International Trade Committee on April 19th, 2016

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

The industry forecast in January 2015 showed over one million barrels per day of future production cutting that growth. If we had the TPP agreement in place, do you think those numbers would stay or would they fluctuate?

[Tim McMillan]

I think you're referencing CAPP's June forecast, where we look out to 2030, and the production forecast.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Right.

[Tim McMillan]

With the lower prices and the lower investment we saw last year and into the future, we thought that instead of growing with a curve of this slope, we would be down by about a million barrels a day in 2030, albeit still growing. We'll bring out an updated forecast in June again. I think the TPP's effect on that curve would probably be far less than if we were to get pipeline and LNG access. That would fundamentally position Canada to be more competitive, whereas TPP would be a more incremental piece, making smaller pieces more efficient.

[The Chair, Liberal, Mark Eyking]

I'm sorry, Mr. Dhaliwal. I know you're on a roll, but I have to cut you down there. Your colleague is going to be up next, and you can throw him a few hints.

We're going to go to the second round. The Liberals are going to start off.

We have Mr. Peterson for five minutes.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Merci, monsieur le président.

[Some hon. members]

Oh, oh!

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That will be it. Get your headphones on....

Thank you, panellists, for being here. We appreciate your insight and your information, because we're here as an information-gathering tour.

I'm going to try to work through this quickly, because I have a couple of questions.

Maybe I'll start with chicken. Erna just told me that her sister actually lives in my riding, so I'm going to have to ask her nice questions.

Thanks for being here. I have a quick question. Don't take the compensation into consideration right now, but just for the TPP on its own, how will that affect your industry? Absent compensation, will it be beneficial or detrimental, in your opinion?

[Erna M. Ference]

It would be detrimental. It's going to allow over two per cent access to chicken, unless the government takes action to enforce some of the rules on previous agreements that it says it will. Then that would mitigate that.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

For you to do a full analysis on whether or not it's a positive or negative, you'd have to know the quantum of that compensation—

[Erna M. Ference]

That's correct.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

—including the length of time and other factors that haven't been determined yet, or not agreed upon in any event.

Let's say that the compensation is satisfactory. What markets among the TPP countries would you be able to grow the most in? Where would your key markets be?

[Erna M. Ference]

I don't know, and maybe I'm off base, but it's my understanding that because we're still supply managed, we don't have access the way other countries do. We'd still be growing to our own requirements in the country.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay, that wouldn't change much from the approach you're taking now.

[Erna M. Ference]

No.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I'll move to Mr. McMillan. Can you tell me where most of your members are located? We assume they are in Alberta, but I'm sure there's a cross-country footprint.

[Tim McMillan]

Yes, absolutely. We represent the upstream, be it offshore Newfoundland, Nova Scotia, or New Brunswick. We represent British Columbia, Alberta, Saskatchewan, and Manitoba. We have members that are located in Quebec, where we have found some resources, Really, it's across the country.

On a production-weighted scale, Alberta does have the largest production in Canada.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Yes, of course, but I think there's a misconception among Canadians that you guys are Alberta-focused and Alberta-centric. I just think it would be fair for us to realize that it's a pan-Canadian association. Thanks for that clarification.

[Tim McMillan]

Thank you.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

You talked a little about the significant decrease in capital investment, which I think is probably driven by the price of oil in the market. It went down by almost the same percentage as your capital investment during the same period.

I'm reading today some reports that this $40, $50, to maybe $55 band is going to set in for the near term, though these are all predictions. What's the ideal capital investment you see to maintain a flourishing and growing industry? What sort of price of oil in the world market would support that?

[Tim McMillan]

Again, that's a very good question.

To put this in a bit of context, we've seen worldwide capital expenditure pull back when the price of oil goes from $95 a barrel to $30. Everybody has pulled back, but Canada has pulled back farther and deeper than anywhere else. Our percentage decline is deeper than the U.S.'s decline, deeper than Saudi Arabia's, and deeper than anywhere else. Part of that is the challenge we have of getting our products to market. Even at $25 a barrel, if you're producing right on the coast, that's not good. If you then have to subtract another $5 to $10 differential, it gets more difficult.

I think the thing we need to be concerned about is that if the price does bounce up to $50 a barrel, will Canada be competitive? Will we be attracting the investment at that point, or will it be going to the U.S., or Nigeria, or Venezuela? What we've seen is that proportionally more of it's going to Venezuela, Nigeria, Angola, and Saudi Arabia than was coming to Canada three, five, or ten years ago.

At $50 or $60 a barrel, we will see incremental increases in investment. As the price gets higher, it will increase. It's hard to put a finger on it. Some of the broader market access issues will be fundamental to leveraging that price increase.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay. Thank you for that.

A question for—

[The Chair, Liberal, Mark Eyking]

No, your time is up, Mr. Peterson. Sorry about that, but there will be another time. Another Liberal can ask the same question you're thinking.

We're going to move over to the Conservatives now, and Mr. Hoback, for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Kyle, I think I know what you were going to ask him, so I'll ask him on your behalf.

Mr. Elliott, I'm going to start with IP protection. We've heard previous testimony from people who don't like TPP, saying there's too much protection, that we're restricting creativity in Canada and not allowing sectors to bloom because of the IP protection. How do you react to that?

[Allistair Elliott]

With respect to our industry, you can't protect the creator enough. We represent the creators. We are the creators. When someone makes their living at creating content and it's not protected, how can you not protect that enough? That's the way they make their living.