Speeches

Delivered on March 25, 2009
Mexico City, Mexico

Introduction

• Thank you Miguel.

• On behalf of the Government of Alberta and our Premier Ed Stelmach…it is an honour to be here among such distinguished government and business leaders.And it is wonderful to be in this beautiful country.

• Like many Albertans I have…in the past…spent some quality time on the beaches of Mexico’s Pacific coast.

• However, this is my first working mission here.

• It is also the first time that I have been to the heart of this special country.

• While Mexico City is a much different experience for me than the beach…there is a constant…

• That being the friendliness and hospitality of the Mexican people.

• I have been told that international surveys rate Mexicans as some of the happiest people on earth.

• My guess is that the importance Mexicans place on family has a lot to do with this.

• And I can tell you that Alberta is very proud to share a long and lasting family bond with Mexico.

• We have a history of agricultural co-operation, dating back to the early 1990s.

• And since 1999, Alberta has been a “sister-state” with Jalisco, co-operating in areas such as agriculture, education, forestry and economic development.

• In fact, tomorrow I will be in Guadalajara where I will be meeting with Jalisco officials to celebrate 10 years together…

• …and talk about what the next 10 may look like!

• In 2002, Alberta stepped up its presence significantly by opening a representational office here in Mexico City.

• It is one of Alberta’s network of 10 international offices established to stimulate economic development, trade and investment.

• Our strategy is working.

• Mexico continues to be Alberta’s fourth-largest export market and one of its fastest growing.

• In 2008, bilateral trade topped $1.9 billion dollars.

• This was an increase of over 50 per cent over 2007.

• In fact, Alberta represents almost 20 per cent of Canada’s total exports to Mexico and nearly 50 per cent of Western Canada’s exports to Mexico.

• The foundations of this relationship will serve us very well as we enter into what I see as a new area of cooperation.

• That brings me to the theme of today’s conference… Canada and Mexico…Key Partners in Critical Times.

• And what I’d like to talk about today is how Alberta can contribute to that strategic partnership – especially as it relates to energy and the environment.

• Specifically, I would like to talk about how Alberta’s private sector can build relationships with the private sector here to help with Mexico’s energy security needs.

• And finally, I’d like to state the importance of Alberta’s role in helping to contribute to the upcoming North American climate change discussions.

Background about Alberta

• Let me begin by talking about what Alberta has to bring to the energy security table.

• Our Western Canadian province may be small, with only some 3.5 million people…

• However, I think it is fair to say that we are becoming a heavy lifter in helping North America achieve energy security.

• Alberta is blessed to be rich in natural resources.

• We have more than 34 billion tonnes of coal.

• And Alberta is 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.

• We also have 1.5 billion barrels of recoverable conventional oil…but our future lies in the proven 173 billion barrels of reserves contained in the Northern Alberta oil sands.

• This puts us second only to Saudi Arabia in proven oil reserves.

• We have come a very long way in a very short time.

• Just five years ago, the Alberta oil sands were considered by many to be a “pilot project”.

• It took hard work – by Alberta’s International Office in Washington, DC and other Canadian voices in the United States – to convince influential Americans that Canada could play a significant role in helping to meet tremendous energy demand.

• To say that we were successful is indeed an understatement.

• In 2006, Canada was the number one foreign supplier of energy to the US, with Alberta providing the lion’s share of oil and natural gas.

• That year, we exported about 1.35 million barrels a day of crude oil to the US, supplying 13 per cent of US crude imports.

• Based on projects already announced and those underway, by 2015, we expect our oil sands production to grow closer to 3 million barrels a day.

• So…I think it’s fair to say that you can’t have a discussion about North American energy security…

• …and what that means to future economic growth…

• …without significant mention of Alberta.

Role of Alberta’s private sector

• It is no secret that much of our success is due to the people in Alberta’s private oil and gas sector.

• Since the major oil discovery in Alberta 60 years ago, Alberta’s approach to its energy sector has been based on the principle that publicly owned resources can be most efficiently developed by private industry.

• The rights to explore and develop oil and gas are leased to private sector companies through a public tender process.

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

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

• It also ensures that the ingenuity of the private sector is used to its fullest to get the very most out of Alberta’s energy resources.

• Let me give you an example.

• I mentioned earlier that the oil sands contain 173 billion barrels of reserves.

• In 1999, the US Department of Energy believed that only 5 billion barrels were recoverable.

• What brought us here and what will take us forward?

• Technology, innovation and public and private sector ingenuity.

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

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

• One of the key elements that makes our energy sector work includes the thousands of private sector firms that make up Alberta’s formidable oil patch.

• They arrange financing, explore, drill, produce, transport and refine…

• …and much of the technology and equipment they use was developed and built right in Alberta.

• And these are just some of the tertiary benefits to Albertans of a robust energy sector.

• Heavy oil and oil sands upgraders require pressure vessels, industrial furnaces, cooling towers and heat exchangers.

• And most of these are manufactured in Alberta and transported to site in some of the most interesting truck convoys you can possibly imagine.

• Alberta’s oil well service and manufacturing sectors churn out sophisticated instrumentation and control systems; engines to run equipment under severe operating conditions; and pumps and compressors, steel pipe and valves, among many other products and services.

• Alberta has developed a wealth of expertise, and an unmatched rate of economic growth because we believe in the ability of the private sector to meet challenges and provide solutions that work…

• …for industry, for government and for the people of Alberta.

• Alberta does not own a state oil company, although Petro-Canada, which was wholly owned by the federal government from its creation in 1975 until 1991, is headquartered in Calgary.

• From 1991 to 2004, Petro-Canada was gradually privatized, and the federal government sold its remaining 19 per cent ownership position in Petro Canada five years ago.

• And on Monday - in fact - Petro-Canada and Alberta oil sands pioneer Suncor Energy Inc. announced a planned merger that could see the creation of Canada’s largest energy company.

  (Pause)

• Alberta does not set production quotas or targets either.

• But, and this is very important, Albertans, through their government own 81% of all these resources I have mentioned.

• And, through government, they expect to benefit from that ownership.

• How do we do that?

• Government seeks to maximize the benefits of resource extraction through the development of a fiscal regime that:

  • encourages private sector development resulting in the creation of jobs for Albertans; and

  • collects royalties and taxes that help pay for high quality government services.

• On both counts, I can easily quantify our successes:

• Over a quarter million Albertans - one in six in the provincial labour force - are directly or indirectly employed in the energy sector. In almost all cases, in highly skilled, high paying jobs.

• At the same time, in fiscal year 2007-08, the Government of Alberta collected more than $11.5 billion in royalties, corporate taxes and bonuses from the sale of leases and licenses.

Alberta’s investment climate

• Alberta looks forward to opportunities like the one we have here today to demonstrate the tremendous investment opportunities we have…

• …opportunities that have been seized by many countries such as Norway, the UK, France, the US, Korea, Japan and China.

Alberta and the World Economic Situation

• Indeed, in recent months, the Premier of our province and other Alberta Ministers – including myself – have travelled to many parts of the world.

• Our message has been that Alberta continues to be a safe bet to partner with and to invest in, even in the midst of global economic challenges.

• Alberta’s fiscal framework was designed to help endure this kind of economic volatility.

• Alberta has no provincial debt and the lowest overall tax regime in Canada – including:

  • no provincial sales tax;

  • the lowest personal taxes;

  • the lowest corporate tax rate; and

  • the lowest fuel tax rate among the provinces.

• In addition, Alberta businesses do not pay capital taxes, payroll taxes or general sales tax as they would in other Canadian provinces.

• We have $7.7 billion in a Sustainability Fund to cushion dramatic changes in provincial revenues.

• We also have a Heritage Savings Fund valued at $14.5 billion dollars.

• And our resources belong to the people of Alberta, as described in Canada’s Constitution. They are not owned by the federal government, meaning that Alberta, as a province, continues to be an important player on the global stage.

• And it’s one of the very reasons why missions that allow me be here today are so very important.

Alberta and Mexican industry partnerships

• Ladies and gentlemen, yesterday I had the pleasure to speak to oil & gas and environment sector companies from Alberta and Veracruz in Poza Rica.

• I can tell you that these discussions were both enlightening and very promising, allowing me to learn more about the tremendous opportunities and challenges facing Mexico’s energy sector.

• And, I was pleased to hear how Alberta companies can help with the development of the Chicontepec basin.

• As the largest terrestrial oil reserves in Mexico, it provides tremendous opportunity for Mexico to increase oil production.

• For Alberta, it provides a market for our companies’ expertise in unconventional drilling, artificial lift, oil and gas processing, equipment and fracturing technologies and services.

• In fact, Alberta companies are already working with PEMEX and lending their ingenuity and technological expertise to Mexico’s energy sector.

• And I’d like to highlight some of those major Alberta players working here today…

• Alberta based TransCanada Pipelines, Tarco International, AGAT Labs, Tesco, Q’Max, Enerflex, Kudu Pumps, TTS Sense and Trinidad Drilling and are among approximately 30 Alberta companies working in Mexico.

• And there could be more to come.

• Alberta also has significant expertise working to support a number of companies in Enhanced Oil Recovery (EOR) methods.

• Partners include the University of Alberta, the University of Calgary, the Northern and Southern Alberta Institutes of Technology and the Alberta Research Council.

• Additionally, Alberta based EnCana Corporation has a project in our neighbouring province of Saskatchewan that is Canada's largest commercial enhanced oil recovery project.

Environment

• I also had the pleasure to meet with Governor Fidel Herrera of Veracruz on Monday.

• And this past December, I had the honour of hosting Governor Herrera when he visited Alberta.

• I was pleased that we were able to continue our dialogue yesterday about more energy partnership opportunities, and what expertise Alberta environmental service companies can lend to Mexico.

• This brings me to the final thing I’d like to talk about today…

• …Alberta’s ability to contribute meaningfully to future continental climate change discussions.

Climate change discussions

• When President Obama was in Canada recently, he mentioned the positive discussions he had with Mexican President Felipe Calderon on clean energy.

• He spoke about the leadership Mexico has taken in this field…and Alberta looks forward to working with our friends in Mexico on clean energy development.

• I was pleased to learn that, in 2007, Mexico adopted a comprehensive climate-change mitigation strategy…

• …and that you have set an emission reduction target of 50 per cent below 2002 levels by 2050.

• I also understand Mexico is looking to expand green power, including a proposed tenfold increase in the capacity of the La Venta wind farm over the next six years.

• And that plans are already underway to build more than 3,000 turbines at the site.

• Ladies and gentlemen, Alberta shares the commitment to clean energy production.

• In fact, I think it’s fair to say that Alberta has been a leader in developing sound environmental practices and policies.

• Can more be done? Absolutely, and we are committed to doing that.

• But ladies and gentlemen, the transition to cleaner energy will not happen overnight. We will continue to need fossil fuels to grow our economies.

• In fact, according to the International Energy Agency, world-wide energy demand is expected to grow by 45 percent between 2006 and 2030.

• The Agency also projects that fossil fuels will account for 80 per cent of the world's primary energy mix in 2030.

• And that oil will remain the dominant fuel.

• So we in Alberta take a pragmatic approach, one that balances energy production with sound environmental practices.

• As with all forms of energy production, there are environmental effects from producing energy from the oil sands...

• …and Alberta realizes we must continue to do what is necessary to protect the environment.

• Alberta is committed to taking further action on climate change and building on our history of sound environmental practices.

• In fact, Alberta was the first jurisdiction in North America to adopt a climate change plan backed by legislation.

• We were also the first to require reporting and emissions reductions by large industry – a move that has resulted in 2.6 million tonnes of real reductions.

• And we have an action plan to cut projected greenhouse gas emissions in half by 2050.

• We will do so by focusing on carbon capture and storage, energy efficiency and conservation and greener energy production.

• Last summer, our Premier announced an investment of two billion Canadian dollars toward research and development of large-scale carbon capture and storage projects.

• This is one of the largest commitments to carbon capture and storage by any government and it is very likely the greatest per capita investment in carbon capture by any jurisdiction in the world.

• For us, it is an investment in the future.

• One that allows Alberta to take meaningful action on climate change without endangering jobs, the economy, or our ability to support public services.

• Carbon capture and storage is one of a number of technologies that have been identified as being able to make a substantial reduction in global greenhouse gas emissions.

• For Alberta, our $2 billion dollar investment shows that we are serious about climate change.

• With this funding, we expect to see three to five large scale projects developed, with the potential to permanently store up to $5 million tonnes of CO2 per year by 2015.

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

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

• As well 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 will create new opportunities for the conventional oil sector, and result in more jobs in Alberta.

• An additional benefit is that the use of CO2 would reduce the need for water.

• Ultimately, we have the opportunity to develop expertise and technologies for carbon capture and storage in North America that we can share with the rest of the world.

• We were very encouraged to hear President Obama and Prime Minister Harper talking about the importance of carbon capture and storage when the president visited Ottawa last month.

• Alberta’s leadership in this area puts us in an excellent position to contribute to the Clean Energy Dialogue the leaders agreed to.

Oil Sands Strategy

• Alberta is also thinking long-term, when it comes to responsible development of our oil sands.

• Recently, Alberta released its 20-year strategic plan for the oil sands…

• …our guide for developing this resource in an environmentally responsible way.

• It supports our province’s long-term vision for the oil sands, including

  • a balanced approach to economic development and environmental stewardship;>/li>

  • innovative, responsible and collaborative development among all levels of government and stakeholders in the oil sands; and

  • clean, healthy and vibrant communities for Albertans.

• Carbon capture and storage is integral to this plan, but there is more to responsible oil sands production than reducing greenhouse gasses.

• This is why the plan also calls for enhanced land reclamation.

• It requires industry to achieve its project-reclamation requirements as a condition of further oil sands development.

• This means developing the oil sands while returning the land to its original state.

• The plan also calls for increased conservation…we must continue to establish protected areas in the oil sands regions to achieve biodiversity.

• We have also taken major steps to improve tailings pond management in the oil sands.

• For those of you who may not know, a tailings pond is a settling pond for oil sands water and by-product.

• Companies in Alberta will have to reduce tailings by 50 per cent by 2013.

Clean Energy

• Due to their scale and strategic security implications for North America, the oil sands often dominate my discussions on energy.

• However, it is important to know that Alberta is also pursuing renewable energy, which will play an important role in our long-term energy future.

• Alberta shares Mexico’s desire for more green power.

• The expanded use of renewable and alternative sources of electrical energy is a key component of Alberta’s climate change efforts.

• To date, we have invested $239 million dollars into alternative energy.

• This has led to more than $850 million dollars in additional private investment in renewable energy.

• Alberta is also among the leaders in Canada in wind power development.

• And our provincial renewable fuel standard will require five per cent ethanol content in gasoline and two per cent renewable content in diesel by 2010.

A voice in North American climate change discussions

• Ladies and gentlemen, Alberta’s experience and expertise in both energy production and environmental stewardship puts us in a very unique situation within Canada – and within North America.

• It is because of this that we are urging our Federal Government to have Alberta actively engaged in future North American climate change discussions.

• Alberta is committed to helping our continent find the right balance between needed energy production and better care for our planet.

• There’s a lot at stake.

• However, Alberta is very much up to the challenge.

Conclusion

• Ladies and gentlemen, I hope I have been able to convey to you today that Alberta seeks a long and lasting partnership with Mexico…

• …and strong Alberta companies can help Mexico and Mexican companies with both energy and environmental challenges.

• Ultimately, Alberta can be a significant contributor in uniting our continent with a plan that will help our economies grow… and protect our planet.

• It has been an honour speaking to you today.

• Thank you. I’d be happy to answer any questions you may have.