Notes for a Speech by The Honourable Joe Oliver, P.C., M.P. Minister of Natural Resources to the Canadian Energy Pipeline Association 18 th Annual Dinner Calgary AB Sept. 29, 2011 Check against delivery
- 2 - Thank you Stephen. (Stephen Wuori, president of Enbridge) Good evening everyone. I understand it s something of a tradition for the Minister of Natural Resources to attend your annual dinner and so I m very pleased to be a part of this evening and to be back in Calgary, a centre of dynamic entrepreneurship. Cette assemblée joue un rôle essentiel dans l économie canadienne. Sans les pipelines pour livrer nos hydrocarbures à nos marchés intérieurs et à notre plus gros acheteur d énergie, les États-Unis, notre économie ne serait pas du tout la même.
- 3 - The people gathered here tonight play a vital role in the Canadian economy. Without pipelines to deliver our oil and gas to our domestic markets and to our biggest energy customer, the United States, our economy would look very different. Canada is fortunate to have abundant oil and gas resources, but if you can t move those resources to market, if you can t get them to consumers, they re not doing anybody much good. CEPA members operate more than 100,000 km of pipelines in North America. These energy highways are essential for heating Canadian and American homes, providing electrical power and meeting the needs of consumers.
- 4 - Every year, CEPA companies transport oil and natural gas that pumps about $60 1 billion into Canada s economy. You of course know that, but I am also talking to a broader audience and I know you would want the facts out. You are world leaders in providing safe, reliable long-distance energy transportation. Together, you transport 97% of Canada s crude oil and natural gas from producing regions to markets throughout Canada and the United States. In short, you just don t talk about the future, you build it. Now, you know all this. 1 CEPA
- 5 - But one of the most important parts of my job is communicating the facts of this sector to the rest of the world. I ve recently travelled to Washington and California. I attended the APEC Conference of Energy and Transportation Ministers in San Francisco a few weeks ago. I m going back to Washington next week. Then I ll be in London. Then Paris. Then China and Japan. Everywhere I go, my message is the same. Canada is open for investment, and we are a safe, marketbased, responsible and reliable supplier of energy. Thanks to our vast energy resources of oil, gas, hydro and nuclear, Canada is in the enviable
- 6 - position of helping to ensure the energy security of trade partners beyond our borders. This is a dynamic industry with the right resource base, workforce, innovative spirit, leadership, and it s in the right environment to thrive like it never has before. I believe in this sector, and I fully appreciate not just the impact it now has on our economic well-being today, but more importantly, its contribution to our future prosperity. Although I have not had the chance to meet with all of you, I want you to know: I understand the challenges your industry faces and I am actively
- 7 - pursuing our shared objectives. Working with your industry, and the many, many Canadians it employs, is a priority of mine and of this government. I know there are some people who feel I ve been out talking about Keystone perhaps too much we saw some of them in Ottawa this week and in Washington a few weeks ago. But look: it s an incredibly important issue. For you, for me, for our country. And I think we d all agree we re making tremendous headway in being heard, and in cutting through the cloud of misinformation with some real facts about the science, about pipelines being the safest mode
- 8 - of transport, and the overwhelmingly positive economic impacts. I ll get back to Keystone XL in a few moments, but I do want to underscore that while such projects come with some vocal critics, I promise these projects have very committed advocates. The Prime Minister has made his support clear. Our Foreign Affairs Minister. Our Minister of Trade. Our Ambassador to the US and Consuls General across the US. We re speaking with one voice, and one clear message. Again, Canada is an energy superpower, a safe and reliable supplier of energy, and we are open for business.
- 9 - That said, we can t take anything for granted. We are fortunate that our sound fiscal fundamentals helped us weather recent economic storms and provided the right environment for success. The global recession hit Canada later and affected us less severely, and we emerged stronger than other G7 countries. Our economy has created nearly 600,000 new jobs since July 2009. And the International Monetary Fund predicts that Canada, along with Germany, will have the fastest-growing economy among the G7 over the next two years. There are a number of reasons Canada has continued to out-perform so many other nations. A key one, of course, is that we have paid attention to
- 10 - the basics the economic and fiscal fundamentals that are essential in building a strong, resilient economy. I don t have to tell people in this audience about the current fragility of the global economy and international financial systems. The Next Phase of the Economic Action Plan for Canada is focused firmly on the economy a lowtax plan for jobs and growth, and a speedy return to balanced budgets in order to maintain Canada's advantage in the global economy. A major part of Canada's advantage is its resource sector, of which the energy sector accounts for
- 11 - nearly 7% of our GDP. 2 As we move forward, energy will be an important part in creating jobs and growing the economy. Part of the challenge as a major player is keeping that status, staying on top, and moving forward. So how do we keep moving forward? Well, we must be diversifying our markets and continue to invest in infrastructure. That much is clear. We must build on our solid safety and environmental record. We need to get better and better. We need to embrace a culture of constant improvement and 2 actual is 6.7%
- 12 - evolution when it comes to our technology, our processes, and our very robust regulatory regime. Investing in Infrastructure and Diversifying Markets Our government is highly committed to supporting the development of clean energy and work is well under way to develop renewable energy alternatives, but it will be many decades before they can meet all of our energy needs and those of our partners. Although the world supply of renewable energy is expected to triple over the next 25 years, the International Energy Agency predicts that hydrocarbons will remain the dominant source of energy for years to come. Canada is well poised to make the most of our
- 13 - tremendous energy endowment. We have the thirdlargest proven oil reserves in the world at 174 billion barrels only Saudi Arabia and Venezuela have more. And about 98% of these reserves are located in the oil sands. According to the Canadian Energy Research Institute (CERI), every region in Canada has benefited from oil sands development, stimulating jobs and growth right across the country. Oil sands development directly provides jobs for 132,000 people across Canada 3. And over the next 25 years, the oil sands are expected to contribute about $2.3 trillion to Canada s economy that s an average of over $91 billion per year 4. 3 CERI (2011) 4 CERI (2011)
- 14 - To achieve our full potential, however, a precondition is major investments in oil and natural gas infrastructure. We know that pipelines are the safest, most efficient way to move energy products in Canada and the United States. In Canada, there are more than 100,000 km of transmission pipelines moving oil and natural gas that s enough pipe to circle the Earth two and a half times 5. In the next 15 years, CEPA members expect to invest more than $40 billion in new and expanded pipeline. Today, Canada is facing a-once-in-a-lifetime 5 http://atlas.nrcan.gc.ca/site/english/maps/economic/transportation/pm_pipelines
- 15 - opportunity to build this essential infrastructure, and capture new markets. 97% of our energy exports go to the U.S. --so basically we have one customer. You don t need an MBA to know that having one customer doesn t make good business sense. Fortunately, oil demand growth is strong in Asia. Just recently, China surpassed the U.S. as the world s largest consumer of energy. For all these reasons, it is strategically important for Canada to further diversify. Diversification would allow Canada to capture new oil market growth and yield higher net-backs for producers. It would also allow new competitive
- 16 - sources of crude oil supply for those Canadian refiners which are not currently supplied by Canadian oil. The private sector is bringing forward proposals for new projects. For example, the new Enbridge Northern Gateway project and expansion of Kinder Morgan s TransMountain system. These projects could bring crude oil from Alberta to Canada s West Coast, where it would be loaded onto tankers for export to Asia. I recognize that these projects are currently under review by the joint panel and I respect that process and await their conclusion.
- 17 - Equally important is diversifying our markets for natural gas. Estimates of Canada's marketable natural gas resources increased from 390 trillion cubic feet in the year 2000 to an estimated 700 to 1,300 trillion cubic feet today well over 100 years of natural gas resource potential 6. Most of this increase is due to shale gas. North American natural gas prices are low by historical standards; they are low relative to oil; and they are low relative to international gas prices. Today s low North American natural gas prices are driven by the ongoing strength in shale gas 6 Canadian Society for Unconventional Gas
- 18 - production, mainly coming from the US but also growing in Canada. It is in this environment that projects are being proposed to diversify our natural gas markets. The National Energy Board is currently looking at two applications for Liquefied Natural Gas (LNG) export licenses for projects on the West Coast both of which propose using Canadian shale gas to supply Asian markets. The KM LNG General Operating Partnership, for example, has proposed a project to liquefy 1.4 billion cubic feet per day of natural gas at an LNG terminal to be built in Kitimat. That one project alone represents an investment of about $4.1 billion.
- 19 - The other LNG export licence application is by B.C. LNG Export Cooperative LLC for a project by Douglas Channel Energy Partnership, also in Kitimat. This project would liquefy the equivalent of 250 million cubic feet of natural gas per day. With the right kind of infrastructure, we know Canada s economy will see significant benefits as foreign customers of our energy view us a politically stable, competitive, responsible and reliable producer of energy. Safety and Environmental performance
- 20 - Our Government will continue to support your efforts to ensure the Canadian pipeline industry maintains the highest standards of safety. Our pipeline research program works on technologies to ensure the reliable performance of existing pipelines. NRCan labs are conducting materials and technology research for pipelines in the North. They are identifying and addressing issues on the transport by pipeline of other commodities, such as hydrogen and biofuels. I know that you are doing your part in maintaining your safety record. I know you fully understand that a good track record in safety and environmental
- 21 - performance helps to create a distinct competitive advantage. This is why we support your campaign to create an 811 number for Canada s Call Before You Dig program. Protecting Canada s underground utility network is of paramount importance and making that phone call could save lives and avoid accidents. The Government of Canada s strong and independent regulator, the National Energy Board, is also playing its part -- taking a leadership role on safety and environmental protection issues. The NEB recently launched an Action Plan that focuses on worker safety, integrity of installations,
- 22 - emergency preparedness and response. I can t repeat this enough; safety is our priority. We remain fully committed to safety so we can continue to develop our energy resources in a manner that is socially and environmentally responsible. Improving the regulatory process While regulators must focus on safety, we also need to tackle getting pipeline projects approved and built. This doesn t mean undermining the integrity of the regulatory process it does mean streamlining the regulatory review process. But it does mean streamlining our review process. You ve told us how important it is that our regulatory processes be more predictable, more efficient, more
- 23 - timely, less duplicative and more effective. Our Government recognizes that this is a necessity to capitalize on potential investments and to grow markets. C est pourquoi à la Conférence des ministres de l énergie et des mines, tenue en Alberta en juillet dernier, le gouvernement du Canada et l ensemble des provinces et des territoires ont appuyé une approche de collaboration en matière d énergie qui prévoit notamment une réforme de la réglementation. That s why at the Energy and Mines Minister s Conference in Alberta, this past July, the Government of Canada and the provinces and territories we agreed to a collaborative approach to
- 24 - energy -- which includes a focus on regulatory reform. That s why we are modernizing the regulatory system for major projects by establishing the Major Projects Management Office three years ago precisely to make our reviews more timely and predictable. About half of the over 70 projects this office is managing are in the energy sector, including pipeline projects such as Keystone XL and Northern Gateway. We are working with you, and with the provinces and territories and other stakeholders on ways to further improve our regulatory processes, with one ultimate goal: one project, one review.
- 25 - Keystone XL pipeline Now, I cannot leave here tonight without discussing Keystone XL. I think I ve made it very clear. Our Government strongly supports construction of the Keystone XL pipeline. Once completed, the pipeline would stretch nearly 2,000 miles from Alberta to Texas. The recently released U.S. State Department final Environmental Impact Statement on the project stated, the project would have a degree of safety greater than any typically constructed domestic pipeline system. So the pipeline s safety would be
- 26 - better than any existing pipelines in the United States. This pipeline would add as much as 700,000 barrels a day of commercial capacity to the Western Canadian crude that Canada can ship south, and provide a direct link to Gulf of Mexico refineries. If approved, it would support over 140,000 additional Canadian jobs annually and over $600 billion more in economic activity over the next 25 years that is on average approximately $24 billion a year to Canada's GDP 7. So we know that Keystone XL has the potential to strengthen our North American economy. 7 CERI (2011)
- 27 - Our Government also believes that this project is an important plank in building continental energy security. But as positive as we believe the benefits of Keystone are, our government respects the American permit process and we look forward to a final decision by the end of the year. Conclusion In Canada, we are fortunate to have not only a great energy industry but also a great pipeline industry. But there is more to be done.
- 28 - We need to continue to advance our strong safety record and practises and streamline regulatory review processes --so that we can continue to grow jobs and the economy, and so we can continue to deliver energy security to North America and the world in a socially and environmentally responsible manner. Thank you.