Evidence of meeting #24 for Natural Resources in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was energy.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Christopher Smillie  Senior Advisor, Government Relations, Building and Construction Trades Department, AFL-CIO, Canadian Office
  • Larry Hughes  Electrical and Computer Engineering, Dalhousie University, As an Individual
  • Jack Mintz  Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual
  • Michal Moore  School of Public Policy and ISEE Core Faculty, University of Calgary, As an Individual
  • Brenda Kenny  President and Chief Executive Officer, Canadian Energy Pipeline Association

9:55 a.m.

Conservative

The Chair Leon Benoit

Thank you, Mr. Calkins.

Mr. Allen, go ahead, for up to five minutes, please.

February 7th, 2012 / 9:55 a.m.

Conservative

Mike Allen Tobique—Mactaquac, NB

Thank you very much, Mr. Chair, and thank you to our witnesses for being here.

Ms. Kenny, I just want to follow up really quickly on one question that Mr. Calkins had. He first dealt with the integrity and safety issues of our existing pipeline network. Do you see any issues or problems with us safely expanding our pipeline network?

9:55 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

I would say no, not at all. Existing infrastructure crosses a wide variety of terrain and has done so very safely for decades. For example, discontinuous permafrost can be tricky, where you have some parts that are solid and some parts not. But we have the Norman Wells pipeline that's been operating since the late 1980s, going halfway up the Mackenzie Valley. We have an extensive gas pipeline network in northeast B.C., which is tricky geotechnically, and very little in the way of serious challenges because we've advanced technologies in Canada to address our terrains and our needs.

The new pipeline will be deploying the state-of-the-art steel technologies and coating technologies, and for any of our pipelines, including ones that have been in operation for quite some time, the technologies for internal inspection and surveillance over ground have advanced considerably as well.

9:55 a.m.

Conservative

Mike Allen Tobique—Mactaquac, NB

Mr. Mintz, in your article in the Financial Post of December 16, you talk significantly about the pipeline to the east coast and whether it would be economic. We've heard from several witnesses in our last couple of meetings about the reversal of the Enbridge line 9. In that, you said the line 9 pipeline was originally built to transport oil from Sarnia to Montreal in the days when western Canadian crude prices were regulated to be lower than importer prices under that dreaded national energy program that we had.

Can you comment a little bit about the economics—you talked a little bit about the economics in the article—and whether maybe the economics would even be there for that reversal?

9:55 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

Actually, my comment on the reversal is that I think the economics are there, potentially. It's 150,000 barrels per day capacity. As Professor Hughes said, one can actually transport by tanker to the Irving Oil refinery in New Brunswick, or, alternatively, one could do the Portland reversal as well. That could take that capacity. We have to remember, though, that 150,000 barrels per day is really just 10% of what we're talking about—increased production—over the next four or five years from the Bakken and the Alberta-Saskatchewan areas alone. We're really talking about a massive increase in the amount of production that will need to have pipelines to get out, and the number of pipeline projects that are going to be needed as a result.

My comments about the economics had to do with trying to ship going east and going all around North America, through the Panama Canal, to Asia, and whether that's going to be economic. In my view, it won't be economic, although potentially there is another opportunity of perhaps turning the TransCanada pipeline that goes east into an oil pipeline and again taking it by tanker from Montreal and going to the gulf coast. However, the transport costs of doing that, including the marine costs, would be roughly $2.50 more than Keystone XL taking oil from western Canada down to the gulf coast as well.

If you try to go to Asia, you're competing with a number of different sources. In fact, my colleague Michal Moore might want to say a little bit about that because he investigated the pricing and the transport cost issues with respect to that.

10 a.m.

Prof. Michal Moore

I'll simply add one point, and that is that the likelihood is that export out of Portland would end up on the gulf coast and at most do something to displace current Mexican imports. It's not likely that it will have a tremendous economic advantage, as Dr. Mintz pointed out.

10 a.m.

Conservative

Mike Allen Tobique—Mactaquac, NB

Mr. Mintz, when you talked about the spreads between international and western crude prices, there was some concern about that as well.

10 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

Yes, and I do think that's going to be eliminated over the next several years. We've already seen, with the Seaway pipeline reversal that Enbridge purchased just recently, that it has already caused a shrinkage of that differential between the West Texas intermediate price and the gulf coast price. There are other projects that are in place, not just Keystone XL, that TransCanada is planning to put in. There are also two or three other potential projects that people are looking at in terms of either new pipelines or line reversals that likely will lead to the elimination of the differential right now that exists.

10 a.m.

Conservative

The Chair Leon Benoit

Thank you, Mr. Allen.

We'll go now to Mr. Stewart, for up to five minutes.

Go ahead, please.

10 a.m.

NDP

Kennedy Stewart Burnaby—Douglas, BC

Thank you, Mr. Chair.

And thank you to all the witnesses for coming and giving great presentations, spurring on good debate.

Last week we had a representative from Suncor come, and he provided evidence on a variety of issues from the perspective of his company. Since Mr. Mintz is the director of Esso and Imperial Oil, I wonder if he might explain his company's position on Keystone XL and Enbridge. It's my understanding that Esso and Imperial Oil oppose Keystone and support Enbridge. If so, what's driving these positions?

10 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

First of all, as a director of Imperial Oil, I do not comment on any public policy issues. I leave that to the management of Imperial Oil.

10 a.m.

NDP

Kennedy Stewart Burnaby—Douglas, BC

You can't clarify, as a director, the position on Keystone, which is public?

10 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

I am not going to speak on behalf of Imperial Oil. I'd be happy to talk about my own personal points of view, as an expert, and I would like to maintain that.

10 a.m.

NDP

Kennedy Stewart Burnaby—Douglas, BC

Okay.

Maybe we can move, then, to Ms. Kenny.

You were talking early in your opening comments about this idea of eminent domain. Since you've also served on the NEB—that helps us as well—I was wondering if you can comment on the rules surrounding expropriation of lands during pipeline construction.

10 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

Eminent domain is always essentially a court of last resort, purely from a public interest standpoint. This is something that can be used by regulators and government if there's a sense that an overall national need is causing an imperative desire to see that infrastructure go ahead. In practice, what will happen in planning a project is that the company will actively work with landowners across a corridor or right of way and seek to negotiate an agreement. For the most part, the vast majority are agreed to easily and readily.

Honestly, I can't recall examples where eminent domain was actually applied. It would be no different if a new electric train system was going in or a new local road. Any kind of public infrastructure in a modern society does require that sort of facility for society to function effectively. I want to stress as well that it was Mr. Bernstein's point, not my own, but I was reflecting that it is a component of modern society because critical infrastructure is so fundamental to our being able to succeed.