Natural Resources Committee on Feb. 17th, 2011

[Robert Reid]

I don't have a number with me, sorry.

The pipeline will obviously significantly help the employment situation in the Northwest Territories. At the peak of construction there will be 7,000 jobs. There is $1 billion in what is called “set-aside” work that's been negotiated under the access and benefits agreements between the aboriginal groups and our project managers.

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

So there's going to be some guaranteed employment for that project.

[Robert Reid]

That's absolutely correct.

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

That's great. That's great.

Do I have a little more time, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

You have about a minute and a half.

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

That's great.

I have another question. What did you mean in your presentation by, in the section dealing with quarter one of 2011, “fiscal framework concluded; financeable for APG”?

What does that mean?

[Robert Reid]

We commenced discussions with the federal government a couple of years ago, with Minister Prentice, on what we call a fiscal framework. Just about one year ago, Minister Prentice put those discussions on hold and told us to come back for serious discussions once we got our certificate.

The purpose of those discussions was to do two things: one, create a shipping toll that's attractive to get more shippers on the pipeline; two, to actually make sure the shipping fee is the same for everybody. To have a user-friendly pipeline is, I suppose, a good way to word it.

We want to reduce the cost of capital. That's the key to reducing the shipping toll, so some kind of guarantee would be what would be on the table.

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

Thank you very much. I appreciate that. I wish you a huge success in getting the capacity that you need out to the west coast and over to Asia. I think that's where the market lies in the future.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Harris.

We actually have very little time left. We have about two minutes for each party in the next round.

Mr. Tonks, please ask a short question with a crisp answer.

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

I'll try to do better than I have in the past on that.

Thank you for being here.

I think, Mr. Reid, you talked about the role of the federal government with respect to one particular part. You mentioned providing a guarantee to lower the cost of capital. Do you have any suggestions as to how and where that might take place?

[Robert Reid]

We intend to re-engage with the federal government. It has now been announced that INAC will be the responsible ministry. We intend to re-engage once we get the certificate or the order in council. We'll be picking up where we left off a year ago, and it'll be some form of guarantee. There's nothing carved in stone here, but lowering the cost of capital is the key.

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

So it would be something more than the accelerated capital plan that might allow for quicker write-offs at some point?

[Robert Reid]

Yes. We're not looking for that at all. What we're looking for is a loan guarantee or equivalent, something along those lines, that simply stands behind the commercial loans.

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

Okay.

I just have a quick question to Dr. Isaacs.

Dr. Isaacs, I'm very impressed, and I'm sure the committee is, with respect to the integration of a number of related research-based issues--water, oil sands technology and so on--that have been integrated into your group now. I understand that it is a provincial corporation. Is there an accountability through the board? How does it actually work?

[Dr. Eddy Isaacs]

Yes, you're right about the accountability. I report directly to the board of directors. It's a very prestigious board, consisting of people who have been in the business community but who also have good insights into the technology aspect. It's a combination of these things. They report directly to the minister. He hires them and he fires them, but in between they are allowed to act in a responsible manner.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Tonks.

We now go to Mr. Anderson for about two minutes.

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

Thank you, Mr. Chair.

I appreciate you gentlemen being here today.

Mr. Reid, we've heard a lot in our hearings about both shale gas and conventional gas, as well as oil sands. Is your pipeline supplied by both conventional and shale gas, or is it pretty much all conventional gas?

[Robert Reid]

It's all conventional.

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

You were talking about shale gas. Do you have a vested interest in protecting conventional gas?

[Robert Reid]

Not really, because the large decline rates, as you can see on the chart, are 20% per year. The conventional resources in the south are mature and are declining. Shale gas, as you can again see from the chart, is filling some of that gap, but overall, production is still declining.

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

I don't have the tables from the other days here, but it seemed to me that the shale gas was going to be a far bigger part of the production in the future than what's on your map here. I suppose we'll have to take a look at those.

We had some testimony that said shale gas is actually competitive at the price that natural gas is right now, while presently conventional gas development really is not. How has the price of natural gas impacted the development of your project here in the last little while?

[Robert Reid]

First of all, some shale gas is economically.... Primarily the shale gas being produced in the U.S. basins, such as the shale gas in Horn River, for example, is going to be relatively costly, and again, all conventional gas is not equal. There are some wells that are more than economically viable today and some that are simply not. You can't really compare. All shale gas is not equal, and all conventional gas is not equal.

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

I wish I had a little bit more time.

Mr. Isaacs, I wonder if you could be a little bit more specific about some of the technologies that you're talking about as part of your mandate. We've heard lots about things like new fracking methods. Horizontal well-drilling, of course, is something that we've heard quite a bit about, as well as the SAGD and those kinds of changes that are taking place here.

What do you see in the future? What will be some of your main initiatives that we could put in our testimony and our report?

[Dr. Eddy Isaacs]

I think that this report will provide you with a little bit of guidance on that. I should say that our previous organization was the one very much responsible for the creation of steam-assisted gravity drainage. We now need to go beyond this technology; there are some technologies that are up and coming, including solvents, including the use of solvents with steam, including the use of electricity, including underground coal gasification. Some of these things we are very much engaged in to try to make happen and to advance.

We're also looking at renewable energy and turning waste into fuels. We've supported the City of Edmonton waste-to-fuels pilot plant. It actually uses a Quebec technology, Enerkem's technology. There are a number of technologies that we think are going to be critical. In the end, we do need biofuels. We have targets for biofuels, but we also think that there will be a future for both biofuels and fossil fuels together.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Anderson.

Finally, we have Mr. Pomerleau for around two minutes.