Energy production: It’s an Ontario story too

Contributed to The North Bay Nugget, The Globe and Mail
Tim McMillan
President and CEO
Canadian Association of Petroleum Producers
May 25, 2015
About 160 years ago, the world’s first integrated oil company began producing, refining and marketing oil discovered near Petrolia, Ont., where Canada’s first significantly successful oil well was drilled.

Yes, Ontario is the birthplace of the North American oil industry. And in 1862, one of the world’s first oil pipelines was built from the Petrolia oilfield to nearby Sarnia, where world-class refining and petrochemical operations continue to this day.

Today, Ontario still gets most of its oil from Canadian sources and much of it is transported through pipelines that have operated safely for decades.

Ontarians consume almost 600,000 barrels per day of gasoline, diesel and other petroleum products. With four refineries in Sarnia and Nanticoke, Ontario has total refining capacity of 395,000 barrels per day. These refineries create local jobs and supply Canadian-made products.

From these beginnings in Ontario, Canada is now blessed with the world’s third-largest reserves of a resource that powers our vehicles, heats homes and businesses and provides us with other products including shoes, plastics and computers.

Oil and gas operations span the country and include pipelines in every province. The industry employs thousands of people and pays about $18-billion a year to all levels of government. That’s money governments can use to help fund social services, education and health care.

From production through transportation to markets in Canada and elsewhere, companies work with pipelines, regulators, governments and communities to ensure world-class safety standards are met. The goal is to handle oil safely at every stage.

Developing, operating and transporting oil and gas safely while continuously improving environmental performance is what’s needed to maintain a strong industry that creates jobs and earns economic benefits for Canadians.

In the words of Ontario Premier Kathleen Wynne: “Oil and gas are clearly fundamental to Alberta’s economy and to Canada’s but also to Ontario’s … Many of our Ontario manufacturers now directly support your industry. I want us to build on that relationship.”

It is estimated new Canadian oil and gas projects will require about $281-billion worth of goods and services from suppliers in Ontario and generate more than $31-billion or $1.3-billion per year in provincial and municipal taxes over the next 25 years.

More than 1,100 Ontario companies, located all over the province, directly supply our industry with construction, manufacturing, transportation, warehousing, financial services and environmental consulting goods and services. The $1.3-billion per year in provincial and municipal taxes is equivalent to paying tuition for more than 172,000 university students and salaries for about 25,000 teachers, 26,000 Ontario Provincial Police officers or 23,000 nurses.

Ensuring these benefits is what pipeline projects are all about. TransCanada’s Energy East and the reversal of Enbridge’s Line 9, which flows between Sarnia and Montreal, are two of several projects needed to help position Canadian oil as the preferred supply to domestic and global energy markets. The Line 9 reversal has been approved by the National Energy Board and is awaiting the final go-ahead to begin operations.

The world will need more energy in the future – more energy from renewables, but without question more energy from oil and gas. Who better to supply the world’s energy needs than Canada?

We believe sound pipeline policy is needed over the coming decades to move oil and gas to new markets through new pipeline projects. Expanding rail capacity is necessary, but so too is expanding pipeline capacity – in every direction. Without the building of this critical infrastructure, Canada will not develop the full economic potential of its resources.

A majority of Canadians believe oil can be produced with effective management of its environmental impacts, including greenhouse gas emissions from the production process.

Oil sands account for 0.12 per cent of global GHG emissions – not insignificant by any means, but small compared to the global total. Nevertheless, companies have found ways to reduce per-barrel GHG emissions by 30 per cent since 1990 and continue to seek more reductions through technology development. Oil sands companies are investing more than $1-billion collectively into developing new technologies to improve environmental performance through Canada’s Oil Sands Innovation Alliance.

In addition, under Alberta legislation passed in 2007, companies must reduce GHG emissions from major projects by 12 per cent over the life of the project or pay $15 per tonne. The money paid under this regulation – about $500-million to date – goes into a fund for more technology investments.

Canada has the energy the world needs. We have the world’s third-largest oil reserves and the fifth largest natural gas production. Our challenge is making it attractive to invest the billions needed to develop and deliver it responsibly so we can compete and find new customers in the global market.

The same Canadian spirit that helped industry unlock Canada’s oil resources in the 1800s continues to push us to find the best way to develop it. Technology and innovation will enable more growth, jobs and other benefits and a reduced environmental footprint.

Canadian oil development is unambiguously good for Canada and unequivocally important to people around the world, representing a tremendous economic opportunity and a largely untapped source of secure, reliable energy. It’s a global success story in which Canadians justifiably take great pride.