Future Opportunities

 As many would be aware, there are significant economic benefits that could accrue to Saskatchewan should we choose to pursue additional value added processing of many of our raw resources.  One area where there has been clear interest on the part of the business community to further value add Saskatchewan’s remarkable uranium resources.  Value adding this resource has been met with some resistance.  While many Saskatchewan citizens believe that the future prospects for Saskatchewan are directly tied to the extent of further development of this resource, others dismiss the economic benefits and actively work against this industry.  In the meantime, value added uranium development continues in other parts of the world. 

The economic argument in support of further development has been articulated for a number of years in Saskatchewan.  Further uranium value adding activity could accrue from the refining, processing, conversion, enrichment, fuel fabrication, medical application, power generation, spent fuel management, reprocessing, and hydrogen generation using Saskatchewan’s uranium resource within the province, as opposed to elsewhere in the world.  These areas of value added activity amount to several billions of dollars of economic opportunity.  Uranium value added activity has created tens of thousands of jobs that are currently being enjoyed in other parts of the world.  While some of these value added activities may or may not be feasible to develop in Saskatchewan from an economic analysis perspective, the publicly voiced opposition to further development of this industry, and the lack of clear policy support has resulted in lower levels of value added than would otherwise be the case.  In the absence of clear policy support, and in view of the lengthy and expensive regulatory environment under which the industry undertakes activity in Canada, the risk of project rejection based on vocal opposition being accepted by politicians – regardless of the facts – has resulted in some of these activities that may be feasible for Saskatchewan occurring elsewhere, where the regulatory process is more time defined and where policy support is clear.  This lack of value added development in Saskatchewan is partially due to proximity to markets, but is also due to the lack of a clear policy supporting the value added development of this industry in Saskatchewan.  This document will deal largely with the moral argument supporting development of additional value added processing activities in the area of uranium, and the nuclear industry in Saskatchewan as compared other parts of the world.

While this discussion will not focus on the economic argument supporting further development, one example does illustrate the connection between economic activity and social benefit.  In May of 2004 the Saskatchewan Chamber completed an investigation of the opportunity cost to Saskatchewan resulting from not securing the Warman Uranium refinery in the late 1970s.  The present value of future gross domestic product lost to Saskatchewan as the result of not securing this project is over $12 Billion.  This amount includes the foregone economic activity from the time of development to today, and the projected future value of this activity.  It is obvious that because of this loss of economic activity and the lack of development of this project in Saskatchewan, many projects of significant public benefit had to be delayed or forgone.  It is also clear that fewer jobs are available today in Saskatchewan than otherwise would be the case had this project occurred in Saskatchewan.  Many of these jobs would have resulted in more and better training for Saskatchewan citizens, including First Nations people in general, and for Saskatchewan youth in particular.  There are clear social benefits that would have accrued to Saskatchewan had the Warman Uranium refinery occurred in this province.  These benefits would have included: a larger tax base, more training, and more jobs.  The larger tax base would have allowed for more public services or lower taxes (and therefore higher disposable income). The additional training and jobs would have improved the lives of many, many Saskatchewan citizens.

Many parts of the world will develop uranium resources and will value add the base material.  Uranium is a relatively prevalent material and the developing and developed world need reliable power as well as access to nuclear medicine materials and its applied technology.  Uranium will be developed for power generation and for a number health based uses, including food safety, medical diagnosis, and treatment purposes.  The question is not if, but where these processes will be developed. 

An area that has been a dominant concern for opponents to uranium development is the area of weapons development using uranium.  There has been significant public discussion in Saskatchewan around this latter case as being an argument against developing these projects in Saskatchewan.  It is fair to say that world security and environmental concerns have grown over the past number of decades and the careful development of uranium resource now and into the future is of great concern to all those concerned with improving the global environment.  Some of this discussion is centered on the Kyoto protocol and the agreed upon need to reduce dependency on future growth of carbon based energy production. 

As underdeveloped parts of the world emerge into the industrial and knowledge era where feeding and educating the populace of these emerging countries become the norm rather than a dream, the need for electricity will rise significantly.  Appropriate mining techniques, careful protection of the environment now and in the future, worker safety, security of supply, and traceability that protects against future dangerous use of uranium and its value added components are all issues that face world citizens today.  These issues will grow in importance as energy demand growth spurs additional use of uranium as a fuel stock for electrical generation.  In each of these areas there is a strong argument to be made that future development in the nuclear cycle should occur in a jurisdiction such as Saskatchewan.  The track record of the industry in Saskatchewan has shown remarkable leadership in the areas of working with indigenous people, safeguarding the environment, protecting the workers, developing local infrastructure, providing support services to adjacent communities, and offering world leadership in sound environmental management.  Given that it is likely that the use of nuclear fuel for medical and energy purposes will continue to grow, the need for good stewardship will become even more important. 

There are several questions relating to how security of the energy supply may be managed now and in the future while ensuring the stewardship of the environment, worker safety and protection of national security.  In each of these cases, both based on past experience and third party evaluation, there is a very clear, strong argument that additional processing and energy production and management development should occur in Saskatchewan.  Over the past 40 years the industry in Saskatchewan has improved its techniques in environmental stewardship to the extent that the Saskatchewan industry is now regarded as being the best in the world.  In environmental protection, and worker safety, as well as working with local indigenous people that are most directly impacted by the development of this resource, Saskatchewan’s industry is peerless in the world.  An example of this achievement would be the high success rate in achieving aboriginal employment targets within the industry in Saskatchewan.  Another example is the very high environmental standards and rules of application that are adhered to by the industry in Saskatchewan, and the ongoing community commitment that has been demonstrated by uranium developers in Saskatchewan.  This paper argues that based on this track record of significant world leadership by the industry in Saskatchewan, future development of the value chain should occur in this province to ensure that these Saskatchewan standards are used as a benchmark to measure the safe and careful value added activity of uranium resources world wide.  Development in Canada, and most particularly in Saskatchewan, should be encouraged and embraced for means of protecting the future environment, developing security of supply, ensuring traceability, and promoting work force safety. 

As Saskatchewan expands its activities in the nuclear fuel cycle, in medical usage, storage, and ultimately reprocessing of spent fuel, the principle of safe and careful usage is promoted.  In each of these cases it could be argued that the industry in Saskatchewan, within the regulatory framework that is offered in Canada, offers the most stringent controls available and is built upon an industry that has clearly adopted best available technology practices throughout its development in Saskatchewan. 

The Greater Saskatoon Chamber of Commerce believes it is in the interest of the world, in the interest of Canadians, and in the interest of Saskatchewan citizens to see additional development of this industry in Saskatchewan.  Development in Saskatchewan will serve as a comparison point to jurisdictions where the controls and track record may or may not meet the standards that have clearly been met and surpassed in this province.

 There is a clear and demonstrated history by the industry in Saskatchewan to be able to undertake its activities in a safe, forthright, and publicly accountable manner to a standard that far surpasses other jurisdictions in the world that are likely to pursue additional development of the nuclear cycle.  It is recommended that the standard of excellence of the uranium and nuclear industry of Saskatchewan be celebrated and recognized in a manner such that the industry is encouraged to develop further value added activity through the cycle in the province.  This recognition would promote the standards that have been established and met in Saskatchewan, and provides a benchmark that can be applied to the industry worldwide to ensure a more controlled and environmentally sensitive development of this resource.  To this end, the Greater Saskatoon Chamber of Commerce is seeking endorsement of this moral argument from constituents who are concerned with the safe future development of the nuclear industry for the benefit of the world population.

"We are looking for profitable projects," which could include everything from minority stakes to full ownership of oil sands projects, said Hou Hongbin, a vice-president of a unit of government-controlled China Petroleum & Chemical Corp. (Sinopec).

Mr. Hou was speaking to reporters late Wednesday after a presentation in Calgary that was organized by Calgary investment firm ARC Financial Corp. and the law firm Heenan Blaikie LLP. During his speech, Mr. Hou said the $150-million invested by China National Offshore Oil Corp. (CNOOC) -- China's international energy company -- in oil sands upstart MEG Energy Corp. was "probably" going to be followed by more deals.

He said he hoped a second deal will be bigger than the first and "the third one will be much bigger."

Yesterday, pipeline company Enbridge Inc. announced a preliminary deal with PetroChina Co. Ltd. for half the supply on the proposed $2.5-billion Gateway line, which is supposed to move 400,000 barrels of oil sands crude to the West Coast for export. Chinese companies have made inquiries about the oil sands for several years and last year visited Alberta with a long list of detailed questions, leading to months of speculation about what sort of moves the giant and increasingly powerful country would make. Enbridge's connection with China had been widely expected.

Mr. Hou said securing oil supplies for his energy-hungry country is China's chief goal. "The more sources of import, the more safe" those supplies are, Mr. Hou said. He added that prices for assets in North America are "slightly high," but the continent's political stability and strong rule-of-law are "one of the most important factors for [China's] investment decisions."

China, however, has invested throughout the world and has close connections with countries such as Iran and Sudan. Mr. Hou said China was in dealings with 70 foreign oil companies in 18 countries, as of last December.

CNOOC said it invested in MEG for the small company's long-term growth outlook and because of the chance to learn more about oil-recovery technology, which could also be used in China. Mr. Hou said China is in general looking to Canada for both reserves of oil and technology sharing.

During his speech, Mr. Hou said China is predicting an increasing gap between its oil demand and domestic production through at least 2020, underscoring the country's need to look for more sources of crude beyond its borders.

Up until 1993, China produced enough oil to supply its own needs.

© The Globe and Mail

Potash sticks around

(From the AECL web site)

Nuclear energy has two major potential uses beyond electricity production:

• Producing hydrogen for transportation fuels
• Desalination

Electricity from CANDU reactors can also be used directly to power stand-alone hydrogen production facilities, without generating carbon dioxide emissions. The electrolytic production of hydrogen is one viable way to produce a non-carbon fuel that could displace today's fossil-based transportation fuels.

Using hydrogen as fuel for transportation would help to reduce greenhouse gas emissions and air pollutants that cause smog. Building CANDU reactors at the rate of one reactor per year between 2005 and 2025 would supply enough clean electricity to produce hydrogen for 13 million hydrogen-powered vehicles by 2025. This creates the opportunity to avoid 120 million metric tonnes of carbon dioxide emissions per year.

Energy produced from nuclear reactors can also help solve the problem of fresh water scarcity that is affecting many regions around the world. Desalination of seawater is one of the most promising alternatives for supplying potable water, and nuclear power plants could be an important part of the picture. In 1993, the International Atomic Energy Agency (IAEA) concluded that using nuclear energy to desalinate seawater could be carried out safely and reliably, without any technical obstacles.

The benefits of the using nuclear power for electricity generation also apply to its use for desalination. These include economic competitiveness in areas that lack cheap hydropower or fossil fuel resources, energy supply diversification, conservation of fossil fuel resources, the promotion of technological development, and environmental protection by avoiding emissions of air pollutants and greenhouse gases.

In Canada, CANDU electricity production for industrial, commercial, and residential use, along with these other technologies, could virtually eliminate all greenhouse gas emissions in the 21st century.

Welcome to the Future Opportunities Think Tank blog space.  Our committee met on February 8th and it was agreed that we would delve into the world of blogging.  We hope to have plenty of informative posts in the future on the various opportunities that we are investigating for the benefit of the economy of Saskatoon.

This week our topics included trade development with India, 80 metre level wind power towers and Saskatoon branding issues.

As our committee continues to evolve we will categorize some of the areas we are working on and hopefully have guest bloggers with expertise and some stimulating ideas to share.

Please feel free to post your comments as we add content.