Natural Resources Committee on Feb. 1st, 2011

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Hello, witnesses. Glad to have you here.

Minister Northrup, I'd like to actually invite you to come to southwestern Saskatchewan, instead of Pennsylvania, and you can actually see the benefits of oil and gas development.

I'm just wondering in your travels if you've focused on the significant benefits that come to local communities in terms of the local employment, the local service providers that are given opportunities, and those kinds of things. Have you spent some time looking at that? Are you inviting those folks, or folks who benefited from that, to come to your public meetings to explain the benefits to communities?

[Bruce Northrup]

I guess that's why we had the open house last Saturday morning, because the first people who came in at 9 o'clock in the morning were the mayors, councillors, LSDs, and representatives from the area. We let them talk to industry. We had three industry representatives there: Southwestern, Apache, and Corridor. We had the government there, including Environment and the Department of Natural Resources.

This is something that we try to get out into the general public. When we were down in Arkansas, we saw the benefits of the areas down there. They were just opening up a brand new office down there. It was a “go green” office. We were there on Sunday and they were opening it up Monday morning. There were over 500 employees there with different areas of expertise. These are good paying jobs too.

Around the area you could see a lot of new houses going up and enerventures out in the rural part. Outside of Conway and outside of Little Rock you could see what had happened around that area because of that shale gas industry. They have 3,000 wells there, in the Arkansas area.

Obviously, there are other things that are attributed to the gas wells, as far as the shale gas goes, and the benefits are just overwhelming.

But at the end of the day, we just have to make sure that it's done right and done in the right way. Just one example: when we met with the governor on Sunday night, he was saying that in the educational system, where a lot of the money was put in, where they get the royalties from shale gas, they went from 40th to 6th in the 10-year program.

So we are trying to bring all the positive aspects back to the area in southern New Brunswick. Our biggest job is communication and educating the people on the benefits.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Well, I'm glad you're seeing them. I think the further you go out into the rural areas where there is this activity, the more the impact is on it. Because you've got smaller companies of two or three or four people who are doing the welding, or the service industry, or checking the wells and those kinds of things, this actually keeps them in the rural communities, which we are all working hard to do.

I just wanted to ask you another question about the phased EIAs. Can you explain a little bit more about how that would work? How do you perceive that working? You also talked about re-examining your approval process. I'm just wondering, do you have any timeline on that—a timeline on your examination, not on the approvals, actually?

[Bruce Northrup]

Even before they start drilling, they have to disclose everything, basically what they're doing from A to Z. That's even before they do anything. They're going to have to give full disclosure of all the chemicals they're going to use and what they're going to do day in and day out. That's what the EIA process is all about. It's well structured, as far as what they're going to use through the process. That's where communication has to come in, where government has to monitor that through the EIA process.

That's kind of where everything's going to go day in and day out. It takes approximately 30 days to do this review--about a month--and the objective is to approve a significant number of wells and sites beforehand, before they even get started. That's why when Apache was drilling two wells in the Elgin area, even before they started, we piloted and phased in the EIA process with Apache. There's an MLA down in that area and I contact him two or three times a week. He said that everything was going well down there and they didn't have any problems.

So it's a strategic EIA process that both government and industry have to work through. At the end of the day, if they're not doing it right, it's plain and simple, we'll shut them down.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Anderson.

We go now to the Bloc Québécois, Monsieur Pomerleau, for five minutes.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you very much, Mr. Chair.

Thank you to our three witnesses for your presentations and comments about the issue we're discussing.

Mr. Angevine, my first question is for you. One of the arguments we hear most often—and you made it like many others before you—to promote exploration and, eventually, extraction of shale gas is to tell us that we could get rid of a large part of our reliance on imported petroleum or natural gas. That's absolutely true in some cases.

However, don't you think that, in Quebec, given that we produce electricity, we could get exactly the same economic effect by relying less on petroleum and more on electricity by, for example, deciding to replace our current automobiles with electric cars over 20 or 25 years?

[Dr. Gerry Angevine]

To examine the benefits of increased hydroelectric development in Quebec and compare that to the benefits of shale gas development, the two options, two possibilities, for reducing the dependence on imported crude oil into eastern Canada, is not something we've done at the Fraser Institute. There would be economic benefits, of course, from both, but I'm sorry, I can't tell you an answer. I haven't compared the employment income and GDP impacts of both possibilities.

[Roger Pomerleau, Bloc, Drummond, QC]

That would be worth studying.

[Dr. Gerry Angevine]

It would be an interesting study to do, yes.

[Roger Pomerleau, Bloc, Drummond, QC]

You talked about land claims and aboriginal land rights. You know that, in Quebec, to build the large hydroelectric networks in the far north, it was absolutely necessary to come to an agreement with First Nations, specifically, the Cree, Inuit and Attikamek. We were able to come to an agreement with these people, and the James Bay Agreement was created.

At that time, Mr. Bourrassa was premier of Quebec. He understood perfectly well that we could not build something belonging to us on a neighbour's land. So he had to establish very strict land ownership rules. He had to buy property rights.

When you say that Canada must come to an agreement with aboriginal nations for land claims, are you referring to something like that?

[Dr. Gerry Angevine]

I think in my remarks looking at non-market barriers, I was simply observing that if we have, and where we have, land claims issues, we need to resolve those. I think a greater effort needs to be made to ensure that they are resolved in a reasonable amount of time; otherwise the cost benefits that could be had from the development may not occur, or may not occur for a long time. There's no easy solution.

We've seen, for example, in the Northwest Territories the great difficulty to get agreement with respect to the possibility of a pipeline coming from the Mackenzie Delta through the territories because of difficulties with various local groups. We certainly wouldn't say that those rights that people have need to be disregarded, but there need to be solutions found to overcome these problems. It may be, for example, that one looks at the amount of land that's impacted and the amount of tax, so to speak, that would normally be levied by a municipality on that amount of land. If a generic formula of some sort could be found at least to start negotiations, that would help.

[Roger Pomerleau, Bloc, Drummond, QC]

But do you agree that we do not have the right to build something on a neighbour's land? We are trying to get pipelines through land that doesn't fully belong to us. Do we have to at least acknowledge that the land doesn't fully belong to us, and do we need to come to an agreement with the people who have claims on it?

[Dr. Gerry Angevine]

I think if we have a group of individuals who oppose development, then it's up to the local government to determine the best way to go ahead and to try to get the parties together to resolve a solution.

We've seen different approaches in recent years. For example, with the Mackenzie pipeline, we see the Aboriginal Pipeline company being put in place and the aboriginal groups being given an equity position in the pipeline through that process. We see that Enbridge, I think, is looking at a similar approach with regard to their Northern Gateway pipeline proposal.

So there have been different versions of that approach, but again, it has to be something that the parties agree to.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Pomerleau.

We go now to Mr. Harris, please, for up to five minutes.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chair.

Thank you, gentlemen.

In listening to the testimony today, I'm getting two distinct pictures of shale gas extraction. One is being given by Mr. Ingraffea, who describes it, as I understand him, as somewhat of a reckless endeavour that is fraught with the danger of spills, truck accidents, bursting valves, and every other kind of mishap you can imagine, and as something that we maybe shouldn't even be looking at up here because of all these potential hazards.

On the other hand, I'm hearing from Mr. Northrup, from New Brunswick, that prior to any development of shale gas extraction or exploration in his area, the regulatory people will set some standards and some criteria that must be.... After their study on how to do this safely and efficiently, the rules would be put in place so that this indeed would not be a fast and loose, reckless endeavour, but rather a very carefully monitored, efficient, safe, and environmentally friendly way of extracting shale gas.

So we have these two pictures. I wish we had more time to get an explanation from each one of you.

My question is this. Given the potential economic benefit to this type of gas development, I would assume that unless you have a fairly delinquent regulatory environmental body overseeing it, in fact there have to be prudent ways of extracting this, where all due diligence has been done, environmental safety has all been put in place, and we're good to go, providing all of this is adhered to. I think we do a pretty darn good job of that in Canada--maybe not in other jurisdictions outside our borders, but in Canada I think we have some of the toughest environmental regulations.

I'm wondering, Mr. Northrup, would you like to comment on my little dissertation there?

[Bruce Northrup]

My first comment is that you're exactly right. I couldn't agree with you more. We here in New Brunswick cannot ignore the potential of what it could mean for this province, but at the end of the day, we have to make sure it's done right. I do take this personally. A lot of this activity is being done in my backyard. I represent the people around that area as their MLA. I take this very seriously, and I've said to many people that if we can't do this right, then we won't do it. But we just can't ignore the potential for this province to help pay down our $9 billion debt, to help pay for education and health costs, which are a burden in all the provinces.

We want to make sure we do it right. We actually have a committee, with industry, first nations, and government, that meets all the time. We just want to make sure at the end of the day that we do this right. We feel we have time to do this right. That's why we're going to B.C., and we've also talked about going to Pennsylvania at the end of February or the first week in March, talking to the regulatory people down there, getting the regulations, seeing why they have a moratorium down there. They can always make a positive out of a negative. Maybe it's not a nice thing to say, but you learn from people's mistakes. That's what we want to do here in the province.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Okay.

Mr. Ingraffea, given what Mr. Northrup has said and the map they intend to follow, notwithstanding what you saw south of the border, what issue can you take with the approach Mr. Northrup is suggesting?

[Dr. Anthony R. Ingraffea]

What I've heard so far in your characterizing of the seemingly disparate viewpoints voiced by the three of us today is, to put it mildly, a somewhat pie-in-the-sky naive view of how everything is going to work out just fine, thank you.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Sorry, is Mr. Northrup being naive?

[Dr. Anthony R. Ingraffea]

I don't think adequate background research has been done. There's a boom and bust cycle associated with resource developments, as you know.

I haven't heard anybody today say anything about the detrimental side in the social, economic, and infrastructure levels to what will be an overwhelming industrialization of your region.

In order to get this gas out effectively—I'm repeating myself again—using unconventional methods, a large number of wells per square kilometre is required. One or two test wells in New Brunswick should tell you absolutely nothing at this point. Talk to me in ten years when you have 50,000 wells in New Brunswick and your roads and bridges need to be reconstructed, the local cost of living has gone through the roof, you can't find a hotel room—

[The Chair, Conservative, Leon Benoit]

Mr. Harris, I'm sorry, your time is up.

Professor, thank you.

We do have to go to the next questioner, who is Monsieur Coderre, and Mr. Tonks, if there's time.

[Denis Coderre, Liberal, Bourassa, QC]

Gentlemen, you realize that was from the Conservative side. We don't talk like that, necessarily. We believe in expertise.

Mr. Ingraffea, one of the issues, of course, is.... You're saying the technology is not accurate right now to address all those issues, and that we should take a break instead of going too fast. Is that what you're saying?

[Dr. Anthony R. Ingraffea]

Yes.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Angevine, what do you think of that? Another expert.

[Dr. Gerry Angevine]

I'm not an engineer or a technologist, but if a jurisdiction decides that it needs to go more slowly than some of the neighbouring jurisdictions that have shale gas potential, the gas will stay in the ground, and someday it may be worth more money.