Natural Resources Committee on March 1st, 2011

[Scott Andrews, Liberal, Avalon, NL]

Will you be able to provide that report to the committee as we're putting together our report as well?

[Shawn Skinner]

Absolutely. I'd be happy to do it.

[Scott Andrews, Liberal, Avalon, NL]

Minister Skinner, there are a couple of things related to our province's offshore safety. Where do you see the state of emergency response to cleaning up an oil spill, as such, off the east coast? Is there anything there that concerns you? How can we improve that situation?

[Shawn Skinner]

It is my feeling that there is a fair bit of overlap among regulatory bodies with regard to the offshore. The Canada Shipping Act has certain regulations. There are response organizations for which Transport Canada has regulations. The offshore operators themselves have requirements. There's an East Coast Response Corporation—you're probably aware of it, Mr. Andrews—here in Mount Pearl in Newfoundland. There are a number of people.

Making sure that the coordination of all of their activities and efforts comes together when it's needed and making sure that everybody understands their roles and their responsibilities would be the biggest concern that I would have, but there seems to be, from my perspective, ample resources and ample bodies in place to deal with an offshore spill. My concern would be making sure that they deploy and that they know what their responsibilities are once they're deployed.

[Scott Andrews, Liberal, Avalon, NL]

With regard to the Cougar helicopter crash, do you see a need to go forward with regulation changes related to that particular incident?

[Shawn Skinner]

As you're aware, we have the Wells inquiry that's currently in phase two here in the province. Phase one of that report was presented publicly, and the province adopted all 29 recommendations, if my memory serves me correctly.

There was also a Transportation Safety Board report that was just released. It's being reviewed by the province, but the short answer is that we will be making any and all changes that we believe need to be made. We will certainly be making those changes if they're within our purview; we will be advocating and lobbying those that need to make them if it's not within our area of responsibility.

[Scott Andrews, Liberal, Avalon, NL]

Finally, you mentioned some development on the west coast. I think you were talking mostly about land development. Where do you see the developing going with Old Harry Basin in the Gulf of St. Lawrence?

[Shawn Skinner]

A number of sites have been identified for drilling in the Gulf of St. Lawrence with regard to Old Harry. We certainly have no difficulty with drilling occurring there. There are some ongoing negotiations with Quebec with regard to the boundary, and we feel that it's something that can be done.

We've got drilling happening there. We have a company that's doing drilling, Corridor Resources, and they've got a project description for an exploration well. The C-NLOPB or the regulatory body will make a determination on that.

[Scott Andrews, Liberal, Avalon, NL]

Have they gone through the environmental assessment process for that particular project yet?

[Shawn Skinner]

They just started that process, actually. It's not finished. They are just in the early stages of that process with the C-NLOPB.

[The Chair, Conservative, Leon Benoit]

Your time is up, Mr. Andrews. I hate to interrupt that questioning.

Monsieur Pomerleau, you have up to seven minutes. Go ahead, please.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you, Mr. Chair.

Thank you to both of you, minister and Mr. Lehrmann for meeting with us today and providing further explanations on the various activities you're involved in.

Mr. Lehrmann, you said there have been over 400 stop work authorities issued in your company. What type of things have happened, exactly, for people to want to stop work? Could you give us a few examples?

[Jeff Lehrmann]

That's a very good question.

As part of our management and leadership policy, we encourage the use of stop-work authority. Before any of our operations, any task we need to perform, we assess the task, we plan it, we identify the hazards, and we identify the role for each of the participants. In many cases, the work is stopped because one of the workers is not clear on the task duties, the responsibilities, or the coordination. Sometimes we identify an additional hazard that was missed during the first job safety analysis. Doing that throughout our operation over three months ensured that we delivered the Lona well incident-free.

I have a story I'll share with you. In offshore operations we deal with a lot of heavy equipment that we have to get from shore to our vessels and onto our drill ships, and we use cranes to lift the equipment. Before we do any lift, we look at the manifest, we do a job safety analysis, and we ensure that everyone involved understands what we're going to do before we do that lift. We verify the equipment and the certification of that equipment. On one such occasion, as they went through all of the standard processes, the crane operator was uncertain. As he looked at the load and as he looked at the manifest, he was concerned. So he stopped the work. The crew re-measured the load, recalculated it. In fact, the weight of the load was a bit over. For that instance, it was well within the weight capacity of the crane, but the operator was uncertain. Because of his actions, they reassessed the load, repositioned it, did a safe lift, and everyone involved with that operation went home safe. We recognized that man within our corporation for that behaviour.

[Roger Pomerleau, Bloc, Drummond, QC]

Can you tell us whether the Lona 0-55 is simply an exploration well or is it also functional? Is it operational?

[Jeff Lehrmann]

The Lona 0-55 well was the second well in our exploration program for the Lona lease. That well was drilled, it was abandoned in August, and then the drill ship was released. The primary focus of the well was to capture data for that reservoir and to look at the data to assess the potential of the entire basin and the entire lease. We are currently assessing the value and the data that we got and determining our next steps of operation.

[Roger Pomerleau, Bloc, Drummond, QC]

You said that, despite the safety measures you have always included in your security plan, following the incident, some would say the tragedy, that occurred in the Gulf of Mexico, you added new safety measures.

Could you expand a little as to the type of measures you have implemented since the problem in the Gulf of Mexico?

[Jeff Lehrmann]

As you stated, the incident in the Gulf of Mexico was tragic—eleven families were affected. We as an industry have taken that very seriously. Chevron, being active in the Gulf of Mexico, has gained a lot of valuable information and applied it worldwide to our operations, as we did in the Lona operation.

Some of the procedures now evolving as requirements in the Gulf of Mexico that we implemented in the Lona operation had to do with our blowout preventer—the testing of it and the protocol we use. Before we installed that piece of equipment, which is a critical piece for our secondary well control containment, we full-pressure-tested the electronics of the system on surface and at the wellhead, subsea. We tested our secondary systems that connect or operate the BOP with our acoustic system to ensure its integrity and operability. We tested our remote operating vehicle, which we could send subsurface. If those two systems fail, we can intervene and close the blowout preventer. We incorporated that into our protocol. We also have redundancy in our ROVs, our remote operating vehicles, so if one fails we have a backup.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you very much.

My next question is for the minister.

Thank you very much, minister, for appearing before us today. I know that, like all ministers, you have a great deal of work to do. So again, I thank you.

[Shawn Skinner]

You're welcome. Thank you.

[Roger Pomerleau, Bloc, Drummond, QC]

You are telling us, and I'm sure you're quite right, that oil industry development in the province of Newfoundland and Labrador has been extraordinary and has brought great wealth, many jobs and significant economic benefits. I am very pleased to hear this and I hope everyone will be able to do the same one day.

My question is very general in nature. If we look at the way Canada has evolved historically—I believe there were no other ways for it to happen—we see that it has mostly happened through major investments from the central government. For instance, the east to west railroad. We often refer to Americans as having invented "Go West", but we came up with it before they did. The St. Lawrence Seaway was another major investment involving the movement of people and capital and the creation of wealth. There was also the automobile industry, as well as the Hibernia project out your way. There was also Atomic Energy of Canada Limited that received billions of dollars in government investments. And, in the coming years, there will certainly be investments in new energy to meet Canada's energy needs.

For the entire time when these economic developments were taking place, it was mostly outside of Quebec, but with a good proportion of Quebec money. In fact, since the beginning of Confederation, we have been providing between 20% and 30% of Canadian revenue. We are currently at 20%. So, any time there are major developments of this nature, Quebec pays 20%.

There were never any investments in electricity in Quebec, which was the form of energy we decided to promote in our province, and nothing is expected in the coming years either. That is what led Lucien Bouchard, in 1993, to say that in Canada—this is why he was a sovereigntist—any time Canadian interests…

[The Chair, Conservative, Leon Benoit]

Monsieur Pomerleau, you're over time. Quickly ask a short question, and I hope we can count on a short response. Go ahead, please.

[Roger Pomerleau, Bloc, Drummond, QC]

I am getting to my question. The development of Canada is done at the expense of the development of Quebec. I was quoting Lucien Bouchard; what do you think of what he said about the situation?

[The Chair, Conservative, Leon Benoit]

Would you like to answer, Mr. Minister?

[Shawn Skinner]

Thank you, yes.

There is lots of development happening that will have provincial benefit, regional benefit, and country-wide benefit. I would just ask you to cast your eyes to a development that we are currently proposing in Newfoundland and Labrador, the Muskrat Falls development, which will see great benefits accrue to the province of Newfoundland and Labrador, great benefits accrue to the whole of the Atlantic region, and great benefits accrue to our neighbours in Quebec and Ontario. I see these developments as opportunities for all of Canada to benefit, and I think that the development I just referred to would be one that would see great benefit for all of us.

[The Chair, Conservative, Leon Benoit]

Merci, Monsieur Pomerleau.

Thank you, Minister.

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