Evidence of meeting #25 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 money.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

9:35 a.m.

President, Mackenzie Valley Aboriginal Pipeline LP

Robert Reid

First of all, at today's gas prices, Mackenzie is simply not economic—there's no question about that. Today's gas prices are simply not sustainable. They're barely covering operating costs, let alone the full cycle of development costs of natural gas.

We've obtained an independent study on gas price forecasts and North American gas supply and demand balances. Those studies show that with the combination of the decline in the conventional resources and the upswing in demand for natural gas—the environmentally preferred fossil fuel—by 2020 gas prices will be there to make a project like Mackenzie economic.

The fiscal arrangement that we're negotiating with the federal government is simply to reduce the cost of capital. The largest single component of the shipping toll is the cost of capital. Pipelines are capital-intensive. So if we can get a government guarantee to reduce our cost of capital, that makes our project very attractive to incremental shippers.

9:40 a.m.

Conservative

The Chair Leon Benoit

Thank you, Mr. Trost. Your time is up.

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

February 9th, 2012 / 9:40 a.m.

Conservative

Blaine Calkins Wetaskiwin, AB

Thank you very much.

I was just a little bit concerned.… I'm going to ask you, Mr. Caron. It seems to me, when I learned of the application by Enbridge to reverse the flow of that pipeline, which has already been reversed once in the past, my understanding is…could you explain to me why that would even be a consideration for the public benefit? This is private infrastructure owned by a private company that's gone through a regulatory process. It's in the ground. Does CN come to some regulatory authority to turn its train around on its own track? Do trucking companies come to some regulatory authority to turn their trucks around on the highway? It doesn't make any sense to me at all what business it is for a regulatory agency or whatever the case might be. If it's a safety issue, fine.

Could you explain to me why simply reversing the flow of fluid through a pipeline would be a matter of public debate and public hearings?

9:40 a.m.

Chair and CEO, National Energy Board

Gaétan Caron

Honourable member, that's an excellent point.

If the application were only about reversing the flow, we'd have to find a way to have questions about it, but the fact is that Enbridge applied under section 58 of the National Energy Board Act because there are some facilities being proposed. It is the wish of Parliament that any facilities applied for be approved or denied by the National Energy Board, so we don't have discretion in that respect. The discretion we have is in the process we use and how long we take to look at it.

9:40 a.m.

Conservative

Blaine Calkins Wetaskiwin, AB

So it's broader than simply turning the flow in the pipeline around.

9:40 a.m.

Chair and CEO, National Energy Board

Gaétan Caron

That's right. There are some valves and fittings, and they are all within company property lines. There's no new right of way, but the farmers and the landowners have expressed concern to us about this thing that they call “reversal”, which also has some hardware to be proposed. We have a duty in law and conscience to listen to them.

9:40 a.m.

Conservative

Blaine Calkins Wetaskiwin, AB

That helps me a lot. I appreciate the explanation.

Mr. Reid, the question I have for you, sir, is that you said in your testimony that the nature of the agreement of the Mackenzie Valley pipeline would be beneficial for aboriginal people throughout the area there. Is that correct? Did I hear you correctly when you said that?

9:40 a.m.

President, Mackenzie Valley Aboriginal Pipeline LP

Robert Reid

Yes, that's correct.

9:40 a.m.

Conservative

Blaine Calkins Wetaskiwin, AB

The question I have for you is about the nature of the agreements with the first nations, between the proprietors, and so on. Is it an equity position? Is it payment, like you would have for landowners for easements?

What's the nature of the funding model that would be putting money into the hands of aboriginal people? Does it put the money in the hands of bands, or does it actually put the money in the hands of aboriginal people on the ground?

9:40 a.m.

President, Mackenzie Valley Aboriginal Pipeline LP

Robert Reid

Thank you. That's an excellent question, and I'm going to break it in two.

We have a hat to wear as an owner, and then, quite separate from that, there were access and benefit agreements negotiated with each aboriginal group along the route. So with respect to our owner's hat, we have a one-third share in the pipeline, and the condition on which we have that share is that we have to pay for it. We have to finance that share on our own. There was no gift from our partners whatsoever.

We're paying our way, and in return for that we actually have two seats at the board table of the Mackenzie gas project and we participate in all of the committees—the environmental committee, regulatory committee, technical committee, commercial committee, and so on. In that way, we're able to actually influence how this project develops and moves forward. We have had a direct impact on a number of processes, where the desires at the community level have been brought to the board table and resolved successfully.

In terms of access, Imperial Oil is the project manager, and they negotiated access and benefit agreements with each aboriginal group down along the pipeline route. We, as an owner, were conflicted in those discussions, and did not take part in those discussions. They were successfully concluded with three out of the four groups, and the fourth group is very close.

9:45 a.m.

Conservative

Blaine Calkins Wetaskiwin, AB

Thank you.

My last question is for you, Ms. Krause. I would like to know exactly what the difference is between the reporting mechanisms that you found in Canadian reporting through CRA and the tax reporting in the United States. Could you give us a little bit of detail on what the difference was that allowed you to do your investigation?

The other question I have for you is an opinion question. In your opinion, if it was found that large Canadian charitable foundations were seen to be heavily investing in charitable organizations, or transferring massive amounts of money from Canada into the United States to influence United States domestic policy, what do you think the reaction would be of the United States Congress?

9:45 a.m.

As an Individual

Vivian Krause

To answer your first question, in what are called 990 tax returns of 501(c)(3) charitable foundations, they're required to report a couple of things. One is the grants that they make—the recipient, the stated purpose, the amount, and the date. If that information were publicly available from Canadian foundations then, for example, we'd know what Tides Canada has done with the $60 million that it got from American foundations.

Another important piece of information is who is being paid, in terms of the PR firms and other for-profit businesses that are funded. In the U.S., charitable foundations are required to report the five highest payees or contractors, and the amounts that they were paid. They're also required to report the names and the exact amount of the salary of the five highest-paid employees. So it's those three things—the grants and the details of the grants, the details of the highest-paid contractees, and the details of the highest-paid employees.

Perhaps I could answer your second question by telling you that in July of last year I was invited to New York by a small American think tank, the Atlas Economic Research Foundation. They convened a meeting with some of the top American journalists in the New York area who cover the energy sector—people from Forbes, Fortune, the Wall Street Journal, and others. They said to me, “What's going on? Don't you have any lawyers in Canada? Why aren't you suing these foundations?” They couldn't believe that we were just letting this happen. One guy told me that unless you get your lawyers down here, they're just going to be laughing all the way to the bank.

That was their reaction. As far as Congress, I don't know, but I can tell you that was the reaction of the journalists around the table when I met with them in New York.

9:45 a.m.

Conservative

The Chair Leon Benoit

Thank you, Mr. Calkins and Ms. Krause.

Go ahead, Mr. Stewart, for five minutes.

9:45 a.m.

NDP

Kennedy Stewart Burnaby—Douglas, BC

Hopefully I'll get through three questions, and they're all to experts here from the National Energy Board.

I was wondering if you could walk us through the expropriation process that may be followed when a general route is approved, yet there are local landowners who do not want to give up their land to have a pipeline laid through. If a landowner refuses to give up land, what happens? Could you just walk us through that?

9:45 a.m.

Chair and CEO, National Energy Board

Gaétan Caron

What I can do is go through the process that would happen if it ever occurred. It has not happened in recent memory. I cannot cite an example for you of when it happened.

Typically landowners, if they have participated in the certificate phase when it is a general route, will have perhaps expressed their concerns about the route or whether there will be a pipeline or not. Then if the board issues a certificate with the approval of Governor in Council, if there is a difference of view between the landowner and the company, we then administer a detailed route proceeding where the fine-tuning, if you like, of the route of the pipeline can be discussed. Again, an independent panel of board members can have the authority to change the location either within the landowner's property or around it, now affecting a different landowner. You can imagine the ripple effects this can have.

If the issue is in part or totally compensation for the disturbance on their land, there is a separate process administered by the Minister of Natural Resources Canada. We do not administer the part of the dispute, if you like, that is about money.

In the end, if all else fails, including compensation by the company to the landowner, there is an expropriation process that, honestly, I can't tell you much about today because I've never seen it in action. Either the route gets relocated, because people of goodwill find a solution, or there is enough compensation to move the topic to a different one between the landowner and the company.

I hope that's responsive, at least in part.