WOODROW WILSON CENTER CROSS-BORDER FORUM ON ENERGY ISSUES Advancing the Energy Dialogue

he Canada Institute of the Woodrow traditional sources of energy in North America, Wilson International Center for Scholars with a specific focus on the development of Canada Institute T and the Canadian Centre for Energy Canada’s oil sands. Participants agreed on several Information co-hosted the sixth Cross-Border key issues including “taking the long view” when Forum on Energy Issues in conjunction with Global approaching the development of oil sands, and a Public Affairs, The Energy Council, and the market-based approach to energy policy. Attendees Embassy of Canada on October 12 and 13, 2006. also addressed the challenges of developing the oil The forum, held at the Wilson Center in sands including lowering costs and building suffi- Washington, D.C., looked at “Security and cient infrastructure such as pipelines and refineries. Assurance of the North American Energy System.” Notably, the consensus of the event was that the The sixth iteration of the successful cross-border largest challenge facing the industry is timing; it forum series built on earlier opportunities for impor- seems that “it’s crunch time.” tant sector-specific dialogue and has become an The fifth forum was held March 2, 2006; the pro- important, honest, and open gathering of the ener- gram, “Investing in the North American Electricity gy sectors in both the United States and Canada. System,” considered challenges for expanding elec- What began as a dialogue on a range of business tricity generation, transmission, and distribution in issues between senior industry, academic, and gov- North America. The challenges of harnessing capital ernment representatives on both sides of the border in order to revamp a seriously under-funded elec- has evolved into a regular, structured exchange of tricity system are immense. Risks and uncertainty in views on the challenges confronting the energy sec- the regulatory environment, the political sphere, and tor in North America. the market structure are difficult hurdles to over- To ensure substantive discussion and interaction, come. The subsequent closed-door discussion yield- the format for the forums revolves around a closed- ed a sense of “cautious optimism” about the door discussion among participants initiated by prospects for progress in modernizing and expanding presentations from guest panelists. Participation is the electrical grid. But what was absolutely clear was limited to a select group of industry and govern- the need for continued cross-border cooperation and ment representatives whose knowledge of the issues joint management of the electricity system. and interest in cross-border energy trade ensure a The sixth forum was held in Washington and ana- candid exchange of opinions and thorough discus- lyzed efforts to assure the capacity to withstand dis- sion of key—and sometimes difficult—questions. ruptions to the cross-border energy system. The As such, the forums are intended to foster and sus- two-day program—a first in the Cross-Border tain an ongoing dialogue between stakeholders in Forums on Energy Issues series—looked at “Security each country’s energy sector. and Assurance of the North American Energy The Canada Institute has worked with the System.” As the two countries’ energy sectors Canadian Centre for Energy Information, Global become more integrated, our need to be mutually Public Affairs in Calgary, and the Embassy of Canada prepared for Hurricane Katrina-like natural disasters to organize these forums. or terrorist attacks becomes vital. The fourth forum, “Discovering the Possibilities The next round of energy forums begins on of North American Petroleum Production,” took March 8, 2007 with a focus on “Energy Innovation, place on October 17, 2005 and considered policy, Science and Technology: Pathway to Progress in a regulatory, and market access challenges for non- North American Market.” Fourth Woodrow Wilson Center Cross-Border Forum on Energy Issues Discovering the Possibilities for North American Petroleum Production

Canada Institute MONDAY, OCTOBER 17, 2005 8:15 A.M.–1:30 P.M.

OPENING REMARKS Andrew Stephens, Vice President, Corporate Lee H. Hamilton, President and Director, Planning & Communications, Petro-Canada Woodrow Wilson Center Greg Stringham (moderator), Vice President, Canadian Association of Petroleum Producers PANEL DISCUSSION The Hon. Greg Melchin, Minister of Energy, LUNCH PROGRAM Government of Alberta The Hon. Frank McKenna, Canadian David W. Conover, Principal Deputy Assistant Ambassador to the United States Secretary for Policy and International Affairs, Robert Ebel, Chairman, Energy Program, U.S. Department of Energy Center for Strategic and International Studies Aidan Mills, Vice President, Strategy and Business Development, BP Americas Oil KEYNOTE ADDRESS Supply and Trading The Hon. Orrin G. Hatch, U.S. Senator Mike Ashar, Executive Vice President, Refining (R-Utah) and Marketing, Suncor Energy Lloyd Byrne, Managing Director, Global Head of Energy & Utilities, Equity Research, Morgan Stanley

he Canada Institute of the Woodrow duction in North America by U.S. and Canadian Wilson International Center for government officials, industry representatives, T Scholars and the Canadian Centre for and financial market analysts.1 The panel was fol- Energy Information co-hosted the fourth lowed by a closed-door, frank roundtable discus- Cross-Border Forum on Energy Issues in conjunction sion. The forum continued at the Canadian with the Canadian Embassy and the Alberta Embassy with a luncheon. The luncheon pro- Office in Washington, D.C., on October 17, gram included a wrap-up of the morning ses- 2005. The program, “Discovering the Possibilities sion, remarks by Ambassador Frank McKenna, for North American Petroleum Production,”con- Robert Ebel, chairman of the CSIS energy pro- sidered policy, regulatory, and market access chal- gram, and a keynote address by Senator Orrin lenges for non-traditional sources of energy in Hatch (R-Utah). North America, with a specific focus on Canada’s The forum provided an opportunity for more oil sands. The program benefited from the support than 50 high-level Canadian and U.S. govern- of Suncor Energy, Petro-Canada, and BP ment officials, industry representatives, and Energy Company. energy experts to continue an ongoing dialogue The half-day program began at the Woodrow on cross-border cooperation with a specific focus Wilson Center with a panel of presentations on on the role of Canada’s oil sands in North oil sands and the potential for petroleum pro- American petroleum production. The discussion centered on the significance of Canada’s oil sands from all over the country; production from the in the context of the global oil market and their oil sands, now at one million barrels a day growing importance for the North America. A (MMbbl/d), represents a growing share of the number of panelists focused on the crucial total oil exports to the United States. Melchin importance of having the adequate regulatory, said that the current production level of one fiscal, and political environment for successfully MMbbl/d from Alberta’s oil sands is expected to exploiting unconventional oil resources. Forum rise between two to three MMbbl/d by 2010 and participants discussed specific challenges and five MMbbl/d by 2030. Hatch noted that Utah opportunities for oil sands developers in supply- already receives one fourth of its total oil con- ing the U.S. market and reflected on the result- sumption from Alberta’s oil sands. ing policy implications. Mike Ashar of Suncor reflected on the oppor- tunities and challenges faced by oil sands devel- opers as this industry niche becomes an ever Canada ranks second only to” bigger supplier to the U.S. market. Shell, Saudi Arabia in proven oil” ExxonMobil, Petro-Canada, and many other reserves. Canada “will inevitably” companies provide an economically attractive and displace Saudi Arabia as the” secure means to help meet the United States’ long term energy needs. He acknowledged the many world’s oil giant.” differences between oil sands and conventional crude oil resources, starting with higher costs for 1. Oil Sands and the Potential for North oil sands. That said, the oil sands industry has a American Petroleum Production number of competitive advantages that help level Greg Stringham began the program by providing the playing field. an overview of Canada’s oil sands industry. First, very little exploration is required to Canada’s oil sands industry took off in the 1990s establish the location, size, and quality of reserves. and today Canada ranks second only to Saudi At minimal cost, the location and size of oil sands Arabia in proven oil reserves. At the luncheon, deposits can be determined with a high degree of Senator Hatch predicted that Canada “will accuracy. Second, overall recovery rates are much inevitably displace Saudi Arabia as the world’s oil higher than for conventional crude. Together giant.”Greg Melchin argued likewise, noting that these two characteristics offer a predictable and 73% of identified oil resources have not yet been stable reserve base and long-term “recovery” recovered. Melchin was quick to point out that in prospects. Third, as Melchin explained, the addition to its oil sands, Alberta is also well Alberta and Canadian federal governments have endowed with natural gas resources and is work- introduced royalty and fiscal regimes that recog- ing to develop non-conventional sources such as coalbed methane. Aidan Mills Greg Melchin This means that the United States will have David Conover access to a “secure, friendly source of [energy] supply.”Today Canada is already the number one supplier of oil and natural gas to the U.S. market, ahead of Saudi Arabia, Venezuela, and others. David Conover underscored the importance of Canada-U.S. relations and friendship, as did Ambassador McKenna in his remarks at the clos- ing luncheon. Canada is “the most secure and dependable source of energy” for the U.S. mar- ket, supplying the United States not just with oil, but also with natural gas, electricity, and urani- um. Canadian exports of conventional oil comes 3

Fourth Woodrow Wilson Center Cross-Border Forum on Energy Issues

nize the large scale, up-front capital investments rules for a company’s proven oil resources on required for oil sands development, while also December 31, 2004. As a result, companies have accounting for the long-term nature of project booked their oil sands reserves according to dif- payouts. Policy and regulatory initiatives are ferent criteria, depending on how they classified designed for both the project developers and the them. One possible solution to remedy such dis- economy as a whole. U.S. officials enquired about crepancies would be to establish internationally the importance of Alberta’s royalty regime in accepted standards for assessing reserves. Aside spurring the development of the oil sands indus- from ongoing differences between private compa- try. Oil sands developers agreed with Melchin’s nies, Melchin remarked that the Alberta Energy argument that the province’s forward-looking Utilities Board has its own numbers and reserves royalty regime was critical for a nascent industry. prognostics verified by third parties, making Ashar stated that “had the regime been different, Alberta a more transparent, attractive place to do we may not have invested in Alberta.” Fourth, business. In contrast, he noted that Saudi claims Canada’s oil sands developers have direct and regarding increases of that country’s reserves are secure access to the U.S. market. typically met with a certain degree of skepticism, since nobody can independently verify official Major oil companies are valued. Saudi statements or the state-owned oil monop- oly’s accounting system for its reserves. based on their growth rates as well. as the returns on their investments. 2. Canada’s Oil Sands in the Context of the Global Oil Market Morgan Stanley’s Lloyd Byrne underscored Andrew Stephens from Petro-Canada remarked the importance of looking 15 to 20 years down that growing demand for energy in the United the road when assessing investment options in the States has proved critical to Canada’s success in energy industry. Alberta’s oil sands offer an attrac- developing its oil sands reserves and bringing tive return on investment and have more than 50 them to market. As the same time that Alberta was years of reserve life. The oil sands industry also tapping its oil sands, new sources of oil supply in operates in a stable political and financial envi- the world market have become more scarce and ronment and will benefit from further technolog- difficult to exploit. Looking at the fundamentals ical breakthroughs. Yet operating costs associated of the global energy market, Lloyd Byrne with the extraction and processing of oil sands are explained that the current $60/barrel price range a major concern, including labor costs and gas for oil futures is no surprise: as conventional oil costs. Byrne concluded with a cautionary note on supplies dwindle, the expectations of growing the valuation of oil sands investments: “oil sands demand rise, notably from the United States. have to get valued properly or they are going to Current oil prices in turn make costlier, uncon- go away.” ventional sources more attractive. “Repeatable The widely held consensus is that Alberta’s oil resources” in Canada and the United States, such sands hold an estimated 170 billion barrels of as methane hydrates, have become more attractive reserves. A number of participants expressed con- despite high initial costs. Aidan Mills from BP cern over differing standards for calculating oil agreed that there is indeed primary global demand sands reserves. On the one hand, some argue that for Canada’s heavy crude derived from oil sands, “if the resources are there, they should be especially given today’s prevailing oil prices, accounted for”; but from an investor’s perspective, which ensure that production from Canada’s oil the critical issue is the cost of recovering the sands are competitive. Furthermore, since the resources and bringing them to market. The quality of much of the world’s oil supply is debate on standards recently has fuelled conflict- becoming ever more heavy and sour, Canada’s oil ing estimates of Canada’s oil sands reserves among sands are well placed to supply the market, espe- 4 the oil majors following the change in the filing cially in the United States, where two of every three imported barrels is sour (only 30% of oil areas for exports of Canadian heavy crude as new imports are sweet). cooking and refining capacity comes online. Government representatives at the forum were Seizing these opportunities, however, requires particularly interested in learning how the market overcoming a number of challenges, including hedges against government and pricing uncer- access to market and the timing of new infra- tainty. The past five to seven years have been a structure connecting suppliers to refineries. The trying time for oil futures, with many predica- pipeline capacity from Alberta to eastbound mar- tions going awry—futures used to be priced at kets is still insufficient, according to Mills, who $30 a barrel, and are now trading at twice the underscored the importance of having a timely, price. Those who swapped forwards lost signifi- market-based solution to infrastructure expan- cant opportunities. However, as Byrne stressed sion. Mike Ashar further emphasized the need of during his presentation, the price of oil alone is cost effective and efficient pipeline services, not the only determining factor for the markets. specifically the need to consider well-targeted tar- Energy companies will consider a number of fac- iffs levied on pipeline use. tors before investing. For oil sands developers, such considerations include the global trend Several obstacles exist before toward heavier, sourer crude, the proximity and access to the U.S. market, and the growth in spe- Alberta could begin exporting cific markets, such as California or the U.S. Gulf oil to China. Coast region, where, according to Mills, deregu- lation and extra “cooking capacity” herald new This calls for extending the existing network opportunities for Canadian heavy crude. connections further south or connecting oil sands Byrne explained that Wall Street is less con- production to tanker terminals on Canada’s west cerned with the price of oil itself than with which coast, providing access to California and Asian companies can best reinvest their cash flows. markets. The goal, based on economic funda- Major oil companies are valued based on their mentals, is to connect to the refineries in south- growth rates as well as the returns on their invest- ern parts of the United States. Projects by ments. Most are also debt free and have stacks of Enbridge, Terasen/Kinder Morgan, TransCanada, cash that can be easily invested. These factors are Koch, and ExxonMobil all aim to provide incre- critical in understanding the types of investments mental capacity to move growing production. the oil majors make: when cheap gasoline was the Oil logistics only resolves part of the equation, norm in the mid-1990s, the oil majors neglected as Ashar noted. Many U.S. refineries are not con- their assets in the refining sector, which then was figured to accept oil sands crude. Perhaps as a only earning a lowly 2-3% return on investment. result, Alberta’s longer term energy policy will be As a result, few, if any, invested in their refining focused on moving toward value-added products, capacity, and today “we’re paying for it.” though Melchin dismissed talk of the provincial government’s potential interest in considering a 3. Positioning Canadian Heavy Crude in refinery project. New refineries are not the only the U.S. Market answer, however. Another option is to upgrade Western Canadian crude oil is currently connect- existing refineries so these can process crude ed to more than 70 refining operations in various coming from Alberta. Suncor, for example, is centers across the continent. To consolidate their investing in upgrades to both its Sarnia and position as major suppliers to the U.S. market, oil Denver refineries that will allow the company to sands developers will need to increase their reach. take in more heavy and sour crude blends. According to Aidan Mills, the traditional mar- EnCana and Premcor (now part of Valero) have ket remains the U.S. Midwest, but there are proposed a joint venture at their Lima, Ohio promising signs that the U.S. Gulf Coast and refinery. Such refinery upgrades reflect a global California are set to become significant growth trend in the market, which has seen an increasing 5

Fourth Woodrow Wilson Center Cross-Border Forum on Energy Issues

volume of heavy and sour crude being processed of Energy agreed that the strong Canada-U.S. rela- in the United States. tionship has ensured that U.S. energy imports from Canada fall within the overall strategy of diversify- 4. The Canada-U.S. Dimension: Energy ing U.S. sources of supply. Conover explained that Security and Policy Implications the U.S. government is not striving for energy Alberta’s oil sands are increasingly being viewed independence per se; rather U.S. policy is focused as a “stable secure source of future oil for the on energy security. Canada plays an important role world,” and have attracted interest of others, in this regard. Asked how Alberta “stays front and including European, Japanese, and Chinese center in the U.S. market,”Melchin explained that investors. The ensuing discussion broached the the United States remains the primary focus of subject of Chinese interest in the oil sands, with Alberta’s energy industry, notwithstanding interest participants asking about the prospects for from other foreign buyers. Canada to expand its exports toward China and Conover noted that the recently launched Asia. Panelists and industry representatives agreed Security and Prosperity Partnership (SPP) has tri- that several obstacles exist before Alberta could lateral working committees on energy, including begin exporting oil to China. Additional west- an initiative on oil sands. There was some con- bound pipeline capacity would need to come cern among forum participants, however, that online, and the question of timing is crucial: as the risk of “stovepipes” between the SPP work- long as Chinese refineries are not designed to ing groups on the environment and the one on process heavy Canadian crude, other exports energy could prevent a productive discussion of markets with the required refining caliber and environmental concerns resulting from oil sands capacity will continue to take in Canadian oil, development. On the other hand, the agenda of such as the traditional markets in the U.S. the North American Energy Working Group Midwest. Melchin stressed the importance of the appears to be converging with the objectives out- U.S. market for Alberta’s energy exports: current lined in the SPP, a promising development for Chinese interest is an “anomaly”; it is the U.S.- cross-border cooperation. Canada relationship that is “paramount” and “vital.” He also underscored the importance of 5. Regulatory and Political Environment not harming energy relations with other issues Andrew Stephens stressed the importance of “tak- such as the ongoing softwood lumber dispute. ing the long view”; Alberta’s success in develop- ing the oil sands stems in large part to the long- The U.S. government is not striving. term political vision of previous governments, for energy independence per se; who promoted a favorable investment climate by establishing a stable, predictable, and transparent rather U.S. policy is focused on. operating environment. Melchin retraced energy security. Alberta’s energy policies over the past three decades, explaining how long-term vision and But U.S.-Canada energy cooperation goes forward-looking initiatives enabled the province beyond trade of oil and gas: when Hurricanes to put in place a market-friendly, fiscally attrac- Katrina and Rita knocked out 30% of U.S. refin- tive, transparent regulatory regime. The “trans- ing capacity and temporarily forced the closure of parent, easy-to-navigate fiscal regime” and royalty many Gulf Coast pipelines, Canadian pipeline system proved successful at attracting investors to operators were instrumental in helping to relieve Alberta, setting the foundations for sustained supply shortages in the United States. One partic- growth in the energy industry. ipant asked whether the U.S. government was Senator Hatch commended the Canadian gov- retooling its energy policy toward a select few ernment’s proactive stance on fostering the devel- “preferred suppliers” around the world, and opment of unconventional oil resources. Conover whether Canada was being acknowledged as one said that Canada’s development of its oil sands has 6 of them. David Conover of the U.S. Department been “exemplary” and should serve as a model for comparable resources in the United States. Hatch urged the United States to adopt a similar approach, noting that “those who would argue otherwise underestimate our capacity to exploit unconventional resources.” He argued that it was time for the U.S. government to take advantage of this attractive environment for developing uncon- ventional oil resources and actively promote the development of oil sands and oil shale in western Colorado, Wyoming, and Utah. He dismissed a recent RAND report that suggested developing U.S. oil shale was not commercially viable.

There is no appetite in Canada for. U.S. Senator Orrin nationalization of energy. Hatch (R-Utah) will look at the issue, though it is unlikely any spe- Conover argued that the U.S. Energy Policy cific legislation will come of it. As for Canada, Act of 2005 goes a step in this direction, calling Andrew Stephens remarked that Canada’s oil sands for the creation of a task force to identify oppor- developers have also had to contend with general tunities for exploiting unconventional resources concerns in North American regarding security of on U.S. soil such as oil shale, with help from supply and high prices at the pump. That said, Alberta. Yet during his remarks during the lunch- retail price volatility may be cause for concern eon at the Canadian Embassy, Robert Ebel sound- among consumers, but panelists agreed that “there ed a cautionary note regarding the Energy Policy is no appetite in Canada for nationalization of Act, arguing that there is little political will in energy”; a recent poll in the Globe and Mail Washington to tackle the underlying energy chal- reflected this consensus view, too. lenges the United States faces. He intimated that energy bill was not bold enough, and the policy 6. Challenges Facing Oil Sands Developers issues it did tackle came “four years too late.”That Several panelists acknowledged the challenges fac- leadership and political will were absent is no sur- ing oil sands developers: lowering costs (natural prising; the last time the political climate was gas, a crucial input, is the single largest operating favorable to significant advances in energy policy cost in oil sands production), broadening the pool was in the aftermath of the oil shocks in the 1970s, of skilled labor, and building sufficient infrastruc- when legislators enacted fuel efficiency standards. ture from pipelines to refining capacity (including It may once again take a combination of high the question of whether refining takes place on- prices at the pump and gas lines to prompt politi- site or closer to consumer markets). The unique cians to seriously tackle energy reform in the business of mining for oil is a relatively simple United States. The aftermath of Hurricanes process, but the size, scale, and timelines to reap Katrina and Rita in September triggered fears of the benefits of development make it a very com- such a scenario, but it is unclear whether there is plicated business. The challenges oil sands devel- congressional appetite to revisit energy legislation opers face include: comprehensively in the short term. One participant voiced concern about the 1. controlling the operating cost of daily pro- political climate in the aftermath of the hurri- duction as well as the capital costs and canes, asking whether price volatility could lead to related labor demand to build and operate political opportunism. Conover acknowledged the the facilities; fears of price gouging at the pump, but noted that 2. the environmental impacts of a growing investigations are already underway. Congress too industry; 7

Fourth Woodrow Wilson Center Cross-Border Forum on Energy Issues

3. pipeline capacity to get the oil sands heavy providers scrambling to get a piece of the oil crude to markets; and, finally, sands, this might not seem like a challenge. But 4. ensuring refiners are capable of turning oil developers are well aware that opportunities for sands heavy crude into the products the increasing production levels are constrained by the market demands. scale of the projects, which can take five or more Operating costs for oil sands are higher than years from conception to completion. Skilled those for conventional production—a median of labor shortages and infrastructure bottlenecks about US$20 per barrel for upgraded light crude.2 have become significant constraints. According to Although considerably higher than average global Ashar, there is currently a need for up to 25,000 lifting costs, there are no associated exploration skilled laborers. There is a particularly acute short- costs, compared to a global average of about US$11 age of welders, engineers, and specialized con- per barrel.3 On a full cycle basis, that means that struction workers. The province of Alberta oil sands production is competitive with domestic recently outlined goals to increase the number of conventional crude. permanent immigrants to at least 24,000 a year from about 16,000, with a focus on getting skilled There is acute awareness among. trades to work—quickly. oil sands developers that managing. The Hon. Larry Bagnell, Member of Parliament (Yukon), spoke of the challenge of the environmental impact of their. integrating young aboriginals into the workforce. operations is critical if they are to. Despite low unemployment rates in Alberta and continue to retain permission. other resource-rich provinces, the largest group of to operate. young, unemployed Canadians is in aboriginal communities. There is a need for more govern- Operating Costs: Costs are constantly under ment communication efforts and job training pro- pressure, in particular from the rising cost of nat- grams. Some companies have been proactive on ural gas used to process heavy crude. The indus- this front. Ashar explained that Suncor’s outreach try is looking at new technologies to reduce programs in aboriginal communities over the past energy consumption, such as injecting light ten years have resulted in a significant increase of hydrocarbons to dilute the bitumen in the Canadian aboriginals in its workforce (in Fort ground to allow it to flow at lower temperatures. McMurray, Suncor’s workforce is now 11% abo- This would reduce natural gas requirements for riginal, up from 3% ten years ago). steam. The industry is also looking at technolo- During the discussion period, attention gies that could replace natural gas altogether, focused on how to address the demand for skilled such as the gasification, which holds the potential labor. Melchin explained that the Alberta govern- to turn petroleum coke into a stable energy sup- ment is addressing question of immediate labor ply. One participant asked about the potential of requirements from a multi-stakeholder perspec- nuclear power to be harnessed as an alternative tive. He currently chairs an interdepartmental input to natural gas to generate steam for pro- committee on human resources development, cessing oil sands. The markets, however, have whose mandate is to work with industry to iden- tended to dismiss this option as there are many tify necessary skill set and the timing of mega- uncertainties and timing constraints associated projects. One participant asked whether the with bringing nuclear power plants online, industry was considering a North American labor dampening the prospects for attractive returns on strategy. Melchin acknowledged the need for investments. proactive approach in conjunction with the Skilled Labor Shortages: The industry is look- United States to develop joint strategies. In this ing at some US$35 billion in new construction in regard, he highlighted the initiatives outlined in the oil sands in the next five years. In a world of the recently passed U.S. Energy Policy Act of 8 $65/barrel oil and with companies and capital 2005, which call for joint partnerships regarding

oil shale and oil sands in North America. however, is one of timing—the consensus in the Conover also noted that the SPP has trilateral industry is that “it’s becoming crunch time.” working committees on energy, including an ini- Bagnell touched on a subject that has long pre- tiative on oil sands. sented challenges for the energy industry, namely Infrastructure Constraints: Oil sands develop- the difficulty of bridging the gap between the ers are working within their companies—and industry and the public.4 Broad-based efforts across the industry—to manage oil sands develop- between government and industry to disseminate ment. Project management is crucial to ensure energy-related information to the public must be that large-scale infrastructure developments do promoted and sustained, he argued. Organizations not compete needlessly for scarce labor; the tim- such as the Canadian Centre for Energy Infor- ing of such undertakings is key. The emphasis is mation play an important role in this regard. on staggering large-scale projects, breaking them Bagnell underscored the importance of informa- down into phases to avoid overlapping demands tion dissemination on the part of the government, on labor and resources. Cooperation between too, suggesting that some form of monitoring industry and government is underway to ensure agency may prove beneficial. Industry representa- appropriate infrastructure is available in the tives at the forum agreed that the private sector has remote oil sands region. Oil sands developers are to do a better job of communicating to the public also cooperating to stagger demand for key proj- just how efficient it has become. ect components by trying to balance maintenance and building schedules that draw heavily on key Broad-based efforts between suppliers and a limited skilled workforce. government and industry to Environmental Challenges: Although the industry has made strides in managing the envi- disseminate energy-related ronmental impact of its operations on air, land, information to the public must and water quality, the scale of growth remains a be promoted and sustained. crucial challenge. The growth in production has driven an increase in total net air emissions, land Alberta is well placed to meet many of these disturbance, and water use—despite intensity challenges by the very nature of the resource at improvements. This is a major issue for the indus- stake: there is a need for the product and strong try, which is working to address its impact on the demand for oil sands production; there is no environment together with the Canadian exploration risk; the industry has a competitive Association for Petroleum Producers, the Cumu- cost structure; there is limited political risk, long lative Effects Management Association, and other reserve life, and attractive returns. Moreover, in multi-stakeholder groups. There is acute aware- an environment of high oil prices, there is strong ness among oil sands developers that managing investor interest in Canada’s oil sands. the environmental impact of their operations is The key success factors in moving forward critical if they are to continue to retain permis- with oil sands development are also emerging sion to operate. clearly. There was consensus among participants that a market-based approach to energy policy is 7. Outlook for Canadian Oil Exports best. Alberta is competing for investment interna- Technology and improved access to infrastructure, tionally and is well placed to attract capital and labor, and investment will continue to play a cru- human resources. It is also crucial to continue cial role as the Canadian energy industry grapples building the U.S.-Canada relationship. Another with the challenges of the next decade—workforce priority is to encourage further collaboration shortages, infrastructure bottlenecks, and strongly between industry, academia, and government on held public perceptions of the industry with regard regulatory frameworks, research and develop- to energy pricing, corporate profits, and environ- ment, and project planning with respect to work- mental impact. The most significant challenge, force and infrastructure. The provincial govern- 9

Fourth Woodrow Wilson Center Cross-Border Forum on Energy Issues

ment must not lose sight of the need to commu- Notes nicate with the public, continue stakeholder 1. Speaker remarks, power point presentations, and engagement, and educate people on oil sands and related conference materials are available at the Canada energy in general. Institute’s website, www.wilsoncenter.org/canada. Finally, as Mike Ashar pointed out, “there is 2. Canadian Association of Petroleum Producers, April no quick fix… no silver bullet”; the industry 2005. needs to address these challenges collaboratively 3. According to FirstEnergy, worldwide finding and to improve the reliability of competitively priced, development costs averaged US$11 per barrel in 2004. North American energy supply. It also behooves 4. This has been a recurring theme through the Woodrow Albertans to realize that other sources of energy Wilson Center Cross-Border Forums on Energy Issues. See the are necessary, including coal and nuclear power. proceedings from the fist three forums on the Canada Institute’s website, http://www.wilsoncenter.org/ events/docs/energyforumproceedings.pdf

10 Fifth Woodrow Wilson Center Cross-Border Forum on Energy Issues Investing in the North American Electricity System

Canada Institute

THURSDAY, MARCH 2, 2006 8:15 A.M.–2:00 P.M.

WILSON CENTER FORUM Linda Chambers, Executive Vice President, David Biette, Director, Canada Institute, Generation Technology & Supply Chain Woodrow Wilson International Center Management, TransAlta for Scholars John Thorndike, Vice Chairman, Investment Colleen Killingsworth, President, Canadian Banking, Merrill Lynch Centre for Energy Information Richard Sergel, President and CEO, North Hans Konow, President and CEO, Canadian American Electric Reliability Council Electricity Association Barbara Kates-Garnick (MODERATOR), Vice Kevin Kolevar, Director, Office of Electricity President, Corporate Affairs, KeySpan Energy Delivery and Energy Reliability, U.S. KEYNOTE LUNCHEON Department of Energy The Hon. Samuel W. Bodman, U.S. Secretary Rick Jennings, Assistant Deputy Minister, of Energy Energy Supply and Conservation, Tom Parkinson, President and CEO, Ontario Energy Hydro One Joseph L. Welch, President and CEO, Jon Allen, Chargé d’affaires, Embassy of Canada International Transmission Company

he Canada Institute of the Woodrow cross-border energy cooperation. The half-day Wilson International Center for Scholars event started out at the Wilson Center with a T and the Canadian Centre for Energy panel of presentations followed by a closed-door Information co-hosted the fifth Cross-Border roundtable discussion. Representatives of govern- Forum on Energy Issues in conjunction with the ment, industry, and investment banking discussed Canadian Embassy in Washington, D.C., on policy issues, reliability standards, investment March 2, 2006. The program, “Investing in the trends, and challenges associated with building North American Electricity System,” considered policy, regulatory, and technical challenges for expanding electricity generation, transmission, Our shared electric system must be. and distribution in North America. The forum planned, built, and managed as if. was organized in partnership with the Canadian our border did not exist. Electricity Association and Global Public Affairs, and benefited from the support of Powerex Corp., KeySpan Energy, and Hydro-Québec. new generation and transmission capacity in the The forum provided an opportunity for more electricity sector. The forum continued with a than 50 high-level Canadian and U.S. govern- luncheon program at the Canadian Embassy, ment officials, industry representatives, and ener- where U.S. Secretary of Energy Samuel Bodman gy experts to continue an ongoing dialogue on delivered the keynote address. Fifth Woodrow Wilson Center Cross-Border Forum on Energy Issues

The Need for Investment in the North Bringing new sources of electricity online American Electricity System requires significant, long-term capital investment. The Canadian and U.S. electric systems are inte- Risks and uncertainty in the regulatory environ- grated into a single, cross-border market, which ment, the political sphere, and the market struc- remains one of the most reliable in the world. ture undermine such long-term, costly commit- Secretary Bodman emphasized the importance of ments. Moreover, consumer expectations are such jointly managing our common electricity grid: that new sources of electricity supply must be “our shared electric system must be planned, reliable, affordable, and environmentally sustain- built, and managed as if our border did not exist.” able. The gap between consumer expectations and Yet as current and projected demand for electric- industry constraints suggests challenges of its own, ity continues to grow, the expansion of the of which policymakers, business leaders, and the North American electricity system is stifled by public at large must be cognizant for investment bottlenecks of all sorts. The 2003 blackout, as Joe in new and existing capacity to produce tangible Welch pointed out, underscored both the degree improvements. “Education is key,” asserted of cross-border interdependence and the “fragili- Konow, as is the role of regulatory and govern- ty” of the electric grid. The greatest fear among ment authorities, who have the power to shape players in the electricity market, according to the playing field. Chambers concurred, noting Linda Chambers, is another event such as the that “the public needs to understand the realities 2003 blackout, which could prompt a “legislative of the electricity market, including its cost struc- overreaction.” ture”; otherwise “it is difficult to raise [electrici- Having suffered from chronic underinvest- ty’s] profile and push policy forward.” ment, North America’s electricity system is now at a crossroads: on the one hand, existing gener- The Impact of the U.S. Energy Policy ation and transmission infrastructure requires sig- Act of 2005 nificant maintenance and refurbishing; on the In this regard, the Energy Policy Act of 2005 other hand, new capacity must be brought online (EPACT) represents a new milestone and refer- before demand outstrips existing supply. As Hans ence point. According to Kevin Kolevar, EPACT Konow put it succinctly, “investment is necessary will help spur investment in a number of ways. across the full spectrum.” There are incentives for new transmission. The

Participants in the FifthEnergy Forum on theElectricity System

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law also repeals the Public Utility Holding American Electric Reliability Council’s plans to Company Act (PUHCA), which will allow for apply to be the ERO (with simultaneous applica- more mergers and acquisitions and economies of tions to the relevant authorities in Canada). He scale. Kolevar argued that the congressional stressed the need to vigorously enforce compliance debate alone fostered investment in the electrici- in order to maximize the effectiveness of the pres- ty sector as the industry anticipated a clear set of ent system, while providing strong incentives for rules of the road. investment to improve the reliability of the elec- tric grid. New sources of electricity supply. must be reliable, affordable, and. Similar Challenges across the Border Rick Jennings highlighted the current challenges environmentally sustainable. and opportunities facing Ontario’s electricity sector. As the province faces an electricity supply The law also requires the U.S. Department of gap in the near future, developing new sources of Energy (DOE) to undertake a “congestion study” supply (including controversial plans for a new of the electricity grid by August 2006, whereupon plant in downtown Toronto), refurbishing exist- DOE will designate special “electricity corridors.” ing generation capacity (including Ontario’s Secretary Bodman noted that this study will draw nuclear plants), and implementing energy con- on the extensive body of existing cross-border servation procurement are taking on renewed studies. A comment period, which ended on importance. Other challenges include moving March 6, 2006, afforded companies and individu- away from coal-fired generation by embracing als an opportunity to provide feedback and make renewable energy as source of electricity produc- a case for “expedited corridor designation.” New tion, including hydropower and wind power. As projects proposed within these corridors can be other states and provinces, Ontario must grapple approved by way of an expedited process, with the with coordination among and between various Federal Energy Regulatory Commission (FERC) regulatory bodies and deal with opposition from empowered to grant eminent domain if state environmental and local interests (i.e., the authorities with jurisdiction over the proposed NIMBY [“Not-In-My-Backyard”] syndrome). project routes fail to complete the review process within a given timeframe. DOE officials expect Constraints Facing New Electricity that few cases will require the FERC to consider Generation and Transmission Projects granting eminent domain—the existence of the Welch discussed the difficulties of building new eminent domain rule alone should spur state transmission capacity. He highlighted a number authorities to act on transmission project. of critical challenges, including the widespread use of the controversial “Location Marginal The conversation revealed a. Pricing” mechanism, hidden constraints of finan- sense of “cautious optimism” cial transmission rights, frozen rates for end- users, overlapping and conflicting regulatory about the prospects for progress. jurisdictions, and a host of disincentives to in modernizing and expanding. regional-based planning, coordination, and the. electric grid. implementation of transmission projects. John Thorndike highlighted similar investment hurdles The EPACT also directs the FERC to name an such as the “free rider” and “contingency” disin- Electric Reliability Organization (ERO) to estab- centives: investors are reluctant to expand trans- lish and enforce mandatory electric reliability stan- mission or build spare capacity when there is dis- dards. On February 2, the FERC issued a final proportionately little or no cost-sharing, even rule directing potential applicants to file within 60 though the benefits are widespread. Welch also days. Richard Sergel discussed the North spoke at length of price distortions resulting from 13 Fifth Woodrow Wilson Center Cross-Border Forum on Energy Issues

to reduce such volatility, electricity generation com- panies tend to spread risks across markets, fuel types, and partners. Financial institutions have also been active participants in the international commodities market, with some, such as Merrill Lynch, offering “one-stop shopping” for financing large-scale, capi- tal intensive energy projects. By putting together financing proposals that cover the typical lifespan of a project, investors can sufficiently reduce the com- modity risk with multi-year, fixed-price contracts, thus yielding attractive rates of return.

U.S. Secretary of Energy Investors are reluctant to expand Samuel Bodman transmission or build spare capacity the existing market structure, which deter invest- when there is disproportionately ment in transmission because “the money goes to little or no cost-sharing, even though generation.” He was skeptical that EPACT alone would be sufficient to address many of the under- the benefits are widespread. lying causes of underinvestment. Chambers detailed the prospects for investment The forum continued with a 90-minute closed- in new generation capacity. The EPACT’s repeal of door discussion of the issues mentioned above. The the PUHCA is “a good start” as it will encourage conversation revealed a sense of “cautious opti- investment in what is a long-cycle, capital-intensive mism” about the prospects for progress in modern- business, which relies on capital markets for financ- izing and expanding the electric grid, a point Tom ing. Yet hurdles remain, including permitting and Parkinson emphasized in his overview of the forum siting restrictions as well as obstacles to expanding discussion at the luncheon program. Referring to the transmission grid. Moreover, technological the hurricanes and political uncertainty around the breakthroughs are no panacea either, as most gen- world, Secretary Bodman remarked that in times of eration companies do not have the scale or research stress and hardship “it is comforting to know that and development budgets required to bring tech- Canada and the United States can work together to nological innovations to market. ensure energy security.” As a result, volatility and political risk remain, For more information, please visit www.wilson dampening the appetite for investment. Accordingly, center.org/canada or www.centerforenergy.com.

14 Sixth Woodrow Wilson Center Cross-Border Forum on Energy Issues Security and Assurance of the North American Energy System

Canada Institute OCTOBER 12, 2006 1:30 P.M.–5:30 P.M.

ASSURING THE CAPACITY TO WITHSTAND Dr. James Young, Special Advisor to the DISRUPTIONS TO OUR ENERGY SYSTEM: Minister, Public Safety and Emergency THE OUTLOOK FOR PUBLIC-PRIVATE COORDINATION Preparedness Canada David Biette, Director, Canada Institute, Michael Armstrong, Vice President, Emergency Woodrow Wilson Center Management and Homeland Security, ICF Colleen Killingsworth, President, Canadian International Centre for Energy Information Patrick Currier, Associate, Van Ness Feldman Tom DiNanno, Deputy Assistant Secretary for Paul F.MacGregor, Vice-President, Operations and Engineering Services, TransCanada Energy TransCanada Infrastructure Protection, United States In business to deliver Department of Homeland Security

OCTOBER 13, 2006 British Columbia 8:30 A.M.–12:00 P.M. Transmission CORPORATIONTM SECURING ENERGY INFRASTRUCTURE Brian Gabel, Vice President, Corporate Services IN NORTH AMERICA and Chief Financial Officer, British Columbia Dr. James Young, Special Advisor to the Transmission Corporation Minister, Public Safety and Emergency Dr. David Dismukes, Louisiana State Preparedness Canada University Center for Energy Studies Representative John Smith, Louisiana House KEYNOTE LUNCHEON of Representatives and Past Chair, The Paul Connors, Counsellor, Economic and Energy Council Energy Policy, Embassy of Canada Matt Morrison, Executive Director, Pacific Wyoming Senator Hank Coe, Chair, Northwest Economic Region The Energy Council Ed Tymofichuk, Division Manager, Hon. Dave Mackenzie, Parliamentary Secretary Transmission System Operations, to the Minister of Public Safety Manitoba Hydro David Nevius, Senior Vice President, North American Electric Reliability Council

he Canada Institute of the Woodrow Assurance of the North American Energy System,” Wilson International Center for Scholars, looked at progress and challenges to the reliability T the Canadian Centre for Energy and security of our North American energy infra- Information, and The Energy Council co- structure, how recent market and regulatory devel- hosted the sixth Cross-Border Forum on Energy Issues opments and initiatives have affected efforts to in conjunction with Global Public Affairs and the assure the capacity to withstand disruptions, and Canadian Embassy on October 12 and 13, 2006 in public-private coordination and cooperation in Washington, D.C. The program, “Security and efforts to ensure that the shared infrastructure is

Sixth Woodrow Wilson Center Cross-Border Forum on Energy Issues

viable, resilient, and reliable. The forum also This conference was designed to explore the received support from TransCanada and British interface between the public and private sectors in Columbia Transmission Company. protecting the infrastructure that transports fuel, The forum provided an opportunity for more processes energy resources, and brings electricity than 50 high-level Canadian and U.S. government into our homes. The major portion of critical officials, industry representatives, and energy energy infrastructure in Canada and the United experts to continue an ongoing dialogue on cross- States is privately owned, so industry has a signifi- border energy cooperation. The two-day event cant stake in ensuring that potential weaknesses are was held at the Wilson Center with two panels of hardened, and recovery and repairs can be accom- presentations followed by a closed-door round- plished in real time. table discussion. Each panel continued with a 90- minute closed-door discussion of the issues men- Supply and production are strongly tioned below. Representatives of government, industry, regulatory agencies, and the academic linked; “no fuel, no power; no community discussed policy issues, the roles of power, no fuel.” the public and private sectors sharing of informa- tion and in assurance of infrastructure, areas for Though terrorism has played a significant role improvement, and the many approaches to ensur- in directing attention to vulnerabilities in the ing the reliability of North American energy sup- United States, natural disasters and consumer ply. The forum also included a reception at the demand have been the most recent threats to our Canadian Embassy on the evening of October 12, energy reliability and security. Many panelists a networking breakfast for participants on spoke of Hurricanes Katrina and Rita and the October 13, and a luncheon program later that devastation those two storms caused in the Gulf day sponsored by the Canadian Embassy, where Coast region of the United States, but there were The Hon. Dave MacKenzie, Parliamentary also references to the Northeast Blackout and Secretary to the Minister of Public Safety, deliv- California’s electricity shortages. Panelists also dis- ered the keynote address. cussed several key lessons on the nature of the

Tom DiNanno James Young

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energy sector that are fundamental to addressing DiNanno of the U.S. Department of Homeland assurance of energy infrastructure. Rep. John Security provided an overview of the U.S. federal Smith explained that restoration and recovery in efforts to oversee infrastructure protection. the energy sector is difficult due to the circular DiNanno discussed the NIPP, a public-private nature of the systems. He aptly pointed out that partnership, and called for the joint creation of a supply and production are strongly linked; “no Sector Specific Plan tailored uniquely to the needs fuel, no power; no power, no fuel.” of the energy system; industry has been at the table, writing the document from the start. A strong It is crucial that any planning for. international annex was written in consultation disruptions involve both the public. with the Department of State to provide a place to work with countries, such as Canada, who share a and private sectors. stake in protecting infrastructure. The U.S. efforts have involved cataloguing of infrastructure, which The energy system heeds a model of rapid led to some discomfort from industry. Issues of data restoration over assurance, an approach that is security and keeping such a list current were unique to the sector. Industry representatives among concerns. Approaching infrastructure pro- spoke of their companies’ commitment to quick tection by itemizing and prioritizing can be con- repair and early detection of failure. The presen- trasted with an approach that allows threats to drive tation from Ed Tymofichuk of Manitoba Hydro what information is collected. outlined ways that electricity infrastructure can be compromised by natural causes like severe weath- er, or simple human intervention such as shredded If damage to energy infrastructure aluminum foil showered over a transformer. The leads to an emergency situation on difficulty in predicting or preventing system dis- either side of the border, economic ruptions was contrasted with a wide variety of impacts could be enormous. quick recoveries and system redundancies, show- ing how such incidents are much more easily remedied by adjusting the system, making diver- James Young was on hand to discuss Canada’s sions, or cooperating across the industry to make effort at creating a critical infrastructure protec- efficient repairs. Paul MacGregor of TransCanada tion plan at the federal level. Canada is quite Energy explained that redundancies, storage on deliberate, developing a plan that is “evergreen” both ends of the supply chain, and seamless inte- and has received much attention for that effort. gration of infrastructure allowed the oil and natu- Past plans did not integrate well and showed the ral gas system to adjust when Hurricanes Katrina government’s tendency to create silos. There and Rita compromised portions of the natural gas needs to be one voice, Young said, with plans supply chain. Concerns were raised, however, that integrated across the government as well as with redundancies that allow the system to be flexible the private sector. The Canadian approach and the capacities needed for quick repair require involves less prescription and more guidelines, significant upfront capital, and future expansion and has not tried to assemble a great deal of infor- of the system may bring efficiencies that save mation; on the other hand, the Canadian money, yet undermine rapid restoration. approach has encouraged industry to keep infor- Given that the energy sector has unique needs mation and be prepared to hand it over when when it comes to securing infrastructure and assur- needed, rather than relying on the government to ing supply, it is crucial that any planning for dis- keep a current record of key resources. There was ruptions involve both the public and private sec- some discussion of Alberta’s provincial efforts at tors. The United States has developed a framework creating an infrastructure protection plan, and the for protecting infrastructure called the National involvement of industry in the planning was cited Infrastructure Protection Plan (NIPP); Tom as a good reason for its success. Canada considers 17

Sixth Woodrow Wilson Center Cross-Border Forum on Energy Issues

preparedness an evolving concept, and plans to active and develop their own standards and guide- constantly reconsider its definition. lines individually or in cooperation with other An additional development in energy assurance companies, and then hope that future regulations is the recent designation of the North American will not nullify their efforts. Others industry rep- Electric Reliability Corporation (NERC) as the resentatives addressed the difficulty of sharing electric reliability organization (ERO) for the information in a transparent process, and voiced United States. It is hoped that NERC will be concerns that data would be secure and used only approved as the ERO for Canada by the end of for assurance purposes. 2007. Rather than setting guidelines and facilitat- The organizers also brought in two panelists to ing communication as it has in the past, NERC speak as facilitators of public-private partnerships. will be a self-regulating international group with Matt Morrison of the Pacific Northwest enforcement responsibility. NERC’s David Economic Region (PNWER) described the cross- Nevius explained that the new incarnation of border regional efforts at assuring infrastructure. NERC will develop standards, monitor compli- The human relationships and trust that are key to ance, and conduct readiness audits. The NERC’s helping industry, government, and regulatory first reliability assessment as an ERO was released agencies cooperate are more easily developed at a on October 16, 2006 and at the time of the con- regional level, where the perception of shared ference, Nevius revealed that many concerns interests and perspectives is stronger. PNWER has raised by panelists and participants had already learned that planning and running exercises is been noted in the report; guidelines are being most successful when all stakeholders truly own developed to address them. He estimated that the process; they fund, lead, and participate in the NERC will be a fully functional ERO by June process. As a consultant to both public and private 2007, changing the regulatory environment by sector stakeholders, Mike Armstrong of ICF moving from industry best-practices and suggest- International deconstructed the expectations of ed guidelines to enforceable standards. industry, regulators, and even the U.S. executive and legislative branches: both what each expected to contribute, and what others expected of them. Critical infrastructure protection Armstrong felt that the term “public-private part- will only be effective if it develops nership” is almost a cliché, and is thrown around as a shared responsibility in both as a panacea in emergency planning. Public- countries between the public and private partnerships can, in fact, be meaningful, but they require true commitment of time and private sectors. resources, voluntary participation, and an added value which can be measured. There was agree- Recent changes to the regulatory environment ment that early involvement of both sides and the are of great interest to industry, which is con- building of trust and human relationships were stantly trying to assess whether it is in compliance important when public and private sectors work with the whole range of guidelines, regulations, together on planning for disaster response. and standards. The law firm Van Ness Feldman has During the luncheon portion of the forum, a practice that works with industry to answer such Parliamentary Secretary to the Minister of Public questions, and VNF associate Patrick Currier was Safety The Hon. Dave Mackenzie spoke of how able to explain the challenges that were revealed Canada’s new government is working with its in this area of public-private interface. The counterparts in the U.S. Departments of Energy absence of regulation is a difficult position for and Homeland Security as well as with the private energy companies; regulatory gaps make infra- sector in both countries to protect the shared crit- structure more vulnerable and confuse future ical energy infrastructure. Canada exports more oil planning. Industry must assess whether to wait for to the United States than any other country and 18 regulations to come along or otherwise be pro- also provides its southern neighbor with large amounts of natural gas, uranium, and electricity. The two countries are becoming increasingly dependent on each other in the area of energy. Incidents or disruptions that earlier may have been isolated to one area can now cause a chain reaction on both sides of the border and have a significant economic impact. Mackenzie spoke about the August 2003 blackout that started out as a minor problem at a power company in Ohio but quickly spread to significant parts of the Northeast and Ontario that left more than 50 million people without power and cost billions of dollars to repair. If damage to energy infrastructure leads to an emergency situation on either side of the bor- der, economic impacts could be enormous because of the potential disruption of the enor- Parliamentary Secretary mous flow of goods and services that cross the to the Minister of Public border each day. To help make sure that such an Safety Dave Mackenzie event never occurs, officials on both sides of the are also working closely with the private sector, border are working together to construct joint which owns 85% of the energy infrastructure. vulnerability assessments of critical cross-border Government agencies monitor seismic activity energy infrastructure. Workshops are being con- near critical dams and nuclear facilities, and are ducted on pipeline security and other threats to increasing their protection of oil, gas, and electric the energy industry, and a newly designed proto- facilities. Critical infrastructure protection will col has been put in place to move people and only be effective if it develops as a shared respon- equipment across the Canada-U.S. border to sibility in both countries between the public and respond to energy emergencies. Both governments private sectors.

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Woodrow Wilson International Center for Scholars Lee H. Hamilton, President and Director

Board of Trustees Joseph B. Gildenhorn, Chair David A. Metzner, Vice Chair

Public Members James H. Billington, The Librarian of Congress; Bruce Cole, Chairman, National Endowment for the Humanities; Michael O. Leavitt, The Secretary, U.S. Department of Health and Human Services; Tami Longaberger, designated appointee within the Federal Government; Condoleezza Rice, The Secretary, U.S. Department of State; Lawrence M. Small, The Secretary, Smithsonian Institution; Margaret Spellings, The Secretary, U.S. Department of Education; Allen Weinstein, Archivist of the United States

Private Citizen Members Robin Cook, Bruce S. Gelb, Sander Gerber, Charles L. Glazer, Susan Hutchison, Ignacio E. Sanchez

The Woodrow Wilson International Center for Scholars is the living, national memorial to President Wilson established by Congress in 1968 and headquartered in Washington, D.C. It is a nonpartisan institution, supported by public and private funds, engaged in the study of national and world affairs. The Wilson Center establishes and maintains a neutral forum for free, open and informed dialogue. The Center commemorates the ideals and concerns of Woodrow Wilson by providing a link between the world of ideas and the world of policy and fostering research, study, discussion and collaboration among a full spectrum of individuals concerned with policy and scholarship in national and world affairs.

The Canada Institute, founded in 2001, seeks to promote policy debate and analysis of key issues of bilateral concern between Canada and the United States; highlight the importance of the U.S.-Canada relationship, both in the United States and in Canada; increase knowledge about The Canada Institute Canada among U.S. policymakers; create new channels of communication among scholars, business leaders, public officials, and non-governmental rep- One Woodrow Wilson Plaza resentatives in both countries; generate discussion about future visions for 1300 Pennsylvania Avenue, NW Washington, DC 20004-3027 North America; and share relevant programming and publications with the www.wilsoncenter.org/canada appropriate partners in Canada to encourage dialogue on those issues with [email protected] Canadian audiences. T (202) 691-4270 F (202) 691-4001

2007 Woodrow Wilson International Center for Scholars, Washington, D.C.