Evidence of meeting #42 for Natural Resources in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tertzakian.
A recording is available from Parliament.
Chief Energy Economist and Managing Director, ARC Financial Corp.
Thank you.
With respect to your phrase “with all the money they're making”, actually, I can demonstrate to you that the oil and gas industry over the long term achieves its cost of capital and just a little bit more. There are periods in the history of the oil and gas business where they achieve returns above normal and plenty of periods where it's below normal. So I don't believe that any change--
Chief Energy Economist and Managing Director, ARC Financial Corp.
In terms of innovation, the business over the last 150 years has demonstrated a great ability to innovate and become more productive. I think the issue I'm pointing out is the access to skilled people to be able to effectively develop these resources that are such a vital part of our economy. I think the federal government needs to be thinking about how it is that this industry is going to be able to attract--and from where--skilled people, because we probably don't have enough in this country to be able to fulfill the needs of the business, which is only going to breed potentially more.
Although you don't feel the inflation in other parts of the country, I should remind you that the last time we saw this sort of activity in this area--between 2005 and 2008--the inflation rate within the business was running at around 14% per year. The conditions for that kind of inflation are brewing again if you look at the labour statistics and the service statistics. I think in terms of competitiveness, what the government can do is try to address how it is we're going to attract people to keep our costs contained so that we remain globally competitive with these commodities going forward.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Coderre.
We go now to the Bloc Québécois.
Madam Brunelle, you have up to seven minutes. Go ahead, please.
Paule Brunelle Bloc Trois-Rivières, QC
Good afternoon, madam and gentlemen. I thank you for coming here today.
Ms. Dowdeswell, you chaired an advisory panel on tar sands. I would like to know who appointed the members of the panel. Were you been appointed by the government? Were you supposed to submit your report to the Minister of the Environment or to the Minister of Natural Resources?
Former Chair, Oilsands Advisory Panel, As an Individual
We were asked to undertake this task by the former environment minister, the Hon. Jim Prentice, and we were appointed directly by him.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Alright.
In your statement, you said that the monitoring system was insufficient, that scientific data were unreliable and that you suggested some key elements to improve the situation.
We received, from the Commissioner of the Environment and Sustainable Development, a letter concerning the impact of climate change. It says:
The lack of a federal strategy and action plan has hindered departments' efforts in coordinating actions to address the effects of climate change. The audit found that for the most part, the departments examined have identified and assessed the potential impacts of climate change on their assets and program activities, but that they have taken few concrete steps, such as adjusting or developing policies and programs, to respond to these impacts.
Thus, we are told that few concrete steps have been taken. I link this with what you tell us about the need for new governance models. If there is no strategy or government action plan and if we need new governance models, who is going to come up with a solution to this situation?
Former Chair, Oilsands Advisory Panel, As an Individual
Well, I would hope that one of the results of our brief study was to put the issue on the table and to actually make some suggestions. I think there is evidence that it was taken seriously by the minister on behalf of the government, and certainly tackling the first phase of it...we have yet to see what those results will be.
But I think it's safe to say that the panel would very much concur with the Commissioner of the Environment and Sustainable Development that there are gaps in the system now, and we question whether or not we have the basic data that's going to allow us to adapt to future change, and such fast-paced change as will exist.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Your answer, nevertheless, leads me to believe that this remains worrisome. You mentioned the Athabaska River, you mentioned Dr. Schindler's report which has been criticized by some but supported by others. Nevertheless, we seem to be late in our response to environmental impacts.
With vague comments like yours, can we expect concrete results or, 10 years from now, will we find ourselves at this same table, talking about the same situation, with an environment even more deteriorated and native people more and more desperate?
Former Chair, Oilsands Advisory Panel, As an Individual
I believe our report would give the reader the understanding that there is an urgency in dealing with this and, as importantly, a need to deal with it in a systemic way. Right now we deal with things in bits and pieces, in fragmentation. We don't link the water quality to groundwater. We don't make the link, or at least there are gaps in our understanding of groundwater.
There are gaps in our understanding of the cumulative effects over time across all media, and certainly the impact you're having on neighbouring jurisdictions. We're saying that until you have a sound monitoring system in place, you're always going to have debates about the quality of the data. Consequently, people will be hesitant to actually use the data in developing good policy.
So there are a lot of gaps. There is a lot of opportunity for technological developments. There are all kinds of opportunities for bringing this together if there is a system and the will to do that.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Mr. Marushack, you said that you were going to invest 300 million dollars to develop technologies for oil sands. What type of technologies are we dealing with? Is it to increase production levels? Is it for carbon capture and sequestration? What do you want to do?
President, ConocoPhillips Canada
What we do with the technology is really based on a number of different factors, all of which are related. For instance, right now we're testing ceramic membranes in order to separate the oil and water more efficiently. We're investing in vacuum-insulated tubing in order to reduce our emissions.
On everything we're trying to do in all of our technology, there are really three phases, and they come together. They're intended to reduce our steam-oil ratio, which reduces our greenhouse gas emissions. They're intended to reduce our water consumption, which makes good economic, environmental, and business sense. Finally, we're trying to reduce our footprint as well. All of those things are environmentally sound, good from a safety standpoint, and good business decisions.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
So, you want to reduce your ecological footprint.
Do you think that you are doing enough research to progress rapidly?
We know that governments and companies have counted largely on carbon capture and sequestration projects, which some scientists do not judge really useful, necessary or performing.
Do you think that you are doing enough?
President, ConocoPhillips Canada
On whether we think we're doing enough on research and development, I guess my answer is that we're doing a lot. We're doing what we think is appropriate at this time. We believe we're putting a substantial amount of commitment into this and a substantial amount of people into it. Whether we're doing enough, I don't know, but we are doing a lot, and we're very committed to what we're doing to improve our environmental and safety footprints.
Conservative
The Chair Conservative Leon Benoit
Thank you, Ms. Brunelle.
Mr. Cullen, you have up to seven minutes.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Thanks, Chair, and thank you to our witnesses.
Ms. Dowdeswell, some have commented that the concern about the impact on water quality--that was the focus of your work--by the oil sands was simply a public relations concern rather than an actual concern; it was just a matter of getting the message out about the impact of the projects, more than understanding the impacts themselves. I've heard this from a number of industry leaders and various ministers of government.
Let me ask you that question directly. Do you think this is simply a public relations exercise to get better at the water quality monitoring around the oil sands?
Former Chair, Oilsands Advisory Panel, As an Individual
May I ask a question in return?
Former Chair, Oilsands Advisory Panel, As an Individual
On the part of whom is it a public relations exercise?
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
It's on the part of both industry and the Government of Canada. The only task needing to be done is to make the public relations exercise better and clearer. That will alleviate concerns of the public, and everything will be tickety-boo.
Former Chair, Oilsands Advisory Panel, As an Individual
Certainly those witnesses, those people with whom we interacted for that brief 60 days, were absolutely consistent in saying that we need a better system.
