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.
4:35 p.m.
Conservative
4:35 p.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you, Chair, and I thank our witnesses for being here today.
Mr. Marushack and Mr. Tertzakian, I want to follow up on some of the labour issues and the inflationary pressures.
Mr. Marushack, what are the types of skills...? Obviously, it's a different skill base in situ as opposed to the open pit, in terms of the profile of people you're actually going to need. I'm assuming there is a little less resource profile on the in situ side than the open pit as well, but what are the kinds of skills that you are looking for? Is it a broad range from skilled trades? Is it a combination? You said you had 2,000 employees in Canada today. What is the anticipated demand that you're looking at over the next five to ten years?
4:35 p.m.
President, ConocoPhillips Canada
Mr. Chair, in short, just about everything. To be specific, we're looking at how we, first of all, employ people who have our safety culture. That's the most important thing to us, to make sure we don't have a number of safety issues. We're training people on that. That goes all the way from engineers to the people who actually do the grubbing and construction work out on the field.
The second thing is we're looking at how we make these contracts small enough so that aboriginal people and people in the local communities can actually participate. Those would be things like clearing the ground, reclaiming the ground, ditching, pipeline work.
Then we go to the next level of work. We need everything from pipefitters to welders, to construction people, to mechanics. We need operators. We need skilled people all the way up to the engineers and geologists, so that we know how to best reclaim, how to best produce this product, and how to do it to get the most recovery, get the best technologies out there. It goes all the way up to scientists looking at how we take that new technology and make a step change in how we're producing this. It goes all the way from unskilled to very, very skilled people. We need more of everything.
4:35 p.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
What are the types of things you're doing at ConocoPhillips to actually build that workforce? I know we've got a significant number of people from Atlantic Canada who are working out west right now. As development proceeds in Atlantic Canada on shale gas, potentially, on the development of the Lower Churchill and other developments, we're going to require a bunch of people back in eastern Canada, which will probably draw on that labour pool. What are you doing as a company to actually get people? What do you see as key success factors? Is immigration going to solve the problem? Are there other incentives to get people in the workforce? What is it?
4:35 p.m.
President, ConocoPhillips Canada
Mr. Chair, we're working with universities. We spend quite a bit of time working with the universities on various programs. We are talking to engineers, to geologists. We spend quite a bit of time working with a lot of the aboriginal communities to try to describe what our projects are and what kind of skill level we need. We try to provide training and educational assistance.
It is a very, very large issue. We try to do relatively smart things with our development. A lot of times you'll have a project and you'll have a lot of labour at the end. We're trying to level out those things so that we can better match up.
I don't have huge numbers of solutions. I think it's a wonderful opportunity for Canada to have this many jobs, relatively high-paying, long-term jobs. I'd also like to make the point that this isn't a five-year phenomenon; this is going to go on for 50 years. We have time to train folks, and then they can expect long-term employment on these particular activities.
4:35 p.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
I was intrigued by some of the numbers. At the dip in the economic downturn, we had an unemployment rate of slightly over 8%, which is masking a bigger problem that we have in the economy from a resource pool standpoint. I agree. I'm a little concerned with that side of it.
You commented about a competitive fiscal regime. Maybe you and Mr. Tertzakian could both comment on this. What are some of the key things you see as part of the fiscal regime for you to be able to attract capital?
4:35 p.m.
Conservative
The Chair Conservative Leon Benoit
Mr. Marushack, if you could answer in about 30 seconds so we could give Mr. Tertzakian an opportunity to answer as well....
4:35 p.m.
President, ConocoPhillips Canada
Yes, sir.
I look for predictability. I look for sustainability. I look for whether the economy right there has a good regulatory regime, a good government regime and a stable government. What I'm saying is, if we're going to invest several billions of dollars, we'll invest it up front, but we need to get that back over time. I look to make sure there aren't ups and down in the tax policies and fiscal policies and that we have faith the government we're investing in is going to remain true to form, if you will.
4:40 p.m.
Chief Energy Economist and Managing Director, ARC Financial Corp.
I agree with everything Mr. Marushack said about the fiscal regime. I also agree with him about the labour, except for one thing, and that is that I think it's an immediate problem. I don't think this is a solved problem that spans 50 years. I think you're going to see inflation within this business creep up.
You mentioned that at the dip, the unemployment rate was 8% in Alberta. Now it's down to 5.5% to 6%, but that's for the province as a whole. Within this business, I would suggest to you, the unemployment rate is about 0%. In the next month or two we will probably be above 155,000 workers in the oil and gas business, which was where we were when it peaked in early 2008.
So I think the people issue is acute. The thing that happens is that wages start going up, services start going up, and they're sticky on the way down. So we progressively price ourselves out of the global market. What I mean by that is we become the highest-cost producer of oil in the world and we become progressively more vulnerable to any weakness in price, any volatility in price.
So to me, it's a much more urgent issue. I personally am a believer in figuring out immigration, intelligent immigration policies that are streamlined to be able to ward off the potential inflationary problems that we saw between 2005 and 2008.
4:40 p.m.
Conservative
February 8th, 2011 / 4:40 p.m.
Bloc
Roger Pomerleau Bloc Drummond, QC
Thank you, Mr. Chair.
I thank the three of you for coming here today to share with us such interesting experiences.
My first question is for you, Ms. Dowdeswell. You have chaired the Advisory Panel on Oil Sands. I don't know you and I only ask you this question to know who you are. You seem to have a very good knowledge of the subject and related matters. What was your experience and why have you been chosen to chair that panel?
4:40 p.m.
Former Chair, Oilsands Advisory Panel, As an Individual
I think I was chosen because of experience in chairing a wide variety of panels on a wide variety of issues.
However, I also spent five years as Under-Secretary General and head of the United Nations Environment Programme. I also had experience working with industry on the question of nuclear waste and working with government, both in Environment Canada and other departments.
I was not the physical scientist on the team; the other five were, and they covered the range of expertise from geology to biology--the full range of expertise. I was the person who had the experience in managing panels and bringing them together to arrive at some consensus. I would say that my work experience has primarily been around issues of governance and organizational development.
4:40 p.m.
Bloc
Roger Pomerleau Bloc Drummond, QC
Then, choosing you was a good decision.
You have been working at the international level. Earlier, you used the term “geopolitical”. Nowadays, when we talk about energy, we can no longer do so in isolation; it is always geopolitical.
In spite of the fact that we talk a lot about it and make a lot of efforts, how do you explain Canada's current poor reputation on the world scene? Do some people hold a grudge against us? Are some groups jealous of us? Have we really done something that was not quite correct? What is the problem and what is the solution if you see one?
4:40 p.m.
Former Chair, Oilsands Advisory Panel, As an Individual
I'm not sure I can answer as to the motivations of other nations and other people.
4:40 p.m.
Voices
Oh, oh!
4:40 p.m.
Former Chair, Oilsands Advisory Panel, As an Individual
I can say that certainly in the environmental field, increasingly we are under a microscope. Most countries are under a microscope.
4:45 p.m.
Former Chair, Oilsands Advisory Panel, As an Individual
Even here, because we're so interconnected these days. It's not only an interconnection in the environmental field, where what you do with water in one jurisdiction affects another downstream or upstream. What you do with respect to air, obviously, affects other jurisdictions, so there's that environmental relationship.
But it also relates to trading regimes and economic regimes. We now have international regimes, a significant body of law, certainly on the environmental front, that is built on the premise that we're all in this together. We are all interconnected, and we need to be able to rely on people, so when they negotiate agreements that are in the best interests of the international community, including Canada, they want to see us at the table. They want to see us meeting our commitments that we've made, and I think now more than ever, that is the climate in which we are actually operating. So we are so interdependent and interconnected that people have expectations of us, rightly or wrongly. I think that drives them—as well as, of course, the self-interests of countries. So it's a whole range of reasons, I suspect.
4:45 p.m.
Bloc
Roger Pomerleau Bloc Drummond, QC
Alright. I thank you very much.
My next question will be for you, Mr. Tertzakian.
I entirely agree with you when you say that having a sole client is not a good thing. It is not very good either to have a sole source supplier. In any enterprise, the first thing to do is to diversify your activities to avoid future problems.
When you speak about diversifying, you say that we are not maximizing the value of our oil products. Do you mean that we do not transform enough our production locally or do you only mean that we do not have enough access to international markets other than the U.S.?
4:45 p.m.
Chief Energy Economist and Managing Director, ARC Financial Corp.
I presume you're also talking about the upgrading and refining into higher-value products. We do quite a bit of that, but that is a much more complex question because there are issues of being close to market. I only highlight it at the very upstream end. Just to give you a couple of outlines, the world oil price is $100 today, but we are only getting $90 here in North America. The world price for natural gas is above $9 per thousand cubic feet; we, in Canada, are only getting $3.50 or maybe $4, generally speaking. These are all a consequence of lack of diversity of markets.
Whether or not we should be adding value by processing and refining further, that is a much more complicated question that I can't answer.
4:45 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Thank you, Mr. Pomerleau.
We go now to Mr. Shory and, if there's time left, Mr. Hoback.
4:45 p.m.
Conservative
Devinder Shory Conservative Calgary Northeast, AB
Thank you, Mr. Chair.
It's actually very interesting to listen to all the witnesses in this committee, because some of the witnesses take a position that these explorations or expansions should be shut down immediately and some tell us the benefits of this industry. I, being from Calgary, Alberta, definitely see all the benefits every day. Those benefits are not for Albertans only; they are for the other provinces and territories also. I have seen workers from all over, and as a matter of fact, from overseas as well.
My first question is to Mr. Marushack. Mr. Marushack, your firm is listed as having interests in both natural gas and oil sands. With your oil sands operation, you must have seen the benefits to the local communities. In your opinion, what sorts of economic benefits for local communities can be expected if Canadian firms continue with that development of gas reserves?
