Environment Committee on May 17th, 2012

[Dr. Brenda Kenny]

That's a good illustration of an absolutely iconic landscape that any well-meaning citizen would take great pride in and great care with. From a pipeline point of view, it is private investment, but there is a duty to move energy to where it's needed, and that implies crossing landscapes that are vast and varied. The example of Jasper was an existing pipeline right of way that had been there for sixty years and needed to be enlarged to meet further needs.

The company, Kinder Morgan Canada, had extensive consultation in advance of putting forward an application. One of the outcomes was to recognize the question of the biggest challenge ecologically in that region, and that was the mobility of large mammals. You may have heard, from a conservation point of view, about Y2Y: the objective of having a connectivity all the way from Yellowstone to the Yukon for large mammal breeding. That was something the pipeline company put forward, and the outcome of that was a pipeline hearing that lasted only a day and a half.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

What—

[The Chair, Conservative, Mark Warawa]

Your time has expired.

Monsieur Choquette, you have seven minutes.

[François Choquette, NDP, Drummond, QC]

Thank you very much, Mr. Chair.

I want to thank all our witnesses for being here today. I am going start with Mr. Dunn.

You talked about shale gas companies, among others. I had the privilege of meeting with a representative from British Columbia. He was somewhat concerned about a coal bed methane project under way in the northern part of the province.

I am pretty familiar with shale gas, given the big dilemma it presents. My riding of Drummond is home to a lot of shale gas; it's incredibly plentiful. But the residents are very concerned. There are 16 shale gas watch committees made up of citizens. Several hundred people are joining forces to find out what is going on. They are extremely worried because the water being used for the project is well water, groundwater.

There are two systems: the shale gas, which is roughly one, two or sometimes three kilometres deep; and the coal bed methane, which is less than a kilometre deep. Is there any scientific research to confirm that, under a national conservation plan, both of these systems are safe, or should we avoid one of the two?

[Richard Dunn]

I appreciate the question. You bring up a good point in terms of doing the work responsibly.

My opinion is that, yes, both resources can be developed in a responsible manner. Again, there are effective regulations that we operate under that ensure that the work is done responsibly.

One example of those regulations is with regard to shale gas. There are a number of concerns that stakeholders generally would bring forward, and they're very valid concerns, that both the industry and regulators have been addressing in this past year.

To give you a few examples, first off, you've heard a lot, as you mentioned, with respect to disclosure of the chemicals that are used in hydraulic fracturing. The industry as well as the provinces have moved, both in British Columbia and in Alberta, and the industry across Canada has moved, to a commitment to disclosure of those chemicals that are utilized in the hydraulic fracturing process.

Secondly, in terms of the protection of the quality and quantity of fresh groundwater, industry made a number of commitments through the Canadian Association of Petroleum Producers earlier this year in terms of the practices around well-bore integrity, protecting the shale operations, and physically separating them, with solid well-bore integrity, from any kind of potential contamination of groundwater...and as well, in terms of the sourcing of water for the use in hydraulic fracturing operations, made the commitment to look for alternative sources, one of which I mentioned in my talk in terms of looking for the Debolt saline water as an alternative to the use of fresh water.

So between the commitments that industry is making and the regulations we operate under, yes, it can definitely be done, and I think that has to get through to the stakeholders in the area.

[François Choquette, NDP, Drummond, QC]

I want to stay on this topic, as the issue is of the utmost concern to my constituents. A crucial part of a national conservation plan is to make sure water is properly protected. As everyone knows, water is the future.

As you may know, the Canadian Environmental Assessment Act has been amended. Regulations are going to be put in place. We're going from trigger-based assessments to an approach based on a list of projects. Do you think shale gas should be on the list of projects that are subject to a federal environmental assessment?

[Richard Dunn]

Yes, we're used to regulations that address where water is used and the amount. For example, in British Columbia the Ministry of Environment, in their environmental assessment office, has thresholds of water extraction projects that are subject to environmental assessments.

For example, the Debolt project that I mentioned, which provides our source water for hydraulic fracturing in Horn River, was subject to the B.C. environmental assessment process.

[François Choquette, NDP, Drummond, QC]

I want to ask another question on the same topic. I know that, in British Columbia, you have some fine plans to use saline water, for instance. For the time being, though, the contaminated water is mostly concentrated in wells, which we all hope are well insulated to prevent the polluted water from leaking out.

Do you have any plans to reuse the water rather than bury it in other wells? I think the ideal solution would be to reuse the same water. That would be more efficient than losing water, even if it is saline water.

[Richard Dunn]

Definitely looking for alternatives is one of the strategies, but certainly there's also reuse and recycling, utilizing it in other areas to minimize the amount of fresh water we use.

Shell, for example, has a very innovative project where they utilize waste water from the city of Dawson Creek as some of their source water for their hydraulic fracturing operations.

So absolutely we are looking for alternative means to the use of fresh water.

You mentioned the disposal. I will just mention very quickly that there are very strict regulations that govern the integrity of disposal wells in Canada. In fact, in Alberta and British Columbia there is no surface disposal of produced water; it's only allowed underground, under strict regulations.

[The Chair, Conservative, Mark Warawa]

Thank you very much.

Next we'll hear from Mr. Toet. You have seven minutes.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

Thank you to our guests who are with us today. I very much appreciate the input you've given us.

I'm going to start with a question for Ms. Kenny. In your presentation you made a statement that I found quite intriguing. You said that we could create better environmental outcomes than are possible today because of regulatory issues. I'm hoping you can quickly expand on that. I don't want to spend a lot of time on it, but I found it quite intriguing.

[Dr. Brenda Kenny]

I'll use a specific example of past and future. Some of these changes are being addressed through the current budget implementation act.

A large pipeline project—we'll say it's travelling over 1,000 kilometres—might cross over a hundred streams. In the old world you would get worried about each and every stream, as you should in terms of mitigation. But the permitting down at that granular level leaves you with a very incremental view of what's going on. Instead of saying we are going to use best practices and there are standard operating approaches and those should all be applied, let's plan ahead and say that If there were eight of those streams that, during construction, might be impacted, instead of eight little offset projects, why not think about a legacy project that is equal to ten of those? Then you're talking about some significant fish habitat improvements or wetland improvements, etc.

So it's taking a more strategic view than is currently enabled in the legislation. This conservation framework gives you that eye to say we should actually be asking those strategic questions during big project planning.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

You would acknowledge, though, that there could be cases in that where there are some unique situations within crossings that should be looked at in a slightly different context.

[Dr. Brenda Kenny]

Absolutely. And of course when you're actually evaluating the design and the plans, you look at each level. But I am saying that those would be integrated into your plan and addressed on a location-specific venture. But at the same time, you would look strategically at the overall impact of the overall project and ask, how can I do a better job to have—as you heard from some of the other speakers—a net zero impact? That is different from a punitive approach that says that for any damage you deserve a fine. That's not the point. The point is that these projects are for the public interest, and how will you do them best.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

You went further, as you talked about this in your presentation, about the 3% to 5% that it costs for each project going through the process, etc., and that there would be potential savings in that. The implication was that there would be an ability to direct those funds. You used the $1 billion example, so $30 million to $50 million, and you'd talked about the ability to direct those to the larger aspect.

How do we ensure that those funds would actually flow in that direction, and not just be seen as savings, so to speak, and not move to the conservation aspects you had talked about?

[Dr. Brenda Kenny]

That's a great question. I just tried to put that out as an illustration of the kinds of investments that are made that aren't necessarily resulting in any better environmental improvement. For all of those industry investments, keep in mind as well, there are government bureaucrats chasing paper, as opposed to actually doing environmental protection. So I think it's just rethinking where we direct our energy or focus our capital. If there were a decision that the level of investment was necessary, that's fine.

I think you want to take through the framework an overall view of what we are trying to achieve, how best to do it, and how we get there effectively. More process does not result in better environmental outcomes.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Right. The outcome is the ultimate goal. I understand and appreciate that 100%, and we want to enhance those outcomes.

I want to be assured by the statements you've made here. You said that you don't have any problem and the industry doesn't have a problem with the costing, and that's fine. You would look at this as not necessarily a savings but as a way to convert more money into creating better environmental outcomes, parallel to the project.

[Dr. Brenda Kenny]

In your project design, I would say yes. That's what some of these legacy projects are. Certainly some of the examples provided here do cost money. I don't know what the right quantum is.

I would say that before the major projects management office today, for resource projects, is a total of I think close to $200 billion worth of shovel-ready infrastructure. Using our estimate, that means that you're planning to spend $6 billion to $10 billion on process. When I talk to ENGOs and others and say here's a cheque for $5 billion and I ask them how they would like to invest it in environment protection, they don't say to tie it up in processes for years at a time. They say let's get on the ground and figure out what we can do.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I have a quick question regarding the need for education that was touched on in the Suncor presentation. Also, Mr. Collyer, you touched on it. Suncor's call to action was the need for greater education about biodiversity and what it means to Canadians.

Have you considered what this would be and how it could be accomplished? I agree with you that there is a great need for that education. Where does that start, and who are we aiming at in this education process?

[Gordon Lambert]

I think it really starts at all levels of education. At the research level, I touched on the integrated land management research chair at the University of Alberta. At the fundamental level of science and understanding of biodiversity, we still have a real need to develop a better understanding of how to accommodate for biodiversity and understand how ecosystems function in a way that can inform decision-making. In that research realm, we really need to devote resources to move that along.

In terms of other levels of education, it is increasing public awareness of their impacts on the land and how they might mitigate those and think differently about preserving biodiversity.

[David Collyer]

I think at the one level, as Gord mentioned, there is a need to educate about conservation and biodiversity. But I would add to that the need for education on the linkage between conservation and a broader framework. The question is the line of sight between resource development impact and conservation objectives and biodiversity objectives and how we integrate those two. They're not two islands unto themselves.

How can we better convey to the public what responsible development means and the fact that any sort of economic activity in oil or gas or other things is going to have some sort of environmental impact? How do we best address that? And how do we relate it back to the economic and other benefits that derive from it? I think that line-of-sight question is an ongoing challenge.

[The Chair, Conservative, Mark Warawa]

Your time has expired.

We're normally starting the five-minute session. I'm going to use my discretion and give Mr. Pilon seven minutes, and then we'll do another round. We're moving quite quickly. Is that okay? Good.

Mr. Pilon, you have seven minutes.

[François Pilon, NDP, Laval—Les Îles, QC]

Thank you, Mr. Chair.

My first question is for Mr. Collyer and Mr. Elliott.

In your presentations, both of you said the sites needed to be protected and, once the land had been used, restored to their original state. Do you believe the national conservation plan should go as far as halting certain activities if, during the course of the project, we see that it will do irreparable harm?

[David Collyer]

I would answer that question at two levels. First, coming back to the point I made just a moment ago, there will be some form of environmental impact from almost any industrial activity. Our job is to try to mitigate those impacts, and as I said earlier, as a matter of principle, to try to land with regulators and governments and other stakeholders on the appropriate balance between environmental protection and economic growth.

I would certainly not suggest that any sort of economic activity or industrial activity, should it have an environmental impact, be stopped. Our job is to try to mitigate those impacts and find the right balance. As I said in my remarks, I think it's important to think about conservation in that broader context. We try to mitigate or reduce impacts in the first instance. You've heard many examples of that, as Murray will comment in a moment.

We try to make sure we restore and reclaim land that is impacted. In some cases there will be high-value areas that legitimately should be protected, and where land activity in one form or another should be minimized and in some cases precluded. I think it's important to look at it in that broader context and to think about all of this under a broad principle, which is that we need to find the appropriate balance between economic activity and environmental performance, and also think about it in a temporal context whereby you can develop and impact the land and still come back to conservation and other objectives over a period of time.

Murray may want to add to that.

[Murray Elliott]

Sure. Thank you.

First, I completely agree with Dave's comments about the need to have that balance. There are lots of examples whereby projects or activities are recognized to have a more significant impact over time than what was originally approved or thought of. You're seeing adaptive management approaches and changes to legislation and regulation.

Certainly from a Shell perspective, we're about driving continuous performance improvement in our environmental performance, as we are with the rest of our business. So if we find defects or things we see that are not accessible, it's about driving that performance, looking at ways to mitigate it, and potentially looking for ways to offset it.

I agree that we have to find that larger balance and we have to have those logical decisions about what are acceptable impacts at the very front end of these kinds of large projects. The change in regulation is really about having a national conservation framework that would allow us to achieve those objectives over a broad context.