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The Canada-US Energy Relationship
Prosperity, Security, Sustainability
Serge P. Dupont
Deputy Minister, Natural Resources Canada
Legislative Energy Horizon Institute
Portland, Oregon
July 20, 2011
2
Canada-US: A Unique Relationship
“The United States and Canada are not simply allies, not simply neighbors; we are woven together like perhaps no other two countries in the world.” - US President Barack Obama, February 4, 2011
“Over the past nearly 200 years, our two countries have progressively developed the closest, warmest, most integrated and most successful relationship in the world. We are partners, neighbours, allies and, most of all, we are true friends.” -Prime Minister Stephen Harper, February 4, 2011
3
Canada-US: World’s Largest, Deepest Economic Partnership
$1.6 billion in two-way trade every day
Integrated supply chains
Canada largest market for US – and for 34 of 50 states
More than 8 million US jobs dependent on trade with
Canada
Canadian FDI in US: $250 billion
US FDI in Canada: $300 billion
4
Canada in Solid Position to Grow Opportunities
Open trade and investment
environment
Strongest fiscal position in G7
Soundest banking sector in
the world
Strong corporate and
household balance sheets
Low corporate taxes
Tax Rate on New Business
Investment, 2012
42.3
34.7
30.928.0 28.0
26.5
16.8
0
5
10
15
20
25
30
35
40
45
Japa
nU.K
.
U.S
.
Franc
eIta
ly
Ger
man
y
Can
ada
%
5
Shared Commitment to Expand the Relationship
Shared Vision for Perimeter
Security and Economic
Competitiveness
US-Canada Regulatory
Cooperation Council (RCC)
6
Canada: A Global Energy Superpower
Sixth largest producer of oil (~3 million barrels
per day)
Third largest producer of natural gas and third
largest exporter
Third largest producer of hydro power
Second largest producer of uranium
Own nuclear power technology (CANDU)
75 per cent of power generation non
emitting
Vast renewable and clean technology
potential
7
Canada: Largest Supplier of Energy to the US
19MMWh
44MMWh
0.7
TcF
3.3
TcF
701
MMb
Electricity Crude Oil Natural Gas Uranium
1% 13% 14% 22% % US Market
$2.1 B $53.6 B $16.5 B $714M US$ Exports
Canadian exports satisfied 9% of total US demand (2010)
2600
tU
8
Canada-US Clean Energy Dialogue
Launched by Prime Minister Harper and
President Obama in 2009
Collaboration in three areas
Carbon Capture and Storage
Clean Electricity and Smart Grid
Clean Energy R&D
Global Context: Growing Energy and Oil Demand
Source: World Energy Outlook 2010, New Policies Scenario
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1980 2008 2020 2035
Millio
n t
on
nes o
f o
il e
qu
ivale
nt
Coal Oil Gas Nuclear Hydro Biomass and waste Other rewables
IEA projects energy
demand to grow by 36%
between now and 2035
Almost all oil demand
growth concentrated in
emerging economies –
57% from China alone
The transition to a lower
carbon economy will take
time
Oil demand projected to
peak no earlier than
2035
World Energy Outlook
10
Canada: Third-largest oil reserves
•OPEC member Source: EIA, 2009 data
11
Canada’s Energy Sector: Open Investment Environment
80% of the world’s known oil
reserves are state controlled or
managed by national oil companies
~20% is openly accessible to
market based development
Canada’s oil sands represent ~60%
of the world’s oil that is open to
market participants
12
Oil sands: A Strategic Resource
Steam Assisted Gravity Drainage
Mining:
20% of
resource
55% of current
production
In Situ:
80% of resource
45% of current production
Extracted in two ways
13
Oil Sands and US Jobs (Forecast of 343,000 New American Jobs from 2011 to 2015)
7,300
4,700
43,200
Alaska = 900
Hawaii = 1,400
3,200
1,200
1,900
6,500 2,000
3,1006,000
800
800
1,000
2,300
3,200
6,800
3,900
2,900
27,3004,800
4,000 3,200
7,200
14,600
10,600
7,600
20,300
10,5005,200
4,700
4,800
7,000
8,400
10,300
13,200
13,800
1,700
1,6007,700
4,0009,300
19,400
800
1,700
1,000
1,200
1,000
Source: Canadian Energy Research
Institute, 2009
14
Oil Sands: GHG emissions
15
Oil sands: GHG emissions
Source: HIS Cambridge Energy Research Associates (CERA), 2010
Life-cycle GHG emissions for various sources of crude oil
16
Oil Sands and Land
100% of disturbed land must be reclaimed
Oil sand mineable area 1/10th of 1% of Canada’s boreal forest
Area deforested since 1967 about area of Chicago
Most future development will be drilled, not mined
17
Oil Sands and Water
Mined Oil Sands Up to 75% of the water is recycled Amounts to less than 1% of average flow of Athabasca River Regulated withdrawal limits from the river 3-4 barrels of water used per barrel of oil sands crude
Tailings Ponds Producers not permitted to return production water to the river Regulations and technology reducing the amount of tailings and
surface of tailings ponds
Drilled Oil Sands (in situ) Up to 90% of the water is recycled New projects are increasingly using brackish water 1 barrel of water used per barrel of oil sands crude No tailings ponds
18
Oil Sands – Commitment to Sustainability and Environmental Responsibility
Stringent environmental reviews and regulation
Climate change goals (Copenhagen) aligned with US
Environmental monitoring founded on best science
Public and private investment in technology
19
Keystone XL: Contribution to Energy Security, Prosperity, Sustainability
Investment: $7 billion
Employment in the US:
120,000 person-years
Energy Supply:
500,000+ barrels/day
Equivalent to June 2011 release
from US strategic reserve,
once every sixty days
Pipelines safest mode of
transportation of petroleum
products
20
A unique relationship
Shared commitment and opportunity
Prosperity, security, sustainability
Conclusion
21
Government of Canadacanada.gc.ca
Natural Resources Canadanrcan-rncan.gc.ca