The Canada Institute of the Woodrow Wilson international Center for Scholars and the Canadian Centre for Energy Information co-hosted the 4th Cross-Border Forum on Energy Issues, "Discovering the Possibilities for North American Petroleum Production." Participants addressed the outlook for non-traditional sources of energy in North America, with a specific focus on Canada's oil sands. Conference sponsors included Suncor Energy, Petro-Canada, BP, and Foreign Affairs Canada.
The Hon. Greg Melchin, Minister of Energy, Government of Alberta
David W. Conover, Principal Deputy Assistant Secretary for Policy and International Affairs, U.S. Department of Energy
Aidan Mills, Vice President, Strategy and Business Development, BP Americas Oil Supply and Trading
Mike Ashar, Executive Vice President, Refining and Marketing, Suncor Energy
Lloyd Byrne, Managing Director, Morgan Stanley
Andrew Stephens, Vice President, Corporate Planning and Communications, Petro-Canada ,
Greg Stringham (moderator), Vice President, Canadian Association of Petroleum Producers.
The half-day event started out at the Wilson Center with a panel of presentations on oil sands and other sources non-conventional sources of petroleum production in North America followed by a closed-door, off-the-record roundtable discussion. The program continued with luncheon at the Canadian Embassy, where Sen. Orrin Hatch delivered the keynote address.
The forum provided an opportunity for more than 50 high-level Canadian and U.S. government officials, industry representatives, and energy experts to continue an ongoing dialogue on cross-border cooperation with a specific focus on the potential for North American petroleum production, and in particular, the role of Canada's oil sands.
Lee Hamilton, president and director of the Wilson Center, welcomed participants and introduced Greg Stringham, Vice President, Canadian Association of Petroleum Producers, who began the program by providing an overview of Canada's oil sands industry. Today Canada is the number one supplier of oil and natural gas to the U.S. market, with production from Alberta's oil sands now at one million barrels a day (mbd). Canada has successfully developed its oil sands as U.S. demand has grown and new sources of conventional oil around the world have declined. Alberta's oil sands reserves, estimated at more than 170 billion barrels, are increasingly being viewed as a "stable secure source of future oil for the world," and have attracted interest from European, Japanese, and Chinese investors. Sen. Hatch predicted that Canada, which he said ranked second only to Saudi Arabia in proven oil reserves, "will inevitably displace Saudi Arabia as the world's oil giant." This means that the United States will have access to a "secure, friendly source of [energy] supply." Utah already receives one fourth of its total oil consumption from Alberta's oil sands. Minister Melchin stressed the importance of the U.S. market for the province's energy exports, noting that current Chinese interest is an "anomaly," whereas the U.S.-Canada relationship is "paramount" and "vital."
Forum participants agreed on the importance of "taking the long view"; Alberta's success in developing the oil sands stems in large part from the long-term political vision of previous governments, which consistently promoted a favorable investment climate by a maintaining transparent fiscal policies, a novel and predictable royalty regime, and a stable political environment. In his remarks at the Canadian Embassy, Sen. Hatch commended the Canadian government's proactive stance on fostering the development of unconventional oil resources. He urged the United States to adopt a similar approach, noting that "those who would argue otherwise underestimate our capacity to exploit unconventional resources."
Alberta is well placed to meet many of these challenges by the very nature of the resource at stake: there is a need for the product and strong demand for oil sands production; there is no exploration risk; the industry has a competitive cost structure; there is limited political risk, long reserve life, and attractive returns. Moreover, in an environment of high oil prices, there is strong investor interest in Canada's oil sands. Sen. Hatch said it was time for the U.S. government to take advantage of this attractive environment for developing unconventional oil resources and actively promote the development of tar sands and oil shale in western Colorado, Wyoming, and Utah.
Yet challenges remain for oil sands developers from lowering costs (natural gas, a crucial input, is the single largest operating cost in oil sands production) to building sufficient infrastructure from pipelines to refining capacity (including the question of whether refining takes place on-site or closer to consumer markets). Technology and improved access to infrastructure, labor, and investment will continue to play a crucial role as the Canadian energy industry grapples with the challenges of the next decade—workforce shortages, infrastructure bottlenecks, and strongly held public perceptions of the industry with regards to energy pricing, corporate profits, and environmental impact. The most significant challenge, however, is one of timing—the consensus in the industry is that "it's becoming crunch time."
The key success factors for moving forward with oil sands development are also emerging clearly. There was consensus among participants that market-based approach to energy policy is best. Alberta is competing for investment internationally, and is well placed to attract capital and human resources. It is also crucial to continue building the U.S.-Canada relationship. Another priority is to encourage further collaboration between industry, academia, and government on regulatory frameworks, research & development, and project planning with respect to workforce and infrastructure. The provincial government must not lose sight of the need to communicate with the public, continue stakeholder engagement, and educate people on oil sands and energy in general. Finally, it behooves Albertans to realize that "there is no silver bullet," nor are there any quick fixes—and they must recognize that other sources of energy are necessary, including coal and nuclear power.
The Canadian Embassy hosted a keynote luncheon to conclude the program. The luncheon agenda included a wrap-up of the morning session as well as a keynote presentation on the potential for North American petroleum production.
The Hon. Frank McKenna Ambassador of Canada to the United States
Overview of forum discussion
Greg Stringham, Vice President, Canadian Association of Petroleum Producers
Overview of U.S. Energy Policy Act
Robert Ebel, Chairman, Energy Program, Center for Strategic and International Studies
The Hon. Orrin G. Hatch U.S. Senator (R-Utah)
This conference was the fourth in the Woodrow Wilson Center Cross-Border Forums on Energy Issues, which have been very well attended by representatives of industry, regulatory agencies, and the U.S. and Canadian governments. The Wilson Center hosted a forum in Calgary in March 2004 that looked at cross-border cooperation in the energy sector, which identified key gaps that affect long-term energy development in Canada and the United States. The event concluded with a commitment to future collaboration on energy issues. As a result, the Canada Institute helped organize a second forum at the Wilson Center in September 2004 to discuss cross-border energy trade, with a specific focus on infrastructure. A third forum took place on March 21, 2005 here in Washington to discuss the security of continental natural gas supply. A copy of the proceedings from the first three forums as well as other relevant materials are available for download (please click on the links in the right-hand "See Also" sidebar).