[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
   THE AMERICAN ENERGY INITIATIVE, PART 17: A FOCUS ON THE FUTURE OF 
        ENERGY TECHNOLOGY WITH AN EMPHASIS ON CANADIAN OIL SANDS

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 20, 2012

                               __________

                           Serial No. 112-128


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov




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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire       MIKE ROSS, Arkansas
PHIL GINGREY, Georgia                JIM MATHESON, Utah
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin 
LEONARD LANCE, New Jersey            Islands
BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 7_____

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               KATHY CASTOR, Florida
GREG WALDEN, Oregon                  JOHN P. SARBANES, Maryland
LEE TERRY, Nebraska                  JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas            EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California         ELIOT L. ENGEL, New York
STEVE SCALISE, Louisiana             GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
PETE OLSON, Texas                    MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia     CHARLES A. GONZALEZ, Texas
CORY GARDNER, Colorado               HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
H. MORGAN GRIFFITH, Virginia
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     3
Hon. Kathy Castor, a Representative in Congress from the State of 
  Florida, opening statement.....................................     5
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   191

                               Witnesses

Eddy Isaacs, Chief Executive Officer, Alberta Innovates--Energy 
  and Environment Solutions......................................     9
    Prepared statement...........................................    12
Anton R. Dammer, Former Director, Naval Oil Shale Reserves, 
  Department of Energy...........................................    19
    Prepared statement...........................................    21
John Nenniger, Chief Executive Officer, N-Solv Corporation.......    39
    Prepared statement...........................................    41
William McCaffrey, President and Chief Executive Officer, MEG 
  Energy Corporation.............................................    54
    Prepared statement...........................................    56
    Final Report, dated October 2009, ``The Impacts of Canadian 
      Oil Sands Development on the United States' Economy,'' 
      Canadian Energy Research Institute.........................    68
    Report, dated July 2009, ``Life Cycle Assessment Comparison 
      of North American and Imported Crudes,'' Alberta Energy 
      Research Institute \1\.....................................
Murray D. Smith, President, Murray Smith and Associates..........   122
    Prepared statement...........................................   125
Simon Dyer, Policy Director, The Pembina Institute...............   132
    Prepared statement...........................................   135
Melina Laboucan-Massimo, Climate and Energy Campaigner, 
  Greenpeace Canada..............................................   162
    Prepared statement...........................................   164

                           Submitted Material

Statement, dated March 29, 2012, of the Canadian Association of 
  Petroleum Producers, submitted by Mr. Shimkus..................   192

----------
\1\ The report is available at http://www.eipa.alberta.ca/media/
  39640/life%20cycle%20analysis%20jacobs%20final%20report.pdf.


   THE AMERICAN ENERGY INITIATIVE, PART 17: A FOCUS ON THE FUTURE OF 
        ENERGY TECHNOLOGY WITH AN EMPHASIS ON CANADIAN OIL SANDS

                              ----------                              


                        TUESDAY, MARCH 20, 2012

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:04 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Shimkus, Terry, 
Bilbray, Scalise, McMorris Rodgers, Olson, McKinley, Gardner, 
Pompeo, Griffith, Castor, Engel, Green, and Waxman (ex 
officio).
    Staff present: Charlotte Baker, Press Secretary; Michael 
Beckerman, Deputy Staff Director; Maryam Brown, Chief Counsel, 
Energy and Power; Allison Busbee, Legislative Clerk; Garrett 
Golding, Professional Staff Member, Energy and Power; Cory 
Hicks, Policy Coordinator, Energy and Power; Ben Lieberman, 
Counsel, Energy and Power; Carly McWilliams, Legislative Clerk; 
Phil Barnett, Democratic Staff Director; Caitlin Haberman, 
Democratic Policy Analyst; Angela Kordyak, DOE Detailee; and 
Alexandra Teitz, Democratic Senior Counsel, Environment and 
Energy.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. I would like to call this hearing to order 
this morning. I might say that this is the 17th day of hearings 
that we have had on energy in America.
    Frequently, President Obama in his speeches talks about 
America having only 2 percent of the world's proven oil 
reserves. Today, we are going to discuss how Canada took action 
to increase its proven reserves several-fold by allowing the 
development of oil sands in Alberta. We know that in Canada and 
in the U.S., there have many groups that have opposed 
additional oil production in both countries, but Canada faced 
that situation and as a result, as I have indicated, 
dramatically increased their proven oil reserves.
    As a result of that, those of us in America, many of us, 
are going to continue to advocate for the Keystone XL Pipeline 
Expansion project that could bring an additional 700,000 
barrels of oil a day to Midwestern and Gulf Coast refineries 
from Canada. The benefits in terms of additional secure oil and 
thousands of jobs is simply too important for us to give up on. 
I for one would like to see more Canadian oil flowing into 
America. I would also like to see the same type of pro-energy 
agenda in America that made oil sand production possible in 
Canada.
    There is a bountiful supply of untapped oil reserves here 
in the U.S., but frequently, it is too bottled up with Federal 
access restrictions and regulatory red tape. And I believe this 
needs to be changed. And the development of oil sands in Canada 
provides many lessons for us here in America.
    In spite of regulatory obstacles to additional development 
and production in the U.S., we do see signs of the can-do 
spirit in America. For example, new drilling techniques 
pioneered in the U.S. have turned North Dakota into a major 
oil-producing State. But that was possible only because it was 
developed on private lands, not Federal lands. In the vast 
areas of America where we have public lands and oil in these 
areas, the Obama administration has been reluctant to give the 
go-ahead for additional exploration and production in those 
areas.
    I am sure the Canadian people care about the environment 
every bit as much as we do in America, and they have insisted 
all along that oil sands production be done in an 
environmentally safe way. We will learn today about the 
successful efforts to reduce environmental impacts from oil 
sand even as the production of oil sands increases through 
technology. The difference is that Canadian regulators seek to 
make energy production safe while the Obama administration 
regulators often seek to make it impossible to do. That is why 
Canada's oil sands is nearly as valuable as an example of 
energy policy done right as it is for the oil itself. America 
can and must increase its domestic energy production and there 
is much that we can learn from the Canadian experience. And I 
look forward to the testimony of all of our witnesses today on 
that very subject matter.
    [The prepared statement of Mr. Whitfield follows:]

    [GRAPHIC] [TIFF OMITTED] T7480.001
    
    [GRAPHIC] [TIFF OMITTED] T7480.002
    
    Mr. Whitfield. At this time I would like to recognize the 
gentlelady from Florida, Ms. Castor, for a 5-minute opening 
statement.

  OPENING STATEMENT OF HON. KATHY CASTOR, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Ms. Castor. Well, thank you, Mr. Chairman. And thank you to 
the witnesses who are here today.
    Today, we are having a hearing on tar sands and we are 
going to hear testimony about how the production and use of tar 
sands fuel exacts a very heavy toll on the environment and on 
communities, whether it is impacts to water quality or strip 
mining or the very serious carbon pollution. This is dirty 
stuff. Do we have the technology to address these issues? It is 
not clear at this point that we should be going gangbusters, 
full speed ahead, until we really can address the economic and 
environmental impacts of tar sands.
    As one of our witnesses will testify today, from the 
production well to the wheels of a car, tar sands fuel is 
estimated to generate about 23 percent greater carbon pollution 
than conventional oil. These are very serious issues and we 
need to get ahead of them and not stick our heads in the sand 
so to speak and play ostrich with this. This could be very 
beneficial for our energy production strategy, but it can't 
come at such a high cost that communities suffer, the 
environment suffers, that we pollute our water, we pollute our 
air.
    One of the worst impacts could be to the climate. And 
colleagues, we have a responsibility to understand the impacts 
to the world's climate because climate change does threaten our 
public health, it threatens our economic security, it threatens 
our agricultural production and our national security. Those 
are just some of the threats posed by climate change. And in 
some ways, this hearing is a first step. We are finally hearing 
about how much carbon-intensive tar sands fuel is and we are 
hearing about some of the technologies that could be used to 
reduce that carbon pollution if we are really serious, if the 
United States and Canada are really serious about reducing 
those impacts.
    There are other very serious issues. I know process isn't 
all that exciting, but we need to be mindful that we have very 
important pipeline systems all across this country and 
throughout Canada and they work well, but what is the 
difference here? They have been subjected to appropriate 
environmental review and they have been subjected to certain 
safety standards. And I am afraid the majority party's push to 
override those considerations will eventually come at the 
detriment of our communities throughout both countries. So we 
have a responsibility to follow the law and not override these 
important environmental laws and community safety laws that 
every other business has been subjected to.
    I am also at a loss frankly that throughout the entire 
112th Congress, the majority of this committee has made no 
effort to consider a comprehensive energy strategy, one that 
puts everything on the table, one that seriously examines the 
proper places to invest for a truly diversified energy supply. 
Until we do that, these issues will continue to be debated 
pipeline by pipeline and coal plant by coal plant and that 
really doesn't make sense. It is past time for this committee 
to examine these issues with the seriousness they deserve.
    I yield back.
    Mr. Whitfield. At this time I recognize the gentleman from 
Illinois, Mr. Shimkus, for 5 minutes.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. Thanks for calling 
the hearing. It is good to continue to talk about energy 
security and lower-priced crude oil, lower-priced gasoline, 
decrease in our reliance from Iran, decrease in our reliance 
from the Strait of Hormuz, countries that dislike us and 
looking north to our friends and allies, the Canadians, who I 
would make a point that there are no better environmental 
stewards than any country on Earth.
    And so let me start by--I have got a couple slides based 
upon my trip. First, I am going to put up the pipeline issue 
that I addressed at a hearing before. Look at all of the 
pipelines we have in this country today. Why do we have 
pipelines in this country? Because it is the safest, most 
secure way to transport liquid product, whether that is crude 
oil, refined product. If you have ever been to a refinery, you 
don't see trucks going in and out because pipeline is bringing 
the crude, pipelines send out the broken up component parts of 
the refined product.
    In the last hearing we talked about the numerous pipelines 
we already have across the Canadian-U.S. border also on the 
Mexican border. Next slide.
    [Slide.]
    Caterpillar, a great U.S. company, one of our largest 
exporters, relies on Canadian oil sands mining for building 
these great pieces of manufactured--we talk about manufacturing 
in this country. That is manufacturing. Our Michelin tires made 
in South Carolina, we are proud from Illinois, and I am proud 
of Caterpillar and their ability to work in this operation. 
Next slide.
    [Slide.]
    Ford trucks, Ford 150 trucks all over Fort McMurray, that 
is at one of the oil sands mining operations, a good American-
made, probably built by United Autoworkers. It is great to see 
up there. Next slide.
    [Slide.]
    Traffic jams, if you have been to Fort McMurray, it is a 
little podunk town--well, it was a little podunk town. Now, you 
have traffic jams. And if you look to the left, those are two 
Harley-Davidson motorcycles, nice to see American-made products 
up in Canada. Next slide.
    [Slide.]
    That is a mining operation, and this is a good point. I 
want to put this up because what we are going to hear today is 
about a different type of oil sands recovery that creates a 
carbon footprint less than the California standards. This is 
what you will hear debated. You won't hear anybody talk about 
what we are going to hear testimony about. Next slide.
    [Slide.]
    Another mining operation. I am from mining country in 
Illinois. I love surface mining; I love subterranean mining, 
good jobs, good salaries, good health benefits. And I think 
that is the last slide. I wanted to have an in situ slide but I 
think for most people it would be very disappointing. And 
hopefully we can get a slide up later on in the questioning 
because if you see in situ operation, what are you going to 
see? You are going to see a platform, maybe the sides, a 
coverage area, maybe three football size long. You are going to 
see a couple buildings and you are going to see pipes. That is 
all you are going to see. You are not going to see a big 
footprint. And you are going to see geothermal applications 
that create a smaller carbon footprint.
    And I am not a big carbon guy, OK? If you follow my public 
testimony and my comments, this climate change thing, pricing 
carbon, I am not in that camp. But if you go in that direction, 
80 percent of this oil sands recovery can be in situ, and that 
is what I hope my colleagues on the other side learn about 
today. Two different types of recovering oil sands, mining 
operations, in situ. Eighty percent of the oil up there now is 
in situ and it is in pipelines and there is no footprint.
    So Mr. Chairman, great to have the hearing today. American 
jobs, Canadian jobs, third-largest oil reserves on the planet. 
To our neighbors and friends, the Canadians, a democratic 
country, if you look at the top 10 how many are free capitalist 
societies, free market ability to grab crude oil, the oil sands 
is one area. We need to work with our allies and friends the 
Canadians to recover that. It will decrease our reliance on 
imported crude oil and lower our prices.
    Thank you. And I yield back my time.
    Mr. Whitfield. Thank you, Mr. Shimkus.
    At this time, I recognize the gentleman from California, 
Mr. Waxman, for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman.
    Today's hearing will examine the production of fuel from 
tar sands, the technologies used in that process, and the 
environmental impacts of tar sands development.
    The Republicans and the oil industry will use this 
opportunity to call for building the Keystone XL tar sands 
pipeline and developing deposits of tar sands and oil shale in 
the United States. They will base these recommendations on two 
central claims. First, they will say that we can reduce 
gasoline prices by expanding production, including developing 
unconventional deposits such as tar sands and oil shale in the 
United States. And second, they will suggest that the 
environmental effects of developing tar sands are not that bad 
and getting better. My response is, don't believe them.
    Let us consider gas prices. It is a Republican article of 
faith that we can drill our way to lower prices at the pump. 
But as we heard at the recent hearing on gas prices, if we 
increase production, it is easy for OPEC countries to reduce 
production by the same amount. That is the definition of a 
cartel--a group of entities that coordinates to control prices.
    The fact is we are drilling more and prices are still going 
up.
    U.S. crude oil production is the highest it has been in 8 
years, and the U.S. has more oil and gas drilling rigs 
operating right now than the rest of the world combined. Net 
oil imports as a share of our total consumption declined from 
57 percent in 2008 to 45 percent in 2011, the lowest level 
since 1995, but prices are still going up.
    In fact, Canada is the poster child for the point that more 
production will not free us from world oil prices. Canada has 
huge tar sands deposits and is developing them at a breakneck 
pace. Canada is a net exporter--that means they produce more 
oil than they use.
    And I want to put up a chart that shows what has happened 
since 2000. Canada's production and net exports have increased 
steadily for the past 12 years. Canada has increased its crude 
oil production by more than 35 percent. Canada is producing so 
much oil that it now exports 70 percent of all the oil they 
produce.
    If everything the Republicans have been telling us is true, 
then gasoline prices in Canada should have plummeted over the 
last 10 years. But that is not what happened.
    Here is another chart I would like to have up. And this 
shows the U.S. and Canadian gas prices over that period. As you 
can see, U.S. and Canadian gasoline prices track perfectly 
because they are both driven by the same thing--world oil 
prices. In fact, Canada's gas prices are actually higher than 
our prices due to taxes.
    More drilling, building a new tar sands pipeline or 
developing oil shale has not reduced gasoline prices in Canada 
and it won't in the United States either.
    But that is not the only fantasy we will hear about today. 
We will also hear that the environmental harms from tar sands 
production have been minimized and will be solved by 
technology. In reality, the tar sands operations have vast and 
devastating effects on the land, water, air, and ecosystem.
    Canadian tar sands are produced in Alberta's boreal 
forests. And the photo I would like to have put up you can see 
a pristine area before tar sands production begins. The 
landscape is beautiful. The air and water are clean.
    In the second photo of which we can put up you can see the 
effects of tar sands production. The land has been turned into 
an industrial wasteland. The forests have become an open pit 
mine. Maybe some of this damage can be avoided. Technology can 
reduce environmental impacts. But that won't happen without 
stronger government regulation.
    I recognize that tar sands holds a large amount of oil. But 
it is a resource that should not be exploited without 
environmental safeguards that protect that land, water, and 
pollution, controls that stop the growing emissions of carbon 
and other dangerous gases. Until these problems are addressed, 
the oil in the tar sands is best left underground.
    Thank you, Mr. Chairman.
    Mr. Whitfield. The gentleman's time is expired.
    At this time, I would like to introduce the witnesses 
testifying this morning. We appreciate all of you being here. 
We look forward to your expertise and we anticipate we will 
learn a lot from your testimony.
    First, we have with us Dr. Eddy Isaacs, CEO, Alberta 
Innovates-Energy and Environment Solutions. We have Mr. Anton 
Dammer, Former Director, Naval Oil Shale Reserves, U.S. 
Department of Energy. We have Dr. John Nenniger, who is 
President and CEO of N-Solv Corporation. We have Mr. William 
McCaffrey, President and CEO of MEG Energy Company. We have Mr. 
Murray D. Smith, who is President of Murray Smith and 
Associates. We have Mr. Simon Dyer, who is the Policy Director 
for The Pembina Institute. And then we have Ms. Melina 
Laboucan-Massimo--I should pat myself on the back--for Climate 
& Energy Campaigner, Greenpeace Canada.
    So welcome to all of you. I am going to call on each one of 
you to give a 5-minute opening statement. And on the front of 
the desk there there is a little instrument that will have 
different colors on it. It will have green, yellow, and red, 
and when it gets to red, that means your time is up. So if you 
wouldn't mind looking at that periodically. But each of you 
will be given 5 minutes. And Dr. Isaacs, we will begin with 
you. So you are recognized for a 5-minute opening statement.

  STATEMENTS OF EDDY ISAACS, CHIEF EXECUTIVE OFFICER, ALBERTA 
 INNOVATES-ENERGY AND ENVIRONMENT SOLUTIONS; ANTON R. DAMMER, 
   FORMER DIRECTOR, NAVAL OIL SHALE RESERVES, DEPARTMENT OF 
    ENERGY; JOHN NENNIGER, CHIEF EXECUTIVE OFFICER, N-SOLV 
 CORPORATION; WILLIAM MCCAFFREY, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, MEG ENERGY CORPORATION; MURRAY D. SMITH, PRESIDENT, 
 MURRAY SMITH AND ASSOCIATES; SIMON DYER, POLICY DIRECTOR, THE 
  PEMBINA INSTITUTE; AND MELINA LABOUCAN-MASSIMO, CLIMATE AND 
              ENERGY CAMPAIGNER, GREENPEACE CANADA

                    STATEMENT OF EDDY ISAACS

    Mr. Isaacs. Thank you very much, Mr. Chairman. And thank 
you for the opportunity to address you. I hope that I can add 
value to the work of this committee.
    I have submitted a short briefing to the committee on what 
I wanted to address so I will keep my remarks fairly brief. I 
want to introduce my organization, I want to speak to oil sands 
technology and the importance of innovation and collaboration, 
and finally, how this all ties to energy security.
    First, my organization, Alberta Innovates--Energy and 
Environment Solutions, we are one of four new provincial 
corporations launched by the Alberta Government in January 
2010. We serve as the technology arm of the Alberta Government 
in Energy and Environment. We are a successor to two previous 
organizations stretching over 37 years. These organizations 
have been instrumental in creating the climate for commercial 
development of the oil sands.
    We invest or fund research and technology with industry, 
other governments, and international collaborators. U.S. 
organizations are major collaborators not only in oil sands but 
also in cleaner coal development, in carbon capture, and 
renewable energy.
    I want to switch now to talk about oil sands technology and 
the importance of innovation. Heavy oil and bitumen are found 
in many places worldwide. Alberta has the largest global 
reserves of these hydrocarbons that are not under the control 
of the state. Technology has been critical to the development 
of the oil sands resources. Many of the technologies we use 
today originated by companies operating on both sides of our 
border. The message for extraction--I think it has been 
mentioned--are generally mining and in situ. For in situ, we 
use in situ for the deeper deposits.
    The major innovation in mining has been the development in 
the past 10 years of hydro-transport. Instead of using a truck 
and shovel, the ore is transported by a pipeline from the mine 
face as a slurry with water. The oil separates in transit to 
the plant. This method is operated at lower temperature than 
conventional extraction, thus reducing energy intensity and 
greenhouse gases. With in situ methods, our steam-based 
processes, cyclic steam stimulation, similar technology to what 
has been pioneered in California in the 1960s; steam-assisted 
gravity drainage, which has been only in commercial operation 
for the past 10 years.
    New technologies are emerging that are poised to 
significantly reduce energy intensity, reduce water use and 
greenhouse gases. These include steam-solvent hybrid processes 
that are being applied at least by one company commercially 
today. Use of solvents without steam, you will be hearing about 
that from Dr. Nenniger and N-Solv is a good example of this 
type of technology. Electric heating and electromagnetic 
heating technology is coming into use. Electromagnetic uses 
radio frequency to heat the oil in the oil sands. These are 
early days for the electromagnetic heating technology which 
really does bring the knowhow of the Harris Corporation in 
radio communication technology with the reservoir expertise of 
oil sands producers and is a great example of cross-border 
collaborative effort on a new, innovative, next-generation 
technology.
    I also want to mention carbon capture and storage and the 
several-billion-dollar investments that are being made in four 
commercial-sized demonstration projects in Alberta. In addition 
to new, transformative technologies there is a critical need to 
focus on emerging innovations to decrease the impact of current 
technologies on the environment, a good example of the 
technology deployment action plan for an end-to-end solution 
for oil sand dealings. This project has brought together all of 
the oil sands mining companies, the Federal and provincial 
government, as well as the key engineering technology providers 
working in the area. Not only are there 100 technologies being 
evaluate to chart promising pathways, but there is a complete 
and open knowledge-sharing of pilots and demonstrations that 
have taken place and practices that have taken place for the 
past 20 years.
    We have had a great deal of success in Alberta from a 
strong government-industry partnership based on clear business 
case and well articulated implementation strategies. This is 
all the formula for success, especially on the environmental 
front.
    In the resource sector, it takes 20 to 30 years to bring 
new technology to market, much longer than in other sectors, 
and this increases the risk profile and the financial 
commitments required. The role of my organization is to work 
with industry to significantly reduce the time lag for 
innovation and the risk of adapting new technology, especially 
next-generation technology.
    And the final point I want to make is about energy 
security. Canada and the U.S. are the only developed countries 
that can dramatically increase oil production. The chairman 
alluded to the fact that not only do we have oil from oil sands 
but also increasingly from shale oil reservoirs, the Bakken 
type found in North Dakota, Montana, Texas, California, and the 
Canadian provinces of Manitoba, Saskatchewan, and Alberta. 
Societal expectations are that in considering economic 
development, we do what is best for the environment. If we are 
to be successful on the environmental front, then technology 
will be the key. To put it in the form of a simple equation, 
energy security equals energy, economy, environment, and 
societal values. In all of these, technology innovation is the 
glue and government's role is to create the conditions that 
ensure that energy is available, accessible, acceptable and 
affordable, or in other words, secure.
    Thank you.
    [The prepared statement of Mr. Isaacs follows:]

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    Mr. Whitfield. Mr. Dammer, you are recognized for 5 
minutes.

                  STATEMENT OF ANTON R. DAMMER

    Mr. Dammer. Thank you, Mr. Chairman and members of the 
committee. It is a great pleasure and honor to me to share the 
podium today with Murray Smith from Canada. I think I am the 
only U.S. citizen on the committee today. Murray was a leader 
in the orderly and progressive development of the Canadian oil 
sands.
    Development has enabled Canada to be energy-independent, 
the goal that has eluded our country since the 1960s. Today, 
Canada is our largest source of imported oil. Canada--Alberta--
has increased their proved reserves of oil to 176 billion 
barrels, second only in size to Saudi Arabia. In comparison, 
the United States has approximately 22 billion barrels of 
proved reserves. We can learn from the development of the 
Alberta oil sands development.
    The first and perhaps the most important lesson might be to 
create a permanent program and decision-making process that 
promotes research, technology development, regulatory and 
statutory reform, and public education. Oil sands and oil shale 
share some distinct physical and developmental characteristics 
as both resources are unconventional and both resources are 
well defined, airily consolidated, and highly concentrated.
    We also share a common beginning. Following the Arab Oil 
Embargo, there was a resurgence in interest and purpose in 
energy independence in both Canada and the U.S. in 1974. In 
1974, the DUI prototype Oil Shale Leasing Program awarded two 
leases in Colorado and two in Utah, attracting $681 million in 
bonus payment. It seemed that as soon as development gained 
momentum, it came to an end in 1982 with the precipitous drop 
in oil prices and the realization that prices would not 
escalate as originally speculated. Exxon's Colony Project 
abruptly closed doors without warning, an event that is 
popularly referred to as Black Sunday.
    Not until 25 years later, the passage of EPAct '05 did the 
U.S. Government demonstrate any appreciable interest in U.S. 
oil shale resource. In the Energy Policy Act of 2005, the 
President and the Congress of the United States declared that 
unconventional fuels, including oil shale ``are strategically 
important resources that should be developed to reduce the 
growing dependence of the United States on politically and 
economically unstable sources of foreign oil.''
    Section 369(h) of that Act directed the Secretary of 
Energy, in cooperation with the Secretaries of the Interior and 
Defense to establish a taskforce to develop a plan to 
accelerate the commercial development of strategic 
unconventional fuels and initiate partnerships with Alberta and 
nations with oil shale resources. The taskforce report with 
recommendations was completed and forwarded to the President in 
February of 2007. Unlike the Alberta experience, the report was 
never implemented, no plan, no policy, no progress.
    We are grateful for a strong and reliable trading partner 
to our north, but we are still dependent on the import of close 
to half of our daily oil requirements. We still consume roughly 
a quarter of the world's oil supply and we remain reliant on an 
increasingly competitive, unstable, and often hostile world oil 
market for our energy security.
    The United States is the custodian of the largest and most 
concentrated hydrocarbon resource on earth, oil shale. 
Conservatively estimated to exceed two trillion barrels, it has 
the potential to provide millions of barrels of production per 
day if developed in a planned and prudent manner analogous to 
the Alberta experience. In the Green River Basin of Colorado 
alone, the USGS estimates that 800 million barrels could be 
produced, over three times the total reserves of Saudi Arabia.
    In spite of lack of national direction in oil shale 
development, there remains considerable activity in the private 
sector. The activities of 32 companies are summarized in the 
report Secure Fuels from Domestic Resources, which is found on 
the web.
    Great progress has been made in limiting water utilization, 
increasing energy return on investment, and minimizing the 
environmental impacts historically associated with oil shale 
development. As history as proved, the only limitation to 
developing oil shale resource in the United States has been, 
firstly, economic; and secondly, access to the resource, 80 
percent of which is on Federal land. As oil prices range above 
$100 per barrel, the economics look increasingly attractive and 
the technical evolution of both surface and in situ 
technologies are encouraging.
    The oil shale moratorium established under the Hoover 
administration in 1930 remains in effect. Today, a handful of 
oil shale R&D leases have been parsed out by the Department of 
Interior. Another programmatic environmental impact statement 
has been published and is now in comment, a weak, disjointed, 
and affected process, unable to provide industry the surety of 
commitment on the part of the government to risk investment of 
billions. We need to plan for the development of this prolific 
U.S. resource as the Canadians plan for the successful 
development of the Athabasca oil sands. We have the mechanism 
through Section 369 of EPAct '05. Ironically, failure to 
perform the requisite planning and preparedness will inevitably 
lead us back to everyone's deepest fear--Black Sunday.
    Mr. Chairman and members of the committee, I thank you once 
again, and I look forward to working with you in any capacity 
in furtherance of national security and preparedness.
    [The prepared statement of Mr. Dammer follows:]

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    Mr. Whitfield. Thank you.
    Dr. Nenniger, you are recognized for 5 minutes.

                   STATEMENT OF JOHN NENNIGER

    Mr. Nenniger. Thank you. Good morning, Chairman Whitfield, 
Ranking Member Rush I guess is not here and members of the 
committee. I am John Nenniger, CEO of a technology company 
called N-Solv. I am a Canadian who has had the great privilege 
of earning a doctorate in chemical engineering from MIT. My 
energetic and remarkably patient wife is an American citizen, 
born and raised in Kentucky, who also has a doctorate in 
chemical engineering.
    It is a great honor for me to be here today to discuss 
solvent-based oil sands extraction. Inexpensive energy is good 
for the American economy but the evidence of climate change is 
both compelling and terrifying. This is a profound moral 
dilemma. I believe that harm reduction is the most pragmatic 
option. On the oil sands, this means finding profitable ways to 
produce cleaner oil.
    The N-Solv extraction process is an underground extraction 
process similar to steam except condensing solvent provides the 
heat. The N-Solv process produces a more valuable product for a 
lower cost because it is energy efficient and it does not use 
water. Although our laboratory results are very encouraging, N-
Solv has not yet been tested in a reservoir. In comparison to 
steam, N-Solv is expected to reduce energy consumption by 85 
percent, reduce well-to-tank greenhouse gases by 205 pounds per 
barrel, increase oil value by 23 percent, reduce capital and 
operating expenses by 30 percent, double the net back per 
barrel, triple the payout. Our field pilot is expected to 
produce first oil in April of 2013.
    As a scientist, I view extravagant claims with great 
skepticism unless they can be supported with compelling 
evidence. I don't have time to present our evidence today but 
there is more detail in the written handout and on our Web 
site. We found that bitumen dissolution into solvent proceeds 
in a way that was quite different than what everybody had 
thought. Our observations have been independently confirmed by 
researchers at a number of different universities. Although 
there has been decades of experimental work on solvent, our 
results show that the previous interpretation of lab 
experiments was incorrect, and consequently, the reservoir 
predictions were also incorrect.
    We developed a sophisticated apparatus and ran a series of 
experiments to measure chamber growth rates. Our experiments 
showed we could achieve oil rates at 100 degrees Fahrenheit 
that were three times faster than steam at 450 Fahrenheit. To 
make sense of our results, we assembled a database of every 
solvent experiment in the scientific literature. We were able 
to successfully correlate the literature data over a huge range 
of conditions and our lab results are exactly in line with the 
independent data from the literature. This gives us great 
confidence that our spectacular results are real and credible.
    It is the early days for N-Solv, so discussion of its 
economics are speculative. The commercial advantage comes from 
producing a more valuable oil at a lower cost. The oil is more 
valuable because it is de-asphalted. On the process capital 
cost is cut in half because there is no boiler feed, water 
treatment, and no steam generation.
    The net back for N-Solv of $52 per barrel is expected to be 
almost twice as high as SAGD. The payout ratio, $6 of net back 
per dollar of investment is three times higher than SAGD. 
Remarkably, we think these numbers are understated. The ability 
to operate modest temperature and pressure will help us access 
standard bitumen resource that is currently uneconomic, 
including the carbonates which contain over 1,000 billion 
barrels.
    Now, I am going to talk about the environmental benefits. 
N-Solv does not use any water. That is a big deal. N-Solv 
reduces the energy consumption by 85 percent because the 
extraction takes place at 100 Fahrenheit instead of 450. The 85 
percent reduction doesn't capture the entire story because the 
oil quality makes it easier to upgrade and refine. We are 
building a $60 million field pilot to test the N-Solv 
technology in a reservoir setting. Suncor Energy has offered to 
host the pilot, including building the wells. Hatch has made 
major capital investments and is providing the engineering. We 
have received financial support from Sustainable Development 
Technology Canada. I can't say enough good things about SDTC. 
Enbridge Pipelines has also contributed significant capital 
towards the pilot.
    The final item I want to talk about is safety. Safety is 
always at the top of our minds. The science tells us that we 
can achieve commercial extraction rates at modest temperatures 
and pressures. Over-pressuring the reservoir is both 
unnecessary and economically undesirable. If a high temperature 
is needed at a lower pressure, the operator can always change 
to a more appropriate solvent.
    In summary, N-Solv produces a more valuable product at a 
lower cost because it is energy efficient and does not use 
water. I look forward to your questions and comments. Thank 
you.
    [The prepared statement of Mr. Nenniger follows:]

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    Mr. Whitfield. Thank you very much.
    And Mr. McCaffrey, you are recognized for a 5-minute 
opening statement.

                 STATEMENT OF WILLIAM MCCAFFREY

    Mr. McCaffrey. Mr. Chairman, Congressmen, thank you very 
much for the opportunity to speak today about technology and 
the energy industry in Canada.
    I am Bill McCaffrey; I am the president and CEO of MEG 
Energy, and today I am here representing In situ Oil Sands 
Alliance. And this is a group of independent Canadian companies 
dedicated to the responsible development of the Canadian oil 
sands using in situ technology. The main in situ technology 
used today is steam-assisted gravity drainage, or SAGD, as it 
is called. And SAGD is important because it is currently the 
most common commercially proven--pretty much the only 
commercially proven way to reach the deep reservoirs that 
contained 80 percent of Canada's total oil sands reserves. And 
just to put that into perspective, that represents about 140 
billion barrels of reserves, roughly equivalent to the entire 
reserves of Iran.
    Now SAGD technology is pretty simply, really. It uses 
horizontal wells drilled from surface and we drill down to 
about 1,000 feet below the Earth's surface. Once we reach the 
reservoir and complete the wells, we drill about half a mile 
out, inject steam into the reservoir, and bring the heated oil 
and the water back to surface without disturbing the forest 
floor. And from a well pad a fraction the size of this 
building, the subsurface equivalent of 95 NFL football fields 
can be accessed. This provides what is among the lowest ratios 
of surface disturbance to resource recovery in the oil and gas 
industries anywhere in the world. About 90 percent of the water 
that is used to create the steam is recycled with the portion 
we can't recycle returned to deep, non-potable reservoirs. 
There are no tailing ponds created and it is essentially a 
closed-loop system.
    In going forward, one of the key research and development 
focuses is to reduce the amount of energy we need to produce a 
barrel of oil. That is critical because of both the emissions 
and costs associated with the energy consumption. One of the 
technologies we are currently applying alongside of the SAGD is 
cogeneration, a very energy-efficient process that produces 
both steam for our operations and electricity for the sale to 
the grid. And that electricity has a carbon footprint less than 
half the Alberta grid average, reducing greenhouse gas 
intensities in the province.
    And in 2011, just as an example, MEG's cogeneration 
contribution alone was equivalent to taking 80,000 cars off the 
road. That kind of benefit is continuing to grow as co-gen 
replaces legacy plants that have reached the end of their 
useful life. In our case, when we factor in the benefits of 
cogeneration and efficient steam use, SAGD can produce a barrel 
with the wells-to-wheels carbon footprint about 6 percent below 
the average U.S. imports.
    And as we look to the future, the industries investing in 
many other innovative technologies, nearly all of which share 
the same common goal--and you will hear that today--is to 
improve energy efficiency, it is to drive down emissions, and 
it is to increase resource recovery rates. And I underline one 
point. SAGD is just 10 years old. It is a young technology. It 
has been in commercial operations for about 10 years. But the 
point out of it is there remains tremendous opportunity for 
innovation to further accelerate the strides that have already 
been made.
    Looking beyond resource recovery, we are also working with 
Canadian and U.S. research groups on technology to customize 
our export barrels. The goal is to better align these barrels 
with the configurations of U.S. refineries offering significant 
improvements in refinery efficiencies and economics and the 
jobs that come with them. These technologies can also support 
more efficient lifecycle fuel use. For example, barrels can be 
tailored to be an ideal feedstock in the creation of ultralow 
sulfur diesel, a friendlier fuel option that many U.S. 
automakers are now targeting.
    Government can have a role in partnering with industry to 
encourage technology acceleration, a topic I know several of 
the other panelists are talking about here. But I would also 
note that the government also has a necessary and a critical 
role as a regulator. While still maintaining the highest 
standards, we need to streamline the regulatory processes so 
that windows of opportunity to invest and innovate are not 
missed.
    And to conclude, innovation, collaboration, and regulatory 
efficiencies are all critical to our economy today and into the 
future. With the oil sands industry alone, the prize for the 
United States is an increase in goods and services output 
projected to reach $45 billion a year by 2035 and the creation 
of nearly half a million American jobs in that same time 
period.
    And finally, I would just argue that it is of our mutual 
interest in terms of economic stability, environmental 
responsibility, and energy security to work together. The focus 
of this committee on harnessing technology to realize these 
goals to me is entirely appropriate. And I thank you for the 
time today.
    [The prepared statement of Mr. McCaffrey follows:]

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    [Additional information is available at http://
www.eipa.alberta.ca/media/39640/
life%20cycle%20analysis%20jacobs%20final%20report.pdf.]
    Mr. Whitfield. Thank you.
    Mr. Smith, you are now recognized for 5 minutes.

                  STATEMENT OF MURRAY D. SMITH

    Mr. Smith. Well, thank you, Chairman Whitfield and members 
of the committee. And as Canadians, let me thank you for 
holding this hearing in March and not in July or August. It has 
been my privilege to serve Albertans as minister of energy, 
elected position, from 2001 to 2004. During that time, I was 
able to quantify and register the 176 billion barrels of oil 
sands resource, proven oil sands resource with the U.S. Energy 
Information Agency. This move catapulted Canada's total proven 
oil reserves from less than 1.4 percent of the world's supply 
to over 15 percent, and we believe, as you have heard, that 
there are many more barrels to come and only technology will 
unlock this resource.
    How did Alberta move from this? We started from scratch, 
1967, with a joint government-private sector consortium, and 
today's production levels of over 1.7 million barrels today is 
a compelling story of human will, initiative, and technology 
evolution. And it would not have been possible without 
significant contributions from U.S.-based companies. Now, 
Alberta owns these resources and manages them on behalf of the 
citizens of Alberta. And today, some scant 50 years later, the 
oil sands is the largest investible resource in the world today 
where private dollars can flow in from private companies into a 
jurisdiction that respects property rights and ownerships.
    Oil sands projects are carefully regulated on multiple 
levels and learning and improving operations all the time. 
Mined permits, facilities, must go through extensive review 
before approval is granted, and after approval, construction 
and fabrication is carefully monitored with annual plans in 
development submitted for mandatory approval. As the projects 
begin to produce, there is again extensive oversight. There are 
no reports of oil spills from oil sands reserves.
    As oil is produced and shipped, there are in place numerous 
monitoring programs, and today this oil is shipped primarily to 
the USA. And a recent EIA report in February showed that retail 
gas prices in areas where oil sands oil is delivered to other 
regions of the USA, the difference in price is as much as 50 
cents per gallon where there has been reports of Alberta oil in 
that region. And that is in the EIA report.
    Throughout this period, technology innovation and 
continuous improvement have been Keystone's and oil sands 
development. Government policy including land sales, royalty, 
and tax assistance, and in some cases actual funding and 
partnership with industry have created a wealth-creating job-
generating engine over many years. In 1993, the oil sands have 
moved primarily from the production of two operators and 
production was 300,000 barrels a day. Government of Alberta 
royalty revenues have been suffering from low commodity prices. 
We had a government that had a deficit that exceeded revenue by 
some 25 percent, debt levels were approaching 28 billion. We 
are 100th the size of this country. Oil sands investors asked 
for a level playing field, a generic royalty structure, and an 
accelerated tax recognition of their investments. They received 
no direct benefits unless they invested their money first. A 
tax on machinery and equipment was phased out, royalty 
structures became based on a payout period, royalties started 
low, and as projects paid out, increased to 25 percent of net 
profit.
    Today, Mr. Chairman, oil sands royalties exceed those 
collected from all our natural gas production and the problems 
in Alberta. So with this structure and investment, billions of 
dollars poured in. We increased production to 600,000 barrels 
per day by the time I got elected in 1993. In 2003, the world 
became aware of this resource and it created a stampede of 
investment. It created technological innovation that basically 
has coined the oil sands as the world's engineering sandbox.
    Let me just give you one example. Williams is an active, 
respected, midstream gas USA company. They have developed and 
deployed a technology that we use as surplus gases emitted from 
the coking process that upgrades bitumen to a transferable 
form. Now, as the gases are emitted from the coking process, 
Williams traps these gases. They then remove the propane, 
butane, and higher C5 gases for use in sale later in the gas 
stream. They return dry, clean-burning gas back to the coker. 
This elegant but simple process now removes over 300,000 tons 
of CO2 from the atmosphere each and every year. They have the 
potential to put four or more plants in that area resulting in 
over some million tons per year in reductions.
    So as a former politician, Mr. Chairman, let me just 
outline the changes. We balanced our budget in 1995 after 
implementing the Oil Sands Royalty Program. All of our 
provincial debt was paid off in 2004. We had never increased 
taxes. We in fact refunded cash to the citizens of Alberta. We 
have doubled the Medical Research Fund. We have doubled the 
Alberta Ingenuity Fund, and we have created a sustainability 
and capital plan that allowed us to go through the difficult 
times of the last 3 years. And then in 2004, the book showed a 
stunning $68 billion turnaround from the dismal economic 
situation of 1993.
    Let me finish, Mr. Chairman, with two quick stories. 2005, 
60 Minutes aired a special on the oil sands. A 22-year-old 
trucker said he made $120,000 that year. The end of the program 
the CBS phone line system was so deluged with calls it crashed. 
Over 1,500 Americans ranging from truck drivers to nuclear 
engineers phoned in. What did they want? Jobs.
    So let me finish with a quote from our great neighbor to 
the south, Governor Schweitzer, Brian Schweitzer, who realizes 
that production from Alberta will be secure, reliable, non-
geopolitical, reasonably priced energy. And he says, ``I do not 
believe that we will ever have to send the National Guard to 
Alberta to protect our oil supply.'' Now Alberta is the number 
one energy supplier to the USA and the dialogue and the insight 
that your wisdom has shown in calling this committee meeting, 
Mr. Chairman, that will be gained today is critical to 
maintaining that special relationship. Thank you for this 
opportunity to serve the House of Representatives.
    [The prepared statement of Mr. Smith follows:]

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    Mr. Whitfield. Thank you.
    Mr. Dyer, you are recognized for 5 minutes.

                    STATEMENT OF SIMON DYER

    Mr. Dyer. Good morning, Mr. Chairman and committee. My name 
is Simon Dyer. I am the policy director with the Pembina 
Institute based in Alberta, Canada. The Pembina Institute is 
Canada's nonprofit sustainable energy think tank. We focus on 
energy solutions through research, education, consulting, and 
advocacy. We have a long history as the leading independent 
expert on oil sands environmental policy and performance. We 
have participated in the regulatory process in Alberta for 20 
years and we conducted extensive research on policy solutions 
to current environmental problems in the oil sands.
    The biggest impediment to progress on reducing the 
environmental impact of oil sands through the deployment of new 
technologies is the lack of regulatory policy to drive improved 
performance. All the major environmental accomplishments such 
as dealing with acid rain, the hole in the ozone layer, and 
removing lead from gasoline were all driven by regulatory 
approaches that resulted in increased environmental performance 
and technological innovation in the industry. In the oil sands, 
however, little attention has been focused on the appropriate 
role of government in regulating environmental performance, and 
thus, many of the environmental impacts continue to worsen 
today.
    My comments, due to the short time, will be focused on 
greenhouse gas pollution but the same principles apply to other 
unresolved environmental impacts such as tailings waste 
management, fresh water use, air pollution, and land and 
wildlife impacts. Over the last two decades, oil sands 
greenhouse gas emissions have more than doubled. In 2009, oil 
sands operations in Canada emitted 45 megatons of greenhouse 
gases. According to recent projections by the Government of 
Canada, this is set to double again by 2020.
    What is less well known is that oil sands greenhouse gas 
emission intensity--that is how much carbon dioxide per barrel 
produced--has actually worsened over the past 6 years. This has 
undone some of the improvements in the emissions intensity that 
other presenters have mentioned. Improvements since 1990 were 
largely driven by one-time changes like switching fuel from 
coke to natural gas and by incorporating cogeneration into 
projects. The insinuation that these kind of improvements will 
continue into the future is not supported by the evidence.
    The worsening emission profile of the oil sands can be 
attributed to three main issues. Firstly, an increasing 
proportion of oil sands production will be coming from in situ 
oil sands development, as noted by other speakers here today. 
In situ development produces two-and-a-half times more 
greenhouse gas emissions per barrel than oil sands mining does. 
Secondly, as oil sands development increases, companies are 
exploring lower-quality and harder-to-access bitumen resources 
and developing these resources means increased environmental 
impacts per barrel. Thirdly, the very weak regulatory 
environment of the greenhouse gas management in Alberta and 
Canada does not require substantial improvements in greenhouse 
gas emissions.
    As you may know, the Government of Canada has repeatedly 
failed to meet its own targets to reduce greenhouse gas 
pollution, and the oil sands are the major reason behind this. 
While most industries in Canada are holding steady, emissions 
in the oil sands continue to rise. A 2010 MIT study quantified 
this effect with economic models and concluded that the niche 
for the oil sands industry seems fairly narrow and mostly 
involves hoping the climate policies will fail. In Canada, 
hitting climate targets while the oil sands expand dramatically 
would mean asking every other sector in our economy to do more 
than their fair share, a prospect that is so unappealing that 
every Canadian environment minister to date has opted to miss 
their targets instead.
    Much attention has been paid to the potential role of 
carbon capture and storage, or CCS, in limiting greenhouse 
emissions from the oil sands. Indeed, Alberta's climate plan 
says CCS alone will account for 70 percent of Alberta's 
reductions by 2050. However, there are no operating CCS 
projects in the oil sands. One planned integrated project, 
Shell's Quest Project, proposes to capture 1.2 million tons of 
emissions from the Scotford Upgrader. This project will receive 
$865 million in subsidies from the Alberta and Federal 
governments.
    While in principle, CCS could be applied at different 
stages of the oil sands, it is not economic under current 
policies. Carbon capture costs for oil sands projects range 
from 75 to $230 per ton of carbon dioxide. In Alberta, the 
effective carbon price is only $15 per ton of CO2. At this 
price level in the absence of further massive public subsidies, 
there will be no deployment of CCS in the oil sands beyond 
Shell's Quest Project.
    Unfortunately, Alberta's climate plan states that 30 
megatons of annual reductions will be derived by CCS by 2020, 
the equivalent of building 25 Quest-type projects in the next 8 
years. Clearly, this is a fiction. For carbon capture to be 
economic, governments would either have to implement carbon 
prices an order of magnitude higher than they are currently or 
mandate carbon capture and storage for the oil sands industry.
    In December, Pembina Institute conducted the first 
assessment of Alberta's climate plan. We concluded that Alberta 
will miss its emissions target by two-thirds. We characterized 
Alberta's climate plan as ``a car without an engine,'' as many 
of the elements that could be effective but without a 
meaningful carbon price, it just won't run. The current 
frenzied rate of oil sands development in Canada is a symptom 
of our failure to implement policies and regulations to meet 
our commitments. Rosy projections of oil sands expansion are 
simply mathematically inconsistent with these commitments.
    I would like to finally comment on the fact that Pembina 
Institute is supportive of voluntary measures in research and 
development by oil sands industry. It is important to 
distinguish between lab research and small-scale pilot projects 
and commercial penetration of new technologies. The commercial 
application of new technologies is simply not keeping pace with 
this expansion and the vast majority of new production will 
rely on conventional more polluting technology. This represents 
a significant opportunity lost and can only be addressed 
through policy and regulatory intervention.
    Thank you very much. I look forward to your questions.
    [The prepared statement of Mr. Dyer follows:]

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    Mr. Whitfield. And thank you, Mr. Dyer.
    And Ms. Laboucan-Massimo, you are recognized for 5 minutes.

              STATEMENT OF MELINA LABOUCAN-MASSIMO

    Ms. Laboucan-Massimo. Thank you. Good morning, chair and 
committee. My name is Melina Laboucan-Massimo. I come from 
northern Alberta, Canada. I am a member of the Lubicon Cree 
First Nation, which is one of the many communities impacted by 
tar sands development.
    For those of us in Canada who are experiencing the 
detrimental effects of tar sands, it is encouraging to see that 
many decision-makers and citizens in the United States are 
beginning to ask questions around whether or not the tar sands 
are in the right direction and which we should be pursuing in 
an already carbon-constrained world. In the past 5 years, I 
have worked in communities throughout Albert and British 
Columbia that are very concerned about the approval of tar 
sands pipelines not only because of potential spills but also 
because it will increase pressure for more tar sands expansion 
in Alberta.
    I personally have felt the impacts of both pipeline spills 
and tar sands-driven industrialization of the landscape in the 
north. Last spring, I returned home where I was born to witness 
the aftermath of one of the largest spills in Alberta's 
history, which was 50 percent larger than the oil spill in the 
Kalamazoo River in Michigan. What I saw was a landscape forever 
changed where my family fished, hunted, and trapped for 
generations. Days before the Federal or provincial government 
admitted that this had happened, my family was sending me 
messages telling me of headaches, burning eyes, nausea, and 
dizziness, asking me if I could find out more information as to 
if it was an oil spill and how big it might be. This was one of 
the saddest and most frustrating points because my family was 
not the first, nor the last, to experience these effects. It 
was alarming to hear that the first phase of the Keystone had 
already leaked and spilled 14 different times in its first 12 
months of operation.
    Where I come from billions of dollars are taken out of our 
traditional territories. Yet, until this day, my family still 
has no running water. The indigenous communities have lived in 
these regions for thousands of years and yet are being pushed 
out, unable to access their traditional territories and unable 
to practice their treaty rights due to tar sands expansion. 
This is a violation of our constitutionally protected rights 
under Section 35 of the Canadian Constitution.
    Communities like Fort McKay First Nation can no longer 
drink the water from their taps and their children are 
developing skin rashes from bathing in this contaminated water. 
A cancer study done by Alberta Health Services reveal that 
there was a 30 percent increase in the community downstream of 
Fort Chipewyan. Leukemias and lymphomas were increased by 
three-fold and bile duct cancers increased by seven-fold. 
Almost all of the cancer types that were elevated were linked 
in scientific literature to chemicals in oil or tar. We have 
toxic tailing ponds sitting in the north of Alberta that span 
over 170 square kilometers, which is equivalent to 42,000 
acres.
    This is the reality in Canada. And more specifically, in 
Alberta, we have a lax and failing environmental monitor 
system, which has little to no enforcement when it comes to the 
tar sands. There have been thousands of alleged contraventions, 
notifications, and releases with little to no evidence of 
enforcement as see in a database from Alberta Environment 
Documents, which details incidences of licensed and unlicensed 
discharges of pollutants, tailing leaks, chronic acute 
pollution incidents, habitat destruction, and failure by 
industry to maintain monitoring equipment, pollution and 
government documentation of reclamation and chronic lack of 
enforcements.
    We have endured decades of promises that have taught us 
that promises of new technologies that will repair this damage 
feel like empty words. The reality is that SAGD solutions 
usually move the problem elsewhere such as pumping the toxic 
byproduct underground where they can leak into aquifers rather 
than storing them in tailing ponds from the mines. Meanwhile, 
the scale of production is increasing and the overall programs 
are getting worse. We have not yet seen a cumulative 
environmental assessment overall in the tar sands and the 
government is therefore passing these projects without this 
cumulative environmental assessment.
    Companies will leave irreparable damage to our lands and 
our homes, and the Alberta government claims to reclaim the 
land. However, many prominent scientists dispute that this is 
possible. Just last week, a report was published in the 
proceedings of the National Academy of the Sciences of the 
United States of America stating ``any suggestion that oil 
sands reclamation will put things back to the way they were is 
greenwashing.''
    First Nations in British Columbia are also adamant that the 
Enbridge pipeline will not be built through their territories. 
Over 100 First Nations have signed on to this declaration to 
oppose the construction of the Enbridge pipeline and its 
associated supertankers on the west coast of Canada and First 
Nations are willing to pursue litigation if the Enbridge 
pipeline is approved in Canada as they have constitutionally 
protected rights under Section 35 of the Canadian Constitution.
    If constructed, the Keystone XL would deepen our mutual 
addiction to dirty oil and enable the ongoing expansion of the 
tar sands at the expense of communities, as well as at the 
expense of advancing cleaner energy alternatives. You have a 
choice in the direction we are taking in the world. You have 
the opportunity to become the world leaders in clean renewable 
energy solution that meet our energy needs without undermining 
or sacrificing the health of our communities and ecosystems.
    Thank you very much.
    [The prepared statement of Ms. Laboucan-Massimo follows:]

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    Mr. Whitfield. Thank you very much. And thank all of you 
for your thoughtful testimony.
    And at this time we will have periods of questions for the 
panel and I will recognize myself for 5 minutes, and then we 
will go to the other members.
    First of all, Mr. Smith, you were the minister of energy in 
Canada for a number of years, is that correct?
    Mr. Smith. That is correct. I was the minister of energy 
for the Province of Alberta, which owns the resource and 
manages it on behalf of all Albertans.
    Mr. Whitfield. And how would you describe the government of 
Alberta's approach to leasing land for oil sands development?
    Mr. Smith. What happens, Mr. Chairman, is that if there is 
no record of development after a lease has been purchased in an 
open auction type of format, then that lease reverts back to 
the Crown and it is in fact resold. So that way it is a clear 
process, it is a transparent process, and it is one that has 
been free from corruption for the last 70 years that it has 
been in place.
    Mr. Whitfield. Well, would you characterize Alberta as 
being encouraging development or being an obstacle to 
development?
    Mr. Smith. Well, I don't think the government that I was 
involved with, Mr. Chairman, made any secret out of wanting to 
generate employment and create jobs and create prosperity and 
wealth for the Province of Alberta. That province, at the time 
I was elected at 2.5 million now has 3.7 million people. It has 
consistently the lowest unemployment across Canada, 
consistently the highest average earnings. The oil sands itself 
has created more jobs for aboriginal and First Nations people 
in Canada than any other place in Canada today.
    The oil sands fall under three areas of the government--
regulator, policymaker, and royalty collector. So you are 
always in a dynamic tension of dealing with those three 
matters. They are making great progress. I have seen 
reclamation of mined sites, Mr. Chairman, where the company 
went to the elders of the First Nations, they asked what would 
they like in reclamation, and in fact they created a buffalo 
herd. That buffalo herd that is on there today has a herd of 
about 300 with a 99 percent successful calving rate.
    Mr. Whitfield. So if I describe the Alberta area as having 
an economic boom since this took place, would that be accurate 
or not?
    Mr. Smith. Absolutely.
    Mr. Whitfield. Accurate, OK. Now, we have had a number of 
hearings on Keystone pipeline, and those people who are opposed 
to it I think I can characterize their description of oil sands 
production and so forth as being inherently dirty and 
inherently more risky than other types of oil. Would you agree 
with that characterization, Mr. McCaffrey?
    Mr. McCaffrey. No, I wouldn't actually. When we look at the 
greenhouse gas footprints that we have relative to other U.S. 
imports, I think we have made great strides on it. It doesn't 
mean we can't continue to do better and that is what we are 
doing. We are focusing that on energy efficiency, and some of 
the things that we are working on right now in areas of 
technology are very exciting. But no, I wouldn't agree with 
that.
    Mr. Whitfield. OK. Mr. Dyer in his testimony made this 
comment that in situ extraction had significantly more 
greenhouse gas intensity means it ostensibly produced more 
greenhouse gases than other methods of extraction and he said 
on average 2.5 times more intensive than mining as far as 
greenhouses go. Would you and Mr. Smith agree with that comment 
or not?
    Mr. Smith. Actually, Mr. Chairman, Dr. Isaacs would 
probably be the best person to----
    Mr. Whitfield. Would you agree with that comment, Dr. 
Isaacs?
    Mr. Isaacs. No, I wouldn't agree with that comment.
    Mr. Whitfield. OK. Now, Mr. Dyer also said that there is a 
weak regulatory system in Canada relating to production of oil 
sands. Would you agree with that statement, Mr. Smith?
    Mr. Smith. No, I wouldn't, Chairman Whitfield, because 
Alberta recognizes that it has great and vast resource and it 
must be developed in an orderly manner and it must pay 
attention to environmental values and social values. It was the 
first province in Canada to have a Department of Environment. 
It was created solely for the purpose of managing these 
resources. We have a quasi-independent semi-judicial regulator 
that makes decisions on the development. It takes 3 \1/2\ to 5 
years to approve one SAGD process. A mining project has been in 
approval over 7 years. These panels are joint panels, Federal 
Fisheries and Oceans, Federal environmentalist departments, 
they will share in the panels. It is a very highly regulated 
and public process.
    Mr. Whitfield. Thank you. My time is expired.
    At this time I recognize Ms. Castor for 5 minutes.
    Ms. Castor. Well, thank you, Mr. Chairman. Thank you all 
for your testimony.
    I would like to keep on that line of questioning and 
understand that in Alberta you have an Energy Resources 
Conservation Board, Department of the Environment, Department 
of Sustainable Resource Development. They all maintain very 
robust rules for tailings management, land reclamation, water 
pollution, groundwater monitoring. So, because my time is 
limited, could you go down and just give me a yes or no answer. 
I think many of you have already stated this. Are those 
fundamental health safety and environmental regulations 
important? Yes or no?
    Mr. Isaacs. Yes.
    Mr. Dammer. Yes.
    Mr. Nenniger. Yes.
    Mr. McCaffrey. Yes.
    Mr. Smith. Without question.
    Mr. Dyer. Yes.
    Ms. Laboucan-Massimo. Yes.
    Ms. Castor. Well, see, the difference here in the great 
United States of America is that what the Republicans have 
tried to do is have this Keystone pipeline approved by passing 
a bill and giving short shrift to a lot of those health, 
safety, and environmental reviews, really giving them special 
treatment by passing a law and not adhering to things like the 
National Environmental Policy Act and others. And that is not 
fair. All of these entities should play by the rules.
    Today, we have heard several witnesses testify about the 
ability of new technologies that attempt to minimize the 
impacts of tar sands oil development on strip mining, on water 
pollution, the lingering toxic chemicals in these large tailing 
ponds, the decades of dealing with the solid wastes that is 
left over and carbon pollution. And it is important that here 
in the United States we understand the impacts of the tar 
sands.
    Mr. Dyer, based on your study of the tar sands industry in 
Canada, have environmental impacts of the tar sands been 
significantly mitigated through the deployment of new 
technology?
    Mr. Dyer. Well, I wouldn't take my word for it. I mean if 
you look at the Royal Society of Canada's report on the tar 
sands, which is the equivalent of your U.S. Academy of 
Sciences. They concluded that regulations haven't kept pace 
with oil sands development, so absolutely not. As was 
mentioned, there was an absolute boom in the oil sands and it 
left regulators unprepared to catch up with addressing 
cumulative environmental limits in the oil sands.
    Ms. Castor. Thank you. And how about you, Ms. Laboucan-
Massimo? Has technology fixed the environmental harms from tar 
sands production that are so devastating to the First Nations 
communities?
    Ms. Laboucan-Massimo. In my opinion no, unfortunately, 
because what we are seeing are impacts of the land. We are 
seeing impacts to the air and to the water. And so we have seen 
exceedances happen from operations that impact the communities 
downstream and that are around the communities. We have seen 
cattle ranchers actually have they think connected to the 
emissions have their cattle miscarriage because of things like 
where they are feeling quite ill from the inability for them to 
capture fugitive emissions. So it is impacting people and I 
don't feel like it is doing its job.
    Ms. Castor. And in addition to pollution of water and water 
quality issues, development of tar sands is a very water-
intensive process. So it impacts water quantity. In fact, it 
takes as much as four barrels of water to produce just one 
barrel of bitumen from tar sands. And here in the United States 
it is reported that we have rich deposits of tar sands and oil 
shale in arid western States such as Utah and Colorado and 
Wyoming.
    Ms. Laboucan-Massimo, can you speak to the impacts of tar 
sands development in Alberta on the local water resources? Go 
into a little greater detail on water quantity requirements and 
water quality.
    Ms. Laboucan-Massimo. Well, the area where we are, the 
Peace-Athabasca Delta is a sixth of Canada's fresh water 
supply, so we are dependent on that water supply. It is very 
important to us so what we have seen is that industry has used 
this water as well so we are somewhat at competing needs for 
it. But the damage that we have seen happen to the downstream 
communities, you know, we are seeing unfortunately fish with 
tumors and such because of the contamination but we are also 
seeing lower levels of water in the area. So I have talked to 
elders that, you know, used to boat down from community to 
community and now they are hitting sandbars because there are 
decreased water levels in the areas. And that is very 
concerning. For the scientific community where they are 
actually saying if there is decreased levels that will, you 
know, do a fish kill or a potential fish depopulation of the 
areas. So there is definitely downstream impacts as well as for 
communities around that region as well.
    Ms. Castor. Thank you very much.
    Mr. Whitfield. At this time, I recognize the gentleman from 
Illinois, Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. So many questions, so 
little time. First of all, I did meet with the chief elder of 
First Nation on my trip and although he was concerned about 
expansion, he did appreciate the hundreds of jobs, thousands of 
jobs available to tribal members in these operations. I want to 
put that on the table.
    And again, this Keystone debate is really kind of goofy 
because we only spent 3 \1/2\ years to study it. Ten thorough 
agencies all approved it. EPA said it was OK. So for us it just 
drives a lot of us crazy to hear these really fallacious false 
statements about the entire process.
    Let me go briefly. I have got a couple pictures. Let us put 
the first one up. This is in response to my friend, Mr. Waxman. 
That is a recovered mine operation site. Now, I am from 
Southern Illinois. We had strip coalmining obviously in the 
first days, not very good environmental stewards. We recover 
coalmine operations now and that is a picture of before and 
after of a recovered, reclaimed surface mining operation.
    Let us go to the next slide because it really dealt with my 
opening. We better start talking about the two different types 
of operations. For as much as the environmental left wants to 
keep beating us up, there are two different operations. And 
these three pictures show that. This is an in situ operation. 
Go the next picture. That is the footprint when it tails off. 
That is kind of the wells. Go to the next one. Of course the 
little pipeline and then the product. So I just need to put 
that on record.
    Let me ask Dr. Isaacs. I have a quick question. You 
mentioned some technology company, communications company. What 
company was that?
    Mr. Isaacs. Harris Corporation, headquartered in Florida.
    Mr. Shimkus. Melbourne, Florida, I think, right?
    Mr. Isaacs. Right.
    Mr. Shimkus. So this is a big operation for them?
    Mr. Isaacs. Yes.
    Mr. Shimkus. Great. Mr. Dammer, I just want to thank you 
for talking about the 2005 energy bill. I was on the Conference 
Committee, great piece of legislation and I hope it helps us 
create additional operation in oil shale development.
    Dr. Nenniger, when you are talking about your new 
operation, it sounds like you are putting a chemical solution 
down to recover the oil sands. Is that correct?
    Mr. Nenniger. Most likely, it is either condensing 
propane----
    Mr. Shimkus. OK.
    Mr. Nenniger [continuing]. Which is what you burn in your 
barbecue or condensing butane.
    Mr. Shimkus. And obviously, you have been following our 
debate on fracking. And you are doing a lot of research. Would 
you want to immediately disclose that list of operation to 
anyone who wants to use that or would it be proprietary 
information?
    Mr. Nenniger. No, it is absolutely open.
    Mr. Shimkus. Good.
    Mr. Nenniger. We have technical papers on our Web site. We 
have 10, 15 patents so----
    Mr. Shimkus. Great, thank you. I got short time. Let me go 
to Mr. McCaffrey.
    Mr. McCaffrey, you have listened to a lot of some of the 
statements. I would like for you to address two issues--wheels-
to-well carbon dioxide emission levels, and also I would you to 
address this water issue that was raised, especially in your 
expertise on in situ.
    Mr. McCaffrey. Sure. In terms of wells-to-wheels analysis, 
we are focused on the energy intensity and we have been 
successful in continuing to reduce our greenhouse gas emissions 
throughout the last several years and we have a target of 
continuing to reduce those. It is all focused on improving our 
energy efficiency and using novel technologies like 
cogeneration and then seeing what we can do to substitute out 
the steam as we go along through infield wells and the use of 
natural gas, which is just methane in the reservoir. We just--
--
    Mr. Shimkus. And you told me that that process is actually 
lower than the California carbon standards, is that correct?
    Mr. McCaffrey. Absolutely. I think it is about 15 percent.
    Mr. Shimkus. Great. Can you now move into the water usage 
issue?
    Mr. McCaffrey. Sure. It is pretty much a closed-loop system 
where we recycle the water back--or we bring the water back 
when it is produced so it is condensed steam, drains down to 
the producer, we bring it back, we recycle it, and we use it 
over and over again.
    Mr. Shimkus. So this number of the use of water in your 
operation is not true?
    Mr. McCaffrey. No. No, we recycle 90 percent.
    Mr. Shimkus. Great. Thank you.
    Mr. Chairman, I will return back 19 seconds.
    Mr. Whitfield. At this time, I would like to recognize the 
gentleman from California, Mr. Waxman, for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Since last May, this committee has held four hearings on 
the Keystone XL tar sands pipeline and passed two separate 
bills to mandate approval of that pipeline, and yet the 
majority has never bothered to examine the impacts of tar sands 
production and transport on public health and the environment. 
In particular, there has been no effort to understand what a 
shift to tar sands fuel would mean for U.S. carbon pollution. 
So today's hearing is long overdue. And it appears that most of 
the witnesses here recognize that tar sands pose serious 
environmental threats that must be addressed. For example, 
every witness on this panel has provided testimony about 
efforts to reduce greenhouse gas emissions from tar sands 
productions. One of the witnesses invited by the majority, Dr. 
Nenniger, states that ``the evidence of climate change is 
compelling and terrifying.'' Another, Dr. Isaacs, states that 
``careful management of environmental issues, especially 
greenhouse gas emissions, is essential.''
    Mr. Dyer, are the tar sands operations really getting 
cleaner in terms of carbon pollution, and if not, why not?
    Mr. Dyer. In absolute terms, definitely not as we 
demonstrated here looking at the emissions doubling by 2020. 
And in terms of the intensity, the evidence suggests not as 
well. You know, this is government and industry data that says 
we have got a worsening trend in the past 6 years. Our data 
that demonstrates in situ development is more greenhouse gas 
intensive than mining is based on industry data and highlights 
in our report drilling deeper the in situ report card. So I 
think the data is quite clear that in situ, based on its 
requirements for steam, is more GHG-intensive than mining and 
that trend is currently outstripping any potential 
improvements.
    Mr. Waxman. Mr. Dyer, are there technologies available that 
could substantially reduce greenhouse gas emissions for tar 
sands production?
    Mr. Dyer. Yes, there are but unfortunately they are 
expensive. And, you know, if you are making decisions about 
whether to deliver, you know, a responsible product that has 
low carbon emissions, adopting expensive carbon capture and 
storage voluntarily is not going to happen. So I think we are 
in a situation where we have been facing other great 
environmental challenges in North America. If we are serious 
about cleaning up some of the worst aspects of oil sands 
development, we should be willing to regulate them. And clearly 
the evidence is that Canada so far hasn't taken interest in 
regulating the oil sands.
    Mr. Waxman. So there are no operating carbon capture and 
sequestration projects now. One is planned, as I understand it, 
but it is being heavily subsidized by the government. Absent 
such subsidies, the industry has no incentive to deploy 
technology, is that right?
    Mr. Dyer. That is correct. You know, there are dozens of 
projects in the regulatory queue currently in Alberta. And with 
the exception of the Shell Quest project, which will be built 
using taxpayers' dollars, none of those projects propose carbon 
capture and storage.
    Mr. Waxman. Ms. Laboucan-Massimo, what is your view? Does 
the industry rhetoric about the sustainable development match 
up to the reality on the ground?
    Ms. Laboucan-Massimo. In my opinion, no, it doesn't. What 
we are seeing is massive mines the size of entire cities. Pearl 
Mine will be bigger than Washington, D.C. What we are seeing is 
a number of in situ projects all over the region. I am from the 
Peace region. There is the Athabasca region. This region in 
total takes up the size of the State of Florida. We are talking 
about completely fragmenting or destroying a landscape the size 
of an entire State of the United States of America.
    Mr. Waxman. The industry and Alberta government talk a good 
game but this is a classic example of greenwashing. The reality 
is that the carbon pollution from tar sands is growing very 
rapidly and the Alberta government is not willing to put the 
policies in place that would be necessary to change that. One 
claim we have heard repeatedly about the Keystone XL tar sands 
pipeline is that if the U.S. doesn't take the tar sands crude, 
Canada will just send it to China.
    Mr. Dyer, does Canada currently have the transport capacity 
in place to send the tar sands to China instead of the U.S.?
    Mr. Dyer. No. There is a small pipeline that currently goes 
to Vancouver but there is a major proposed pipeline the 
Enbridge Gateway project. That is facing even more opposition I 
would say in my estimation than the Keystone XL.
    Mr. Waxman. Ms. Laboucan-Massimo, is this pipeline going to 
happen?
    Ms. Laboucan-Massimo. No, in my opinion it will not happen. 
Over 100 First Nations are opposing this pipeline and over 80 
percent of British Columbians themselves actually oppose the 
supertanker traffic that would need to be associated with the 
tar sands pipeline.
    Mr. Waxman. Thank you. My time is expired. Thank you, Mr. 
Chairman.
    Mr. Whitfield. At this time, I recognize the gentleman from 
West Virginia, Mr. McKinley, for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman. Melina?
    Ms. Laboucan-Massimo. Yes. Hi.
    Mr. McKinley. I am just curious if you could give me a 
little insight. Does your group or something similar--do you 
support drilling for oil in the Gulf?
    Ms. Laboucan-Massimo. In the Gulf? Well----
    Mr. McKinley. Yes or no.
    Ms. Laboucan-Massimo. No.
    Mr. McKinley. Do you support drilling in ANWR?
    Ms. Laboucan-Massimo. ANWR which is where?
    Mr. McKinley. In Alaska.
    Ms. Laboucan-Massimo. Oh, no.
    Mr. McKinley. Do you support the Keystone Pipeline, the 
conception of it?
    Ms. Laboucan-Massimo. No, I don't.
    Mr. McKinley. Do you support surface mining for coal, like 
mountaintop mining, for example?
    Ms. Laboucan-Massimo. Well, I have been to Kentucky and I 
have talked to people from there and it seems like the 
repercussions are similar to the tar sands so I would say in my 
opinion things have been sacrificed.
    Mr. McKinley. Do you support the fracking technique to get 
to the gas shale like in the Appalachian Mountains or in Texas 
or wherever shale gas is located? Is that something that your 
group would support?
    Ms. Laboucan-Massimo. For fracking?
    Mr. McKinley. The fracking to get the gas out of the ground 
there.
    Ms. Laboucan-Massimo. No.
    Mr. McKinley. So I am really curious where you are going 
with this. You know where I am going----
    Ms. Laboucan-Massimo. Yes.
    Mr. McKinley [continuing]. And that is that we don't want 
oil, we don't want coal, we don't want gas, but yet we have a 
Nation that depends on those. But you are saying that I want us 
to use--and that is fine. I am going to support the all-of-the-
above, the renewables----
    Ms. Laboucan-Massimo. OK.
    Mr. McKinley [continuing]. But I don't understand your 
point because you are trying to ban this. The technique that 
everyone has used up here has been very clever, the focus on 
the 20 percent that is not in situ. In situ, clearly you have 
seen the pictures how environmentally sensitive it is for that 
but everyone seems to be focused, even from the folks on the 
other side of the aisle have been focused so much on the 
negative of surface disruption. But coming from the 
construction industry 45 years, I would challenge someone if 
they have not been on a golf course to see a golf course 
constructed. Millions of cubic yards are disturbed to have a 
golf course but at the end of the day everyone enjoys it. 
Surface mining, I have seen them use then, after the surface 
mine, to use after the reclaim for shopping malls, schools, 
penal institutions. But you just always look at the worst side 
of it and that is during the construction. And again coming 
from a construction I don't think anyone ever likes a 
construction site during construction but when it is all done, 
when it is reclaimed, it is something positive. Why are you so 
focused on the negative?
    Ms. Laboucan-Massimo. Well, what I am actually----
    Mr. McKinley. Because you are not willing to get oil, gas, 
or coal----
    Ms. Laboucan-Massimo. Well, it is actually asking for more 
of a transition away from oil and gas and the associated 
greenhouse gas emissions that are causing issues worldwide. We 
need to transition away from that and actually put our 
investments in renewable energy systems so we can actually have 
healthier communities.
    Mr. McKinley. OK, Mr. McCaffrey, if I could go to you just 
for a minute.
    Back in May of last year, we had some testimony here in a 
hearing and there were issues. I would just like your comments 
that were given to us by--it said on a lifecycle basis, tar 
sands may emit almost 40 percent more carbon pollution than 
conventional fuel. Would you agree with that?
    Mr. McCaffrey. No, I wouldn't.
    Mr. McKinley. OK. There was another testimony on the same 
day that--we have talked about pipeline safety because a lot of 
the opponents are trying to indicate that it is dangerous what 
we are doing. There was testimony said including the bitumen 
high pressure, including internal corrosion, abrasion, and 
stress corrosion cracks only weaken pipelines over safety. And 
then it went on to say that Alberta's scorched earth tar sands 
operations are the most destructive sources of oil on the 
planet. Would you agree with those statements?
    Mr. McCaffrey. Absolutely not.
    Mr. McKinley. Back to Mr. Smith. Can you touch on just a 
little bit about the revenue source, what impact your revenue 
source has been on the Nation with Canada, what you have been 
able to facilitate in Alberta? Has that had a positive impact? 
Has that provided revenue to the country to get out of its 
own----
    Mr. Smith. Well, there are significant studies done by 
major and reputable economic groups across Canada and the 
United States that talks about an oil sands barrel delivers 
more economic value to the United States than any other barrel 
that you use import or derived in the world today. Member 
Shimkus talked about Caterpillar and Michelin, Chicago Iron, 
the number of companies that are involved in the oil sands----
    Mr. McKinley. I know my time is essentially expired, but if 
we in America couldn't mine coal or can't burn coal and we 
couldn't use oil or gas, what do you think our role is as 
leaders? How long do we----
    Mr. Smith. North America's economic recovery has always 
been based on reasonable and low-priced energy costs and will 
continue to be that way.
    Mr. McKinley. Thank you very much.
    Mr. Whitfield. The gentleman's time has expired.
    At this time, I recognize the gentleman from Texas, Mr. 
Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. And let me for the 
record correct--there were some statements made earlier by our 
ranking member that talked about the Keystone pipeline was 
trying to get ahead of what is normally required for pipelines 
in our country. That is just not true. The Keystone pipeline 
has had, you know, one environmental impact statement with two 
supplemental and it was still approved by the EPA. So that is 
even more than the typical pipeline from Texas to Cushing, 
Oklahoma, that is the southern leg of it that the President 
supports. So there has been no exceptions. You know, when you 
have study for 2 \1/2\ years on a pipeline, you obviously are 
going to get a lot of reviews so there have been at least one 
full environmental impact and two supplementals and approval by 
the EPA of the Keystone pipeline. And that is subject to even 
more reviews than our typical pipeline safety law, even the 
ones that we just passed that is now law. So the Keystone 
pipeline has been reviewed. Now, I don't know wherever the 
people get their information.
    Let me ask some questions, though, of Mr. McCaffrey. A 
number of what happens at the oil sands is you are using 
cogeneration to natural gas to use to provide steam for the 
process in the in situ. How many of the current oil sands sites 
are using cogeneration?
    Mr. McCaffrey. I don't know the exact number but I would 
guess that there are three or four that are doing it, but a lot 
more are starting to flag it as a very viable way to go.
    Mr. Green. And you mention in your testimony the technology 
developed largely along reducing the steam-to-oil ratio in the 
in situ operations. Is that also a process that is being more 
expanded?
    Mr. McCaffrey. Yes. The industry is very, very focused on 
reducing the steam-to-oil ratio and seeing great successes. And 
every quarter that goes by you see improvements. There are 
other companies besides ourselves that are just putting great 
effort in as well.
    Mr. Green. Is that natural gas produced somewhere close to 
the sites?
    Mr. McCaffrey. Typically, it is in Alberta. It is quite 
often very close to the sites.
    Mr. Green. OK. So we don't have to worry about pipelines to 
bring that natural gas to your well sites?
    Mr. McCaffrey. No, there is significant infrastructure in 
Alberta already.
    Mr. Green. I know the issue is fresh water, even in Alberta 
but, you know, in Texas obviously hydrofracking has been very 
successful but it takes a tremendous amount of water. What 
happens to the water? Is most of it recycled?
    Mr. McCaffrey. Yes, we recycle about 90 percent of it. And 
the water we originally use is non-potable so it is saltier 
water and it is from deep aquifers. We do not use any surface 
water, no rivers, no lakes in our operations.
    Mr. Green. And what happens to that 10 percent----
    Mr. McCaffrey. And I am referring to most of the operations 
in the south. Towards the north where it outcrops, they do need 
to use the Athabasca River.
    Mr. Green. OK. Also, Mr. McCaffrey, in 2010 Big K Energy 
Corp contribution and Greenhouse Power offset 238,000 tons of 
GHG production. Was that based on the In Situ Oil Sands 
Alliance or where did that number come from?
    Mr. McCaffrey. That comes from our own operations and we 
are planning to put in more cogeneration because of the 
benefits we see on our future phases right now.
    Mr. Green. OK. Mr. Smith, Ms. Massimo writes in her 
testimony the government of Alberta actually allows the 
industry to self-report in this system where there is no 
independent third party regulating. Is that true?
    Mr. Smith. The Energy Resources Conservation Board is an 
independent regulator. In fact, you can go to a Web site today 
with the Department of Environment and see active air quality 
life on a real-time basis. The maximum flow from the Athabasca 
River that the oil sands companies can extract in its 
development does not exceed 4 percent. So there is extensive 
water conservation, water management, and it is independently 
regulated at this point through rules and permits.
    Mr. Green. I was wondering because our gas wells that we 
hydrofrack, obviously OSHA has access to those sites and EPA 
has those on the U.S. side, so I assume Alberta has some of the 
same government oversight regulations. You can send an 
inspector out and verify whatever self-reporting is being done?
    Mr. Smith. Absolutely.
    Mr. Green. To verify that number.
    Mr. Dyer, in your testimony, based on approved water 
licenses and current proposed projects where they draw 15 
percent of the Athabasca River flow during the lowest period 
introducing fish habitat, if the producers are going to move to 
in situ production in order to reach the resource, if it is 
doing so, they are not going to use fresh water instead of 
using recycled water is the testimony. In your statement, what 
was your basis for, ``based on approved water license, the 15 
percent of the river's water flow?''
    Mr. Dyer. A basic problem with your statement there, 
companies are not moving to in situ oil sands development. Oil 
sands mining is expanding and it is going to trickle. It is 
just in situ development is actually expanding at a fast rate. 
So we are still going to see three times the impact on the 
Athabasca River from mines. It is just because more in situ----
    Mr. Green. OK. Well, you are talking about the strip 
mining?
    Mr. Dyer. Yes, that is correct.
    Mr. Green. OK, but----
    Mr. Whitfield. Gentleman----
    Mr. Green [continuing]. Mr. Chairman, I understand that 80 
percent of the production is going to come from in situ and 
only 20 percent from the strip mining is my understanding.
    Mr. Dyer. Yes, that is correct----
    Mr. Green. OK.
    Mr. Dyer [continuing]. But we have only produced 3 percent 
of the bitumen so far so there will be lots more cumulative 
effects for both mines----
    Mr. Whitfield. At this time I will recognize the gentleman 
from California, Mr. Bilbray, for 5 minutes.
    Mr. Bilbray. Thank you, Mr. Chairman.
    First of all, I guess I need to clarify some items that the 
representative from Greenpeace was able to bring up. Your 
concerns about oil or natural gas, how about does Greenpeace 
support corn ethanol and the use of corn ethanol in the 
mandates?
    Ms. Laboucan-Massimo. I can't comment on that right now.
    Mr. Bilbray. OK. How about the expanded use of algae 
production for the----
    Ms. Laboucan-Massimo. That is also not my study of 
expertise.
    Mr. Bilbray. No alternative fuels. OK.
    Mr. Smith, I have some real questions. As somebody who has 
been involved in the environmental movement in one way or the 
other since 1970, I am just trying to think of a country 
anywhere in the Western Hemisphere that is at least 
historically been perceived as environmentally sensitive. I 
cannot think of a country that at least the public perceives as 
environmentally sensitive than Canada. In fact, I remember 
operation Canadian Bacon was the way we were going to attack 
you guys was we were going to throw trash into your parks.
    Mr. Smith. I think, Mr. Bilbray, we also said we walk 
amongst you undetected.
    Mr. Bilbray. And we worry about that. Has Canada made such 
a huge shift from its history of being the environmental leader 
of the Western Hemisphere, leader in everything from, you know, 
renewable resources to greenhouse gas control? How can I sit 
here and believe that Canada has totally abandoned its standard 
of environmental protection that has historically been there 
and taking a walk on this issue? Has Canada been taken over by 
some evil foreign force and forced you guys to have to trash 
the environment?
    Mr. Smith. Well, Honorable Member, Canada and resource-
producing provinces of which there are now six have responsible 
permitting, they pay attention to changing environmental 
conditions, to they pay attention to that triple bottom line of 
environment, social values, and corporate profit. We have been 
able to weather a serious, serious recession because we do 
produce a great abundance of natural resources and natural 
minerals and products. We continue to clean up oceans and 
fisheries and ponds--the Sydney Tar Ponds, for example. We have 
environmental records of excellence. I think that as we grow, 
we are going to continue to get better and better about 
defining surface reclamation.
    One of the issues is that we are transparent. We are not 
afraid to put our record out front, have the discussion, have 
the debate, and where we can find need for change, we implement 
change. And it not that anything has remained static, neither 
the development of the resource, nor the regulations that 
surround it. So it is an ongoing process. There is dynamic 
tension. We still import in excess of 700,000 barrels a year on 
our east coast a day. And I believe that we can replace that 
with oil sands crude. Once we do that, that oil sands crude 
will then go into eastern markets in Canada and we will also 
find a gateway to foreign shipping. In fact--and I thank the 
U.S., for Congress to give that permission to build that 
pipeline from Cushing to the Texas Gulf Coast because that is 
going to increase the abilities for your refineries to use 
Canadian crude and not crude from hostile jurisdictions that 
really want to take the money they gain from selling oil to you 
and use it against your interests.
    Mr. Bilbray. Now, I remember we were negotiating with 
Mexico about an oil line back in the '70s and the '80s and 
there were those that stood in the way. That oil now, instead 
of being transported through a pipeline, is being transported 
through trucks and tankers. And actually, a lot of those 
tankers are going into Houston as we speak. My question though 
is you have pointed out--who is Canada's number one trading 
partner in the world?
    Mr. Smith. You are.
    Mr. Bilbray. Who is America's number one trading partner in 
the world?
    Mr. Smith. We are.
    Mr. Bilbray. So we are sort of tied together here from that 
aspect of it. My question though is it appears to me when I 
look at the Keystone pipeline that the problem with the 
administration is not the EPA, is not the water quality control 
people. There is no controversy on that side. It comes down to 
a 5-foot artificial barrier called the international border 
between Canada and the United States and that the issue is not 
issuing the permit for you to bring a pipe up to your side of 
the border and for us to bring a pipe up to our side of the 
border. That is what is being held up here. So my question is, 
is it true to say that this issue really is not about the 
environmental impact in the United States, not the 
environmental impact on our water or resources in the United 
States, but more an issue about the United States trying to 
impose a regulation onto Canada and hold Canada to change its 
environmental policies and that the State Department--not the 
EPA--will not allow you to connect to a pipeline on our side 
unless you change something on your side of the border?
    Mr. Smith. We are continuing to provide a safe, secure, 
reliable, geopolitical, sensible stream of product to a nation 
that needs the product desperately.
    Mr. Bilbray. Thank you.
    Mr. Whitfield. The gentleman's time is expired.
    At this time, I recognize the gentleman from Texas, Mr. 
Olson, for 5 minutes.
    Mr. Olson. I thank the chair and welcome the witnesses. I 
am sorry you are here today because of election-year politics. 
It was clear that something changed this past fall with the 
President's handling of the Keystone XL pipeline. The 
Department of State wanted the pipeline. The labor unions 
wanted the pipeline. The environmental activists didn't want 
the pipeline. The President ruled and deferred the decision 
because of the elections coming up this November. But one thing 
we have learned since that time is the Keystone XL pipeline is 
safe. Why else would the administration approve the first 
portion of it being built from my home State of Texas up to 
Cushing, Oklahoma, unless it was designed to be safe? Why would 
they do that? And the President still has an opportunity to do 
what is right for the economy, approve the full Keystone XL 
pipeline now. Unfortunately, he is still being misled by the 
environmental activists and the Hollywood elites.
    The Keystone pipeline, not the XL pipeline, but the 
Keystone pipeline already brings Canadian oil sands crude 
across the border, across that aquifer in Nebraska and to Wood 
River in Patoka, Illinois. The exact same oil is flowing 
through the pipeline right now across the border to the United 
States. The protesters that surrounded the White House are 
waging a new war against Canada's oil sands. It has happened 
already. And as we have heard from the witnesses today, 
Canada's oil sands present an incredible opportunity for 
American energy security. Coupled with White House Press 
Secretary Carney's admissions that we have ``world-class, 
state-of-the-art refineries on the Gulf Coast,'' we can ensure 
Americans have access to affordable energy for our children and 
our grandchildren.
    My first question is for you, Mr. Smith. Some claim that 
the Keystone XL pipeline is designed to ship oil from Canada 
through the United States to our ``world-class, state-of-the-
art refineries on the Gulf Coast'' and out to Asia. But if you 
simply look at a globe you would see that Canada's west coast 
is much closer to Shanghai than it is to Houston. And on the 
same globe you might find a pipeline connecting Alberta to the 
Gulf of Mexico is a lot longer than a pipeline connecting 
Alberta to the Pacific. Why is the Keystone XL pipeline being 
proposed?
    Mr. Smith. Well, Honorable Member, I was here when Keystone 
I was approved and had its presidential permit. Oil sands crude 
has been reaching markets in the United States since the 1980s. 
It continues to grow. Production continues to grow. It creates 
opportunities, it creates jobs on both sides of that border, 
and I believe that ultimately we can have a North American 
answer to energy security and independence with reasonably 
priced energy prices that will stimulate economic recovery in 
both countries.
    Mr. Olson. How does building a pipeline through the U.S. an 
efficient means of accessing Asian markets?
    Mr. Smith. Each time you touch a barrel of oil, it becomes 
worth more money and thereby more expensive. So if there is a 
market closer, that is where the shippers go. That is where the 
producers would like to provide that produce. So it is a reach 
to think that you would move into a big ship that has a 
proclivity for a spill and it is also very expensive. So I 
would be very surprised, particularly in light of refinery 
closures on the northeastern side of the United States that oil 
reaching the Texas refinery complex would go anywhere else but 
the United States of America.
    Mr. Olson. Yes, sir. Thanks for that.
    One more question for you, Mr. Dammer. We have heard from 
Mr. Smith on how Alberta achieved basically energy independence 
and the positive effects that oil sands have had on their 
economy. And I saw a very similar thing in my home State of 
Texas about 3 weeks ago with the Eagle Ford Shale Play. A 
little different source of energy, it is true oil and true 
natural gas, but the exact same thing is happening in many 
cities across Southeast Texas. In very underprivileged cities, 
underprivileged counties, one example in Dimmit County the 
sales tax revenue has gone up 300 percent, the property tax 
revenue has gone up 400 percent making a real difference in the 
quality of lives of those people in my home State.
    And I mean if the United States had the same attitude 
toward oil shale, do we think we could have similar results 
across the country, not just what you experienced in Alberta 
and what we are experiencing in Texas?
    Mr. Dammer. Yes. Absolutely. As I said in my testimony, 
there are over 30 companies working on oil shale R&D here in 
the United States, and many of them have shown a lot of 
promise. Shell is working in situ; Chevron, Exxon, some of the 
larger companies are spending billions of dollars in trying to 
release the huge reserves that are locked in the Permian Basin. 
I think the problem we have here in the United States is we 
have no national program similar to the one that they put 
together in Alberta that directs the types of research and 
development toward these resources. We throw programmatic EIS 
at it, we do oil shale regs and then we revoke the oil shale 
regs and then we do another programmatic EIS. And that is why I 
brought up the fact that we have on the books a law, Section 
369(i), that calls for a national program to develop these 
resources. And I think if we followed the presets of that law, 
we would safely and comprehensively start to develop those 
resources.
    The reason why Shell is having so many problems in Colorado 
is they have no assurance that they will ever get out on the 
Federal land.
    Mr. Olson. I am over my time, Mr. Chairman, but I want to 
thank our witnesses from Canada. As a former military veteran, 
thank you for standing beside us in the War Against Terror. I 
know over 200 of your brave men have given their lives beside 
us in Afghanistan. I really appreciate that. We will stand 
beside you. I yield back.
    Mr. Whitfield. At this time I recognize the gentleman from 
New York, Mr. Engel, for 5 minutes.
    Mr. Engel. Thank you very much, Mr. Chairman.
    I really have an open mind about this. I believe very 
strongly that the United States can never be totally free in 
our foreign policy and such similar matters unless we wean 
ourselves off of oil that we get from unfriendly nations, and I 
think that Canada certainly is the friendliest nation. So I 
think that there is potential there, but I am concerned about 
the environmental difficulties. So I have just a couple of 
questions.
    Canadian tar sands obviously aren't regular oil. They are 
highly corrosive and very carbon-intensive. And obviously as 
lawmakers we have to evaluate the immediate health and 
environmental consequences of tar sands production, weigh our 
obligations to leave full functioning ecosystems for future 
generations and consider our responsibility in terms of adding 
greenhouse gas emissions to our planet. I take those 
responsibilities very seriously, and obviously, everything is a 
balance.
    In January 2012, Canada became the first nation to withdraw 
from the Kyoto Protocol. Now, we have never joined it so in a 
way people that live in glass houses shouldn't throw stones. 
But when Canada withdraws from it, I wonder why. It makes me 
suspicious. Every oil sands developer claims they can clean up 
the bitumen production with better technology, but from what I 
have seen--and please correct me if I am wrong--this technology 
doesn't yet exist, and the hard truth is from what I can see, 
the energy industry hasn't been really investing much in 
innovation.
    And I say this because according to Forbes, big energy 
companies devote barely 0.3 percent of their sales to research 
and development and many have ended their R&D programs. And if 
the technology worked really well, it would use less energy and 
steam over time to produce more bitumen. But exactly the 
opposite has happened. In the late 1980s, 2.38 barrels of steam 
was considered to produce a barrel of in situ bitumen and in 
2010 the steam industry average increased to 3.3 barrels. So 
that is a 50 percent decline in efficiency over a 20-year 
period. So I don't know. You look at the energy companies, they 
profit from commodity price increases, not ingenuity. So it is 
almost a disincentive for them to come up with these things. So 
I am concerned about development without proper fiscal, 
political, and environmental safeguards, and I would be happy 
if anyone would want to comment on what I have just said, 
either people from the industry or others as well. Mr. 
McCaffrey?
    Mr. McCaffrey. Sure, I would be happy to.
    Just speaking from our own company's perspective, our 
numbers are we design our plant for steam-oil ration of 2.8, 
which are the numbers you are referring to. We are currently at 
a 2.4. We are targeting to get down to 2. We have got 
technology that we think can be implemented now and that we are 
working on getting implemented to drive us in that direction. 
And some of the other companies in the area are also moving in 
that direction and they are being successful at it. So the 
technology that may have changed over time would have been 
cyclic steam technology is now steam-assisted gravity drainage, 
and that is a far more efficient process. And directionally, we 
are seeing good gains in that area.
    Mr. Engel. Mr. Dyer, didn't you in your testimony say that 
the tar sands are not getting cleaner and that technology is 
expensive and therefore that is the reason? Would you disagree 
with what----
    Mr. Dyer. Yes, that is correct. There have been 
improvements since 1990, as I mentioned, but in the past 6 
years we are starting to see declining intensity. I think, you 
know, if the industry is confident that improvements will still 
happen and we have innovation there, I think you would see them 
embracing the ability to demonstrate that through regulation 
and through low carbon fuel standards that would enable low 
carbon fuels to compete.
    Mr. Engel. Let me ask you this question. And anyone who 
wants to answer it may. What happens if these pipelines are not 
built? Will Canada continue to produce tar sands oil for the 
U.S. and Canada? Will it run out of customers before it runs 
out of product? What happens if this is not built? Mr. Smith?
    Mr. Smith. Thank you, Honorable Member. Yes, we will 
continue to increase production in this process. They will find 
alternate markets. Oil is a fungible commodity, which means it 
can be exchanged around the world on a computer transaction or 
a moment's notice, and I believe that more and more of that 
will happen. They will find outlets for direct shipment either 
to the east coast or through--there is a pipeline, the Kinder 
Morgan Trans Mountain pipeline that was built by Becton back in 
the '50s. That line has a corridor and can be doubled in size 
without great difficulty. That takes care of 400,000 barrels. 
500,000 barrels can go to eastern Canada to replace foreign 
import that we import. So we can find a market for a million 
plus barrels.
    It is also important to mention that we have received tens 
of billions of dollars of investment from sovereign-owned 
companies from around the world, including China, Korea, and 
the Middle East. So in fact they are realizing that we have a 
fungible commodity.
    I just also want to talk to you briefly--and Dr. Isaacs may 
want to supplement. We have a fund in Alberta that has 
contributed over $230 million simply in the last 3 or 4 years 
to better improving technologies for greenhouse gas reduction, 
energy efficiencies, and better practices in the oil sands. Our 
surface disturbance in the oil sands today is about the size of 
the city of Tampa. The size of the oil sands deposit is about 
the size of the State of Florida and we will be reclaiming 
that. And I am not sure that Tampa will ever get reclaimed. So 
we have a mine plan that goes forward every time and they have 
to provide reclamation programs to get things back equal to or 
better than--which is the watch word of the Department of 
Environment.
    Mr. Engel. Thank you.
    Mr. Whitfield. The gentleman's time is expired.
    At this time, I recognize the gentleman from Virginia, Mr. 
Griffith, for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    I guess I am somewhat curious. If the oil sands are going 
to be used anyway even if we don't build the pipeline, then I 
guess I am kind of curious as to why all the opposition to the 
pipeline, and I am wondering if any of you all can--start with 
Dr. Isaacs. Can you give me some explanation as to why, if the 
oil sands are still going to be used, why someone would oppose 
this pipeline coming into the United States? From a U.S. 
perspective--I know you all are mostly Canadians but can you 
all understand that?
    Mr. Isaacs. No, I can't understand that.
    Mr. Griffith. Can you understand that, Mr. Dammer?
    Mr. Dammer. No, I don't understand that at all.
    Mr. Griffith. Doctor?
    Mr. Nenniger. I am sensitive to some of the issues but I am 
not sure that is the right way if, you know, you are concerned 
about carbon emissions that really is effective.
    Mr. Griffith. All right. Mr. McCaffrey?
    Mr. McCaffrey. No, I don't understand it.
    Mr. Griffith. Mr. Smith?
    Mr. Smith. We are already shipping 1.7 million barrels 
south and also if I were receiving oil, I would want it in the 
safest way possible in the newest infrastructure possible.
    Mr. Griffith. Let me touch on that in a minute, Mr. Smith. 
I have heard previous testimony about shipping it the way that 
we are shipping it now in the United States, we actually have a 
bigger carbon footprint than if we build the pipeline. Is that 
accurate?
    Mr. Smith. Well, if you bring it in by tanker load, when 
you go quantity to quantity, the increased amount of emissions 
from tanker traffic than by pipeline.
    Mr. Griffith. All right. And you talked about safety as 
well. Is there more likelihood of accidents if you are doing 
the tankers?
    Mr. Smith. Well, it is your safety program, Honorable 
Member, and it will be a pipeline built by Americans, 
supervised by Americans and made safe by Americans. That 
includes union and nonunion labor.
    Mr. Griffith. All right. I appreciate that.
    Let me ask you as well, Mr. Smith. You know, we always hear 
that the U.S. possesses only 2 percent of the world's proven 
oil reserves. Now, we know that that is because proven reserve 
estimates only account for oil fields that are currently being 
produced. However, not long ago Canada had a similar proven 
reserve figure to ours. Did your government accept that 
Canada's proven reserves in 1994 should mean that there should 
be no new oil exploration?
    Mr. Smith. No, it did not. What it meant was that we had to 
find a way to publicly quantify and qualify these reserves. The 
oil sands reserves are based on public record of 56,000 wells 
and 6,000 cores. Drilling records and core samples remain 
intact today and they can be viewed by anybody from this 
community. And I believe that much of the criticism that we get 
from the oil sands is our own fault because we are too 
transparent, we might be too apologetic, we might be too 
Canadian.
    Mr. Griffith. Well, I am not sure I would go there, 
especially as an American. I don't want to accuse you of being 
too Canadian. But, you know, does this not say to us that the 
United States can learn that if we go out there and we look for 
new ways to discover new ways to use what we have in our 
country that we can in fact discover new ways to use what we 
have and come up with a greater percent than the 2 percent that 
we always hear bandied about in the press when the President 
tries to give us math lessons?
    Mr. Smith. One of the great things that Canada and the U.S. 
share is technology development, innovation, and germination 
and pollination between companies. And whether it is horizontal 
drilling, measurement while drilling, hydraulic fracking, 
production of gas from shales, production of liquids from 
shales, production of oil from shales, these technologies are 
shared across the border. The 49th Parallel doesn't mean much 
when you are moving technology throughout. And I think that the 
Bakken Field in North Dakota is a very good example of that.
    Mr. Griffith. So you would generally agree with me that we 
probably have greater than 2 percent if only we would use our 
resources, is that correct?
    Mr. Smith. Yes.
    Mr. Griffith. Yes. Dr. Isaacs, your testimony states that 
only the U.S. and Canada are the only developed countries that 
can dramatically increase oil production. There are other parts 
of the world that are producing large amounts of oil and will 
experience some growth, but are any of the other countries in 
the world that are expanding their growth, are they committed 
to producing oil with comparable environmental sensitivities to 
that of the United States and Canada?
    Mr. Isaacs. I don't believe they are.
    Mr. Griffith. And so would I be correct in believing that 
by not allowing the United States and Canada to expand our use 
of our natural resources, we may in fact be creating a greater 
problem worldwide with pollution than if we are allowed to use 
with our sensitivities to the environment are allowed to use 
our natural resources? Is that true?
    Mr. Isaacs. I think it is very possible, yes.
    Mr. Griffith. I appreciate it and I yield back my time, Mr. 
Chairman.
    Mr. Whitfield. At this time I recognize the gentleman from 
Louisiana, Mr. Scalise, for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman, and thanks for having 
this hearing on the American Energy Initiative. I know this has 
been a series of hearings that we have had on this in addition 
to the legislation that you have brought forward through this 
committee to help our country become more energy independent. 
And at the end of the day when we look at the skyrocketing 
price of gasoline and projects are it is only going to go 
higher, I think most people recognize that supply does have a 
factor in price. You can't ignore that basic fact of economics. 
And we have done a lot of things in this committee not only to 
increase the supply in America, to open up more areas that are 
currently closed, but also to create what would be hundreds of 
thousands of new American jobs that would go along with it. And 
of course here with the Keystone XL pipeline proposal, I know 
we have seen projections that on the low end there would be 
20,000 new jobs created, over $5 billion of private investment 
that would be brought in, not this Federal stimulus program of 
spending money we don't have but actual private investment to 
build this pipeline.
    Mr. Smith, if you can address the jobs issue because there 
have been some that have criticized that not enough jobs have 
been created or that the 20,000 number is not accurate--I have 
heard it is even higher but there are some suggesting it is 
lower as if only a few thousands new jobs is a bad thing, they 
oppose that. If you can address the jobs issue on what the 
estimates are that Keystone would create in America, the United 
States.
    Mr. Smith. Well, what we do know is that economic recovery 
is always based on reasonable energy prices or energy prices 
that are more competitive than the balance of world markets. To 
construct that pipeline, it is my understanding that it is a 
shovel-ready project, requires no taxpayers' dollars, and the 
number of direct and indirect jobs have been wildly debated. 
And I believe that the number of 20,000 immediate jobs in a 
country with 8.3 percent unemployment would be significant.
    Mr. Scalise. 20,000 immediate jobs. And in the long-term, 
what estimates do you have there?
    Mr. Smith. I think the long-term is probably more difficult 
to calculate because as you move into economic recovery with 
reasonable and secure energy prices, you do ramp up over all 
economic activity. So I have heard in the range of 50,000 
indirect.
    Mr. Scalise. Great. And, you know, of course some, 
including the President are suggesting they need more time for 
environmental concerns and all of that. And of course one of 
the facts that they leave out is that even if the President 
were to approve Keystone, which, you know, has been on his desk 
for over 3 years and there have been environmental studies that 
have suggested it would be a positive thing to do, each State 
would have to permit it, even Nebraska where, you know, there 
has been a lot of attention given to Nebraska's route. The 
State of Nebraska would still have to issue a permit before the 
pipeline could be built even if the President said yes, which 
of course the President has not. Is that correct?
    Mr. Smith. That is my understanding.
    Mr. Scalise. Yes. And so, you know, as the President tries 
to say he is for an all-of-the-above energy strategy, you are 
not for all-of-the-above if you say no to Keystone and so many 
other things that we have seen him say no to.
    There is one final question as a follow-up to my colleague 
from Virginia asked on this 2 percent--because I know the 
President said this; others have suggested that in America 
there is this finite 2 percent amount of all the world's known 
reserves. And of course in Canada they were using similar 
numbers even going back to 1994 numbers before of course some 
of the new technologies came out. And as many know, you know, 
that known number of reserves only counts where there is actual 
production. If you are shutting an area off to exploration, 
there could be a vast amount of reserves that are there; we 
just don't know about them because the Federal Government won't 
let them go there. How did you all address that in Canada when 
you had a similar kind of smaller number of known reserves 
before the new technologies were allowed to advance?
    Mr. Smith. Well, Honorable Member, that is an important 
distinction. The resources are managed by each individual 
province/state if you will. They have an independent 
jurisdiction and the Federal Government is basically forbidden 
by the constitution to interfere in the orderly development of 
those resources or the trade and commerce of the provinces with 
those resources. So my direct experience was transparent 
records, environmental surveillance, a keen and strict 
regulatory process, and an ability to communicate that 
throughout the jurisdiction. Even with this great amount of 
debate, continually polls across Canada support the orderly 
development of the oil sands.
    Mr. Scalise. Well, thanks. And then the final question, Mr. 
McCaffrey, if you look at Canada's oil field discovery, it 
increased their proven reserves by an order of magnitude of 
multiple times over. Can you kind of give your commentary on 
how this was accomplished?
    Mr. McCaffrey. I think it is through the advancement of 
technology. We continue to see incredible improvements in terms 
of the recovery factors and being able to demonstrate those 
recovery factors. And I think it really echoes the point of the 
sheer size of that resource that is commercially recoverable. 
And we have a large number of customers from the U.S. right now 
on the Gulf Coast that are very interested in connecting with 
the supply. So as this supply has come on, as it continues to 
improve in efficiencies, there is a vast majority of the 
refineries on the Gulf Coast that have come up on a regular 
basis saying we need the crude; we have got to get the crude. 
And that is the only thing is the pipeline that is preventing 
the customer from getting the supply it needs.
    Mr. Scalise. Well, thank you all for coming and thanks, Mr. 
Chairman. I yield back the balance of my time.
    Mr. Whitfield. Thank you, Mr. Scalise. And I want to thank 
those members of the panel for being here today. We appreciate 
your testimony very much. And I do think that this hearing 
brought to a clear focus the different policies in Canada and 
in the U.S., and because of Canada's policies they have gone 
from a net importer to a net exporter. And we recognize that 
there are many groups that sincerely do want to stop the 
exploration, production, and use of fossil fuels, but the 
reality is for our transportation needs we don't have any 
alternative right now. So this hearing has really been helpful 
and we appreciate your expert testimony.
    And with that I will adjourn this hearing and we will keep 
the record open for 10 days for any materials that need to be 
admitted. Thank you.
    [Whereupon, at 12:12 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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