Environment Committee on May 17th, 2012
On the agenda
- David Collyer President, Canadian Association of Petroleum Producers
- Murray Elliott Vice-President, Health, Safety, Environment and Sustainable Development, Shell Canada Limited
- Gordon Lambert Vice-President, Sustainable Development, Suncor Energy Inc.
- Richard Dunn Vice-President, Canadian Division, Regulatory and Government Relations, Encana Corporation
- Brenda Kenny President and Chief Executive Officer, Canadian Energy Pipeline Association
- David Pryce Vice-President, Operations, Canadian Association of Petroleum Producers
- Larry Sears Chairman, Alberta Grazing Leaseholders Association
- Lorne Fitch Provincial Riparian Specialist, Alberta Riparian Habitat Management Society - Cows and Fish
- Bob Jamieson As an Individual
- Jake Veasey Director of Animal Care, Conservation and Research, Calgary Zoo
- Kevin Strange Senior Advisor, Conservation Outreach, Calgary Zoo
- Doug Sawyer Chair, Alberta Beef Producers
- Rich Smith Executive Director, Alberta Beef Producers
- Lynn Grant Chair, Environment Committee, Canadian Cattlemen's Association
- Alan Gardner Executive Director, Southern Alberta Land Trust Society
- Stephen Vandervalk Alberta Vice-President, Western Canadian Wheat Growers Association
- Bill Newton Member, Board of Governors, Western Stock Growers' Association
- Norman Ward Member, Board of Governors, Western Stock Growers' Association
- Fawn Jackson Manager, Environmental Affairs, Canadian Cattlemen's Association
May 17th, 2012 / 9 a.m.
The Chair Mark Warawa
We'll call this meeting to order.
I want to welcome everyone here, this being the 37th meeting of the Standing Committee on Environment and Sustainable Development, as we continue our study on the creation of a national conservation plan.
We have five groups of witnesses today, and each has ten minutes. Then there'll be a wrap-up.
We'll begin hearing from the Canadian Association of Petroleum Producers and then we'll introduce the next group.
David Collyer President, Canadian Association of Petroleum Producers
Good morning, Mr. Chairman and members of the committee.
My name is Dave Collyer. I am the president of the Canadian Association of Petroleum Producers. With me today is Dave Pryce, who is the vice-president of operations at CAPP, and three representatives from our member companies: Richard Dunn from Encana Corporation, Murray Elliott from Shell, and Gordon Lambert with Suncor.
I'm going to provide an overview of our industry's approach to conservation and our views on the proposed plan, after which member representatives will provide examples of the various conservation tools and practices they employ within their respective corporations. Then I'll conclude with some very brief comments.
You may have noticed that I skipped Brenda Kenny. Brenda will have separate remarks from CEPA, the pipeline association.
Let me start by saying that CAPP is supportive of efforts to develop a broad vision for conservation in Canada. That being said, it's important to recognize that conservation involves many governments and a multitude of stakeholders. In that context, we would propose that it would be more constructive, and I think realistic, to focus on development of what we would call a national conservation framework, which establishes broad goals, principles, and priorities under which conservation would be advanced in Canada, rather than what would be perhaps a more prescriptive—and perhaps less realistic and achievable—national conservation plan. In our view, this is more than a semantic difference, and we would encourage the committee to consider repositioning this initiative along those lines. We can address that further in questions, if you wish.
From our perspective, a national conservation framework, or NCF, as I'll refer to it going forward, should align federal, provincial, and territorial conservation initiatives under one broad framework; it should provide a model for integrated planning that realizes both environmental performance and economic growth; and it should provide leadership and direction with regard to the policy and regulatory challenges that Canada faces in supporting and advancing conservation and biodiversity.
I should note that while this presentation will focus on land-based conservation, we believe that the framework I'll be describing is in most respects equally applicable to marine conservation.
Let me start with a few comments on conservation principles. We've consistently articulated three principles that we believe should be the broad basis for environmental policy and regulation. They should also inform the development of a national conservation framework.
The first principle is balance. The NSF should focus on conservation within a policy context that concurrently advances environmental performance, economic growth, and energy security and reliability.
Second, the NCF should address intra- and intergovernmental coordination. In our view, the NCF should serve to align interests within and among governments to reduce overlap and duplication and to improve both efficiency and effectiveness. Importantly, it should also strive to integrate conservation and biodiversity considerations into a broader planning framework. An example is the land use planning work under way in the provinces of Alberta and British Columbia.
Third, there should be clarity and predictability in the process. The NCF should provide stakeholders with clarity and predictability with regard to government policy as it pertains to conservation and biodiversity.
Importantly, in developing an NCF, aboriginal consultation must be considered by governments. We highlight the ongoing need to improve the aboriginal consultation process for the benefit of all parties.
Finally, we would observe that consideration of the NCF is, in our view, very well aligned and entirely compatible with the government's broader actions to encourage and enable responsible resource development in Canada.
I also want to talk a little bit about defining the scope of conservation strategies. We would encourage the committee to take a broad view of the scope of conservation to encourage innovation and excellence in land use approaches and to enable the application of a diversity of conservation tools.
We think there are three dimensions of conservation the committee should consider, while being flexible in how these strategies are applied in specific circumstances.
The first dimension is reducing impacts. What we mean by that is reducing the surface impact of our activity, applying adaptive management techniques, and then monitoring impacts and responding accordingly.
The second dimension is reclamation and restoration. It is imperative that consideration be given to temporal approaches. What we mean by that is allowing land use in the near term with a view to establishing conservation areas over time. Ongoing improvements in reclamation and restoration would allow lands that have been disturbed to be returned to a state that supports both conservation and biodiversity objectives.
The third dimension of the conservation strategy relates to protected areas. We recognize that in some cases it may be necessary to set aside high-value areas and preclude or severely limit use to achieve conservation and biodiversity objectives. However, I think those decisions need to be taken with a full understanding of the opportunity cost of precluding activity.
We would also add that in addition to the above dimensions, the NCF should enable industry to make informed decisions about where and how to contribute to national conservation priorities. Where appropriate, they could make voluntary conservation investments, potentially through public-private partnerships or in partnership with conservation organizations that align with their own corporate stewardship programs. You will hear more about that from our member representatives.
There are a number of what we would see as key foundational elements for an effective national conservation framework. Many of these are informed by what is in place and is working today. We would say that a conservation framework must be structured to enable the best-placed regulatory or government authority to lead the development and delivery of conservation initiatives. It should be characterized by effective and inclusive decision-making processes. Sound science should inform policy and regulatory decisions pertaining to conservation and biodiversity. But science alone should not be determinative.
A conservation framework must allow for flexibility and balance in establishing conservation objectives and strategies. A conservation framework must establish a comprehensive monitoring, evaluation, and reporting system to track performance and to inform adaptive management strategies.
Finally, a conservation framework must enable collaboration among industry and non-governmental organizations that are committed to addressing conservation objectives in innovative ways.
As noted, there is a lot of good conservation work under way today. The system is by no means broken, but collectively we believe that it can do better. In considering an NCF, we suggest that the committee focus on opportunities for improvement in conservation and biodiversity outcomes that address the following areas.
First is collaboration. Enhance engagement and collaboration in both policy development and implementation among diverse interests that have a stake in conservation and biodiversity.
On technology and innovation, the advancement of innovative conservation and biodiversity tools and approaches can be accelerated through improved industry collaboration and information sharing—the recently formed Canada’s Oil Sands Innovation Alliance, or COSIA, is an example of that—along with more effective interfaces among industry, government, academia, research, and other institutions.
On alignment, a more consistent approach will drive progress and encourage shared responsibility and ownership among diverse stakeholders.
On integration, conservation is not a policy island unto itself, but rather the conservation framework must be integrated into broader environmental policy and regulation.
On adequate resourcing, NCF will require long-term, durable funding and resourcing commitments.
Finally, on education, as it applies to many other areas of the energy and environment arena, there is a need for improved public understanding of conservation and biodiversity, and of how these fit into the broader policy and regulatory framework for responsible development of natural resources in Canada.
Mr. Chairman and committee, that provides a broad overview of our industry's perspective on the national conservation framework, as we would prefer it to be referred to. I'm now going to turn over the discussion to our member representatives, who will provide some examples of how they approach this matter within their own companies. They will provide some examples of the application of conservation and biodiversity initiatives.
Murray Elliott of Shell will start.
The Chair Mark Warawa
Mr. Elliott, you have ten minutes.
Murray Elliott Vice-President, Health, Safety, Environment and Sustainable Development, Shell Canada Limited
My name is Murray Elliott. I'm the vice-president for health, safety, environment and sustainable development in Shell's heavy-oil business. Thanks for the opportunity to speak on behalf of Shell Canada and contribute to the House of Commons Standing Committee on Environment and Sustainable Development's study on a national conservation plan.
First, I'd like to note that Shell Canada shares CAPP's view that a national conservation framework would best inform future conservation discussions within the context of a balanced policy and regulatory reform in which environmental performance is addressed alongside economic growth and energy security.
Shell is of the view that flexible conservation strategies, rather than prescriptive plans, are the preferred means to mobilize industry to continue developing innovative and effective conservation strategies, such as reducing impacts, reclaiming lands, and setting aside lands with particular ecological value. We recognize that land conservation and biodiversity protection should be an integral part of all development.
Shell's business principles include commitments to contribute to sustainable development. This requires us to balance short- and long-term interests, and to integrate economic, environmental, and social considerations into business decision-making.
We aim to deliver benefits and reduce our impact through the choices we make about which projects to invest in by making more energy-efficient products and by reducing the impact of our operations.
I would like to provide a brief description of some of Shell's activities to illustrate how companies in the oil and gas sector contribute to conservation.
First, our seismic surveys used to explore for oil and gas are designed to minimize surface disturbance. Today two- to three-metre-wide seismic lines are cut with mulchers to avoid damage to near surface layers of soil. In the past these lines would have been cut by bulldozers in an eight-metre-wide swath. Meandering lines have replaced straight-cut lines to reduce predator impact and to preserve the forest canopy. The recording phase often uses heli-assisted techniques to minimize the need for vehicular access.
Many of the impacts of oil and gas development are temporary. In Shell's in situ oil sands business, two cycles of wells have been drilled, produced, and abandoned. Much of this land has been reclaimed. In the 1970s wells were drilled from individual, well-spaced pads, and all subsequent drilling has been based from multi-well pads to reduce surface footprint impacts.
Shell Canada has a long history of promoting land and marine conservation. Shell has been a partner with the Nature Conservancy of Canada for more than 28 years.
In 1992 Shell donated 8,900 hectares, or 22,000 acres, of land to establish the Mount Broadwood Heritage Conservation Area in British Columbia.
In 1997 Shell Canada was one of four oil and gas companies to relinquish mineral rights to 130,000 hectares, or 320,000 acres, off the west coast of Canada. This was the first step in establishing the Gwaii Haanas National Marine Conservation Area Reserve.
Shell's heavy-oil business has a land and reclamation strategy in place. Given that oil sands reclamation takes decades to complete, purchasing land elsewhere in the boreal zone of Alberta allows us to take action in the short term.
One of our long-term aspirational goals is to achieve a net neutral disturbance by offsetting our active footprint through reclaiming or conserving lands.
Since 2007 we've acquired more than 500 hectares, or 1,200 acres, of land in the southern boreal zone of Alberta in association with the Alberta Conservation Association.
Earlier this year Shell Canada announced the purchase of Shell True North Forest, an additional 740-hectare, or 1,800-acre, tract of land in northern Alberta to conserve boreal forest habitat. The lands were secured through another arrangement with the Alberta Conservation Association.
The Chair Mark Warawa
Thank you, Mr. Elliott.
Next we will hear from Suncor. You have ten minutes.
Gordon Lambert Vice-President, Sustainable Development, Suncor Energy Inc.
Thank you, Mr. Chair.
My name is Gordon Lambert, and I'm vice-president of sustainable development for Suncor Energy.
We very much welcome the opportunity to contribute to the House of Commons Standing Committee on Environment and Sustainable Development's study on a national conservation plan.
To introduce Suncor for you, we've been developing the oil sands since 1967. We're currently Canada's largest integrated energy company operating in all provinces. We have refining and marketing under the Petro-Canada brand, the oil sands business, and we're very active in renewable energy--wind and biofuels.
Suncor is committed to being a good steward of the land through responsible resource development. We have public goals on land reclamation, water use, air emissions, and energy efficiency. Energy development does disturb land; there's no way around that. However, the land is not lost forever.
Suncor has adopted the triad approach to address our impacts on the land. This triad approach—think of it as a three-legged stool—consists of extensive land uses where we can apply best practices to minimize land disturbance. In-situ oil sands development falls into that category. Second is intensive land uses—mining would be an example—where the impact of the activity is very extensive. Third is protected and conserved lands.
Mining operations are considered intensive, while in-situ is considered extensive. Suncor has supported the integrated land management work, and has supported a research chair in that area over many years.
We also worked to identify conservation areas and ecological priorities, and the use of best practices to minimize land impacts. Our approach generally is simple to describe. We minimize or avoid disturbance wherever possible, as this makes good ecological and economic sense. When there is a disturbance, we use a combination of voluntary and regulatory reclamation measures to address the disturbance at a landscape level. I will mention some voluntary examples in a moment.
We are committed to reclaiming the land that we disturb and accelerating the pace of reclamation. We also undertake conservation of lands in regions where we operate working with stakeholders.
I will give you some examples of best practices. There are tremendous steps being taken. One of those is the reclamation of the first tailings pond that was built as part of oil sands development. It's now known as Wapisiw Lookout. It's the first pond closure. We're working very hard to reduce our land footprint. This is a great example of the temporal nature of reclamation of disturbed lands. That original tailings pond was built some 45 years ago, and it's now being returned to a natural state.
We also have developed and are deploying a new technology to de-water tailings, which will accelerate future pond closures to reduce our footprint on the landscape even further. This technology will allow us to cancel four planned tailings ponds. It's a great example of technology being used to minimize future disturbances. As we speak, we're in the midst of a $1.2 billion capital project to deploy that technology on a large scale.
We have also shared this technology with our industry peers. Canada’s Oil Sands Innovation Alliance, recently announced, will be the vehicle for progressing on our technology that we've shared with others and for Suncor to take advantage of technologies developed by our peers.
The oil sands leadership initiative, I would highlight, has also developed a comprehensive land disturbance map of the oil sands region, documenting everything from walking and all-terrain vehicle trails to seismic lines and pipeline corridors. This past winter, the OSLI member companies revegetated the Algar region, located southwest of Fort McMurray. The treatments included winter planting and mounding of 65 linear kilometres of historic seismic lines to reduce forest fragmentation in a caribou zone.
We're proud to mention that this area is entirely off-lease from OSLI member companies' operations, and more land restoration and conservation is planned. That is, instead of member companies focusing only on our own land leases, we are looking regionally across the oil sands resource to see where it makes most sense to plant trees, initiate caribou protection programs, or carve out conservation areas.
Suncor is also a partner in a project aimed at restoring the woodland caribou herd in the west-central Alberta area of Little Smoky. Together with Conoco, we've invested $1 million in habitat restoration work in that region.
I'd like to touch on conservation for a moment. We're a strong supporter; as my Shell colleague pointed out, a number of companies participate with conservation groups that provide strong ecological and conservation solutions. Suncor and Petro-Canada supported the Nature Conservancy of Canada to advance the conservation science and explore opportunities for land conservation initiatives in the western boreal plains.
Another example is that over a nine-year partnership with the Alberta Conservation Association, through the Suncor Energy Foundation we have conserved approximately 5,000 acres in the boreal forest of northern Alberta with the goal of reducing forest fragmentation. This partnership has served as a model for other companies who are also now engaging with the Alberta Conservation Association.
Suncor has also signed a memorandum of understanding with Ducks Unlimited Canada to coordinate research into watershed function and raise awareness of the importance of wetlands. A specific example includes consultation on pipeline routings through and around wetlands. We have worked with Ducks Unlimited Canada to plan and create a pilot fen in Fort McMurray. Our work has shown that fens can be developed in decades, not centuries, as had previously been assumed.
Suncor is also a supporter of the Boreal Leadership Council, which is endeavouring to conserve 50% of the boreal forest on a national basis across Canada. It's a terrific example of a national partnership involving a vision that's been developed with 20 first nations, environmental groups, and resource companies. We also are doing work on caribou and the Mackenzie River Basin.
On biodiversity, we consult with other companies about how to minimize local impacts. That includes forest and other oil companies. This is known as integrated landscape management, and it includes sharing access roads or using land already disturbed by previous development.
The Chair Mark Warawa
Thank you very much.
Next we will hear from Encana Corporation. You have ten minutes.
Richard Dunn Vice-President, Canadian Division, Regulatory and Government Relations, Encana Corporation
Good morning. I'm Richard Dunn, the vice-president of government relations for Encana.
Encana is a leading North American energy producer, with Canadian unconventional natural gas operations in northeast B.C. and Alberta.
At Encana we take our responsibility as a steward of the land very seriously. We believe conservation and development can proceed together, and certainly we believe it is not a matter of one or the other. It's about finding that balance.
In Alberta and British Columbia, strong regulations set out by our provincial regulators provide effective and efficient operating frameworks that enable both environmental protection and resource development.
Mandated by a culture of continuous improvement, we meet and in many cases exceed the regulations by working collaboratively with other operators, governments, first nations, and communities to minimize our environmental footprint.
Our development in the Horn River basin, located in the far reaches of northeast British Columbia, is illustrative of the success of this approach through the use of new technology and innovative methods, such as pad drilling, saline water sourcing, and participating in the development of boreal caribou management plans, all of which I'll touch upon in the next few minutes.
The Horn River basin is an important development for the Canadian natural gas industry. This shale gas play has been estimated by the National Energy Board to hold some 78 trillion cubic feet of marketable natural gas. In context, that's enough gas to meet the energy needs of the city of Calgary for some 500 years. So it's a huge amount.
The Horn River basin is in a very remote area. It's a long way from market and as it's at the very early stages of the play it has very little infrastructure, all of which requires us to innovate and look for solutions not only to reduce costs but at the same time minimize our environmental impact as we proceed with development.
A key feature of that innovation is pad drilling. Pad drilling operations in the Horn River involve drilling multiple horizontal wells from a single surface location. This technique enables us to disturb far less surface area while maximizing our resource extraction. One 250-by-250-metre-square multi-well pad produces some 15 square kilometres of resource, essentially replacing several hundred vertical wells and well sites, along with their associated roads and pipelines. The result is enhanced environmental performance through minimized land disturbance.
Working together, and with the support of government, producers in the area have created the Horn River Basin Producers Group. This initiative is comprised of 11 companies active in the basin and is dedicated to efficient development planning and also open communication with stakeholders. Regular dialogue with the Fort Nelson community and the Fort Nelson First Nation has enhanced communication, and in doing so allowed the shaping of the development in the area. Additionally, it has generated initiatives that maximize the benefit of natural gas development to local stakeholders, principally in the form of local employment and job skills creation opportunities.
The Horn River Basin Producers Group has developed an integrated approach to minimizing surface disturbance by using effective planning measures, such as the joint development of roads, pipelines, and processing facilities to reduce the collective environmental footprint. In the Horn River basin, as in other shale gas plays, the shale gas development is a water-intensive process, there's no doubt about it. In 2009 the Horn River Basin Producers Group worked with the B.C. government to examine non-potable water supply alternatives for our operations. This was accomplished through Geoscience B.C., a government-supported research organization that launched a number of projects to identify and map subsurface aquifers in the basin.
The Debolt source water plant, a joint project of Encana and our partner in the area, Apache, is an innovative result of this research. The Debolt plant has been in operation since June 2010 and supplies some 98% of the water needed for both companies' hydraulic fracturing operations in the Two Island Lake area. The plant produces water from the Debolt formation, a geologic formation some 800 metres deep. This is a non-potable aquifer, holding saline water that is unfit for human, agricultural, or animal consumption. The salinity of the water produced is so high it's effectively the same as seawater.
The availability of the Debolt water has allowed us to by and large eliminate the use of fresh water in our hydraulic fracturing operations in that Two Island Lake area. We're quite proud of that. This results in significant conservation of fresh water and preservation of the surrounding aquatic surface habitat.
Turning to an example of land use, the industry continues to take measures to protect sensitive species.
In 2010 the industry partners worked with the B.C. Oil and Gas Commission and the B.C. Ministry of Environment to develop the B.C. implementation plan for the management of boreal caribou. The detailed local knowledge and on-the-ground understanding of B.C.'s specific issues were essential to achieving the desired outcome. That outcome was the development of a flexible strategy that provides for caribou protection while enabling much-needed, responsible resource development.
In addition to promoting the use of pad drilling, as mentioned, the implementation plan manages access for development during the critical calving period. It also includes such items as meandering seismic lines, which Murray touched upon. Those meandering lines limit the line of sight between predators and prey and afford the caribou protection.
Furthermore, industry has committed to provide $2 million per year in annual funding for caribou research that guides, informs, and really underpins the implementation plan.
I've spoken to how conservation is applied while development is occurring. However, as mentioned, production occurs for a finite period of time. I would like to address some of the steps we've taken to reclaim areas no longer in production.
In 2011 Encana received reclamation approval certificates from the regulator for almost 360 acres of land that had been returned to the environment. That was our highest amount to date. Additionally, we have some 4,800 acres of land under active reclamation in Canada. We have worked with local stakeholders, first nations, and governments to ensure that the land is returned to its original state and in certain cases is enhanced. That is the case with the recent project we undertook as part of our ongoing support of the Foothills Research Institute. For example, in 2011 we took an abandoned well site from the 1990s and converted it into a wetland to provide habitat for a diverse range of species. Since the reclamation has occurred, we've seen grizzly bears, moose, and birds moving into the area.
In closing, I would like to reiterate that it is our opinion that conservation and environmentally responsible development can and should proceed together. Strong regulations ensure that environmental concerns are a priority and are sensibly balanced with development activities.
The examples I've provided from our operations in the Horn River basin of northeast B.C. highlight the importance of technology, effective planning, and collaboration among governments, communities, first nations, and industry partners in enabling the economic sustainability of our industry in an environmentally responsible manner.
Thank you very much.
The Chair Mark Warawa
Mr. Collyer, did you want to close before we go to Ms. Kenny? Is that my understanding?
President, Canadian Association of Petroleum Producers
I just have a few brief wrap-up comments, Mr. Chair, if that's okay.
The Chair Mark Warawa
That's great. Proceed.
President, Canadian Association of Petroleum Producers
I will be very brief.
I hope that our presentations have conveyed a couple of key themes. The first is that CAPP and its members are supportive of efforts to develop a broad vision for conservation in Canada through what we would characterize as a national conservation framework. This should build on and enable what we believe to be a lot of very good work that's already under way in our industry with respect to conservation.
The NCF should be grounded, we believe, in the same principles that apply to broader environmental, social, and economic policy and regulation. As I said earlier, we encourage the committee to take a broader view of the scope of conservation initiatives. Just to summarize, those would be reducing impacts in the first instance; focusing on reclamation, restoration, and protected areas where it's appropriate to do so; and encouraging innovation and excellence in land use approaches in the application of a diversity of conservation tools.
We also strongly encourage the committee to develop recommendations on the NCF that build on current initiatives and that focus on specific opportunities for improvement in our collective approach to conservation and biodiversity in Canada, all within a broader policy and regulatory construct that enables the responsible development of Canada's oil and gas resources.
Thank you very much on behalf of our collective panel. We look forward to your questions.
The Chair Mark Warawa
Good. Thank you so much, Mr. Collyer.
Finally, we'll hear from Ms. Kenny, from the Canadian Energy Pipeline Association.
Dr. Brenda Kenny President and Chief Executive Officer, Canadian Energy Pipeline Association
I think you'll find our comments to be fairly consistent with what you've heard from the upstream. Just to set the tone, what's different for our industry is that this is about long, linear infrastructure.
I represent the Canadian Energy Pipeline Association. We're very pleased to be here today. Thank you for your time in hearing these views.
Our members represent the companies that move virtually all the oil and natural gas that's produced and used throughout Canada and North America every day. We currently operate over 100,000 kilometres of transmission pipeline companies. These pipelines are energy highways, if you will, really the only feasible and the safest means to transport large volumes of oil, natural gas, and refined products. Our member companies are job creators in themselves. We're currently on the cusp of investing over $20 billion in nationally significant projects, but these job creators themselves are also enablers of the functioning of an appropriate energy system in Canada and enablers of trade over a very long time. So when we look at conservation we're thinking about how to construct an appropriate pipeline that might be needed, but also keeping in mind that these are very long-lived assets. They're not moving around. They're typically there for many decades.
We believe that the national conservation plan or framework is a very positive and progressive step forward. It helps to integrate and modernize Canada's overall framework for environmental legislation to meet the goals of sustainable development in the 21st century. We support the work of the committee in advancing this initiative through some very clear and practical recommendations, eventually to the Minister of the Environment, on how best to move forward with the development of this approach.
We would note that Canada's legislative framework related to energy, environmental assessment, and environmental protection is multifaceted and very complex. Many different acts are involved, some recently promulgated and some that have been in effect for many years. The passage of each piece of legislation reflected the needs of the governments and people of Canada to address specific issues and concerns at that time. Unfortunately, in the past the mindset tended toward prohibiting or regulating certain activities against harm.
I'll come back to that, because we believe that part of the challenge we face in appropriate conservation strategies and in the work under way to look at legislative change is a result of years of effort of trying to knit these processes together. Regardless, there's a real mismatch of legal requirements, and often that's resulted in only a modest improvement in results and a need for some fundamental change. So we support the efforts under way to change legislation with regard to regulation. We believe that the national conservation plan or framework is a great opportunity to change the focus, to complement this change further, by changing the focus from a prohibition of activities to creating better environmental outcomes than are possible today, in part with agreed principles and objectives. While we see various pieces of legislation contributing and mutually reinforcing, this updated framework is important.
How could this work? We think it is time to look at environmental protection as only one component of environmental conservation. The word “protection” brings the context of stopping harm—and clearly environmental protection is necessary in some circumstances. But the word “conservation” really connotes a broader set of actions that promotes desirable outcomes and includes protection.
We believe that conservation should be the business of project proponents, regulators, and citizens alike, and that legislation should enable and support that engagement and productive outcome. A project that is found to be in the public interest could proceed along with an agreed set of conservation objectives that reflect current policies. The attainment of specific permits for activities such as water crossings that have been proven over time to be relatively benign or fully mitigated could be looked at in new and better ways.
Let's be specific. A large pipeline project today costs billions of dollars. Environmental studies, consultant and legal fees, and costs to develop extensive applications to support environmental assessment and regulatory permitting are all part of those costs. We don't begrudge that, but we would observe that currently the estimated costs spent on these permitting activities by our proponents are anywhere from 3% to 5% of the capital cost of each large project. For a billion-dollar project, that amounts to between $30 million and $50 million.
President and Chief Executive Officer, Canadian Energy Pipeline Association
In complementing the legislative changes that are proposed in the budget implementation act and looking to this conservation plan, imagine an outcome where we could redirect some of those funds away from details permitting and look at positive environmental results, in effect creating an environmental legacy for the project. It would have a direct link to the pipeline under consideration but contribute to environmental objectives in the area through which that project passes. CEPA believes that this is an important conversation to have. It could change the relationship away from an adversarial confrontation to one of mutual objectives.
We must make this point clearly and directly. In this conservation-focused scenario pipeline companies would continue to build and operate pipelines in an environmentally sound way, using standards and mitigation measures that have been proven in the past and continually improved. We would continue to assess and deploy new technologies to advance both safety and environmental performance.
At the same time, the primary regulator, in our case the National Energy Board, for large national projects would have and continue to build a sound understanding of best management practices. So the conservation focus would rely on those practices and really focus on outcomes and results on the ground.
In essence, then, we have to recognize that any development, even the construction of a hospital or a school, will have some environmental impact. The approach we have described here is based on the concept of conservation offsets as one vehicle just to enable the possibility that in a broader scheme where you have construction, rehabilitation, and protection of ecosystems you would at the same time recognize that there are sometimes unavoidable residual impacts that can be addressed on a broader scale. There are many studies and examples of this, and we believe that it complements very well what's under way.
One specific example I would point to is a project that was completed just a few years ago. The Kinder Morgan Canada pipeline was expanded through Jasper National Park and Mount Robson Provincial Park. To achieve this the company did extensive multi-stakeholder engagement in advance of final design and realized that we needed to take a net benefits approach. The Trans Mountain Legacy Fund was put in place, which recognized that the major challenges in that region were not in fact about the pipeline at all, but were about ecological connectivity between railways and roads, etc. So a legacy fund was put together to allow that to be established because the pipeline project took the broader view.
I'll just quickly run through a couple of other observations.
So what is the purpose? Clearly the purpose would be to define clear principles, goals, and priorities at a national scale that could be adapted and adopted at the provincial, territorial, and local levels. It should enable effective integration of rules and goals.
The goal itself should be one of sustainable development. This integration is key, so that you have goals of protecting species at risk as well as enabling watershed protection. You need a path to bring these forward, and this plan can do that.
The guiding principles are really all about this linkage and focusing on outcomes and results. For new developments the national conservation plan should be focused on the principle of a conservation agreement, so that project proponents can look ahead and understand their overall fit into that landscape.
Some of the factors would obviously be looking at how to optimize outcomes. These agreements should not be viewed as a penalty for development but should in fact recognize that when development proceeds it needs to be done in the best possible way, and this gives a path to do so.
Let me close by simply saying that this is an important way to move forward. We are very supportive of how to integrate the three pillars of sustainable development, look for potential tangible outcomes, build our economic future, and create jobs and social outcomes for today through responsible development.