Evidence of meeting #23 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 refineries.
A recording is available from Parliament.
10 a.m.
Director of Research, Communications, Energy and Paperworkers Union of Canada
I think Mr. Gargiso could answer that.
10 a.m.
Administrative Vice-President, Quebec, Communications, Energy and Paperworkers Union of Canada
When it comes to petroleum product supply, the specific situation of eastern Canada has been on the radar for some time. It came to the fore when Shell announced the closure of its refinery in 2010. Refining capacity was being cut by 25%. That was when a red flag went up and people tried to say that something had to be done.
That is what spawned the whole discussion about reversing the flow of line 9 of the pipeline. Security is not just a matter of the end product but also a matter of crude supply.
In my view, a country with as many oil resources as Canada should start by ensuring that the entire country has a guaranteed supply. It is not enough to say that we will put it on a tanker and move it through the Panama Canal and hopefully it will arrive a week later.
10:05 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
It would actually be a sustained energy security plan and not just part of one in the event of a disaster.
10:05 a.m.
Director of Research, Communications, Energy and Paperworkers Union of Canada
Mr. Lapointe, let's look at Quebec. Twenty-eight percent of that province's oil comes from Algeria and about twenty percent comes from Kazakhstan. That means that nearly 50% of its oil comes from countries that have had quite serious problems. The other main source is the North Sea, with the oil coming from England or Norway. And normally that would be considered secure.
However, forecasts show that their production will drop by half in the next 10 years. I would not call that—
10:05 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
That is not an energy security plan.
Thank you.
As far as the closure of the refinery in Montreal goes, I believe the remaining production is currently maxed out. Do you think that has an effect on the price of gas in eastern Canada? Could that have driven up the price of gas in eastern Canada?
10:05 a.m.
Administrative Vice-President, Quebec, Communications, Energy and Paperworkers Union of Canada
You would need another committee to study the price of gas. It is a pretty broad topic with many factors at play.
10:05 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Too many to make any headway on the matter?
10:05 a.m.
Administrative Vice-President, Quebec, Communications, Energy and Paperworkers Union of Canada
Exactly.
10:05 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Would you also agree that, oddly enough, some of the world's biggest oil-producing nations have clearer plans to achieve some degree of independence when it comes to oil? As far as I know, the industry does not see that as a threat. On the contrary, it knows what to expect over the next 30 years and is able to make forecasts spanning 30 years.
What is your take on the fact that Canada has no clear plan on how to diversify or achieve some degree of energy independence? Do you see it as a drawback, even for the industry, since it cannot make any forecasts for the next two, three or four decades?
10:05 a.m.
Administrative Vice-President, Quebec, Communications, Energy and Paperworkers Union of Canada
It brings to mind a country that has development plans for the next 20, 30 or 50 years. The industry does not like uncertainty. If there is a 50-year plan in place, the industry will know where things are headed and will be able to adapt and adjust accordingly.
10:05 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Mr. Quinn still has 30 seconds to respond to the comment on the lack of a long-term plan. Is that seen as positive, even from the investor's perspective?
10:05 a.m.
General Manager, Integration and Planning, Refining and Marketing, Suncor Energy Inc.
Again, I'll come out and say that we have been in support of a national energy strategy, which we think helps to map out a long-term plan. Plans are plans. Then we have to deal with the realities and adapt to the realities as we move forward. But we are supportive of that, certainly, and we are supportive of—
10:05 a.m.
NDP
François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Can the lack of a plan help the strategy of the investor? Can it help, this absence of a plan?
10:05 a.m.
General Manager, Integration and Planning, Refining and Marketing, Suncor Energy Inc.
Again, there's greater uncertainty in the industry in the absence of plan, yes.
10:05 a.m.
NDP
10:05 a.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Lapointe.
We'll go now to Mr. Allen, for up to five minutes.
10:05 a.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you, Mr. Chair.
Thank you, gentlemen, for being here today.
I just want to follow up, Mr. Quinn, on your testimony in terms of Enbridge line 9. You said this could foster possible investments in Montreal to allow it to more fully adapt to those crudes. Given Mr. Ervin's comments about our crack spreads and everything else associated with that, is that likely? Or is someone forcing the oil to move that way the only way to force something like that to happen, which wouldn't necessarily be very conducive to provincial domain over energy?
10:05 a.m.
General Manager, Integration and Planning, Refining and Marketing, Suncor Energy Inc.
Today Montreal is capable of running some western crudes, a limited degree of western crudes, from an oil sands base. They're quite capable of running western Canadian conventional light crudes. That's not a problem at all. It depends on what you put into line 9 coming east.
The money you'd spend in Montreal would be for taking greater advantage of synthetic crudes and even bitumen-based crudes, such as the heavier crudes, without full upgrading to synthetic. That's where the investment would come. You'd look at that carefully based on price structure and the relative cost of that crude and its quality versus other available crudes. And that's what would give Montreal, then, flexibility.
I don't think we're promising that we would necessarily come off foreign oil, but we would almost certainly take a far greater proportion of our oil from the west. But those will be negotiations that will go forward, presumably with Enbridge, as they make their decisions around that line.
10:10 a.m.
Conservative
10:10 a.m.
Vice-President, Director of Consulting Services, MJ Ervin and Associates, The Kent Group
The choice of feedstock for any refinery is based on a vast number of considerations. There are very sophisticated computer programs that do that sort of planning. But the trade-off between taking western crude and available crudes from other sources like crudes really comes down to the investment at the refinery.
As Mr. Quinn said, there would be a need for investment in refinery capacity, within certain capabilities, to produce gasoline from heavier crudes. That's the real question to be answered, which we can't really break down and analyze in this meeting. It's not just a choice of closing one tap and opening another. Investments would have to be made at the refinery to accommodate heavier crudes.
10:10 a.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Mr. Quinn, you talked a little bit about more upgraders in the west. You're roughly balanced now, but you said you might get a little bit behind in that. I think there are some estimates that to beat Alberta's goal of two-thirds of it being upgraded, four more upgraders would need to be built by 2020. Do you have any estimates on the number of upgraders you'd be looking at, and what is the investment?
10:10 a.m.
General Manager, Integration and Planning, Refining and Marketing, Suncor Energy Inc.
We're adding one big one, called Voyageur. It's in the middle of engineering right now. As I said earlier, I think, we expect to have that up and running by 2017. That adds 200,000 barrels a day of upgrading capacity. With the increase in bitumen production we're investing in as well in the west, that will keep us in balance for some time. I think by 2020 we'll probably get to somewhere like 75% of the bitumen being upgraded. That's directionally where it goes.
It is billions of dollars. I'm not going to get specifically into the investment in a project, but it's billions of dollars.
10:10 a.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Do you have an estimate of the number of jobs that creates?
10:10 a.m.
General Manager, Integration and Planning, Refining and Marketing, Suncor Energy Inc.
Again, I'm sorry. I'm not absolutely sure. It's thousands.
10:10 a.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Can I extend the conversation of value-added one step further? Is there any opportunity, as we go forward, to look at other advanced products, such as bioproducts and plastics? Is there any thought, going forward, about the high-level jobs they would create?