Securing an Energy Strategy for Albertas Future

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Securing an Energy Strategy for Albertas Future
Presentation to the Economics Society of Calgary
March 23, 2006
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Outline

• 1. The Big Picture
• 2. Alberta challenges and opportunities
• 3. ISEEE

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The Big Picture
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Global energy demand will continue to growbut
declining conventional oil and gas reserves and
ever-increasing environmental constraints from
water restrictions, to resource access, to
greenhouse gas limits-- present huge challenges
for us and the world.
Night view of earth from National Renewable
Energy Laboratory, Golden, Colorado. Chart from
US DOE
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Global Energy Trends

• The global demand for energy will continue to
  grow
• The demand for oil and gas will remain strong,
  and given the supply situation, real prices will,
  on average, be substantially above historical
  averages
• Price volatility will increase
• Natural gas will become a more important
  constraint than oil in both oil and gas supply,
  unconventional supplies will be key
• There will be substantial growth in the use of
  coal
• Growth in alternative and renewable energy will
  be strong but will remain a relatively small
  share of total energy the sorting process will
  take a decade or more before the sustainable
  alternatives are clear

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Worlds Largest Concentration of Energy Resources

• Almost 50 billion bbls
• of conventional oil, 150 trillion
• cubic feet (tcf) of conventional
• gas and perhaps as much as
• 1,000 tcf of unconventional gas
• remain potentially recoverable.
• Over 170 billion bbls potentially
• recoverable from the oil sands
• and ultimate potential of over
• 600 billion tonnes of coal.
• -Large potential for
• alternate and renewable energy.

We have the potential to become a globally
competitive, clean and secure energy super power.
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Importance of the Energy Sector

• It is the largest private sector investor in the
  Canadian economy and accounts for more than one
  half of our positive trade balance.
• Directly and indirectly, it accounts for
  approximately half of total Alberta output,
  income, employment government revenues.
• Albertas output currently accounts for
  approximately 13 per cent of Canadas Gross
  Domestic Product and Albertas economy is a key
  driver of growth in the national economy.
• The energy sector represents one of the clearest
  cases of comparative advantage for Canada in an
  increasingly competitive global economy.

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Importance of the Energy Sector

• The energy sector directly and indirectly
  accounts for approximately half of total Alberta
  output, income, employment government revenues.

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Impacts of the Oil and Gas Sector 1971-2004
Source R. Mansell and R. Schlenker. An Overview
of the Impacts of the Oil and Gas Sector on the
Alberta Economy (forthcoming).
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Converting Potential into Reality

• There are huge challenges to converting even a
  modest portion of this enormous potential into a
  sustained, high standard of living (including a
  clean environment) for current and future
  generations it is definitely not a slam dunk.
• We must invest strategically and wisely we must
  maintain those commitments over the longer term
  and, yes, we also need some good luck.

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Defining Our Energy Future

• How much of Albertas energy-based economic
  progress can be attributed to research and
  development, entrepreneurship and smart policy
  and regulation?
• An example Asleep at the Switch Oil Shale vs
  Oil Sands
• Most of the technology that has allowed rapid
  growth of the oil sands industry today was
  developed over more than five decades of research
  effort. Breakthroughs such as SAGD were
  developed over the 1980s and 1990s under the
  AOSTRA program- a joint government and industry
  research initiative. Without such programs, the
  equivalent oil shales industry in the US has not
  developed.

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Energy Price Trends
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Will the future look after itself? Example
Declining Production Values for Conventional Oil
and Gas
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Increasing Costs of Conventional Gas Production
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Implications for Government Resource Revenues
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Projected Impacts of the Energy Sector
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The Curse of Natural Resources

• Dissipation / destruction of energy rents through
  inefficient exploitation, policy and regulation
• Impacts on other sectors (de-diversification)
  during periods of rapid growth
• Rent dependency (consuming the rents
  complacency lack of investment in extending
  production and value of the resources)
• Instability

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Some general challenges

• Average age of people in the energy and
  environment sector implications for HQP,
  institutional / organizational memory
• Huge costs of physical and social infrastructure
  to support growth
• Average age of energy and environmental
  infrastructure
• Climate and availability of cheap water
• Density / intensity of development / Access
• Complexity and uses of technology
• Cost / value of energy and environmental
  resources
• Location and mix of energy supplies and markets
• Need for integrated solutions
• Policy and regulation associated with all of the
  above
• Funding Models for Research, Education and
  Innovation

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Conventional OG and Oil Sands Impacts
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Alberta (AERI) Priority Areas
Source Alberta Energy Research Institute
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Need for a new paradigm for deployment
e.g. climate change
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Overview - Priorities and the ISEEE Model

• Leading Innovation in Energy and Environment
• is a Priority Development Area

• ISEEE is the vehicle to operationalize this
  priority

• The ISEEE Mission Collaborative,
  multidisciplinary
• and mission-oriented research, education and
• innovation to advance and secure competitive
  energy
• supplies for a sustainable, clean environment and
• a strong economy

• ISEEE is aligned with Alberta energy and
  environment strategies which are focused on
• upgrading, improved recovery, carbon and water
  management, clean coal and alternative
• energy- and with the national innovation strategy.

• ISEEE is guided by the MOU (re collaboration and
  capacity building) involving the Government of
  Alberta (through AERI), the University of
  Alberta, the University of Calgary and the
  University of Lethbridge and the MOU with SAIT
• ISEEE has been developed working in close
  collaboration with industry

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University President Dr. Harvey Weingarten

• ISEEE Leadership Board
• Robert Church, Chair Emeritus, Alberta Science
  and Research Authority (ASRA)
• Elizabeth Dowdeswell, President, Nuclear Waste
  Management Organization (NWMO)
• Charlie Fischer, President CEO, Nexen Inc.
• James Gray, Chair of Canada West Foundation
• Robert Mansell, Advisor to the President on EE
  and Managing Director of ISEEE
• Granger Morgan, Head, Dept. of Engineering and
  Public Policy, Carnegie Mellon University
• Gwyn Morgan, President and CEO, Encana Corp
• Neil McCrank, Chairman, Alberta Energy and
  Utilities Board
• Harvey Weingarten, President, University of
  Calgary

ISEEE Managing Director Dr. Robert Mansell
Institute for Sustainable Energy, Environment
Economy (ISEEE)
Sustainable Development Technologies (Alternative
Energy)
Advanced Recovery Upgrading
Water Management
Carbon (CO2) Management
Advanced Policy Research
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Unique approach

• Alignment with provincial and federal strategies
  (increases effectiveness)
• Integration of energy, environment economy
  (leads to more effective and efficient solutions)
• Integration of energy types (polygeneration leads
  to viability of alternatives that are non-viable
  on a stand alone basis)
• Integration of research, innovation, education
  and development of highly qualified people
• Multidisciplinary, collaborative, coordinated and
  mission-oriented research
• Strong partnerships linkages (builds critical
  mass while reducing duplication and cost)
• International standards of excellence (makes
  Canada a leader)

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ISEEE Development Portfolio

Advanced Recovery Upgrading


-Alberta Ingenuity Centre for Insitu Energy
-Conventional Oil Gas -Unconventional Gas
Water Management
CO2 Management
-Alberta Ingenuity Centre for Water Research -Oil
Gas Water -Wastewater

Capture, Storage Use, Transportation Safety
Sustainable Development Technologies
E E Systems, Integration, Policy (includes
integrating elements SOFC, CO2, H2 /
gasification)

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ISEEE Focus
Sustainable solutions for secure, competitive
energy supplies for a clean environment and a
strong economy
Energy Environmental Systems Analysis, Design
Integration

• Next Generation Hydrocarbons
• Advanced recovery
• Higher value
• Greener
• Unconventional
• Harder to find and / or produce

• Alternative Energy Systems Technologies
• Carbon Management
• Novel Hydrogen
• SOFC Fuel Cells
• Bioenergy related bioproducts

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Building Capacity

• Building on existing strengths and on new
  opportunities to expand capacity

• Capacity building through increases in funding
  for Chairs, faculty positions, space, student
  places, and collaborations
• Goal is increase in U of C presence / brand
  recognition, quality and impact

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What is the Overall ISEEE Plan?
ISEEE / Energy Environment Integrated 5 Year
Forecast 521 million (419 million with
building costs financed)
Advanced Recovery Upgrading 76 M
Sustainable Development Technologies 130 M
OtherCarbon Management 24M
Water Management 63M
ISEEE Building - 175 M
ISEEE Core - 11M
External
Engineering
Science
Social Science
Haskayne
Law
EVDS
Academic Programming 42M New Capacity (FLE)
1000 Graduate Undergraduate
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Where are we today?

• Over 110 million of 521 million committed to
  date.
• Decisions pending on over almost 300 million.
• Reallocation of internal resources-- examples 25
  chairs allocated to priority EE development
  areas and another 10 are under development 7
  million invested to free up and fit transitional
  space.
• Initial funding in place for major new
  initiatives.

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Business Plans and Applications- ACCESS

• Application for 48.4 million (over five years)
  in funding for 1000 additional students in energy
  and environment area- submitted to Advanced
  Education Oct. 17, 05 (tuition covers 16.8
  million of total cost)
• Under MOUs with UofA, UofC, UofL and SAIT, part
  of application for about 2500 student spaces.

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Item 4 Business Plans and Applications- ACCESS
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What are the related components?

• An additional 90-100 faculty and associated costs
  of increased access.
• Renovated and new space integrated with
  Engineering and Science complexes (including
  replacement of about 40 trailers on campus with
  permanent space) will also increase interaction
  with University Research Park.
• Increased adoption of team approach involving
  faculty, students,post doctoral students,
  visiting faculty, industry fellows and
  researchers / fellows from other organizations.

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Business Plans- Space

• Business plans for approx 600,000 sq ft of new
  and renovated space submitted to Alberta
  Infrastructure and Transportation at the end of
  May 2005.
• Phase I ( approx 400,000 sq ft)- Cost is 140
  million expected funding from Govt of Ab.
• Phase II Cost is 60-80 million financed on
  basis of leases to partnering organizations,
  mortgage and fund development.
• Planning money approved. Contract for functional
  planning awarded to HFKS Architects and work
  began in Sept. 05. RFP for Architectural design
  went out in Feb 2006.

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• Proposed ISEEE Building Plan on the U of C Campus

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Collaborations- Examples

• On-going work with U of A and U of L to build on
  MOU and pan-Alberta initiatives joint school of
  energy combining EE plans and funding requests
  e.g., Joint submission of ACCESS applications.
• Discussions with Ontario and Quebec universities
  to extend coalitions (e.g., the Western Canada
  Fuel Cell Initiative and joint resource and
  environment initiative with Queens).
• Discussions with AERI and Alberta Ingenuity to
  expand support and capacity.
• Meetings with other post-secondary institutions
  to explore opportunities for expanded
  collaboration.
• Advanced discussions with Stanford, National
  Renewable Energy Laboratory, and Lawrence
  Berkeley Labs to complete MOU and initiate joint
  projects.

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Partnerships Examples

• Direct Energy evolve partnership (energy
  savings, chairs, scholarships, research)
• Shell investing in our future (founding
  industry partner in AICISE, research chairs,
  supporting students, ISEEE Fellow)
• TransCanada - (ISEEE Fellow, research funding,
  sponsored forums, Alberta value-added project)
• Alberta Government (seed funding for research
  projects, expected ACCESS funding for new student
  spaces and capital facilities)
• Alberta Ingenuity (base funding for Alberta
  Ingenuity Centre for In Situ Energy- AICISE)
• TransAlta (ISEEE Fellow, graduate funding,
  other components under development)
• EnCana (Chair and other components to be worked
  out)

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New Research Programs-examples

• Next generation in situ recovery and upgrading
  (dispersed nanocatalysts, in situ hydrogen
  generation)
• Advanced seismic monitoring and modelling of
  flows in underground reservoirs
• Hydrocarbon conversion using solid oxide fuel
  cells
• Legal, regulatory and policy frameworks for
  alternative energy
• CO2 monitoring, capture and storage (including
  risk assessment)
• Treatment and use of produced water
• Integrated modelling and analysis of energy and
  environment systems
• Spatio-temporal modeling of ecosystems and
  resource management
• Smart drilling technology
• Emissions and health
• GHG emission mitigation alternatives
• Polygeneration and electricity exports

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Why are these investments essential?

• The current shortages of personnel in the energy
  and environment sectors of our economy will only
  worsen as baby boomers retire in increasing
  numbers.
• Our focused expansion of undergraduate and
  graduate programs is tailored to address the need
  for highly qualified professionals and to advance
  the development of new processes, technologies
  and practices within the energy sector.
• The collaborative, multidisciplinary and
  mission-oriented approach will better equip
  graduates with knowledge of energy transformative
  technologies, as well as provide valuable
  workplace experience and the drive to innovate.
• Under a business as usual scenario, future
  growth and prosperity is at risk. Declining
  conventional oil and gas production, coupled with
  growing environmental and other constraints will
  have increasingly negative implications for the
  province and the country.

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Why are these investments essential?

• At the same time there are opportunities to
  increase recovery of conventional oil, increase
  the large potential for unconventional oil and
  gas and the potential for alternative energy.
• For example, just a modest 10 percentage point
  improvement in the recovery and upgrading rate
  for the 90 of the oil sands resource that is too
  deep to mine translates into an additional 260
  billion in GDP, 100 billion in labour income and
  29 billion in government revenues.
• These investments are focused on the development
  of technologies and people that will greatly
  increase energy supplies, reduce emissions and
  increase jobs and incomes, while providing
  substantial gains in returns on investments.
• The energy sector accounts for over half of the
  entire Alberta economy and is a major driver of
  the Canadian economy. Given the opportunities we
  cannot afford to not invest in the future of this
  key sector and its major contributions to
  continued economic growth and prosperity.

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Seminars, Workshops and Lecture Series

• Distinguished Lecture Series (begins Feb 16)
• Visiting Speaker / Seminar Series on going
• Alberta Energy Futures planned for April
• Research Development Workshops on going

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Thank you !

• CONTACT ISEEE
• The Institute for Sustainable Energy,
  Environment and Economy
• Room 220, CCIT Bldg.
• University of Calgary
• 2500 University Drive NW, Calgary, AB T2N 1N4
• Ph. 403-220-6100 Fx. 403-210-9770 info_at_iseee.ca
• www.iseee.ca
• (You may also email me directly
  rmansell_at_ucalgary.ca)