Evidence of meeting #70 for Finance in the 41st Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was prices.
A recording is available from Parliament.
Executive Vice-President, Strategy and Corporate Development, Suncor Energy Inc.
I would say it's a market solution, but I think it involves all of us—obviously industry, but I think government has a role in a lot of this as well.
Conservative
Vice-President, Canadian Government Relations, Encana Corporation
Thanks. I appreciate that, Mr. Chairman.
You asked about what we can agree upon. I believe we can agree that oil and gas is an important industry to Canada from a national perspective, whether it's suppliers across the breadth of the country or governments that get revenues from oil and gas across the breadth of the country. I believe we can agree on that. I also believe we can agree that we're moving into a new era with respect to the need for competitiveness, and that, whether that's driven by the supply-demand dynamics in North America or by reduced prices, there is a compelling need, in order to achieve as much of the market access and growth in the investment in the industry as possible, to be as competitive as possible.
It takes actions by both industry and government to impact that.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Maybe just quickly Mr. McMillan could answer that as well.
Conservative
President and Chief Executive Officer, Canadian Association of Petroleum Producers
I think it's a great question. When we talk about diversification, there are the LNG options off the coast. We have always thought LNG was a landlocked, North American phenomenon. We have 200 years' supply, as Mr. Dunn mentioned. There is a 60% growth expectation in Asia for natural gas. Canada can be very well positioned.
I think the federal government and provincial governments do have a role in enabling that. The announcement we saw on the tax treatment for LNG facilities, to treat them like all other facilities, is an important part of that.
Conservative
Conservative
Mark Adler Conservative York Centre, ON
Thank you, Chair.
Thank you all for being here today. Before I start my questioning, I want to make a comment.
Mr. McGowan, you mentioned that prices go up and prices go down. That's very astute, and that's how the marketplace works. I want to ask you this. Is the marketplace working as it should right now?
President and Chief Executive Officer, Canadian Association of Petroleum Producers
I think on a world basis, the commodities are traded freely. I think there are challenges in market access, which is a disadvantage to—
Conservative
Mark Adler Conservative York Centre, ON
We'll get to that, but is the marketplace working?
You know, we wouldn't be holding these hearings if the prices were $110 a barrel, but they've gone down. It has of course a multiplier effect. You're here because there's been a shift in prices.
So is the marketplace working as it should?
President and Chief Executive Officer, Canadian Association of Petroleum Producers
I grew up on a cattle ranch, and we saw the price of beef go up and down on a regular basis, as it does when a product is traded on a world market.
Conservative
Mark Adler Conservative York Centre, ON
Okay.
Right now, because of the shift in prices, would you recommend any change in the regulatory regime? What I mean by that is: should we as a government be doing anything that we're not doing, or should we stop doing what we are doing, to influence that price?
President and Chief Executive Officer, Canadian Association of Petroleum Producers
I think we are price-takers on a world market. As an industry, we hope our government has very robust and certain regulatory rules that are public so that we know how to operate in them and we can operate effectively in them. WorleyParsons has done a review that Canada has one of the best regulatory systems in the world. That's important for certainty for our industry.
Getting those fundamental pieces right is essential. Market access is one of the obvious ones that we view as a barrier to us being successful. At $100 a barrel, at $80 a barrel, at $50 a barrel, it's fundamental to get the basic pieces straight.
Conservative
Mark Adler Conservative York Centre, ON
With regard to the fact that we're right now experiencing a dip in the global price of oil, you wouldn't recommend any rash decisions being taken by any government or any regulatory regime to rush in to influence that price.
President and Chief Executive Officer, Canadian Association of Petroleum Producers
No, I wouldn't advise that.
Conservative
Mark Adler Conservative York Centre, ON
Okay. Thank you.
Mr. Dunn, right now about 15% of the oil that is exported is going through pipelines. I think we have the third-largest oil reserves in the world right now. That oil in the ground isn't doing anybody any good. Once we get it out, we need to ship it somewhere. At 15%, the pipeline infrastructure we have right now is not going to carry that capacity. We need more pipelines. Is that correct?
Vice-President, Canadian Government Relations, Encana Corporation
Yes, definitely, we need that export capacity in various ways, shapes, and forms to access different markets. We need more pipelines to access different markets.
Conservative
Mark Adler Conservative York Centre, ON
How fast would you say the oil trade is growing, not just here in Canada but around the world? Do we have a window of opportunity right now to do something about the export of oil that may not be working in our favour a few years from now?
Vice-President, Canadian Government Relations, Encana Corporation
I'll let Tim comment on the growth. I would certainly say that worldwide the markets are growing. The opportunity to access Asian markets with both oil and natural gas is significant, and without a doubt Canada has vast resources that it can draw upon.
Sorry, the other parts of your question...?
Conservative
President and Chief Executive Officer, Canadian Association of Petroleum Producers
Certainly. We see the world demand for energy growing every year by about 1%. For oil that's about a million barrels a day on an annual basis. Where we're seeing the growth isn't in our traditional markets; it's in Asia, it's in India, and it's in Africa.
Conservative
Mark Adler Conservative York Centre, ON
Is our current infrastructure well suited to...? We all know how important it is to diversify our markets. Are we in a position right now to do so, given our current situation and our lack of pipeline infrastructure?
President and Chief Executive Officer, Canadian Association of Petroleum Producers
Today's capacity does not allow us to access the growing markets in the world in the way that we think Canada should as a supplier of choice.
Conservative
Mark Adler Conservative York Centre, ON
Getting back to what you said at the beginning, that the energy industry is not just the energy industry anymore, this is a national sector and a national industry with tens of thousands of jobs, millions of jobs.
What kind of effect is that going to have on Canada's economy going forward if we don't do something about pipeline infrastructure now?
