Natural Resources Committee on Dec. 9th, 2010

[The Chair, Conservative, Leon Benoit]

Okay. We have you now. Go ahead with your presentation, please.

[Brenda Kenny]

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Excuse me. Before we can allow you to speak, you're going to have to take that Calgary Flames logo down, because I simply can't live with that.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Leon Benoit]

Go ahead, please.

[An hon. member]

I'm starting the questions afterwards and I'm from Montreal if you want to have fun.

[Brenda Kenny]

I haven't been in this room before--

[Some hon. members]

Oh, oh!

[Brenda Kenny]

--and as soon as I came in this morning, I thought, boy, I hope there aren't any major Senators fans or Leaf fans out there.

In any event, I am here representing the pipeline sector. I'll provide a few perspectives from the pipeline point of view.

Of course, the members I represent with the Canadian Energy Pipeline Association are all of the major oil and gas transmission pipeline companies in Canada. I believe that before the committee this morning are a few slides that you'll have in hard copy. I hope that came through okay. There are some maps and some other photographs that might be useful to you.

If you think about movement of energy, we're the highways. Across a network of over 100,000 kilometres of large pipelines, we transport virtually all of the oil and natural gas that's produced and used in Canada. Pipelines are by far the safest means to transport large quantities of energy.

We are essential to ensuring Canada's place in a changing global economy. Truly, the interests of CEPA's member companies are critical to the public interest. The energy that we deliver is essential to our survival, be that heat and power in homes, industries, hospitals, or schools. It transports the food that we eat. It transports clean water to our taps every day. It moves people, goods, and information, and ultimately provides an unparalleled quality of life across this nation.

My comments today are from the perspective of the major energy sector, and I want to say that this is rooted in a very strong sense of duty. We have a duty to enable the meeting of energy needs and enabling trade, and an utmost duty to do so with a clear and strong sense of responsibility for safety and environmental protection. We also have a duty to speak out when we see danger signs that affect the Canadian public interest. My remarks today will look at this through the lens of pipelines and will focus on trade, on safety, and on regulation.

First of all, on markets and trade, Canada is and always has been a trading nation, right from our first nations. Indeed, we are the most trade-dependent member of the G-8 group of countries. It means that a huge part of what creates a quality of life for Canadians is tied to trade.

In the west, the strategic importance of Canada's Pacific Gateway strategy is well understood by governments of all stripes and it is very much tied to our past, current, and future prosperity. Energy products are not a new part of that picture.

Canada's situation in the world of energy is unique. This country has unparalleled opportunities. The oil sands, for one, contain 170 billion barrels of oil. That accounts for half of all of the accessible world oil supplies. The energy sector represents about a quarter of all the value on the Toronto Stock Exchange.

Let's keep in mind that is not about big business. That means people. That's pensioners. That's parents saving for kids' education. That's capital to invest in our future. Over the next 25 years, investments in oil sands are expected to spur the creation of some 500,000 jobs and bring in nearly $491 billion in government revenues.

From a west coast perspective, pipelines represent the opportunity to bring Canada's resources to the world at the same time as contributing to local and regional prosperity. The expanding economies on the west side of the Pacific Ocean--including China, Japan, and India--need energy, and Canada must compete with other energy providers. Ensuring these markets are open to Canada will provide critical diversity in this trade-dependent economy. It will also build and strengthen important new trade relationships that increase Canada's power and influence in the international community. By looking ahead over the next 20 years, pipelines alone intend to invest $80 billion.

When we consider energy from the point of view of security and sustainability, we have to acknowledge that the long-term interests of this nation ripple across many decades and perhaps centuries. But imagine today if there were no energy delivery at all.

By way of comparison in terms of critical infrastructure, imagine if we had failed to build the CPR railway. I think the map of this nation would undoubtedly be different from what it is today. Or consider the St. Lawrence Seaway and the impact that has had over time. Getting the right infrastructure in place has profound implications not only for today, but for many tomorrows.

Safety is the number one and critical duty and interest for pipelines. In our day-to-day operations, nothing else matters more, and there is absolutely no competitive advantage to cutting corners on safety and the environment. Indeed, more than $1.6 billion is spent annually to promote and advance this.

We're among the most sophisticated in the world. Pipe design and installation is low impact, and pipelines, unlike highways and railways, can be restored to productive habitat for wildlife following construction. With regard to pipeline and marine operations, CEPA member companies are constantly involved in updating and advancing environmental and safety standards.

We also have been proactive in the development of new technologies, such as advanced technologies for 24-7 monitoring, control centres, remote centres, automatic shut-off, and emergency planning, and also internal inspection, which gives us new data that's critical to ensuring we can maintain these systems very safely. Those combined advances in technologies have resulted in a significant improvement in safety over the last 20 years. However, we will not and cannot rest. We understand our duty and responsibility to protect the environment and the general public and are committed to continuing to improve.

Clearly, Canada wants and needs energy and trade. Where projects are needed to deliver that energy, regulation influences that economic activity. It protects the public and the environment and enables without restricting outright.

Integrated decision-making, stakeholder engagement, and aboriginal consultation are core parts of sustainable development. Resource projects are no different. Our historical patchwork of laws and segregation can create a false sense of security and undermine the ability to optimize outcomes and adjust designs where needed.

If a project is in the public interest, it needs to be integrated, and we believe that, ideally, over time regulation will be improved in this country, leading to one project, one assessment, and a true consolidation of safety and environmental protection. Longer reviews are not better reviews.

Effective consultation and timely review focused on strategic issues have the following: decisions need to be transparent, with good follow-through and monitoring. That follow-up comes after a fundamental public interest determination over whether a project is to proceed or not. The interests of all Canadians and the duties of pipeline operators are tied to this. W must have a better system of regulation over time so we can focus on the things that matter most.

In the meantime, the pipeline industry has a duty to Canadians. Not only must we provide the highways needed to fulfill consumer needs and to facilitate trade, but we must also be diligent on an ongoing basis in terms of safety and the state of the environment.

Thank you for this opportunity.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation.

We'll now go to our third witness. From the International Ship-owners Alliance of Canada, we have Kaity Arsoniadis Stein, president and secretary-general.

Go ahead, please. You have up to seven minutes.

[Kaity Arsoniadis Stein, President and Secretary-General, International Ship-Owners Alliance of Canada Inc.]

Thank you and good morning.

My name is Kaity Arsoniadis Stein. I am the president and secretary-general of the International Ship-Owners Alliance of Canada. I'm also director of the International Maritime Centre, director and vice-president of the Vancouver Maritime Arbitrators Association, and a trustee of the Insurance Dispute Resolution Services of British Columbia.

I appear before you today on behalf of the International Ship-Owners Alliance of Canada. This group represents local and international merchant shipowners, managers, and operators of ships, who collectively control a fleet of over 500 ocean-going vessels and employ over 10,000 sea-going and shore-based employees.

Through their Canadian companies in Vancouver, they employ over 340 direct management jobs. Their membership includes a Canadian ferry operation, a coastal tug and barge operation, and international members who have been in Canada employing Canadians since 1991.

Among the ISAC members, I benefit from the fact that a founding member is an integral provider of marine services to the oil and gas extraction business, transporting more than 10% of global seaborne oil. In addition to this member, there are several other members of ISAC who are engaged in providing similar services, albeit on a small scale.

The ISAC members are responsible Canadian corporate citizens. In fact, they maintain this reputation internationally and have sought to encourage the marine industry to address air contaminant matters by adopting the use of cleaner fuels. Domestic regulators, like Environment Canada, are aware of the contributions ISAC has made in this regard. ISAC maintains contact with the Canadian regulatory environment and wishes to continue operations consistent with Canadian societal objectives.

On the west coast we see propositions for a ban on tankers being advanced, yet on the east coast we see no similar constraints or concerns being entertained. Our observations include this: that the nature of the stimulus behind this proposed ban is questionable for its authenticity. The waters on the east coast and on the west coast represent demands upon those operating on either coast, yet the west coast is being singled out for environmental concerns that apparently are not considered on the east coast. This dichotomy begs the question: why has this occurred?

Recent observations have been made in the press that the pretext is not genuine and may be for other strategic and economic reasons. I reference the Financial Post article dated October 14 and written by Vivian Krause, indicating that U.S. foundations are compromised in their agenda and have been financing Canadian environmental groups and others to advance the American-based agendas of their American contributors.

The resounding question remains: why? What is the Canadian strategy? We have members who are experts in moving oil globally and who are at a loss with respect to what is occurring here in Canada and why. Is this a U.S. plot to ensure that Canadian oil can only be destined for the U.S. market?

We submit that the safe and responsible movement of Canadian resources into the international market could and should be a source of employment creation for communities on the coast. The logistical chain of resource extraction includes the exploration, the production, and the transportation of the products.

I will quote from page 4 of Ethical Oil by Ezra Levant. It is believed that the Alberta oil sands:

...represent the largest single deposit of petroleum reserves on the planet, with, by some estimates, between 1.7 trillion and 2.5 trillion barrels of oil inside it. The recoverable oil in Alberta's north has the potential to deliver a stable oil supply to the world for the next one hundred years.

Perhaps a solution to the dilemma caused by a ban on tankers could be found in the creation of sustainable jobs for stakeholders, both aboriginal and non-aboriginal. Sustainable employment in the transportation of these goods could come in the form of creating and utilizing an internationally capable Canadian fleet of tankers, with corporate headquarters in Canada, employing Canadian citizens and transporting Canadian resources. A Canadian fleet with Canadian staff will abide by Canadian environmental standards and would endeavour to ensure that Canadian requirements were met.

Further safeguards, creating additional layers of employment, could be instigated to bring comfort to coastal communities, the fishing industries, and our government, before we even start discussing a ban on tankers.

For example, we could have additional escort tugs, increased numbers of pilots, and specified sea lanes, and we could designate companies with social corporate responsibility status. Also, with respect to a very current issue now, we could see the continued retention of coastal watch by staffed light stations, thus building a strong coastal infrastructure and creating numerous jobs for aboriginal and non-aboriginal stakeholders along the west coast.

The extraction and exploration industries are major employers, but to constrain our ability to transport will only see a reduction in the employment opportunities afforded by exploration and extraction.

We are of the view that trade diversification is more desirable than reliance on a single market. If Canada were unable to export from the west coast to areas of the world where demand existed, such as Asia and India, would we not be limited in the markets to which we could sell, in the jobs that we could create, and in the prices we could command?

Would a west coast ban not result in the reduction of employment opportunities within the oil and gas sector? If you cannot sell the product internationally, you cannot command an international price. Therefore, inevitably, we would be giving it away at a discount. Is this the U.S. agenda and are we playing into this plot?

On the east coast, oil goes to the U.S. as a consequence of choice. On the west coast, in the face of a tanker ban, oil from the oil sands will be denied the markets of Asia and elsewhere. By consequence, we will be restricting our sales to the U.S.

The irony is that tanker traffic from Alaska to Washington State along the west coast of Canada will continue unimpeded. Recent statistics show there are over 500 such voyages a year. American flagged vessels under the Jones act can transit from one U.S. port to another U.S. port of call. Of interest should be why they are travelling along the coast and not shipping the oil by pipeline.

The answer is evident: it's American security of supply. They do not want American oil to enter Canada by pipeline, but they will take Canadian oil via pipeline for their own use. This again provokes the question: why? The arbitrary choice of denying Canada the offshore markets seems to fly in the face of the economic development principles of Alberta and B.C. and their indigenous and non-indigenous communities.

Canada has the single greatest coastline in the world. Canada as a trading nation must remain a global trading entity. Canada's environmental concerns must be preserved, but a balance must be achieved to ensure continued global trade.

I will leave you with the example of Norway, a country much smaller than Canada, which boasts a nominal GDP of $88,000 per capita, while Canada's comparable number comes in at $40,000 per capita. In Norway, the oil and gas industry is the backbone of its economy. To quote the minister of oil and energy, “It is the government's ambition that Norway shall remain a significant supplier of oil and gas to the world markets for a long time”. This industry is embraced by the people of Norway.

We encourage Parliament and this committee to achieve an equilibrium for west coast exports of all natural resources. We further encourage the committee to recognize the appropriateness of allowing Canadian natural resource producers to engage in global trade.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Ms. Arsoniadis Stein, for your presentation.

We'll go directly to questions by Monsieur Coderre, for up to seven minutes.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Chairman, in the last two days, I have heard so many conspiracy theories that we should call in Mel Gibson for the sequel.

Kalispera, Ms. Arsoniadis Stein. How are you today?

There's a smile there. That's a start.

[Kaity Arsoniadis Stein]

Very good--

[Some hon. members]

Oh, oh!

[Kaity Arsoniadis Stein]

You're impressive with the Greek.

[Denis Coderre, Liberal, Bourassa, QC]

That's my souvlaki. I eat too much souvlaki. I'm working on that.

[Kaity Arsoniadis Stein]

Très bien, monsieur, et merci bien.

[Denis Coderre, Liberal, Bourassa, QC]

Yasou.

That means “hey”, okay?

From the way you have been talking, you think it is the Americans who are setting the price of oil right now. I thought it was--

[Kaity Arsoniadis Stein]

I think the point that--

[Denis Coderre, Liberal, Bourassa, QC]

You were saying that it is the Americans who are putting up the price of oil. Was that what you were saying?

[Kaity Arsoniadis Stein]

No, I didn't say the Americans are putting up the price of oil. I'm saying that if Canada is limited to providing its resource to one market--

[Denis Coderre, Liberal, Bourassa, QC]

Oh, okay.

[Kaity Arsoniadis Stein]

--a single market price will be the price we can get. We won't be able to compete internationally.

[Denis Coderre, Liberal, Bourassa, QC]

Okay. You like the Norwegian way of doing things. Do you think we should do what Norway is doing?