This is part of Fort McMoney, an interactive documentary game that lets you decide the future of the Alberta oil sands, and shape the city at its centre.
Oil is part of our daily lives – the average Canadian uses it every day.
The average oil consumer is the person driving from his home in Mississauga to work or taking the kids to soccer practice. She is the passenger flying from Edmonton to Toronto. And since much of our crude oil is sold to refineries in the U.S. Midwest, she is also the person filling up her car at a Chicago gas station.
Canadians and the world have made the choice to use oil as part of their daily lives and energy diet – in transportation, to heat homes and in myriad consumer products, including shoes, plastics and vitamin capsules. They made that choice because oil is one of the most versatile, efficient, economical, easily transported and available forms of energy.
Canada's oil sands industry, because of our large resource base, is in a strong position to help meet oil consumer demand in Eastern Canada and the United States by displacing imports from less secure foreign sources. The Canadian industry's goal is to become the preferred supplier of responsibly produced oil to customers across North America and soon to global markets.
And competition in the oil business, like competition in any free market business, is fierce.
First, Canada must compete for capital with a range of international producers – including OPEC and state-owned companies. Second, Canadian oil producers have to compete environmentally against expectations of zero carbon emissions set by renewable forms of energy, but more realistically against the alternative to Canadian crude, which is imported crude oil.
Canada's oil sands producers recently announced their goal to produce Canadian crude in a manner that is on par with or better than the import alternative to Canadian crude in terms of GHG emissions. In fact, the newest oil sands mine produces oil with GHGs only 2 per cent higher than the U.S. average for oil and GHG emissions at the newest oil sands drilling operations are only 5 per cent higher. These technologies are the new basis for future projects on which further improvements will be built.
Environmental performance for Canadian producers includes meeting regulations, which in some cases are more stringent than those required elsewhere. For example, Alberta law requires industry to reduce GHG emissions by 12 per cent over the life of a project or pay a price of $15 per tonne under Alberta government legislation. This is more than two times the price paid under the European Union's CO2 trading regime. The money paid into this fund – more than $300-million to date – is earmarked by government for investing in technology to store and reduce emissions. Many other oil exporting countries have no such requirements.
Are the oil sands perfect? No, but here are a few numbers to put GHG emissions impact into perspective: in 2011, total oil sands GHG emissions were 55 megatonnes, equivalent to 4.3 per cent of emissions from the U.S. coal-fired power generation sector the same year. Globally, oil sands account for 0.14 per cent of global GHG emissions.
As we work to meet the demand for our oil, we will continue to reconcile production growth with expectations by energy consumers for a global energy system that addresses GHG emissions.
While competing global supplies of oil are becoming more energy intensive, the Canadian oil sands industry cut per-barrel emissions by 26 per cent since 1990 and continues to develop new technology for more reductions. For example, companies are testing the use of light hydrocarbons together with and instead of steam to reduce the amount of energy needed to extract the resource. This makes sense from an environmental perspective and it makes good business sense because it makes our product more competitive in a global market that prefers responsibly produced energy.
We also entirely fund a $50-million-per-year enhanced environmental monitoring system that helps us better manage cumulative environmental impacts. The Joint Oil Sands Monitoring Program was developed by federal and provincial government scientists with input from dozens of other scientists across Canada. Oversight is completely independent from industry.
Through the creation of Canada's Oil Sands Innovation Alliance, the oil sands industry has taken the unprecedented step of pooling its intellectual property and investing about $700-million to find collective solutions to reduce impacts on air, land and water. This is in addition to the billions of dollars our member companies spend individually on research and development.
Responsible development is what the global energy consumer expects of us. It's how Canada competes and will continue to compete. It's not perfect, of course, but in the range of real world choices, we can deliver the goods.
Greg Stringham is vice-president, markets and oil sands, Canadian Association of Petroleum Producers.