Natural Resources Committee on Feb. 27th, 2014

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay. Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian.

We go now to Mr. Payne followed by Ms. Moore.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair, and thank you to our witnesses for coming.

My riding is Medicine Hat. Many of you may have actually heard about Rudyard Kipling and what he said about Medicine Hat, that it has “all hell for a basement”, meaning plenty of natural gas, a lot of shallow gas. That has been an important aspect for the community and surrounding communities.

From that there were a number of facilities built such as Canadian Fertilizers, which produces obviously fertilizers, ammonia, and urea. There is a company called Methanex, which produces methanol, and another company, Cancarb, which produces carbon black. All of this is from natural gas. I actually worked for one of those companies so I've had a lot of information regarding them.

In terms of employment, it's huge. Canadian Fertilizers probably has somewhere in the neighbourhood of 250. Methanex has about 100, and carbon black about another 75. Then if you do the offshoot on those things—I'm not sure which numbers are out there these days, I've heard anywhere from two to five but—that's huge in terms of employment in a community of 60,000 people. It's a lot of major jobs.

That happens with the manufacturing equipment they buy from other provinces, steam vessels, and so on and so forth, columns, valves, and pipes, and so on, as well as a lot of local investment in terms of supplies for the operations of those facilities. That doesn't even touch on the oil and gas part of the business around Medicine Hat, so oil and gas is a really important piece not only to our community but obviously to the country.

I'm wondering if you have anything that would indicate what the impact of these offshoot organizations, which are not directly involved in the development of oil and gas but actually purchase those supplies, are across the country?

[Jay Khosla]

It's a challenging question to answer because you're asking us to break down some big numbers and give them to you from a local context.

[LaVar Payne, Conservative, Medicine Hat, AB]

Not just the local, but certainly across the country....

I know that Medicine Hat isn't the only community that has these types of facilities. I understand there are a lot of other provinces that have investments like these and certainly it has a huge impact on the Canadian economy.

[Jay Khosla]

From oil and gas, period, the job figures and overall growth are enormous. Across the country...350,000 jobs that I had mentioned off the top, when you look at adding in induced employment versus direct.

We know for a fact, as I ran the table earlier, that each province has a play when it comes to that. I'm loath to repeat all of those numbers again—

[LaVar Payne, Conservative, Medicine Hat, AB]

No, that's fine.

[Jay Khosla]

I don't know if anybody else has anecdotal or specific information from Medicine Hat, or otherwise, on the examples that have been provided.

[Terence Hubbard]

Yes, I'm sorry, I don't have any specific examples to be able to highlight—

[LaVar Payne, Conservative, Medicine Hat, AB]

That's fine. I just wanted to actually highlight what's going on in my community and how this really impacts that particular community. Also, there are others in the riding.

But I also wanted to touch on one thing, which I haven't said yet. You talked about energy efficiency. It's really interesting, because the carbon black plant actually takes their excess steam and produces electricity, then sells it back to the City of Medicine Hat, which produces its own electricity. So there's a really prime example of the efficiencies that are being created, and certainly the dollars saved, instead of letting all this excess steam go to waste.

The other interesting thing is, of course, in my area there's a lot of oil and gas development. It's not so much the gas right now, because the prices haven't been...but oil wells being drilled around Brooks, which is part of my riding. There's lots of activity going on there, so there are hundreds of jobs in the oil and gas industry there. They have to go out, they have to have operators looking after the wells, and so on and so forth. So you have to buy the equipment to pump the oil, etc. This is huge for my riding. If there is some non-development there, that would create major problems in terms of employment.

[The Chair, Conservative, Leon Benoit]

Mr. Payne, I think you've made your point.

[LaVar Payne, Conservative, Medicine Hat, AB]

Well, thank you.

[The Chair, Conservative, Leon Benoit]

Your time is up. You've done your bragging on Medicine Hat. That happens from time to time, and I can understand that.

We go now to Ms. Moore for up to five minutes.

Go ahead, please.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Thank you very much.

The ability to effectively manage the disadvantages of the natural resources industry is in fact an advantage, even if only a competitive advantage.

Can you tell me the main disadvantages and risks associated with oil and gas production? How does Canada’s ability to manage those risks and disadvantages compare to that of other countries? How many jobs are involved in managing those disadvantages and risks? Would you be able to provide me with a breakdown of those jobs?

[Jay Khosla]

It is difficult to determine exactly the number of jobs connected to risk management, but the fact is that the natural resources sector directly and indirectly accounts for 18% of the gross national product. That percentage might give you an idea.

Furthermore, as you pointed out, when a project is initiated, an environmental assessment is carried out. The jobs that stem from this process are in line with the risk elements. As I already mentioned, it is difficult to provide an exact figure. Perhaps someone else has a better idea of the number.

[Terence Hubbard]

As Jay was indicating, we do have in place in Canada a comprehensive environmental and regulatory regime, which was put in place to manage the risk associated with resource development activities, both at the federal level and at the provincial level. These requirements create obligations on industry to be able to manage and study environmental impacts and obligations that create employment directly in environmental monitoring-type activities to study and manage the risks associated with development.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Canada is recognized as a country with extensive expertise in managing mining waste sites. That is why other countries want to work with Canada to develop mining sites.

In terms of oil and shale gas, what is our ability to manage spill risks, both environmental and economic, compared to other countries? Is our country better than other countries or is it average? Does Canada have to increase its ability to manage risks more effectively in order to become more competitive?

[Jay Khosla]

Canada is very innovative in developing gas and oil.

Martin, perhaps you can talk about our innovations, such as Canada’s Oil Sands Innovation Alliance (COSIA) and other aspects.

[Martin Aubé]

Certainly.

First of all, I would like to point out that the industry has invested around $1 billion in research and development, mostly to address environmental issues. I think those investments have had a positive impact. Right now, when we use the in situ approach, 90% of the water used for oil sands projects is recycled. In addition, we have reduced greenhouse gas emissions by 26%.

As Jay mentioned, COSIA has come into existence. This is an alliance of 14 companies that came together to share projects, resources and intellectual property in order to focus on environmental issues only. I am not able to tell you what the situation is in other countries, but I think Canada, in partnership with provincial and territorial governments, is investing a great deal in reducing environmental risks.

[The Chair, Conservative, Leon Benoit]

Merci, Ms. Moore.

We go now to Ms. Crockatt for up to five minutes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you very much.

I'm intrigued by the member opposite's question, I think it's a good one so I just wanted to expand on it a little bit more.

Are we able to ask you to get us information on where Canada sits? This is something I hear constantly as well. My colleague is from Quebec. She hears the same thing about us being world-class in terms of reclamation. I'm from Alberta, and that's what I hear too.

Could we have something from the department that actually lets us know whether that is correct? One of the things about our competitiveness is that our companies are saying that we are competing on the world market while maintaining the highest environmental standards in the world. This is something that our competitors from other countries like Algeria, which is the primary supplier of oil to Quebec, are not working on.

I think that is also a benefit to Canadians, that we are achieving these high environmental standards.

Are we able to ask you for that?

[Jay Khosla]

We have a pretty comprehensive piece that we can provide specifically on some of the innovations around tailings and tailings management.

Just to expand on the question for a minute or two, Canada is seen as a world leader for sure in terms of its innovative ability to develop these resources. I just heard recently—and maybe this will be interesting for the committee to hear—that even the United States is now asking us for our help in developing an area that they have in Alabama that's similar to the oil sands. They're coming to talk to our companies about in situ and more holistic ways of developing this resource.

Around the world, when we go and sign agreements with various countries, we have an energy dialogue, if you want to call it that. India, China, Japan, the first thing they obviously want to talk to us about is very clearly the resource. But the very next thing they generally want to talk to us about is our innovations in terms of developing the resource, so that we can help them. It's a true signal.

The final point I'll make—

[Joan Crockatt, Conservative, Calgary Centre, AB]

May I just ask a follow-up? Have we quantified that? Do we know how many? There's much talk about whether we have high-tech jobs being created here. This is an area again where we hear there are. This is a high-tech industry. It is not a hewers of wood and drawers of water.... Are we both creating very high-tech jobs in this industry and are we developing expertise? Are we then benefiting by selling both in terms of human intellectual property as well as manufacturing equipment to help bring the world up to higher environmental standards?

[Jay Khosla]

The simple answer is absolutely yes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Any quantification?