOMY, EXPORTS

Share of Canadian GDP, 2010

Low Emission-IntensiveManufacturing

29%

Agriculture, Forestry,Fishing and Hunting 4%

Services

15%

Other Sectors

3%

Emission-Intensive Industries

49%

Share of Canada Exports, 2010

Source: Industry Canada and Statistics Canada (2011)


U.S. ECONOMIC IMPORTANCE In 2010 energy products including oil, natural

gas and electricity, accounted for $103 billion worth of trade between the two countries. 97% of Canada’s energy exports went to U.S. markets. Source: NRCan; * All monetary values are American dollars based on February 2011 conversion rates.

According to estimates by the, development of the oil sands has the potential to generate more than $483 billion in royalty and tax revenues for Canada’s federal and provincial governments over the next 25 years. Oil Sands Developers Group

On average, U.S. output of goods and services will increase by $45 billion/year from 2011 – 2035 due to increased demand from oil sands activity. Source: CERI 2011


CLIMATE & EMISSIONS

• Canada and U.S. have aligned (GHG) emissions reduction targets: 17% below 2005 levels by 2020

• Canada represents 2% of global emissions, the U.S. represents 18% (2005 Mt CO2e)

• Canada and U.S. emissions per capita are about the same: 22.04; U.S. emission per capita are 22.74 (2008 Tonnes CO2e)

• Climate change could cost Canada $43 billion per year in 2050

Source: UNFCC, 2010 and Environment Canada, 2011


CANADA’S EMISSIONS PROJECTIONS

Source: EC. 2011


2020 EMISSIONS GAP


GHG EMISSIONS BY ECONOMIC SECTOR (MT CO2E)

There is an estimated 30% growth in the oil and gas sector from 2005 to 2020

Source: EC. Canada’s Emissions Trends, 2011


SHARE OF TOTAL ELECTRICITY GENERATION BY SOURCE FOR CANADA AND THE U.S., 2006

HARMONIZING ON CARBON PRICE AND ON TARGETS HAVE DIFFERENT IMPLICATIONS

OIL SANDS AND PIPELINES


OIL PRODUCTION DRIVEN BY OIL SANDS

Source: NEB (2011) Canada’s Energy Future: Energy Supply and Demand Projects to 2035


U.S. ENERGY SECURITY RISK INDEX, 1970-2035

Source: Institute for 21st Centre Energy, U.S. Chamber of Commerce. Index of U.S. Energy Security Risk (2011 Edition)

Finding Sustainable Pathways 21Source: CAPP (2011) Canada’s Oil Sands: Creating U.S. jobs and business opportunities. Pg 11-12.


KEYSTONE PROPOSAL

NEW PROPOSAL: TransCanada Working with State of Nebraska and Department of State to Finalize New Route for Keystone XL through Nebraska

Source: CBC. Canada's main pipeline network; Leach (Nov 2011) Keystone XL: Game Over

• The original proposal would have seen the pipeline run from Alberta through several states to the coast of Texas. It raised concerns in Nebraska because it would pass through an area that supplies drinking water to millions of people. The XL pipeline is an extension of an existing Keystone pipeline.

• In November 2011, TransCanada agreed to change the proposed route so that it wouldn't pass through the environmentally sensitive Sandhills area of Nebraska, a move that would add up to 65 kilometres of pipeline and another pumping station to the project.

• Last fall, U.S. officials said they would defer a final decision on the pipeline until the end of 2012 — after the next presidential election


EXISTING PIPELINES OPERATIONS + TRANSCANADA KEYSTONE XL PIPELINE + ENBRIDGE NORTHERN GATEWAY PIPELINE

U.S. GDP – Potential Additions, 2010-2020

US employment totals are expected to grow from 80,000 jobs to 200,000

jobs in 2020

Employment in Canada (direct, indirect, and induced) is expected to grow from 390,000 jobs to a peak of

800,000 jobs in 2020

• Total Canadian GDP impact as a result of the investment shocks is estimated at close to $1,178 billion over the 20-year period. US GDP impact from 2010-2020 as a result of the investment shocks is estimated at close to CAD$138 billion

• In Canada, the oil sands development affects Alberta more than any other province. The oil sands development also affects, in order, Ontario, B.C., Quebec, and Sask.

• In US, the oil sands development affects , in order, Illinois, California, Texas, Wisconsin, and Ohio

CERI (2011) A decade of staged oil sands growth (2010-2020). Pg XV


“WE ARE AT THE WRONG END OF MULTIPLE DISCOUNTS” said Mike Tims, chairman of Peters & Co., the Calgary-based energy investment dealer.

Source: Financial Post. Canada loses in oil discount. Feb 9, 2012 http://business.financialpost.com/2012/02/09/canada-loses-in-oil-discount/?__lsa=a5e4079a

CANADA AND CHINA

Prime Minister Stephen Harper shakes hands with Chinese President Hu Jintao before their meeting in Beijing on Feb 9, 2012.


PRIME MINISTER HARPER IN CHINA We are an emerging energy superpower," Harper

said. "We want to sell our energy to people who want to buy our energy. It's that simple.“ (Feb 10, 2012)

"It is increasingly clear that Canada's commercial interests are best served through diversification of our energy markets," Harper said.

Current bilateral trade is modest and in 2010 was less than $60 billion, around a tenth of combined Canada-U.S. two-way trade. (Vancouver Sun)


WEST COAST PIPELINE PROPOSED ROUTE

The proposed Northern Gateway Pipeline would run from Bruderheim (near Edmonton) to Kitimat with a return condensate pipeline for importing oil sands diluent material. Given heavy crude production profile forecast, Canadian producers require additional pipeline capacity to export incremental production volumes of heavy crude oil to key demand centres. Canadian pipeline companies are considering a myriad of projects to provide potential solutions for Canadian crude oil producers to have sufficient access to appropriate refining markets. In assessment of adding West Coast crude oil export capacity results in the following substantive findings:• Additional export capacity connected to heavy crude refining markets is needed to place growing Canadian oil production by 2017;• Tidewater access provides an important link to the significant and fast-growing Asian market;• Asia is an attractive market for Alberta production on a netback basis• Canadian producers not having sufficient access to premium heavy crude 29 refining markets could lose about $8/bbl for every Canadian heavy crude barrel, with a revenue impact averaging C$8 billion per year for 2017 to 2025.

Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback impact analysis of West coast export capacity.


GATEWAY PROJECT

Of the Asian markets, China would be the most attractive for the disposition of heavy Canadian crude oils. The projected price for gasoline and diesel in Asia are expected to rise in this region as emerging deficits support the increase in oil product prices. This would support Synbit and Dilbit to have a sustainable netback in Asia competitive against that of PADD II and PADD III, respectively.

Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback impact analysis of West coast export capacity.

OIL SANDS: IMAGE, RISKS, & REALITIES


UNEP. Keeping Track of our Changing Environment. 2011


CLIMATE CHANGE IS REAL: GLOBAL MEAN TEMPERATURE INCREASED BY 0.4°C BETWEEN 1992 &2010

http://www.cccma.ec.gc.ca/diagnostics/cgcm3-t47/cgcm3.shtml

http://www.google.com/gadgets/directory?synd=earth&preview=on&q=climate+change

http://www.epa.gov/climatechange/effects/polarregions.html

UNEP. Keeping Track of our Changing Environment. 2011


Arctic sea ice losses during 2011 were the second-greatest in the satellite record dating back to 1979, according to an official NSIDC report…. However, ice loss in recent years has been proceeding faster than the models predicted. EarthSky 2011

Headline: 2011 already costliest year for natural disasters. Expert: 'We are rewriting the financial and economic history of disasters on a global scale‘ MSNBC, July 2011

Australia, Queensland

Arctic Sea Ice

Despite an increase in conservation efforts, the state of biodiversity continues to decline, according to most indicators, largely because the pressures on biodiversity continue to increase. Secretariat of the Convention on Biological Diversity (2010)

Australian Rainforest

UNEP, 2011

Brazil Rainforest

ENVIRONMENTAL CHANGES HERE & NOW


RISKSJuly 2008 issue: Alberta’s oil sands

Oilsands pipeline protestors arrested near White House-

Aug 2011 (CBC)

Celebrity protesters blur the Canadian oil sands message -

Sept 1 (the Star)

EU fuel directive targets oil sands unfairly: CAPP

NGO PERSPECTIVE: OIL SANDS

Keystone XL in context: oilsands and environmental managementTwo decades of ineffective management have left their mark on the Canadian landscapeThere is a growing debate in the United States about the environmental impact of oil sands and the related issue of whether there are effective legal and regulatory frameworks in place in Canada to address these impacts. Filling the proposed KXL pipeline with oil sands will result in nearly a 50 per cent increase in oil sands production. Until environmental management of the oil sands is improved, KXL will cause significant environmental harm due to increased oil sands production.

It will take more than rebranding to make tar sands oil "ethical“ by David Suzuki with Faisal MoolaOn “ethical oil”. Oil has never been about "ethics". It has always been about money. Those who argue the case for "ethical oil" should work to ensure that our energy needs are met in a truly ethical way, now and into the future. In the end, the only truly ethical solution is to phase out oil. The black eye that tar sands oil is sporting can't be remedied with meaningless phrases such as "ethical oil".

Due to its sheer scale, all Canadians are affected by the tar sands, no matter where they live. Canada's fastest-growing source of global warming pollution is TARnishing the maple leaf.

Tar Sands Pipelines Safety RisksTar sands crude oil pipeline companies may be putting America's public safety at risk. Increasingly, pipelines transporting tar sands crude oil into the United States are carrying diluted bitumen…raising risks of spills and damage to communities along their paths.

The Dirty Truth about Canada’s Tar Sands Industry


OIL SANDS VS. COAL

Nature magazine – “The Alberta oil sands and climate”

Andrew Weaver, Neil Swart “if entire Alberta oil sand resource

were to be used…would induce a global mean temperature change of 0.36 Centigrade

Using all world coal reserves would lead to temperature change of 15 degrees Centigrate


Water use is found predominantly in nonconventional oil and gas extraction, including the oil sands subsector. The overall oil and gas sector’s water intake showed an uneven trend between 2001 and 2005, with both increases and decreases.

Overall, the water-use intensity of the oil and gas sector has been dropping over time, The oil and gas sector as a whole has the lowest water-use intensity of the sectors covered in this study due to its relatively large economic output (23% of output of all sectors) compared with a relatively small amount of water use (0.6% of water intake of sectors covered in this study)


Oil & Gas rises from 0.6% to 1.1%


EXISTING MONITORING

Source: Government of Canada and Government of Alberta (2012) Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring


PROPOSED MONITORING BY 2015

Source: Government of Canada and Government of Alberta (2012) Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring


NO HARMONIZED OPINION

Source: NSAPOCC and Public Policy Forum – Sustainable Prosperity Survey (February 2011)

Views of Americans and Canadians on the Existence of Global Warming

There is solid evidence of global warming

There is no solid evidence for global warming

Not sure

Americans 58% 26% 16%

Canadians 80% 14% 6%

Question wording: From what you’ve read or heard, this there solid evidence that the average temperature on Earth has been getting warmer over the past four decades?

Perceptions of Government Roles in Addressing Global Warming in the United States and Canada

A great deal of responsibility

Some responsibility

No responsibility

Not sure/ refused

Federal US 43% 30% 22% 5%

Canada 65% 24% 8% 3%

State/Province US 35% 37% 23% 5%

Canada 52% 36% 9% 2%

Local US 29% 36% 30% 5%

Canada 42% 42% 13% 2%

Question wording: For each level of government that I mention please tell me if it has a great deal of responsibility, some responsibility or no responsibility for taking action to reduce global warming


OIL AND THE ENVIRONMENT

No matter where we get oil, there will be some environmental risk

27%

26%

59%

66%

5%

5%

3%

1%

0% 20% 40% 60% 80% 100%

USA

Canada

Strongly agree Agree Disagree Strongly disagree

Source: Harris Decima (2010) Modern Environmentalism


CAN OIL SANDS DEVELOPMENT BE ACCEPTABLE?

83% 17%Total

Possible to develop oil sands in environmentally satisfactory way

Not possible to develop oil sands in environmentally acceptable manner



IDEAL GOAL FOR OIL SANDS DEVELOPMENT

22% 70% 8%Total

Ensure full economic benefits of the oil sands resource

Oil sands developed with greater effort to limit environmental impacts

To stop the development of the oil sands altogether



That said, I

WHAT IF…

For more information, please visit:

www.nrtee-trnee.ca

canadian energy and the u.s. - a mutually beneficial partnership: economics, security and the...

Documents

sustainable pathways

environment oil sands

nrt canada

canadas oil reserves

industry canada

statistics canada

oil sands activity

meltdown slide