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Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 8 - Evidence - Afternoon meeting

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CALGARY, Monday, March 7, 2005

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 2 p.m. to examine and report on emerging issues related to its mandate.

Senator Tommy Banks (Chairman) in the Chair.

[English]

The Chairman: I will call the meeting to order. We have a quorum.

I would like you to meet Senator Willie Adams from Nunavut. Senator Lorna Milne is from Ontario. Senator Mira Spivak is from Manitoba. My name is Tommy Banks. We are members of the Standing Senate Committee on Energy, the Environment and Natural Resources. There are many more of us, but we are running all over the place.

Our mandate is so broad that it is virtually impossible to describe. We are embarked upon studies having to do with water. I think that has been made known to you. Our interests also include everything else having to do with energy, including nuclear and spent nuclear fuel.

I am an Albertan and to me there are normal means of getting energy, generating energy and finding energy.

The questions which senators will ask you may touch on any or all of the above and more besides. In the meantime, I suspect that you have something that you would like to tell us before we begin with questions for you.

Our two guests are Mr. Brian Maynard, and Mr. Stephen Ewart. Both of these gentlemen are from the Canadian Association of Petroleum Producers. Mr. Alvarez who was listed to speak today is not here.

Mr. Maynard, you have the floor.

Mr. Brian Maynard, Vice-President, Public Affairs, Canadian Association of Petroleum Producers: Thank you on behalf of Pierre Alvarez, our president, who sends along his regrets. He is in Ottawa today, but like the committee members, we have many issues to deal with and many places to go and we are spread around a little thin ourselves.

First, I would like to say good afternoon and welcome to Calgary. The weather is always like this here.

The Chairman: I was born here.

Senator Milne: It is not like this in Ottawa.

Mr. Maynard: In particular, we would like to thank the committee for the invitation to present our views on some of the issues facing our industry.

Our submission, a copy of which has been provided to you, is intended to make five points. Canada has a vast resource base of oil and gas. Oil and gas development generates tremendous benefit for our country. Our industry recognizes that we must develop this resource base in a responsible manner. We are developing the resource responsibly. Finally, as long as we continue to operate responsibly, it is in government's best interest to facilitate development of our oil and gas resources for the benefit of Canadians.

Canada is one of the largest producers of oil and gas in the world. We are the ninth-largest producer of crude oil and the third-largest producer of natural gas.

The Chairman: Pardon me, Mr. Maynard. Sorry to interrupt you. This is a Parliamentary procedure, so there are some niceties that we have to observe, and one of them is that all of what you are saying has to be translated. So please slow down a tiny bit.

Mr. Maynard: Please excuse my Newfoundland roots. I can cover many words in a very few seconds.

Canada is one of the largest producers of oil and gas in the world: the ninth-largest producer of crude oil and the third-largest producer of natural gas. We are also one of the few countries that produces more oil and gas than our citizens consume.

Oil and gas exports count for almost 60 per cent of Canada's annual trade surplus and greatly bolster our GDP. Thanks primarily to the oil sands here in Western Canada, we are one of the few countries in the world with the ability to make significant long-term increases in production to meet the rising global energy demand. Canada's 180 billion barrels of crude oil reserves are second in the world only to that of Saudi Arabia.

The oil and gas industry is also responsible for creating 350,000 direct and indirect jobs in Canada, and we expect to pay, roughly $20 billion directly to governments in 2005.

Total spending by our members exceeds $75 billion annually, with more than $30 billion in capital investments, making us the largest single industrial-sector private investor in Canada.

Our industry has a longstanding record for growth, productivity, capital investment, innovative technology. We have a highly skilled work force.

The vast resource base across this country means exploration and production of oil and gas can continue to be an important part of Canada's economy for decades to come. However, it will only happen if industry, governments, and other stakeholders work together to find ways to balance our economic necessities and our environmental priorities. The ability to access resources in a timely and efficient manner is critical to our industry. Although Canada has abundant oil and gas resources, most of the new energy supplies are in more remote locations and are far more expensive to develop. To produce and deliver our product to consumers, the industries needs certain and secure access to resources. However, a growing burden of complex and overlapping regulatory processes increasingly threatens our ability to access these resources.

Canada's petroleum industry is one of the higher-cost jurisdictions in the world in which to operate. Overlap and duplication in the regulatory system only pushes costs higher. A clear and simple regulatory system would facilitate more investment, bolster oil and gas supplies, create more jobs, and generate more revenues for government.

Water is a high-profile issue across Canada and especially here in Alberta due to recent droughts. Many people believe our industry uses a significant amount of the overall water allocation in Alberta for our operations; the facts show otherwise. The oil and gas industry uses less than 2 per cent of all the water allocated for diversion in Alberta. By comparison, the agriculture industry is licensed to use about 46 per cent.

In the last 30 years, our industry has cut the amount of freshwater used in oil field injection by one-half. Advances in technology have enabled us to use more saline groundwater, and in some cases, we now inject carbon dioxide underground in order to increase reservoir pressure and maximize oil recovery. Furthermore, some oil sands projects in Northern Alberta recycle as much as 90 per cent of the water that they use.

The development of coal bed methane, CBM, has also attracted significant media attention, primarily over concerns about environmental issues such as water handling. The media has focussed on problems that occurred in coal bed methane development in parts of the United States several years ago.

Comparisons to development of coal bed methane in Canada with problems in the U.S. are simply misleading. Most coal bed methane wells in Canada are structurally different than those wells in the U.S., and they tend to generate less produced water.

Stringent regulations for wastewater management have been in place in Canada for decades and require the safe disposal of waste water, usually into deep disposal wells, where it poses no threat to water courses, land or water wells.

Our association is also an active participant in the Alberta government's multi-stakeholder initiative on coal bed methane development. This initiative is examining issues around coal bed methane to ensure that the regulatory regime is appropriate.

We must recall that coal bed methane is in the early stages of development in Canada, but as an almost pure form of natural gas, it represents a significant opportunity to supply cleaner-burning fuels and to reduce greenhouse gas emissions overall.

CAPP and our members support a comprehensive climate-change policy that will address real reductions in greenhouse gas emissions without compromising the country's economic competitiveness. We believe that investments in new technology, such as carbon dioxide capture and storage, and improved energy efficiency are critical to the success of any climate-change policy.

CAPP is on the record as saying that Canada's target under the Kyoto accord is not consistent with responsible and sensible action that contributes to a global effort on climate change. We believe another international approach is needed that includes the United States, China, India, and Brazil, among other countries. Nevertheless, we are working with the federal and provincial governments to develop policies that reflect Canadian realities. Governments must recognize the importance of policy clarity and certainty as well as reporting systems that are harmonized and efficient for major oil and gas projects.

Our work with the Clean Air Strategic Alliance, CASA, has helped to manage air-quality issues in Alberta. CASA is composed of stakeholders from industry, government, and non-government organizations such as health and environmental groups. Its mandate is to prioritize air-quality concerns and develop plans to resolve them. CASA's work has been instrumental in the dramatic reductions in gas-flaring and venting over the last decade. Examples of our success through CASA in Alberta include: Gas-flaring emissions have been reduced by 70 per cent since 1996; gas- venting emissions have been reduced by some 38 per cent since 1996; and benzene emissions have been reduced by 77 per cent since 1995.

The oil and gas industry has also dedicated significant effort to reducing the size of our on-the-ground footprint over the last several years. For example, the use of new technologies such as global positioning systems enable oil and gas companies to conduct exploration and seismic programs with greater precision and far less disruption to the environment.

In the boreal forest, seismic lines that were often 6 metres to 8 metres wide in the 1980s now average less than 3 metres. The overall size of areas cleared for well sites has dropped by some 40 per cent.

When CAPP launched our stewardship initiative in 1999, it was the first of its kind for the oil and gas industry. Stewardship is a stated commitment by CAPP members to responsible and balanced resource development and continuous improvement in environmental, health, safety, and social performance. We are proud of our accomplishments under stewardship, and we are confident that our performance will continue to improve in the future.

Canada is blessed with an immense oil and gas resource base, but with it comes an equally-large responsibility to ensure proper stewardship and management of that resource. Our industry believes it is developing Canada's resources in a responsible manner, and we are committed to continually improve our environmental health, safety, and social performance.

So long as we continue to demonstrate that proper stewardship of the resource, we believe it is government's best interests to ensure reasonable and timely access to resources, so that they can be developed for the benefit of Canadians.

The Chairman: Thank you very much.

Senator Spivak: My understanding is that in the first greenhouse emissions plan or climate-change plan, the industry was committed to reducing 55 megatons of greenhouse gas emission a year. Perhaps the rumours are not accurate, but I have read that the industry feels they cannot accomplish that goal.

It is said that it would cost about 25 cents a barrel to reach that goal. The petrochemical technology institute has said that we can accomplish 29 megatons at no cost. It costs you about $12 to produce oil from the oil sands, and oil is selling at $55 a barrel.

Is it accurate that the industry does not think it can achieve 55 megatons a year, based on that data?

Mr. Maynard: Thank you, senator.

The target of 55 megatons that is in the public domain is not just the oil and gas sector; it is the large, final emitters sector, which includes electricity generation, oil and gas, and large manufacturing.

I believe our industry's share of the 55 megatons would be, approximately one-half. So that is important. It is not only offset; it is all large industry.

Senator Spivak: That is right. I am sorry. Yes.

Mr. Maynard: The break-even costs in the oil sands are between $19 and $20 a barrel.

It is correct that today's oil price is in the range of $50 to $55 a barrel. However, we must remember that the world price that is quoted is for West Texas intermediate crude, which is very light, sweet oil. There is a significant differential for heavy oil from the oil sands, and the differential can be anywhere from $15 to $25 a barrel. So, we are trading significantly less than the world price. The oil companies that are operating in the oil sands are certainly not realizing $55 a barrel.

All that being said, your real point is that if it only cost 25 cents a barrel, why are we complaining?

Our complaint is not necessarily with the cost. We believe there are only three real ways to address climate change: We all need to reduce our consumption; we have to change our energy mix from a high-carbon intensive to lower- carbon sources; and we must capture and store carbon dioxide. All three depend on a technology that does not exist to get us to the Kyoto target for this country.

We can accomplish the Kyoto target by the purchase of offshore credits. We view that as an inappropriate use of Canadian resources. Our view is that it would be best to take that money and invest it in technology, and pursue the three primary means that we have of reducing greenhouse gases. If we do that, then we will address the real problem.

That is our primary opposition to Kyoto. We are seeking a policy that focuses on technology and on the long-term to get us there.

Senator Spivak: Well, I cannot agree with you more. It is quite necessary not just to concentrate on one element but to have a broad-based strategy, and part of that is also to address motor vehicles.

Let me get this straight. You have not really answered the question. You are suggesting that, right now, your commitment to one-half of 55 megatons a year is not achievable within the time frame of Kyoto.

Is that your position?

Mr. Maynard: We can achieve one-half of 55 megatons as an oil and gas industry, yes. It will come with certain consequences if we are blindly stuck on a target: We may see less activity in the oil sands; we may see less drilling in conventional sources.

Senator Spivak: Really?

Mr. Maynard: We may. The industry is a global industry. I am not trying to suggest that we would see significant impacts right now. As an industry, we have spent a lot of time working with the federal government and have largely agreed on the elements of a policy that is responsible and sensible both for our industry and for the country as a whole.

Where we get worried and what sends the chill through the investment climate is when there is uncertainty around the process, when we have not engaged or we are not engaged in the development of the proposals.

Senator Spivak: Yes, I quite agree with you; certainty is the key.

Mr. Maynard: Yes.

Senator Spivak: I want to change the subject, but we are just at the very beginning. We will have to do a lot better. So, this is a mild first step, and it is important to know whether or not it is achievable.

Let me get to the issue of water. Is it correct that there has not been a study of what the groundwater looks like in Alberta? Do we know if oil industry and others use it at a sustainable rate? Do we know what the aquifers are like?

The forecast for droughts and for runoff from the mountains is pretty pessimistic, and in fact, some estimates I have seen say that the ice caps will disappear within 15 years.

Is it true that neither the Government of Alberta nor the industry has done a really serious estimate of the groundwater content?

Mr. Maynard: That is a very good question. I do not know the full nature of the governmental studies that have been undertaken. If there are studies available, I will confirm them and provide a copy to the committee.

This is a very complex issue, and a study of the aquifers would have to be done on a fairly extensive basis, and obviously, there are pressure points in certain aquifers, and there are not pressure points in others.

There is no question that water is a significant issue here in Southern Alberta. The government has struck a multi- stakeholder group to examine the issue. Much of the work that you have referred to has been identified as things that need to be done in order to properly assess the situation.

We are doing what we believe we can do. I mentioned that we use some 2 per cent of the freshwater allocation in Alberta. Oil field injection and the use of water to maintain pressure has resulted in some $600 million in royalties, as a result of that enhanced production.

It is a question of balance and trade-off. It is our view that the policy decisions should be made based on the science and the studies to which you referred. In order to understand how water is being used, and what it is being used for, we must make decisions based on an informed and non-discriminatory approach.

Senator Spivak: I quite understand that there has to be balance, but if you do not have different technologies your industry will face a crisis. I understand that for some of them there is a 10-year lead time, and during that time you run the risk of running into serious water shortages. It is not just the environmental crisis but also an economic crisis. That is not pie in the sky. I think that is a serious consideration.

You have wonderful people like Dr. Schindler and others, who are world-renowned experts on water situations, and they have been talking to government well in advance of the problem. The train is coming down the track.

Senator Spivak: What percentage of freshwater is being used as opposed to saline water?

Mr. Maynard: These are not easy numbers to compile. Saline water is not necessarily a licensing issue, if we were using saline water. What we do know is what we are using of the allocation of freshwater and diversions in that sense.

This is not something that we have been really monitored very well. It is something that industry has recognized that, over the last year or so, needs to be monitored so that we can answer those questions.

Senator Spivak: You mentioned that the coal bed methane situation here is very different from the situation in the U.S.

Mr. Maynard: Yes.

Senator Spivak: Yet, one of the problems, according to people in Montana it is the number of wells for coal mapping, per quarter hectare.

Mr. Maynard: Per sector, yes.

Senator Spivak: I know that you are working on standards. So, it is quite a footprint on the land.

In terms of your standards, how many wells are there per quarter section?

What do you see as a reasonable standard of the number of wells?

What kind of impact will this have on the groundwater?

Mr. Maynard: Coal bed methane, as our submission points out, is a relatively new activity for our industry here in Western Canada; however, it is not unlike the drilling that we do for shallow gas. There are a significant number of shallow gas wells per section, and I am led to believe that in many situations coal bed methane is not much different than that. In some sections, however, we are looking at four wells per section.

Senator Spivak: Regulations or standards are going to be promulgated shortly.

Is that correct?

Mr. Maynard: Yes, they are being developed.

Senator Spivak: Are you looking at setting a ceiling of four wells per section?

Mr. Maynard: It is up to four wells per section, yes.

Senator Spivak: Yes. In Montana, there are 200 wells per quarter section, which is devastating.

Mr. Maynard: That is a significant number of wells, but I cannot speak for the Montana or Wyoming situation.

The regulations are being developed with landowners, interest groups, and environmental groups. We recognize that we have to balance those interests. I think it is fair to say that the last thing industry needs or wants is a repeat of a situation.

Senator Spivak: What does your study tell you about the impact on groundwater?

Mr. Maynard: There are two primary coal sources where we are looking at coal bed methane. In one area, there is very little groundwater production and the other is much wetter.

This is a pilot development to determine the answers to the questions that you have asked: How deep do we have to drill? Can we drill economically? Can we dispose of the wastewater in a safe manner, deep enough, and still make economic sense?

Senator Spivak: You mentioned that you would do a lot better if there was not so much regulatory duplication, and I think it would be very helpful to us if you could tell us exactly what you mean by that statement.

Where is the duplication and where are the regulations oppressive?

Mr. Maynard: One area of regulatory duplication is between provincial and federal interests. There are provincial environmental assessment processes; there is a federal environmental assessment process.

Senator Spivak: Yes. Thank you.

Mr. Maynard: There is also considerable regulatory overlapping duplication between government departments themselves: between the Department of Fisheries and Oceans; between the Department of Environment; and, between the Department of Transport. Many of these departments have regulatory regimes that are intended to address the same issues.

We are not asking for a less than standard regulation. We are just asking for a coordinated and rational system of regulation.

So, government to government, department to department, department to agency are some of the samples that I suggest to you.

Senator Spivak: Mr. Chairman, it would be handy if we could get a written response to that, to the duplication and whatever.

The Chairman: Can you do that, Mr. Maynard?

Mr. Maynard: Yes, we can do that. We have some good samples at home, particularly in Northern Canada, particularly offshore East Coast, and certainly here as well, in Western Canada.

The Chairman: When you find that information, if you could get it to our clerk.

Mr. Maynard: Yes.

The Chairman: Just before I go on, with the East Coast reference that you just made, are you talking about the recent contretemps over whose jurisdiction this is and who is driving this bus or something more in place by way of regulation than that.

Mr. Maynard: No. I am referring to the fact that if we are to develop anything offshore Nova Scotia or offshore of Newfoundland and Labrador, we have to deal with something like 16 regulatory bodies.

The Chairman: That would be very helpful to us.

Mr. Maynard: We will provide that.

The Chairman: Maybe we can assist in clearing the decks.

Mr. Maynard: Yes.

Senator Adams: I come from Nunavut in the Territories. Maybe my question is a little different from Senator Spivak's, because we have lots of water up there. We are not really concerned with our water, I hope.

In the 1980s, we had quite a bit of exploration in oil and gas. You have information here — Foreign Affairs, February 19 — about the number of cubic feet of gas in Alaska and the Mackenzie-Delta, around 1980. I was a member of the Petro-Canada board from PanArctic — that may be before your time.

Mr. Maynard: I am afraid, senator, you are going to know more of the answers than I do. I am starting to get really nervous.

Senator Adams: PanArctic Oil discovered a little bit of oil on one of the islands. It did discover a lot of the natural gas. I see that you do not have any information respecting the reserve, cubic metres of gas, in the High Arctic.

Mr. Maynard: Our estimate of discovered resource is between 9 trillion and 10 trillion cubic feet.

Senator Adams: Okay. You are talking about the High Arctic.

Mr. Maynard: No. No. That is Mackenzie.

Senator Adams: In the Mackenzie-Delta, you get up to 143 trillion cubic feet of gas.

Mr. Maynard: The amount of exploration in the High Arctic would make it very hazardous to assign any estimate. We believe that there is resource potential there, but without infrastructure to allow the development of that resource and get it to market, there has not been a lot of interest, which gets to the real value of the pipe. If we get the pipeline in the ground, there will be a strong incentive to explore and to determine the potential that is there.

Senator Adams: The discovery at Mackenzie-Delta was around $6 billion, for the cost for the pipeline?

Mr. Maynard: My understanding is $6 billion to $7 billion, sir.

Senator Adams: What does $18 for Alaska mean?

Mr. Maynard: The cost of a pipeline from Alaska down would be in the range of $18 billion to $20 billion in capital cost.

Senator Adams: That $18 should be $18 billion.

Mr. Maynard: That should be $18 billion.

Mr. Stephen Ewart, Manager, Media Relations and Communications, Canadian Association of Petroleum Producers: That is not Mr. Maynard's presentation. That was a previous presentation to another committee.

Senator Adams: I just wanted to make sure.

I know the guys on the East Coast and in Newfoundland have quite a few billion dollars. Is there interest around the Baffin area, around Hudson Bay, in developing oil and gas?

We have 179 trillion barrels, and the Americans have 2.3 billion barrels. Is that Alaska, or is it the 2.3 billion barrels only in the United States?

Mr. Maynard: That is all of it.

Senator Adams: Alaska and the United States.

Mr. Maynard: Yes.

Senator Adams: You are talking about Texas, California and everything?

Mr. Maynard: Yes.

Senator Adams: Will there be exploration around the Hudson Bay area in the future?

Mr. Maynard: Senator, we are interested, of course, in accessing resource potential wherever it may exist in our country, understanding, of course, that there will always be special places where public interests and public expectation is that we not explore.

I think we have to recognize what it will take. We are seeing record and sustained high natural gas prices, which are sending us to look in new areas. It is clear that the markets to the south of us are very, very interested in an additional supply of natural gas and oil.

So the real challenge for us is to make an economic case, and if we discover something, can we get it to market, and can we realize a sufficient rate of return?

So to crystal ball a little, in the future, yes, I think we will be interested. I think there is the development of infrastructure; we need to see sustained prices; and we need to see an ability to access the resource and access the market.

Senator Adams: We have settled land claims. It is very difficult for us, living in the Arctic. Costs are high, there is unemployment. Right now, there is focus on setting up commercial fishing in the High Arctic — turbot, coldwater shrimps and stuff like that.

We are looking to the future of oil and gas. We do not have a policy yet in the Nunavut government. We do not have a shortage or anything like that.

It would be nice to have more exploration in the future, economywise in the future. Currently, there is a lot of exploration for diamonds; however, the exploration does not benefit people in the community, because it is just the prospectors, the diamond drillers and the helicopter pilots that are making the money, not the community.

Mr. Maynard: In response to the call for supply, there is a strong incentive for our industry to focus on technology that reduces costs and allows a high-cost environment like Nunavut to become a lower-cost environment.

The answer to all of this is technology and responding to the price signals that are there. If we see extended periods of prices in the $6 to $7 to $8 range for 1,000 cubic feet of gas, there is a strong incentive for our guys to go and find more resources and to find economical ways to develop it. So, I would not be discouraged. I do not think that we are talking next year or the year after but over the longer term; yes, you will see more development in the High Arctic.

Senator Adams: Last year, there were 180 exploration permits; this year, we have 1,600 for diamonds and gold.

The Chairman: Thank you, Senator Adams. I am glad to hear that you have 1,600 people up there looking for diamonds. That is good. The more that are looking, the more they will find.

Senator Milne: In response to Senator Spivak you said that a 55 per cent reduction in CO₂ emissions is unreachable.

Mr. Maynard: Fifty-five megatons.

Senator Milne: Then you went on to say something that I did not quite hear. You a have almost agreed on something with the government.

Mr. Maynard: We are working on a proposal with the government, and we are nearly there. We are close to achieving the oil and gas industry's percentage of 55 megatons. That is what we are focussed on, and it is a combination of using the best-available technology, to drive real reductions, and setting targets for certain players.

Obviously, if you take a new oil sands project, they have the best-available technology. There is nothing that they can do and maintain their current output. Some of the existing operations and facilities are running on very old technology and they are filled with opportunities to invest in new technology to reduce emissions.

Our proposal is a combination of existing and new projects, and includes large and small players, with an overall eye on competitiveness. It is designed to reach our percentage of those 55 megatons.

Senator Milne: It is designed to, and you are not trying to get your percentage reduced.

Mr. Maynard: No. We may very well have to purchase domestic offsets, and we may have to purchase carbon credits wherever they exist.

It is our preference, if we cannot meet our target with real reductions, to be able to put our money into a technology development fund or to fund technology development that gets to reducing greenhouse gas emissions.

So if we cannot do it ourselves, we want to be able to put the money into a fund, if the Government of Canada were to operate such a fund, so that they will pursue technology.

Let us develop the technology; let us develop it here in Canada, instead of shipping dollars overseas. Let us keep the money here, so that we can develop the technology and we can become world leaders. That is the focus of our proposal.

Senator Milne: Well, I am very glad to hear that you agree with me on that.

Mr. Maynard: We do.

Senator Milne: I have another problem, in that some of the background material we have says that the upstream oil and gas industry in Alberta is licensed by Alberta Environment to divert surface water and groundwater. In particular, up to 30 per cent of the groundwater licensed for use in Alberta is used by oil and gas.

You said that it was less than 2 per cent.

Mr. Maynard: Freshwater. We use less than 2 per cent of the freshwater.

Senator Milne: You are not talking about the surface water and groundwater. That figure represents freshwater.

Mr. Maynard: Yes.

Mr. Ewart: There is saline water provided as well.

Senator Milne: I am trying to come to an understanding of which figure is correct. Is it 2 per cent or 30 per cent?

Mr. Maynard: My understanding is that we are allocated to use some 2 per cent of the total freshwater allocated for use in Alberta. We do not use the full 2 per cent, and I do not know where the reference of 30 per cent comes from.

Senator Milne: While our research staff looks for an answer, I will ask you another question.

Are CAPP member companies charged a fee for the water they use?

Mr. Maynard: No; I do not believe we are, but I will confirm that.

Senator Milne: Okay. So water, you are pretty sure, comes free.

Mr. Ewart: Everybody has the same allocation.

Senator Milne: It is allocated per amount; there is no fee.

Mr. Ewart: There is no fee. Under the study that is being reviewed by the Alberta government, it is looking at all of the aspects of the water resource base. This is being conducted through our Western Canadian operations department. We are a player in that process.

Mr. Maynard: We will confirm that for you, senator.

Senator Milne: Okay. Thank you.

I think I may have an answer. I will quote from the Canadian Association of Petroleum Producers:

Putting industry use in context: Groundwater: Concern has been expressed that Alberta's oil and gas industry uses a large percentage (up to 30 per cent) of Alberta's licensed groundwater. This is true.

Mr. Maynard: Can you give me the reference and the document, senator, please?

Oh, that is a water-use document. Stephen tells me that the 2 per cent relates to freshwater; the 30 per cent is total water allocated; and much of that is not drinkable.

Senator Milne: So you are saying the rest is saline?

Mr. Maynard: The rest is saline or water that would not be able to be consumed by humans or animals.

The Chairman: I just want to make sure that we use the right terminology. ``Allocated,'' I think, is a word which you would want to apply to water coming out of a river, or groundwater.

Is saline water also allocated?

Mr. Maynard: No. ``Allocated'' is what we are permitted to use.

The Chairman: Out of flowing water, is what I understand that to be. I want you to correct me if I am wrong.

Mr. Maynard: My understanding, it would be allocated out of flowing water, or it could also be out of aquifers, as well.

The Chairman: Is the word ``allocation'' one which is appropriate to apply to saline water?

Mr. Ewart: The word ``allocation'' deals with freshwater in terms of rivers and aquifers. Mr. Maynard and I are not the CAPP experts on this subject. Saline water is used on a much more open basis, because it does not affect other people's rights to water.

The Chairman: Right. It is either less or virtually unregulated.

So if all of these numbers are right, that means that the industry is using 30 per cent of the water, including saline water, but only 2 per cent of the 100 per cent is freshwater.

Mr. Maynard: Yes.

The Chairman: Do we understand that correctly, in your view?

Mr. Maynard: Mr. Ewart will make a quick phone call, and we should be able to confirm this.

The Chairman: No. Please find out and let our clerk know.

Mr. Maynard: We will get back to you.

Senator Spivak: Excuse me. May I ask a question?

Saline water is not part of your allocation, because they can use as much as they want. So what are we talking about here?

The Chairman: It is that definition, that difference that they are going to confirm for us.

Senator Milne: Yes, I hope you do get back to us on this, because it seems to be that freshwater is everything except saline water, whether it is groundwater, aquifer, or it is pumped out of a river, it is freshwater; it is not saline.

Mr. Maynard: That is my understanding.

Senator Milne: It is potentially potable.

Mr. Maynard: Yes.

Senator Milne: You are not charged a fee, at this point, for the water that you use.

Would your members support the introduction of such a fee?

Mr. Maynard: If the government makes the decision to impose a water fee and it is applied equally to all, I cannot see how our members would argue against that decision.

Senator Milne: When you say ``equally to all,'' you mean agricultural usage as well, of course, and urban usage.

Mr. Maynard: Yes, if it is charged on a non-discriminatory basis; we ask to be treated equally, same as everyone else.

Senator Milne: Is this level of use, up to 30 per cent, sustainable, or are the aquifers here in Alberta, as well as the rivers, becoming depleted?

Mr. Maynard: My understanding is some of the aquifers are under pressure in certain areas. Water is more of an issue in Southern Alberta, and some of the aquifers have not recharged with the little amount of rainfall we have seen in the last number of years. I think that it is an issue of not only rivers but also aquifers.

Senator Milne: I assume that your industry is looking at other strategies to reduce water use, because you can read what is happening as well as the rest of us can.

Mr. Maynard: Yes.

Senator Milne: What are some of the strategies that you are concentrating on to reduce water use.

Mr. Maynard: We are looking at the use of saline or non-potable water. We are also looking at the injection of other substances, carbon dioxide being one, to maintain and enhance pressure.

Senator Milne: That process includes the sequestering of carbon.

Mr. Maynard: There is a study being conducted in Weyburn, Saskatchewan, to look at whether it is safely sequestered and permanently sequestered. I agree that it does have that added benefit.

There are also certain drilling technologies that will allow us, whether it is horizontal drilling or otherwise, to contact a greater resource base.

Ultimately, if the decision is taken that we cannot use freshwater and there are no other technologies available to us, it means that more oil will be left in the ground as opposed to that oil being produced.

Senator Milne: So, it is obviously to your benefit to find these new technologies and to experiment with them, to get as much out of them as you can.

Mr. Maynard: I would argue it is to the benefit of everybody: governments, industry, and stakeholders, as well.

Senator Milne: We all use energy, yes.

The Pembina Institute for Appropriate Development put out a study that concluded that federal government expenditure in the oil and gas sector adds up to over $1 billion a year, and it is mainly in the form of tax deductions.

Do you think that is about right?

Have you ever calculated the amount of support you get from the federal government?

Mr. Maynard: Well, let us be honest. What we have seen are not tax expenditures, but they have actually been called ``subsidies'' to the oil and gas industry. We take exception to that. Some of the things that were argued as subsidies included the cost of the Department of Natural Resources Canada, the cost of the National Energy Board, which is cost-recovered by industry, by the way, not refunded by the taxpayer. So, those are the easy ones to knock off and to argue against.

Others are such things as cumulative exploration expenses and cumulative development expenses, which are the actual costs that we incur when we develop or explore. It is hard to argue that those are subsidies or incentives to the oil and gas industry, when all it is is a recognition that we can deduct the expenses that we actually incur; and in some cases, these are deducted in accordance with depreciation schedules, as opposed to deducted immediately when outlaid, when we incur the expenditures.

There was the suggestion that the resource allowance, which is a proxy for Crown royalties that we pay as a deduction, amounted to a subsidy. The resource allowance has been done away with, and we are now able to deduct actual royalty payments. That goes through a phasing period.

So, in our view, there are not subsidies to the oil and gas industry. We have looked at the tax system and compared ourselves to other industries. There are some tax deductions that are unique to the oil and gas industry, because other industries do not have those types of expenditures.

From a competitiveness perspective, only recently we were able to avail of the lower tax rate, that all industries were provided; the 21 per cent. We are moving towards the 21 per cent.

So we are perplexed as to where the industry subsidies are.

I would also point out that the Department of Finance and EnerCan, themselves, have rebutted the arguments made by Pembina and probably are able to do so far more articulately than I am doing right now.

Senator Milne: We should ask them.

The federal government has long supported the oil and gas industry, and I think it has been through support for the oil sands and offshore oil and gas drilling. These are viable industries.

What would you think about the government concentrating its support for on renewable energies?

I notice there is a section in the presentation that you made that you did not talk about.

Mr. Maynard: No, I did not.

Senator Milne: It is about renewable energies, and perhaps now you can discuss that topic.

Mr. Maynard: My understanding is that the Government of Canada supports renewable energy through weather; both wind power and ethanol are supported as renewable sources of energy.

Our position on renewables is clear. Energy demand is growing significantly year over year; I think in North America it is roughly 1.5 per cent growth. All energy sources will be necessary in order to meet supply demands, whether it is renewable, or oil and gas.

I come back to your position on support for the oil and gas industry. I am not arguing that the Government of Canada has not been supportive of our industry. Look at the oil sands. The Government of Canada changed the rules for capital cost allowance in the oil sands. That was a timing issue. We would not have been able to deduct those expenses. The Government of Canada shortened the time frame during which we could deduct them. The Government of Alberta put in place a royalty regime which recognizes the long-term cost and the long-term investment of these projects.

CNRL's recent announcement of the Horizon Project is a $10 billion project. It takes a while to get the money back from that. It is subject to significant costover on risk, over the while.

So the royalty regimes and the tax regimes that apply give recognition to those risks, and those decisions to support the oil sands through that manner have given rise to significant new industry and significant activity in Northern Alberta.

I am a native Newfoundlander, and I should tell you I was the Deputy Minister of Mines and Energy in Newfoundland and Labrador for a number of years. The Hibernia Project was supported by the Government of Canada and the people of Canada, with an outright grant of some billion dollars. That established a very robust oil and gas industry in Newfoundland and Labrador, and I know how much the economy of Newfoundland and Labrador has benefited from it.

Senator Milne: And will more so.

Mr. Maynard: And will more so. Anyway, we will not go there. I have my own views on that one, and they are personal views, by the way.

So have the people of Canada benefited from that investment and it has facilitated other development of resources and things like that, and it has been good.

I think that if you look at the numbers, the economic activity and the returns that have been generated, I think you will find that the Government of Canada has recovered its investment and done fairly well.

I was around in the 1990s when that was a very difficult decision to make. I think that the key message in all this is that governments, industry, and stakeholders have been able to do some things that have generated significant economic activity, generated significant wealth, and have allowed this country to prosper.

I go back to the economic arguments and the economic facts. In 2005, our industry will expect to pay some $20 billion to governments at all levels, in terms of royalties and taxation. We have a significant number of people working in and around our industry. If you argue that there is a tax subsidy and you are generating $20 billion in direct revenues to governments, one could argue that was a very successful business.

I do dispute the billion dollars in tax incentives or subsidies that have been provided to our industry, but it gets to the competitive nature and the global nature of this industry, and you have seen record levels of investment in Canada. You will also see that many of our companies now look for opportunities outside of Canada. Last year, Canadian companies invested close to $5 billion outside of Canada; we are pursuing opportunities elsewhere, as well. Now, that is both a good-news story, obviously, and a bad-news story, in some regard. The good news is that Canadian oil and gas companies can play on the international stage; the bad news is that is $5 billion that could have been invested in Canada has gone outside of our country.

Senator Milne: You say here that some of your companies have significant investments in renewable energy.

What percentage of your companies?

Mr. Maynard: By and large, our member companies that are making the investments in renewables are either the multinationals or the larger Canadian companies, such as Petro-Canada, EnCana; obviously, Exxon, Mobil, and the internationals such as Suncor, Shell , and so on.

Rightly or wrongly, my view of the system, the way it should work, is we operate in a market-based environment, and we should be responding to price signals. Today, the world is clearly calling for more supply. We are at record levels of prices, both on the oil and gas side.

Our members are busy doing what they do best, which is to respond to that price signal. When the price signal goes and consumers are clearly differentiating and calling for renewables, our guys will step in and fill that market void, as well.

Senator Spivak: Yes, I just have a supplementary.

The gentleman from the Pembina Institute for Appropriate Development was talking about how the investments that were made by government and by private industry in the oil sands for 30 years has resulted in a very profitable industry, both for the oil companies and for Canada. His suggestion is that we need to invest a great deal of money in making sure that these are sustainable in terms of the environment industries. So, of course, it would have been good if that had gone hand in hand.

What is your view on that? How do you see that investment for the future?

What is the percentage that the industries are spending in terms of research and development for technology?

Mr. Maynard: I am not sure of the question.

Senator Spivak: What percentage of the research budget that the industries have is being spent on technology that will be environmentally friendly?

How should the government subsidize the industry in terms of achieving a better environmental performance?

How should that money be spent? Should it go into research or some place else?

Mr. Maynard: I can only give you general numbers on research and development spending by our industry, and it is not targeted or broken down in whether it is research and development for environmental improvements or anything else. It is just a general research and development number. It is not something that we, as the collective industry association, would collect. These numbers come from Statistics Canada and they have told me that our industry pays .6 per cent of our gross revenues on research and development.

Senator Spivak: Please be clear. Is the number .6 per cent or 6 per cent?

Mr. Maynard: The number is .6 per cent.

We are also the biggest spender on environmental technology of any industry. Again, that is Statistics Canada data.

I cannot give you percentages, and they would vary between companies. We have some of the larger companies, certainly, Suncor and Syncrude, I understand, are heavy into research and development spending.

What should governments be doing, and what should we be doing?

There is no question that we should all be focussed on improving our environmental performance; our health and safety performance; and our social performance.

I am a firm believer that it is neither a carrot nor a stick but a combination of both. I think that we need — and I am going to use ``incentive,'' but not incentive necessarily in terms of a fiscal incentive. Companies should be incented to improve their performance around environmental performance.

There is also a clear requirement for regulation. Sometimes, industry has to be pushed, and sometimes, we want to pull. So there has to be a combination. There is no cookie-cutter approach to this. What we would ask for in the development of any environmental performance standards is an ability to engage the stakeholders and all the stakeholders; an ability to engage in a process that is open and transparent, based on science, and based on clear objectives of what we were trying to achieve.

We also ask that recognition is given to the complexity of the issues. We can talk about greenhouse gas reductions.

What if we are faced with a situation where we are able to achieve reductions in greenhouse gases, but it means we have to increase our production of sulphur dioxide or nitrous oxide or something else?

These are all balances and trade-offs that would have to be taken. Again, what is our objective; and once we look at our objective, where does that fit in into the broader picture?

These are not easy issues. That is why the process is very important in this. This is why it needs to be based on science, and it needs to be based on a clear understanding of what we are trying to accomplish.

Senator Spivak: Yes, I agree with you, because I think that we also have to focus on conservation and eco-efficiency in other areas.

Senator Milne: What is CAPP's vision of the future?

How far ahead does this stewardship project of yours go?

Fifty years from now, will Canada still be a major producer of oil and gas?

Mr. Maynard: Our vision on stewardship is one of continuous improvement, embracing technology to improve our environmental performance and our health and safety performance at all times. We are never satisfied with the status quo. That is our broad vision.

In 50 years' time, I believe that the world will still be dependent on oil and gas as an energy source. I do not expect that it will be as dominant then as it is today. That is my personal opinion.

If we see sustained price signals of $55 a barrel for oil and $6, $8, $10 a thousand for natural gas, there will be a strong incentive for the market and for technologies to find different ways to generate the energy that we need.

I am always hesitant to forecast 50 years out, because we just do not know what could happen. The world could turn on its end tomorrow. Our objective and our vision is to improve, improve, improve; adopt technology; invest in technology; improve our performance; and improve our performance in those areas that are most critical to our stakeholders.

I would like to be able to tell you that we could solve our greenhouse gas emissions problems tomorrow. That is unlikely. I can tell you that we are committed, over the long term, to pursue the technology to do that and stay in the energy business.

Senator Milne: Thank you.

The Chairman: I am going to ask some sort of devil's advocate kind of questions, as we do when we are examining issues. I will not give you examples, but there are both ends of the stick, and we make it a point, always, to bring forward ideas which have been posed by people at the other end of whatever the stick is that we are talking about, so that they can be refuted, or not.

What is CAPP's view with respect to the introduction of a cap-in trade system for carbon emissions?

Mr. Maynard: CAPP's view is that there are many mechanisms required, including a cap-in trade, to provide overall maximum flexibility. We believe that the best bang for our buck, in the long term, and the best success for all of us, in the long run, is to pursue technology. A cap-in trade system, emissions trading system, domestic offsets, and international offsets should all be part of the mix.

The Chairman: Tell us what you think of the idea that it is turning gold into lead to use natural gas in the process of extracting crude oil from bitumen? What do you think of using a clean fuel to make a dirty one, to use the rhetoric?

Mr. Maynard: The energy intensity of oil over natural gas is, roughly, six to one. So you get six times more energy out of a barrel of oil as you would an equivalent amount of natural gas. It is an economic equation, right now.

There is a strong incentive, when energy prices, natural gas prices are as high as they are today, to pursue other technologies to bring down our energy costs. Energy accounts for a significant part of our operating costs in the oil sands, there is no question about it, but there are incentives to reduce that.

Some of our member companies are looking at, effectively, gasifying the heavy bottoms of the barrel — the asphaltites and others — to create an energy source like that. So, we are pursuing the technology. We do not have a technology that can compete with natural gas. If prices stay where they are, the incentive will be stronger to develop that technology.

Technology does not necessarily occur overnight. It has to take some time.

Like I said, it gets back to the first equation: six times the energy out of oil as there is in natural gas.

The Chairman: That makes it sound pretty efficient.

When one makes anything and you are producing a product in which the demand far exceeds the supply, there are two things that you can do. The most obvious one is to increase the supplies to meet the demand. The second way, which is very efficient for some businesses, is to reduce those customers' demands.

I will give you one example in the energy area. B.C. Electric was looking at the prospect of building three new hydro dams. A new president came along and asked the question: How can we improve our bottom line? How can we find this electricity and satisfy our customers without having to build those three dams?

Instead of building the dams to meet the demand they began a program to convince their customers to use as little of their product as possible. I know that sounds backwards but with the successful campaign they very substantially increased their profits and staved off the necessity of a huge capital investment and made their customers' bottom lines a lot better in the process.

Does CAPP have anything like that in mind, in other words, to convince your customers to be more efficient in their use of your product?

Mr. Maynard: No, and I would argue that the situations are non-analogous.

The Chairman: I will give you one more analogy. Pardon me for interrupting.

I have a cousin who was in the gas business in Texas, and he was hired by a company for the specific purpose of convincing that gas company's customers to use less gas. The company could drill wells, which is like a gamble; they could rely on extending some pipelines, from someplace from out in the west, and certain supply; or they could convince their customers to use less gas. That is energy. So is the electrical energy.

Why is there not an analogy?

Mr. Maynard: I am not arguing that energy efficiency is critical to the long-term success of Canada, to North America, and to the world. We have to become more energy efficient, whether it is greenhouse gases, whether it is environmental, or anything else. It makes sense, oftentimes, to be more energy efficient.

We are just in a situation where we are at record price levels; we are at record activity levels; and the market continues to scream for more and more and more supply. Right now, we are focussed on bringing on additional supplies.

If we go out and tell our customers to reduce they will turn around and call for higher-cost supplies.

The discussion and debate around liquefied natural gas in the United States today is unprecedented. Liquefied natural gas, on a pure economic basis, cannot compete with Canadian gas. The demand situation is so strong in the United States that they are looking at higher-cost liquefied natural gas.

In this unprecedented situation I cannot preach to my customers and tell them to cut back on their consumption. The customer does not care and that is evident in consumer behaviours that we are seeing. We see increased consumption of natural gas for power generation and for items such as larger SUVs. It is very hard for us to make a case that people will listen to.

Plus, let us be honest: Our credibility will be slightly suspect our industry is to go out and preach energy efficiency and make it front row and centre as one of our key messages.

As I mentioned earlier, if we are going to get to a situation where we are going to improve climate change emissions, it will be through energy efficiency, a change in the energy mix, or it will be through the capture and store system. We are preaching those messages. To date, we have not seen any reaction from consumers.

The Chairman: No. Neither did BCE's customers or Texas Gas customers perceive that there would be any advantage, until they were shown that advantage by the people who supplied them with their energy. They did better because their energy costs were less because they used the energy more efficiently.

So I am looking at a difference between that efficiency, which is demonstrable, provable, if it is historically true, on the one hand, and the idea which you have just put out, which is no matter how much the demand is, our job is to meet it by whatever means we can; and I am having a hard time with that.

Mr. Maynard: Well, I will go back to the philosophy that we operate in a market-based system, in a free market- based system. Government may very well have a role in telling consumers what is —

The Chairman: No, but I am not talking about government; I am talking about the industry.

Mr. Maynard: Our shareholders charge us with the responsibility of maximizing long-term shareholder value. The market is clearly calling for more supply, and we are working to meet that supply.

Our customers are not the people that are driving the SUVs. We are selling it to refineries that are making gasoline; we are selling it to distribution companies that are providing the natural gas to consumers. We can continue to make the case on energy efficiency; and we do make the case, to governments and others.

We have not seen any dampening of demand. We all know what price gasoline rose to last year. Even with record- high prices, we have not seen any dampening of demand with our customers, and I cannot explain it.

The Chairman: So you do not think that we should be looking at any efforts to conserve in order to stretch out the longevity of time over which we can rely on our present conventional sources.

Mr. Maynard: No, I am not saying that. I think we do need to focus on conservation and energy efficiency; there is no question.

The Chairman: Are you saying that government has to do it?

Mr. Maynard: No, we are doing it with our members. You asked an earlier question about the oil sands. Our members are trying to conserve energy, because we are responding to the price signals that are there.

Natural gas is extremely expensive, and therefore, we are trying to reduce our own energy bills in production. Our ability to influence the end-use consumer is very, very limited in that regard.

I am not saying we should not try. I am saying it is not a significant effort on our part. I would argue that the effectiveness of any effort on our part would be minimal, at best, because consumers are not responding to price signals.

The Chairman: The price signals that I gave you were downward and made the cost of the product less expensive. It might be worthwhile to have a look at those two examples, because they were unusual then, too.

I certainly do not want to tell you how to run the oil and gas business.

We must take a small break and change witnesses. I thank you very much for being with us today, for your most informative testimony. You have undertaken to provide us some information. If you could get it to the clerk, I would be grateful.

We would like to write to you concerning some questions that we have but have not had time to ask. We would very much appreciate it if you would take the time to respond to those questions.

I hope that we will be able to invite you back again because this has been much too short.

Mr. Maynard: Well, senators, thank you very much for the opportunity. We really enjoyed it. It was an hour and-a- half that quickly flew by.

We will endeavour to follow up. If we miss anything, please let us know. Any other questions, we would be happy to answer or try to answer to the best of our ability, certainly; and, yes, any future time, we would be pleased, very pleased, to present.

Senator Lorna Milne (Acting Chairman) in the Chair.

The Acting Chairman: Our next guest is Mr. Nikiforuk.

Mr. Andrew Nikiforuk, As an individual: I have a very short presentation to make. I was asked to come and speak about water, and I shall do so.

I am the father of three boys, and I am here today largely because I am concerned about their future and the serious depletion of water resources in Western Canada. I fear that by the time they reach 30 years of age, our glaciers will have melted out; our groundwater will have been mined; and the Bow River will be nothing more than a utility corridor.

I am here today because I believe that neither the federal government nor provincial governments have paid enough attention to this critical issue.

Our glaciers hold 50 per cent more water than the Great Lakes; yet, they are leaving us. At present, there are no reliable figures on the total number of area of glaciers in Canada, and that is a national embarrassment. The best estimate says that there are 1300 glaciers in the eastern slopes. Our limited science on six sentinel glaciers says that the majority of these glaciers are thinning and receding at a rapid pace.

In the last century, the Southern Canadian Rockies have lost at least 25 per cent of their glacial cover, and some glaciers have lost up to 70 per cent of their volume. One of Canada's most studied glaciers, Peyto, could disappear in the next 20 years. In other words, a body of ice that has taken thousands and thousands of years to form and to accumulate could vanish in less than a century. All in all, glacial coverage in Western Canada is now approaching its lowest extent in the last 10,000 years.

Now, why is this important?

Glaciers make us happy. They also make us an oasis civilization on the Prairies, a civilization, in other words, dependent on melting ice. Glaciers are our water banks, our water insurance; they are a dependable cup of stored water. Without these mighty water towers, many of our rivers would not flow in late summer. Without them, much of our groundwater would not be recharged. Without them, there would be no alpine environments. Without them, 5 million tourists to Banff would wonder where the ice is. Without them, Edmonton, Calgary, and Saskatoon could not exist. Without them, there would be no irrigation in Southern Alberta and no beef industry. Without them, there would be no blue-ribbon trout fisheries. Without them, in other words, my children will go thirsty. Yet, we could very well be without them within 20 years to 50 years.

At the same time as our glaciers are melting, we are rapidly expanding the population of people dependent on their existence. The area between Edmonton and Calgary is experiencing one of the world's highest rates of growth. Calgary is spilling over the plains like a cancer intent on consuming everything in its path. We are expanding vulnerabilities, not limiting them, just as we did in the Roaring Twenties when the federal government encouraged settlement on the plains, rather than prepare for drought.

As Wallace Stegner once said,

The history of the West has been a history of the importation of humid-land habits (and carelessness) into a dry land that will not tolerate them;

The melting of our glaciers is tied to another depletion crisis, that is, the burning and exhaustion of fossil fuels on this planet. Canada is the world's third-largest consumer of energy and hydrocarbons and one of the world's major greenhouse gas producers. Thanks to the global proliferation of greenhouse gases, our winters are now shorter; our nights are warmer; our springs are longer; and our glaciers are getting smaller.

The world's climate is no longer glacial-friendly. In fact, with a few exceptions, glaciers are melting out and leaving us in the Rockies, the Alps, the Andes, the Himalayas, the Arctic; and they are leaving behind water shortages, drought, and electrical blackouts.

Tree rings and lake fossils now tell us that Europeans settled in Alberta and Saskatchewan during the wettest century on record in the last 2,000 years. So aridity is the norm. The Prairies are prone to droughts, there are as many as five per century. Some can last 45 years. Scientists now say we have a 40 per cent chance of being hammered by a whammy drought by 2030, and all at the same time that our glaciers are leaving us.

Our snows are also leaving us. Due to reduced snowpacks in Southern Alberta, river flows will decline by 20 per cent to 40 per cent in the next decade. That means severe shortages leave barely enough water for the fish. The flow of the Saskatchewan River, below Prince Albert, is already 20 per cent of what it used to be at the turn of the century. Almost every river on the Prairies has declined between 30 per cent and 80 per cent in the last 100 years.

Groundwater is always the ignored guest at every water party, but it is just as critical as our glaciers. All the recent science suggests that surface and ground waters are intimately married. If you abuse one spouse, then you have abused the other. If you over-allocate surface water, as both Alberta and Saskatchewan have done, then you are depleting your groundwaters.

Groundwater matters for a number of reasons: It recharges our lakes, our streams, our rivers, our wetlands; it keeps our running waters cool; it flushes out pollutants and nutrients; it provides drinking water for 8 million Canadians.

Twenty-five per cent of Alberta's population drinks groundwater. The number of aquifers supplying Canada's drinking water greatly exceeds the number of rivers and lakes providing that drinking water.

Yet, our groundwater is being rapidly depleted. Five communities in Central Alberta alone have exhausted their groundwater and must now depend on a multimillion-dollar pipeline to the Red Deer River, already an over-allocated water source.

Unprecedented drilling by the oil and gas industry poses a multitude of threats to groundwater in Alberta. The use of freshwater for enhanced oil recovery alone now consumes enough water, or approximately 37 billion litres, and that is enough to quench the thirst of nearly one-half of the world's bottled-water market; this practice is a disgrace.

Coal bed methane, which requires extensive water production from coal seams, is another grave threat. Coal bed methane development in the state of Wyoming and Montana could wipe out $2 billion worth of water in the next 20 years to 40 years.

Will Alberta repeat this error?

In addition, more than 600,000 abandoned oil and gas wells pose threats to groundwater in Alberta, Saskatchewan, and British Columbia. Yet, the federal government admits that its understanding of groundwater is abysmal, limited, and shamefully inadequate.

The depletion of water on the prairies, due to warming temperatures, drought, rapid population growth, and wasteful industrial practices guarantees a troubled West. Every forecast calls for heightened tensions along the border, in fact, all borders. Montana wants more water and fears Alberta's consumption patterns. Saskatchewan, in turn, fears Alberta's thirst. Manitoba, an end-stream user — or loser — looks at Saskatchewan and Alberta warily. The Northwest Territories, in turn, cannot believe the ugly water addictions of the oil sands.

It takes, by the way, two to three barrels of water to produce one barrel of oil; and at current production rates, that is an unsustainable level; the Athabasca River will no longer be a river within 20 years, at those rates of depletion.

So the West is getting dryer. There is less water. Old treaties and old water regimes based on the assumption of plenty are crumbling and falling. We are about to learn, and painfully so, as Wallace Stegner once observed,

Landscape, with its basis of aridity, is both our peculiar splendour and our peculiar limitation.

So what can the Senate do? I do not know what you can do. Like most citizens on the Prairies, I have lost respect for the federal government. It has become a silent, if not absent, voice on water issues. It has simply walked away from the table. It has cut money for important research. It does not know if the glass is half-full or half-empty. There are fewer than four federal scientists studying the fate of our glaciers and our alpine environments. In Europe, this would be regarded as a disgrace; in the United States, this would be regarded as a disgrace.

So for my children's sake, I ask only one thing: Give us the same funding that the Europeans and the U.S. have set aside for glacier research; adopt our glaciers as critical water banks; accept that they have become disturbing icons of climate change. If you do that one thing, Westerners, at least, will have a critical early-warning system. Such data could inform our water policies and our water management systems. It is information that could change the lives of my children.

If you do that one thing, we might also be able to recall what Wallace Stegner understood so clearly: ``Water is the true wealth in a dry land.''

I have brought with me a copy of an article that I recently completed for Canadian Business Magazine. It is entitled ``Mythoilogy: Eight wrong ways to think about the future of energy.'' I will leave it here and submit it for your review, on issues related to oil and gas and the depletion of those valuable resources.

The Acting Chairman: Thank you, Mr. Nikiforuk.

I have a copy of an article in the Calgary Herald: ``Gone for good: Water is too precious to waste on oil recovery.''

Mr. Nikiforuk: That is correct.

The Acting Chairman: Is that it?

Mr. Nikiforuk: No, you do not have the copy of the one I mentioned.

The Acting Chairman: We also have a copy of the article from the Calgary Herald entitled: ``Landowners wary of coal bed methane: Alberta is doing a poor job of presenting facts to Albertans.''

Mr. Fortin, the floor is yours.

Mr. Gaby Fortin, Director General, Western and Northern Canada, Parks Canada: I would like to start with the Parks Canada Agency mandate from the Parks Canada Agency Act:

On behalf of the people of Canada, we protect and present nationally significant examples of Canada's natural and cultural heritage, and foster public understanding, appreciation and enjoyment in ways that ensure the ecological and commemorative integrity of these places for present and future generations.

National historic sites create significant economic impact on local and regional economies. There are 26 million visits annually across the country, which generate a $1.2 billion contribution to the produit national brut.

The Acting Chairman: If you wish to speak in French, please do, because we have translation.

Mr. Fortin: It is just that sometimes I do not know the acronym in those languages.

It is equivalent to 38,000 full-time jobs in the year 2000. Two-thirds of expenditures of Parks Canada are in rural communities.

They are icons of Canada and centrepieces of the tourism sector, which is equivalent to $52 billion. The tourism industry, itself, attracts $755 million spent by international visitors. Finally, it expands and diversifies regional tourism products by providing destinations services, marketing and infrastructure.

This presentation will focus on all the mountain parks but more specifically on Banff. I will just provide an overview of what we call the mountain parks. There are more mountain parks than we find in the Rockies. For the purpose of this presentation, we are looking at Alberta and British Columbia. The mountain parks are Banff, Kootenay, Jasper, Yoho, Waterton Lakes, Mt. Revelstoke, and Glacier.

We operate all these parks as one large entity for the purpose of consistency, efficiency, and effective operation. Individual parks are responsibility centres, but an executive director of all the mountain parks manages all of them together as a unit.

Visitors and fee collection occur at major entry points, and visitors usually visit multiple parks. You can see there is a map that shows the location of these different parks in Alberta and British Columbia.

There are two world heritage sites along with a provincial park in British Columbia; the seven national parks; the 17 national historic sites and 10 million visitor days per year. The expenditures approached $1 billion; that is the visitor expenditure. There is $44.5 million in parks revenue. The assets are evaluated at $2.4 billion. The operating budget is $71.9 million. The capital budget is $8.6 million. Overall, there are about 1100 employees, and that includes seasonal employees.

From a pure economic point of view, there are five communities; 3,900 leases; three hot spring pools; four ski hills; three golf courses; the Trans-Canada Highway; the Yellowhead Highway; and the Canadian Pacific Railway and the Canadian National Railway main lines.

I will not go over the details of the revenue.

The Acting Chairman: We can all read pretty well. So we will come back to those ourselves, later on.

Mr. Fortin: That is what we have provided them for.

Banff National Park, alone, is part of a world heritage site. Within Banff National Park, there are seven national historic sites. Visitation is 2.9 million visitors a year. The revenue is $25 million a year. The park's assets are $490 million. There is $229 million in the Trans-Canada Highway.

I have also provided some pictures that show the types of assets we are talking about.

The national asset portfolio replacement cost is evaluated at $7.1 billion, and the mountain parks, alone, represent $2.4 billion of that amount of money.

The diversity of assets in Banff National Park is unmatched. We have a modern, state-of-the-art sewage treatment plant, to late 1800 historic buildings; we have backcountry campsites, to full-service RV campgrounds; we have four- lane, divided, interprovincial highways; and we have campground roads and other park roads, as well.

The assets are both cultural and contemporary. The mandate for cultural assets and artefacts collections is to protect irreplaceable historic fabric. The mandate for contemporary assets is to provide safe and cost-efficient and effective delivery of service to Canadians.

The mandate for administrative-operational assets is to provide safe and secure facilities and equipment for staff to deliver the Parks Canada mandate.

Many of our assets, especially the contemporary assets, were built between the late 1950s and the late 1970s. They have reached the end of serviceable life and need rebuilding or replacement. You can see, in the graph, the big blurb that follows. That is what we call the ``recapitalization tidal wave,'' which, if left unattended, will lead to large-scale facility closure and service reduction.

The treasury board secretariat cites 2 per cent of replacement costs as annual recapitalization expenditures requirement. So Parks Canada nationally would mean $140 million a year. The Parks Canada base capital budget, as of today, is $40 million.

I will talk, a little later, about the most recent budget and the impact that it has had.

The Acting Chairman: We have 20-some-odd pages here to go through, and I think, rather than perhaps reading it all to us, you can point out the highlights of your presentation and get on to what you see as the problems and what you see the federal government can do to help solve those problems.

As part of an ongoing study that is concerned with the Kyoto Protocol and with the situation of water supplies and sources, we are here to hear from experts from the West.

Mr. Fortin: I will jump to the conclusion. I have some pictures that show some of the funding requirements.

I will not go through all of them but just some of the pictures that show the kind of work that highways, bridges, historic structures, and campgrounds must have done.

The Acting Chairman: You are referring to the infrastructure.

Mr. Fortin: Yes, I am.

The Acting Chairman: Some of these, I have seen myself.

Mr. Fortin: It happened over the years with not reinvesting in our assets.

On page 22, you will see the two-pronged proposed solution. You will see that establishment and preservation is part of the core mandate. It is what we call ``public good'' and the funding comes from taxpayers' appropriation to the Government of Canada. There is $75 million additional appropriation that was announced in the most recent budget.

For use of and enjoyment, there is a section that relates to personal benefit. This is partially recovered through user fees. There is a $25 million user-fee adjustment being proposed.

The Acting Chairman: Can you tell me about the proposed user fee adjustment.

Mr. Fortin: Parks Canada proposes the user-fee adjustment. It has to go through the User Fees Act.

The Acting Chairman: Oh, I see. That has not been provided for in the budget.

Mr. Fortin: No.

The Acting Chairman: It will increase what people pay to get into the parks, basically, or the users themselves.

Mr. Fortin: Yes. It will increase a whole range of fees.

This is subject to the User Fee Act. That presentation has to be made to that committee to obtain approval.

I will go, very quickly, over what we received in the budget 2005.

The Acting Chairman: Yes, please.

Mr. Fortin: So, for 2005 and 2006, there is $11 million extra; $25 million the following year; and then $43 million; and $55 million; finally, reaching $75 million in the fifth year. That is a permanent allocation within the budget.

That will provide the necessary funding to repair our assets, excluding major projects such as the Trans-Canada Highway, for example.

I have given you some examples of the projects for the coming year.

Now, I want to make sure that we understand how the revenue money is used and how the user fees are being used, and it is important in a budget. The key principles are the services providing public goods are paid to tax-based appropriation. These are what we talked about: basic information services, resource protection, and those kinds of public goods.

The Acting Chairman: Safety.

Mr. Fortin: Safety, yes; that is correct.

Services providing personal benefit are paid, at least in part, through user fees; for instance, a campground. That means because the direct benefit is to the user rather than to Canadians in general.

Collected revenues stay in the parks and sites for visitor services and facilities. The principle is that the money collected for revenues does not go back to central revenue.

As I said, we are proposing an increase in the revenue and an increase in user fees. Those changes will have to go through User Fees Act and the minister must table it in Parliament.

The Acting Chairman: That is beyond the purview of this committee.

Mr. Fortin: That is correct.

The Acting Chairman: They do not let us spend money.

Mr. Fortin: No. I think it has to go to the Senate, as well.

The Acting Chairman: It has to be passed by the Senate, once it goes through the House of Commons. They do not allow the Senate to bring in money bills or to introduce things that will spend taxpayers' money.

Mr. Fortin: So thank you for the presentation. My understanding was that the purpose of the presentation was to deal with the assets issue.

The Acting Chairman: Well, I am very glad, sir, that you have pointed this out to us. Mr. McGuire, have you anything to add?

Mr. Terry McGuire, Director, Western Asset Management Services: I am just here for backup, if there are some specific questions.

The Acting Chairman: Senator Spivak wants to ask some questions.

Senator Spivak: Thank you.

I read your articles, and you can make anybody depressed for a long time. I do not mean that as an insult; I mean that is reality.

I want to ask you about the term ``over-allocation.'' The Alberta government has just introduced something called Water for Life.

What is your analysis of their awareness of this and how they are going to deal with it?

Mr. Nikiforuk: Alberta has a strategy called the Water for Life Strategy, and it is a new initiative. It is largely the brainchild of Lorne Taylor, who is no longer in the government. There are a lot of really good things about the Water for Life Strategy, in particular, its emphasis on watershed protection and management.

As things now stand, we do not know how much money the provincial government is prepared to make available to make this plan work, how much life they want to put in for Water for Life. Therefore, we are sort of at a standstill.

Now, in terms of over-allocation, almost every basin in Alberta is currently over-allocated: the Red Deer Basin, the Bow River Basin, and the Oldman Water Basin.

We have reached the point where we are spending more water than we are getting. It is a concern not only for us, as Albertans, but also for the folks in Saskatchewan and the folks in Manitoba, who are dependent on rivers having some of that water. Alberta is committed to a number of agreements not to drain the rivers dry; however, we are very close to doing just that.

Senator Spivak: Well, what are the possibilities, because it is the Alberta government's problem?

I am not sure of the federal government's responsibility for allocation of. I know there is responsibility for fish.

Mr. Nikiforuk: In terms of allocation, that is a problem for Albertans to solve. I think what would be useful from the federal government is greater capability in terms of research and reports on the state of our glaciers and the state of snowpack in the Rocky Mountains and the state of our alpine environments. These are critical environments; many of them are located in our national parks. Most governments in the world, particularly in Europe and the United States, have paid a lot of attention to this particular science and this particular research.

We have 3 million people on the Prairies that are dependent on these glaciers and their future, and I think it is incumbent upon the federal government to devote more time and energy and importance to this issue.

Senator Spivak: Have you any idea what the funding is like in Europe? What do you think might be an adequate funding level for this type of work?

Are there people in Canada with that expertise? I know about David Schindler and other people like him.

Mr. Nikiforuk: We have an excellent glaciologist by the name of Mike Demuth, who works for Natural Resources Canada. I certainly advise this committee to hear from him. He will tell you how we have less than a handful of scientists working on the state of glaciers, and that despite the great glacial coverage we have in this country, we have among the world's worst funding for glacial research.

The Swiss have active programs that monitor glacial retreat in alpine areas to determine the impact on forests, alpine ecology, wildflowers, and the water supply. These programs also study the impact the glacial retreat has on farming and on hydroelectric generation. They take this issue very seriously. They know that if they do not watch it, all of Central Europe is going to have extreme water problems. The United States has very active programs in both Alaska and in Montana.

We have nothing on the same scale that scientists have in either Europe or in the United States. It is unacceptable to prairie dwellers to not have a federal presence and voice in this area.

Senator Spivak: It seemed to me that the Canadian Association of Petroleum Producers seems to be sanguine about the shortage of water. They seemed equally sanguine about the impact that it could have on the industry; they did not seem to be in a crisis mode.

Mr. Nikiforuk: The oil and gas industry in Alberta is eternally optimistic and hopeful. They do believe that market technology will solve each problem.

I do not think technology will solve the problem of emerging water shortages in the Fort McMurray area. That is another area where the federal government has a responsibility to do long-term research on the cumulative impact of oil sands development on both surface water and groundwater in Northeastern Alberta. That water, and the loss of that water, will affect both Saskatchewan as well as the Northwest Territories.

We have a situation where an industry is expanding on a mammoth scale, without anyone sitting down and putting the numbers together and asking what this growth will mean to the population and the wildlife that are dependent on the river. Nobody is asking those questions.

Senator Spivak: It is, really, truly astonishing. It is astonishing.

Mr. Nikiforuk: It is.

Senator Spivak: Anyway, what about this coal bed methane? When I questioned CAPP, they said that they thought it was not such a big problem here in Canada.

Would you like to comment on coal bed methane both here and in the U.S.?

Mr. Nikiforuk: Well, there are 3,000 coal bed methane wells in Western Canada. The majority are located in what is known as the Horseshoe Canyon play. The Horseshoe Canyon play is an extremely unusual and novel coal formation, in the sense that there appears to be very little water in it.

The Manville coal formation contains salt water and the Ardley formation contains freshwater; both will raise problems with the production of water.

Producing water from coal seams is energy intensive and very expensive. Normally, you have to produce water from these coal seams for a period of two years before you get any economic methane or gas production. Where do you dispose of this water? The disposal issues usually have to deal with what kind of water is in the coal.

In the United States, this water has been highly saline and corrosive. It has been dumped onto native grasses, into rivers, and into ponds.

Now, under current legislation, we cannot dump salt water onto our prairies or into our rivers. However, the pressure and demand for natural gas might very well change those regulations.

Water issues raised by coal bed methane in Alberta could be substantial, dramatic, and they could affect aquifers throughout the province. The environmental minister's 2002 groundwater-quality report recommended that there should be no extensive coal bed methane development at all until there has been extensive groundwater base surveys done in order to determine the impact of this activity on groundwater supplies.

One final thing about coal bed methane is that it represents an incredible change in scale in terms of drilling. It takes about three coal bed methane wells to produce the equivalent of one conventional well. To replace 3 billion cubic feet of gas or a 21 per cent decline in production a year, we would need to drill 33,000 coal bed methane wells a year.

The impact of that kind of drilling on the farmlands and on groundwater aquifers in Central Alberta could be tremendous. We are talking about the industrialization of prairie landscapes, with unknown consequences for our groundwater supplies.

Senator Spivak: They suggested that they would only have two wells per section.

Mr. Nikiforuk: No. I think what they are saying is somewhere between six to eight wells per section. That is on top of probably five to six existing wells for either shallow or deep gas. So we are looking in the neighbourhood, in many cases, of 12 wells per section in Central Alberta. Many landowners fear that it could increase as high as 16 wells to 32 wells per section. We really do not know how high it will go, at this point in time.

Senator Spivak: There are already 3,000 wells without any regulations. Now they are thinking of regulations?

Mr. Nikiforuk: The existing 3,000 wells are considered natural gas wells, and are under the same regulations as natural gas.

What is not being regulated is their potential impact on groundwater. In addition, no one is looking at the cumulative impact of drilling thousands and thousands of additional wells in Central Alberta. The Horseshoe Canyon play could require as many as 50,000 wells in the next 20 years to 30 years. That is just one coal bed formation.

The Acting Chairman: Please tell us how large that area might be.

Mr. Nikiforuk: In an area between Edmonton and Calgary, the most heavily populated region of the Prairies.

The Acting Chairman: Yes and where the population is growing so rapidly.

Mr. Nikiforuk: That is correct.

The Acting Chairman: What are the regulations now for natural gas wells? Is it four per section? There are limits.

Mr. Nikiforuk: The average used to be one per section.

Senator Spivak: In a previous study that was done, we looked at the impact on the boreal forest and what is already there; it is huge.

So are the people of Alberta ready to accept this?

Mr. Nikiforuk: The people of Alberta do not know what the footprint of coal bed methane will be. Dr. Brad Stelfox, who is a land-use ecologist, recently looked at the Horseshoe Canyon to examine the effects of the footprint of 50,000 additional wells from that coal bed methane formation. That formation extends over 11,000 sections of land.

It has the potential to directly impact about 1 per cent to 2 per cent of the landscape, and it could indirectly affect another 12 per cent of the landscape, simply in well setbacks and pipeline setbacks alone. In other words, 12 per cent of the landscape could be frozen and dominated exclusively by gas developments; and, I might add, this area is within some of Alberta's prime agricultural land.

Now, there are a few other implications from this, too. The potential impact on groundwater is unknown, as studies on this subject are inadequate. There will be other consequences in that the proliferation of wells will make it more difficult for farmers to farm. Some farmland owners have told me it will make it difficult, even, to turn their farm equipment around if you have as many as six to twelve wells per section.

There are concerns about adequate compensation and impact of the industry on tourism and agriculture. There are concerns about the impact on rural roads and compressor stations, because approximately 1500 compressor stations will be required for this play alone, and the compressor stations will use an extreme amount of natural gas. There are concerns about more pipelines.

We are looking at a similar impact to agricultural land in Central Alberta that the industry has already had on the boreal forest.

Senator Spivak: Now, remind me: A section: Is that 1 mile by 1 mile?

Mr. Nikiforuk: That is correct.

Senator Spivak: It is not that big.

Mr. Nikiforuk: It is 12 city blocks.

Senator Spivak: Oh, my God.

In B.C., they rejected this; at least, they rejected it initially.

In Alberta, there is no organized opposition?

Mr. Nikiforuk: There is extreme organized opposition in Alberta.

Just a comment on the situation in B.C.: B.C.'s coals are different than our coals. Almost all the coals in British Columbia contain water. Many of them are in areas that are highly inaccessible and are not very economic to produce from.

There has also been sustained opposition to coal bed methane in Alberta.

Senator Spivak: So that is why the companies agreed not to bid on it.

Mr. Nikiforuk: Certainly, down in the Flathead Valley region that is why companies have been reluctant to bid on lease land there.

In Alberta, landowner groups, in particular, the Wheatland Surface Right Action Group, have made a number of presentations. The WSRAG's presentation to the standing policy committee of the Alberta government pointed out that landowners are at a disadvantage; that groundwater protection is inadequate; and that the current legislation does not adequately address the industrial scale of production that coal bed methane represents.

Coal bed methane is the oil sands of natural gas. In other words, if you consider energy as a pyramid, at the top of the pyramid is the cheap oil and gas; at the bottom of the pyramid are the dregs of the barrel. Coal bed methane and sour gas, both highly intensive, both with very extreme environmental consequences and impacts, are at the bottom of the barrel. They are a sign of resource depletion.

Senator Spivak: So, before I turn to the Banff area: What role has the federal government got to play in this? What is the environmental hook? It is not fish.

It is for environmental assessment, if they have the courage to do it. The federal government does very few major environmental assessments.

Mr. Nikiforuk: Well, I think there are a number of responsibilities here that fall on the federal jurisdiction: One is groundwater; the second is simply the future of gas and oil supplies in the country.

I would just draw your attention, again, to a very important report, by David Hughes of Natural Resources Canada. He has an open file on energy demand and supply trends and forecasts in the country. If you have not heard from this individual, you should. His perspective on oil and gas depletion in the country is sobering and accurate.

Senator Spivak: We have it.

Mr. Nikiforuk: His data raises a number of questions about the sustainability of natural gas exports as well as the sustainability of natural gas use and oil sense.

Senator Spivak: Does Parks Canada monitor the water quality and quantity in the national parks? Do you monitor the rate of glacier retreat in Banff National Park?

Mr. Fortin: We measure the rate of the retreat of some of the glaciers, not all of the glaciers, and we monitor water quality.

The Acting Chairman: Do you have results that you could share with us, Mr. Fortin?

Mr. Fortin: I do not have the exact results on the retreat.

The Acting Chairman: I mean not necessarily right now or here; but could you get them to us.

Mr. Fortin: I think we can, certainly.

Senator Spivak: I understand that one of the glaciers was right at the road.

Mr. Fortin: You are referring to the Columbia Icefield.

Senator Spivak: It is now a mile and-a-half back. Is that an accurate statement?

Mr. Fortin: It may not be a mile and-a-half, but it is certainly a kilometre.

Senator Spivak: Do you monitor the water quality in the parks?

Mr. Fortin: We have just carried out a study, but I do not have the results now. We have done analysis of water quality, especially at all the facilities.

Senator Spivak: So we need to get that too.

Mr. Fortin: Yes, we will make sure that you receive that information.

Mr. McGuire: We test the water quality that is for our visitors' use. We do not test the groundwater.

The Acting Chairman: So, you test what comes out of the tap.

Mr. McGuire: That is correct. We test that water as opposed to the natural state of the water.

Senator Spivak: The federal government policy and resource development in federal parks, it is firm; is it not?

I am aware Manitoba allows resource development in the provincial parks.

Mr. Fortin: You mean resource extraction.

The Acting Chairman: Ontario also allows resource development.

Mr. Fortin: Yes. There is no formal resource extraction for mining or logging or those kinds of activities in national parks.

Senator Spivak: Does the legislation state that there can be no resource extraction?

Mr. Fortin: It is there.

Senator Spivak: It is there.

Mr. Fortin: Yes.

Senator Spivak: Well, that is comforting.

Mr. Fortin: It goes further than that; the boundaries of the communities are legislated for commercial development.

The Acting Chairman: Are the communities' boundaries frozen?

Mr. Fortin: Yes, they are legislated, with a maximum footprint and maximum commercial development.

Senator Adams: I am concerned about the glaciers melting because of the climate change. Either it is not cold enough or there is not enough snow.

Do you have any reports to give us?

Mr. Nikiforuk: Yes. All of the information I presented on glaciers has been well documented by the federal government, in particular, by Mike Demuth at Natural Resources Canada. I believe I have provided this committee with a copy of this article, where all of this information is referenced.

Mike Demuth, in particular, has concluded that our glaciers are melting because snow packs that are not building up the way they should, and because of warmer temperatures, particularly in the evening and in the wintertime.

Senator Adams: That glacier is flowing in B.C., too, or just more to Alberta.

Mr. Nikiforuk: The glaciers in the Eastern Slopes have probably experienced the most dramatic melting. Many of the glaciers in the interior, particularly in Glacier National Park have also lost up to 50 per cent of their volume. The only areas in the country where glaciers are growing are on the Sunshine Coast, where another effect of global warming sends more precipitation to some of those areas. That is only for a very small number of glaciers; the majority of the glaciers are rapidly vanishing.

Senator Adams: What percentage is flowing down to the rivers? I am concerned about oil exploration and oil drilling and the farmers, because they all us so much water. Is that maybe a problem, too?

Mr. Nikiforuk: It is; it is a big problem.

Mike Demuth has calculated that the peak period for glacier melts which added more water to our rivers happened about 80 years to 100 years ago. Our glaciers are so small now that the volume of melted ice is actually decreasing the flow in our rivers, with the exception of one or two on the Eastern Slopes.

The time when one would expect glaciers to contribute more water to our rivers has passed, and they are now contributing less water to our rivers, from Northern Yukon all the way down to Southern Alberta.

Senator Adams: Do you have any information that indicates that the fish are declining in the rivers, in the spawning areas, and even in the lakes?

Mr. Nikiforuk: I think that David Schindler, and others, could present evidence that would suggest that all of our freshwater fisheries are in trouble, because either we will soon be losing insects due to warming river temperatures or we will just not have enough water to sustain fish populations or spawning populations.

Senator Adams: You mentioned that you have to do some upgrading in some of the park areas. I remember, that you built culverts and, now, you have started to build overtop of the highway, for the elk and deer and other animals.

Is it more effective?

Mr. Fortin: Yes, it is.

Mr. McGuire is the expert on highway engineering: that is his favourite topic.

Mr. McGuire: Well, what we have certainly seen, as wildlife became more familiar with the structures that the usage has increased. Certainly, as offspring have learned about them, then it is no longer an oddity; it is part of their existing landscape.

Over the past six years, we have seen over 50,000 various species of wildlife, everything from elk to grizzlies, cross over these passages.

In the beginning people said that the structures were an abysmal failure, but time and ongoing monitoring shows us that the animals are making use of them. In fact, in the next 35 km stretch of the Trans-Canada Highway twinning that will take us to the B.C.-Alberta border there will be enough of the structures to have a crossing once every kilometre on that stretch of road. There will be seven new structures like the ones we already have, and three secondary 25-metre bridge structures. We will also have 13 new tertiary structures that are 4 metres by 7-metre culverts.

Senator Adams: A couple of years ago, I went 400 miles north of Rankin Inlet, to the middle of Hudson Bay. We have grizzly up there now, in the Arctic.

Do you have any studies of any mammals? We are seeing mammals that we have never seen before, and they even go to the sea ice now to follow the polar bears' hunt for seals. We do not know what is causing it; it could be climate change or forest fires. Do you have any ideas of the cause? I do not know the reason. Maybe it comes from the Yukon area. I do not know, but it comes from somewhere.

We have so many snow banks, and in the fall and in the spring many char come down the rivers. Maybe it is better living for them up there. I do not know what is causing the mammals to move. I do not know how they travel.

Do you have any of that kind of information?

Mr. Fortin: I do not have any specific information to your question. We do have a climate change program in place in the North, in both the Northwest Territories and Nunavut; Environment Canada works in cooperation with us. We look at not only the ice flow or the thickness of the ice but also at all the wildlife up there, including caribou migration.

We also have a special project in the Nunavut national parks that makes use of traditional knowledge to help us understand the distribution of those animals.

These are programs are in place, but I do not have specific results that I can give you.

Senator Adams: We just passed Bill C-7, with the same minister. Is he more satisfied now with the system? How do you feel about that?

Mr. Fortin: Do I have to answer that question?

The Acting Chairman: You never have to incriminate yourself.

Senator Adams: Maybe Mr. Nikiforuk is happier, because the minister is now responsible for the park and the environment.

Mr. Nikiforuk: I think in the long term, it is probably a good change.

The Acting Chairman: Mr. Fortin, your proposed solutions, and the appropriations, show that your total five-year unfunded recapitalization requirements are $500 million with a budget of $209 million over five years. Increased user fees are not going to make up that kind of a difference.

How are you going to meet the needs, even just the health and safety needs within the park, with that kind of a gap?

Mr. Fortin: With the recapitalization funding that we have right now, we think that we can meet most of the recapitalization needs.

Not all issues are included in there, for example, the major work on the Trans-Canada Highway going through Roger's Pass or Banff, are not all included in those needs.

The Acting Chairman: Oh, I see. They are part of the $500 million.

Mr. Fortin: They are part of the $500 million. The big-ticket items that are not all included in the $500 million.

The Acting Chairman: Well, that is a little more encouraging, at any rate.

We heard from the Honourable Herb Gray, before our committee two weeks ago. He is now head of the IJC, the International Joint Commission, on international waterways. Mr. Gray informed us that there is a continuing dispute between Montana and Alberta over both the Milk River and the St. Mary's Rivers in Southern Alberta, because Montana wants more water, please and thank you. There is a dispute over the division of the water allotments between the two countries.

I was astonished to hear from Mr. Gray that the IJC does not have any kind of a policing role whatsoever. The only issues that they can look at are issues that both countries agree to look at, because they share in the cost of any studies et cetera.

Once they complete their study and hand in their report, as far as they are concerned, that is it; that is the end of it; they have no further mandate in these areas.

I had always thought they had a continuing mandate to monitor water quality and water flows and everything in these international waters.

We are finding out a lot as we go through this study.

Mr. Nikiforuk, you published an article in the Calgary Herald, the one that we have in our binder, not the one that you handed out today, about the fact that the Government of Alberta is planning to sell provincial Crown lands to private interests. Are they still going ahead with that plan?

Mr. Nikiforuk: My understanding is that that program has been temporarily scrapped.

The Acting Chairman: That is good, because I was wondering what sort of impact that would have on the aquifers.

I have to agree with you that the federal government has been woefully lacking on funding for basic research. They do not even have aquifers mapped.

Mr. Nikiforuk: That is correct.

At one time, Canada used to have some of the best research in the world. We were leaders in water research. We are no longer leaders in water research.

The Acting Chairman: These people are gone elsewhere. We are exporting our expertise.

Mr. Nikiforuk: We are abusing our resources because we do not have adequate data with which to make proper decisions.

The Acting Chairman: Yes, I have to agree with you. I cannot say that I have a question about it; I just have to agree with you.

I understand that we are going to hear from a woman who is an expert in glaciers, Hester Jiskoot at the University of Lethbridge. We will have some questions out of your presentation to be able to ask her tomorrow.

I am very concerned, and I want to see what information Mr. Fortin has on the shrinkage of the glaciers within the national parks. I have been telling people for about five or six years that if they want to see a glacier, they had better go quickly because they are going to be gone very, very shortly. I think that is an absolute disgrace.

What can we do about it? Is there anything that can be done about it? We hear all these problems; we see the pictures. We are not hearing solutions. I do not think there is a magic bullet. Certainly, there is not to the glaciers. They are gone.

Mr. Nikiforuk: Well, they are going.

The Acting Chairman: They are going, yes.

Mr. Nikiforuk: We have to prepare for their eventual departure and for water shortages on the Prairies. That is what it will mean.

All we have to do is look at what is happening in Europe and in South America, to get a picture of what departing glaciers means in terms of social change: It means less water for irrigation; it means less water for hydroelectric generation.

That could be a critical issue in British Columbia. The less water for irrigation will be a critical issue here in Alberta.

It could t mean less water all around and that will be a critical issue if we find ourselves in the 25- to 45-year-long drought. We have not prepared for that eventuality.

The Acting Chairman: No, we have not. I agree with you.

Senator Spivak: Some of our best scientists were involved in the Experimental Lakes Area project. That project was cut, I think, through real ignorance. It was not the minister, but the bureaucrats who cut the project some years ago. So the best scientists, who were really experts in terms of water, went to other places, and they are gone. I think that is one of our problems.

The Acting Chairman: Do any of you have something final that you would like to say to us.

The Senate is of some use, Mr. Nikiforuk.

Mr. Nikiforuk: I hope so.

I would just draw your attention, again, to a report I did for the Munk Centre for International Studies, called: Political Diversions: Annex 2001 and the Future of the Great Lakes.

I do not know if that is part of your concern.

The Acting Chairman: Very much so, yes. The Great Lakes are very much part of our concern.

Mr. Nikiforuk: I can leave a copy of that with you.

The Acting Chairman: Wonderful.

Senator Spivak: We do not have that, do we?

The Acting Chairman: Yes. It comes with international waters.

We intend to look at waters of the eastern part of Canada. As we go along, we pick up all the information that we can, so we do not have to come back again to get it.

Mr. Nikiforuk: The pressures that we are seeing here in the West are also being experienced in the Great Lakes space and are just as critical.

The Acting Chairman: Yes.

I thank you very, very much, gentlemen, for attending here today and for speaking to us. You have helped us quite a bit.

The committee adjourned.

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