Legislature(2009 - 2010)HOUSE FINANCE 519

01/26/2010 10:00 AM House ECON. DEV., TRADE & TOURISM


Download Mp3. <- Right click and save file as

Audio Topic
10:09:48 AM Start
10:10:09 AM Pnwer Regional Collaboration on Economic Revitalization
11:36:58 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time & Location Change --
Joint with Senate WTI
+ PNWER Regional Collaboration on Economic TELECONFERENCED
Revitalization
                    ALASKA STATE LEGISLATURE                                                                                  
                         JOINT MEETING                                                                                        
 HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL                                                               
                       TRADE AND TOURISM                                                                                      
SENATE SPECIAL COMMITTEE ON WORLD TRADE, TECHNOLOGY & INNOVATION                                                              
                        January 26, 2010                                                                                        
                           10:09 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                              
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL                                                                  
TRADE AND TOURISM                                                                                                               
                                                                                                                              
Representative Jay Ramras, Chair                                                                                                
Representative Chris Tuck                                                                                                       
Representative Nancy Dahlstrom                                                                                                  
Representative Mark Neuman                                                                                                      
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
SENATE SPECIAL COMMITTEE ON WORLD TRADE, TECHNOLOGY & INNOVATION                                                                
                                                                                                                                
Senator Lesil McGuire, Chair                                                                                                    
Senator Gary Stevens                                                                                                            
Senator Bill Wielechowski                                                                                                       
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
House Special Committee on Economic Development, International                                                                  
Trade and Tourism                                                                                                               
                                                                                                                                
Representative Reggie Joule                                                                                                     
Representative Mike Chenault                                                                                                    
Representative Kyle Johansen                                                                                                    
Representative Harry Crawford                                                                                                   
                                                                                                                                
Senate Special Committee on World Trade, Technology & Innovation                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Senator Johnny Ellis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
PNWER REGIONAL COLLABORATION ON ECONOMIC REVITALIZATION                                                                         
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
IAN BURKHEIMER, Program Manager                                                                                                 
Pacific NorthWest Economic Region (PNWER)                                                                                       
Seattle, Washington                                                                                                             
POSITION  STATEMENT:   Gave  a  slide presentation  titled  "PNWER                                                            
Arctic Issues Caucus".                                                                                                          
                                                                                                                                
MATT MORRISON, Executive Director                                                                                               
Pacific NorthWest Economic Region (PNWER)                                                                                       
Seattle, Washington                                                                                                             
POSITION STATEMENT:   Gave  a presentation  on PNWER's  Innovation                                                            
Strategies.                                                                                                                     
                                                                                                                                
RICHARD MARZ, Member                                                                                                            
Legislative Assembly of Alberta                                                                                                 
Alberta, Canada                                                                                                                 
POSITION  STATEMENT:   Provided comments  about the  oil sands  of                                                            
Alberta.                                                                                                                        
                                                                                                                                
MICHAEL PADUA                                                                                                                   
Alberta   Ministry   of   International    and   Intergovernmental                                                              
Relations                                                                                                                       
Government of Alberta                                                                                                           
Alberta, Canada                                                                                                                 
POSITION  STATEMENT:   Provided a  presentation on  the oil  sands                                                            
and pipeline issues.                                                                                                            
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:09:48 AM                                                                                                                   
                                                                                                                                
CHAIR  LESIL  MCGUIRE  called  the  joint  meeting  of  the  House                                                            
Special  Committee on  Economic Development,  International  Trade                                                              
and  Tourism and  the  Senate Special  Committee  on World  Trade,                                                              
Technology and Innovation  to order at 10:09 a.m.  Present  at the                                                              
call  to  order  from the  House  Special  Committee  on  Economic                                                              
Development,    International     Trade    and    Tourism     were                                                              
Representatives  Tuck,  Dahlstrom,  Neuman,  Holmes,  and  Ramras.                                                              
Present  from  the  Senate  Special  Committee   on  World  Trade,                                                              
Technology  &  Innovation  were  Senators  Stevens,  Wielechowski,                                                              
French, and McGuire.  Also in attendance was Senator Ellis.                                                                     
                                                                                                                                
^PNWER Regional Collaboration on Economic Revitalization                                                                      
    PNWER Regional Collaboration on Economic Revitalization                                                                 
                                                                                                                              
10:10:09 AM                                                                                                                   
                                                                                                                                
CHAIR MCGUIRE  announced that  the first  order of business  would                                                              
be  a  presentation  by  the  Pacific  NorthWest  Economic  Region                                                              
(PNWER).  She relayed  that the PNWER delegation has  been meeting                                                              
with  the   governor  and  legislators   on  matters  of   energy,                                                              
workforce  development,  and  economic   development.    PNWER  is                                                              
comprised of a  unique membership of public and  private entities,                                                              
and the  state and  territorial governments  of the United  States                                                              
and  Canada.   Furthermore, the  organization  is nonpartisan  and                                                              
presents  an opportunity  for  a collection  of  leaders from  the                                                              
Pacific Northwest region  to meet and share information  about the                                                              
best  practices of  resource development,  workforce  development,                                                              
and  regional   partnerships.     Chair  McGuire  introduced   the                                                              
following  guests:  Michael  Chisholm, Member  of the  Legislative                                                              
Assembly,  Saskatchewan,  and  Vice President  of  PNWER;  Richard                                                              
Marz,    Member   of    the   Legislative    Assembly,    Alberta;                                                              
Representative  Mike  Schaufler,  Oregon  State  Legislature,  and                                                              
Vice  President of  PNWER; Jennifer  Loten,  Consul, Consulate  of                                                              
Canada;  Michael  Padua, Alberta  Ministry  of  International  and                                                              
Intergovernmental  Relations;  Matt Morrison,  Executive  Director                                                              
of PNWER; and Ian Burkheimer, Program Manager for PNWER.                                                                        
                                                                                                                                
10:13:39 AM                                                                                                                   
                                                                                                                                
IAN  BURKHEIMER,  Program  Manager,  Pacific   NorthWest  Economic                                                              
Region (PNWER), presented  a brief discussion of the  newly formed                                                              
PNWER  Arctic Issues  Caucus.   He  explained that  PNWER  members                                                              
from the Northwest  Territories, Yukon Territory, and  Alaska have                                                              
initiated  the Arctic caucus.   Members  of the  caucus first  met                                                              
during November  2009, in  Regina, to discuss  how to ensure  that                                                              
the issues  important to the  Arctic are effectively  communicated                                                              
throughout  the  region  and to  the  federal  governments.    The                                                              
caucus  is comprised  of legislators  and  private sector  members                                                              
who  meet to  identify issues  and inform  PNWER's "working  group                                                              
structure."   Mr.  Burkheimer advised  the  committees that  PNWER                                                              
meets twice a year  to work on areas of regional interest  such as                                                              
transportation, tourism,  and energy policy.  The  caucus proposed                                                              
topics  for  discussion  at  PNWER's  upcoming  annual  summit  in                                                              
Calgary during  July 2010.  The proposed  topics are:  (1)  to the                                                              
energy working  group, the challenges  and opportunities of  outer                                                              
continental   shelf  oil   and  gas   development;   (2)  to   the                                                              
transportation   working   group,   presenting    information   to                                                              
communities  and  businesses  on  improving  the  flow  of  goods,                                                              
people,  and services  through the  northern gateway;  (3) to  the                                                              
telecom working  group led  by Northwest  Tel, the development  of                                                              
telecom  infrastructure;   (4)  to   the  border  working   group,                                                              
identifying  solutions  to  the challenges  of  the  Alaska/Canada                                                              
border.    He then  spoke  of  a  proposal  for PNWER  to  host  a                                                              
Northern  Caucus Symposium  in Anchorage  during June  2010.   The                                                              
symposium  would provide an  opportunity for  a high-level  dialog                                                              
between the  government and  business leaders  from Alaska,  Yukon                                                              
Territory,  Northwest Territories,  and Nunavut.   Mr.  Burkheimer                                                              
opined  this  would  be  a  unique  opportunity  for  sub-national                                                              
jurisdictions to  talk about issues  and "help inform, again,  our                                                              
national  and regional  discussion  on these  issues."   He  noted                                                              
that the  caucus is working  closely with  Senator McGuire on  its                                                              
proposed symposium.                                                                                                             
                                                                                                                                
10:19:17 AM                                                                                                                   
                                                                                                                                
CHAIR MCGUIRE observed  the symposium would be an  opportunity for                                                              
Alaska  to invite  its  neighbors  from  other Arctic  regions  to                                                              
share information  about Arctic  policy and  for the  participants                                                              
to  project  themselves  as  state,  provincial,  and  territorial                                                              
leaders.   At this  time, most  of the groups  involved in  Arctic                                                              
issues are  federally based,  and it  is important  for those  who                                                              
govern  and live  in the  region to  weigh-in  on those  policies.                                                              
Indeed, the Arctic  "frontier" will change the face of  Alaska and                                                              
Canada forever.   Chair McGuire  requested that committee  members                                                              
submit symposium agenda topics to her.                                                                                          
                                                                                                                                
10:20:53 AM                                                                                                                   
                                                                                                                                
MATT  MORRISON,  Executive Director,  Pacific  NorthWest  Economic                                                              
Region  (PNWER), stated  that PNWER  has  had a  working group  on                                                              
innovation for  the last  five years.   Initially, the  Washington                                                              
State Legislature  undertook a two-year  analysis of "synapses  of                                                              
innovation"  from  different   areas  of  the  U.S.     The  study                                                              
indicated  that  the  most important  keys  to  success  were  the                                                              
linkages  between  research  and  development   (R&D)  facilities.                                                              
Although  there are  "turf issues"  between  higher education  and                                                              
R&D facilities,  for the last three  years PNWER has attempted  to                                                              
link  R&D institutions  in  Canada and  the  United States  in  an                                                              
innovation network.   Legislators are  concerned with the  cost of                                                              
building  new nanotech  labs;  however,  what the  private  sector                                                              
wants is  to access  existing facilities,  even if the  facilities                                                              
are  a two-  or three-hour  plane flight  away.   At PNWER's  last                                                              
annual   summit,  arrangements   were  made   for  25   university                                                              
presidents  to participate  in next  year's  summit discussion  on                                                              
innovation.    Furthermore,  at the  last  winter  meeting,  PNWER                                                              
introduced  the  topic  of  "The  Pacific  Northwest  as  a  Giant                                                              
Science Innovation  Park, a 'Tool Box'  for Growth" in  an attempt                                                              
to build  linkages and overcome  the turf issues between  existing                                                              
facilities.   This  will enable  the best  and  brightest to  work                                                              
together, and for  the private sector to "tap into  that network."                                                              
Mr. Morrison advised  that discussions at the meeting also  led to                                                              
the following  questions:   What platforms are  needed?  What  are                                                              
the structures  needed to catalyze  the collaboration?   What does                                                              
innovation as  a distributive activity  look like?  Where  are the                                                              
nodes in  this network  across the  region?   How do we  encourage                                                              
the  convergence   of  these  nodes?     As  a  result   of  these                                                              
discussions,   the   Washington   State   [Economic   Development]                                                              
Commission  Innovation Ecosystem  asked  PNWER to  bring  together                                                              
key innovation  thinkers from all of  the provinces and  states in                                                              
the region  to a two-day  summit, March  16-17, 2009, in  Seattle.                                                              
He expressed  PNWER's interest in a  discussion on how to  build a                                                              
regional innovation  strategy.  Recognizing  that there are  great                                                              
economic  challenges   throughout  the  region,  he   said,  "It's                                                              
innovation that  we really  need to get  where we  want to go,  to                                                              
create  the high-paying  jobs  that we'll  need  for the  future."                                                              
Mr. Morrison acknowledged  several technology laboratories  in the                                                              
region that  have been  working together,  and concluded that  the                                                              
region  has "so  much more  to gain  from  working together,  than                                                              
just going  it alone."   PNWER's goal is  to go beyond the  "silo"                                                              
approach and  identify a  strategic economic  development plan  to                                                              
inventory  regional  capabilities  and  bring  in  partners  where                                                              
necessary.   He  stressed  the critical  factor  of including  the                                                              
private  sector in the  dialog, because  that is  where the  ideas                                                              
are pulled together and the products and jobs are created.                                                                      
                                                                                                                                
10:27:30 AM                                                                                                                   
                                                                                                                                
MR. MORRISION then  spoke of the PNWER Legislative  Energy Horizon                                                              
Institute-a  new  product  developed  in  collaboration  with  the                                                              
National  Conference of  State Legislators  (NCSL)-that  is a  60-                                                              
course  hour program.    He said  that at  the  completion of  the                                                              
course, legislators  will receive a certificate of  energy policy,                                                              
and the  first class  from this successful  program will  graduate                                                              
in April.   Furthermore,  the U.S. Department  of Energy (DOE)  is                                                              
encouraging  PNWER to  expand the  institute  into a  sustainable,                                                              
nationwide program.                                                                                                             
                                                                                                                                
10:29:39 AM                                                                                                                   
                                                                                                                                
MR.  BURKHEIMER began  the  presentation  entitled "PNWER  at  the                                                              
2010  Olympics."     He  noted  that  PNWER  partnered   with  the                                                              
Vancouver  Olympic  Organizing  Committee (VANOC)  to  become  the                                                              
first bi-national  organization, outside  of the host country,  to                                                              
be invited as a  direct partner with the local  Olympic organizing                                                              
committee.     He  pointed  out   that  this  partnership   is  in                                                              
recognition of  the support  by PNWER, and  its member states,  of                                                              
the 2010  Olympics.   The games  will bring  about 2,600  athletes                                                              
and  about 250,000  visitors  to  the Vancouver,  West  Vancouver,                                                              
Richmond, and Whistler  areas, and about 3 billion people  will be                                                              
watching worldwide.   In addition, attending the Olympics  will be                                                              
media  from  almost   all  of  the  major  tourism   marketplaces,                                                              
including Australia.   During the games,  15 days are "themed"  by                                                              
individual  territories and  provinces,  and February  22 will  be                                                              
"PNWER DAY,"  on which  there will be  special events on  economic                                                              
development  and tourism  in Alaska.   He displayed  slide 3  that                                                              
indicated the  first event scheduled for  PNWER Day is  a "Tourism                                                              
Promotion  and Athletes  Reception."   Global  and regional  media                                                              
are  invited to  the reception,  where  regional Olympic  athletes                                                              
will  be recognized,  and  there  will  also be  presentations  by                                                              
tourism offices  and mixer activities.   He stated that  this will                                                              
be  an   opportunity  to  improve   existing  relationships   with                                                              
international   media,  build  new   relationships,  and   improve                                                              
relationships  between  various  jurisdictions  in  the  marketing                                                              
sector.   Later in  the day,  there will be  a "Border  Symposium"                                                              
that will  be a  high level  dialog with  government and  business                                                              
leaders  as  a  means  to  guide  the  discussion  of  the  summer                                                              
Trilateral  meetings  to the  subject  of  the U.S.  and  Canadian                                                              
border.   In  the evening,  the  Northwest Territories  and  Yukon                                                              
Territory will  host a "Business  and Investment Reception."   The                                                              
reception  will  be  held at  Canada's  Northern  House  pavilion;                                                              
PNWER will be featuring  Alaska and there will a focus  on oil and                                                              
gas, mining,  transportation,  innovation, and tourism.   Also  on                                                              
February 22,  "Global Business  Leader Day"  will be sponsored  by                                                              
the  Government of  Canada and  the Financial  Times  publication.                                                              
Finally, he  displayed slide 7, which  was a map illustrating  the                                                              
location  of the events  and noted  that most  are within  walking                                                              
distance.                                                                                                                       
                                                                                                                                
10:38:16 AM                                                                                                                   
                                                                                                                                
MR.  BURKHEIMER,  in  conclusion,  encouraged  the  committees  to                                                              
search  the   PNWER  website  for   further  information   on  the                                                              
Olympics.                                                                                                                       
                                                                                                                                
CHAIR  MCGUIRE advised  the  committees that  at  the February  22                                                              
event, Alaska  will have a featured  area at which to  display job                                                              
opportunities   and   tourism   information  on   Alaska.      She                                                              
highlighted  that  Alaska  may  have  the  highest  percentage  of                                                              
athletes  from any  one state  in the  U.S.  participating in  the                                                              
Winter Olympics.                                                                                                                
                                                                                                                                
10:39:31 AM                                                                                                                   
                                                                                                                                
The committees took an at-ease from 10:39 a.m. to 10:43 a.m.                                                                    
                                                                                                                                
10:43:54 AM                                                                                                                   
                                                                                                                                
CHAIR  MCGUIRE then  announced  that the  committee  would hear  a                                                              
presentation regarding the Alberta oil sands.                                                                                   
                                                                                                                                
10:44:18 AM                                                                                                                   
                                                                                                                                
RICHARD MARZ,  Member, Legislative Assembly  of Alberta, began  by                                                              
stating  that the  oil  sands of  Alberta  are very  important  to                                                              
Alberta.  However,  he also pointed out  that the oil sands  are a                                                              
resource that produces jobs throughout Canada and North America.                                                                
                                                                                                                                
10:44:58 AM                                                                                                                   
                                                                                                                                
MICHAEL   PADUA,    Alberta   Ministry   of   International    and                                                              
Intergovernmental Relations,  Government of Alberta,  informed the                                                              
committee  that  although  he  would be  referring  to  the  slide                                                              
presentation  entitled  "Alberta's  Oil   Sands,"  he  would  move                                                              
through  the  slides  in  a  slightly  different  order  than  the                                                              
printed  version.    He  explained  that   the  oil  sands  are  a                                                              
naturally  occurring   mixture  of   sand,  water,  and   bitumen.                                                              
Bitumen is  a very heavy  form of  oil.  In  fact, it takes  about                                                              
two tons of bitumen  to produce one barrel of oil.   The oil sands                                                              
formation slopes upward  from underground and reaches  the surface                                                              
close to  the town  of Fort McMurray.   From  that point, the  oil                                                              
sands are  extracted, diluted,  and piped  to other  parts of  the                                                              
province or  the U.S.  for upgrade  to synthetic  crude oil.   The                                                              
resource has  been known  about for years,  but the technology  to                                                              
utilize  the  resource has  only  recently  been developed.    Mr.                                                              
Padua noted  that oil  sands exist  in other  parts of the  world,                                                              
but they're  not being  developed yet.   The method of  extraction                                                              
for  oil  sands, he  explained,  depends  upon  the depth  of  the                                                              
deposit.  At depths  of less than 245 feet, the  extraction method                                                              
is open  pit mining,  and therefore  the operation  is similar  to                                                              
those  for coal,  gold,  or copper.   The  sand  is extracted  and                                                              
trucked  to facilities  where the  oil  sands are  mixed with  hot                                                              
water  and   the  bitumen  melts  out.     Then  the  bitumen   is                                                              
centrifuged and  extracted.   He shared  photographs of the  large                                                              
equipment  used  to  extract  and  transport  the  oil  sands  and                                                              
reviewed the costs of maintaining the equipment.                                                                                
                                                                                                                                
MR.  PADUA related  that  although  the  most attention  has  been                                                              
given to the surface  mining operations, it isn't the  majority of                                                              
the resource.   The majority of  the resource, 80 percent,  is too                                                              
deep  for  surface  mining.   Therefore,  technologies  have  been                                                              
developed  to  access the  resources  too  deep to  surface  mine,                                                              
which  is  referred to  as  in-situ  mining.   He  then  shared  a                                                              
photograph  of  an  in-situ  mining  site,   which  illustrates  a                                                              
smaller  environmental  footprint.    The   smaller  environmental                                                              
footprint  results  in  the  land  being  reclaimed  much  sooner.                                                              
Moreover,  in-situ  mining  doesn't  create  tailings  ponds  like                                                              
those  created with  surface mining.    Currently, the  technology                                                              
used to  extract the bitumen  from underground  is referred to  as                                                              
steam  assisted gravity  drainage  (SAGD)  in which  two  parallel                                                              
wells are drilled  10 feet apart and drilled horizontally  through                                                              
the formation.   Super heated steam  is pumped into the  top well,                                                              
which  melts  the bitumen  underground  that  flows  down  through                                                              
gravity and sucked through the bottom pipe.                                                                                     
                                                                                                                                
10:49:40 AM                                                                                                                   
                                                                                                                                
SENATOR  WIELECHOWSKI   inquired  as  to  the  cost   differential                                                              
between in-situ and strip mining.                                                                                               
                                                                                                                                
MR. PADUA said that the costs are probably fairly similar.                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI  then inquired as  to why the in-situ  mining                                                              
isn't being  pursued since  there is  such an  outcry and  concern                                                              
surrounding strip mining.                                                                                                       
                                                                                                                                
MR. PADUA  answered that  it's definitely  heading toward  in-situ                                                              
mining.  He estimated  that at this point about 40 percent  of the                                                              
resource is  being extracted  by in-situ mining.   He then  opined                                                              
that the future lies with in-situ mining.                                                                                       
                                                                                                                                
MR. MARZ, to provide  a point of reference, offered that  the open                                                              
pit mine is comparable to the size of Toronto.                                                                                  
                                                                                                                                
10:50:33 AM                                                                                                                   
                                                                                                                                
SENATOR  FRENCH inquired  as to  the relative  energy  differences                                                              
between in-situ  and open pit mining,  specifically which  type of                                                              
mining requires more natural gas to operate.                                                                                    
                                                                                                                                
MR. PADUA  said that  the energy  use is probably  about the  same                                                              
because either  way the bitumen  has to be  melted off.  With  the                                                              
open pit mining, trucks  transport and dump the oil sands  in vats                                                              
of heated water.   The water is heated via natural gas.   With the                                                              
in-situ mining,  steam is  being created  and pumped  underground.                                                              
He then  informed the committee  that there is experimentation  of                                                              
other methods  for in-situ mining  because burning natural  gas is                                                              
expensive  for the  producers;  it's  likely their  biggest  cost.                                                              
The alternative technologies  being reviewed use solvents  or pump                                                              
oxygen into  the top  hole, ignite  the bitumen,  and the  burning                                                              
bitumen melts the  surrounding bitumen.  There are  pilot projects                                                              
to determine  whether  the latter  is a  plausible alternative  to                                                              
burning natural gas.                                                                                                            
                                                                                                                                
10:51:48 AM                                                                                                                   
                                                                                                                                
SENATOR WIELECHOWSKI  inquired as to the amount of  thousand cubic                                                              
feet (mcf) it would take to create one barrel of oil.                                                                           
                                                                                                                                
MR. PADUA  said he will address  that in his presentation  as well                                                              
as carbon capture.                                                                                                              
                                                                                                                                
10:52:15 AM                                                                                                                   
                                                                                                                                
MR.   PADUA,  returning   to   his  presentation,   directed   the                                                              
committees'  attention to  a  map, entitled  "Oil  Sands -  Alaska                                                              
Comparison," of the  physical location of the oil sands.   The oil                                                              
sands  deposits  underlay  about 55,000  square  miles,  which  is                                                              
about  the  size of  Florida.    However, he  clarified  that  the                                                              
actual  size of  the disturbed  land is  a  hole the  size of  the                                                              
Kennedy  Space  Center.   The  map illustrates  the  portion  that                                                              
would  be surface  minable while  the remainder  would be  in-situ                                                              
mining.   He  noted  that about  205  miles is  the  part that  is                                                              
actually being disturbed  at the surface.  Mr.  Padua acknowledged                                                              
that  it's more  expensive  and  troublesome  to extract  the  oil                                                              
sands  than to  extract conventional  oil.   However, the  Alberta                                                              
oil sands  contain 1.7  trillion barrels of  bitumen in place  and                                                              
the recoverable amount  is about 170 billion barrels.   The amount                                                              
of  recoverable   barrels  places  Canada   in  second  place   in                                                              
international  oil reserves, when  it was  recognized a couple  of                                                              
years ago.   He  noted that  as conditions change,  the amount  of                                                              
recoverable oil from  the oil sands may increase.   As illustrated                                                              
on the slide  entitled "World Oil  Reserves - Top 18  Comparison,"                                                              
conventional oil makes  up only a small portion of  Canada's total                                                              
reserves, while the  vast majority of it is oil sands.   Mr. Padua                                                              
then referred  to the chart on  the slide entitled "Alberta  Crude                                                              
- Future  Production."   The chart  illustrates that  conventional                                                              
oil production has  been declining, while oil sands  production is                                                              
increasing.   He estimated that  oil sands production will  double                                                              
in the  next five  years.   In 2007 total  production for  Alberta                                                              
was 1.9 million  barrels per day, which included  conventional and                                                              
oil  sands.   The  total production  for  Alberta is  expected  to                                                              
reach 3.4 million barrels per day by 2017.                                                                                      
                                                                                                                                
10:55:37 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  emphasized that  when one discusses  carbon                                                              
reductions  and   taxes  on  carbon   emissions,  it's  a   global                                                              
situation.   Canada has realized  the aforementioned and  has used                                                              
its funds to ensure that it's economical 10 years down the road.                                                                
                                                                                                                                
MR.  PADUA related  that the  emissions  per barrel  from the  oil                                                              
sands  are  being reduced  while  the  production  is  increasing.                                                              
Therefore,  total emissions  from the  province are  theoretically                                                              
increasing  because  of  increased  production.     To  stop  that                                                              
production  would eliminate  economic growth  anywhere because  it                                                              
will always  be accompanied  by increasing  green house gas  (GHG)                                                              
emissions.   The  question becomes  what  can be  done about  [GHG                                                              
emissions], which is under review, he said.                                                                                     
                                                                                                                                
10:56:59 AM                                                                                                                   
                                                                                                                                
SENATOR FRENCH, referring  to the slide entitled "Alberta  Crude -                                                              
Future Production," inquired  as to which of the oil  from the oil                                                              
sands  is in  the synthetic  crude oil  and  which is  in the  non                                                              
upgraded bitumen.                                                                                                               
                                                                                                                                
MR.  PADUA  clarified  that  both  synthetic  crude  oil  and  non                                                              
upgraded  bitumen are  oil sands  production.   He explained  that                                                              
synthetic crude  oil is oil  sands that have  been upgraded to  be                                                              
the same  as crude oil,  and therefore can  be shipped to  regular                                                              
refineries.   The non upgraded bitumen  is diluted oil sands.   He                                                              
related  that Alberta  doesn't have  the capacity  to upgrade  all                                                              
the non  upgraded bitumen to synthetic  crude, and therefore  some                                                              
of  that will  be shipped  to  the U.S.  to facilities  that  will                                                              
upgrade it.                                                                                                                     
                                                                                                                                
10:58:14 AM                                                                                                                   
                                                                                                                                
CHAIR  MCGUIRE  mentioned  that  she,  Senator  Wielechowski,  and                                                              
Representative  Neuman have reviewed  some of  the processes  used                                                              
to  convert  coal and  natural  gases  to synthetic  crude.    She                                                              
inquired as  to the properties  of the  synthetic crude oil  [from                                                              
the  oil sands]  and indicated  her understanding  that  synthetic                                                              
crude oil  is cleaner burning  and has  a higher commodity  value.                                                              
She asked  if that's similar  [with the  synthetic crude oil  from                                                              
the oil sands].                                                                                                                 
                                                                                                                                
MR. PADUA  related his understanding  that the synthetic  crude is                                                              
actually "sweeter"  since the  sulfur content  has been  extracted                                                              
at the oil sands  point.  Therefore, the crude has a  lower sulfur                                                              
content  at the  refineries when  the crude  is  being mixed  with                                                              
higher sulfur content resources.                                                                                                
                                                                                                                                
10:58:59 AM                                                                                                                   
                                                                                                                                
SENATOR  WIELECHOWSKI inquired  as to  the  rough breakeven  point                                                              
with the synthetic crude oil.                                                                                                   
                                                                                                                                
MR. PADUA answered  that it varies over  time.  At one  point, the                                                              
breakeven point of  synthetic crude oil cost about $30  per barrel                                                              
to extract the  oil sands.  However,  in the last couple  of years                                                              
the aforementioned  increased to  about $70  per barrel, which  he                                                              
attributed  mainly  to  an  increase  in  labor  costs  due  to  a                                                              
shortage in  labor.  He  noted that many  factors are part  of the                                                              
breakeven  point, including  the  price of  steel.   He  estimated                                                              
that  the current  breakeven cost  of synthetic  crude  oil to  be                                                              
about $50  or so per  barrel, although it  would depend upon  each                                                              
facility.                                                                                                                       
                                                                                                                                
11:00:03 AM                                                                                                                   
                                                                                                                                
MR. PADUA, returning  to his presentation, informed  the committee                                                              
that there are  91 oil sands projects  of which four are  open pit                                                              
mines and  the remaining are in-situ  mines.  He further  informed                                                              
the committee  that $150  billion was invested  in these  projects                                                              
as well as related  projects, such as the upgraders,  between 2000                                                              
and 2008.   Another  $142 billion  has been  invested in the  last                                                              
two years  for projects  currently under  development or  projects                                                              
that will  be completed  in the  next two years.   Therefore,  the                                                              
total  amount  of  investments  in  the  last  10  years  is  $300                                                              
billion.                                                                                                                        
                                                                                                                                
11:00:36 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS inquired  as to  the fiscal  terms and  the                                                              
certainty  surrounding those  terms.   He further  inquired as  to                                                              
whether the  prevailing tax regime has  been in place and  whether                                                              
the  $150 billion  investment was  made  incrementally over  time.                                                              
He  also  inquired  as  to  how  the  taxation  issues  have  been                                                              
addressed.    He  then  asked  who  the  major  producers  of  the                                                              
resource are.                                                                                                                   
                                                                                                                                
MR. PADUA  related that  originally the  oil sands were  developed                                                              
with slightly better  terms than for conventional oil in  order to                                                              
encourage  the initial  investment.   However,  once the  projects                                                              
break   even,  they   are  on   similar  terms   for  royalty   as                                                              
conventional  oil.   The major  players  include Syncrude,  Suncor                                                              
Energy, Shell Canada,  as well as some smaller companies  that are                                                              
beginning   to  explore.      He   offered  to   provide   further                                                              
information.                                                                                                                    
                                                                                                                                
11:01:58 AM                                                                                                                   
                                                                                                                                
MR. PADUA, returning  to his presentation, turned to  the economic                                                              
impact of  the oil sands.   He noted that  although the oil  sands                                                              
are located in  northern Alberta, the material and  manpower comes                                                              
from  other  places.   In  fact,  the  Cambridge  Energy  Research                                                              
Associates (CERA) confirms  that spinoffs of the oil sands  had an                                                              
economic impact of  $30 billion internationally to the  year 2008.                                                              
Given  Canada's trade  patterns, he  suggested that  most of  that                                                              
was  spinoff  to  the  U.S.    Furthermore,  the  Canadian  Energy                                                              
Research  Institute  (CERI)  projects $1.7  trillion  in  economic                                                              
impact  from  the  oil sands  into  the  Canadian  economy,  which                                                              
includes  $167  billion  in  federal  tax  revenue  of  which  $85                                                              
billion  will go  to the  Alberta government  and  $19 billion  to                                                              
other provincial  governments.   The CERI  also released a  report                                                              
in  October  regarding  the  spinoff,  specifically  in  the  U.S.                                                              
economy.    Because  of  increased  demand   for  U.S.  goods  and                                                              
services  from the  oil  sands, the  U.S. gross  domestic  product                                                              
(GDP) will increase  by $34 billion in 2015, $40 billion  in 2020,                                                              
and  $42 billion  in 2025.    He then  directed  attention to  the                                                              
slide entitled  "Impacts of Alberta  Oil Sands Development  on the                                                              
US Economy"  regarding the impact  in employment.  He  highlighted                                                              
that  from  2011-2015  there  was  343  thousand  person  year  of                                                              
employment with  declining numbers  in the years  after that.   In                                                              
regard  to Alaska  specifically,  Mr. Padua  referred  to the  two                                                              
slides entitled  "Impact of Alberta  Oil Sands Development  on the                                                              
Alaska  Economy."   These slides  relate  that the  impact of  the                                                              
Alberta oil  sands development  on the Alaska  economy to 2025  is                                                              
an increase of $82 million to the state's GDP.                                                                                  
                                                                                                                                
11:03:52 AM                                                                                                                   
                                                                                                                                
SENATOR  FRENCH  inquired  as  to  which  Alaska  companies  would                                                              
benefit.                                                                                                                        
                                                                                                                                
MR. PADUA  clarified that  the benefit  is from increased  overall                                                              
consumption.   In many  cases, there  could be  a specific  Alaska                                                              
company that  produces specific equipment  that's used in  the oil                                                              
sands.   In  other cases,  the benefit  is the  result of  gaining                                                              
employment in the oil  sands that allows them to take  a cruise to                                                              
Alaska  or to  increase the  consumption  of Alaska  seafood.   He                                                              
acknowledged that  these spinoffs aren't  only in the oil  and gas                                                              
sector.    In  further  response  to  Senator  French,  Mr.  Padua                                                              
specified that CERI developed the aforementioned figures.                                                                       
                                                                                                                                
11:04:59 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN asked  if that  change in  value added  GDP                                                              
assumes  that Alaska  will follow  the  pace and  path of  Alberta                                                              
with carbon capture and sequestration.                                                                                          
                                                                                                                                
MR. PADUA related  his understanding that the calculation  [of the                                                              
increase in  Alaska's GDP] was  calculated using GDP input  output                                                              
tables  as   they  have  used  in   the  past.    Therefore,   the                                                              
calculation assumes  the continuation of  conditions as they  have                                                              
been over  the last couple  of years.   He explained that  the GDP                                                              
multipliers  are reviewed  and  the  associations when  there  was                                                              
increase in  the GDP in  one location and  the spillover in  other                                                              
locations, such  as with  extra investment  and extra creation  of                                                              
jobs.                                                                                                                           
                                                                                                                                
REPRESENTATIVE NEUMAN  surmised then that Alaska might  learn from                                                              
Alberta in regard to the value added/synthesis processing.                                                                      
                                                                                                                                
MR. PADUA  noted that  the aforementioned  wouldn't be counted  in                                                              
these figures.   The figures are  merely increased consumption  in                                                              
Alberta of  the type of  products and  services that are  produced                                                              
in  each of  the states.   He  offered  to share  the report  with                                                              
those who are interested.                                                                                                       
                                                                                                                                
11:07:15 AM                                                                                                                   
                                                                                                                                
MR. PADUA,  returning to  the slides entitled  "Impact of  Alberta                                                              
Oil  Sands Development  on the  Alaska  Economy," highlighted  the                                                              
person years  of employment  created in  Alaska due  to oil  sands                                                              
development.   Although the economic  impacts are the main  reason                                                              
the oil  sands are  strategic for  Alberta as  well as the  entire                                                              
continent,  continental energy  security  is another  top  factor.                                                              
Of  the  companies  listed  on  the  slide   entitled  "World  Oil                                                              
Reserves  - Top  18 Comparison,"  there aren't  many friendly  and                                                              
open  faces on  the list.   Furthermore,  only 13  percent of  the                                                              
world's  oil   reserves  are   accessible  to  international   oil                                                              
companies,  of   which  half  are   in  the  Alberta  oil   sands.                                                              
Therefore,  there are  opportunities with  the  Alberta oil  sands                                                              
that  just  don't exist  with  say  Saudi  Arabia oil.    He  then                                                              
directed  attention to  the slide  entitled "US  Sources of  Crude                                                              
Oil," which  illustrates that  Canada is  the largest supplier  of                                                              
oil to the U.S.   As oil sands production increases,  Alberta will                                                              
become the most  important source of foreign  oil to the U.S.   In                                                              
terms of  Alberta's regulatory  framework, the  resource is  owned                                                              
by  Albertans,  but developed  by  the  private sector  that  pays                                                              
royalties  for  what  is extracted.    There  is  a  comprehensive                                                              
regulatory   regime,   both   provincially   and   federally   for                                                              
environmental  impacts.   Mr. Padua  pointed  out the  map on  the                                                              
slide  entitled   "Crude  Oil   Pipeline  Proposals"   illustrates                                                              
current and planned  network of pipelines leading out  of Alberta.                                                              
He highlighted  the line  specifying the oil  that will travel  to                                                              
the West Coast.   Currently, practically all of Alberta's  oil and                                                              
natural gas  exports are to  the U.S., but  the line [to the  West                                                              
Coast] provides the potential for export to Asia.                                                                               
                                                                                                                                
11:09:53 AM                                                                                                                   
                                                                                                                                
MR. PADUA said that  although the oil sands have been  known about                                                              
for some  time, technological  developments have  allowed for  the                                                              
capitalization of  the oil sands.   He then highlighted  the chart                                                              
on  the  second slide  entitled  "Technology  and  Innovation  are                                                              
Key," which  charts Alberta's public  investments in research  and                                                              
development  in  oil  sands  and heavy  oil.    The  $850  million                                                              
investment  for the 2008-2012  timeframe allows  Alberta to  carry                                                              
on a  lot of  research and  become a  leader in  oil sands,  heavy                                                              
oil,  coal gasification,  carbon capture  and  storage, and  water                                                              
use and management around the oil sands.                                                                                        
                                                                                                                                
11:10:34 AM                                                                                                                   
                                                                                                                                
CHAIR  RAMRAS mentioned  that  Alaska  is dabbling  in  government                                                              
subsidies to induce  gas pipeline development.  In doing  so, when                                                              
the state develops  proprietary work, he questioned how  the state                                                              
would recover its costs and share it with the producers.                                                                        
                                                                                                                                
MR. PADUA  opined that  this type of  research is being  performed                                                              
in   universities,   which  have   their   own   commercialization                                                              
policies.                                                                                                                       
                                                                                                                                
11:11:20 AM                                                                                                                   
                                                                                                                                
MR. PADUA,  continuing with  his presentation,  announced that  he                                                              
would now discuss  GHG emissions.  He pointed out that  there have                                                              
been many  attempts in the  media to target  the oil sands  as the                                                              
largest  threat for  GHG  emissions in  the  world.   However,  as                                                              
related  on the  slide  entitled "Oil  Sands  and GHGs,"  the  oil                                                              
sands  produce 5  percent  of Canada's  GHG emissions  and  Canada                                                              
produces 2 percent  of the world's GHG emissions.   Therefore, the                                                              
oil sands are contributing  one-tenth of 1 percent of  the world's                                                              
GHG  emissions.   Obviously, the  problem is  there, but  shutting                                                              
down the  oil sands would  make no difference  in terms of  global                                                              
GHG emissions.   He highlighted that  GHG emissions per  barrel of                                                              
oil have  been reduced by  about one-third since  1990.  In  fact,                                                              
some facilities  have achieved  reductions as  high as 45  percent                                                              
per barrel.   Mr. Padua echoed  his earlier comments that  burning                                                              
natural  gas is expensive  and they  have every  incentive to  try                                                              
and cut  those costs, which would  also reduce the GHG  emissions.                                                              
He then directed  attention to the slide entitled "Canada  and the                                                              
U.S. --  a shared  challenge," which illustrates  a comparison  of                                                              
GHG emissions  from the  oil sands  versus other  U.S. sources  of                                                              
crude  oil.   Often, it's  said  that the  oil  sands produce  3-5                                                              
times more  GHG emissions  than other  sources of  oil.   However,                                                              
that's  when   one  views  only   the  extraction  portion.     He                                                              
acknowledged  that extracting  the  oil sands  is  3-5 times  more                                                              
carbon intensive  than extracting Saudi  Arabian oil.  Still,  one                                                              
must realize  that the  Saudi Arabian  oil has  to be  transported                                                              
from  Saudi Arabia  to  the  U.S.   The  aforementioned  transport                                                              
occurs via tanker  while the oil sands can be piped  via pipeline,                                                              
which is  more GHG efficient.   [Referring  to the slide  entitled                                                              
"Life  Cycle GHG  Emissions  of Crude  Oil"]  said that  the  blue                                                              
section reflects  the bulk  of emissions,  which is produced  when                                                              
oil/gasoline  is burned  by  an  automobile.   The  aforementioned                                                              
emissions are  equal for every  source.  The  [yellow] bar is  the                                                              
differential  between  the  other sources,  which  is  extraction,                                                              
transportation,  refining  costs,  et   cetera.    On  the  whole,                                                              
Alberta's  oil  sands  produce  between   5-16  percent  more  GHG                                                              
emissions than other U.S. sources of crude, wells to wheel.                                                                     
                                                                                                                                
MR. PADUA reviewed  a scenario in which the Alberta oil  sands are                                                              
shut down.   He reminded  the committee that  the oil sands  are 5                                                              
percent  of  Canada's  production  of  GHG  emissions  and  Canada                                                              
produces 2  percent of the world's  GHG emissions.  If  nothing is                                                              
done on  the demand side,  the oil from  the oil sands would  have                                                              
to  be   replaced  with  oil  from   elsewhere.    Therefore,   he                                                              
calculated  that  shutting down  the  oil  sands would  result  in                                                              
declining world  GHG emissions  of .03  percent.  He  acknowledged                                                              
that the  oil sands  have a slightly  higher environmental  impact                                                              
in terms  of  GHG emissions.   However,  those U.S.  jurisdictions                                                              
that  are considering  low  carbon fuel  standards  might want  to                                                              
consider  whether national  security  outweighs that  .03  percent                                                              
difference in world GHG emissions.                                                                                              
                                                                                                                                
11:15:29 AM                                                                                                                   
                                                                                                                                
SENATOR FRENCH  asked if there's a  slide for U.S. produced  crude                                                              
oil.                                                                                                                            
                                                                                                                                
MR. PADUA  said that the presentation  does include a couple  such                                                              
slides.   He  then  related  concern with  California,  which  has                                                              
introduced  low  carbon  fuel  standards   that  aren't  based  in                                                              
science.    California  deducts  its  heavy   oil  from  its  fuel                                                              
standards   while   including   the   oil    sands   without   any                                                              
justification,   in  terms   of   GHG  emission.      Furthermore,                                                              
California's heavy oil  produces more GHG emissions than  oil sand                                                              
imports do, in many cases.                                                                                                      
                                                                                                                                
11:16:30 AM                                                                                                                   
                                                                                                                                
MR. PADUA,  continuing on  the topic of  GHG emissions,  specified                                                              
that  the problem  isn't  really  oil,  but rather  is  coal-fired                                                              
power plants.   Referring  to the slide  entitled "Canada and  the                                                              
U.S. --  a shared  challenge," pointed  out that  the blue  circle                                                              
represents GHG  emissions from the  oil sands; the yellow  circles                                                              
represent  coal-fired  plants.    In  Alberta   alone,  coal-fired                                                              
plants  produce  more GHG  emissions  than  the entire  oil  sands                                                              
operations.   The aforementioned  doesn't even  consider the  many                                                              
red circles on the  map that represent the coal-fired  power plant                                                              
GHG  emissions  in  the  U.S.    Therefore,   addressing  the  GHG                                                              
emissions from  the oil sands,  but not addressing the  coal-fired                                                              
power plant  GHG emissions  does nothing  to reduce GHG  emissions                                                              
worldwide.   To  address  the GHG  emissions from  the  coal-fired                                                              
power  plants  in  the U.S.,  Mr.  Padua  proposed  capturing  and                                                              
storing those  GHG emissions.  He  then directed attention  to the                                                              
slide  entitled "Confronting  Global  Issues:   Alberta's  Climate                                                              
Change  Plan  (2008),"  which  relates   Alberta's  plan  for  GHG                                                              
reduction  between 2010  and  2050.   The  reductions are  in  the                                                              
following three components:   conservation and energy  efficiency,                                                              
greening  production,   and  carbon  capture  and  storage.     He                                                              
informed the  committee that  Alberta was  the first  jurisdiction                                                              
in North  America to  introduce carbon  pricing, which applies  to                                                              
those large facilities  that release over 100,000  tons of CO  per                                                              
                                                             2                                                                  
year.    That's   100  facilities  that  compose  50   percent  of                                                              
Alberta's CO  emissions.  In  the two years this project  has been                                                              
            2                                                                                                                   
in place,  there has  been 10  mega tons of  actual emissions  and                                                              
$123 million  has been  put toward  a fund  that can  be used  for                                                              
investment in greening  energy production, efficiency,  and carbon                                                              
storage.                                                                                                                        
                                                                                                                                
11:18:26 AM                                                                                                                   
                                                                                                                                
SENATOR FRENCH  surmised then that  the $123 million is  generated                                                              
from  the price  placed  on the  carbon emissions,  and  therefore                                                              
it's coming from producers.                                                                                                     
                                                                                                                                
MR. PADUA  replied yes,  adding that it's  being generated by  the                                                              
producers within the province.                                                                                                  
                                                                                                                                
CHAIR MCGUIRE  expressed excitement  regarding the possibility  of                                                              
pairing   hydrocarbon   development  with   carbon   capture   and                                                              
sequestration  technology  that's  available  to  grow  an  energy                                                              
economy that's clean, safe, and located on free soil.                                                                           
                                                                                                                                
11:19:26 AM                                                                                                                   
                                                                                                                                
SENATOR WIELECHOWSKI  inquired as to the status of  exploration in                                                              
Alberta.                                                                                                                        
                                                                                                                                
MR.  PADUA  answered   that  exploration  on  the  oil   sands  is                                                              
increasing  while it's  decreasing  for  conventional [oil].    He                                                              
then reviewed the process  with carbon capture in which the COis                                                                
                                                              2                                                                 
taken  from large  points of  production, particularly  coal-fired                                                              
power plants, and  is transported by pipeline, pumped  underground                                                              
into the  same formations where  the hydrocarbons were  extracted.                                                              
The advantage of  pumping into the depleted formations  is that it                                                              
releases  a  fair  amount  of  extra  oil  as  the  COis     being                                                              
                                                      2                                                                         
sequestered there permanently.                                                                                                  
                                                                                                                                
MR. MARZ interjected that  the [sequestration of the CO]replaces                                                                
                                                       2                                                                        
water in some of the wells that are currently in use.                                                                           
                                                                                                                                
SENATOR WIELECHOWSKI  asked if  the CO  could  be used to  achieve                                                              
                                      2                                                                                         
enhanced oil recovery of the heavy oil as well.                                                                                 
                                                                                                                                
MR. PADUA  replied yes, but clarified  that would be the  case for                                                              
heavy oil deposits not in the oil sands.                                                                                        
                                                                                                                                
CHAIR  MCGUIRE noted  that  Alaska is  struggling  with the  heavy                                                              
viscous oils  in Prudhoe  Bay, and therefore  it's appropriate  to                                                              
continue to  review ways  in which  the carbon  can help lift  out                                                              
heavy oils.                                                                                                                     
                                                                                                                                
11:21:23 AM                                                                                                                   
                                                                                                                                
SENATOR  FRENCH remarked  that Mr. Padua  is likely  aware of  the                                                              
one  area of  resistance to  the natural  gas  pipeline, which  is                                                              
that it  will only fuel more  development in Alberta and  increase                                                              
the world's  woes with  regard to carbon.   Senator French  opined                                                              
that  major steps  in  the right  direction  are being  made,  and                                                              
therefore he asked  if Alberta is receiving any credit  or support                                                              
from environmental groups.                                                                                                      
                                                                                                                                
MR. PADUA said  it would be nice  to have such support.   He noted                                                              
that an entity  called the Aspen  Foundation gave an award  to the                                                              
province for its work  on carbon capture.  He offered  to find out                                                              
more  about the  Aspen Foundation.   Mr.  Padua  agreed that  it's                                                              
unfortunate that  the Alberta  oil sands are  being targeted as  a                                                              
global-sized   disaster,  in   terms  of   GHG   emissions.     He                                                              
highlighted  that  the  Alberta  government  has  put  forward  $2                                                              
billion  for carbon  capture  and storage  research.   Four  pilot                                                              
projects have  been announced  and if the  technology works,  they                                                              
can be applied  worldwide.  [As  specified on the slides  entitled                                                              
"CCS Commercial  Scale Projects"],  the pilot  projects are at  an                                                              
ungrader refinery  facility, a coal-fired power plant,  converting                                                              
coal to synthetic  gas underground and then injecting  carbon, and                                                              
a pipeline network that will connect the sources of carbon.                                                                     
                                                                                                                                
11:25:08 AM                                                                                                                   
                                                                                                                                
CHAIR MCGUIRE highlighted  that for the Swan Hills  project, which                                                              
aims  to  convert  coal  into  synthetic   gas  for  low-emissions                                                              
electricity and carbon  capture for use in enhanced  oil recovery,                                                              
the Alberta government  has committed $285 million.  She  asked if                                                              
there is a private sector partner for the Swan Hills project.                                                                   
                                                                                                                                
MR.  PADUA specified  that  the  actual  generator itself  is  the                                                              
private sector  partner.  He explained  that the government  isn't                                                              
providing  funding  until the  contract  specifying what  will  be                                                              
developed  is written.   He  anticipated  that the  aforementioned                                                              
will occur in the next couple of months.                                                                                        
                                                                                                                                
CHAIR  MCGUIRE  asked  whether the  government  is  providing  the                                                              
capital infrastructure or providing a match.                                                                                    
                                                                                                                                
MR. PADUA offered to find out for the committees.                                                                               
                                                                                                                                
CHAIR MCGUIRE  said such information would  be helpful as  she and                                                              
others review  where it's appropriate for  the government to  be a                                                              
partner   in   energy   projects,   particularly   in   innovative                                                              
situations  such  as  with  in-situ  mining   and  carbon  capture                                                              
sequestration.   She also  expressed interest  in incentives  that                                                              
Alberta  has  done  through  policy  to  incentivize  the  private                                                              
sector to enter some of these large projects.                                                                                   
                                                                                                                                
MR. MORRISON  interjected that there  will be presentations  at an                                                              
upcoming PNWER summit on this matter.                                                                                           
                                                                                                                                
11:27:13 AM                                                                                                                   
                                                                                                                                
MR.  MARZ  pointed  out  that  the  federal   government  is  also                                                              
contributing  a  portion,  $63 million,  for  the  Alberta  Carbon                                                              
Trunk Line.                                                                                                                     
                                                                                                                                
CHAIR  MCGUIRE  asked  if the  aforementioned  funds  are  through                                                              
Canada's federal stimulus package.                                                                                              
                                                                                                                                
MR.  PADUA  answered  that  those  funds  are  separate  from  the                                                              
stimulus and are from the environmental funds.                                                                                  
                                                                                                                                
CHAIR MCGUIRE reiterated  her interest in understanding  where the                                                              
government  is   involved  in  the   four  CCS  commercial   scale                                                              
projects.                                                                                                                       
                                                                                                                                
11:28:16 AM                                                                                                                   
                                                                                                                                
MR. PADUA,  returning to his presentation  and the slide  entitled                                                              
"Responsible  Water Use,"  turned the topic  of water  usage.   He                                                              
informed  the committees  that it  takes  two to  five barrels  of                                                              
water to  produce a barrel  of oil  sands oil.   He noted that  90                                                              
percent of  that [water]  is recycled.   Although the water  being                                                              
used  is from  the Athabasca  River, there  are  strict limits  in                                                              
place.   Although the  limit is  3 percent of  the average  annual                                                              
water flow, in  2008 only .06 percent  was drawn.  As  with carbon                                                              
emissions, the operations  are becoming more efficient.   Although                                                              
water  usage has  been  reduced by  40  percent between  2002  and                                                              
2007,  bitumen   production  increased   by  almost  50   percent.                                                              
Referring  to the slide  entitled "Tailings  Pond Management,"  he                                                              
explained  that the  tailings ponds  are necessary  to filter  the                                                              
solids  from the  water.   The  water on  top  is reused  multiple                                                              
times  to get  the  solids  to settle  out.   The  solids  contain                                                              
toxins that  are already  present in the  ground, but they  become                                                              
more  concentrated.    Historically, it  has  taken  large  mining                                                              
operations  up to 40  years to  settle out the  solids.   However,                                                              
last month Suncor  announced that it has developed  new technology                                                              
that reduces reclaiming  tailings ponds to seven years.   He noted                                                              
that  the in-situ  projects  don't produce  tailings  ponds.   The                                                              
goal is to  reclaim all of the land  impacted by the oil  sands to                                                              
its natural  state, including  the pit  mines.   To that end,  all                                                              
the sand is  stored for use to  refill the pit upon  conclusion of                                                              
the project.   In order to  ensure the aforementioned,  a security                                                              
bond has to be  provided by the mining companies.   Currently, the                                                              
reclamation   security  bond   holds   $828  million   to   ensure                                                              
reclamation  of  the  land  to  its  natural  state.    The  first                                                              
reclamation was issued in 2008 to Syncrude for 257 acres.                                                                       
                                                                                                                                
11:30:38 AM                                                                                                                   
                                                                                                                                
CHAIR RAMRAS commented  that he was struck by the  magnificent way                                                              
in which  Alberta  has managed  its resources,  from which  Alaska                                                              
should  learn.   He said  he  was also  struck  by the  difference                                                              
between the posture  of an expanding oil and hydrocarbon  province                                                              
and a province, Alaska,  which is in decline.  Alaska,  he opined,                                                              
needs a significant paradigm shift from its defensive posture.                                                                  
                                                                                                                                
11:31:44 AM                                                                                                                   
                                                                                                                                
CHAIR  MCGUIRE  mentioned  her  wish to  have  more  time  because                                                              
Alaska seems  to have much  in common with  Alberta.  She  pointed                                                              
out  that Alberta  has  travelled on  the  same journey  on  which                                                              
Alaska  is  embarking,  that is  revisiting  oil  and  gas  taxes.                                                              
Alberta had  some of the most attractive  oil taxes in  the world,                                                              
went to higher taxes,  and now is shifting back.   Finding balance                                                              
between incentivizing  industry and growing  jobs is a  challenge,                                                              
she opined.                                                                                                                     
                                                                                                                                
MR.  MARZ noted  that Alberta's  change in  royalty structure  was                                                              
done  with  much  support  from  the  electorate.    However,  the                                                              
economic climate  can change,  which can  change the  electorate's                                                              
view.    Therefore,  Alberta has  had  to  review  the  unintended                                                              
consequences  [of its  royalty policy].   He  agreed that  finding                                                              
the aforementioned  balance is a difficult challenge,  although he                                                              
felt  that Alberta  is close.   He  noted that  the sliding  scale                                                              
structure  that  is   in  place  results  in  the   citizens  take                                                              
increasing as  prices rise  and vice versa.   Therefore, with  the                                                              
new  structure and  the  recession  many companies  were  actually                                                              
receiving more than before.                                                                                                     
                                                                                                                                
CHAIR MCGUIRE  pointed out  that Alaska has  a similar tax  system                                                              
to that of Alberta.  She recalled past discussions with Alberta.                                                                
                                                                                                                                
11:34:27 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   NEUMAN,  recalling   Senator  French's   comments                                                              
regarding   environmental   concerns,   pointed  out   that   when                                                              
synthesis fuels  are created coal is  being used for indirect  and                                                              
direct  processes.     He  further  pointed  out  that   the  U.S.                                                              
Department   of  Environmental   Conservation   (DEC)   classifies                                                              
[synthesis   fuels]  as   biodegradable  because   there  are   no                                                              
aromatics,  sulfurs, and  most  of the  carbon has  been  removed.                                                              
Therefore,  any spills  don't hurt  the environment  since it's  a                                                              
biodegradable product.                                                                                                          
                                                                                                                                
11:35:32 AM                                                                                                                   
                                                                                                                                
CHAIR MCGUIRE  remarked that perhaps  the PNWER conference  should                                                              
hold a  work shop on  the various  types of transportation  fuels,                                                              
which countries  are using  them, and how  Alaska could grow  that                                                              
market.                                                                                                                         
                                                                                                                                
11:36:06 AM                                                                                                                   
                                                                                                                                
MR.  MARZ  related  that  development   is  expanding  outside  of                                                              
Alberta into  Saskatchewan.  "As you  can see by the  slides, it's                                                              
just not  oil sands  or Canadian  oil sands,  it's North  American                                                              
job sands," he highlighted.                                                                                                     
                                                                                                                                
11:36:45 AM                                                                                                                   
                                                                                                                                
CHAIR MCGUIRE thanked  the presenters for taking the time  to come                                                              
before the committees.                                                                                                          
                                                                                                                                
11:36:58 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the committees,  the joint                                                              
meeting   between  the   House  Special   Committee  on   Economic                                                              
Development,  International  Trade  and  Tourism  and  the  Senate                                                              
Special  Committee on  World Trade  and State/Federal  Regulations                                                              
was adjourned at 11:36 a.m.                                                                                                     

Document Name Date/Time Subjects