Legislature(2009 - 2010)Anch LIO Rm 220
09/27/2010 03:30 PM Senate ENERGY
| Audio | Topic |
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| Start | |
| Presentation - "alberta's Clean Energy Future" by Members of the Alberta Legislative Assembly | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE SPECIAL COMMITTEE ON ENERGY
September 27, 2010
3:38 p.m.
MEMBERS PRESENT
Senator Lesil McGuire, Chair
MEMBERS ABSENT
Senator Lyman Hoffman
Senator Albert Kookesh
Senator Bert Stedman
Senator Bill Wielechowski
OTHER LEGISLATORS PRESENT
Senator Linda Menard
Senator Coghill
Representative Chris Tuck
Representative Johnson
COMMITTEE CALENDAR
Presentation - "Alberta's Clean Energy Future" by Members of the
Alberta Legislative Assembly
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JEFF JOHNSON, MLA for Athabasca-Red Water
Alberta, Canada
POSITION STATEMENT: Participated in presentation of "Alberta's
clean energy future."
EVAN BERGER, MLA for Livingstone-McLeod
Parliamentary Assistant to the Minister of Sustainable Resource
Development
Alberta, Canada
POSITION STATEMENT: Participated in presentation of "Alberta's
clean energy future."
CAL DALLAS, MLA for Red Deer South
Parliamentary Assistant to the Minister of Environment
Alberta, Canada
POSITION STATEMENT: Participated in presentation of "Alberta's
clean energy future."
ACTION NARRATIVE
3:38:46 PM
CHAIR LESIL MCGUIRE called the Senate Special Committee on
Energy meeting to order at 3:36 p.m. Senator McGuire was present
at the call to order.
^Presentation - "Alberta's Clean Energy Future" by members of
the Alberta Legislative Assembly
3:40:58 PM
CO-CHAIR MCGUIRE welcomed the delegation from Alberta: Jeff
Johnson, MLA for Athabasca-Red Water; Evan Berger, MLA for
Livingston McCloud; and Cal Davis, MLA for Red Deer South. They
would present on Alberta's clean energy future. She said many of
the Pacific Northwest Economic Region (PNWR) members were able
to visit the Alberta oil sands in July.
JEFF JOHNSON, MLA for Athabasca-Red Water, Alberta, said they
are in town to take part in the oil and gas congress with their
minister of energy. He said they spent the morning looking at
the Fairbanks cold climate housing research project and the
pipeline training center.
MR. JOHNSON said he knows of a number of vocal detractors around
the world who would prefer they shut down the oil sands, and
even shut down fossil fuels. Some think they simply don't care
about the environment, but they do. Canadians back it up with
laws and regulations that they believe are some of the strictest
in the world.
He said his role as parliamentary assistant to the Treasury
Board is not just to assist the minister, but to work
specifically on their oil sands secretariat, which is a body
within government that is doing some coordinating and planning,
especially community and infrastructure around the incredible
growth the oil sands are seeing.
MR. JOHNSON said that Alberta is a secure and responsible
supplier of energy. It has an abundance of resources and is
committed to developing them as responsibly as possible. No
other oil-producing jurisdiction in the world takes
environmental management more seriously than Alberta.
He said they are being challenged to look at the development and
extraction of oil in a more comprehensive manner as opposed to
just the very important economic rewards and environmental
considerations; they are being pushed to look at this "more
ethically and more comprehensively" along with adding a third
pillar, which is the socio-political aspect (ethical oil), and
where we get our oil across the world. He would argue that in
Alberta no soldiers are losing their lives over that oil field,
and no money is being invested there that ends up in the hands
of terrorism. The US and Canada stack up very well in terms of
human rights, but this is not to say they shouldn't shift to
cleaner energy.
MR. JOHNSON said Alberta produces oil because the world demands
it; people will continue to rely on oil to meet day to day
needs. But they also recognize the importance of new
technologies and they are investing in them. New technologies
are key to reducing the environmental impacts of production,
mitigating risk, reducing energy consumption, advancing the role
of renewable and alternative energy, and speeding the
reclamation in Alberta's oil sands and disturbed lands across
their province. Something that is not widely reported is that
Alberta is the number-one supplier of non-domestic oil for the
US, at 17 percent of the country's total imports - more than
from Saudi Arabia and Iraq combined.
MR. JOHNSON said Alberta is the only jurisdiction in his pie
chart that is not a country. Like Alaska, as an energy producer
provider, their energy policies will be increasingly coming
under more and more scrutiny. This scrutiny is not a bad thing
even though it will not always be balanced and fair; it's
healthy and they welcome the challenge. The irony is that they
will be under the microscope because they embrace the debate as
a western democracy. Very few of the world's top producers and
reserves owners permit this debate.
In terms of energy security, he said they need to remember that
each barrel of oil purchased from Alberta means less dependence
on oil from sometimes unfriendly countries overseas. But that's
not the only benefit the oil sands provides. They are a powerful
economic driver, not only in Alberta but in all of Canada and in
the US, and this is at a time when North America desperately
needs strong economic drivers.
3:48:36 PM
MR. JOHNSON said based on infrastructure development going on
north of Alberta, its oil and gas sector looks very promising.
In 2009 alone, capital investment in Alberta's oil sands was
nearly $10 billion and currently about $140 billion worth of oil
sands construction is in progress or being proposed for 2012.
Alberta is getting the world's attention with the oil sands and
they are seeing a dramatic increase not only in the scrutiny
they are getting but in terms of the interest they are getting
from foreign nationals - like state owned oil companies from
China, India, Korea, Japan, Middle East, and others.
3:49:24 PM
Their research has shown that every dollar invested in the oil
sands creates about $9 worth of economic activity and one-third
of that is generated outside of Alberta in Canada, the U.S. and
around the world. From 2011-2015 it's estimated that oil sands
development will create 343,000 person years of employment
across the US alone. Due to the job creation, the increased
demand for American made goods will increase its GDP by an
average of $31 billion annually. He said many Americans are
already employed through existing contracts to Alberta's oil
sands and that will only grow. Mr. Johnson said the question is
whether security and the financial benefits come at the cost of
the environment, and the answer is, "Absolutely not!
3:50:22 PM
EVAN BERGER, MLA for Livingstone-McLeod and Parliamentary
Assistant to the Minister of Sustainable Resource Development,
continued the presentation. He said oil sands are a naturally
occurring mix of sand, clay, water and bitumen. The bitumen is
separated from the sand top grade into refinery-ready crude.
Each grain of sand is actually encased in water and then the oil
wraps around that. So, when you hear the oil sands are on top of
the ground that means they are on top of the ground in many
places. In other places the oil flows out of the sand into the
Steep Bank River in one area where the river cuts through the
sands naturally.
He said the oil sands are in northern Alberta, and currently
they contain more than 170 billion barrels of recoverable oil
with today's technology (potentially 315 billion barrels or 3
million barrels a day for 150 years). This is the second-largest
proven oil deposit in the world after Saudi Arabia.
MR. BERGER said they keep hearing that the size of the land
disturbed by the oil sands activity is the size of Florida, some
have said it is twice the size of England, but the fact is the
oil sands underlie over 54,000 square miles of land in northern
Alberta and that is about the size of Florida. But the entire
minable area in the oil sands covers about 1,800 square miles,
which is less than 1 percent of Alberta's forested area. Only
232 square miles have been disturbed by oil sands activity to
date.
MR. BERGER said that using the word "disturbed" doesn't mean
open pit mines. He explained that only 20 percent of the oil
sands are close enough to the surface they can be extracted
through open pit mining. The other 80 percent will be "in situ"
(meaning in place) developments, which uses steam to access
deposits that are too deep with a very minimal footprint to the
surface. In situ mining, and the steam brings the bitumen to the
surface but leaves the sand in place under the ground. The
environmental footprint is quite small making them much more
efficient operations.
3:54:19 PM
MR. BERGER said the Alberta oil sands are built on innovation
and that, in turn, fuels work and responsible resource
development. However, there is no oil sands development without
emitting CObut the common misconception is that developing oil
2,
from oil sands results in a much higher carbon dioxide emission
than conventional oil. However, when taking into account the
entire lifecycle of a barrel of oil including production,
refining, transportation, and end use, greenhouse gas emissions
from oil sands crude averages 5 percent higher than a variety of
conventional crudes in the North American market place. He said
his graph of "well to wheels" indicated a competitive position
among other regions of the world.
Green house gases from the oil sands account for 15 percent of
Alberta's annual emissions; that is about 5 percent of Canada's
total emissions. Canada is 2 percent of the world's emissions.
This means the oil sands produce less than one-tenth of 1
percent of global emissions, but they are always looking for
better technology.
3:57:32 PM
CAL DALLAS, MLA for Red Deer South and Parliamentary Assistant
to the Minister of Environment, said Alberta's climate change
strategy aims to reduce their project green house gas emissions
by 200 megatons by 2050. Their carbon capture and storage (CCS)
initiative plays a key role in this strategy and they expect it
will help achieve 70 percent of their target. That is equivalent
to taking approximately 1 million vehicles or about one-third of
all the registered vehicles in Alberta off the road.
Alberta has invested $2 billion into CCS, a technology that is
seen as a major component for large scale green house gas
reductions by organizations such as the United Nations
Intergovernmental Panel on Climate Change. Outside of CCS,
Alberta is the first jurisdiction in North America to require
large industry such as at the oil sands to reduce green house
gases. Through options that include reducing their emissions and
paying into a technology fund, industry has reduced more than
1,700 million tons of green house gases. They paid $187 million
into a clean energy fund and invested $71 into clean energy
projects.
MR. DALLAS also said that Alberta has strict legislation in
place to protect its air, water and land. For those living in
the oil sands region air quality is a big concern and it is the
most heavily monitored region for air quality. There are 15 real
time stations that are at work 24/365. Alberta's air monitoring
tells them that the air quality in Fort McMurray rates better
than major Canadian cities like Toronto or Vancouver. Using a
more specific measurement, air quality is rated as good more
than 95 percent of the time based on Alberta's air quality
index.
MR. DALLAS said that water use is strictly regulated in the oil
sands and it is constantly monitored. Some believe that oil
sands projects are using nothing but fresh drinkable water to
extract bitumen, but in fact, oil sands developers have
drastically reduced their need to draw fresh water. He explained
that water users have permission to withdraw a combined total of
3 percent of the water flow of the Athabasca River, Alberta's
longest river; 2 percent of that is allocated to the oil sand
operations and most water users don't withdraw their limit. In
fact, less than 1 percent of the water is used.
4:01:05 PM
Restricting industrial water withdrawals might sound like a
major obstacle to oil sand operators, but most have found ways
to reuse and recycle water and some projects are recycling 80-95
percent of the water they use. Tailings ponds are another
challenge. Tailings are a by-product from oil sands mining
operations where water is used to extract bitumen from the rest
of the ore. Tailings are a mix of sand, clay, small amounts of
bitumen and naphtha. The ponds serve as a place for the solids
and the water to settle out of mix. This is a common industry
practice in various mining operations. While a large portion of
the tailings can be settled out quickly, some smaller portions
such as those containing fine clays in solution can take a very
long time.
New tailings management technologies and polices are being
developed that will shorten the lifespan of ponds to 10 years
and maybe less. The potential to eliminate wet tailings is also
backed by a directive from Alberta's Energy Resources
Conservation Board. It provides performance criteria that will
result in faster reclamation and reduced fluid tailings. So far
oil sands operators have committed more than $1.5 billion in
upgrades to comply with this directive. In the meantime, Mr.
Dallas said, Alberta has multiple checks and balances in place
to manage tailings pond. They must have extensive ground water
monitoring systems and effective seepage capture facilities.
MR. DALLAS said that reclamation is the law in Alberta. Every
square inch of disturbed land must become as ecologically
productive as it was before development. It can take decades,
but they are working to speed things up by encouraging the use
of progressive reclamation process where industry begins
reclamation work on a site before operations are complete. As of
December 2008, industry has reclaimed almost 42 square miles of
land. Government has issued its first pond reclamation
certificate to Syncrude in 2008 for the reclamation of a 256-
acre site called Gateway Hill where buffaloes now graze. Last
year Suncor [Energy] announced it was the first company in
Alberta to successfully reclaim a 1.3 square-mile tailings pond.
MR. DALLAS said their challenge is to balance energy
development, the resulting environmental impacts and the
economy; and they will achieve this by establishing realistic
targets and policies that continually reduce environmental
impacts of development while investing in clean energy research.
CHAIR MCGUIRE thanked him for his presentation.
4:05:55 PM
REPRESENTATIVE CRAIG JOHNSON asked where the $2 billion in
carbon capture funds came from.
MR. DALLAS answered that the entire fund came from general
revenues that he presumed resulted from royalty payments related
to resource extraction. It was provincial allocation only and
the expenditures were restricted by legislation to engage in CCS
technologies.
REPRESENTATIVE JOHNSON asked what he thought the response would
have been if the money came from gas taxes.
MR. DALLAS replied that he could only speculate, but as the
owners of world's second largest proven reserve of hydrocarbons,
it was necessary to make a very serious statement about
environmental stewardship and the impact the extraction of those
resources would have on green house gas potential. The
investment has been well received so far and even though the
benefits will take a long time to reap, the opportunities they
have been exploring with that fund are significant in many
respects - for instance, capturing COin their electrical
2
generation facilities and opportunities to enhance conventional
oil and gas recovery through the use of CO back down hole
2
development. It's not just about the mitigation of CO, but about
2
other real business opportunities outside of the resource
extraction.
4:09:53 PM
SENATOR MENARD asked how long the Athabasca River is as compared
to the Kenai River. She also wanted to know what some of the
more important questions were at the climate change summit in
Copenhagen on oil sands. She heard that it was a failure, but
she wanted to know if he thought it was successful in terms of
sharing his innovations.
4:11:20 PM
MR. BERGER answered that one-third of the Athabasca River runs
through Alberta before it goes through the Northwest Territories
and out to the ocean. Regarding the climate change summit, Mr.
Berger said that the Minister of Environment, who represented
them at Copenhagen, was able to put the facts on the table and
rebut some of the misinformation that was there. Two other
provinces made comments on the oil sands, but they both
retracted them after the meeting and getting more information.
In general, it was an opportunity for Alberta to clear the air
on the oil sands situation.
4:14:18 PM
REPRESENTATIVE JOHNSON mentioned he was anticipating a $140-
billion investment through 2012, and asked if the oil sands had
been in development for eight years.
MR. BERGER replied no; it's more like 40 years. The $140 billion
is for some of the new projects coming on going forward; in 2009
those investments added up to $10 billion.
REPRESENTATIVE JOHNSON asked what they did as a legislative body
to incent that investment.
MR. BERGER replied that a big part of the change is that they
are undergoing a regulatory review of sustainable resource
development, energy and environment - putting them all on the
table and saying they want the process to be environmentally
sound, but they want it with no huge delays. They want to
streamline the application process by having applications go
through a "one window shopping type thing" where an applicant
comes into the Energy Resources Conservation Board (ERCB) as the
regulator and that application is transferred through all of the
other regulatory departments that have to see it. Another reason
for the increase is that bitumen has moved up closer in the
spread to West Texas intermediate. And a significant pipeline
network is getting better all the time - to connect it to the
market. The combination of all those things has brought more
investment forward for the oil sands.
REPRESENTATIVE JOHNSON asked if their tax regime was changed.
CHAIR MCGUIRE said that Senator Thomas joined the committee some
time ago, as did Senator Coghill.
4:19:28 PM
MR. JOHNSON answered that the $10 billion is what would have
been invested roughly in 2009, but they have to recognize that
the oil sands projects are massive and take a lot of capital.
It's not uncommon for one project to take $5-$10 billion and 10
years to construct. To put that in perspective, in 2008 1.3
million barrels per year were being produced out of the oil
sands and now they are at 1.5 million/day. The projections are
to move to 6 million barrels per day over the next three
decades.
He added that another incentive for investment in the oil sands
is Canada's royalty structure that allows some of the capital
costs to be recovered before royalties are paid. He said last
year was the first year that the oil sands royalty revenue
surpassed royalty from natural gas (which was always their big
money ticket) and conventional gas combined. He said that Canada
is fortunate in that they are a western democracy that has
investable oil reserves; most private companies don't want to
invest in some other countries with different types of
governments.
SENATOR THOMAS asked him to clarify how the settling ponds would
affect the river.
4:21:14 PM
MR. DALLAS said the Athabasca River is just under 800 miles
long. He said that none of the tailing ponds from the mining
operations have a discharge or seepage back into the Athabasca
River. One tailing pond he is familiar with has more than 70
monitoring wells around the circumference. Any migration of any
material is closely monitored. The ponds are engineered to seep
and then the recovery component gets pumped back in. Vertical
migration is measured as a function of millimeters per year.
Because the Athabasca River runs through this bitumen-bearing
geology deposit, those same hydrocarbon materials can be
detected in the water; and run off - not from mining operations
- but all along the river through the oil sands region
potentially contribute to some of the measurable components that
are in those water tests. In the last few days, the Minister of
Environment announced an independent panel of scientists would
peer review both the measuring capacity of government measured
water quality and some of the independent measurements that have
taken place. Quality of that river is taken very seriously by
Albertans, especially by inhabitants that are downstream from
the mining operations.
4:25:31 PM
SENATOR THOMAS asked if all taxes are suspended until the
investment is recovered or just the royalty taxes.
MR. DALLAS replied the there were no changes to the tax
structure either in 2008 or the recent restructuring that was
made just a number of months ago, and they are talking about
royalty payments based on the extraction and sale of the
resource as opposed to what they would think of as an income
tax. The tax regime is the same both from a federal and a
provincial jurisdiction.
He elaborated that commitments have been made to Albertans that
without compromising environmental or social outcome, they will
review policy assurance and improve on the time performance of
the approval process. This review is called the Regulatory
Enhancement Project and is being done by Emily Berger, Dianna
McQueen and himself.
4:27:45 PM
SENATOR THOMAS asked if the regulatory changes they made were
more like streamlining the system and he asked how that was
done. Did they get input from industry?
MR. DALLAS replied that there were two different pieces of
business. The initial one was around refinement of the royalty
regime. Their government engaged industry in a very frank
dialogue about each of the different types of geological
formations and the different conventional and unconventional oil
and gas plays that are available. They had "very good
disclosure" by industry in terms of the economics of production,
and the government of Alberta had a "good discussion" about the
interests of Albertans in terms of fairness because the resource
belongs to all Albertans. Considerable trust was built in the
initial discussions. This very frank dialogue resulted in
changes that not only satisfied industry but Albertans, as well,
with the industry's willingness to invest.
For the second piece of work involved in the regulatory
enhancement project, he said not only have they been working
with industry through their major associations including the
Canadian Association of Petroleum Producers, but other
stakeholders - landowners, First Nation Groups, and the
government of Alberta.
CHAIR MCGUIRE recognized Jennifer Lowden with the Canadian
Council. She then asked if he had updates on the McKenzie Delta
pipeline and from the AGIA-led pipeline - from his perspective.
MR. BERGER said he didn't have a specific answer right now, but
as partners in the energy industry, it's in their best interest
to work collaboratively with Alaska and their other partners to
facilitate what they can for movement of product. That benefits
everyone in the end.
4:32:49 PM
CHAIR MCGUIRE said "keep us posted," and thanked everyone for
being there; she adjourned the meeting at 4:32 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Alberta MLA Presentation.pdf |
SENE 9/27/2010 3:30:00 PM |