Speeches

Mexico City, Mexico
Delivered March 25, 2009

Introduction

• Thank you, Dr. Wood.
• Good afternoon, ladies and gentlemen.
• As Deputy Premier and Minister of International and Intergovernmental Relations, it’s my pleasure to be here and represent Premier Ed Stelmach and the Government of Alberta.
• I’d like to start by thanking Dr. Duncan Wood, from ITAM, the Mexican Energy Network, and the other sponsors of this event: the Secretariat of Energy, and the Canadian Embassy in Mexico.
• Thank you also to the Canadian Chamber of Commerce for inviting me to deliver the opening remarks for today’s seminar.
• I’m sure you’re accustomed to people remarking how nice it is to be here, enjoying the balmy Mexican weather, and so forth.
• I’m afraid it’s hard to resist saying that – because, after all, I am from Alberta.
• Located in the western part of Canada, in many ways we are blessed. <
• From our boreal forests, to our soil rich prairies, to our world-famous Rocky Mountains – Alberta is one of the finest natural environments in the world.
• We have temperate summers, and days when the sunlight lasts long into the evening…
• But, we also have very cold winters for a few months of the year.
• Indeed, our climate can sometimes be harsh…which is likely part of the reason that Albertans are known as tough, resilient people.

Energy ties

• Alberta is about one-third the size of Mexico, but we only have about 3.5 million people – that’s about 10 per cent of Canada’s population.

• Despite this, we contribute about 20 per cent of Canada’s GDP.

• Like Mexico, Alberta is a resource-based economy, and our people are used to the economic ups and downs that go along with that.

• I don’t have to tell you that the oil patch, in fact the energy industry overall, is not for the faint of heart.

• This is something I think Mexico understands as well.

• Especially since the success of both of our respective economies rests, in large part, on the performance of our energy sectors.

• To give you a sense of Alberta’s approach to managing and developing our energy sector, I’ll start by providing a bit of background...

Oil and gas

• Alberta is home to one of the largest proven oil reserves in the world – in fact, we’re second only to Saudi Arabia.

• The Alberta oil sands contain 173 billion barrels of oil using today’s technology.

• But, with technology continuing to advance, it’s possible that as much as 334 billion barrels will be recoverable in the foreseeable future.

• And while we won’t get it all in our lifetime, the oil sands actually contain some 1.7 trillion barrels!

• For now, Alberta produces about 1.85 million barrels of oil per day…

• With the lion’s share, 1.35 million barrels, coming from the oil sands…

• The remainder is produced through conventional oil production.

• Alberta is also the world’s third largest exporter of natural gas.

• An estimated 40 trillion cubic feet of conventional natural gas is considered recoverable.

• And an additional 1,500 trillion cubic feet of unconventional gas from shale and coal bed methane is also considered recoverable.

• Currently, Alberta produces more than 80 per cent of Canada’s natural gas - and expanding pipeline capacity will increase the amounts available to Canadian and North American markets.

• In short, Alberta’s energy resources are fairly significant.

Ownership tenure

• And these resources are owned by the people of Alberta, which the provincial government manages on their behalf.

• We do this in accordance with Section 92A of Canada’s Constitution Act, which describes provincial jurisdiction over non-renewable resources.

• As for development - since the major oil discovery in Alberta almost 60 years ago, our government’s approach has been based on the principle that publicly owned resources can be most efficiently developed by private industry.

• As such, the rights to explore and develop oil and gas are leased to private sector companies through a public tender process, to the highest bidder.

• Private companies develop Alberta’s energy resources for profit, under government regulations.

• Ultimately, this ensures that the discovery, development, and delivery of energy resources is fair, environmentally responsible, and in the public interest.

Royalty regime

• As owners of the province’s natural resources, Albertans receive royalties on the production of oil, natural gas, coal, oil sands and other minerals.

• These royalties help to fund essential public services, such as health care and education, and they also help to keep Alberta’s taxes the lowest in Canada.

• Alberta's conventional royalty regime is sensitive to variations in price, production levels and the depth of the resource.

• This regime is unique in that it factors in the economics over the life of a project.

• For example, royalty rates vary in response to:

  • the depth of the well;

  • the date the well went into production;

  • the productivity of the developed well;

  • the previous month’s par price of oil and gas; and

  • in the case of oil sands and coal, allowed costs.

• Alberta’s three-point drilling incentive program also includes a drilling royalty credit for new conventional oil and natural gas wells, and a new well incentive program.

• This entrepreneurial approach has resulted in significant private investment, new employment, and innovations in technology.

• For example, Alberta currently has nearly 190 billion Canadian dollars in investment, in major projects that are planned, underway or recently completed.

• As for job creation, approximately 140,000 Albertans work in the energy sector.

• For every job created in oil and gas extraction, more than four indirect and induced jobs are created in the provincial economy.

• That’s a total of 750,000 jobs, many of them well-paying and requiring highly-skilled people.

Technology

• The primary responsibility for development and implementation of new technology belongs to industry.

• However, government has also made strategic investments over the past 30 years.

• One of the most significant investments came this past summer, when our Premier announced a commitment of two billion Canadian dollars to carbon capture and storage technology.

• With this funding, we expect to see three to five large-scale projects developed, with the potential to permanently store up to five million tonnes of CO2 per year by 2015.

• That’s equivalent to taking a million cars – every third car in Alberta – off the road.

• In addition to significant reductions in emissions carbon capture and storage technology offers enormous potential for additional value-added development.

• Such as opportunities for enhanced oil recovery.

• CO2 can be injected into existing oil fields to increase recoveries by an estimated 500 million to two billion barrels.

• This at will create significant benefits, including new opportunities for the conventional oil sector, and more jobs for Albertans, and potential investors…

Research

• Meanwhile, Alberta’s approach involves partnerships – between government, the private sector, and universities.

• All of whom share a common vision – ensuring that Alberta will have an environmentally and economically sustainable energy supply for years to come.

• The Alberta Science and Research Authority, Alberta Research Council and Alberta Energy Research Institute are leading innovative research projects working in collaboration with industry and academic partners.

• Naturally, energy research is conducted within a context of environmental responsibility.

• Aside from carbon capture and storage, research currently underway includes the development of cleaner coal, and the exploration of non-conventional energy sources such as fuel cells, and hydrogen.

Summary

• Oil, gas, oil sands, power generation and pipeline projects continue to drive Alberta’s economy.

• It bears repeating that the value of major capital projects for oil, gas, oil sands, pipelines, power generation and biofuels over the next decade, is estimated at more than 190 billion Canadian dollars.

• I believe this reflects Alberta’s success in managing its energy resources, and creating an economic climate that is attractive for private sector investment from around the world.

• Alberta’s royalty revenues help to keep taxes low, creating a favourable business climate that helps attract investment at about double the Canadian average.

• Our model of partnerships between government, industry and educational institutions has led to years of successful energy exploration and development.

• And these public / private partnerships still ensure public ownership and responsible development of non-renewable resources, and protection of the environment.

Mexico partnerships

• Today, many Alberta energy sector companies are partnering and investing in Mexican energy projects.

• Alberta engineers and specialists are providing expertise in pipeline operations, drilling and enhanced oil recovery projects.

• Alberta also welcomes Mexican investment and collaboration in our energy sector.

• That’s why in 2007, the Government of Alberta and the Mexican Energy Secretariat signed the Declaration on Cooperation.

• This agreement captures our intent to work more closely, sharing best practices and promoting collaboration between our energy sectors.

• I’m glad to say that as part of this agreement, Alberta Energy and SENER met here in Mexico City last week.

• …and a mission of 10 Alberta companies with technologies focused on enhanced oil recovery met with SENER and PEMEX in Cuernavaca, earlier this week.

• These are but two examples of this successful partnership between Alberta and Mexico.

Conclusion

• Over the past several years, Alberta’s relationship with Mexico has grown.

• It has also become stronger, in part to the success of the Alberta Mexico Office and David Nygaard’s team.

• And, this year marks the seventh anniversary of this office.

• Among its accomplishments, I’d like to recognize the role of the Alberta Mexico Office in working with Mexicana to make direct flights between Alberta and Mexico City a reality.

• This made my trip down here much easier, and will surely facilitate smoother business linkages between Alberta and Mexico in the future.

• In short – it helps us to connect.

• This brings to mind the words of respected novelist Carlos Fuentes, who wrote that,

  • “Culture consists of connections, not of separations: to specialize is to isolate."

• We look forward to continuing to develop our relationship with Mexico and creating many more connections for years to come.

• Muchas gracias. Thank you.