Industry Committee on July 20th, 2010

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Chair. Thank you, witnesses.

[The Chair, Conservative, Michael Chong]

Now, are we going to deal with the issue Mr. Coderre brought up, concerning information that he wishes Shell to present to committee?

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Chairman, we are hearing all kinds of figures here. I really have the feeling that someone is trying to pull the wool over our eyes.

This is a public meeting, and Mr. Oblath is speaking quite openly, for which I thank him. However, he is also relying on a document in making his comments, and he says he has the figures in front of him. I would ask that he table that document so that committee colleagues are also able to have a copy, because this is an important issue.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Coderre.

Is it the wish of the members of the committee to request of Shell this information?

Go ahead, Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I think, in all fairness, we should give Shell an opportunity to respond to that first. There may be some information there that isn't ready for public disclosure or wouldn't be proper for public disclosure, so I think they should have an opportunity to respond to that first.

[The Chair, Conservative, Michael Chong]

Okay. Any other comments on this?

Monsieur Godin.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

I am prepared to hear what they have to say. He is referring to a document, and I agree with Mr. Coderre on this point. M. Van Kesteren said that this may be a confidential document that we have no need to see or that we should not have access to. However, let's not forget that we are talking about a company that has been operating here for 77 years. Stories have been circulating and the public has a right to know the truth. In my opinion, that document should be tabled with the committee.

[The Chair, Conservative, Michael Chong]

Okay, thank you.

I'm going to ask Mr. Oblath

or maybe Mr. Houle. Would it be possible to obtain the information requested by Mr. Coderre?

Monsieur Coderre, what specific information were you looking for from Shell?

[Denis Coderre, Liberal, Bourassa, QC]

The numbers you were talking about. You were saying the source—

[The Chair, Conservative, Michael Chong]

The source of the funds that Delek had made in its offer to Shell, or its letter of intent.

Go ahead, Mr. Oblath.

[Richard Oblath]

Mr. Chair, this is a document between Delek US... Actually, it's a document from Delek US to Shell, given to us during the negotiations. I will ask them after this hearing whether they're willing to release this document. It's a confidential document. Shell would certainly be willing to release it, but I think I owe it to Delek US, as it's their document.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Oblath.

Mr. Van Kesteren, you had a point to make?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I just wanted to clarify what Mr. Godin said and make it clear that the issue isn't whether they're just using those remarks or taking those remarks for the presentation. The issue is exactly what was stated: that it's a legal matter. They should be offered the same courtesies we would offer anybody who has privacy issues.

[The Chair, Conservative, Michael Chong]

Thank you for that, Mr. Van Kesteren.

We have a motion on the floor to request the information, so if there's no further debate I'm going to call the vote on this.

Mr. Coderre.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Chairman, since Mr. Oblath has just told us that this document is from Delek US Holdings, we will direct our request to them. It is not a Shell document.

[The Chair, Conservative, Michael Chong]

Okay, so the motion is withdrawn.

We'll now proceed with Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Chair, thank you.

Thank you very much for being here today.

Mr. Oblath, I'm going to ask you a number of questions that deal with the much wider question of implications for the rest of Canada. You'll appreciate that after 17 years on a file you get a little nervous when you see the domino effect of supplier after supplier exiting the Canadian market in the hope that somehow they're able to find supply elsewhere.

You have both made reference to the fact that you need to shut this refinery down, that there is a period of time. Can you tell me specifically, when is your stop-processing date for crude, and how much crude do you have in storage?

[Richard Oblath]

I'll ask Monsieur Houle to answer that.

[Christian Houle]

The process units will start to shut down on September 13, and that will continue until about October 9. It takes several weeks to decontaminate the units. That may take until the end of October or November.

In terms of sales of crude, you have to go back in time by 30, 45 or even 60 days, because of tanker inventories in different countries. The final shipments will be purchased around the middle of August.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Okay, so let me then go to the next question. When do all non-branded businesses stop getting supply, your so-called customers, Mr. Oblath? When do we see an interruption in supply to independents, to the high Arctic, to the territory of Nunavut? And have you begun the process of abrogating or terminating your exchange agreements between you, for instance, and Esso in Dartmouth, the eastern passage refinery? Have you begun this process of cancelling the arrangement by which Shell stations are supplied by Esso in the Maritimes, and Esso stations, principally in the Quebec and Ontario regions, supplied by you will come to an end? When does that happen?

[Richard Oblath]

I'll have Monsieur Houle answer.

[Christian Houle]

As regards the conversion—the mechanics of it, in other words—we will be modifying our dock at the Montreal refinery and making offloading docks faster, in order to increase our offloading capacity. We will also be changing the piping and increasing the process safety of certain tanks, as well as changing the service function of certain refinery tanks. That is what I would call the mechanical side of the refinery.

In terms of supply, changes will have to be made. Some of our exports, based on imports, will no longer be justified. So, exports will be the first volumes to disappear. Furthermore, refineries generally have excess capacity. That is the case for our Sarnia refinery. That will supply us with a certain volume.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Monsieur Houle, could I just interrupt you there?

Sarnia processes 72,000 barrels a day. Your Montreal refinery produces 130,000. By my math, what you're producing in Sarnia is just about half of what you produce in Montreal. How are you going to continue to supply places like the Arctic and eastern Canada in your current base of non-branded dealers?

[Christian Houle]

I was not done, Mr. Chair; let me finish.

There are multiple components. You have the total sales, just to make a simple picture, of what we do today, and the data would be made of multiple sources. One of the sources is cutting the exportation, which will be reduced to zero, pretty much. Then the Sarnia refinery will supply fuel to the Montreal orbit, via Kingston and Toronto, and we will source the other product from imports and a blend

of domestic supply from Quebec refineries. Unfortunately, for the same reasons already given by Mr. Oblath, I cannot name names.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Monsieur Houle, I only have a few minutes. Let me ask very specific questions.

Are you in the process of seeking another supplier for the territory of Nunavut, for the coldest regions of this country, yes or no, and have you found one to replace the excess capacity created by the 130,000 barrels you process a day? Have you found a person to supply those regions today, yes or no?