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 CEO
National 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
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 solutions
that integrate environmental and economic
considerations to ensure the lasting prosperity
and well-being of our nation.
”
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MELTDOWN
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4
THE NRT PROCESS
RESEARCH
CONVENE
ADVISE
We rigorously research and
conduct high quality analysis on
issues of sustainable development.
Our thinking is original and
thought provoking.
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.
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.
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CANADA’S OIL RESERVES
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CANADA AS AN ENERGY SUPPLIER
“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)
Finding Sustainable Pathways
Source: CAPP(2011) Canada’s Oil Sands: Creating U.S. jobs and business opportunities. Pg 6. AND
NRCan (2011) Oil Sands: A Strategic Resource for Canada, North America and the Global Market
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ENERGY, ECONOMY, EXPORTS
Share of Canadian GDP, 2010
Share of Canada Exports, 2010
Other Sectors
Services
Agriculture, Forestry,
Fishing and Hunting 4%
3%
15%
Emission-Intensive
Industries
29%
49%
Low Emission-Intensive
Manufacturing
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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
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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
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Source: UNFCC, 2010 and Environment Canada, 2011
CANADA’S EMISSIONS PROJECTIONS
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Source: EC. 2011
2020 EMISSIONS GAP
Finding
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GHG EMISSIONS BY ECONOMIC SECTOR
(MT CO2E)
200
There is an
estimated 30%
growth in the oil
and gas sector
from 2005 to 2020
150
2005
2020
100
50
0
Waste and Others
Agriculture
Buildings
EITE Industries
Oil and Gas
Electricity
Transportation
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Source: EC. Canada’s Emissions Trends, 2011
SHARE OF TOTAL ELECTRICITY GENERATION BY
SOURCE FOR CANADA AND THE U.S., 2006
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HARMONIZING ON CARBON PRICE AND ON
TARGETS HAVE DIFFERENT IMPLICATIONS
OIL SANDS AND
PIPELINES
OIL PRODUCTION DRIVEN BY OIL SANDS
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Source: NEB (2011) Canada’s Energy Future: Energy Supply and Demand
Projects to 2035
U.S. ENERGY SECURITY RISK INDEX,
1970-2035
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Source: Institute for 21st Centre Energy, U.S. Chamber of Commerce.
Index of U.S. Energy Security Risk (2011 Edition)
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Source: 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
• 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 election22
Finding Sustainable Pathways
Source: CBC. Canada's main pipeline network; Leach (Nov
2011) Keystone XL: Game Over
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
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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.
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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
Prime Minister Stephen Harper shakes hands with Chinese President
Hu Jintao before their meeting in Beijing on Feb 9, 2012.
CANADA AND
CHINA
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. twoway trade. (Vancouver Sun)
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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.
Finding Sustainable Pathways
Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback
impact analysis of West coast export capacity.
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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.
Finding Sustainable Pathways
Source: Wood Mackenzie, inc. (For Alberta Government) Dec 2011. A netback
impact analysis of West coast export capacity.
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OIL SANDS: IMAGE, RISKS, &
REALITIES
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UNEP. Keeping Track of our Changing Environment. 2011
CLIMATE CHANGE IS REAL: GLOBAL MEAN
TEMPERATURE INCREASED BY 0.4°C BETWEEN 1992 &2010



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http://www.cccma.ec.gc.ca/di
agnostics/cgcm3t47/cgcm3.shtml
http://www.google.com/gadg
ets/directory?synd=earth&pr
eview=on&q=climate+change
http://www.epa.gov/climatec
hange/effects/polarregions.ht
ml
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UNEP. Keeping Track of our Changing Environment. 2011
ENVIRONMENTAL CHANGES HERE & NOW
UNEP, 2011
Arctic Sea Ice
Arctic sea ice losses during 2011 were the secondgreatest 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‘
Australia, Queensland
Australian Rainforest
Brazil Rainforest
MSNBC, July 2011
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.
Finding Sustainable PathwaysSecretariat of the
Convention on Biological Diversity (2010)
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RISKS
Oilsands pipeline protestors
arrested near White HouseAug 2011 (CBC)
July 2008 issue: Alberta’s oil sands
Celebrity protesters blur the
Canadian oil sands message Sept 1 (the Star)
EU fuel directive targets oil sands unfairly: CAPP
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NGO PERSPECTIVE: OIL SANDS
It will take more than rebranding to
make tar sands oil "ethical“
Keystone XL in context:
environmental management
oilsands
and
Two decades of ineffective management have left
their mark on the Canadian landscape
There 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.
Tar Sands Pipelines Safety Risks
by David Suzuki with Faisal Moola
On “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 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
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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)
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Oil & Gas rises from 0.6% to 1.1%
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EXISTING MONITORING
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Source: Government of Canada and Government of Alberta (2012) Joint
Canada-Alberta Implementation Plan for Oil Sands Monitoring
PROPOSED MONITORING BY 2015
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Source: Government of Canada and Government of Alberta (2012) Joint
Canada-Alberta Implementation Plan for Oil Sands Monitoring
NO HARMONIZED OPINION
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
Federal
State/Province
Local
A great deal of
responsibility
Some
responsibility
No responsibility
Not sure/
refused
US
43%
30%
22%
5%
Canada
65%
24%
8%
3%
US
35%
37%
23%
5%
Canada
52%
36%
9%
2%
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
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Source: NSAPOCC and Public Policy Forum – Sustainable Prosperity Survey (February 2011)
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OIL AND THE ENVIRONMENT
No matter where we get oil, there will be some environmental risk
Strongly agree
Canada
26%
USA
27%
0%
Agree
Disagree
Strongly disagree
66%
5%1%
59%
20%
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40%
60%
5% 3%
80%
100%
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Source: Harris Decima (2010) Modern Environmentalism
CAN OIL SANDS DEVELOPMENT BE
ACCEPTABLE?
Possible to develop oil sands in environmentally satisfactory way
Not possible to develop oil sands in environmentally acceptable manner
Total
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83%
17%
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Source: Harris Decima (2010) Modern Environmentalism
IDEAL GOAL FOR OIL SANDS DEVELOPMENT
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
Total
22%
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70%
8%
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Source: Harris Decima (2010) Modern Environmentalism
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WHAT IF…
That said, I
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For more information,
please visit:
www.nrtee-trnee.ca