April 15, 2011 - EA and Oil Sands - Queens

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EA and the Oil Sands – A Producer Perspective,
Presented April 15, 2011 by CAPP President David Collyer (www.capp.ca)

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April 15, 2011 - EA and Oil Sands - Queens

  1. 1. EA and the Oil Sands – A Producer Perspective Clean Energy Superpower Environmental Assessment QIEEP – April 15, 2011 Dave Collyer President, Canadian Association of Petroleum Producers
  2. 2. Global Crude Oil Reserves by Country ls rre 300 ba World Oil li on rves 260 b i l es e Reserves Accessible 70 s r e s 1 and Oil Reserves 250 lud oil s 211 Inc of Canada’s 175 State owned Oil Sands 52% 200 or controlled 78% Accessiblebillion barrels Other 48% 137 Accessible 150 Reserves 115 102 92 100 60 46 50 37 30 25 20 19 0 sia n q ria na ya da r ait bia i ela I ra n Ira ta ab es ta Li b i s ge na Qa Ch w Ru ra Dh zu at hs Ku Ni Ca iA St ne ak u ud Ab Ve zh d ite Sa Ka Un Source: Oil & Gas Journal Dec. 2010
  3. 3. Oil Sands Deposits & Projects Kearl Fort Hills Lake Horizon Northern Lights Joslyn Creek Muskeg River Syncrude Albian Dover Firebag Peace River Suncor Jackpine MacKay River Fort Seal McMurray Surmont Peace River Hangingstone Christina Lake Long Lake (ECA) White Sands Jackfish Cold Lake Foster Hilda Lake Creek Wolf Lake/Primrose Cold Lake In Situ Projects Tucker Lake Mining Projects
  4. 4. Oil Sands Production Methods Drilling (80% Resource, 97% Land) Mining (20% Resource, 3% Land)Photo: ConocoPhillips - Surmont Schematic: Devon - Jackfish
  5. 5. Outlook for Oil Sands Activity• Renewed project activity ($15B 2011)….projecting sustained growth  Re-activations of projects “shelved” during downturn  New project announcements  Key drivers are demand growth, recovering oil prices and lower project costs (industry mindful of potential for cost escalation)• Increasing interest by Asian investors  China, Korea, Japan  Implications for markets / infrastructure• Increasing collaboration among oil sands producers to address reputation / social license issues  Technology / Performance  Communications• Evolving public policy and regulatory context  Broad range of stakeholder & public perspectives  Third party reviews  Local / regional vis-à-vis climate / energy system
  6. 6. W. Canadian Oil Sands &Conventional Oil Production OutlookMay 2010
  7. 7. Access to Current and New Oil Markets Canadian & U.S. Crude Oil Pipeline Proposals Key Drivers • Market growth • Market diversification
  8. 8. Asian Market Potential forCanadian Oil Sands Production • Prince Rupert/Kitimat Prince Rupert/Kitimat 0 3,84 1, 400 Miles Korea Japan ~ 4,500 N Miles China • • Japan • Los Angeles N Persian Gulf • Japan Los Angeles • Taiwan Taiwan Taiwan 1, 7 90 Jose/ Jose/ ~ 8,600 N Miles SantaCruz La Cruz La Cruz • • ~ 5,400 N Miles Far East Target Markets U.S West Coast Competitive travel distances for Canadian supply to both markets Source: Enbridge Pipelines
  9. 9. Reputation / Social License & Oil Sands Industry Reputation / Social License = Performance + Communications • “3E” policy framework • Proactive • Robust regional planning: • Transparent  System-wide metrics • Verifiable  Effective monitoring • Visible leadership  Transparent data • Broad portfolio:  3rd party validation  mainstream • World class regulation  social media • Technology & innovation  3rd parties • Collaboration
  10. 10. Royal Society of Canada ReportEnvironmental & Health Impacts of Canada’s Oil Sands Industry• Science-based, independent analysis of the environmental aspects of Canada’s oil sands• Addresses many of the issues and perceptions of oil sands development:  Reclamation is not keeping pace, but sustainable reclamation is achievable  Water use does not threaten viability of the Athabasca River  No impact on Athabasca water quality/ecosystem and no evidence of impact on human health in downstream communities  Tailings technologies are emerging, but tailings inventory is growing  GHG emissions per barrel are reducing but growing production creates a challenge in meeting international commitments December 2010  Minimal impacts on regional air quality
  11. 11. Moving to EA…..Context - Setting• Rapid growth of new environmental policies and regulation have been driven by (usually) valid public concerns• Result is more regulation and “layering on” - system has become complex, poorly integrated and duplicative• Cumulative environmental regulatory load is impairing Canada’s competitiveness (costs, schedule, uncertainty)• Three themes characterize regulatory challenge:  Inter-and Intra-governmental Coordination  Process Timeliness and Effectiveness  Balancing the Environment and Economy• Reform is needed – enhance competitiveness while ensuring responsible environmental outcomes• EA is an important element in broader regulatory framework
  12. 12. Canada’s Oil Sands – Highly Regulated Government of Canada - National Policies and Standards • Interprovincial and International P/Ls • National Energy Board • Fisheries and Navigable Waters • Fisheries & Oceans • Transport Canada • CEAA Triggers • Trans-Boundary Issues • Environment Canada • CEAA Government of Alberta - Primary Resource Development Jurisdiction • Resource Rights and Crown Royalties – Alberta Energy • Environment (air, water, EAs under EPEA) - Alberta Environment • Public Land Access, Wildlife, Forests – Sustainable Resource Development • Energy Project Approvals – Energy Resources Conservation Board
  13. 13. Environmental Assessment Process -Oil Sands• EA for projects with potentially significant environmental effects is expected (and accepted by industry)• Alberta EA Determination for Oil Sands  Project focus - “mandatory”, “exempt”, or “discretionary”  New commercial oil sands (mining or in situ) require assessment  Differences in mining & in situ ToRs• Federal EA Determination for Oil Sands  “P.E.A.T. Test”: •Project - at a minimum as described by proponent •Excluded - e.g., clear span bridge < than 30m long and 20m wide •Authority - e.g., Fisheries & Oceans, Transport Canada, CEAA •Triggers - e.g., fish habitat, navigable waters  Generally broader engagement on mining projects; generally narrower engagement for in situ  Potential to utilize Ministerial discretion to narrow scope  Federal determination more complex than provincial determination• Environmental Assessment Process  Process and timelines hinge on drivers for assessment and complexity of issues
  14. 14. Oil Sands Regulatory Road Map
  15. 15. Current Trends• Lack of clarity in policy objectives….EAs backing into policy• Jurisdictional overlap and duplication  Policy  Regulation• “Competing” regulators• Need for improved metrics, monitoring, review  Better science  Regional versus project-specific• Lack of consistent application of risk-based approaches• Challenges in managing scope & timeline  Many interventions  Local versus broader public interest  Consequential matters specific to the project versus “boiling the ocean”
  16. 16. Forward Policy & Regulatory Framework • Industry wants: Integrated, Collaborative Policy &  Predictability Regulatory Framework  Timeliness  Efficiency  Credibility Single “Best Placed” Regulator • Public wants:  Balance  Assurance Risk-Based Regulatory Approach  Transparency  Credibility
  17. 17. EA Recommendations• Foundation is “3E” policy framework based on sound science, effective engagement, good judgment• Use regional planning processes to address regional-scale issues• Integrated, collaborative approach to regional planning• “One project, one EA” led by best-placed regulator (via coordination, equivalency, substitution)• Project EAs focus only on consequential matters to project• Risk-based approach to EA scope (e.g. ToRs)• Improved process:  Coordination (e.g., Aboriginal consultation)  Clarity on protocols and standards  Mandatory timelines  Accountability for regulatory delivery• Utilize and build on “sound science” (align on metrics, monitoring, transparency, validation)
  18. 18. EA and the Oil Sands - Summary• Oil sands:  A tremendous opportunity for Canada / N.A.  A key part of Canada’s “clean energy” future• Policy & regulatory framework:  “3E” policy (broad public interest)  Robust & collaborative regional planning (federal / provincial)  Single “best placed” regulator  Risk-based approach to regulation  Process discipline  Supported by sound science• Role of EA:  Regional planning  Project-level reviews (role diminishes over time?)• Desired outcome:  Competitiveness to attract investment  Responsible environmental & social outcomes  Credible, integrated, predictable process  Reflects the broad public interest

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