Evidence of meeting #22 for Natural Resources in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was refinery.
A recording is available from Parliament.
10:10 a.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Boag.
Thank you, Mr. Stewart.
We go now to Mr. Daniel.
Welcome. You have up to five minutes.
10:10 a.m.
Conservative
Joe Daniel Conservative Don Valley East, ON
Thank you, Mr. Chair.
Thank you, witnesses.
I'm going to have a couple of questions for Mr. Gabbar, since you have been very quiet all this time.
First, it's great to hear that you're working on research for the future and making contributions to the future.
My question is about your modelling. How are you actually validating your model, and how are you ensuring that it's not just telling you what you want to hear?
10:10 a.m.
Associate Professor, University of Ontario Institute of Technology, As an Individual
Thank you very much for that question.
It's indeed modelling what we have in practice. First, it's modelling the well. I would just like to highlight which components we are modelling: we're modelling the well, the pipelines, the refinery process, the flares, and even the greenhouse gases in the environment. These are the major components that we're actually modelling. When I say “modelling the refinery,” I mean modelling the refinery process with equipment underneath.
In terms of validation, what we have developed throughout our expertise—and I was in Japan for almost ten years, working with all oil and gas companies. Until now, I also did a lot of consulting with oil and gas companies in the Middle East.
So through this expertise, we have developed modelling validation through a link with a real-time plant. That means we have the actual plant data, and we develop our models. We link them with what we call real-time simulation. That means the plant is running, and we have our simulation, and I can simulate at a faster pace so I can see an hour ahead in just a few seconds what the actual pipeline ingredients or the turbulence or the production speed, for example, will be.
So primarily the validation is actually through integration with the real-time data. We have this cross-link or integration where we reduce the error of our model's parameters so that it will be tuned to the real-time simulation.
That's primarily the story of modelling.
10:10 a.m.
Conservative
Joe Daniel Conservative Don Valley East, ON
Just to follow up on that—this modelling is obviously very interesting and can be very useful—could you explain how this could be used in coming up with a future strategy for energy?
10:10 a.m.
Associate Professor, University of Ontario Institute of Technology, As an Individual
Yes, indeed.
One of the things I wish for, which from my perspective could be very helpful, is to be able to actually model the whole supply chain so we can see these what-if scenarios. I have really enjoyed most of the questions. All of them have really been what-if scenarios: What if we extend the pipeline? What if we extend the production of the refinery? What if we extend the production of one product?
These what-if scenarios are our main outputs, using simulation modelling and simulation tools. What I am proposing, which I feel could be very beneficial, is to have a modelling and simulation tool that could project these what-if scenarios and could provide some sort of decision support and could actually be used for some policies in terms of determining the maximum capacity and the minimum capacity, etc. It can accurately or dramatically affect decision-making.
10:15 a.m.
Conservative
Joe Daniel Conservative Don Valley East, ON
Good.
Do I have more time? Yes?
For the rest of you, clearly we're not building any new refineries, and we're not expanding from that point of view. We're just upgrading, although we're spending a lot of money. How can Canada stay competitive globally if we don't create new refineries?
10:15 a.m.
President, Canadian Petroleum Products Institute
I think that in order to remain competitive, we need to continue to be able to have an investment climate that encourages investment in our refining infrastructure. That investment might be in existing refineries to continue to improve their efficiency or to respond to increasing environmental performance expectations. I think that is really the key: to make sure there's an economic environment conducive to the kind of investment that's required to maintain that competitiveness.
10:15 a.m.
Conservative
Joe Daniel Conservative Don Valley East, ON
I meant that perhaps there's a limit to how much upgrading you can do before you actually have to go to a completely new facility. Is that point coming close, or do we have a clear path to go on for a long period of time?
January 31st, 2012 / 10:15 a.m.
President, Canadian Petroleum Products Institute
Over the past number of years we've certainly seen significant investments in upgrading our refineries. Some have been efficiency upgrades; a number of refineries have made significant investments in being able to upgrade heavier crudes and in particular either synthetic crude or diluted bitumen. Under the right economic conditions, I think there's still lots of scope to continue to build on our existing refinery infrastructure and remain competitive.
10:15 a.m.
Conservative
Joe Daniel Conservative Don Valley East, ON
Is that for a significant amount of time? Would it be the next 10 years?
10:15 a.m.
President, Canadian Petroleum Products Institute
It's difficult to make forecasts into the long term. There's still lots of uncertainty. We've seen huge swings over the last three or four years in demand, prices, and cost, so it's very difficult. At least in my crystal ball, it's not all that clear in looking out in the future. We saw the price of crude in the summer of 2008, and then we saw the price of crude early in 2009; six months in advance of that, would either of those have been forecast? I doubt it. Certainly my forecasting ability is not that good.
If you look out a number of years, there's a lot of uncertainty about where demand is going to go. We're seeing increasing emphasis on alternative fuels and transportation, so there's a lot of uncertainty in the market. There's a keen interest within the industry to continue to be a viable and competitive part of Canada's economy, and they're going to take the steps to do that, but, as I've indicated in my remarks, there are some policy issues that will have some impact on whether the right investment climate exists for investing those billions of dollars when payback times are very long.
10:15 a.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Daniel.
We go now to Monsieur Lapointe. You have up to five minutes.
10:15 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
You may wish to wear your headphones, gentlemen; I may speak in “Frenglish”, since there are two official languages in this country.
My questions are for Mr. Boag or Mr. Corey.
Which pipelines have had the fewest leaks? Where did the most leaks occur in the Canadian or the North American network? I would like to know which pipelines were the best and the worst in terms of performance?
10:15 a.m.
President, Canadian Petroleum Products Institute
I'm not the best person to ask about pipelines. I would suggest to the committee that someone from the Canadian Energy Pipeline Association would be a far better person to address issues directly related to pipelines and pipeline safety than I would.
10:20 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Perhaps Mr. Gabbar could answer.
10:20 a.m.
Associate Professor, University of Ontario Institute of Technology, As an Individual
I couldn't hear the question, but I think I got.... I couldn't hear the question in English.
10:20 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
What's the worst scenario on pipelines not working well and the best scenario on pipelines working well?
10:20 a.m.
Associate Professor, University of Ontario Institute of Technology, As an Individual
Actually that's indeed a very important question. It is coming to that stage where it's coming to the performance of the pipeline.
First of all, one way the pipeline operation can work, as Peter mentioned, is by transporting one product at a time. That's one scenario, to transport one product at a time.
The other scenario is actually what we're trying to study and investigate. It involves having something called the carrier, which means we have the pipeline actually carrying multiple products at a certain point in time. This pipeline—
10:20 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
In your model, that could be a possible solution.
10:20 a.m.
Associate Professor, University of Ontario Institute of Technology, As an Individual
Yes, it could be possible. It could be feasible, based on the fact that we select which carrier and which product we can actually push in the same pipeline at the same time. That is something that is under study, actually, and what we—
10:20 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
And what about the safety of those pipelines? Will they be...? Can we tell the Canadian public that they will be totally safe—or that they are dangerous? We have to tell them.
10:20 a.m.
Associate Professor, University of Ontario Institute of Technology, As an Individual
Yes: in particular, the word “safety”—I specialize in safety in particular—we define as “freedom from unacceptable risk”. This means that if we want to say that transportation of a product combination in a pipeline is safe, in order to achieve that we need to estimate accurately the risks around it.
10:20 a.m.
Associate Professor, University of Ontario Institute of Technology, As an Individual
These risks, coming from transportation at a distance, are the corrosion or the impact on the pipeline, the degradation, because multiple products might have different chemical properties that might impact the pipeline.
In other words, we cannot say that product one and product two, as transported in a pipeline, are safe unless we actually evaluate exactly the risks.