New Directions In Managing Alberta's Resources:
TrueNorth Energy’s Approach to Integrated Landscape Management”

Remarks by
David Park, President and Chief Executive Officer, TrueNorth Energy Inc.
To

The Alberta Chamber of Resources
Annual General Meeting
Westin Hotel
Edmonton, Alberta

Feb. 1, 2002 Good Morning, everyone. It’s great to see such a big turnout for this event, and I understand that there are over 400 people coming to dinner tonight.
That kind of support doesn’t just happen. I want to congratulate Bill Hunter and the entire Chamber of Resources team for the incredible work they’ve done to make this a dynamic, effective, and – most importantly – a relevant organization.
The Chamber, under Bill’s leadership, and with the capable management of Brad Anderson and his team, has been able to grapple with the biggest issues facing resource developers and take definitive actions to move our collective agenda forward.

One of the best examples of the leadership and commitment the Chamber has shown in recent years is the topic of our discussion today: Integrated Landscape Management. The ACR has been instrumental in developing the ILM model and bringing industry, government and academia together to work toward common goals.

Perhaps the most visible evidence of this work is the Chamber’s support of the Industrial Research Chair in Integrated Landscape Management at the University of Alberta. TrueNorth is proud to be one of many Chamber member companies, along with government and other funding agencies, who have collectively contributed $2.5 million to fund the Chair for the next five years.
This means Dr. Stan Boutin, who has spent most of his career studying the northern boreal forest system, will have the resources to do some very important research. He will be looking at how we can achieve the ultimate goal of Integrated Landscape Management: to reduce the size, duration and intensity of human infrastructure on the landscape.

In other words, to reduce our ecological 'footprint,' so we can make more efficient use of the resources of this great province – and protect the environment for future generations.

Which brings me to the theme of my remarks today: Why TrueNorth Energy believes in Integrated Landscape Management, and how we are putting its principles into practice.

But first a short commercial for TrueNorth Energy. TrueNorth has proposed a new $2.5 billion oil sands development about 90 kilometers northeast of Fort McMurray. It’s called the Fort Hills Oil Sands Project. Our plan, which is currently in front of regulators, calls for a two-phase project. The first phase is designed to produce 95,000 barrels of bitumen per day by 2005, and the second phase will double that production to 190,000 barrels per day by 2009. Our leases contain an estimated 2.8 billion barrels of oil – enough to sustain production for well over 30 years. We are aiming to start construction in the fall.

What’s important about our project to this discussion is that we’re one of several oil sands developers in the Athabasca region. That, of course, is an understatement. It’s a giant wave of development, with oil sands and infrastructure projects like power generation facilities, pipelines and oil upgraders totalling somewhere around $50 billion in approved and potential development over the next 20 years.

I say “approved and potential” because there is about $20 billion in projects that have been approved, and another $30 billion or so that are in various stages of planning and regulatory processes.

With all the hype around oil sands development in recent years, we’ve created a situation where people assume all this development is going to go ahead at any cost. But, as everyone in this room knows all too well, unless we take care to balance the economic, environmental and social aspects of oil sands growth, we could get ahead of ourselves and over-promise on all counts.

This may look like a hundred yard dash at times, but we should treat it as a long, steady walk into a sustainable future.

With that little disclaimer, no matter which way we look at it, oil sands development has the potential to be the most powerful economic driver this province has seen since the great post-war conventional oil boom. It’s creating thousands of jobs and billions of tax and royalty dollars, and it’s solidifying Alberta’s place as the industrial and financial centre of Western Canada.
It’s the amount, and the pace, and the intensity of oil sands development that raises valid concerns about the cumulative impact of all these activities. And I haven’t yet mentioned another key player in Northern Alberta – a vibrant, growing forest industry that contributes to the economic health of our province – and also has an impact on the environment.

And a the big question for all of us is: How can we make sure Alberta and Canada can reap the socio-economic rewards of resource development – and at the same time ensure there’s a healthy land base to develop for future generations?

The good news is that we have a solid foundation to build on as we look for new ways to minimize our impacts. TrueNorth, as a new player in the oil sands industry, is benefiting from the solid work Suncor, Syncrude and Albion Sands have done, and continue to do, in working towards sustainable development.

A fundamental principle of Integrated Landscape Management is that our industrial activities are inter-related, and that the key to reducing our ecological footprint is to coordinate our activities at the landscape level.

The idea of on-the-ground coordination of activities, of collaboration between companies, and between industries, is very important to the future of resource development in Alberta. We have a growing problem of what is being called the ‘fragmentation’ of our forests. Conventional oil and gas exploration and development, seismic cutlines, forestry, oil sands development, pipeline construction and road building, are putting increasing pressure on forest habitats.

Two summers ago, an influential paper was published by the Pembina Institute for Appropriate Development. It’s called “Patchwork Policy, Fragmented Forests: In-situ oil sands, industrial development, and the ecological integrity of Alberta’s boreal forest” and it was written by Gail MacCrimmon and Thomas Marr-Laing. It was one of the first papers I read on the subject, and if you haven’t read it, it’s worth a look.

This report argues that we need a broad policy framework for managing the cumulative impacts of industrial development, so it can occur in an ecologically sustainable way.

One of the key recommendations of the report speaks directly to Alberta’s resource industry. It calls for “Coordination of development activities between industries and development of best practices and procedures for individual industries to minimize net disturbance to the boreal forest.”

I have a great illustration of exactly what this means to me, and to TrueNorth Energy. It’s a story that starts with a dinner conversation with Bill Hunter in Edmonton in the fall of 2000, and ends with a great leap forward in Integrated Landscape Management.

It was a memorable meeting because Bill and I talked about how the company he leads, Alberta Pacific Forest Industries, and TrueNorth Energy might be able to work together to dramatically reduce the combined footprint of our operations.

Al-Pac had already done some ground-breaking (or, rather, ground-saving) work with Gulf -- now Conoco -- by jointly planning road-building into areas where they both had interests. Together they saved millions of dollars and reduced the amount of land disturbed by their operations.

As our conversation progressed, we talked about our businesses and our visions for the future. And we also began to realize that there were opportunities to work together toward the mutual goal of minimizing our impact on the land.
Almost a year and a half later, I’m delighted to report that Al-Pac and TrueNorth have changed our plans so that our operations over the next five years will now be integrated with each other. The block of land that Al-Pac had previously planned to harvest over the next several years will remain untouched, and the cut has now been shifted onto the footprint of our proposed mine site. Instead of two roads – one to a mine, one to a logging operation – there will be one.

Our clearing requirements will be synchronized with Al-Pac’s timber harvest from day one of our project, from clearing land for the plant site, to building roads and utility corridors, to day-to-day, week-to-week mining activities. Even the reclamation of the land will be a joint effort between our companies – and it will be done progressively, minimizing our footprint and maximizing new forest growth for future harvests.

Our cooperation is so extensive that Alpac has actually seconded one of its forestry experts to TrueNorth’s environmental project team. We are sharing information and working together on everything from our environmental impact assessments to our detailed development planning.

Now I’d like to show you the tangible results of this collaboration. The first slide I’m going to show you is the footprints of our mine and Al-Pac’s original planned harvest over the next five years. The next slide shows the new mining and forestry plan. As you can see, the footprint is now half of what it was. This is Integrated Landscape Management at work.

With all the oil and gas development planned for Northern Alberta over the next 30 years, there is no reason we shouldn’t be able to dramatically reduce the joint footprint of the energy and forestry industries.

As we plan our resource development activities, we need to keep asking ourselves the question: how can we cooperate with other players? How can we integrate our activities to reduce our joint impact and improve our operational efficiencies?

It will take planning and coordination, and a spirit of cooperation. But it can be done.

Of course, if industry fails to take the lead and work together to integrate our activities in this way, someone else will dictate what we do and how we do it.
Let me give you another example of Integrated Landscape Management at work.

Syncrude’s Aurora Mine shares a border with our Fort Hills oil sands lease. And we’re now talking with them about how we might work together to ensure we get the most value from mining the resources around the lease boundary.

If both operators mine right up to our common boundary, the mechanics of mining dictate that we would both leave a sloped area at the border of our mines. This would effectively sterilize a sizeable amount of oil sand, wasting the resource. Through joint planning and perhaps some land swapping, we should be able to get around this. And, ultimately, the more efficient we are, the smaller and gentler our footprint.

In the coming years I believe there is great potential for all the oil sands operators to take an even more integrated approach, particularly in infrastructure and land reclamation planning activities.

So, I’ve given a couple of examples of how we have found ways to put the principles of Integrated Landscape Management to work. This is a significant development for our industries, and it bodes well for the future of our province.
But I should also point out that it’s very early days. We have found a couple of easy wins and we definitely have some momentum and a good amount of enthusiasm.

What is now called for is to take Integrated Landscape Management to the next level – to make ILM as much a part of our core culture as health and safety is today in our companies.

One of the core principles of Integrated Landscape Management is that most of the responsibility for reducing our collective footprint rests with the industrial operators, working in the field, on the ground, sharing detailed information and taking practical steps to cooperate every day. ILM needs to happen at the operational level, where companies can make the sophisticated assessments necessary to make a difference.

But for industry to be truly effective on the ground, we need to better define public policy around integrated resource management throughout the province. Government is playing a critical policy role in setting the overall resource development and environmental priorities for the province’s land base.

We need a policy framework to guide the long-term direction of resource development in Alberta. To that end, there is some very good work going on right now over at Alberta Environment and Sustainable Resource Development. John Donner, the assistant deputy minister for strategic directions at Alberta Environment, is leading a major government initiative to develop an integrated resource management strategy for Alberta.

This is an example where government can add real value. I know that Bill Hunter is going to talk more about this in his remarks in a few minutes, and I’m looking forward to hearing his thoughts on this important issue.

There’s another very important component to effective Integrated Landscape Management: good research. We need solid, accurate information about our land base and its ecosystems. The more data we have, the better decisions we can make as we continue to look for ways to reduce and soften the footprint of our operations. We can’t set the right priorities, or make good decisions, unless we have a picture of how the land behaves in its natural state.

One area of opportunity is wetlands research. Our Fort Hills Project, like other oil sands developments, will disrupt some wetlands. About 16 percent of Alberta is covered in this kind of terrain, but we still don’t have a strong understanding of the ecology of certain types of these features, and their susceptibility or resilience to land use activities.

As development continues, we have identified some land that is similar to the area we plan to mine that we can use as a control – an undisturbed area that we can compare to the land that is disrupted by oil sands development. The goal will be to build a storehouse of data on wetland areas to improve our reclamation efforts in years to come.

We are currently working with the provincial government, Al-Pac, Ducks Unlimited and the University of Alberta to have an area west of Fort McMurray become the focus for this kind of baseline research. The area is called the Thickwood Hills wetland complex, and it’s a good, representative example of wetlands similar to those found at our Fort Hills site, which will also be part of our joint research project.

To that end, TrueNorth and its research partners have applied to the Province for a notation to help protect the integrity of the research area over the coming years. TrueNorth is proposing to spend a million dollars over the next five years to fund this wetlands research. The goal is to provide our company, and the rest of our industry, with the kind of data we need to help determine the best management approaches for these landscapes.

We are excited about this new initiative, and we look forward to working with the University, Ducks Unlimited, Al-Pac and the province – and updating you on our progress.

I’d like to conclude my remarks today by focusing on what I believe is the most important factor in making Integrated Landscape Management work to increase efficiency, lower costs, and make our ecological footprint smaller, and lighter.

And that is the winning spirit that pervades this great province of ours. Just the other day I was reminded that Albertans are more involved in volunteer work than any other province. Albertans are people who are always ready to roll up their sleeves and get the job done, because we know if we don’t do it, no one is going to do it for us.

It’s that volunteer spirit, that ‘let’s-get-it-done’ attitude, that makes the Alberta Chamber of Resources such a great organization. TrueNorth is proud to work with the Chamber and other organizations to help make Integrated Landscape Management a tool that will contribute to a healthy, prosperous Alberta – and a sustainable future for our children and grandchildren.
END

For more information contact:
Ron Shewchuk
Director, Corporate Communications
TrueNorth Energy
Tel: 403-514-7047
Cel: 403-681-7047
Email: ron.shewchuk@truenorthenergy.com