Natural Resources Committee on Dec. 9th, 2010

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

As you know, we're here today to continue our study of energy security in Canada. We have two panels today. For the first panel, we have, from the Northern Gateway Alliance, Colin Kinsley, chairman, and from the Coastal First Nations, Art Sterritt, executive director, Great Bear Initiative.

Welcome to both of you.

In the second panel, we have three witnesses, all by video conference. That will be interesting. We've never tried that before, so I'm looking forward to that.

Let's get on with the panel. We'll have the presentations in the order they are listed on the agenda.

We'll start with the Northern Gateway Alliance.

Mr. Kinsley, go ahead, please, for up to seven minutes.

[Colin Kinsley, Chairman, Northern Gateway Alliance]

Thank you, monsieur le président.

Gentlemen, it's my pleasure to be here this morning to present on behalf of the Enbridge Northern Gateway Alliance. Simply put, it's a group of community leaders—elected officials, mayors, regional district chairs and others, community leaders from chambers of commerce, and some labour groups—whose main purpose is to be a voice to the membership and to keep them apprised of the project as it goes forward through the joint review panel.

First, if I may just share this with the panel, Enbridge is an energy transportation company, one of the largest in North America, and serves industrial, commercial, and retail consumers in Canada and the United States. They operate the longest crude oil pipeline system in the world, with about 15,000 kilometres of pipe, extending from Canada's Northwest Territories to northern Alberta to the American Midwest and all the way down to Oklahoma. They also transport natural gas. They have an extensive and growing portfolio of renewable and green energy generation facilities in both Canada and the United States.

The purpose of Enbridge's Northern Gateway pipeline project is to have strategic access to Canada's west coast. National Energy Board data from 2009 shows us that less than 1% of Canada's petroleum exports went anywhere other than the United States, yet just a little more than a thousand kilometres west of us--with the world's largest industry resources--is a coastline that is perfectly positioned, strategically and geographically, to connect Canada's petroleum supplies to the growing demand of Asian markets.

Right now, there is little oil flowing west towards those markets. Northern Gateway will change that picture and have a huge strategic impact on Canada. I would like to share with the panel the fact that this is Canada's resource--not Alberta's resource, not B.C.'s, but Canada's. And it's Canada's resources, I would submit, that pay for the health care system we proudly have, for our education system, and for many other of the services that Canadian citizens demand of their leaders.

Northern Gateway provides a much-needed large-volume option for Canadian energy to the Pacific Rim, which includes the U.S. west coast and east Asia. With the only market available to us now being the United States, we are more of a price-taker than a price-maker. The Americans dictate pretty much what our energy is worth and we have no choice as to where that could go. By accessing what is known as the fastest-growing middle class on earth, in China, where their energy needs are vast....

There's an argument that I have heard from time to time, which is that Canadian oil into Asia would in fact increase their greenhouse gas effects and such, and I would submit that this argument is stated by those who haven't been to China. If you see how the Chinese create the bulk of their energy, electric energy in particular.... In my experience—and I have been there more than a dozen times—they produce electricity and community energy with low-grade coal for every part of China, including the far north, Heilongjiang province, in Harbin. The environmental impacts are devastating. Being a proud Canadian from the north, I had never seen grey snow until I went to northern China.

With respect to demand in America and in Asia, I'd like to speak briefly to a paper that David Emerson wrote. David Emerson is a former federal Minister of International Trade and Minister of Foreign Affairs. He noted that of all the G-8 countries, Canada is the one most dependent on trade, and that hitching our wagon to the U.S. alone, which is currently struggling to emerge from what some have called the “great recession”, is not a prudent approach in maintaining our long-term prosperity as a nation.

If we are trade dependent, then let's play to our strengths and foster diversified trade with global trading partners, not just the North American markets. This will help insulate our nation from economic challenges that any single market might experience.

Coming from Prince George—one of the wood capitals of the world, I would submit—we know what devastation occurred when we relied on one marketplace for our softwood lumber products. When the U.S. housing market collapsed, our forestry industry faced almost the same fate.

Also, in considering Canada's west coast and the Pacific Rim, the geographical fact is that Canada's west coast ports are two days closer to the Far East than other ports in North America and South America. That's an important consideration in a world where competitiveness in our supply chain is defining our success factor. Our nation's Pacific advantage is clear.

Another advantage we have is our world-class energy advantage. A Northern Gateway pipeline is an opportunity to marry these two fundamental global competitive advantages for the long-term benefit of the nation, both strategically and economically. In very broad strokes, that's the strategic case for the Northern Gateway.

Now, let me take you very quickly through some of the aspects of the project. It comprises two parallel pipelines extending 1,172 kilometres from Edmonton, Alberta, to a marine terminal at Kitimat, British Columbia. The projected cost in 2010 dollars is $5.5 billion.

The 36-inch westbound oil line will have a capacity of 525,000 barrels per day from Edmonton to Kitimat. A 20-inch returning line to the east will carry condensate. Condensate is a product used to distill the oil to make it flow better--think of it almost like paint thinner. It will deliver 193,000 barrels of condensate from Kitimat to the industry in Edmonton. Today that condensate comes from various countries. It's a derivative of natural gas. It's delivered to Kitimat in tankers--and has been for 25 years--put on railcars, and shipped from Kitimat to Edmonton to be used in the industry.

Next I'll talk very quickly about the regulatory review process. A joint review panel was established with consultation between the National Energy Board and Enbridge. The joint review panel was chosen because it also brings in the Canadian Environmental Assessment Agency, so there can be a parallel discussion on the national interest and the environmental concerns that will be raised.

The initial filing has been done and the JRP has been formed. They've had some preliminary hearings on how they should proceed. We're waiting to hear when the public hearings will take place and where. These public hearings will take place at least over the next year. The entire review process could take from 18 months to 36 months, depending on the type of extra information required.

In the filing, there are 17,500 pages of geotechnical, geophysical, and first nations issues, from traditional use to traditional medicines, and those types of things. Through this review process, Enbridge will most likely be given more requests to find and submit information as it goes forward.

When and if the approval to construct is given, there will be about a three-year construction period. That will impact every community from Edmonton to Kitimat because of local procurement, first nations procurement, and opportunities.

The opportunities are vast. The stakes are high. It's a Canadian issue. And I appreciate being here today because it needs Canadian attention.

Thank you, Mr. Chairman and gentlemen.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Kinsley, for your presentation. I'm sure you'll have questions directed at you later.

We'll go now by video conference to Art Sterritt, executive director of the Great Bear Initiative, from the Coastal First Nations.

Go ahead, for up to seven minutes.

[Art Sterritt, Executive Director, Great Bear Initiative, Coastal First Nations]

Good morning, gentlemen, and thank you for inviting me to present to you.

As you said, I'm the executive director of the Coastal First Nations. We are an amalgamation of 10 separate first nations comprising 20,000 members, the vast majority of the population from Rivers Inlet, on the central coast, to the B.C.-Alaska border.

I want to speak to you today about our concerns about energy development in Canada and how it affects us. You have heard other people's concerns about the threats posed to them from oil drilling, shale gas development, and oil sands. We, too, share these concerns.

The marine resources we harvest sustain our communities and our culture. They create who we are. Our future is dependent on these coastal waters. We are the ones who face all the risks but derive few benefits from any such developments.

We are not some not-in-my-back-yard group. We hold constitutionally protected aboriginal and treaty rights that would be seriously threatened by offshore drilling and oil tankers in the waters off the central and north coasts of British Columbia.

Let me be clear. The Coastal First Nations are not against development. We are promoting it. For the past eight years, the Coastal First Nations have brought together industry, the environmental community, and governments, both municipal and provincial, to develop a sustainable economy on the central and north coasts and Haida Gwaii. We've done this to breathe life into our economy and into our rights and our title.

We have raised and invested in excess of $300 million in this geographic area on things such as building a shellfish industry. We have a partner out of China. I've been to China many times and have seen their industry. In our initiative to try to protect these waters, we have support from the Chinese as well.

These economic initiatives, as well as our rights and title of each nation, are threatened by oil spills. That's why we are firmly opposed to offshore drilling and the introduction of oil tankers as proposed by Enbridge. I don't have to remind you folks that accidents affecting the marine environment do happen--I visited the Gulf of Mexico this summer.

These accidents happen despite government oversight and regulatory control, and despite promises and commitments made by their owners and developers. In other words, we, the Coastal First Nations, will face all the risks.

When I visited the Gulf of Mexico, I found a very disturbing scenario. About half the amount of oil that spilled over these many months in the gulf would be carried by each tanker that plies the waters of Douglas Channel and our coast. The consequences of a catastrophic oil spill on our people cannot be calculated, nor can it be compensated.

I want to remind you that, like in the Arctic, the effects of an oil spill and the difficulties of cleaning it up are problematic on the north coast. We have much higher tides and a much greater chop in the winter than the gulf, but we don't have the cleanup fleet or the micro-organisms that absorb oil in the Gulf of Mexico.

Suffice it to say that the technology, the management, the regulatory regimes, the intergovernmental agreements, the oil spill response capability does not exist to deal with oil spills on the north and central coasts of British Columbia and Haida Gwaii. There is no way that we will be able to clean up an oil spill. The technology we found in the gulf, where all the technology of the world was concentrating on trying to clean up an oil spill, is 1960s technology. Nothing has advanced on this in the last four or five decades.

This is what Coastal First Nations are afraid of. This is why we are opposed to offshore drilling and oil tankers in our water. Out of respect for our rights and our title, the current moratorium on offshore drilling should be maintained, and the informal ban on oil tankers off the north coast of B.C. should be legislated, as the majority of parliamentarians indicated a couple of days ago in Ottawa.

Until first nations are satisfied that such development can be done in a way that doesn't pose an unacceptable risk to them, the National Energy Board should not approve specific projects that will introduce oil tankers on B.C.'s north and central coasts, such as the Enbridge Northern Gateway project.

Further development would require a strategic environmental assessment for the region, such as you heard the chairman of the Canada-Newfoundland and Labrador Offshore Petroleum Board say they conduct before even contemplating any approvals for drilling or exploration. Any such developments also require a regional risk assessment and the kind of inquiry that the National Energy Board is launching with respect to Arctic drilling. You have also heard the suggestion that a commission of inquiry be created, one that deals with oil tankers, offshore oil exploration, and licensing and oil spill response.

Lastly, no oil tanker should be introduced in B.C.'s north and central coasts or the offshore drilling moratorium lifted until the National Energy Board, Transport Canada, and the Government of Canada can satisfy us that an acceptable process is in place to consult with first nations on approving and managing these developments and that government agencies have the financial and human resource capability to deal with catastrophic oil spills. I know that you heard earlier in the week from a panel that said we don't possess that ability right now.

A full regional study needs to be done for the west coast of B.C. on the consequences to first nations of a catastrophic oil spill, including worst-case scenarios. The National Energy Board and Transport Canada must consult with first nations on any related regulatory standards it uses as part of their so-called goal-oriented regulatory regimes.

And certainly, adequate tanker owners' liability for spill cleanup needs to be addressed, so that Canadian taxpayers do not have to pay for the cost of cleanup and people seeking compensation don't have to go to court, where the oil companies can run them out for decades. Accidents that can cause irreparable harm to first nations constitutionally protected rights can, do, and will happen. This cannot be in the national interest.

We on the coast are the ones who are facing the risks and we are the ones who must be satisfied that the risks are worth taking. Until that happens, offshore drilling and the introduction of oil tankers on the north and central coasts of B.C., through the back door of a project-specific approval such as that of Enbridge, is wrong and totally unacceptable. We are not asking for anything different from what you would want to protect your family if something that threatened them--like an oil refinery or a crack house--was allowed to locate next door to you.

I've been to China on numerous occasions and I don't buy the idea that we need to have a reason to send oil to China just to raise the price of oil. The last time I looked, the most lucrative industry on planet earth was the oil industry, and they don't need any help making any more money at the expense of the rest of us.

Enbridge, over the last decade or so, has spilled millions and millions and millions of litres of oil throughout North America. Coastal First Nations find it unacceptable that they are proposing to do that in our areas and that first nations in the interior of B.C. find it acceptable that they propose to do it there.

Thank you. I look forward to your questions.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Sterritt.

We'll go now directly to questioning, starting with the official opposition.

Mr. Tonks, you have up to seven minutes. Go ahead, please.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you very much.

Thank you once again to our deputations for the testimony you've given.

My question is for Mr. Sterritt. You heard Mr. Kinsley talk about the environmental assessment, and you also heard him talk about the issues related to a parallel pipeline to transport condensate, which is required for the development of the bitumen. You have heard him say that at present the traffic in condensate is carried by tanker, and we obviously are very concerned about your testimony with respect to emergency response and so on.

Could you tell the committee whether you are satisfied with the terms of the environmental assessment that have been described? Because that seems to be a very immediate concern to you, on behalf of the first nations. Are you satisfied? He has indicated that there will be thousands of pages of technical data and so on and so forth. Have you been brought into preliminary discussions on how the terms of reference for the EA will be prepared and what your opportunity for input is? Have you been given any funding, if you will, to be part of that process?

[The Chair, Conservative, Leon Benoit]

Mr. Sterritt, go ahead.

[Art Sterritt]

Yes, we have. We applied and received funding to be engaged in that review process. We have written briefs to the panel indicating what we consider to be the many deficiencies that are evident within the report. With reference to the pipeline, the condensate and all of that, the issue with Coastal First Nations is about crude oil, crude in the true sense, when we talk about crude oil coming out of the tar sands.

Our issue is not about trying to shut down the tar sands. Our issue is about allowing crude oil to be introduced to our coast in a way that would jeopardize what we have there now. Coastal First Nations and others currently have 17,000 to 20,000 jobs that are dependent on a healthy coast. There is nothing in this review that is going to show us that Canada or British Columbia or any oil company has the capability of cleaning up a spill of crude oil.

Now, on the difference between crude oil and the condensate that's moving in right now, we're not particularly happy with the condensate that's coming in right now; however, it can be cleaned up to a certain extent. For crude oil, it would be impossible, based on the technology that exists for this today.

I hope that answers your question.

[Alan Tonks, Liberal, York South—Weston, ON]

That's very good. Thank you, Mr. Sterritt.

As a follow-up to that, I guess, you've talked about the 1960s technology with respect to the response if there were a spill and to the impact it would have, for example, on shellfish production and so on. That production is adding huge value to the first nations that you speak on behalf of. In regard to the environmental assessment, has the joint panel also included that as part of the terms of reference for the environmental assessment?

[Art Sterritt]

From our perspective, they have not done a risk assessment of everything that would happen in the case of a spill. What they're doing is trying to show us that there is some kind of technology out there, that Canada is ready for a spill. Really, the report that came out in Ottawa earlier in the week I think is the definitive statement on that: this kind of technology doesn't exist.

When I was in the Gulf of Mexico, I went right out into the gulf area with the head of the Louisiana Shrimp Association, a fellow who worked in the oil industry for decades. When we went out there and looked, we saw were billions and billions of dollars' worth of vessels that were anchored up. We were out there in an 18-foot skiff in a two-foot chop. They were anchored because they couldn't skim oil because of this two-foot chop.

They only have two-foot tides in the gulf. We have 24-foot tides in Douglas Channel, where they're proposing to do this. On any good sunny, calm day, tide slop in our area can exceed that. So this oil, if there were ever a spill, would literally coat the whole coast of British Columbia in a very short period of time. This is the major concern we have: that we do not have the technology.

I give the oil industry absolute credit for being able to move oil faster and further and dig deeper to get it, but they have not spent the resources necessary to clean up a spill when it happens. And it does happen, as we have seen over the last six or eight months.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you for that, Mr. Sterritt.

I have just one question, then, for Mr. Kinsley.

Mr. Kinsley, with respect to the preliminary preparation on the EA, you've listened to Mr. Sterritt's concerns, and you've heard that they're not fundamentally opposed to the added value and so on. What is your response to the concerns they raise, particularly in terms of technical response?

[Colin Kinsley]

I'm not technically expert in those fields. I certainly respect the comments of Mr. Sterritt, and I understand them. It just so happens that the Douglas Channel has been kind of my second home for 30 years, too, because of the pleasure of fishing, crabbing, and prawning out there. I know it extremely well.

I've read extensively on this project, and from the information I have, and from what I know exists out there, spill response is not where it should be right now. In fact, Mr. Sterritt would probably agree that since the sinking of the ferry that struck Gil Island, emergency response has not changed on the northwest coast of British Columbia. The spill response comes out of Kitimat.

Under Enbridge's proposal, the entire coastal region response and emergency preparedness will grow, and it will employ first nations along the channel to do that emergency response. This will actually enhance what exists, because the transportation of oil takes place now, too, albeit in smaller ways, even into Haida Gwaii. Some million gallons a year of diesel goes in to feed the oil electric generation plants and also some coastal villages up and down the B.C. coast because they're not on the grid.

So this type of activity takes place all the time, and this proposal will enhance it, and not only on the spill response. As you know, in health care, staying healthy is more important than trying to get healthy after you're sick. To that end, this proposal, again, will make the coast safer because radar will be introduced. There will be better weather monitoring, better buoys. The speeds will be altered. Weather conditions will be put in. It has been proven that the tugs that are going to be designed and built in British Columbia to be tethered to these tankers can actually stop a tanker or steer a tanker if it loses rudder control or power.

I can't dispute what Mr. Sterritt was saying exists today, but I can argue, I think, that a project such as this will enhance not only what will be coming but what is there now. When you talk about what's taking place now, there's a 50-kilometre exclusion zone on the outside of Haida Gwaii, from Alaska to Cherry Point down in Washington State. About 350 tankers a year go down there and have for many years.

The 50-kilometre exclusion zone is there because there are no rescue tugs anywhere along that sphere, so if a tanker were to get in trouble off the coast of British Columbia, Haida Gwaii or otherwise, the rescue tug would have to come from Alaska or Washington State. Under this plan, they will be closer to home and they will be locally operated. It's amazing how it will change this.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Tonks.

Witnesses, the next questioning will be in French, so if you need interpretation, you can make it available.

Monsieur Pomerleau, please, for up to seven minutes.

[Roger Pomerleau, Bloc, Drummond, QC]

Good point! Thank you, Mr. Chairman.

[Some hon. members]

Oh, oh!

[Colin Kinsley]

Mr. Pomerleau, I may get it if you go real slow. I had high school French for years.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you to both of you for being here today to help us with the study we have undertaken.

Mr. Kinsley, most of the arguments you have presented today are based on economics and make sense. You claim that we must turn towards Asia to find new markets for western oil, and that it is not a good thing to have only a single client. Because as it now stands, we depend entirely on that single client to set the price he is willing to pay, whereas if we had several clients, we could get a better price.

I completely agree with you, that's true. This is an economic argument and I believe that other arguments can be made in the study we have undertaken. Other arguments include the one made by Mr. Sterritt regarding the rights of aboriginals, whose lands will be affected. Of course, natural resources fall under provincial jurisdiction, but aboriginal rights fall under Ottawa's jurisdiction. I wanted to frame the issue this way.

You know that Quebec had the same problem which you will or might be faced with, as well. We wanted to develop hydroelectricity in northern Quebec on native land. We built power plants on the lands of the Cree, the Naskapi and the Inuit. Legally, you cannot build something on your neighbour's land without first obtaining his consent to be absolutely sure that you have the right to do so. This is why in Quebec, we signed an agreement with the aboriginal nations—which took a long time to negotiate—and which is called the James Bay and Northern Quebec Agreement. Canada was involved, that is, the federal government, of course, because it is the trustee of aboriginal rights. Therefore, we worked very hard, very specifically, over a very long time, to meet the needs of aboriginal people, to meet the needs of those who wanted to build the power stations, and to meet the needs of the federal government, since it is responsible for protecting the rights of aboriginal people in the long run. We ultimately signed an agreement which was recognized as being an extraordinary one, since it was one of the first major agreements we signed with aboriginal people.

So if you want to send oil through a pipeline over native land, what kind of long-term, well thought-out and detailed agreement have you begun to undertake, or are thinking of undertaking, with the aboriginal people who will be affected?

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Kinsley.

[Colin Kinsley]

Merci, monsieur Pomerleau.

The discussions with first nations--and there are some 50 of them, including aboriginal and Métis, along the proposed corridor--have been ongoing for several years. Protocol agreements have been signed with 30 of the various aboriginal groups out of about 50, and discussions are going on with others. Many more may sign on, because the approach has been, first of all, to engage first nations experts on gathering traditional knowledge, such as the use of the land, ceremonial sites, traditional medicines and those kinds of things, and other traditional uses as they go along the corridor.

To give you a very quick description, the corridor right now is a kilometre wide for identification purposes and geotechnical studies. The construction right-of-way will be 50 metres wide. The end right-of-way will be 25 metres wide. Everything will be returned to its natural state except on that final 25 metres.

What has taken place with aboriginal people is discussion on an equity position. There are going to be 40 units of economic opportunity for the first nations, funded by Enbridge, so it's about 10% of the value of the pipeline. It's in the millions of dollars. The financing will be conducted by Enbridge for the nations because, as you probably know, a lot of first nations don't have the financial capacity to put in their own funds. This will be paid back through their share of revenue on the pipeline.

In addition to that opportunity, they will have opportunities for procurement, provision of services, and training. There's a plan in place. Discussions have been going on for two years with Northwest Community College in Terrace, which is about 150 miles northwest of the proposed line, with the College of New Caledonia in Prince George, with Northern Lights College in Dawson Creek, and with the University of Northern British Columbia, with its main campus in Prince George.

This is to identify what employers will need: the types of employees and the kind of training they'll require. The opportunity has been given for first nations to participate in that. First nations chiefs and councils have been consulted with for some time. Not all, of course, are in agreement, and some have actually not had consultation because they have chosen not to.

So the job before Enbridge and the development team is of course to earn the trust of those first nations, to earn a social license with them, and to have acceptance to cross their traditional territories. In my previous life, I was the mayor of Prince George for 12 years and chairman for several years of the regional district—which takes in a large rural area—and we had incredible relationships with our first nation neighbours.

Three of the chiefs I have consulted with are very open to participating in this. The resistance grows the further west we go. We recognize fully that the introduction of the pipeline industry is new west of Prince George. There are three lines that come down out of northeastern British Columbia through Prince George to serve the southern coast, Vancouver, and the Lower Mainland. There's only one small gas line that runs from Prince George west to Kitimat. It's Pacific Northern Gas, supplying natural gas.

It's new, and there is a challenge, but the fact remains that we feel the economic opportunity, the educational opportunity, and the lifelong opportunity for first nations are there, and the partnerships are being developed. I think they will be developed over the next six months or so to where we need to be to receive that social license.

[The Chair, Conservative, Leon Benoit]

Monsieur Pomerleau, your time is up.

Mr. Cullen, you have up to seven minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you.

Thank you to both gentlemen for being here today.

Mr. Kinsley, we're studying energy security. Has your group endeavoured to understand the job loss potential for moving unprocessed bitumen out of Alberta through the Enbridge pipeline?

[Colin Kinsley]

I'm sorry, but are you making reference to it not being upgraded in Alberta? No, because from my understanding.... Again, I chair the alliance, which is an advocate to see it go through the process as opposed to the project itself.... But in talking with Mayor Mandel of Edmonton and other people who have asked this same question of me about upgrading, the market isn't there for upgraded areas, so the opportunity is to sell our product to new markets.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

This was asked of witnesses previously. In terms of funding, who funds the Northern Gateway Alliance?

[Colin Kinsley]

The Northern Gateway Alliance is funded by Enbridge. I have a small consulting firm and I was contracted to chair the alliance on a part-time basis. I'm the only one who is paid in that capacity. But in the spirit of full disclosure, I do get some administrative help from both the corporate office in Calgary and the operations office in Edmonton.