Natural Resources Committee on April 3rd, 2014

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Leslie.

We go now to Ms. Block, for up to five minutes.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Chair, if my questions don't take me right through the five minutes, I will definitely share my time with either Mr. Trost or Mr. Calkins.

Our government introduced the responsible resource development plan back in 2012, which certainly has a focus of ensuring that projects are approved in a timely and predictable way, but also with a view of strengthening environmental protections. I certainly throughout this study have come to understand that, following up on the comments my colleague was making earlier, and Ms. Charlton, just in terms of the either/or or both/and conversation that we tend to have when it comes to non-renewables versus renewables, the responsible development of our oil and gas sectors creates a space for us to continue looking at innovations and renewable sources of energy.

What I would like you to do, Ms. Kennedy, is talk to us a little bit about COSIA and the work that group does.

[Heather Kennedy]

Canada's Oil Sands Innovation Alliance is an alliance of 13 oil sands companies that I think actually just spoke to a lot of what Ms. Leslie and Mr. Leach were just speaking about around innovation. A natural part of research and development is failure; a natural part of research and development is learning. If you're in an industry such as ours which is so vested in technology and needs technology to continually improve, it is far better off to share those learnings and those failures rather than repeat them over and over again and hoard them.

So the 13 CEOs got together and signed an agreement, and it's the only kind in the world, actually, where intellectual property is shared among all of the companies. Each company is required to put a certain amount in each year, so you can't just ride on the coattails of others. You actually have to participate actively in research and development and share it. It started two years ago, and right now there's a billion dollars' worth of intellectual property that's being shared, 560 projects to be exact. We are starting to see some of the benefits.

I can speak to a small example at Suncor. Another company did some research with an initiative called Faster Forests. It allows us actually to plant trees. It saves us about $5 million and allows us to reclaim land much faster. We didn't have to do anything to that, for example.

On some of the centrifuging technology around tailings, Syncrude developed it, and Shell is using it without having to use the technology. In fact, there are actually some parallels to some of the steel industry. Erosion is actually one of the biggest challenges in our industry. The sand can be quite abrasive, as one would imagine. So development of new kinds of steel.... There's some technology now that rather than it just happening and the rest of us having to figure it out, we're using it industry-wide. That's, of course, to the benefit both from a safety and a cost perspective.

It's very innovative, and I would venture a guess if I were to come back here in two or three years, there would be some absolute breakthrough technologies that were a result of COSIA and the sharing of technology.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

[The Chair, Conservative, Leon Benoit]

You have about a minute left.

Go ahead, Mr. Calkins.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I was hoping that maybe Heather would be able to provide some insight on the fleets of vehicles that are used up in the oil sands and where they come from.

[Heather Kennedy]

I'm so...[Inaudible—Editor]...I shouldn't have to answer that question.

[Voices]

Oh, oh!

[Heather Kennedy]

We have fleets of thousands of vehicles and most of them are with one particular manufacturer. But I can get back to you on the specific details.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

You don't have to give the manufacturer; just tell us that they're Canadian or North American made and I think that would be—

[Heather Kennedy]

That they are.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Okay, and that's great news.

[Heather Kennedy]

There are thousands of them and they're all white pickups.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Fantastic.

[The Chair, Conservative, Leon Benoit]

Okay, we're on to the next round.

Mr. Calkins or Mr. Trost. Who's going to start off?

Go ahead, Mr. Trost.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Following up with Mr. Leach, you made a remark about how...and we know this in Saskatoon, anecdotally, that salaries are under pressure throughout western Canada due to the higher salaries being paid in the oil sands.

As far as you know, have there been any studies done to calculate what the impacts are on wage rates for various skilled trades throughout not just Alberta, but western Canada, and increasingly throughout Canada, due to the situation with the oil sands?

[Dr. Andrew Leach]

I don't have a specific study that I could point you to apart from Statistics Canada data that shows very clearly western Canadian wages outstripping Canadian wage growth significantly. Stephen Gordon has significant writings on specific sector wages. He's frequently at Maclean's magazine, processing some of those data. That would be a good source to start with.

Again, what you do see is not just manufacturing sector wages or skilled trade wages. You see essentially all Canadian wages being pulled up by that increased labour demand relative to what would happen if we didn't have that industrial growth.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

That would just be the general macroeconomic analysis rather than anything specific.

[Dr. Andrew Leach]

Well, at the sector level or at the skill level, that does it just as well. I just don't have it in front of me.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Okay, that's totally understandable.

Ms. Kennedy, you've been the one most directly involved in this and everyone else tends to spin off this. Looking forward, we've been going through this now for a few weeks seeing what the benefits are, where and how. If you could pick one or two things that would allow your industry, your company, to grow more, and therefore allow more of the spinoffs to spread throughout the country, what would they be?

We're not opposed to Fort McMurray getting as much benefit as possible, but as my good friend Brian Jean has pointed out, there's a lot of pressure there due to the geographical constraints. What can we do from a prescriptive perspective at the federal level to allow the benefits to continue to spread out throughout the country?

[Heather Kennedy]

Back to Ms. Block's comment, I think from a government's perspective continuing with the implementation of responsible resource development is an important component, so that creates some certainty and creates some stability.

The second point I would make is actually local to Fort McMurray, but is relevant. It's around infrastructure investment. Oddly enough, it's probably one of the only large-scale industrial investments in the world that doesn't have a rail line that goes right to it. I think there are some opportunities to invest in infrastructure there. The reason I mention it is, if that can significantly reduce cost, then that will actually help across the country.

The third piece I would talk about is technology. We think the opportunity to create the technology breakthrough in the oil sands probably doesn't rest anywhere near Fort McMurray. It's somewhere else, either with supply companies or universities, and so continuing support for research and development in technology would be absolutely critical.

Probably the last thing is around labour mobility. It's very important for us to hire Canadians and also to hire folks who are into the non-traditional roles, so being able to move or get across Canada more easily so you can have a good wage and support your family, we think, is critical. So it's continued work on labour mobility.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I saw a couple of other witnesses nodding when you were making your remarks, so I will throw that out to Mr. Leach or Mr. Mallay.

Do you want to answer the same question? From your perspective, is there one thing that you could add to what Ms. Kennedy has said that would help bring the benefits to Sarnia?

[George Mallay]

The one thing for us currently is the movement of large modules. We have the ability to make large modules inside existing facilities all year round. I guess there are two things that need to happen. One is changes by engineers in terms of design of modules so that they can be smaller. Two, we can manufacture large modules now and ship them to Thunder Bay, but then the problem is getting them from Thunder Bay to the oil sands. If that transportation—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

So it's an infrastructure question.

[George Mallay]

It's an infrastructure problem, yes.