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

Issue 10 - Evidence - Afternoon meeting

EDMONTON, Wednesday, March 9, 2005

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 1:35 p.m. to examine and report on emerging issues related to its mandate.

Senator Tommy Banks (Chairman) in the chair.


The Chairman: Honourable senators, we have before us this afternoon Dr. Ian Potter, Director of Sustainable Energy Futures for the Alberta Research Council, and Mr. Phil Murray, Vice-President, Energy.

Our purview covers energy, the environment, and natural resources and everything that is included therein, so we are most interested in hearing anything that you have to inform us about having to do with any aspect of any of those items.

I would be grateful if you would begin with an outline of what I believe is a unique provincial body in Canada, that is, the Alberta Research Council. Having asked that, I would hope that you will be concise so that we will have time for a dialogue.

Mr. Phil Murray, Vice-President, Energy, Alberta Research Council: Good afternoon, and thank you for the opportunity to be here today. Welcome to sunny Edmonton.

We are here today to tell you a little bit about our organization and some of our thoughts on energy in Alberta and Canada, and how that can be impacted by the environment and some of the issues that we face in Alberta and Western Canada.

First I will give you a quick overview of the Alberta Research Council. Our role is to develop and commercialize technologies to give clients a competitive advantage. We are a leader in innovation, providing solutions globally to industry in the energy, life sciences, agriculture, environmental, forestry, and manufacturing sectors. We are pretty broad-based.

Both Dr. Potter and I work within the energy and environment arena in Alberta. Our work overlaps. My specific role, of course, is Vice-President, Energy.

We are Canada's first and foremost provincial research organization. Established in 1921, we now have about 550 employees. We have about 100,000 square metres of office, laboratory, and pilot facilities here in Edmonton. We have offices in Vegreville, just east of Edmonton; in the research park in Devon; and in Calgary. These facilities provide impressive locations for sustainable energy research and technology development activities.

Our annual operating budget is approximately $85 million of which the sustainable energy activities are in the range of $38 million. Almost half of our total activities is focused on energy and environment.

With innovation as our primary role, we differentiate ourselves and support an innovation culture by focusing on building an economic advantage for our customers and for Canada — converting good ideas to products and services. We provide the link from lab to pilot to field demonstration and commercialization. We fill the gap between basic research and commercial activities — and that gap is one that is sorely needed to be filled in all of Canada, not just in Alberta — using an integrated multidisciplinary team approach, which includes collaboration with others, often driven on the work of universities and entrepreneurs, but driven by the needs of industry and government.

To this end, partnership and collaboration in innovation and commercialization is absolutely critical and requires that we build on the diversity and strengths that exist across the whole innovation spectrum, so we partner with industry, universities, governments, and other research institutions and laboratories.

One of the main questions that ARC and Canada face is how to build a sustainable energy future. Our belief is that a new organization, the Energy Innovation Network, as outlined by Dr. Eddy Isaacs to you a couple days ago, is central to building this future, and ARC is fully committed to aiding EnergyINet, as we call it, in all its endeavours. From our perspective, the EnergyINet is dedicated to ensuring an abundant supply of environmentally responsible energy, creating economic prosperity and social well-being for all Canadians.

Dr. Potter will now tell you more about ARC's role in helping EnergyINet Alberta and Canada achieve what I have just talked about.

Mr. Ian Potter, Director, Sustainable Energy Futures, Alberta Research Council: In the near term, it is fairly obvious that climate change is the first challenge that we will have to deal with, but it will not be the last challenge. There will be recurring challenges as we go forward into the future.

As energy grows more and more important, not only is Canadian and North American energy security a priority, but it will also become a priority with the economic development of many of the developing countries around the world.

To meet this challenge, Canada's thriving industry must make a dramatic and crucial shift from traditional hydrocarbon resources and operations to what we believe is an exciting and technically driven future of more effective recovery of our energy resources, while ensuring environmental stewardship.

We believe that this future includes the sustainable development of coal, conventional oil, and natural gas production; the effective development of the oil sands and the heavy oil resource sector, coupled with upgrading and associated value-added products; exploiting methane from unconventional sources, such as tight gas, shale gas, and coalbed methane itself; utilizing carbon dioxide not as an emission but as a resource and a commodity for enhancing energy production from hydrocarbon energy extraction; and, at the same time, helping meet our climate change objectives in sequestering carbon dioxide.

We also believe that there is a fundamental need for the integration of hydrocarbon resource development with other sectors such as the petrochemical industry to promote and provide saleable petrochemicals, and to enhance the ability to couple coal, oil, gas, electricity, and hydrogen as co-products in a single system.

We also believe that we should be embracing renewable and alternative forms of energy in a much more wholehearted way and, overall, promoting cutting-edge research into a variety of sustainable issues that are impacted by energy but must deal with the issues in air, land, and water ecosystems that are undoubtedly affected by energy production.

ARC recognizes the challenges and opportunities facing the Canadian energy sector and, over the last few years, we have redeployed our resources to effectively address these issues and align our activities with EnergyINet as well as federal and provincial strategies. Our objective is to provide and promote high-impact collaborative programs to meet the cleaner energy needs of Alberta and Canada. As Phil mentioned, this draws on knowledge and expertise within ARC, but is driven by the need to build government, industry, and academic collaboration across the research spectrum to acquire, develop, adopt and adapt transformational energy technologies.

I will briefly discuss three of these specific technology areas with you now. These areas are very important to ARC. First, I will touch on cleaner coal technologies. Coal utilization must be transitioned to a future which includes next- generation, coal-fired power systems and emission control technologies such as gasification which offers extensive value-added product opportunities with integrated polygeneration systems. Second, I will deal with linking and developing new technologies and new methodologies for land reclamation. Third, I will talk about bridging the gap to the hydrogen economy by launching business-driven programs in hydrogen production, storage and distribution to bridge the transition to clean, affordable hydrogen-based energy from hydrocarbon resources.

Moving now to general resource recovery, Canada is a world leader in the recovery of oil and gas. The value of maintaining this leadership by developing new technologies for exploiting efficient resource recovery to ensure and conserve natural resources and maximize economic benefit while mitigating environmental impact cannot be overemphasized.

Examples of ARC's technology leadership include our long-standing consortium, the Alberta Energy Research Institute, the ARC Core Industry Research Program, which develops valuable and viable in situ oil recovery technologies that help industry deploy them to the fields, and the Enhanced Gas & Oil Recovery Program, which serves the longer-term research needs of the upstream and downstream conventional oil and natural gas industries to overall improve the recovery available.

We are also linking research to field services for the unconventional gas industry. We are actively collaborating with North American-based companies to develop and unlock the potential from coalbed methane and shale gas.

The last area I would mention is carbon dioxide management, an area in which Canada and ARC are world leaders and which I believe is a cornerstone of sustainable energy development. Perhaps the management of greenhouse gases and resource exploitation represents one of the largest challenges of the provincial and federal climate change plans, but it is one that also has the largest opportunities to fulfill the aspirations and intentions of those plans while maximizing economic benefit.

It includes developing technologies, processes and capabilities for the safe capture of greenhouse gases from combustion and waste gas streams; understanding and modelling reservoir dynamics related to storing the gases in hydrocarbon sinks such as coalbeds and active and depleted oil and gas reservoirs; fundamentally building and participating in national and international consortia programs with industry and academia to understand the technology and risks of geological storage of greenhouse gases from enhanced coalbed methane to enhanced gas and oil recovery, for example, projects such as the International Energy Agency Weyburn Project and the Canadian International Development Agency China Coalbed Methane Project.

Lastly, we believe there is a need to foster the development of carbon capture, transportation and storage infrastructure such as carbon dioxide pipelines, to enable effective use of carbon dioxide where it is needed, when it is needed.

To summarize, we believe that the work of the EnergyINet and ARC, if fully supported, will potentially provide affordable, clean energy to meet the expanding energy demand of Canada. It also embraces solving critical environmental problems at the same time as addressing energy safety and security issues by supporting the use of diverse fossil fuels or encouraging the broader adoption of renewable and alternative energy resources, wholeheartedly improving economic sustainable development.

The problems to be addressed are highly complex and should not be underestimated. We are currently running up against limitations of current technology to convert our natural resources to marketable energy supply in an environmentally responsible way; and the development of new technologies requires collaboration among and between industry research organizations and governments.

We believe that EnergyINet is an answer, a collaborative organization designed to pursue an integrated strategy within and beyond Alberta.

Based on our assessment of the energy technology development in Canada, the Alberta Research Council recommends to you the following: That sustainable energy development and climate change can most appropriately be addressed by increasing Canada's support for research and development and, importantly, commercialization. We also believe in more active cooperation and collaboration between federal, provincial, and territorial governments in energy research, development and demonstration.

We also must continue to facilitate research and development and demonstration of clean hydrocarbon technologies. Coupled with that is the support, maintenance and enhancement of Canada's leadership in carbon dioxide capture and geological storage. In particular I would suggest monitoring, measurement, and verification of the carbon dioxide when it is in the ground.

We must, however, continue to facilitate the production and use of renewable and alternative energy and concentrate its development and deployment in niche markets and high-value applications.

All of this must be done under the increased profile of government research and development support, linking basic research through the innovation spectrum to commercialization. From our perspective here today, our most important request is that there be clear and unwavering federal support and funding for the Energy Innovation Network, which we believe is fundamental to the future of energy research and technology development.

At that point, ladies and gentlemen, thank you for your time, and thank you for the opportunity to appear before this committee. We would now like to answer any questions you may have.

Senator Angus: In your concluding sentence, did you say that one of your main objectives was to ensure clear and unwavering federal support and funding for the Energy Innovation Network?

Mr. Potter: Yes.

Senator Angus: Do we have that text?

The Chairman: Yes, we have a copy of the text, in point form. As well, the transcript will be available.

Senator Buchanan: I will concentrate my questions and comments on coalbed methane extraction which, as you probably know, is most important in Nova Scotia. We still generate 70 per cent of our electricity from coal, and that will have to continue. Even though we use the most up-to-date coal technology that we can, including fluidized bed technology, many people say that is not enough.

We have been experimenting over the years. We did a lot of drilling during my terms in office in Nova Scotia, as well as during the 1980s and the early part of the 1990s, and we experimented with different methods of using coal rather than direct burning.

We have done a lot of drilling in Pictou County and in Cape Breton on coalbed methane extraction. Unfortunately, we met with little success. The reason, apparently, was that drilling methods were just too expensive, the recovery was insufficient, and there were many other factors.

I have looked at the research you have done here and what has been done in the United States. I have been told that the United States is much further ahead in coalbed methane extraction than you are here in Alberta. I have also been told that you could extract as much as 100 Tcf of natural gas or methane with coalbed methane extraction. The National Energy Board and our own people in the Department of Energy, have estimated that we have as much as 70 Tcf in Nova Scotia in the coalbeds of Cape Breton and Pictou County primarily, of which 30 or 40 per cent is recoverable.

The biggest problem that we have, of course, is how to do that. What is the best method of doing it? What is the cheapest method of doing it? Can it be done in a fashion that will be cost effective?

I am told that there are many new methods of drilling. Are you up to date on the new methods of drilling?

Mr. Potter: Yes. I can address your general question.

About three years ago I had the opportunity to go to Wyoming and see what they did and what they did not do right. They admit that they made mistakes in Wyoming. They did not understand what they were getting into and did not understand the ramifications specifically from the environmental point of view.

A lot of brine developed from their wells, and they had to dewater before they produced gas. That brine was left on the surface. As a result, there are now many salt deposits on the surface. It was an intelligence-gathering exercise. We knew that the industry was going to come here, and we wanted to make sure that the protocols and the regulations within government were adequate.

While I cannot speak specifically to the government regulations, because we are at arm's length as an organization, I believe that the protocols that the Alberta government has through the Energy & Utilities Board do effectively address the sorts of disposal issues that they were challenged with in Wyoming.

I do not know if my numbers are up to date, but in Wyoming approximately 20,000 wells have been drilled for coalbed methane. To date, in Alberta, I believe we are at the 2,400 mark. About 2,000 of those have been drilled in the last two years. Drilling commenced, probably, in the 1970s. Canadian Hunter, I believe, was one of the most aggressive in Alberta. They did a lot of drilling along the foothills but they did not find gas. At that time, gas was cheap. It was not a particularly high-cost item, so it did not fit the economic curve of the industry and the business strategy.

We are all familiar with the price of gas and the resource gas triangle. We are going further and further down the triangle.

Coalbed methane has become an attractive form of gas. Estimates from the Energy & Utilities Board in Alberta, I believe, are reserves of up to 500 trillion cubic feet. However, the amount recoverable is questionable. It may be of the order of 100. It may be less; it may be more. Some estimates even put it as high as 3,000 trillion cubic feet, and other estimates put it at 40 trillion.

We do not really understand the resource, so I will defer to the Energy & Utilities Board as our geological experts on that.

To put that in context, I believe that Alberta has exploited, to date, natural gas in the order of 120 trillion cubic feet, so we are talking about a magnitude of four times what we have already taken in Alberta specifically.

There are problems. I am not familiar with the coals, geologically, in Nova Scotia, so I apologize for not being able to address those issues specifically. However, the coals on the surface at Wabamun, for example, are thick. You can drive along the side of the road, and you can see thin seams which are three or four metres thick. In Wyoming they are 70 metres thick. It is much different. Probably most of you have been to the oil sands and have seen the thick seams of oil sands. I would equate the Wyoming seams to the thick seams of oil sands. That is the magnitude of the operation. It is a huge operation. They extract coalbed methane before they extract the coal, and that is done in advance of the coal exploitation and digging.

However, many of our coals are not on the surface. You hear about the ``800 years'' of coal in Alberta. Most of that is at 700 metres or even 1,200 metres. These areas are so thin and so deep that you would never go down a shaft mine to reach them. At the moment it is not economically viable.

However, it is viable to get the gas out of the coal by coalbed methane extraction. If you just drill a vertical well down into the coal, the interfacial area between the well bore and the coal is so small — you only have an exposure of perhaps 4 metres — you do not achieve the transfer of the gas into the well. By using advanced drilling techniques such as horizontal drilling, you can go down into the thin seam and drill laterally along it. That way you expose more of the drill pipe to the coal and subsequently to more of the gas.

As you mentioned, the other problem is the flow rates. The gas is tightly wound into the coal itself. We think of coal as generally being just ``black stuff.'' There are different types of coal, and each is packed differently. As a result of the tectonic activity around the Rockies, the coals nearer the mountains are very tight, and the gas cannot be released. It is like squeezing a wet sponge but nothing comes out of it. However, if you let it expand a little bit, the water will come out of the pores much more easily.

One of the tricks is knowing how to fracture the coal to make the gas come out easier. That is the subject of the research that we and others in the industry are doing now. We are examining how to increase the permeability of the coal in order to release the gas.

We are fortunate in that we do not have the water problems that Wyoming experienced. Water is not as prevalent in the coals that we have here. There is some, and it has to be dealt with, but it is not as prevalent as they had in Wyoming.

Senator Buchanan: Longitudinal drilling is the kind of drilling we would have to do, because, as you may know, most of our coal is under water. However, I am told that there are methods — and perhaps you have examined them — where the drill can go down and then go horizontally over many miles in order to extract methane.

Mr. Potter: Yes, sir.

Senator Buchanan: Interestingly, our coal is highly fractured now, it has high permeability, and it has good flow efficiency. That is what our people in the Department of Energy have told us over the years.

The old methods of drilling throughout the 1980s and early 1990s were just not doing the job. The new methods of drilling that you just mentioned, the horizontal drilling, could be a partial answer.

I believe people from the Department of Energy in Nova Scotia will be coming here to talk to you about the experimental work you are doing on horizontal drilling. Have you ever meet Jim Livingstone?

Mr. Potter: No, sir, I have not.

Senator Buchanan: He is a Nova Scotian who, like so many others, lives here now. He has some patents on drilling for coalbed methane extraction. The Minister of Energy here is well aware of them. I was talking to Jim just yesterday about this.

What about CO2 in methane extraction?

Mr. Potter: May I just comment on horizontal drilling? I am a researcher at heart, and there is always research to be done, but I would mention that the industry can actually do horizontal drilling now. Research would enhance it, make it better.

You can also horizontally drill by using one vertical well and have many horizontal drills coming off of it, so you minimize the amount of drilling overall.

I would encourage the industry to actively go after the opportunities in Nova Scotia.

You asked about CO2 in coalbed methane. We have a vision for coal, especially the deep coal. Most of our work on coal started with the enhanced recovery of coalbed methane using carbon dioxide as the medium. By injecting carbon dioxide between the coal pieces where the gas is stored, the CO2 adheres to the coal by chemical absorption and preferentially kicks off the methane because it has a stronger chemical activity. For every two molecules of CO2 that you put down, you get, approximately, one molecule of methane off.

We have been and are doing that in Alberta. We are doing it in China under the CIDA project. We are looking at how we sequester CO2 permanently within coal but, at the same time, exploiting the resource.

We found certain issues concerning permeability to be critical. We have problems with permeability, so we backtracked into the coalbed methane industry, which is still in its infancy, and tried to determine what issues we could deal with before we got to the next stage of carbon dioxide in coalbed methane.

We have gone beyond that to the stage where, in the future, we could have a coalbed saturated with CO2 into which we would inject biological media, slurries, that would eat the CO2, eat the coal and generate more methane and more hydrogen. At the end of that you would still have, perhaps, some coal. We then look at in situ combustion and extracting more energy so that you are fully exploiting the coal seam but, in some cases, at a huge depth.

Enhanced CO2 in coalbed methane, we believe, is a viable technology for the future. Does it make business sense now? The economics are marginal. We have a few companies that are entrepreneurial enough to work with governments.

This is a government issue. It is not just an Alberta issue. Currently, the federal government supports it through Environment Canada. We believe it would be a very strong industry, an industry in which Canada would be a leader. I believe it is very important.

Mr. Murray: On the issue of enhanced coalbed methane, tests to date have shown that it is effective in increasing the recovery of methane. There could be between 50 and 100 per cent more methane to be produced. However, a lot of work still has to be done on it and we are continuing to work on it. The industry is starting to see the opportunity there, so I think it will start moving ahead faster.

I would also touch on one issue that has not been recognized well in the past but we are starting to understand it better, and that is, quite often the seams of coalbed methane — and I do not know if this is the case in Nova Scotia — are surrounded on both sides by shale, and we have found that there are significant amounts of gas in the shale, which is another area we are trying to explore by understanding the reservoirs better to determine how much gas may be available and how it can be recovered in conjunction with the CBM.

Senator Buchanan: That is interesting. There are, I believe, perhaps three or four areas where there is a lot of shale. Outside of Moncton in New Brunswick there is a lot of shale, but there is very little shale in the coal fields of Cape Breton. I believe Pictou County also has some shale. As you move further up into the Midas Basin and across into New Brunswick, there is a lot of shale. For many years, they have actually been producing natural gas from the shale deposits outside Moncton.

Senator Spivak: My notes say that Canada's reserve of gas from conventional sources is currently estimated at less than 10 years. Here you are talking about coal. However, I have read about the enormous environmental problems in Wyoming to do with coalbed methane. There was contamination of water and an impact on the ecological footprint.

Would you comment on the effect on freshwater aquifers, and whether you are involved in setting standards regarding how many wells can be drilled in a section or, say, a quarter section?

Do coal seams in Alberta and British Columbia present any special challenge regarding the possibility of in situ, real time, biogenic gas formation from coalbeds? Could this supply virtually unlimited natural gas, as some have claimed?

Mr. Potter: With regard to the 10 year reserves of gas, I would just say that I am only in my forties and we have been talking about 10 years for a long time. That is the nature of resource exploitation. There is a finite amount. How much is it? We keep finding it. The big pools have probably all been found.

Senator Spivak: Is it a fact that the trend is declining?

Mr. Potter: Yes. The gas that we are finding in Alberta now is more sour. It has more CO2 and more acid gas in general, so it needs more processing before it goes into a pipeline.

Coalbed methane represents a huge potential, building on what we already have, as does the shale gas. There are methane hydrates in the North — an important area that cannot be ignored.

With regard to what happened in Wyoming, standards, and how we operate in the province, I would just say that we do not have any direct influence over standards. Those are set by the Energy & Utilities Board. I would defer to my colleague who may wish to address this issue further.

There is an environmental footprint because of the water involvement. My understanding is that the codes and the regulations that have been put in place by the Energy & Utilities Board are adequate to deal with those issues from a standard oil and gas production point of view.

Noise is another issue. The compressors that are used generate noise, and that is an ambient issue. There are low- noise compressors.

On the matter of land use, because of low permeability, instead of one well per section, we would normally have about eight wells per section, so there is more drilling. Some of the drilling techniques we talked about earlier may be an advantage. You have one drill hole, but pipes would go out laterally instead of having many drill holes per section. The industry is dealing with that area now.

With regard to in situ biogenic production, that is part of the work, as I mentioned earlier, the methanogenesis, as we call it. It involves a long process to generate the gas when you put slurry or biogens into the coal. We are looking at mechanisms to improve that. We have to go from thousands of years of geological time, to weeks or days, hopefully. We need to be more proactive. Some of our lab tests are very encouraging, but there is a difference between that and what happens in the field.

Senator Spivak: How many wells will the utilities board allow per quarter section?

Mr. Potter: I do not know what they will allow, but I believe the standard is eight wells per section.

Senator Spivak: Per quarter section or per section?

Mr. Potter: I am getting into a numbers game and I am not comfortable with that. I apologize. The regulations are well laid out.

Senator Spivak: I have some questions about clean-coal technology. We have heard about the Genesee project. How many coal-fired generators exist? What is the state of that technology? Do they have scrubbers? What about mercury and sulphur? What is the timeline for deployment of clean-coal technology, and to what extent does coal gasification reduce emissions compared to traditional combustion methods? What is the incremental cost of that technology as well as the deployment of clean coal? Is it billions, millions, or thousands of dollars per generator?

Mr. Potter: That is a lot of questions. I have actually given lectures on this over a week's period.

In Alberta we have approximately 11 gigawatts of generation, of which about 60 per cent is coal-fired generation.

The existing power stations meet the regulations as laid down, as they must, by environmental standards and CEPA, under Alberta Environment. While we advise on the technology, I would not want to get into the area of discussing individual emission profiles for individual coal-fired power stations.

The supercritical system at Genesee is an advancement on the existing coal-fired power stations, mainly because most of the coal-fired power stations were built several decades ago in Alberta, as they were in most of Canada. It is the next step.

The technology is deployed in places such as Japan. From the point of view of familiarizing themselves with operation, many companies are trying it out to see if they can make it work. Is it viable? Does it fit into their business profile?

I believe it will be. They have taken amazing strides in embracing new technology and in meeting the sulphur recovery standards, for example, and also dealing with particulate matter with bag houses and so on.

I would hope that more supercritical power stations will be built across Canada as we get more experience with their operation, and as we build the human resources capacity to deal with the new technology.

In the future, I believe that we will utilize gasification technology. As yet, we have not done that. However, I believe it will be utilized in the oil sands in the OPTI/Nexen project, but they are using some of the residuals from the oil sand process to drive the gasification rather than using coal.

Coal has been used. The Weyburn project in southern Saskatchewan uses carbon dioxide from a coal-based gasification company in North Dakota. Most of the gasification in North America, though, has been used by the petrochemicals industry, because they generate a value-added product in petrochemicals. They take in a raw material that is fairly cheap, and they add tremendous value to it.

If you apply gasification to our electricity, my understanding is that, in the rate base systems in Canada in general, it does not make economic sense. It cannot work. That is why I alluded to polygeneration. Instead of applying gasification just to electricity, we are suggesting gasification to electricity, to heat, to hydrogen, to petrochemicals, to whatever.

You could use the coal in the Wabamun area, for example, and transport the hydrogen that you generate, or transport the coal and the slurry to the oil sands and mitigate the use of natural gas there. From the petrochemicals point of view, you have to look at the value-added opportunities.

Having the confidence to invest in that sort of business is a big leap for many companies, so we have to understand the economics. As I said a minute ago, I do not have an economic answer for you, that is: What is the price? That is the modelling we are doing at the moment. For example, if I were to model a gasification facility at Wabamun from an economic development perspective, what industry would I build in alongside that gasification to make that plant economically viable? Would it be a chemical plant? Would it be a fertilizer plant? What makes the business case? From a shareholder perspective, what tweaks their bottom line? What is the win-win-win situation for the governments, the people, and the industry?

I believe we are getting there. I believe that we will have gasification polygeneration within the next 20 years, and I would hope that that will be the start of an encouraging integrated future for Canada.

There are several places in Canada where you can actually use the natural resources, Alberta being one. I would suggest that the Sarnia area is another, as well as areas in southern Saskatchewan and Nova Scotia. They could be linking in gasification to other value-added products.

You mentioned emissions. It depends on the size of the plant and the actual end products. There are misunderstandings about emissions per gigawatt. It depends on the gigawatt unit. Is it in a petrochemical gigawatt? Is it fertilizer gigawatt? What is the base unit?

I would suggest that, no matter what hydrocarbon processing we have in the future, without the carbon dioxide sequestration into the coalbeds, into the oil reservoirs, it is going to be hindered. You need to look at the package deal, and I think linking future coal technologies with geological storage is essential.

Senator Spivak: The Genesee project does not reduce CO2 very much.

Mr. Potter: Overall no, but, to my understanding, the efficiency is higher.

Senator Spivak: Does it reduce sulphur and nitrous oxide?

Mr. Potter: My understanding is that they have better scrubbing and removal techniques on the back end, which is a very costly endeavour.

Senator Spivak: It is a major reduction.

You have not answered my question about the existing plants. I know you have reasons. The vast majority of the existing coal-generating plants release everything into the atmosphere. Most of them are not coal scrubbers. What do you think the timeline is for getting into cleaner burning coal? Everybody is talking about cleaner burning coal, but what do we mean on the ground and in real time? In the meantime, we are polluting the atmosphere, and if we put in the technology, people might accept it more easily.

Many of the pulp and paper mills had to bite the bullet and spend billions of dollars because they were killing the fish in British Columbia.

Senator Angus: Now they have all been closed down.

Senator Buchanan: They are closing down everywhere.

Senator Spivak: It was the Conservative government, right? No, they have not closed down.

The Chairman: Gentlemen, do you want to answer that before we go to the next questioner?

Senator Spivak: Perhaps you could send us a written response.

Mr. Potter: I can address it to some extent. Power stations have extensive emission control technology to meet the standards laid down by the governments; otherwise, they would not be allowed to operate.

With regard to transitioning, there is a good aspect and a bad. If we spend billions of dollars on making them entirely environmentally friendly from an air emissions point of view — I will stick with air emissions, not water — then where is the trade-off between doing that and deciding that we should get away from that sort of coal-burning technology and look to a future where we deal with, say, gasification?

You should not consider retrofitting plants. You should look at building new plants. I think that is where we should go.

You may want to retrofit some of the newer plants with some of the technologies. Why? You may want to do it for reasons of grandfathering, capital expenditure, capital turnover and that sort of thing. It is a purely economic business case.

Senator Spivak: That is why I asked you about the timeline.

Mr. Potter: The timeline is: You are getting to that point. In Alberta, Wabamun, for example, part of their system has just been shut down. When a power plant is 40 years old, it requires major renovations to the system, or you have to deal with gasification.

I would suggest that the Canadian Clean Power Coalition, which was formed approximately five years ago, was formed to deal with the very question that you have asked, that is, to consider how they can transition their systems to a clean-burning future. With federal and provincial support, they have put a lot of money into looking at next generation coal-fired power plants. My understanding is that their conclusions were similar to those I mentioned a minute ago, which is that electricity does not make economic sense under the current regimes and they need to look to polygeneration. It takes time to go through those sorts of turnovers.

I would see gasification being front and centre or a similar sort of technology, a clean coal-burning technology in the early 2020s.

The Chairman: Did you just say that Wabamun has shut down?

Mr. Potter: Part of the system has been shut down, not the whole thing. I believe that fairly recently they mothballed some of the units or laid them off from generation.

Senator Buchanan: What about a fluidized bed? We have the only one in Canada in Nova Scotia. I opened it. It is working well in that we have completely eliminated SO2. What do you think of fluidized beds?

Mr. Potter: Some people say that this is the best technology for everything, but I believe that there is no one technology for everything. I believe there is a portfolio for different applications, different feedstocks and different end products.

For your application, I imagine that, when the business case and the technical case were prepared, it made sense. I would not question that.

The Chairman: It depends on the kind of coal, does it not?

Mr. Potter: It depends on the feedstock, yes.

Senator Buchanan: It is right for our coal.

Mr. Potter: Yes. However, to use South Africa as an example, Sasol has been doing this for 50 years, but they have very poor coals. They have lignite and brown coals. Some of their technology may be extremely valuable and viable here, but we have to find that out.

We were careful in our wording to be clear that we are not out to develop new technology. We are out to adapt and adopt technology from abroad, in some cases, to suit Canadian circumstances. Why reinvent the wheel?

Senator Milne: We are operating from these blue pages because there are certain questions that we want to have answered regarding different aspects of the community out here.

You talked about how CO2 sequestration can help how we are doing this, particularly in coalbeds. What about reclaiming oil, old oil and gas fields and getting more production from them? What are the main hurdles to carbon sequestration here in Alberta? Since you have such hard coal here, how practical is this type of a solution?

Mr. Potter: I will just answer the last part of your comment there.

I mentioned the tightness of the coals around the Rockies. The coals further out are softer, more permeable. The coals around Horseshoe Canyon and the Drumheller area are pretty good. There are good coals in Alberta. However, around the Hinton area where you have anthracites, the steel coals, it is probably not worth doing it, but I am not saying that you should not do it.

Senator Milne: It is farther away.

Mr. Potter: Yes.

With regard to using carbon dioxide for enhanced oil and gas and/or gas recovery, since 1986 we have had an enhanced oil recovery operation functioning in Alberta just south of Joffre. It is doing very well and it is still working.

The Weyburn Project within PanCanadian and EnCana is front and centre in the International Energy Agency work, and it has been very successful. It is world-recognized, and it is discussed at many conferences. However, that uses carbon dioxide from a close source. It is about 120 miles away.

One of the hurdles is dealing with carbon dioxide. The exhaust of CO2 in the coal-fired power stations that were mentioned a minute ago is very low in quantity, and scrubbing it, removing it, is extremely expensive because there is such a low partial pressure within the exhaust. You need to find sweet spots where you can get CO2 fairly readily.

In Alberta there are several such spots. Most gas processing plants have a good gas stream. The oil sands, with their generation of hydrogen for upgrading the oil, present another huge opportunity for CO2. The only problem is that the oil sands are not in areas where there is oil or coal. You would probably have to pipeline it for 300 or 400 kilometres.

Senator Milne: Could you not just pipeline it right into the oil sands where they are using the drilling method?

Mr. Potter: There is research going on in that area. You may be familiar with what they call the gas-over-bitumen issue, that is, removing the natural gas and then being unable to mine the bitumen. There is a trade-off in the use of the pressure that the natural gas causes within the bitumen reservoir. There is research going on at the moment about taking the gas out and then using carbon dioxide to repressurize that gas. However, it is only research. We need a solution today. Having the ability to pipeline the CO2 down into the Drayton Valley area, for example, into the Pembina Cardium field, would be extremely valuable. In theory, the Pembina Cardium field could take 100 megatons of CO2 and generate an additional 11 per cent oil from the original oil in place.

Senator Milne: However, there is no easy or economic way of doing that.

Mr. Potter: There is no good way. Earlier I mentioned infrastructure. There has been a suggestion about building in a backbone through which you could pipeline CO2 just as we have with the TransCanada Pipeline for gas.

Why would we not have infrastructure around CO2 so that we could gather it and then put it back?

Senator Milne: Perhaps future pipelines could be twinned as they are being built.

Mr. Potter: There are many options.

Four projects just launched in Alberta were initially put forward under the CO2 royalty program in Alberta. There was a $15-million royalty incentive program that the federal government piggybacked on, so now it is a $30-million program which is supporting four or five companies to explore enhanced oil recovery. Some work is also being done through Sustainable Development Technology Canada looking at Suncor and its coalbed methane project.

You asked about hurdles regarding CO2 supply and cost. We have to figure out where we get it, and how we get it from where it is to where we want it.

I specifically mentioned monitoring, measurement and verification. I am of the opinion, not just as an Alberta Research Council employee but as a citizen of the world, that we must ensure that what we do today does not come back to bite us in a few years' time. I do not believe it will, but we are putting gas down there, and no matter what that gas is, we must be sure it is as risk-managed as possible. The work that we have done today suggests that it is, especially with regard to coal because of its chemical nature.

Senator Milne: You are the first person to tell us that there is this two-for-one chemical bonding with coal.

Mr. Potter: Yes. The liability for the governments and for us is huge, so we have to do our due diligence.

Most of the work done in EnCana and the work we are doing here in the province is monitoring, measurement, and verification of where the gas goes, that is, if you put it down, does it come back out?

You mentioned leakage into aquifers and water cross-contamination. We must make sure that we do not get contamination of the CO2. We have to ask ourselves: How does it stay there? Where does it migrate? What is a safe way of storing it? Can we ever be 100 per cent certain? Unfortunately, no. However, as much as is possible, we do the due diligence on the research perspective by working with our colleagues in the Alberta Geological Survey and at the two universities here and give as much advice to the governments as possible to develop action plans and strategies going forward.

The Chairman: Is there a special difficulty in piping CO2 from A to B?

Mr. Potter: Yes and no. It depends on who you talk to, senator.

The Chairman: I will try you.

Mr. Potter: It has to be dry. People will argue whether it is better to pump it as a liquid or as a gas. It depends on the pipeline specifications and the costs that you are willing to spend on a pipeline depends on the distance the pipeline must travel over. Compression costs are also a consideration. You may require slightly different compressors for carbon dioxide from those required for natural gas. Basic things like the seals in the valves of the pipeline must to be made with a different material because, in certain instances, the gas may permeate out. It is not a simple thing.

In the States there are a couple of thousand kilometres of pipeline that pump CO2 now into their enhanced oil recovery in the San Juan Basin in the Texas area. Most of their CO2 is from natural sources. They have underground CO2 reservoirs. They are pumping up from one reservoir and putting it down into another, so they do not have to deal with the capture issue.

I would suggest that the technology is there. It does not hurt to stand back and check that we have the technology, the application and the knowledge to do it properly.

Senator Milne: You mentioned that the need for different seals and valves and, perhaps, pressurized pumping equipment. Can you not just convert a pipeline from a depleted oil well into a carbon dioxide pipeline which would be routed back to that oil well?

Mr. Potter: You would have to know how the original pipeline was designed and what materials were used. You may be able to do that, but I would not take it for granted.

Mr. Murray: It has been done. Perhaps I could expand on your question. Dr. Potter answered it well, but I think part of the issue is: Who is going to do it? I do not think there are any technical hurdles to building these pipelines. The hurdles are business and economic hurdles. No one will build it until there is enough use for it or until there can be an economic, financial return, and that is, perhaps, where an organization like the Energy Innovation Network and the federal and provincial governments need to provide the leadership in bringing it all together so that someone will take the risk of partly building the backbone. It could be, perhaps, initially financed by the governments.

No one is going to build it today, because there is not enough demand for it. If they built it, it would be so small it would have no long-term practical value.

It is not the technical challenges that are holding it back at this point. It is the fact that we have not proven what the recovery will be if we use it for coalbed methane. We do have lots of oil where it would improve recovery and there are a number of companies that are operating, but are they all ready to take the risk?

Bringing that together in the collective of EnergyINet will bring us a long ways towards moving ahead with a carbon dioxide pipeline backbone in Alberta.

Senator Milne: I would like to move on to the topic of water because that is the main focus of our study, particularly in Western Canada. Has anyone done any projects to ascertain if there is a connection between enhanced oil recovery and aquifer depletion? Is climate change having an effect on Alberta's freshwater sources? I know the answer to that question but, for the record, could you respond?

As well, can carbon dioxide be used as a substitute for water in certain enhanced oil or gas recovery operations?

If you cannot answer all of those questions now, we would be delighted to receive your response in writing.

Mr. Potter: I have worked at the Alberta Research Council for nearly five years. I am a marine engineer by training and I was a naval officer in England, but my work is on power generation in general.

When I came to the council, my job was manager of the climate change technologies group. As I have dealt with climate change over the last five years, I have come to the conclusion that climate change is an issue, but I believe water is probably the dominant issue. From a local perspective, it is more important than climate change. I do not, however, want to get into the Kyoto rationale.

Water impacts every part of our lives, day in and day out. Therefore, protecting water resources is extremely important.

You asked about aquifer contamination studies. I am not personally aware of any such studies. We do not do that at the moment. We do, however, do some groundwater research. A lot of that work is done within the Alberta Geological Survey, but I am not personally aware of any studies that would link water issues to contamination, but that does not mean that they are not there.

You mentioned a link between climate change and water. I will let the scientists deal with that.

I have been in groups such as this where I have heard somebody say that it is a major issue and somebody else say that it is not a major issue. Both arguments make sense to me. I think I am reasonably well educated, and I am not sure. That is a comment by a typical scientist. I take my hat off and say, I do not know.

However, what can we do to take a risk-managed approach? How do we deal with it? How can we make sure that it is not an issue? If it is not an issue, fine. We had learned some lessons and we have spent some money, so we have dealt with it taking a risk-management approach.

With regard to water and the current injection activities, there is the potential to use carbon dioxide in certain instances to replace water. Most of the reservoirs that have been utilized today have had their primary recovery. In some cases they have then had water injection and maybe even a secondary water injection, and then they will have CO2. I think of Weyburn in that context. I believe that had one or two water injections.

All these reservoirs are different. You may use a combination of CO2 and water in sequence and sort of batch it to get the maximum effect. The work that is being done does suggest that it would reduce usage — not just CO2 but other gases as well. Nitrogen, for example, can be used, and it is being used now.

Active work is going on. I mentioned our in-house oil and gas recovery program where we are looking at other techniques, using better lift systems to reduce the amount of water used, using different gases, using better reservoir- management techniques and that sort of thing. We are actively looking at it.

Senator Milne: You mentioned methane hydrates, and I know there are lots of those across the Arctic as well as off the coast of B.C. I did not realize there were some in Alberta.

Mr. Potter: I am not aware that there are any. My connection with methane hydrates is such that, about three years ago, I led a Western Canada and federal initiative to look at hydrocarbon research and development. It was a road- mapping exercise with 10 government departments. I touched on methane hydrates because they are important to our future, just as coalbed methane was deemed important 20 years ago.

We know there are hydrates there, but how do we get them out safely? The Malik field that the Canadian Geological Survey is investigating with Natural Resources Canada is a good example of how we get it out.

Senator Milne: They are a long way down.

Mr. Potter: Is it the same techniques? Is it the same methods of actually capturing it?

It is the same off the coast of B.C. We have seen trawlers drag up fizzing bubbles of whatever. There is a huge opportunity there. There is, reportedly, more methane under the oceans than all the energy we have used to date, but the question is how do we get it out?

The Chairman: You can get it out, but it just goes away.

Senator Milne: We have to get it out and capture it.

Mr. Potter: I wish there were some in Alberta. It is one of the few resources we do not have here.

The Chairman: We must not be selfish.

Mr. Potter: That is true.

Senator Angus: I would revert to Mr. Murray's introductory comments. You indicated that yours is Canada's foremost research organization, yet, its focus is largely or entirely in Alberta, is that correct, as the name would suggest?

Mr. Murray: We are Canada's largest provincially owned research organization. We are one of the foremost research organizations. Far be it for me to say we are the foremost.

Senator Angus: In any event, sir, I noted a couple of things. You have just clarified one. It is provincially owned. It is owned by the Alberta government.

Mr. Murray: We do 60 per cent of the research in Canada by provincially owned research organizations.

Senator Angus: You have told us that it has an annual budget today of $85 million. Can I take it that it is funded the Heritage Fund?

Mr. Murray: No. There is some direct funding by the Alberta government, but the majority of the funds are contracts related to industry and/or contracts we have with different companies.

Senator Angus: You do get mandates from companies in the private sector.

Mr. Murray: Yes.

Senator Angus: I was amazed at the size of your organization. You have 550 employees and 100,000 square feet of offices. Does that space accommodate labs, wind tunnels and the like?

Mr. Murray: We do not have wind tunnels, but we have some laboratory and dense scale facilities. For example, in the energy area, we research heavy oil sands. We also do coal research.

Senator Angus: Do you set up models and replicate certain conditions?

Mr. Murray: Yes. We also do that in the agriculture portioned area.

Senator Angus: That is very interesting. As you know, this is the Energy, the Environment and Natural Resource Committee of the Senate, and you have indicated that most of your thrust is in the energy and environment area. In that regard could you crystallize one or two or more issues that you would like us to take back to the government? Are there any other things we should be considering?

In the course of our brief visit we have found that there is a lot of overlapping. There are even conflicting jurisdictional questions, over-regulation, under-regulation, situations which, on the face of it, seem to be easily resolved, but, in fact, they are not. They are major barriers to the efficient and speedy realization of our great potential in the energy field.

Mr. Murray: If I could be so bold as to mention the one thing that we stressed in our opening statements as being the most important thing we believe you can do, and that is encourage the federal government to fully participate in the Energy Innovation Network with the Western provinces. It is only one part of the energy and the environment picture but it is extremely important both to the country of Canada and the Western provinces in Canada.

The Chairman: Has INet applied to the federal government for funding? If so, to whom was the application made and what was the response?

Mr. Murray: I will answer that in a circuitous way. The two governments, as governments do, work back and forth: You put your money up and I will put mine up, but I am not putting mine up until you put yours up; and: We want to see what your programs are and what our programs are.

There has been good communication between the two, but until both governments start showing joint leadership with industry, industry will not come to the table. Although I am not part of industry, I am part of a government organization, and I believe that industry will come to the table as governments get their act together. Showing that leadership and working together will push industry to the table, and that will do more for the environment and more for the energy industry in Western Canada and allow them to be sustainable environmentally and economically in the long term.

The Chairman: How much do you have in mind?

Mr. Murray: We believe a mature research program going from applied research right through to commercialization would be mature with an additional $150 million a year. That came from the study that Dr. Potter mentioned we did a couple of years ago. We believe that, in that order, we would make significant inroads into some of the issues like carbon dioxide pipelines and how we resolve some of the issues around enhanced coalbed methane. We can produce lots of carbon dioxide through mechanisms like gasification, pure streams, but if we have no way of utilizing it, it will not do us any good. Those are some of the issues.

Mr. Potter: While I fully endorse our comments in general about more federal support, I would emphasize that through the Western Economic Partnership Agreement that Alberta has with the federal government, Western Diversification, the EnergyINet programs, the Carbon Management Program, and the alternative renewable energy program, are jointly funded in the order of approximately $8 million over the next three years. Federal funding is coming through WEPA, not through Natural Resources Canada.

Senator Angus: It is important that we know that. This is another example of how the situation is not in proper focus.

Mr. Potter: If I have a project or a program, I can be confused about who I should go to. I am fairly familiar with all the federal funding mechanisms, all the eligibility requirements and all the criteria, although I need an encyclopedia to wade through them sometimes. A one-stop shop would be very useful, sir. It is important. That is one of my key bugbears.

I believe the EnergyINet will be launched on the March 16. There will a joint launch in Calgary and in Ottawa, and I believe there will be representation on the unincorporated board from the deputy minister level of the federal government, industry, and provincial governments.

On the subject of provincial governments, I would mention that Nova Scotia has been represented at many of the discussions as well as B.C., Saskatchewan and other provinces. It is not just a matter of the Alberta provincial government and the federal government working together. The interest stretches across Canada. BC has hydrogen issues it wants to deal with. Saskatchewan has issues similar to those faced by Alberta. Nova Scotia has coal-type issues. Ontario is waking up. They want to know how to deal with coal-fired power stations.

Senator Angus: In terms of prioritizing climate change or freshwater issues, it is obvious that water issues trump the other every time. This is not to belittle the current effect of the climate change issue. In your opening remarks, Mr. Murray, I believe you said that climate change was the number-one challenge.

Mr. Murray: It is one of the main challenges we face, but I believe I said that, along with that challenge we see significant opportunity.

Senator Angus: Yes, is that because it forces us to address other issues properly?

Mr. Murray: It forces us to address issues that perhaps we should be addressing in any event. We should be improving recovery but doing it in an environmentally sustainable way. We must better integrate what we are doing today, and industry has trouble doing that, because industry plays different parts. That is where the leadership of the federal government, the Alberta government, or Western Canada governments, and organizations like ours and the universities can actually help.

Senator Angus: I want to ask one question about the Mackenzie Valley pipeline. It is a big political football, it seems to us. We did hear from industry folks and others yesterday on this. I have asked our chairman privately to brief me on the subject. I am concerned about the delays in going ahead with the Mackenzie Valley pipeline for natural gas from the North. Do you have any constructive comments to make on that situation?

Mr. Murray: I do not think that I can add anything. I have read the arguments.

Senator Angus: Has the research all been done?

Mr. Murray: Research is still going on regarding the production and delivery of gas in the North. Our organization is working with some of the companies doing some of that research.

I do not think we can comment on whether the pipeline will go or even when it will go, because it will be driven by factors far beyond our control.

Senator Angus: Do you think it should go?

Mr. Murray: Yes, absolutely, and there is no technical reason why it cannot go.

The Chairman: They are all political reasons.

Mr. Murray: Yes, or other reasons. The reasons could be economic or political.

The Chairman: Regrettably, we are out of time. We could go on, as I am sure you have divined, for a very long time. Hopefully you will permit us to write you with some questions that may occur to us later, and that you will, when you can, reply to the committee through our clerk.

It remains only for me to thank you very much for sharing your day with us. You have given us a lot of valuable information, grist for our mill, as it were, and we are very grateful.

Senators, we are pleased now to be joined by guests from Alberta Environment, Mr. Robert Harrison, Mr. David Trew, Mr. Keith Leggat and Ms. Kate Rich.

We are anxious to hear what you have to say. We hope that you will do that in the most concise but complete way possible so as to allow us time for a dialogue.

Mr. Keith Leggat, Director of Environmental Policy Branch, Alberta Environment: We are pleased to be here today to talk to you about water and Alberta's water strategy.

I would like to introduce the people who are here with me. Mr. Robert Harrison was a leader in the preparation and development of Alberta's water strategy, Water for Life. He has a great deal of experience in the water business in Alberta. Mr. David Trew is the head of our water section. He has also had a long history with water issues and is very knowledgeable about water in Alberta. He has been involved, most recently, with issues around oil field injection and coalbed methane. Ms. Kate Rich is involved in coordinating the implementation of the water strategy, and she is a groundwater contaminant specialist, or she was before she took on coordinating the implementation of the water strategy.

I will be relying on them when you have some questions. The most appropriate person will respond.

I believe you have the material that was handed out to you today. I will quickly go through a couple of the general points regarding the Government of Alberta's overall approach to the environment.

The first point I would make is that we are making a change in our approach to the environment. We are taking a more strategic approach, a more systems approach.

The responsibilities, roles and responsibilities for water and the environment are spread among several departments, several levels of department. Industry and Community Development have roles with respect to environment and water, and our new approach recognizes that everybody has a role to play in water management and in environmental management.

I would emphasize, however, that the Government of Alberta retains its accountability for overall performance and achieving outcomes that are important to Albertans with respect to the environment.

The second point I would make is the Water for Life strategy is one of the ways that we want to show Albertans how we are making a move to a more coordinated policy, a greater focus on outcomes. By ``outcomes,'' I mean the three outcomes that are identified in the water strategy: safe drinking water, secure supplies of water for the economy, and protecting the aquatic ecosystem. We want to use the water strategy to demonstrate how we are making this shift to a more strategic approach.

The third point I would make is that 2004-05 was the first full year in which we were implementing the water strategy. I would emphasize that a strategy is not worth much if it is not implemented. If it sits on our shelves and we do not use it, it will not make a difference in the outcomes with respect to water. We are now very focused on the implementation of the strategy and following up on the commitments that were made in it.

One of the ways we are doing that is through the Alberta water council. Robert is very involved with that water council, specifically, in developing an overall accountability framework for the water council, basin councils, and water stewardship groups that will all partner in achieving the outcomes in the water strategy.

You heard about CASA today. CASA is an excellent model of a partnership. Communities, NGOs, industry and government come to the table to deal with issues around air and develop policy recommendations for government and so on. It has been a most successful experiment.

We are trying to build a water council that will be similar to CASA. It will be different, because water is different, but we are using the same kind of partnership model. The water council will be important in the implementation of the water strategy.

The fourth point I would make is that, during the development of the water strategy, Albertans identified a couple of issues that were important to them at the time such as the use of water or freshwater for, particularly, oil field injection. We have made a great effort — largely led by David Trew — to develop recommendations in a multi- stakeholder group to deal with that issue and the expectations of both Albertans and industry through that process. We will continue to work through the water council to achieve the targets that have been identified for underground injection.

The fifth point I would make is that, within the water strategy, there is a commitment to a 30 per cent improvement in efficiency in productivity by 2015. I believe you heard from the City of Calgary yesterday about some of their interests around water and supplying water to the City of Calgary. They are taking action to meet their target of servicing 30 per cent more people with their current allocation of water.

The Chairman: In fact, we did not talk to the City of Calgary. It is our intention, and our message will be: Install some meters.

Mr. Leggat: If I may digress for a moment, I recently read a report that indicated there is no evidence in the world that meter-reading causes an increase in water use.

Senator Milne: We are looking for a decrease.

Mr. Leggat: Exactly. There is no evidence that it increases water use, so it must lead to the opposite, which is a decrease in water use.

I thought I seen representatives of the City of Calgary on your agenda. Perhaps talking to those people is one of your areas of interest.

Senator Angus: Professors from Lethbridge told us the same thing.

Mr. Leggat: The sixth point I would talk about is agricultural uses. In Southern Alberta we have a well-developed, modern irrigation-based industry that uses world-class technology. That has played a big part in the economic and social development of Southern Alberta.

Agricultural uses of water and effects of water are one area that we must focus on to do a better job in achieving the outcomes stated in the water strategy.

A final point which I would make relates to the purpose of this Senate committee, and that is where the federal government and the Government of Alberta can partner in dealing with water issues. A number of partnerships have been very successful. I am referring to partnerships which resulted in the Northern River Basins Study, the Northern Rivers Ecosystem Initiative, and the formation of the Canadian Council of Ministers of the Environment. The two studies I mentioned are excellent examples of all levels of government in provincial and territorial jurisdictions coming together to develop recommendations to address concerns or future issues concerning water. They are excellent examples of where the federal and provincial government have partnered with communities at all levels.

Alberta believes that the Canadian Council of Ministers of the Environment, CCME, is a good vehicle to develop partnerships on all matters related to the environment. We would like to see continued use of that mechanism to deal with water issues. The council is are currently developing Canada-wide approaches to issues such as full cost accounting for water.

One way that the federal government can help Alberta and help Albertans with respect to water is by partnering regarding information knowledge, research. That has been a real strength. In many instances, federal government involvement in those activities has helped Alberta and Albertans deals with water issues, and we would like to see that continue. If there are opportunities to increase or expand that role of the federal government related to water, we would encourage that.

That is my final point in my overview of water and water strategy. If senators have questions, we would be more than happy to respond.

Senator Spivak: My first question, which is directed to Mr. Trew, is: How does the Water for Life strategy address the problems that have been seen in other jurisdictions around coalbed gas? We have heard that some coalbed seams are dry, and they will not be affected, but others are not. Could you be specific in telling us what your Water for Life strategy is in that regard?

Mr. David Trew, Water Section Manager, Environmental Policy Branch, Alberta Environment: We have just completed an extensive review and consultation phase with a multi-stakeholder group consisting of farm groups, industry, NGOs and so on. We did a thorough review of experiences elsewhere, particularly in the States. They have had a lot of issues regarding salt water disposal. We also closely examined the geological knowledge base in Alberta.

There are some differences between our experience with coal seams here and the experiences they have had south of the border. We have some dry coal seams, some that contain fresh water, and some that contain salt water. This is a reflection of the depth of the particular coal seam and where it is in Alberta. It is a highly variable situation.

We have taken those facts and produced a series of recommendations which are in the final process of being consolidated. They will go out for one more round of public review. The recommendations call for a strengthening of our own regulatory approach to the freshwater and salt water potentials, and specifically by that I mean salt water, whenever it is produced, is deep-well disposed in Alberta. It is never allowed to be disposed into surface water systems or on the ground.

Situations south of the border were different.

We have had a long-standing policy: Any salt water produced by oil or gas wells or that could be produced by coalbed methane wells will be immediately deep-well disposed.

If freshwater of any significant volume is produced, then we recommend that it be utilized rather than disposed of or wasted in any way. How we would gauge its utilization would depend on where it is in Alberta. We have advocated a risk-based approach. In a dry area of Alberta where freshwater is being produced, we would require the companies to explore all avenues for the most beneficial use of that water.

We have looked at the facts and the practices and knowledge in Alberta. I should point out that CBM is in its infancy in Alberta. There are a lot things we do not know. To a certain extent, we are relying on industrial development to provide water data to us so that we can better gauge the current situation. We expect many seams to be dry.

That is where we have been for the last year. We have done a thorough review, recommended new policies and practices, and those are in the final process of being consolidated.

Senator Spivak: You say that you do not allow salt water to be put into surface water, but what about aquifers?

Mr. Trew: I am sorry. I glossed over the aquifer protection issue. That was one of the major recommendations of our water working group. When you are drilling, there is always potential to cross-contaminate aquifers, and that is a major concern for people living in rural Alberta and small communities. We would ensure that any salt water disposal is done in such a manner that fresh groundwater is never impacted. In fact, those are the conditions we apply today, so we are fairly consistent on that.

Senator Spivak: Are you saying that the approximately 3,000 current operations are already under strict regulations?

Mr. Trew: Yes. I believe that you are referring to the 3,000 or so wells that have been drilled for coalbed methane.

Senator Spivak: Yes. It may be around 2,400.

Mr. Trew: Yes, it is in that range, and it is expanding.

Let me clarify that any salt water that is produced is immediately deep-well disposed by law, and that law has been in existence for some time. It has to be disposed of in a manner that ensures fresh groundwater is not contaminated in the process.

Senator Spivak: Can they do that?

Mr. Trew: They can do that.

Senator Spivak: We have been told that eight wells per section will be allowed. Do you consider that that will have an impact on water? Do you agree with that?

Mr. Trew: That is a very contentious point.

Senator Spivak: I read that Ted Turner is allowing only two per section on his ranch.

Mr. Trew: The scale and intensity of CBM well production is an issue of concern. Our committee considered this and we made recommendations respecting the fact that, obviously, the more wells per unit area, the greater the potential risk to an aquifer. We also identified some knowledge gaps. I am not trying to imply that we have a completely adequate knowledge of how groundwater systems in Alberta work, because we do not.

Senator Spivak: You do not have the data.

Mr. Trew: We have data, but it is perhaps at a scale, location, and of duration that is not always useful for measuring finite impacts at the section level. We have a groundwater monitoring network that looks at broad scale trends in Alberta, but that will not necessarily tell you what is going on in your backyard, so to speak.

The question of intensity is a real concern that our committee identified, and we have recommended that we put a lot more thought into what kind of monitoring will be required at that level of development.

Senator Spivak: It may not be eight.

Ms. Rich, do you see any problems in implementing the whole coalbed methane scenario? It is one thing to have regulations and quite another to ensure that they are enforced. How will you do that? Will you hire more inspectors?

Ms. Kate Rich, Water for Life Implementation Coordinator, Environmental Policy Branch, Alberta Environment: The overall approach to implementation is to do it in partnership. That applies not just externally to the government but to other agencies. Obviously coalbed methane is not regulated by Alberta Environment alone; Energy and the EUB play a role. There has to be a sustainable resource environmental management framework of cross-ministry policies to attain our objectives.

Part of the Water for Life implementation means moving forward in knowledge and research, and that includes knowledge of our groundwater resources, trends, et cetera. It involves a commitment in that respect.

Senator Spivak: My next question is about allocation. We have heard conflicting view on whether water is over allocated in Alberta, particularly with regard to the oil sands. We have heard the claim that they are using only 2 per cent of the water allocated. Is water overallocated in Alberta? Do you see a retreat from how much you are allocating? Are increased fees an answer, especially respecting the oil sands? As I understand it, they pay nothing for the water, and neither do the companies that produce bottled water. They pay nothing and, in my view, that is a crime. I am referring to the situation in Ontario. They should be paying something.

It has been said that it takes three barrels of water to produce one barrel of oil. If you price those barrels of water properly, they would be more expensive than the barrel of oil.

Mr. Leggat: Perhaps Robert would respond to the general question of allocation, and then he can probably talk about the oil sands. Dave can expand on the oil sands issues.

Mr. Robert Harrison, Partnerships and Strategies Manager, Environmental Partnerships and Education Branch, Alberta Environment: Let us broaden the question to overall allocation, because there is also general allocation. In our consultations with Albertans, we identified places in our province where we have reached our limit of new available water for allocation. We are reaching a point in time where there is a limit of new water being able to be allocated. That is the picture across the province. However, allocations are tighter in the southern part of our province than in the northern part.

Senator Spivak: In the setup?

Mr. Harrison: Correct.

On your specific questions about the use of water in the oil sands I want to correct the relevance of 1 or 2 per cent figure. The general number of 1 to 2 per cent of allocations is for the oil field injection industry overall. Some are less than that. That is what they are utilizing of the total volume of water that is allocated in our province.

As to fees and the pricing of that allocation and that use, and whether that would create a better, more efficient, more productive use, one of the areas we are pushing forward with in the water strategy is more effective use of the water. We believe that we should be using water 30 per cent more effectively. We should either be using less of it, being more conservative in our use of it, or we should be getting more out of the use of that water.

During the 1980s, the early oil sands or heavy oil development in the Cold Lake-Beaver River area was using around eight or nine barrels of water per barrel of oil produced. The industry has moved to a point now where you are referencing numbers around the three to one. As an overall industry, it is moving in the right direction, but our water strategy would encourage it to move even farther along that line.

Will pricing encourage more efficient use of water? In this regard, I often use the cow/cattle industry in prairie Alberta as an illustration. One of the biggest users of water in Alberta is cattle, and I do not know how we can engineer or design a cow that will use water more efficiently.

Senator Spivak: Do not allow them to drink at the riverbanks.

Mr. Harrison: That is another issue. We are getting better at that.

If we price water, we will add to the bottom line of that operation, but it has no way of becoming more efficient. A cow will drink X amount of water.

You cannot take a broad-brush approach to water allocation.

Alberta, compared to the rest of the provinces, has a high level of allocation. A lot of water is under licence. We have some 56,000 licences.

The water strategy recommends that we should allow what are called water allocation transfers. It is a pricing mechanism on water. We hope that tool will allow water to be more mobile in the industries, that it will move between industries, and that they will use it more efficiently. Yes, some schemes utilize economic instruments. The debate is whether direct pricing or a royalty on water is the answer.

Senator Milne: You told us that there are 56,000 licences in Alberta, licences under which people are entitled to use so much water.

Mr. Harrison: There are licences as well as permits.

Senator Milne: I understand that in the Oldman River Basin 70 per cent of the mean annual flow is licensed. In Waterton — the Belly River and St. Mary's Basin — it is between 75 and 118 per cent of the mean annual flow. It is pretty difficult to come up with 118 per cent of the flow. I understand that 45 per cent of that goes to agriculture and 5 per cent to the oil and gas industry in total across the province. Where does the remaining percentage go? Is it to municipalities? Where does the other 50 per cent go?

Mr. Harrison: In our province the largest user of water is the overall agriculture industry in the south. The second largest category is municipal use. Then the pie, so to speak, breaks down into smaller and smaller pieces for use by the other industries. I am sure you have access to those pie charts which show the break down of the licences.

Senator Milne: Coming from Ontario, the licensing of water is a new concept to me, so you have to educate me. I am learning as I go.

Mr. Harrison: An important point relates to the municipal use of water. That water is returned to the rivers. Although there are licences covering a large volume of use for, say, the city of Calgary, that city, net, returns more water than it withdraws, because so much of the area of Calgary is now paved that more water runs off than formerly was the case. If you were thinking about the impact that the city of Calgary would have on, say, the Bow River, from a quantity standpoint the city of Calgary has a very low impact on the that river. However, it does have a quality impact on it.

A consumptive use, such as irrigation, which removes the water, is then used to grow a crop, but it is not returned to the system.

Senator Milne: Some must be lost to evaporation.

Mr. Harrison: Yes, or it can be lost to evapotranspiration. That water is not returned to the system. In our calculations we consider the consumptive volumes of water.

Senator Milne: That 45 per cent is a major use of your water.

Mr. Harrison: Yes.

Senator Spivak: I just have one more question to do with the quality of water and safe drinking water.

Your bottom line is that you are not overallocating water Alberta. You are not depleting the aquifers faster than they can be replenished. You are taking into account the fact that you may not have any glaciers in 20 years and the impact of climate change. You are saying that is the picture, or is it the opposite?

Mr. Harrison: You have recited a very broad list. I will start with groundwater. We have had some long-standing policies covering groundwater.

Senator Spivak: That is essential.

Mr. Harrison: I agree. In Alberta, under the law, we do not allow what is called groundwater mining, which means that you deplete an aquifer to a greater extent than it is able to recharge. That is a long-standing policy, law, in Alberta. We should not get into the situation they are in in New Mexico.

The Chairman: Is it a policy or a law?

Mr. Harrison: Both. It is policy and it is law. Our licensing people do evaluations respecting licences for groundwater.

Senator Angus: I take it that does not include artesian wells for domestic use at homes.

Mr. Harrison: For domestic water use, a licence is not required in the province of Alberta.

We get information on every farmer who drills a well, but we do not issue a licence, and the farmer does not have to provide us with information on the use. It is a kind of honour system in the rural world.

Senator Angus: Are allowed to do that?

Mr. Harrison: Yes, they are.

On your question of overallocation, let's talk about our surface waters. Currently, a large study is being done for the whole South Saskatchewan system. This involves a partnership with the four watershed councils representing the four systems in that area. This study will try to determine how much water we should be leaving in the river system so we have a healthy ecosystem. Therefore, it will determine how much water can be safely be allocated.

As of 2001, the Belly River and the St. Mary's have been closed to new allocations.

Senator Milne: It is hard to give new allocations when you are at 118 per cent.

Mr. Harrison: Correct.

Senator Angus: I would commend you for what appears to be a well-thought out strategy for your water management here in Alberta. I have not seen anything like this anywhere else. It is terrific. I think you are at the leading edge.

As to your comment, Mr. Leggat, about the federal government could best help you folks with respect to water and your strategy for sustainability, I understood you to say that help should be in the area of information sharing and partnering, research, and findings. At the moment, it is not going well in that area?

Mr. Leggat: It goes very well. I listed some examples where we have had excellent partnerships. What we are saying is that we know, through doing the water strategy, that we need more information and knowledge about groundwater and surface water. We have excellent relationships. We need more and continued excellent relationships. That is what I was trying to say.

As part of the water strategy, we have been developing and will be spending more time this year developing an overall coordinated and integrated research strategy to support the water strategy. We know we need a better job done, and we need more and better information, and this is a role that the federal government can really help us with.

Mr. Trew: Over many years now, we have had some positive and pretty productive relationships with federal agencies. For instance, we rely on the research capacity of the institutes with Environment Canada and DFO to help us sort out some problems. In the past, we have relied on that support in the whole area of research and knowledge.

The Chairman: Is it enough?

Mr. Trew: On the quality side, there are many types of water issues. We typically agree that there are about 15 major issues in Canada on which we would all like more information. We have a lot of knowledge. Over the past 30 or 40 years, lots has been done in Canada. We are not starting from square one. We have good information on beautification; we have good information on acidification; and we have new information on pesticides and pharmaceuticals. There are various categories of issues.

These are complex questions, and you need the capacity to sort out knowledge and understanding so we can make the right management decisions here in the province.

We have had good relationships. Keith alluded to some of the northern rivers work that was initiated here with the rapid expansion of pulp mills in the late 1980s and early 1990s. Alberta, the Northwest Territories, and Canada collaborated on the Northern River Basins Study, the purpose of which was to try to have a much-improved understanding of how these river systems function and of man's impact to that date, and then to develop some predictive tools for helping us manage pulp mill effluence.

That was followed by the Northern Rivers Ecosystem Initiative. There were several ecosystem initiatives across Canada led by Environment Canada. The one for the northern rivers was to supplement some of the knowledge gaps in the policy issues that were identified during NRBS. The relationships have been productive.

Senator Angus: Yesterday we had a visit from a researcher at the University in Lethbridge named Fitzpatrick. I do not want to put words into his mouth, but the impression I got from his quite interesting comments was that the people in Alberta, since it was Alberta that he was talking about — I think he really meant more general and he meant Canadians — do not understand the water problem and that there is some emphasis on the wrong ``syllable,'' if you will. That is what I took from his evidence. When I saw your clear publication, Water for Life and as I listened to you, I was surprised, because you do seem to be focused, and you seem to be putting the resources in the right places. Is the person I mentioned known as a quack? He was quite outspoken.

Mr. Trew: No. My background is in water quality, and my view is that on certain issues and for certain places we have very good information. On other issues and other places the information is less than what it could be. To generalize and say that we do not know anything about anything is inaccurate. Canada has a tremendous history of freshwater research under the old Fisheries Research Board of Canada and under the various federal agencies which had some well-known scientists with international reputations. I am sure you are familiar with this.

Senator Angus: Are you referring to people like, Schindler, for example?

Mr. Trew: Yes.

Senator Angus: We have heard from Dr. Schindler.

Mr. Trew: There is a legacy of great freshwater research in Canada. There is substantial knowledge, experience and expertise in the country. However, in certain issues we are scratching the surface, so I think you have to be more specific.

Senator Angus: With regard to the state of our collective knowledge, from what this committee has heard already in the course of our study, it appears that there is a good awareness that this is serious business. We have had the luxury of unlimited freshwater for a long time, and we have more or less taken it for granted in many ways. In hindsight, we have acted fast and loose with this great resource, but it is something we are zeroing in on now.

What seems to be controversial is the effect of climate change on the water issue. There are those who think that we are chasing up the wrong street. As a layperson who has heard the scientific and other advice, it appears to me that these issues are closely related, especially in this part of the continent. Am I correct? Would you comment further on the effects of climate change?

Mr. Harrison: Some people do not want to believe that climate change will have an impact on water. In our water discussions, both within the spectrum of the water strategy and within the study that is being done on the South Saskatchewan, when you have to plan long-term water management, you must take into account the possibility that we will have a different world climate than we have had over the past 50 or 100 years.

Two pieces of information have come to light within the last few years. A large amount of research was done by David Sauchyn of the University of Saskatchewan in Saskatoon. He did tree ring analyses that indicated that, in the 1900s, in southern Alberta, southern Saskatchewan we experienced the wettest of the last 500 to 1,000 years. We have just lived through a one-in-ten-year wet time, a 10 per cent high. That was one caution.

The second piece of information has come out of all of the research done by Environment Canada into climate change. The academic world will agree that there will be some change, but the question is: What might that change be? Will it be less precipitation? Will it be more rain and less snow? When you are managing water to the degree that we are, particularly in southern Alberta, whether it comes as rain or snow directly affects whether we need larger reservoirs or smaller reservoirs, and those kinds of things.

David Sauchyn's research on whether we will have more rain or less snow, or less precipitation overall, or warmer temperatures causing evapotranspiration, weather causing water transpiration, each of these alternatives is being built into our management models so that we can test what our future might be. Do we have the capacity within the systems that currently exist in southern Alberta to be able to manage for those potential futures?

We take seriously the potential of having a climate change, and we are testing it against all of our reservoir operations to assess what kinds of challenges it will present in the future.

Senator Angus: Is glacier recession a relevant consideration?

Mr. Harrison: Absolutely. With respect to the Bow River, we have to run a model to find out what will happen if we do not have the Bow Glacier. If the trend continues, we may not have that Bow Glacier in 30 to 50 years.

Senator Angus: We may have no river.

Mr. Harrison: Currently the amount of water provided by glaciers is only measured in very dry years during the few summer months. The flow of the Bow River does not come from that glacier; it comes from an annual snowpack and an annual rainfall. We have to be very careful. Are we doing the modelling to find out what that would do to us in a very dry year in July and August? Yes, we are taking it very seriously.

You referred to 45 per cent of that water being consumed. It is being consumed by people whose livelihoods rely on their farms, so they need that water.

Senator Milne: Ice melt is important at the time of year that they need it.

Mr. Harrison: Yes.

Senator Angus: Time and time again we hear what a huge percentage of the water usage in this area and in the west generally is for irrigation. That, of course, sustains livelihoods. This is the basis, pre-energy, of the economy of the west. I would not assume that it is a bad priority in terms of allocation, but I do not know. What would you say?

Mr. Harrison: I am from Lethbridge. Over the last month, I have been to a number of presentations, and the comment that I continually make is to the effect that Lethbridge, Cardston, Raymond and Magrath would not exist in the form that they exist today without irrigation. People think that irrigation is part of an important livelihood that is made in Southern Alberta. We do consider it to be a fairly high priority.

Senator Angus: We have heard from some of the ecologically sensitive groups, such as Ducks Unlimited that wetlands, through bad management or even negligence, are not being properly managed in terms of water for the conservation of the natural habitat. Have you anything to say in that regard that we might mention in our report? There is a body of thought that these lands, for example, are in the hands of private individuals who do not have the resources to do what is necessary. Not a large amount of money or not a large amount of labour, necessarily, is required, but action is needed. It has been suggested that there be tax relief or capital gains tax relief if a person sells. Have you given any thought to those issues?

Mr. Harrison: I sit as Alberta Environment's representative on what is called the North American Waterfowl Management Plan Program, which is a joint partnership between the federal government, through Environment Canada, the Canadian Wildlife Service, Ducks Unlimited, the Nature Conservancy, and then three departments within Alberta: the Agriculture department, our Sustainable Resources department, and Alberta Environment. Overall, its goal is to establish what is the best wetland picture that we should have within each of our watersheds across our provinces.

Over the last 20 years, we have a history of trying to restore wetlands that have been lost due to agricultural expansion or just human intervention. As part of the water strategy, the focus is now: Can we create a culture within each of the watersheds so that people understand the value that a wetland actually brings to their watershed, and can we start the prevention of the loss of these wetlands?

You commented on tax relief. A main support program, which is identified in our strategic planning for the NAWMP partnership is found in the Ag Policy Framework which provides incentives to individual farmers to do on- farm environmental planning. We have been successful in getting best-management practices to include wetland-type issues.

This is a work in progress. We hope to improve our landscape in terms of the wetlands, but both the water strategy and the work of the NAWMP partnership is moving towards that.

If there were, right across our country, a good wetland inventory, both what exists today and what has been lost, that would be a benefit.

The Chairman: How do you encourage farmers to do what you want them to do?

Mr. Harrison: The Ag Policy Framework is a federal-provincial partnership program. There are environmental farm plans. If a farmer does undertake an environmental farm plan then cost-shared dollars are made available to the farmer to implement some of the best-management practices. I would refer to the comment about keeping cattle out of riparian areas, which include wetlands. If the farmer undertakes this plan, then he may apply for funds to help implement those things on the ground. It is an incentive.

The Chairman: It is a carrot, not a stick.

Mr. Harrison: It is a carrot, not a stick. That is also the approach for the implementation of the water strategy.

Senator Milne: You spoke earlier on of scratching the surface on some water issues. What issues are those, and what sort of research is being conducted on those issues particularly? Is the government encouraging research? Is the government funding research? I read this to say that the Government of Alberta is the systems manager setting the goals in Alberta Environment and that you are the coordinator. That does not convince me that the government is using a carrot.

Mr. Leggat: I will make a couple of comments and then turn it back to Dave, because I believe it was David who used the phrase ``scratching the surface.''

With respect to the overall approach, being a systems manager, the point we are trying to make is that, even within the provincial government different departments, such as Innovation and Science, have the mandate to finance, coordinate and partner in research. Alberta Environment does not have the specific mandate to do research. That is in a different department.

When I say we are trying to coordinate a system, it could be called other things, like horizontal management, interdepartmental coordination, cooperation, whatever. Those are some of the examples that we are trying to use.

Although we do not have a specific research mandate, we have a major interest, reflected in the water strategy, in ensuring that we are doing the right things in research and knowledge. We are influencing universities, other levels of government and industry to invest in research because we do not have all the resources to carry out that research.

That is my response to your overall question about our role as coordinator.

Senator Milne: If I could just interrupt for a moment, it seems to me that departments in Ottawa are always being accused of operating within a silo, and here you have each department trying to feed into one particular silo. It seems to me that somewhere along the way there should be a more holistic approach to this so that, when you people see the need for basic research, you can go ahead and do it without having to feed in through some other department.

Mr. Leggat: I appreciate your metaphor of silos. We use that frequently ourselves.

We have to work this way across the silos. Governments will always create silos. If we created a water research silo, somebody else would be doing a climate change research or forestry research. We have institutes in Alberta to focus on forest research, agriculture research and energy research. We want them all to have important priorities around water to help us. There is a theme in the water strategy about working this way.

We want the Minister of Environment to be accountable for the outcomes around water. To do that, he needs excellent information and knowledge on water. Whether we get that through the federal government, through universities or industry, we must ensure that it gets into the system so that, at the end of the day, we can tell whether or not we achieved those outcomes. That is a what we mean when we say we are making a shift to a systems approach.

Perhaps Dave would respond to your question about scratching the surface and some of the emerging issues.

Mr. Trew: In earlier comments I referenced the history of freshwater research in Canada. In dealing with certain issues we feel quite confident, but certain other issues are emerging issues. An example would be the pesticide story. It is not a new story to any of us, but as we gain more information, we get more insight into the ubiquitous nature of pesticide residues in our environment.

Alberta, similar to many other jurisdictions, has information that indicates that pesticides, herbicides and insecticides are showing up in surface water systems, generally reflecting the population centres and generally reflecting agricultural intensity.

We are getting a body of information across Canada about pesticides in our environment, but we are not fully capable of understanding the risks associated with all of these different pesticides and what risks may be present when they occur together. For example, 2,4-D, which is an old herbicide that has domestic and agricultural applications, shows up in many water systems in Canada. We do not understand what is the effect of 2,4-D in combination with another series of herbicides or a series of pesticides.

In certain issues we understand cause and effect very well. For issues like pesticides and pharmaceuticals, which is another topic you may have heard something about, we are just scratching the surface. We have just completed our first intensive survey on pharmaceuticals in Alberta. We encourage more research and look to all partners for that.

On the cross-ministry approach to research that we are trying to foster regarding water research, we are going to develop a water research plan for the province, and we will assess all issues, active researchers and programs and try to introduce a degree of coordination and leadership. Many institutes and universities pursue individual water-based research problems, and we would like to provide a degree of coordination and financial support.

Senator Milne: That is encouraging, but how far along in the process are you? Mr. Harrison spoke of the South Saskatchewan River, and it seems to me this is an area that is crucial. You cannot wait too much longer.

Mr. Harrison: That has been realized by many of the researchers across the country. People from many Ontario universities have said that the hotbed for water research issues is Southern Alberta. Many researchers have been submitting applications for grants to do water research in southern Alberta. As part of the water strategy implementation we think that is wonderful. We do not want to stop people from having their own ideas of what might be, but we want a coordinating or leadership effort to ensure that three or four are all trying to tackle the same issue and another issue is not being researched.

In the last five years there has been a significant amount of research into the value of water, ecosystems, climate change, use and the economic use of water. Dennis Fitzpatrick is one of the leaders in that the institute that he is putting together in southern Alberta will try to address some of those research issues.

In our overall coordinating leadership role from the provincial standpoint we will try to bring that all together so that we have a good plan of attack regarding research needs.

Senator Milne: What sort of a budget does the Government of Alberta have for research on this sort of research? What was it last year or the year before, and what will it be this coming year?

Mr. Leggat: I do not have a specific number.

Senator Milne: If those numbers are available could you get them to us so that we can determine whether there is an upward or a downward trend?

Mr. Leggat: We will provide the committee clerk with specific numbers on the amount of money we are spending on water research in Alberta.

The Chairman: You mentioned as your fifth point, Mr. Leggat, that you have issued a challenge to Alberta to use 30 per cent less water. We are familiar with the idea of challenges to people to be more efficient. We issued a report called ``The One-Tonne Challenge: Let's Get On With It!'' The one-tonne challenge specifically says to folks: Here is what you as individuals need to do. You need to change your lifestyle a little bit. I think that is what you are talking about here. There are things that we should do such as not leaving the tap running when brushing your teeth, for example, as a microcosmic example?

Senator Angus: Or leaving your car idling.

The Chairman: That has nothing to do with water.

We found, and we expressed it quite clearly in our unanimous report, that, having looked at this question in other jurisdictions and having gotten advice, all the moral suasion on earth and all of the logic on earth and all of the cajoling on earth will not bring these things about. What will bring them about is somebody taking the bit in their teeth — one might call it leadership or the risk — and setting out what needs to be done, and imposing those rules one way or another, either by incentives, such as you have talked about, or disincentives, or by simply internalizing the true costs of bringing certain things about. As we all know, people in this part of the world, in fact people across Canada, do not understand the true internalized cost of water and other resources.

Have you considered that fact? How do you think that you will get Albertans in particular to meet the 30 per cent challenge?

Mr. Leggat: That is a good question. I will make a general comment and then ask Robert for a more specific response.

Our overall water strategy and our overall approach to the environment are based on the fact that we need more from industry, individual Albertans and communities. We cannot achieve the environmental outcomes that Albertans desire solely through the actions of government, whether the passage of laws, rules, traditional approaches or new approaches. We expect and we need more.

The roles of government have been changing over time. They continue to change, and the roles of industry and communities also have to change.

There is a major thrust in the water strategy towards education and extension. In Alberta we try to use a variety of approaches, and so we would like to have more tools in our tool box. You mentioned incentives. We have not always had as many economic instruments or incentive-type tools in our tool box. Historically, we have relied on the traditional tools.

We are putting a great effort into the education of Albertans. We are putting a great effort into the multi- stakeholder processes that David talked about with industry and communities around coalbed methane and oil field injection. We need industry to do more.

That is my general comment. I think Robert is in the best position to elaborate on some of the specifics regarding conservation and some of the processes or tools or techniques we will use to try to achieve that 30 per cent.

The Chairman: Am I correct is saying that this is 30 per cent from folks and that you are not talking about 30 per cent from businesses, or is it the ``whole fell swoop?''

Mr. Harrison: I will explain a little bit about the 30 per cent, because it is the ``whole fell swoop.''

Traditionally people would think of water conservation, as using a water conservation shower head where you are using less water. What we have said in the water strategy — and this was during discussions with the oil industry, the agriculture industry and municipalities — is that we want them to strive to use less water in any activity.

However, that is not where we will make our big gain. By way of illustration, I will talk about the irrigation industry. Two years ago we modified our legislation to give the irrigation districts the ability to manage water within their irrigation districts, so we gave them an allocation and asked them to use it as best as they possibly could. In each of the irrigation districts, over the past four to five years, additional acres of land have been brought online because, internally, they have gotten better at using water. They are not getting new allocations. They are getting better at using that water.

A major example of this kind of a use was related, I believe, to a McCain's potato plant. They wanted to locate near Taber. As we have said, it is difficult to get a new allocation. The irrigation district said that they would give out part of its water allocation to operate the potato plant, knowing that having a potato plant next to the people who grew potatoes would be good for the economy because the potatoes would be processed in Alberta.

The other side of this 30 per cent target is encouraging people to get more out of the use of the water that is allocated. We want additional barrels of oil produced from the use of a certain amount of water. We want more crops and crops that give us more economic value in Alberta. Will we have some gains on the conservation side? We certainly will, but what we are really hoping for here in Alberta is that of all the water that is taken out of our rivers will be used better.

The Chairman: Does that include an assessment of whether the crops that are being irrigated are the most efficient crops?

Mr. Harrison: Yes. Part of the water strategy was Alberta Agriculture, because they are a partner in this, was aimed at best-management practices.

Senator Milne: Does that involve, say, irrigating at night rather than during the heat of the day?

Mr. Harrison: Yes, it involves all of those kinds of things from an overall conservation standpoint. However, it is also a matter of encouraging farmers to move to crops that better utilize water or those crops that give us greater economic value in Alberta.

We are not currently using ``stick'' tools to do that. We are using education and encouragement to attain that 30 per cent.

The Chairman: We have heard that we can buy sugar at less cost than we can grow it. Might you convince some sugar beet farmers to grow a different crop?

Mr. Harrison: Those are the challenges of the landscape. You are hitting the nail on the head. If people have been involved in one kind of process all of their lives it is difficult to change the way they think. We are working to try to change the way they think. Some farmers do change. They change over to corn, or they may rotate the crop instead of always growing the same crop.

There is a very good report called ``Irrigation in the 21st Century,'' which can be found on the Alberta Irrigation Projects Association website, which gives a clear picture of the kind of changes that they have made both technologically and in relation to crop and water utilization.

The picture that used to be painted about flood irrigation and spraying water when it is 50-mile-an-hour winds no longer applies to the landscape in Southern Alberta.

The Chairman: There are places in the world that still do flood irrigation, though, are there not?

Senator Milne: Australia.

The Chairman: I believe that still happens in Montana.

You talked about an irrigation district trading parts of its allocation that it might not use. It would have the capacity to sell that to its neighbour. We are a little concerned about the commodification of water, that is, if you can buy it or if you can pay for it, it must be a commodity. Canadian conservation law has been careful never to commodify water. It is not a law to do with commerce but to do with the environment. As soon as we commodify it, it becomes subject to NAFTA, and we lose a lot of control, then, particularly with respect to boundary waters, which is a different subject that I will come to in a minute. Have you thought about the implications of that? Are you satisfied that we are not, for those purposes, commodifying water?

Mr. Harrison: Yes, I am fairly confident of that. I participated in all of the national discussions on what was called ``bulk water export'' and this whole issue of the commodification of water and whether it invokes the NAFTA.

Will we ever know until this is put into a court of law and then somebody makes a final decision? However, all of our advice indicates that, as long as we are dealing with it as a natural resource management issue, and we are working with the allocation within the capacities of a watershed and those kinds of environmental issues, then we do not trigger that particular clause in the NAFTA.

Our Water Act, which came into force in 1999, specifically talks about managing the water within watersheds, and it provides that it is against the law for interbasin transfer, and it is against the law to transfer water outside of the country. However, that act that gives us the ability to those who have allocations to trade those allocations.

Yes, some people are concerned that that moves us another step towards commodification. However, our argument has been that that is one of the tools you must have in place in order to manage that resource. If you have 100 units of water available for allocation, and you want to allocate that water to a new and innovative industry that wants to come into your area, you must have a tool in your tool kit to allow you to allocate that water to that new industry. The only tool that is available is to allow allocations to be traded. The marketplace is the best place to determine the best place for that water.

At this point in time, from all the advice that we have received and the way we are proceeding, we understand that we do not trigger any of those issues under NAFTA by having water allocation transfers. That is how it is worded in our Water Act.

The Chairman: I hope that is right. We all hope that you are right.

Our arguments with respect to stumpage fees being a natural resource management device have not always prevailed — I mean in law they may have, but not in fact, not in practice.

We have heard a lot about the shortfall in data with respect to water. Mr. Trew, you said that we have a lot of information, but you also said that we need a lot more. We have heard, that sufficient data with respect to measurable flows, for example, is not what it should be and that the scientists, prognostications, cannot properly do their predictive job absent that kind of information. We do not have a complete groundwater map and we do not have any kind of map that means much as far as aquifers are concerned or the measurement of glaciers. We know about two glaciers: Peyto and one in Nunavut. We have no idea of the volume of others.

We will urge that those issues be addressed and the fact that that there needs to be more information.

Have you addressed the question of aquifers that flow across borders? We know what happens to surface water that flows across the borders or forms borders. The International Joint Commission has jurisdiction, and we have several rivers in this province that go in and out of this country and our neighbour's. What is the situation with respect to jurisdiction over aquifers that cross borders, if they do, which one assumes they do? I cannot imagine that they would recognize borders.

Mr. Harrison: I work with the Prairie Provinces Water Board and the Mackenzie River Basin Board. Here, in Alberta, our concern relates to the river systems that flow east through Saskatchewan and Manitoba and those that flow through B.C. into Alberta and then north into the Northwest Territories.

Currently, with the Prairie Provinces Water Board, we have a long-standing agreement that started from the genesis of talking about surface water only. About 18 months ago we ran a strategic planning session which dealt with the interjurisdictional relationship or agreement that we would have over groundwater. Two studies were started.

One has already been done. It is to identify the aquifers and the kind of use on those aquifers between Manitoba and Saskatchewan. The second one, which started just last year and which has not been completed yet, is to identify what we are calling the ``transboundary aquifers'' between Alberta and Saskatchewan.

The second part of that is coming up with a method for calculating the sustainable yield of those aquifers. You will remember that I mentioned that we do not allow the mining of aquifers

Once we know where they are and their potential yield, then we can sit down on a wrist wrestle about how much will be available for use in Alberta, and how much will be available for use in Saskatchewan. It is the information base.

We have commented on this area because Environment Canada also sits on the Prairie Provinces Water Board. We have said that a leadership role is needed in the identification of those groundwater aquifers.

The Chairman: Let me take it one step further. It is generally accepted that the United States is not in as good shape with usable water as we are, and in particular that the north central states are not. I think that generalization is probably accurate.

What if they begin to mine aquifers in North Dakota, Montana or the Idaho Panhandle that bumps up against our border? Have you thought about whether a body such as the International Joint Commission ought to address that question? In mining an aquifer, it matters not which end of it you are taking the water from; it is gone.

Mr. Harrison: It has been our assumption that, if we ran into a cross-border groundwater aquifer issue with the United States, we would use the office of the IJC to try to sort out the problem.

You have to imagine that the kind of pumping they are doing to deplete the aquifer in the southern United States is because they are growing four irrigation crops a year. It would not be economic to pump aquifers in Montana heavily enough to grow crops in Montana. It just is not economically viable at this point in time. However, in the future, it may become economically viable.

If you are asking a ``what-if'' question, then we hope that we would deal with it through the generalized transboundary water treaty that was prepared in 1909. We have a founding principle of equitability. If we had problems or even envisioned problems in the future, we would, hopefully, invoke the concept of equitability as a principle and go through the IJC.

Senator Milne: Herb Gray spoke to us not too long ago, and he pointed out something that I had been unaware of which is that the IJC does not undertake studies whatsoever unless there is agreement to do so by both governments. If the U.S. does not agree to it, it will not happen.

As well, the IJC does not perform a policing function. They produce a study, and once they have done that, they are, by law, done unless it is in a water management district; then they carry on. The IJC is a lame tiger.

Mr. Harrison: I hope that Herb Gray did not say it in that way or left that impression.

We have a working relationship with Montana, and the IJC has been quite involved in some interesting challenges respecting the Milk River and the St. Mary's River. Our long-standing experience has been that, in terms of monitoring, reporting, it is an enforcement tool. The IJC process for managing the Milk and the St. Mary's rivers has worked very well. In the early 1900s the people who lived on the Montana side and on the Alberta side almost took up arms over what was going to happen with the water down there. We now have a process that has lasted for a hundred years so that we can work together, and we do that on a daily basis. We do some incredible sharing. We may tell them that we are not going to use our allotment of the water on a particular day and we ask them if they want to use it. We can transfer. We have a good working relationship. The troubles we have just now with Montana are just a blip.

We would expect the same kind of processes to be used to reach some kind of agreement. The IJC is there to help us to try to reach an agreement.

We then have to manage that water. They do not do the policing. We would do that. We would expect to have the same kind of relationship for groundwater if that became a problem. That issue is not now on the radar screen.

The Chairman: Mr. Trew, if you had a wish list, assuming that you agree that more data would be useful to your deliberations and considerations, in some sort of approximate order of priority, what would it be? Where, for example, would mapping aquifers appear on the list?

Mr. Trew: From our perspective, groundwater is the issue of the day. We need to have a much enhanced understanding of aquifer delineation and depth of usable groundwater. Through dealing with many issue over the last few years, I have come to learn a lot more about groundwater. That is not part of my original background. I can clearly say that that would be our number one priority in terms of data needs.

As Rob has just outlined, in some part of the province we have a sophisticated capacity to monitor and manage surface water flows. The southern system is a good example of that. With respect to flow data in the northern regions, we could probably use some enhancement of our networks.

As for water quality, we are just starting to deal with many issues. The challenge with water quality work is the testing. The analyses are very expensive. Water quality as an attribute of natural systems displays lots of variability over time and over space. If you really want to get a fix on what is going on, you need a statistical sampling design, which generally means you need a good quantity of analyses. Some of these tests are expensive, so there is significant dollar implications to enhancing water quality work.

The Chairman: Traditionally the federal government has done that kind of research and data collection; is that so?

Mr. Trew: Correct. We have a reasonably significant history of water quality testing in Alberta, I would suggest, from the 1960s to the present. For surface water flows in Alberta, that goes back 100 years. The water quality database is much newer and more complex, because you are measuring, potentially, hundreds of contaminants, and each one has its own story.

The Chairman: That is expensive.

Mr. Leggat: We undertook the water strategy because this is a very busy province with a vibrant economy. There were concerns about drought and water availability. After Walkerton, there was a lot of interest in reducing the risks of a ``Walkerton'' ever happening here. That is why we developed the water strategy. We wanted to assure Albertans, through this water strategy, that they can drink the water, they can eat the fish and, if they have a commitment to obtain water for their business or their industry interest, that we can follow up with those commitments and they will have a sustained, assured supply of water.

I would emphasize a point I made earlier. We do not see this strategy sitting on a shelf and collecting dust. We are making a great effort to ensure that we are actually implementing the changes to which we have committed ourselves. All four of us are involved in doing that, and many other people and many other departments are following through to ensure that we do follow through with our commitments and achieve those outcomes.

Those would be my concluding marks. If the committee clerk or senators would like to receive any additional information, they can be in touch with us and we will be happy to provide that.

We will follow up on the one item about water research and how much money is spent on water research in Alberta.

The Chairman: Ms. Rich, gentlemen, thank you very kindly for sharing your time so generously with us. You have informed our debate and our discussions a great deal.

We will take you up on your offer, Mr. Leggat. We will probably come back to you with written questions, and I hope that we will have the opportunity of meeting with you again.

The committee adjourned.