Building Bridges to Our Energy Future
Steve Williams, President and CEO
Suncor Energy Inc.
CERA Week (Houston, Texas)
Mar. 5, 2013
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Thank you, Dan.
It’s great to be back in Texas.
I have attended this conference many times. And there have been different conversations we’ve had over the years: Peak oil. The global economic crisis.
Today, we’re starting to see a new map of energy being drawn. And that’s what I want to talk about, particularly focusing on North America.
Today, I’d like talk about bridges. The structures that carry us past today’s challenges. The pillars of a bridge to a positive energy future.
As we build that bridge, here are the things - the foundational supports - that I think will be key:
- First, how energy has a positive impact.
- Second, how a strong Canada/US energy partnership benefits both Americans and Canadians.
- And third, how continuous improvement, innovation, and collaboration will help us get to a better place.
The Positive Impact of Energy
So let’s start with that first pillar of the bridge: energy and how it continues to touch our lives.
I’ve been in this business for over 35 years working for the majority of it for American corporations. Born in the U.K., as you can tell from the accent, and now a Canadian citizen, I bring a unique perspective on energy. And, like many of you, I’ve seen a lot of change.
Just consider these recent developments:
- Tight oil production continues at a rapid pace. By 2020, it’s expected to be the single largest source of supply in North America.
- We have significant price differentials in our North American market. Not because we have too much oil, but because we’re struggling to develop distribution systems.
- And, as we’ve all seen, proposed pipelines now face significant resistance.
You might think I could be discouraged. In fact, I’m quite optimistic. And that’s because despite the tight oil boom, the US will still require oil imports - particularly heavy oil - for the foreseeable future.
The reason? None of us - whether we’re in the industry or not - can imagine where we would be without energy.
In early times, wood fires provided warmth and a means to cook. The industrial revolution was all about “coal.” That energy source helped ease the need for manual labour, stoked steam engines, and drove economic growth and production in factories. Oil and natural gas development in the 20th century made the world smaller. We took to the roads, we took to the skies, took to high speed rail, and we ventured into space.
Fossil fuels and electricity, generated from a variety of sources including wind, solar, and hydro have brought us other things: air conditioning, iPads, the internet, pacemakers, and the list goes on.
Energy is also a huge part of our economy. The oil and gas industry is one of America’s largest employers, contributing almost half a trillion dollars annually to the economy. Depending on when you look, that’s approximately Walmart’s annual sales volumes or Apple’s market capitalization. And In Canada, capital investments are exceeding $50 billion each year.
So, what does our energy future look like? In the next 20 years, the world’s population is expected to grow to 9 billion people.
- Will we have the energy to meet their needs?
- Can energy bring increased quality of life?
- Can it further reduce levels of poverty?
- Can we reduce the environmental footprint from energy production?
The answer to all of those questions… is yes.
The Polarization Challenge
But there’s a catch. To get there, we have to get past today’s polarized debates.
Whether it’s climate change policy, low-carbon fuel standards, pipelines, or what source of energy we prefer, more and more of us are focused on staking out positions.
We seem preoccupied with what we’re against: dirty coal, tar sands, hazardous nuclear waste, fracking, and yes, even bird and bat-killing wind turbines.
In the midst of trying to prove who’s right and who’s wrong, I’m troubled by the idea that we may find ourselves in a worse place than where we started. Talking about the Keystone XL pipeline, the city of Calgary’s Mayor said:
“It’s a terrible shame that this one metre in diameter pipeline is being asked to carry all of the sins of the carbon economy.”
We do need to think about unintended consequences. Make no mistake – oil will find its way to markets. It might just get there by different means, which in the end, could be more carbon intensive.
Some have called for shutting down the oil sands. The reality is that stopping them would remove just one tenth of one percent of global emissions.
Just to put oil sands emissions in context, they are smaller than the emissions of New York City.
Is shutting off this supply the answer? When global demand for energy has grown by 45% since 1990, and by using this energy to triple the size of the global economy, we’ve moved 700 million people from poverty to the global middle class in the same period?
Shouldn’t we be focused on what we’re for? That is, meeting energy needs reliably, safely, responsibly, and sustainably?
We need to “get to the yes.” That bridge to a positive energy future means greater cooperation and collaboration and conversations, rather than confrontations.
Because whether you are an oil sands producer or an environmental activist, we all want the same things: vibrant communities, a healthy environment, good schools and employment prospects for our kids and grandchildren.
And that’s the same the world over. Surely, we’re all for potable water, nutritional food, heat or warmth, safe, efficient transportation.
Good Neighbours, Even Better Partners
If less confrontation and more collaboration is the goal, then the Canada/United States relationship may point the way.
In 1953, President Eisenhower addressed the Canadian Parliament, saying:
- “By mutual respect, understanding and with goodwill, we can find acceptable solutions to any problems which exist or may arise between us.”
That strong relationship was affirmed again in another address to Parliament by President Kennedy in 1961:
- “Geography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder.”
What was true then is just as true today. What unites us is far greater than what divides us.
That brings me to the second pillar of the bridge: how a strong energy partnership benefits both Canadians and Americans.
Canada exports crude oil, natural gas and electricity to the U.S. According to the Government of Canada, these energy exports amount to over 87 billion dollars. And there’s good reason for that to continue.
Why? Don’t think of Canada as just snow and ice, the Royal Canadian Mounted Police, hockey, Justin Bieber and the maple leaf. Think of it in terms of abundant oil resources – the world’s third largest, a strong regulatory environment, an open investment climate, and importantly, a commitment to sustainable development.
Canada is already America’s largest, most secure foreign oil supplier. We provide the U.S. with nearly 2 million barrels per day. That’s more than 20 percent of American imports. And don’t forget that U.S. refineries are looking for heavy oil that we can provide to feed their refineries.
The implications of this strong energy partnership are clear: reliable, safe supply from Canada, refining jobs in the U.S., and energy development spin offs. For every dollar America spends on Canadian oil, almost 90 cents returns, through Canadian purchases of American goods and services.
We want to grow the energy relationship.
And recent polling shows a majority… some might say a silent majority…of Americans agree the United States should import more oil from Canada. We need to focus on three key opportunities:
- One - improved infrastructure, including pipeline development that brings benefits on both sides of the border.
- Two - greater certainty around national energy and environmental priorities, including climate change objectives. Let’s start having more cross-border conversations about our shared aspirations—and a roadmap to achieve them.
- Three - increased investment in technology and innovation to drive energy efficiency and environmental performance.
That brings me to the third pillar of the bridge – how innovation and collaboration will help us get to a better place.
In the early days, oil sands technologies were focused on economically getting the resource out of the ground. Today, many of the breakthroughs are focused on environmental performance.
A good example is in how we’re dealing with tailings at our oil sands mines. At Suncor, we’ve spent over a billion dollars to develop a new tailings reduction technology. That’s already allowed us to cancel plans for five additional tailings ponds. And, we expect to reclaim entire mine sites in a third the time it now takes.
Another example is on water use. Over the past six years, Suncor has reduced its freshwater intake by more than 30%. Our freshwater use is the lowest it’s been since 1998, even though we have tripled production.
We’re also a Canadian pioneer in wind energy and operate Canada’s largest ethanol plant.
We’ve made progress, but we know we need to do much more. That’s why we’ve publicly set ambitious environmental performance goals:
- To reduce our water use and air emissions;
- Increase land reclamation rates;
- and improve energy efficiencies - all by specific, targeted rates through 2015.
That goal initiative, by the way, grew out of another kind of collaboration with our stakeholders.
Suncor regularly consults with Ceres—a broad coalition of investors, labour representatives, members of the faith community, environmental advocates, and public interest groups.
It was Ceres that helped us get to the place of developing environmental performance goals. And we’re working hard to achieve them.
When it comes to the environment, though, we can’t do it alone.
The Next Step in Collaboration
About a year ago 14 companies came together to form Canada’s Oil Sands Innovation Alliance, or COSIA. Its mandate is to collaborate on environmental performance. What excites me about COSIA is this:
- 14 companies which account for 90% of oil sands production
- 14 CEOs are committing to step-change performance improvements in tailings, water, land and GHG emissions.
- 14 competitors who in just a year, have shared 446 distinct technologies with associated development costs of $703 million. This is unheard of. 14 companies determined it is better to share intellectual property than compete on environmental performance.
To our knowledge, COSIA is the largest collaborative effort of its kind, anywhere on the planet. And it’s happening in the Canadian oil sands.
Let the Dialogue Begin
It’s an extremely exciting time. Thinking big and acting boldly are essential. But to build a bridge to our energy future, we need to earn trust. We must engage every sector of our economies—and our citizens—in an informed dialogue:
- How can we develop our vast resources—both hydrocarbons and renewables to the best advantage?
- How can we build the kind of society we want to create?
- How can each of us use energy more wisely?
- How can we better plan our cities, heat our homes and drive our cars?
As we do this, we also need to focus on partnerships that help to create healthy markets and a healthy economy – like the U.S./Canada partnership. With a healthy economy, we can support appropriate social needs like education and health, creating better quality of life.
And of course, just as important, we can invest in technology and innovation that minimizes our environmental footprint. While we may not always agree, we need to start the conversation to get to solutions. Because in the end, we can all agree on this: No one has a monopoly on good ideas.
When I started out, I talked about building bridges to our energy future. The three pillars I’ve mentioned: energy and its ability to drive positive change, a strong Canada/U.S. energy partnership, and continuous improvement, innovation, and collaboration, I believe, are what is needed to build a bridge to a better energy future.
And we all have a part to play in its construction. What lies on the other side of that bridge is an exciting place. Working together, I’m confident we’ll get there and it will be a destination well-worth the effort.