As the Obama administration considers the State Department's draft supplement environmental impact statement on the Keystone XL pipeline, what is the future of the U.S-Canada energy relationship? During today's E&ETV Event Coverage of a Brookings Institution event, Alberta Premier Alison Redford discusses the future of the Keystone XL pipeline and Canada's oil sands, and weighs in on efforts by the United States and Canada to reduce carbon emissions. Following her remarks, Redford joins Daniel Yergin, chairman of Cambridge Energy Research Associates, and Charles Ebinger, senior fellow and director of the Energy Security Initiative at the Brookings Institution, for a discussion on the economic and environmental impacts of the pipeline.
Daniel Yergin: Thank you very much, Charlie. I appreciate those words but I really prize my association and activities here at Brookings both as a trustee and then also as co-chair of your Energy Security Initiative which makes such a contribution, and it is under the auspices of the Energy Security Initiative that we have this discussion today.
I'm very pleased of course to have Premier Alison Redford, the Premier of the Province of Alberta. We have two of her ministers with her here today, Diana McQueen who is the Minister of the Environment and Cal Dallas who is the Minister of Intergovernmental Affairs, and of course, in addition to Ambassador Doer, former U.S. Ambassador to Canada, Giffin, is here as well.
The topic, the specific topic of course is the Keystone Pipeline which is the most famous pipeline in the history of the world and all the more so that it hasn't even been built, so it is quite an achievement, but it also - there's a larger energy security aspect to this which is, behind that, is the scale of Alberta as an energy producing country.
Its 2.4 million barrels a day of oil output total are equivalent to a major OPEC country. For instance, it's really the same scale as Venezuela, which indicates the strategic importance of that resource, and on top of that, the 1.8 million barrels a day of oil sands, if that was a country onto itself, would be the largest single source of U.S. oil imports.
So in other words there's a lot of significance in the discussion that we're gonna have today and it's very valuable that we have the premier to guide us through this discussion. She graduated from the University of Saskatchewan with a degree in law. She spent several years working in the Federal government in Ottawa, both for the Prime Minister and as the Senior Advisor to the Minister for External Affairs, the Foreign Minister of Canada.
She then turned in her career to focusing on human rights and she worked on human rights education, policy and legal reform in South Africa, in Mozambique, and other countries in Africa, in the Balkans, and in a number of countries in Asia.
While doing that she had the opportunity to work alongside Nelson Mandela after the end of Apartheid in South Africa, and then representing the United Nations, she was one of four of the International Election Commissioners who organized Afghanistan's first ever parliamentary elections in 2005. With that broad international experience she's also deeply rooted in Alberta where she practiced law for a number of years.
She was first elected to the legislative assembly in 2008. She served as Justice Minister for three years and then became the leader of Alberta's Progressive Conservative Party and Premier in 2011, and she's very much at the forefront of her work in seeking the balance and indeed the partnership between energy development and environmental stewardship, so Premier Redford, we're really very pleased to welcome you to Brookings today. Thank you.
Charles Ebinger: Sorry, I forgot to tell you, you have cards on your seats. If you'd like to write questions while the Premier is speaking we'll be glad to get those answered during the course of the delivery.
Alison Redford: All right, well thank you very much for being here today and thank you so much Charlie and Dan for hosting this event which, for us, is every exciting.
The Brookings Institution of course is a place where I've never spoken before but it is certainly an institution that is well-known to many of us in Canada and it is an honor to be here today with our Canadian Ambassador, Gary Doer, and with Ambassador Giffin, and I know that while there are those of us in the room that there's also a webcast to this, so I welcome people that are watching on-line from the comfort of their own homes.
It is a pleasure to be here, to be able to have a discussion in this room which is truly representative of one of the most trusted think tanks in the United States because this institution has a tremendously distinguished record of promoting shared solutions and dialog with respect to the issues that matter the most to us in North America, not just because of the focus that we might have in our own jurisdictions with respect to social policy and economic growth but the fact that we share priorities.
Canada and the United States have had a long trading relationship and the priorities of this institute, energy and climate, energy security, global change, growth through innovation, are also the opportunities and the shared values that we have in Alberta.
It's wonderful to be able to think about the opportunities that we have to change the way that we talk about energy, social development, and the environment, and every opportunity that we have to come together to do that, I think, allows us to better understand what our shared goals are and can be.
So right now the reason we're all here, the reason I'm here in your beautiful city, is because we're involved in witnessing some pretty heated discussions about what progress on those priorities that we've talked about should look like. The debate over Keystone XL illustrates this point.
This is a Canada-U.S. pipeline and everyone knows it will further build the ties that we currently have between the United States and Canada, and I want to emphasize that it's a joint Canada-U.S. pipeline. Pipelines have beginnings, they have ends, the cross borders, they cross jurisdictions, and if we think about the energy infrastructure and the pipeline infrastructure that we have in North America clearly this pipeline is part of that system.
We think it's important for all of us as North Americans because it will bring a sizeable amount of new supplies, not only from the oil sands to the United States, but also a sizeable amount of the new supplies from the Bakken Formation in North Dakota to the United States' great refining centers.
We're seeing divergent views about the project's impact, the benefits that it will bring, and the weight that should be given to the needs of the environment and the economy, and the supposed costs of tilting towards one or the other.
For the most part I consider this conversation to be a healthy and a very worthwhile process. At the end of the day as citizens in our countries, we all need to be part of the decision-making process, and we have to make sure the governments that are making decisions and leading responsible change, can do it with the social license to operate, and we only get that from the people that we represent, but to be honest, one of the reasons that I wanted to come this week, is because the dialog that is going on right now does suffer some fairly glaring deficiencies.
They're overshadowing essential truths and we need to make sure that whatever our perspective might be on this project that we're talking about facts. The most basic truth is that the stark choice that Keystone's opponents have put at the heart of the debate is an illusion. Too many of the arguments that are deployed against Keystone are far too far from reality. They proclaim that either you stand against the oil sands or you write off the environment along with any hope for sustainable existence, and that is completely wrong.
I want to address Alberta's approach to the environment first because being responsible stewards of our natural resources is upper-most in Alberta's minds. We live in our province in our community just as everyone else does in North America.
We know that our quality of life depends on our respect for the land that we live in and we accept that we're global citizens with responsibility to the planet that we leave behind and we have to be forthright with respect to that, and I am going to be forthright today, because the truth is that Alberta is home to some of the most environmentally-friendly progressive legislation in the world, and you wouldn't know that from the clamor of the debate.
We have nothing to hide. We're a democracy, we're transparent and we'll talk about our facts. We'll talk about what our record has been and I'll start by acknowledging the most basic one. Energy does come with an environmental cost since its production and its use generate greenhouse gasses that affect the climate.
The oil sands contribute 21 percent of Alberta's greenhouse gas emissions, seven percent of Canada's emissions, and less than 0.15 percent of global emissions. The Canadian oil sands in total produce less greenhouse gas emissions than the electric power plants in Ohio, in Indiana, and even less than the agricultural state of Iowa, and we're bringing our emissions down as far and as quickly as possible.
In 2008, Alberta became the first jurisdiction in North America to require large industry to curb greenhouse gas emissions through legislation. Since 1990 Alberta's energy industry has reduced greenhouse gas emissions per barrel of oil that's produced by an average of 29 percent and some facilities have achieved reductions as high as 50 percent.
Alberta's coal-fired power plants have lowered their emissions by an amount that is equivalent to taking roughly 240,000 cars off the road and will close up to a dozen of our older plants over the next 17 years so that we can replace them with cleaner alternatives.
Our renewable fuels initiative mandates that the inclusion of alcohol and bio-diesel in all our fuel that's sold in the province is a requirement and we're also pushing ahead with plans to capture and store as much of our carbon as possible. The government of Alberta is providing $1.3 billion in funding for two large-scale carbon capture and sequestration projects. These are major commitments for a province of only 3.8 million people, smaller than the metropolitan D.C. area, but we're undertaking them because we know that they are necessary and because it's the right thing to do.
We're not just limiting pollution; we've put a price on it, we've put a price on carbon. Since 2008 Alberta's legislative price on carbon has helped to support 49 clean technology projects that include a Lethbridge bio gas project which generates electricity and steam from renewable natural gas formed by industrial scale digestion of organic waste, reducing greenhouse gas emissions, and an electrothermal oil sands pilot project which uses water and electricity to separate oil from sands and clays that nearly eliminate on-site greenhouse gas emissions from oil sands production.
Of course our opponents' focus has always been on the oil sands. The government and the people of Alberta hold producers accountable for every aspect of their operations in the oil sands. Before any project begins industry must develop and receive approval for closure plans that outline how affected areas will be reclaimed and then they have to post a reclamation bond as a further guarantee.
Currently government holds one billion dollars in such bonds from industry and companies can only get that money back after they meet rigorous standards. Reclamation means using local plant species to target the return of local boreal forest ecosystems, we test soils, we monitor vegetation growth for at least 15 years and only after we're satisfied that the site's technology and ecology is returning to normal can energy firms apply to receive their bonds back.
As part of this industry has planted 7.5 million tree seedlings. Only 0.15 percent of Alberta's total boreal forest has ever been disturbed from oil sands development and by law every single inch of that must be reclaimed, and we don't stop there. The Alberta government has brought in a land use plan for the oil sands which sets aside roughly five million acres of boreal forest for conservation.
Total protected land in Alberta is larger than Connecticut, Rhode Island and D.C. combined. Critics still point to the tailings ponds where the byproducts of the industry's chemical separation processes are stored and they point to those as a reason to deplore oil sands but, here too, their claims simply aren't backed up by the facts. 80 percent of oil sands reserves are accessible only through in situ methods which involve separating the bitumen from the sand underground and pumping it to the surface. The resulting land disturbance is only 10 to 15 percent the size of a conventional mining operation and it produces no tailings ponds.
The companies who do use mines and tailings must completely halt the growth of fluid tailings ponds by 2016 and process tailings at the same rate that they are produced thereafter. Tailings ponds disappear from Alberta's landscape in the very near future and reclamation of existing tailings ponds has begun. All of this is happening under the auspices of a world-class monitoring system that is jointly run with Canada's Federal government.
This new system dramatically improves our ability to detect environmental changes and to manage the impact of development. By the time it comes fully on-stream in 2015, the system will include more site samplings over a larger area, a longer list of testable parameters and increased testing frequency for biodiversity and air, for land and for water quality.
Monitoring activities will be subject to external independent peer review by internationally acclaimed scientists, and all data gathered will be made publicly available on-line in real time so that anyone can access the oil sands performance for themselves.
This is all part of our integrated approach to resource management. Instead of studying impacts on a project by project basis we are examining the combined effects of the work that takes place in the oil sands on existing and future developments over the entire region and this is how we will achieve the environmental and the economic outcomes that Albertans expect and ensure that we maintain our very important social license so that we can continue to produce energy responsibly and transport it safely.
Now I know all of this is a lot to take in at once but Alberta has a strong record to defend, a very persuasive case to make, and an undeniable need to make it. The facts need to be on the table during the debate over Keystone.
We are a responsible energy producer and we are looking to develop our market and our resources in a sustainable and a thoughtful way to the benefit of both the buyer and the seller. That's the real story.
Canada and the U.S. share one of the most integrated trade relationships in the world. After all, Canada is the most important global export destination for 35 states. Over eight million American jobs depend on trade and investment with Canada and despite this country's expanding supply of domestic tight oil which I know everyone is very excited about, as are we, energy imports will still remain a reality for a very long time to come.
Now there's much talk in the United States about energy independence. The only realistic way to see this is in terms of a North American energy economy, North American energy independence that allows for close integration between our two countries because, historically, that has allowed our partnership to be most successful.
Almost 30 percent of U.S. oil imports now come from Canada. Without Canada's almost two million barrels a day from the oil sands there is no prospect of North American energy independence. It makes economic and environmental sense to get that energy from a trusted partner.
Unlike so many of your suppliers Alberta is part of a democratic nation, so your dollars go to support a free and an open society, and that's when they don't come back to you. For every dollar that the U.S. spends on importing Canadian oil, 90 cents returns in the form of Canadian imports of American products. That is far more than the average OPEC country and development of the oil sands will only accelerate this trend.
More than 900 American companies supply oil sands firms with equipment, parts and services. Keystone XL would add an estimate $6.9 billion a year to your economy over the next 25 years and create or preserve more than 75,000 American jobs.
Canadians would like to see a level playing field in the debate over Keystone XL. The opponents of Keystone are in effect tilting the playing field ironically in favor of Venezuela which would be the biggest beneficiary in the absence of Keystone.
If it is not Canadian oil sands in the U.S. refineries it will be Venezuelan heavy oil yet Venezuela's oil has the same carbon footprint while Venezuela has little of the environmental policies and the commitment that we do in Alberta to sustainable energy development and importing oil from Venezuela does far less for the U.S. economy and for U.S. jobs than Canadian imports.
Alberta does have other options besides Keystone and I know that those are always part of the discussions that go on. We are an exporting economy. We know that we can get our product to Tidewater.
We know that we can sell to customers around the world and there are several proposals that are on the table including moving energy west to the Pacific and East to the Atlantic via pipe, north via rail, pipes going north, and we think that this will allow us in the very near future to achieve an even higher level of deliverable product to developing world.
Now I believe that from our perspective in Alberta and as Canadians that this will prove viable to a growing global strategy that will allow for the developing world to get access to the resources that we produce.
We know that the world is thirsty for our energy. Whether it's China or India our trading relationships and the investment is growing all the time but it's Keystone that offers the U.S. the most direct and the most tangible rewards, and I hope that not just Washington but Americans across the country understand them and recognize that the precautions that Alberta is taking allow for us to produce energy safely and in an environmentally sustainable way.
To echo recent remarks by President Obama we in Alberta believe that North Americans should never have to choose between jobs, economic growth, energy security and strong environmental protection, and we want to be able to lead in those North American discussions.
Through our policies and our actions past, present and future we will continue to demonstrate that Alberta is the safest, most secure and most responsible energy supplier to the United States. I have to say that when I travel around the world we see that the best opportunity for us is to partner together, to make sure that we're having a full, frank conversation with respect to the options that face us, and to make sure that whatever we decide, that it's based on real information and facts.
One of the reasons that we are so fortunate in Alberta to have the energy economy that we do is because of historic partnerships with industry leaders in the United States who have seen the potential of what a North American energy economy could be. It's what has led to our great economic success. We share common values and beliefs that allow us to pull together in the same direction and to ensure that we're building infrastructure that allows us to be sustainable in North America.
That is ultimately what Canada-U.S. energy trade is about. That is what our friendship has been about, that is what our whole relationship has been about, and we're striving to overcome some of the same challenges around sustainable growth and development as you are. In Keystone we have a solution in hand. We have a solution that is in full accord with our economic, our social and our environmental values.
It's a matter of putting facts into the dialog and letting them speak for themselves. There's information that's available to people who want to understand the choices that we need to make in our life, the choices that we need to make in order to continue to have the quality of life that has led to our success over the past 50 years.
So as we move ahead I look forward to the questions and answer session. I look forward to the dialog. At the end of the day we have opportunity to change the conversation and I look forward to having that with you. Thank you.
Daniel Yergin: Thank you very much, Premier Redford. I think that you've sketched an environmental framework in which Alberta's energy is produced in a very comprehensive way. One question, I think big surprise for many people, we've already heard it today, is that Alberta has a carbon tax.
Alison Redford: Yeah.
Daniel Yergin: Can you tell us how that carbon tax came about and when and so forth, and how it works?
Alison Redford: Well it was - it's legislated and it was first started in 2007. It is a system that monitors emissions from large emitters and emitters who - what's the statistic - 100,000 tons per year, pay into a carbon fund where we say we have a price on carbon.
So what that allows us to do at $15 per ton over 100,000 tons is put money into a technology fund which we then use to reinvest in technologies that will allow for more sustainable development of conventional resources and we're taking another step as we move forward now to put investments into what we think are important which are other technologies that allow for energy efficiency, public transportation and that sort of thing.
But it's terribly important for us that we see actual impact from these projects which we've now started investing in for the past two and a half years.
We have invested as I said in 49 projects and some of them, as I said, are not related directly to production in the oil sands but related to water, related to longer-term environmental sustainability issues, so from our perspective that seems to make more sense than simply collecting a tax and putting in general revenue.
Daniel Yergin: Right, Charlie?
Charles Ebinger: Premier, critics of Keystone might say that the last several weeks have not been particularly good for the oil industry vis a vis pipeline with the spill from the Pegasus Pipeline and of course several railroad tank cars having accidents up in Minnesota.
Alison Redford: Yeah.
Charles Ebinger: How do you, what do you say to critics who site the Pegasus spill as a small-scale example of what might go wrong with Keystone?
Alison Redford: Well as I said in my comments we have to be honest about the fact that if we do have energy development there is the risk of really unfortunate incidents happening and it is an unfortunate incident. It impacts people's lives but the strength that we have is that we have a regulatory process and we have industry that is accountable for when those actions happen.
The other thing to take a look at is that what we're talking about with Keystone is a pipeline that is going to be, of course, state of the art technology. As I said earlier we walk around our communities and probably don't realize how much pipe there actually is underground.
We shouldn't be worried about that because the point is we don't know it's there because overall these are very isolated incidents and they don't happen as often as people might suggest that they could.
The other comment I'd make and you raised it in the context of rail cars is of course rail is a very important part of the transportation network but rail cars also have risks, and as you've mentioned, this can happen.
Without pipelines you end up with an awful lot more railcars carrying an awful lot more product above-ground and I think the risks get elevated, not to mention the impact on emissions.
Charles Ebinger: I think this is your fourth trip now to Washington as Premier. How do you find the discussion, today you've had a lot of discussions already. What strikes you about the nature of the debate that's going on? Well we talked about this a bit earlier. I mean this is a discussion that's going on right now.
We know that the decision is getting closer and closer. I'd say people's minds are quite focused. I'm not sure that we're necessarily talking about a lot of things that are different than what we've been talking about in the past year and a half because what we've been talking about has been Canada's commitment to environmental sustainability and Alberta's record with respect to production.
But there's no doubt that there are a number of people that are very engaged right now knowing that there is a possibility of a decision coming and so it's a great opportunity for us to be able to share as much information as possible in a very efficient way.
Daniel Yergin: Right.
Alison Redford: [Chuckling]
Daniel Yergin: Since the first rejection of the pipeline by the President last year ...
Charles Ebinger: Postponement.
Alison Redford: Postponement [Laughing]
Daniel Yergin: Postponement, excuse me.
Charles Ebinger: I think technically.
Alison Redford: I was going to say that.
Daniel Yergin: Since the postponement of the pipeline last year the boom in U.S. oil production has continued unabated with production estimated to continue rising at the fastest rate in the history this year.
Alison Redford: Yes.
Daniel Yergin: From your perspective how has this surge in production south of the border affected the debate around Keystone, particularly when it comes to the energy security case for the pipeline?
Alison Redford: Well you know it's interesting because we know that the United States has always been a very loyal customer of Canada, that - as we've talked about before, you know, 30 percent of important are coming here, or exports are coming here, from our perspective I think it's really important that the United States has a conversation with respect to energy security and sustainability but I just don't think that anyone benefits from living in isolation.
If we take a look at production of resources you see always at the very beginning increased escalation with respect to production and then in some cases decline with respect to production. There are ups and downs, there are always new technologies, there are always different ways to discover resources.
I know that there's a lot of talk about sort of energy self-sufficiency by 2020. We know that there is also the opportunity to continue to be integrated. In terms of the work that we see going on in the United States there's incredible activity around production and I think you're gonna continue to see upgrading and refining happening but it's never been successful when it's been done only within national borders.
We see in North America generally an integrated transportation system, an integrated refining system that really allows for much more economic opportunity. I just don't think anyone should live in isolation.
Daniel Yergin: In your remarks you talked about - up until now I guess the oil has gone south to the United States. You talked about it going east, west, even north. Do those projects - I mean can you give us a sense of where the discussion stands in those projects and do they go ahead whether or not there's a Keystone?
Alison Redford: Well one thing that's always fascinating to me about industry and markets is that markets will, that industry will always find their markets and we've seen in the last six or seven months tremendous innovation with respect to transporting product to market. As we talked about earlier some of that's been by rail. We have pipeline projects that have been well on the go now for some time to the West Coast, to the East Coast. There is a pipeline right now that's almost fully built in Canada that takes our product, will take our product to Tidewater through New Brunswick and Quebec, and that, it's a pipeline that's actually almost completely built.
There's about a 100-mile section that needs to be built but provinces are very engaged in making that happen, so we have both short-term, medium-term, and long-term opportunities to fill existing pipelines, some even going north, possibly through Alaska or to our northern borders, so they're all at different stages.
Keystone itself is in a project that's expected - was expected to be able to ship for still a number of years, so there's still lots of opportunity for all of that product to get to market but we've got projects that are all in different stages right now that would allow for further export of the product.
Charles Ebinger: We want to go to the floor in just a second but let me ask another question if I may. After the publication of the State Department's SEIS, their environmental review which found that the pipeline would have minimal greenhouse gas impacts in the context of total U.S. emissions environmental opponents are now focusing less on the quantitative impact of the pipeline and more on its symbolic dimension.
They say that President Obama should block the pipeline to send a message that he is serious about climate change and that demonstrates to the rest of the world that the U.S. is taking some actions at emissions mitigation. How do you respond to that?
Audience member: They want to sell out the future of life on this planet! Let's get more creative. Create green jobs, it's easy, just a little bit of subsidies and we could create green jobs!
Daniel Yergin: Excuse us for the interruption.
Alison Redford: Sorry?
Daniel Yergin: I said excuse us for the interruption, but I think we see that this is a passionate debate.
Alison Redford: It's an important part of the debate.
Daniel Yergin: Right.
Alison Redford: It's an important part of public debate. Sorry, but I missed the last part of the question. [Chuckling]
Daniel Yergin: Sorry, the people were saying the president ...
Alison Redford: Oh yes, yeah, yeah, yeah.
Daniel Yergin: ... to show he's serious about climate change needs to take a bold and dramatic action.
Alison Redford: Oh well, I think that everyone needs to take action and we're really proud of what we've been able to do. We know that in the United States that there has been action taken. I know just today on the Hill there's confirmation hearings with respect to a possible new Secretary of Energy, and these are exactly the sorts of questions that are being asked, you know, should there be a price on carbon, should there be investment in carbon capture and storage?
We think it's important for political leadership to take steps and we've certainly seen tremendous progress in the United States. I think that there could be more. I think even consumers can take different steps with respect to their commitment to public transit but I don't think that one particular project needs to symbolize the whole piece.
It's a complicated business. It is important for us to be building technologies. It's important for us to be greening the energy economy. It's important for us to be investing in things like carbon capture and storage, and to have a price on carbon.
You can do all of those things but you can still allow the pipe to go ahead because the pipe will have such a significant impact on economic development and growth in the United States and in Alberta certainly.
Charles Ebinger: So let me read you one of the questions from the floor. The recent draft environmental impact statement by the U.S. State Department notes that building the Keystone XL Pipeline will only create 35 full-time jobs in the U.S. How do you rectify this number with the 75,000 jobs you cited, have the economic benefits of Keystone been exaggerated, and then the person concludes, thank you, Premier Redford.
Alison Redford: Well, thank you. That is a number that's in the environmental impact report. That's absolutely true but that is the number that's associated with the people that would actually be operating the control room that would run the pipeline and monitor the pipeline, and I had actually thought the number was 100.
So we could probably get some clarity with respect to the statistics but that doesn't speak to, and this is important, the construction jobs that you'd have as a result of this, you know, in the Midwest and the refineries around Chicago, 90 percent of the volume going through those refineries is oil sands oil right now.
That's a lot of jobs. This is not short-term and this isn't isolated. This is about really a ripple effect on an economy that allows for people in communities right across the United States to have economic growth in employment and that's certain been the case in Alberta.
One in six jobs in Alberta is indirectly tied to the energy industry and you've seen already in your own country with the development of what's going on in North Dakota just how much wealth and activity and economic growth there is as a result of these projects and, as I said, the pipeline also supports that activity, that growth, and getting that product to market and to refineries as well.
So I think our numbers are closer to the truth in the long-term and we talk about what that means in the next 25 years because that is long-term economic growth.
Charles Ebinger: I'm not sure that this is true but the question is asking you can you confirm you are looking to raise the carbon levy in Alberta? If so, why now, and what do you think of the idea that the Canadian Federal government should be taking tougher steps on the emissions from Alberta oil sands?
Alison Redford: Well we think that it's very important to have a price on carbon. We have a price on carbon and we're very pleased with how that's worked and the way that we've been able to build the technology fund. You know we continue to have dialog, probably Diane and I talk about this, it's essentially her job almost once a month to sit down with the Federal government to make sure that we're creating a system that allows for real impact with respect to environmental sustainability and economic growth.
We've taken leadership on that, we're working very closely right now with the Federal government on a new set of oil and gas regulations that will deal with this. Part of that dialog is talking about what our carbon price can do for technological development and economic growth and from our perspective that's part of our ongoing conversation. The second half of the question was which? I'm sorry.
Charles Ebinger: Whether the Canadian government, the Federal government should be taking stronger actions.
Alison Redford: Well our view is that the Federal government is and these are the discussions that we're having on a regular basis with the Federal government around things like new oil and gas regulations on emissions and so, for us, it is an evolving process.
Again I will say that I was getting reports of some of the confirmation hearings on the Hill, and one of the questions asked was should there be a price on carbon, and the discussion seemed to be going towards it not being considered right now. I don't know if it will or won't be considered in the United States but, you know, everyone is having these discussion right now.
We're having them and Washington is having them, and I think people right across this country are having them as well.
Charles Ebinger: There's several questions, by the way, if others have questions I guess what's the process, just to hold up your card and somebody will come by and collect it if there are other questions but there are several questions related to energy exports, i.e. one of the questions if some of the Keystone XL's oil will be exported from the United States why is the project in the national interest and that ties in also. Others have asked about the trade-off between Canadian oil sands and Venezuelan oil.
Alison Redford: Well I won't speak more about the Venezuelan oil. I think I spoke to it in terms of our concerns with respect to how that resource is developed and the regulatory systems that are in place around that. I heard a radio ad this morning that talked about how Keystone was going to export oil to Venezuela. I've gotta think that's not likely when you're actually importing oil from Venezuela right now into refineries on the Gulf Coast.
So, again, a good example of factual inaccuracies, but from our perspective we think that the refineries that are currently in place that have been built as I talk about sort of historically to, am I still oyes, to actually refine product, to refine the heavy oil that is produced out of Alberta, still have very long lives that will allow for continuing economic growth and activity, and there's no reason to presume that all of that would be exported. Perhaps some of it will. If companies decide to make the decision to upgrade resources, some of which would be produced in the United States and upgraded and possibly exported, I guess that's a possibility but our experience is that what's been refined in the United States has partly been refined and the refineries have been built because of domestic consumption.
So whether that changes or not I think it would be wrong to presume that it would but the thing I do know right now is that those are refineries that will continue to be able to produce this resource which is only supplied at the moment by the oil sands.
Charles Ebinger: This is perhaps an interesting question. What prevents a large expansion of refining in Alberta in lieu of shipping the crude or bitumen to Texas?
Alison Redford: Well part of it is going back, again, to the fact that we've always had an integrated energy economy, it's made a lot of sense for the private sector to build refineries in the United States in communities where people have the skills and the interest in doing the work.
We've found that in terms of how we develop our resources and export our resources that that makes economic sense for us because it's the most effective way to transport the project or the product, I'm sorry.
We do some refining and upgrading in Canada and we'll continue to do some of that but our approach is that it's most important to be able to provide the product the customers have asked for and what we're dealing with in the United States is tremendous demand for the heavy oil that's produce out of Alberta for the refineries particularly along the Gulf Coast.
Charles Ebinger: You've noted that there's been significant investment by Asian countries in Canadian oil sands. Obviously that implies pipeline routes to the west, to the Pacific. Can you give us a sense of the nature of the kind of political discussion going on about pipelines and how you assess prospects and timing?
Alison Redford: Sure, well one thing I'll say just before that is don't make the assumption that we've got to pipe west to go to Asia. If you're actually exporting out of New Brunswick it is a shorter distance to India than if you export out of the West Coast.
Charles Ebinger: [Chuckling]
Alison Redford: I know that doesn't, it ...
Charles Ebinger: Can we get a map?
Alison Redford: We checked it out.
Alison Redford: We checked it out, it's absolutely true, and shipping east doesn't actually increase the cost of transportation to getting the product to Asia significantly at all but in terms of the West Coast pipeline our sense is that there is a dialog going on right now in British Columbia about Gateway that is very different than it was a year ago.
There's really an appreciation for the fact that there's been a regulatory process, that there have been hearings, that the information has been provided.
We're still very optimistic that the project will get regulatory approval and we do think that, at that time, that there is going to have to be probably through the provincial election in British Columbia which will be in the next couple of months, much more public discussion in B.C. about the same issue that we're talking about here.
But we do think that it's imperative that people are part of that conversation and we think that this still goes ahead, probably slightly delayed but there's still opportunity for that.
Charles Ebinger: Right. If we had a pipeline to the West Coast is there any prospect that's, ironically that some of it, to the planne of the pipeline, is there any possibility that some of that oil could then be shipped to the refineries in California which have the capability to process that heavy oil?
Alison Redford: Well I think anything is possible. I don't know if that would make sense for a company that's making commitments into a West Coast pipeline, and if they've made those commitments to go to Asian markets then they would but I guess I wouldn't really want to go too far down the path because I think these are becoming sort of incredibly strange and complicated scenarios that don't really get us much further ahead and I don't know if they even would make economic sense at the end of the day. I just don't know the answer to that.
Charles Ebinger: We're still thinking about the East Coast route to India being shorter than the West Coast.
Alison Redford: I know, it's fascinating.
Charles Ebinger: We're trying to process that, yeah.
Alison Redford: Everyone's going to run out and get their atlases when they get home.
Charles Ebinger: Yeah. Is the debate over Keystone affecting the time, the pace of development and will it affect the development of the oil sands? This is a question that's come up in a couple of the cards.
Alison Redford: Yeah, what we're seeing is a continuing growth in the oil sands and one of the things that the State Department's reports said is that if Keystone didn't go ahead we wouldn't really see much of a slow-down with respect to production. That's my sense in terms of, as you've mentioned, major investments that are being made in the oil sands right now.
We see capacity ramping up 20-20, is that, to probably three million barrels and we think that's going to continue. We don't see any reason why that is going to slow down. As we've said we know that innovative private investors are able to get their products to market and we see continuing global demand for the product, so we don't foresee any drop in production as a result of these discussions.
Charles Ebinger: Right. We have several questions here, slightly different, but they all relate to the question of how would rejection of the pipeline affect U.S.-Canadian diplomatic relations on almost, and also relations between the business communities?
Alison Redford: Yeah, I don't know if I can answer that with the ambassador sitting in the front row. [Laughing]
Daniel Yergin: He's really interested in your answer actually.
Alison Redford: Well I'd make a couple of comments. We, and this is, I'm glad that there's a second part of that question because something else to remember, and I didn't talk about it in my speech, is that a lot of the investment in oil sands are by American companies. I mean there's economic opportunities in growth and profit that comes to the United States as a result of a lot interest that U.S. companies have in the oil sands.
And I think those are very tight relationships. I think that at a business level that everyone in the business community understands pretty completely what the opportunities are and I think they work very closely together, so I don't see much of a change there.
I had someone describe to me what they thought a possible outcome could be if there was a decision not to proceed with Keystone and they said, you know, we shouldn't make the assumption that if the decision was to not proceed with Keystone and they said, you know, we shouldn't make the assumption that if the decision was to not proceed with Keystone, that that would simply mean that the matter fell off the table.
We've had experiences as trusted trading partners before on issues like softwood lumber where even though there wasn't direct dialog going on with respect to the issue it tended to come up again and again in other discussions, other bilateral discussions, in the Canada-U.S. level and I think you probably, Gary, were a premier during some of those discussions.
So my sense is that it would be a lot more helpful to have this proceed because I think that if it didn't it would end up becoming a part of ongoing conversations and that would be disappointing because there's too many other issues that we need to discuss and be productive on and it would be a shame to just let that sit in the middle of it.
Daniel Yergin: The world price may be over $100 a barrel for oil but it isn't for Alberta or, indeed, for oil that's being produced in the center of the United States and I think the term somebody's noted here is the 'Bitumen Bubble.' What's been happening with your budget at home?
Alison Redford: Well we've had some challenging times and we have coined the phrase I think, the Bitumen Bubble, and it's really had an impact on our revenues. We've expected that probably this year alone that because of that differential that we're probably seeing about a 6 billion drop in revenue and that's why it is imperative for us.
Daniel Yergin: For the provincial government, yeah.
Alison Redford: Yes, yeah, so our annual budget this year is about $38 billion and so, yeah, $6 billion is quite significant for us but you are right. It's about whether you're producing it in Alberta or whether you're producing it in the center of the United States, getting that to world market is very important and it will be important for both of us.
Daniel Yergin: And I guess that goes back to the fact that you have these new centers of production and the logistics aren't connected which is ...
Alison Redford: That's right.
Daniel Yergin: ... what Keystone's about.
Alison Redford: That's right. What was your statistic about pipe in the ground? 180?
Daniel Yergin: Well there are 180,000 miles of oil pipelined in the United States and so Keystone is about, would add about less than one percent to the ...
Alison Redford: Less than 1 percent ...
Daniel Yergin: ... yeah, to that.
Alison Redford: ... to the existing.
Daniel Yergin: In the United States.
Alison Redford: It's amazing.
Charles Ebinger: And there are a lot of gas pipelines too.
Audience member: You all are responsible for these pipelines in the United States and for oil proliferation throughout our country. I'm not hurting anybody, I'm not hurting anybody.
Audience member: Climate change means mass casualty flooding, mass casualty famines, mass casualty droughts.
Alison Redford: That's why we're doing something about it.
Audience member: Can you tell us about these facts regarding the climate change outside of the area?
Charles Ebinger: We would be delighted if you'd put a question in writing to her.
Daniel Yergin: Send up a question. Well I'd love to, well we'll pass up your card and we'll bad glad to ask the question.
Charles Ebinger: We'd be delighted to answer your question if you pass it up.
Daniel Yergin: Everybody else has passed up the card and perhaps you could do the same, be polite about it. We'll be happy to ask your question.
Charles Ebinger: Here's one I think that, do we have one on the floor or do you want it?
Alison Redford: Sure.
Charles Ebinger: I mean here's one I think that some of the people who may be opposed to the pipeline might enjoy hearing the premier's views on. It says you talk about shared solutions and shared priorities regarding the economic benefits of the pipeline project.
What is the plan of action regarding the shared solutions for any environmental damages that might occur, both with the transportation of the oil and the export of the oil? Could you restate your priorities regarding conservation in light of these kinds of concerns?
Alison Redford: Yeah, well I think this is very important and it's one of the reasons that the regulatory process and the approval process is so important and we, in Alberta, certainly have very rigorous regulatory frameworks around how we expect industry to conduct themselves, how we expect them to build infrastructure, and how they need to be accountable for the consequences of adverse circumstances.
We think that these are really the shared values that we already have with the United States. I mean the United States also has very strong regulatory processes in place. That's one of the reasons we're going through all of this right now. So in terms of shared priorities I think they're already there.
I think there's always work that we can do and it's happening in Canada and the United States about how to continue to enhance the response to clean-ups when we need to.
As I said they don't happen often but when they do we want to make sure that we're partnering on that and I know that when those circumstances have occurred that there are systems in place that have been developed in joint partnership, whether it's emergency response systems or industry approaches to deal with those issues.
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