Natural Resources Committee on Feb. 27th, 2014

[The Chair, Conservative, Leon Benoit]

Go ahead.

[Jay Khosla]

Jeff will come back on the last part of the question.

But I'd like to clarify, Chair, that in terms of no governance, I think it's really important for me to mention that if I misled the committee, again, I apologize. I certainly did not want to leave the impression that there's no governance with respect to these issues. In fact, it's quite the opposite. We take our role very seriously as regulators in the federal government of these major resource projects and have been working hard and long at putting in effective regulatory practices over the last number of years—and decades, I would argue.

In fact, we continue to look at it on a daily basis: how pipelines operate in a safe and secure manner; how we can do environmental assessments in a time-oriented but effective way. We've put in means and mechanisms over the last four years that, we would argue, are amongst the world's best—the environmental certificating process and on we go. So the NEB does take its role very seriously. I would never want to leave this committee with an impression that there is no governance. In fact, we exist to do that. That's why we're here at this table.

Jeff, answer the specific question on the reviews, please.

[Jeff Labonté]

The other part that I think we want to be clear with is that the government doesn't direct the NEB in any way. The NEB is an independent regulator. There's an act of Parliament that spells out how the NEB functions. It has a regulatory set of protocols and guidelines. The government doesn't direct the NEB. I think it's clear that Parliament does. That's a point of interest.

In terms of the upgrading....

[Linda Duncan, NDP, Edmonton Strathcona, AB]

The regulations....

[Jeff Labonté]

Pardon me?

[Linda Duncan, NDP, Edmonton Strathcona, AB]

The regulations are not passed by Parliament.

[Jeff Labonté]

But certainly the act that spells out what the regulations will be and what the scope of the regulations are is an act of Parliament.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I couldn't agree more.

[Jeff Labonté]

With respect to the issue of the value added, I think we should probably step back a wee bit on this point. Certainly more than half of the oil sands produced in Canada today is upgraded in Canada. Canada's refining and upgrading capacity is running at about 85% right now, which is still lower than most global standards. So if you will, there's more capacity that we would want to look at.

At the same time, certainly the market determines where the best value comes from the resources in terms of its ability to sell those products to customers. Certainly we live in North America. North America is a completely integrated market. Energy flows across the border in both ways.

Certainly one of the things we live with is that there is already an existing capital stock of refineries and upgraders across North America, and some of those happen to exist in the United States and some of them exist in Canada. Certainly in eastern Canada, Irving's refinery exports the predominant output from its refinery into the eastern seaboard of the United States, because that's the dynamic of the eastern seaboard. In the western part of the country, more of the crude oil exits the country and the refining happens more in the United States. But overall, Canada still is a net exporter of value-added petroleum products. So I think it's really important to contextualize all of the aspects, and certainly the NEB act does not spell out that the NEB's public interest test is to test what alternative uses of the energy might be. The test is whether or not there's adequate supply for Canadians and there will be supply for Canadians in the foreseeable future. So given that we have capacity that's not being utilized and given that there's a North American context, I don't see where the difference would be.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Ms. Duncan.

We really don't have any time to get into Ms. Block's section of questioning, so I'll just thank the witnesses all for coming today: Jay Khosla, assistant deputy minister, Energy Sector; Jeff Labonté, director general, Energy Safety and Security Branch, Energy Sector; Terence Hubbard, director general, Petroleum Resources Branch, Energy Sector; Carol Buckley, director general, Office of Energy Efficiency, Energy Sector; Jonathan Will, director general, Electricity Resources Branch, Energy Sector; and Martin Aubé, director general, Strategic Science-Technology Branch, Innovation and Energy Technology Sector.

[Joan Crockatt, Conservative, Calgary Centre, AB]

I think we have to raise a point of order just before we leave—

[The Chair, Conservative, Leon Benoit]

Okay, there is a point of order.

[Joan Crockatt, Conservative, Calgary Centre, AB]

—and that is that Ms. Duncan asked our witnesses for some information that I think is far outside the scope of what we are working on in this committee. I just want to clarify so that they might not feel that they had to follow this through.

I think she slid it in, rather than giving us a chance to hear what she was asking for.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Can we discuss that?

[The Chair, Conservative, Leon Benoit]

What was the information, Ms. Crockatt?

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Well, I asked for it, so I'll explain.

[The Chair, Conservative, Leon Benoit]

Yes, sure.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

The study we're doing is looking at the benefits of the oil and gas sector, and we heard some testimony. Then, we all agree that the information that is provided does not just talk about the oil and gas sector, but talks about the whole energy sector. So—

[The Chair, Conservative, Leon Benoit]

Well, we're focusing on oil and gas.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

So I asked, if they had the information available, whether they could provide it with a detailed breakdown of the direct and indirect jobs affiliated with the oil and gas sector.

[The Chair, Conservative, Leon Benoit]

Right.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I don't see why that's out of order.

[Joan Crockatt, Conservative, Calgary Centre, AB]

I thought that was great.

The piece I thought I heard you say—correct me if I'm wrong, and if I was, then it's no problem—was hypothetical: what could we do if we used this money in some other way?

I think that is something that is far beyond the scope, asking our officials to spend time on an endeavour that isn't productive.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Chair—

[The Chair, Conservative, Leon Benoit]

Order, please, Ms. Duncan. Just let Ms. Crockatt finish first.

I think you're finished now, are you?