Natural Resources Committee on Oct. 19th, 2006

[The Chair, Conservative, Lee Richardson]

We have to move on, Brad, but I'll come back to you on the next round.

Mr. Cullen.

[Roy Cullen, Liberal, Etobicoke North, ON]

How much time do I have?

[The Chair, Conservative, Lee Richardson]

How much would you like? Five, seven minutes? Okay, take seven.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you, Mr. Brown and all the witnesses. Sorry I didn't make it earlier. I was in the House.

First of all, Mr. Brown, I'm surprised, in a sense, that you say the market is going to sort out all these social problems and labour market issues. I'm quite sure it won't, but that's not really why you're here. That's not your bailiwick, I suppose. When it comes to natural gas, and the fact that the market is going to sort out whether it's natural gas or something else, is it not appropriate that the federal government has a mandate to look at what is the highest and best use of our natural gas resources? Shoving it down to extract tar I think raises some questions about whether that's the highest and best use of our natural gas.

[Howard Brown]

I think the factual response to that is that to the very best of my knowledge, there is nothing in the legislation or in the Constitution that requires the Government of Canada to centrally plan the use of energy resources or any other resources in the country. I understand that some people feel the government should do that. It's not obvious to me that the federal government would have the authority to do that, even if one wished to do that as a matter of policy.

[Roy Cullen, Liberal, Etobicoke North, ON]

I'm not going to get into a political debate with you, but it seems to me that the federal government has a lot of levers at its disposal, and if our natural gas resources.... For example, if you look at the petrochemical industry, they're looking for feedstock, and we also have huge volatility in terms of natural gas. I think it is a legitimate question for the federal government to ask whether this is the highest and best use of our natural gas resources. I think if we were creative, we'd find ways to deal with that.

I'd like to come back to another question, and that is not to put you on the spot as to whether you think we should slow down or have a moratorium with respect to the oil sands development. If the Minister of Natural Resources came to you one day, Mr. Brown, and said he's been swayed by all these arguments that we should slow down the development of the oil sands or put on a moratorium, I'm curious to know what the levers of the federal government are in this area. Clearly, there are some provincial levers, but what are the levers the federal government has if they wanted to proceed in this way?

[Howard Brown]

I don't mind being put on the spot about whether there should be a moratorium or whether development should be slowed down. Actually, I already answered that question. I believe I said that—

[Roy Cullen, Liberal, Etobicoke North, ON]

No, I'm not dealing with that.

[Howard Brown]

I'm sorry. The question was...?

[Roy Cullen, Liberal, Etobicoke North, ON]

I don't think you were listening, Mr. Brown. What I said was that I'm not putting you on the spot with respect to whether the oil sands development should be slowed down or whether a moratorium should be placed. I'm asking this: suppose the Minister of Natural Resources came into your office one day and said, “Howard, I've been swayed by these arguments, and I think we should slow it down or put a moratorium on it. I'm confused. Tell me, what are the levers that the federal government has or does not have in this area?” That's what I'm asking.

[Howard Brown]

I'd be delighted to answer the hypothetical question.

My advice to the Minister of Natural Resources would be that, constitutionally, it is not the responsibility of the federal government to determine at what pace the Province of Alberta should develop its oil sands resources.

[Roy Cullen, Liberal, Etobicoke North, ON]

If I were the minister, that wouldn't be the answer. It might be an answer, but it's not a full one. There are indeed some levers that the federal government has at its disposal—maybe not the most useful ones, but some levers.

I'd like to come back to the state of play. We hear a lot about water recycling, as well as carbon capture and sequestration. They're great ideas, and that's the way we should be proceeding. But I've been around long enough to know that having an idea and actually doing something are two different things.

Could you brief the committee on the state of play with respect to the recycling of water? This is having a huge impact in the Athabasca basin. I'd also like your comments on where we're at with carbon capture and sequestration. How far are we from making these technologies economically feasible?

[Howard Brown]

On the water recycling, any proposal to develop an oil sands project would have to undergo an environmental assessment. There would then be terms and conditions as part of the licence. Typically, there would be a water-use licence issued along with that, so that the companies would have to recycle water. At the moment, I believe 90% of water is recycled. Given that water is a finite resource, particularly in that part of the world, I think the level of recycling will simply have to increase. I don't think there's any way to develop the potential of the oil sands without increasing the recycling of water. As to how it will that happen, I think it will be through a combination of technological advance and regulation.

[Roy Cullen, Liberal, Etobicoke North, ON]

My information is that the water recycled now is not at that level. Maybe you could provide the committee with some additional information.

[Howard Brown]

I'd be delighted to do that. I will qualify my answer, though, by saying that this is my personal belief. I'd be glad to get hard figures for you.

On the question of carbon capture and sequestration, we may have a slight difference in the way we view the world, but I view this as a fundamentally economic issue. There are now commercially viable carbon capture and storage opportunities. They're economically viable, because putting the carbon dioxide underground increases recovery of oil from the wells, and this more than pays for the extra costs.

I think your question was aimed more at a larger scale of capture and storage. This would become economical if, through regulation or other means, emitting carbon dioxide were to become costly enough to overcome the costs of capturing and storing. When that will happen, I don't know. It depends to some extent on how quickly we're able to reach the long-term goals enunciated in the clean air package announced today.

[Roy Cullen, Liberal, Etobicoke North, ON]

I can't agree with your philosophy that the market sorts out everything. If you're going to intensity-based carbon dioxide, part of the oil and gas sector, then you don't have to worry much about anything. But if you want to deal with carbon dioxide emissions, you're going to have to deal with carbon capture and sequestration much more aggressively, or you're going to have to do something else. I can't buy the idea that the market will sort it out.

Thank you.

[Dr. Hassan Hamza]

I would add one thing. We actually engaged with a number of provincial governments in looking at safe installation and storage of carbon dioxide. One of them is actually internationally linked, and this is the IEA Weyburn carbon dioxide monitoring and storage project. It has finished the first phase, and the second phase is starting now. It shows a lot of promise. It injects carbon dioxide underground to produce heavy oil, and it is really increasing the production. At the same time, there is a large amount of carbon dioxide being injected. There's a lot of monitoring and so on, to make sure there is long-term safety of this. It's a large project. The U.S. DOE is part of it, for $6 million, and a number of companies, even some Europeans, and Japan is part of this, to look at how this technology can help store carbon dioxide in a manner that is safe. It is a large-scale experiment, but nevertheless it is showing a lot of promise.

[The Chair, Conservative, Lee Richardson]

Thank you.

That concludes your contribution, Mr. Cullen, thus far.

Mr. Ouellet.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you, Mr. Chair.

My first question is for you, Mr. Chair. Don't leave; I'm talking to you.

[The Chair, Conservative, Lee Richardson]

Yes.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

May I ask Mr. Brown to file the sustainable development policy to which he refers when he talks about his role? May I ask him to file it with the committee? I'm not asking him to do it today, but in the coming days. I'm putting the question to you.

[The Chair, Conservative, Lee Richardson]

Certainly. You don't have to ask me.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

All right.

So I'll ask you the question, Mr. Brown.

Could you file this sustainable development policy as soon as possible? I'm talking about the current policy, the one you use.

[Howard Brown]

I would be delighted to table the sustainable development report of the department. Absolutely.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you.