Evidence of meeting #16 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was study.
A recording is available from Parliament.
9:40 a.m.
Conservative
The Chair Conservative Leon Benoit
As you know, Mr. Regan, the officials don't determine the scope of the study.
9:40 a.m.
Conservative
The Chair Conservative Leon Benoit
—on the oil and gas sector of our energy economy. That's what the study is clearly about, we all know that, and that's the way we will proceed.
Ms. Duncan.
9:40 a.m.
NDP
Linda Duncan NDP Edmonton Strathcona, AB
The problem, Mr. Chair, is that the experts, however they were advised on what they were come and speak to....
A good half of the material is about the energy sector, which is very interesting. The energy sector in Canada is and could be much more diverse, and they're showing that potential. Some of the overheads in the presentation talk just about oil and gas, and then towards the end we're talking about promoting energy innovation and efficiency, including hydro.
If the focus of this review is going to be only oil and gas, I think we might be well advised to say, in deference to the officials, who may have been left with some confusion on exactly what we needed from them, that they may want to revisit and pare this back and again provide us with information only on what the oil and gas sector is doing.
They could remove all of the other sectors—
9:45 a.m.
NDP
Linda Duncan NDP Edmonton Strathcona, AB
—because that's not giving us a picture of just the oil and gas sector. They may well have it at their fingertips, or they may be able to drill down, but I don't think we're being....
You know, we're trying to respond to what they provided to us. That's why we're getting into the material they've provided. It is making it difficult.
9:45 a.m.
Conservative
The Chair Conservative Leon Benoit
As you know, Ms. Duncan, witnesses can provide whatever information they choose. The study is focused on the oil and gas sector of the Canadian energy economy. I don't think we're disagreeing on that.
Let's just proceed.
Mr. Julian, are you ready to move ahead on that?
February 27th, 2014 / 9:45 a.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you, Mr. Chair.
Yes, I think we've clarified it. We've taken a look at the motion. It's very clear that it's not limited to oil and gas. I think that's an important point.
But I certainly appreciate our witnesses coming forward. I'm a former oil refinery worker, so I understand the benefits of the oil and gas industry—there's no doubt—but it has to be done in a framework where we're maximizing economic value and it has to be done in a framework where we're minimizing the economic consequences. I think public concern right now is that neither of those things is happening.
I'm interested in coming to the first part, which is the value added. I'm interested in knowing whether there's been any analysis done within the department on how a potential national strategy could look, one that is based on really looking at value-added upgrading and refining here in Canada. The refinery I used to work for is closed, and so many others have closed as well.
Mr. Khosla, are there internally within the department any discussions about how we could put in place a dynamic national energy strategy that puts much more emphasis on value added?
9:45 a.m.
Assistant Deputy Minister, Energy Sector, Department of Natural Resources
In terms of an overall energy strategy, what I would say just off the top—I think you got to it in the second part—is that we're a little different from many of the other international players around the world in that we're a market-based system, and we're very lucky to have that system. We really do rely on the market to drive the energy resource, the energy play.
Secondly, the provinces, as you know from the overall construct, own the resources. Generally our role in the federal government has been to try to facilitate to the extent possible the development of these resources in, as you mentioned, a responsible and time-oriented way.
From an overall strategic perspective, in the deck we talked about some key imperatives. Responsible resource development, meaning that we want to put in play constructs such as time-oriented development—
9:45 a.m.
Assistant Deputy Minister, Energy Sector, Department of Natural Resources
Sorry; I'm just getting to the components on the strategy.
9:45 a.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
What I'm actually looking at is the value-added component. Could you speak to that, to whether there has been any analysis within the department, any studies you could release to this committee that indicate what the economic added value would be of providing for more upgrading and refining in Canada?
9:45 a.m.
Assistant Deputy Minister, Energy Sector, Department of Natural Resources
Sorry. So specific on refining?
9:45 a.m.
Assistant Deputy Minister, Energy Sector, Department of Natural Resources
Upgrading and refining.... Sorry, I was dancing on the other part of the question, which is what is the strategy, the overall national energy plan. I thought you were asking about that.
There are components we are driving forward on. I'm not sure we would label it so much a national plan as an action plan to get things done.
In terms of upgrading and refining, I'm going to ask Jeff to take the question, but I'll come back to the point that we're a market-oriented economy when it comes to energy, and those decisions are largely driven by the private sector. We do our best to facilitate, and we engage with the private sector where and when they need regulatory approvals, where and when they are looking for any other kinds of government levers that need to move forward.
9:50 a.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Sorry. I only have five minutes so I'll pass it on to Mr. Labonté if he could respond.
9:50 a.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
I appreciate the question. Certainly in a market-based energy system and the way Canada operates private investors and companies make decisions about where to and when to upgrade and how to refine product based on their view of the market and the returns to their investments.
As you would know from your experience working in the sector, it's an extremely capital-intensive sector. It's certainly one that's globally competitive.
9:50 a.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
I'm aware of all that. My specific question that I'll ask—this is the third time I'm asking it—is whether you have done any studies on how the federal government could take initiatives to provide for more upgrading and refining in Canada.
The North West Upgrading Inc. in Alberta is a good example. You could talk about market-based forces, but what the Government of Alberta did in this case—and I disagree with a lot of what the Government of Alberta does—in using the bitumen royalties to actually stimulate upgrading in Canada is a very good idea. It's the kind of thing former premier Peter Lougheed would have spoken very positively on.
I'm wondering to what extent within the department there have been any discussions, any studies, anything whatsoever you can release to this committee about value added stimulating upgrading and refining in Canada.
9:50 a.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
I think generally, to take two parts to the question, the first part would be that if it's a market-based system, the government doesn't generally pick winners and losers as to whether or not the upgrading should occur here, there, or elsewhere.
9:50 a.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
So what you're saying is that there have been no studies, no discussions, within the department. That's what I'm hearing.
9:50 a.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
We certainly examine and study what's happening in the market and what's happening with investors, and the North West Upgrading is interesting. Certainly there's a proposal on the west coast by Mr. Black where he has proposed something.
9:50 a.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Is there anything within the department that you can...? Otherwise I think I'll have to draw the conclusion that you're simply not looking at value added within the department.
Is there anything you can release to us?
9:50 a.m.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
I think we look at it. I think your question said is there anything the department was considering in a study that would stimulate, and I would say, no, we have not considered anything to stimulate, although we do look at value added and what its value does and how it works. But we haven't been looking at programs to stimulate. No.
