Special Report: Rick George talks energy demand

There were many highlights at April’s G8/G20 Business Summit in Canada (see www.chamber.ca for more information), not the least of which was a special lunch presentation from Rick George, President and CEO of Suncor—one of Canada’s biggest oil sands company. Suncor currently holds the largest position in the Canadian oil sands business, and Rick George is well-known for being an oil sands spokesman, and industry icon.

Canada faces today an increase in oil sands foreign investment, as we looked at last month in our special report on Canadian oil sands development (www.irjonline.com). But there is no harm in calling to action more outside investors—as the resource grows, so too do the opportunities to capitalize on it in order to feed the ever-increasing need for energy.

As George stated at the Summit: “energy, after all, is a very, very critical part of the overall world trade equation.” George is the right spokesperson for the job—he advocates for Canadian oil sands development, citing Canada’s unique position to “address the energy needs of today.”

George echoed the sentiments of many at the business summit, both in the G8 and G20 forums, when he said that globally, we need to come together on a commitment to a “full suite of energy options” so that the G20 can continue to enjoy “economic growth, prosperity, and security of energy supply.”

We’ll need more options

With all the recent interest in our oil sands, Rick George is surprisingly modest about Canada’s position—but emphasizes that we’ll need to find alterative sources of energy regardless of the potential domestically. “The world energy outlook is that global demand is expected to increase by 50 per cent over the next 20 years” he explains. “Oil, natural gas and coal today provides 85 per cent of the primary energy demand worldwide. But even if you take the most optimistic views of how quickly we can bring on renewables and nuclear [energy sources], we [oil producers] will still represent 75 per cent of industry demand in the middle part of this century.”

Clearly, an oil man is expected to talk about the positives of his industry. However, George points out candidly the challenges we’ll face if we rely strictly on oil. “What we’ll see in the future are some higher energy costs. What makes this supply situation particularly challenging is that only 20 per cent conventional reserves are accessible by western companies—the rest are held by government and state-owned companies, this is limiting. Energy resources are not evenly distributed around the world.”

True to George’s views, even big time investor China has already seen struggle getting into the oil sands—delaying production. China has put $7 billion into the oil sands but is having problems because of hearty opposition to pipeline development. These, as well as other national issues will threaten development from foreign investors—all the more reason to diversify our energy sources.

However, for Canada, oil sands development should still be number one (for the time being), considering that the oil sands contain, according to George “about 170 billion barrels of recoverable oil using today’s technology.” That is the second largest amount in the world, and will only escalate as technologies allow us to explore previously untapped resources.

Today, the world produces and consumes about 85 million barrels per day of oil, and in the future consumption will be much higher—with Brazil, Russia, India and China expected to be three quarters of that increase. All the more reason for Canada to tout its resources.

GDP contribution

George cited source the Canadian Energy Research Institute to back his statements about Canada’s oil sands and their importance to GDP growth. He said that the institute estimates oil sands contribution to the GDP at over $1 trillion over the next 25 years.  The report states that “oil and gas companies will invest C$1.07 trillion (2008 dollars), which will result in incremental growth in gross domestic product (GDP) for the Canadian economy of C$3.5 trillion.”
However, George points to increased environmental attention and a need for better technologies to continue this advancement. Luckily, he adds that governments in Canada recognize the strategic importance of all these resources.

His message is clear: “Canada can and should be seen as a pillar of reliable and responsible resource development. In the North American context Canada is the most important energy supplier to the States and close to half of that crude comes from the oil sands.” He maintains that global attention is only going to increase, and capital will continue to flow in. We’re one of the few countries, he says, that is a “net exporter of energy.”
 
Goerge doesn’t underestimate the impact that oil sands will have—both positive and negative, with regards to the environment. The future of development, he says is going to rely on our “ability to manage the by-products of oil sands development, and significantly reduce our footprint” which he adds Suncor, specifically, can expect to be able to do shortly.

Suncor is currently in the process of spending $1.2 billion implementing a new technology that will make a huge difference. But it’s all part of responsible growth, says George. His presentation concluded with a statement on Canada’s ability to promote and invest in innovative technology, as we look more ready than ever to contribute to the world’s energy future

“Responsible development is our job and absolutely the right thing got do. Is this a complex problem? Absolutely. Innovation is centred on new technologies. The bottom line is: find sustainable energy solutions that reflect our values and aspirations, and maximize the benefits of all our countries and citizens. Imagination has got to replace the status quo.”

www.suncor.com

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