Evidence of meeting #17 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 alberta.
A recording is available from Parliament.
9:40 a.m.
Director, Industrial Economic Trends, The Conference Board of Canada
I don't know how to answer that. We haven't done the analysis so I can't really say whether or not.... I don't even know which programs you're talking about so I can't really comment on whether or not they're appropriate.
9:40 a.m.
Conservative
The Chair Conservative Leon Benoit
Thank you very much.
Thank you, Mr. Regan.
We go now to the five-minute round. We'll start with Mr. Trost, followed by Ms. Crockatt and then Ms. Duncan.
Go ahead, please, Mr. Trost, for up to five minutes.
9:40 a.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
To Ms. Mitchell, following up on the question that I started with, you had outlined some of the current benefits. But you talked quite encouragingly about the potential New Brunswick has. We don't think of New Brunswick as exactly an oil and gas centre in Canada. So what would it take to realize some of that potential that you're talking about? We know some things with pipelines. Could you outline for us some of the steps? And who are the actors who would have to take them, for New Brunswick to become like Saskatchewan, like Alberta, and like Newfoundland, which is becoming very successful in this industry?
9:45 a.m.
President, Atlantica Centre for Energy
As an example, for Nova Scotia, there's $4 billion in offshore investment going out to 2025, which generates $700 million in royalties during that period. New Brunswick has larger proven and probable reserves, natural gas. That's the kind of economic impact we're talking about. What would have to happen to develop those is right now we do have the regulatory framework in place. That's one thing. The second is attracting that investment from other shale plays around North America.
There has been in the United States a 518% increase in shale gas production from 2007 to 2011. In particular, this has created full employment in North Dakota. The same thing could happen in New Brunswick. So really it's a matter of attracting that investment to the province. We have licences in place. There are companies that are interested in doing the exploration. The New Brunswick government has the regulatory framework in place. So really it's a matter of getting the parties together and getting the development started.
9:45 a.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
One of the things you noted was about how much Saskatchewan gets in some of its resource revenues relative to New Brunswick's equalization payments. Blue-sky here a little bit: I don't know if you have numbers on this. If the industry develops with the economic projections that you've been involved with or have referenced, is it possible that New Brunswick could move from being a have-not province with a higher unemployment rate than the national average, to being a have province with a lower unemployment rate than the national average, if this industry is successfully developed or successfully expanded?
9:45 a.m.
President, Atlantica Centre for Energy
I think that's exactly the potential we have here presented before us with respect to the natural resources that we know we have in New Brunswick, in particular, in this case, speaking of natural gas. It's to look at the opportunity for Atlantic Canada, and particularly New Brunswick, and further developing our natural gas specifically from shale formations, just as other regions in North America have done.
9:45 a.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
My question is to Mr. Burt. You had noted how there are other elements of the supply chain, not just refineries and upgraders, that could be developed. You talked about manufacturing. Could you explain to us some of the distribution across the country? Where are we seeing that manufacturing take place? Is it just in Alberta or is it spread around the country? What centres are being tied in? Who are the people who are benefiting from the oil sands, who may not realize they're benefiting from it?
9:45 a.m.
Director, Industrial Economic Trends, The Conference Board of Canada
Manufacturing, because it's more tradable than other types of goods and services generally speaking, is one of the products for which we see more trading across provincial borders. I will say there's plenty of opportunity to improve domestic trade ties with the oil sands. We actually import more from outside the country than we do from other provinces into Alberta as a result of the oil sands. There are lots of opportunities to improve domestic supply chains.
It varies by region. The big manufacturing inputs going into the oil sands are things like steel, manufactured metal products, different types of machinery. The things that are very specific to the oil sands tend to occur in Alberta so there's definitely a cluster there associated with those things, but a lot of secondary things might come from elsewhere. For example, from Saskatchewan there's a fair amount of steel coming in and there's a fair amount of metal products coming from Ontario. Even out east the Michelin plant in Nova Scotia provides tires that go onto some of the vehicles that are used in the oil sands. It goes right across the country. It's tied to what's produced in the local regions and then how they've been able to link with Alberta.
As I said, 30% of the supply chain effects in terms of employment occur outside of Alberta. Ontario is the biggest beneficiary. They have half of that. B.C., Quebec, and the other prairie provinces each split the rest of that between them. The Atlantic ties are fairly small, to be honest. The biggest impact for most of the Atlantic provinces is the income remittances they get from people who are working temporarily in the region.
9:50 a.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Thank you, Mr. Trost.
We go now to Ms. Crockatt for up to five minutes.
March 4th, 2014 / 9:50 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Thank you very much, Mr. Chair, and thank you to all our witnesses for being here today.
I want to follow up on Mr. Trost's question because I'm interested in the induced effects as well. I know it's not always a straight uptick when you're investing and that it can fluctuate a bit, but I wonder if you could talk about some of the investors in the oil sands, because I think some individuals might be surprised to know who some of the investors are. I wonder if you know about OMERS and the Ontario Teachers' Pension Plan's investments in the oil sands and could tell us anything about that.
9:50 a.m.
Director, Industrial Economic Trends, The Conference Board of Canada
Obviously it's a very capital-intensive industry. We're talking about billions of dollars being invested. That money comes from a variety of sources. Roughly half of the ownership in the oil and gas sector is foreign. The other half is domestic. It comes from different sources. As you say, pension plans are one of those sources. Equity markets, private wealth, there are lots of different potential sources.
In terms of foreign investment, the U.S. is the largest source, but we have seen growing investment coming from Asia as well.
9:50 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Are you aware that the Ontario municipal employment pension plan and the Ontario Teachers' Pension Plan are two of the largest investors in the Canadian oil sands?
9:50 a.m.
Director, Industrial Economic Trends, The Conference Board of Canada
I wasn't aware of the fact.
9:50 a.m.
Conservative
9:50 a.m.
President and Chief Executive Officer, Canadian Energy Pipeline Association
I don't have hard numbers. Michael may know this more tightly than myself, but I would point generally to the Toronto Stock Exchange, for instance, which is broadly held by a lot of those sorts of investors. I think about 25% is energy related at this point in time in Canada. So any large pension plans would certainly have a stake in this.
9:50 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Essentially you're saying that Canadians are heavily invested in the energy industry for their pensions. Is that taking that too far or...?
9:50 a.m.
President and Chief Executive Officer, Canadian Energy Pipeline Association
That's my understanding absolutely, in respect of anyone who has gone beyond simply holding a GIC in a bank. Any other types of investments, about one in four of those dollars are typically in energy as I understand. I'm not an expert in the field.
9:50 a.m.
Director, Industrial Economic Trends, The Conference Board of Canada
It's fair enough to say that given that energy's a large component of the Toronto Stock Exchange, anyone who owns mutual funds, pension funds, these sorts of things, would indirectly be invested in the oil sands, yes.
9:50 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Did I hear you say one in four pension dollars would be invested in energy?
9:50 a.m.
President and Chief Executive Officer, Canadian Energy Pipeline Association
These are publicly available numbers to be corroborated, but my understanding is that currently the Toronto Stock Exchange is roughly 25% valued related to energy.
9:50 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Thank you very much.
Could I ask a little more about Ontario, going back to you, Mr. Burt? You're saying industries with the largest above-average employment effects—these are effects from the oil and gas industry in Ontario—include scientific services, science and technical consulting, scientific research and development, computer services, accounting for one-fifth of the manufacturing employment effects. Do you have any examples that you ran across as you were doing that analysis?
9:50 a.m.
Director, Industrial Economic Trends, The Conference Board of Canada
It's only four businesses, but we actually highlight a few companies that have been working with the oil sands in other provinces.
The main objective is to try and understand how we improve domestic supply chains and how they become successful suppliers to the oil sands. There are a few examples in the bigger report.
9:50 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Maybe I'll pass on to Colleen Mitchell if I could. Thanks for that.
While you're here, I'd like to know with regard to New Brunswick—if you could bring this home for us—what examples have you seen personally or companies you know of that are part of this? It's sometimes hard for us to get our heads around when we see huge numbers in the billions of dollars.
Have you seen local companies—I think we heard about a Michelin tire plant just in passing—that are actually benefiting real folks who buy washers, dryers, cars, fridges, and stoves? Can you give us one or two concrete examples of that in New Brunswick or Atlantic Canada?
9:50 a.m.
President, Atlantica Centre for Energy
Absolutely. We'll take the engineering sector as an example. Consulting engineers in New Brunswick are constantly looking for engineering solutions to the oil and gas industry.
One that is coming currently as we are speaking is the processing of waste water from natural gas exploration activity. There are companies, such as Fundy Engineering, Stantec, exp Services, all local companies based here in Atlantic Canada, or have offices here in Atlantic Canada, that are working with exploration companies for the treatment of the spent waste water that comes from the exploration activity. So there's one right off the top of my head.
If you also look at the contractors who are required for my earlier example of a refinery turnaround, it spans the whole thing from taxis to restaurants, to plumbers and pipefitters who are physically doing the work. When you have 2,000 extra people on site, it's phenomenal the amount of spinoff activity that does become generated. You won't be able to find a hotel room in St. John as an example. Short-term lodging will be completely taken up.
These are just a couple of examples, but in particular with the engineering businesses located in Atlantic Canada, they are always working hand in glove with the various suppliers to the energy industry looking for engineering solutions.