Evidence of meeting #25 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 ukraine.
A recording is available from Parliament.
10:35 a.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
We continue our questioning with Mr. Nicholls and then finally with Ms. Crockatt.
Mr. Nicholls, go ahead, for up to five minutes.
10:35 a.m.
NDP
Jamie Nicholls NDP Vaudreuil—Soulanges, QC
Thank you, Mr. Chair.
My question will be for Mr. Langrish, Mr. Salkeld, and Mr. Sorensen.
Are you aware of Bill H.R. 6, introduced in the American House of Representatives on March 6, 2014, which seeks to fast-track approvals for LNG terminals in the United States? Can you comment on how much of the attention being given to energy security in Ukraine and Europe is related to what's happening in Washington and a concern that the Canadian supply of gas is being pushed out of the LNG market by the Americans?
10:35 a.m.
Conservative
10:35 a.m.
Executive Director, Canada Europe Round Table for Business
I think Alfred should go.
10:35 a.m.
President and Chief Executive Officer, Pieridae Energy Ltd.
I'll go first.
10:35 a.m.
President and Chief Executive Officer, Pieridae Energy Ltd.
All right.
Well, certainly I saw that with the U.S. side. It's an important part of my business to understand what's going to affect us.
I think within the United States there are two issues. Where the gas is and how it can get out of a country are two things. There might be a political angle to this whole thing. Both our countries have infrastructure issues in trying to export LNG. I think those are good statements that are being made to perhaps show Russia that they're serious. Certainly there's a window of opportunity, and how Canada reacts to that window of opportunity certainly is.... I think we are. I don't see it's a threat to Canada one way or the other. Both countries operate on a commercial basis. I think it's trying to set an environment in the United States that's more friendly to development. Canada is already there, so I don't really think that's a big issue.
10:35 a.m.
Executive Director, Canada Europe Round Table for Business
I'd just add that it is commercially driven. I'm not so sure it's an energy security piece. It's basically just getting this product out to international markets so it's not sitting at $4.
But, by way of background, generally speaking in the United States you can't export oil or gas to a country unless you have a free trade agreement with that country. It's very difficult, and that's why they're taking this alternative approach. For a lot of these markets they're looking to sell this gas to, they don't have free trade agreements. They need to have other legislative requirements in place, and that's what they're doing with this bill so that they can export.
10:35 a.m.
President and Chief Executive Officer, Petroleum Services Association of Canada
Respectfully, I'll pass on that question. It's outside my area of expertise.
10:35 a.m.
NDP
10:35 a.m.
NDP
Tyrone Benskin NDP Jeanne-Le Ber, QC
Thank you.
I don't speak a word of Polish, but welcome to the Polish delegation, and welcome to the Canadians giving testimony. It is much appreciated.
To our Polish witnesses, you touched on the issue of energy inefficiency, and your colleague Mr. Kijewski had mentioned that one of the issues around energy inefficiency was the low pricing.
Can you elaborate a little more on what other issues are contributing to such a low energy efficiency rate in the Ukraine. What were the steps that you took in Poland to help improve yours?
Thank you.
10:35 a.m.
Acting Director, Economic Cooperation Department, Ministry of Foreign Affairs of the Republic of Poland
Well, we're talking about prices, but I get an impression that energy efficiency needs to be approached in a more comprehensive way. If you are looking at what is happening right now, a number of organizations have pointed out the need to increase and to work toward energy efficiency improvement in Ukraine. A lot of efforts are being made by [Inaudible--Editor] and different constellations of cooperation for Ukraine.
My understanding is that there is going to be a comprehensive strategy toward energy efficiency projects in Ukraine that will help develop the entire regulatory framework needed for the energy efficiency projects being carried out, and that it will create the investment climate for private sector to carry out the projects needed to increase energy efficiency there.
I would say that these two elements are key to the success of the entire exercise of energy efficiency projects in Ukraine.
10:40 a.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Thank you, Mr. Benskin and Mr. Nicholls.
We go finally to Ms. Crockatt, for up to five minutes.
Go ahead, please.
10:40 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Thank you very much again to all our witnesses here today. I apologize that I wasn't here for the first part, but it seems to have been fascinating.
We're investigating today and it seems increasingly clear from the testimony we've heard that Canada has the product, the technology, if not yet the infrastructure, to help Ukraine lessen the pressure that Russia is exerting on it as its primary supplier of gas, particularly by raising gas prices. I think the last story I read said gas prices have gone up by 81% in recent weeks. In fact, The Globe and Mail filed a story 36 minutes ago about Gazprom saying that its gas exports to Europe could be disrupted. It's not clear whether this is as a result of or as a response to western sanctions. I think that does put Europe in a slightly precarious position.
Mr. Langrish mentioned that the architecture is there now, the rules are there, and Canadians are well-placed to be able to supply gas to Europe. I think it's sort of a timeframe issue and we're trying to narrow down where we have benefits and where we may have challenges. I'm wondering if I can ask Mr. Sorensen, first of all, then Mr. Salkeld.
10:40 a.m.
Conservative
The Chair Conservative Leon Benoit
Mr. Salkeld has left actually. He indicated he was going to leave early. Go ahead.
10:40 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Okay, sorry.
Mr. Sorensen, maybe I can ask you then. How close are we to actually being able to supply Poland, and is there infrastructure that we can currently use, however creative we might need to be? We've just heard that Poland is going to have an LNG terminal by spring. How close are we to actually being able to supply Europe with Canadian gas and is their infrastructure ready to utilize it?
10:40 a.m.
President and Chief Executive Officer, Pieridae Energy Ltd.
I would say we are not close at all. If one of the west coast terminals, say, were to begin construction in 2014, the end of 2019 would probably be the earliest. Our terminal is coming on in 2020. We have to remember that Canada has depended on the United States for our exports since the gas industry began to grow 15 years ago. There is no infrastructure in place. There's not that much infrastructure in the United States in place to export natural gas outside of the liquefaction terminal in Alaska, but that's not connected to anything. So North America has been an island. It remains an island, and it will remain an island, probably until 2017, and maybe 2018 at the most. Certainly, as a short-term solution to the issues that are going on currently in Ukraine, most of it, I would say today, is about cheering them on, but there's really not very much to be able to be done in the short term, or even the medium term for that matter.
10:40 a.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
What if we look at the west coast as a possibility? I understand that it's probably not the preferred one, but are there any other creative things we can be looking at? I think we've heard that we have world-class operating procedures in Canada, that very few oilfields around the world have been developed without Canadian expertise in one fashion or another. We're a leader in the world. How can we help? Can you see any creative ways in which we could help?
10:40 a.m.
President and Chief Executive Officer, Pieridae Energy Ltd.
Well, I think that companies like RWE, as I mentioned earlier, is now trying to find way to bring gas into Ukraine through the Black Sea. We simply don't have any of those kinds of resources at our disposal. Obviously, crude oil is a much more fungible commodity that can be moved much more easily.
One of the fundamental problems is that the Ukraine doesn't pay for its gas. That's one of the big complaints Gazprom has, or they use that as one of their complaints. So I think it's going to be very difficult. As you heard Mr. Salkeld say earlier, Ukraine is a very difficult environment for most Canadian companies to deal in. People can try to do stuff, but I think in the short term, because the nature of our energy industry is one where there's very little government control outside of owning the resource—the provinces own the resource—I think it will be very difficult to see anything in the short to medium term, because we operate on a commercial basis and it would be very difficult to try and get transactions in place.