Natural Resources Committee on Feb. 7th, 2012

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

I'm just wondering, then, how it applies to crown lands in first nations reserves. Did you have any experience of that on the NEB, or do you have any knowledge?

[Brenda Kenny]

I won't reflect on any personal experience at the NEB, but my understanding is that crown land does not usually trigger something like eminent domain because it's actually crown to crown saying, “I think this infrastructure is important.” Aboriginal interests are of course critical, and finding a way to have sincere and clear consultation is important.

Accommodation is a different and related piece of that. Accommodation can lead to a discussion about benefits or some sort of adjudication.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

I'm just wondering, then, about the technical side and maybe your experience with overseeing a newer pipeline construction or experience watching these projects go forward. You describe pipelines as highways. How wide a swath of land is needed for, say, a 300,000-barrel-per-day pipeline?

[Brenda Kenny]

It would depend, but a typical easement would be about 30 metres in width or less. Sometimes during construction you will need some additional working space, which is negotiated separately on a very temporary basis, just because you take the topsoil off first and carefully store that as you're doing the trenching and stringing the pipe.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

How big is that extra, say, easement?

[Brenda Kenny]

It would depend on the working conditions and the sort of construction that's under way. It's not very large, particularly, but it is just a temporary workspace issue. Once a pipeline is constructed, it is typically about a metre below the ground, so in our experience active land use is unimpeded. We work very closely with the agricultural community particularly, for example. When we do surveys of landowners, the vast majority are very happy to have a pipeline on their ground and have no environmental concerns that continue on. These are very long-term relationships and for the most part work very well.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Are maps of these—

[The Chair, Conservative, Leon Benoit]

Mr. Stewart, your time is up.

We go now to Mr. Trost, for up to five minutes.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

Again, I appreciate all the witnesses coming today.

I guess my first question can be answered by either Mr. Mintz, Mr. Moore, or Ms. Kenny, or all of them. In looking at the various pipeline options that are being discussed in North America—we have Keystone, Northern Gateway, things like that—would you say that right now the expectations of investors in oil sands, and I guess in general in western Canadian oil projects, are by and large working on the assumption that these pipelines will go through and there will be increased capacity? If my assumption there is correct, what would be the effect on investment in the western Canadian oil patch if all of a sudden something came that these pipelines would not be able to go through? Say President Obama is re-elected and absolutely forbids Keystone, and something happens in B.C. that we can't ever put a pipeline through there. What would happen then if that expectation, assuming it's there, were changed? Could I get a couple of answers on that?

[The Chair, Conservative, Leon Benoit]

Mr. Mintz, go ahead.

[Prof. Michal Moore]

I'll start off on that.

I want to go back to Ms. Kenny's point about a national energy strategy and remind us that we're part of a North American continent, and that when we talk about a national energy strategy we're really talking about a North American energy strategy.

That leads us to a connection with our clients in the U.S. and ultimately our friends and other markets in Mexico. That means we're going to have to have long-term dedicated rights of way as part of the national energy strategy that will guide investment that can serve Canadian producers and provide access to those markets. Right now, the long-term need is for more pipeline capacity beyond Keystone, for instance, and certainly more long-term access to other markets, including liquid natural gas, LNG, markets. So I will just say that that's the basis of having a rational, long-term North American energy strategy where we're a major player.

To back up, if we don't have that, then the logical outcome is that production is going to have to slow down or investment is going to slow down until we can get that long term.

[Brenda Kenny]

If I can use the analogy of a manufacturing plant in Ontario, the expectation is that if I am planning to invest in that manufacturing plant in Ontario, there will be sufficient highway, bridge, and border-crossing capacity for me to be able to deliver my goods to markets. If I suspect that's not the case, I may hesitate about that investment. This is a good illustration of the difference between public interest considerations and enabling investment, and it is why I use the analogy of pipelines as energy highways. They are the facility through which we enable trade and they're fundamentally important to open our choices going forward.

One added comment I would make, very briefly, is this. I think it's critically important when we're looking at the energy strategy question that we not fall into the trap of false choices. So often I hear people painting a picture of either we have oil sands or we have green technologies; I find it remarkable that in fact for me, all boats rise with a rising tide. That extra 1% of GDP, that extra revenue that pensioners and shareholders get in our a very fluid investment market, enables Canada to actually do something exciting on renewables and green technologies. If we don't get there on trade, we will be an impoverished nation and our hopes of actually rising with green technologies are greatly dashed.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Very quickly, are there any alternatives, as has been pointed out, if we don't have pipelines? Is there really anything else that can ship it? There's been some talk about the railway. What would be the extra costs of shipping through some other system such as rail?

Could Mr. Moore or Mr. Mintz answer that one fairly quickly?

[Prof. Michal Moore]

We looked at the costs of shipping the last mile out through Pacific ports by rail, and it adds a tremendous cost. It's not likely to be, long term, a very effective solution.

To put it in context, that last mile, so to speak, down on the gulf coast, where we have to get past Cushing and out to those refineries that can actually process our products, adds about $10 a barrel to the costs, which could be alleviated if in fact we can get access to a more efficient pipeline.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We go now to Ms. Day for up to five minutes.

I'd just like to tell the witnesses that if any of you don't understand French, you might want to put your translation device on now and set it to English.

Go ahead, Ms. Day.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Good morning, ladies and gentlemen. Thank you for joining us today.

My first question is for Mr. Hughes.

You say that 80% of the crude oil refined in Atlantic Canada is imported. What kind of risks are associated with this dependence on foreign oil, whether we are talking about our families or about the economy and the imbalance between imports and exports?

[Prof. Larry Hughes]

The risk is not so much affordability, which of course I did mention before, but it can be an availability issue when we're talking about energy security.

Specifically, we have eight major suppliers to eastern Canada. The U.K. and Norway, as I mentioned earlier, both peaked; Saudi Arabia has effectively entered a plateau; Russia has peaked; Venezuela has peaked; and Nigeria is in a plateau. So with respect to production, some of our major suppliers are having difficulty maintaining supply.

The other side of the coin is what type of domestic and political security risk do they have? Although some of our major suppliers, like Angola and Saudi Arabia, haven't necessarily peaked, they are in regions of the world where they may be politically unstable, and of course it's the same thing with Iraq, which eastern Canada relies upon.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

You partially answered my second question. You talked about certain realities our families are faced with, such as energy poverty. You also talked about how much of the family or household budget is used to cover energy costs.

My question is about the potential recommendations to policy-makers. You talked about the possibility of opting for other energy sources, such as hydroelectricity, or shipping western Canadian crude oil from Sarnia to Montreal and Enbridge.

We import crude oil, and we have more than we need. In addition, a refinery was recently closed in Montreal. Could you tell me what the logic is behind importing more crude oil right now?

[Prof. Larry Hughes]

I'm willing to be corrected on this, but it's primarily historical. The dividing line was developed in the 1960s, so that everything west of the Ontario-Quebec boundary was to be supplied by western Canada and the area east of the Ottawa River was to be supplied from overseas. During times of little or no political volatility, when the energy was available and affordable, it made sense.

On what has happened over time, as has been pointed out, with the OPEC crisis, line 9 was installed with the intention of overcoming this reliance on countries outside of Canada. Since then, line 9 has been reversed. One of the underlying assumptions is that we don't need to reverse it again, but we do need to reverse it now to meet not necessarily our energy security, but the energy security of other countries. From my understanding, it was a historical decision to take that path and supply eastern Canada with overseas crude.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Thank you.

Mr. Smillie, at a committee meeting, the minister told us that the Keystone project would create 140,000 jobs. If the project moves forward, how many of those jobs would be in Canada and how many in the United States?

[Christopher Smillie]

There are two stages of jobs. Let's talk first about direct jobs, and then related jobs.

If Keystone were to go ahead today, there would be about 3,000 to 3,500 construction jobs in Canada in this section from Hardisty to the U.S. border for three seasons. The direct construction in the United States for Keystone would involve about 20,000 jobs. It makes a lot of sense, because the majority of the pipeline is in the U.S. But the jobs afterwards in the extraction, upgrading, and construction industry down the road would make a big difference.

Producers in Alberta would build and grow their facilities in order to fill that pipeline with product. That's where the jobs for Canada would come from. The jobs for Canada wouldn't really come in large numbers from the construction of the pipeline. It's the 50-year jobs that come afterwards. It's all the tertiary effects of the oil sands employment afterwards. It's in the hundreds of thousands that's calculated after a project like Keystone is completed. It's billions of dollars to Canada's GDP.

[The Chair, Conservative, Leon Benoit]

Merci, Ms. Day.

We will now go to Mr. Daniel for up to five minutes.

Go ahead, please.

[Joe Daniel, Conservative, Don Valley East, ON]

Thank you, Mr. Chairman.

Thank you, witnesses.

I'm going to focus on what the government is focusing on, which is the job side of things. I think my questions are going to be primarily to you, Mr. Smillie.

You talked about there being 25,000 apprentices in training at the moment. How many of them graduate each year? Is there a gap in the demand for these folks, positive or negative, in each of the trades?

[Christopher Smillie]

Canada's apprenticeship system writ large has approximately 250,000 people currently registered. That includes construction, hairstylists, bakers, anything that's considered a registered Red Seal trade. There are about a quarter of a million folks, and each year Statistics Canada says there are 25,000 to 30,000 people who graduate from the apprentice program.

Apprentice programs differ in their length. For a specialty welder, it's four years, and for a carpenter, it's three. For a heavy machinery operator, it may be two or three years. In Canada's apprentice system, of which construction is a part, there are 20,000-odd folks graduating from their field of study, so to speak.

Basically, 10% of the entire apprenticeship system is in construction, and it's in Alberta. If you talk to some of the industrial unions or manufacturing trades, they haven't been able to hire apprentices in a long, long time because there's been a contraction in those sectors. The construction trades and companies, by opposite logic, have been able to hire tons of apprentices; it's usually three or four apprentices per journeyperson in the workplace.

[Joe Daniel, Conservative, Don Valley East, ON]

Are you able to keep up with the demand? Is there a gap between the number of people required versus the number of people who have been trained, or is there a surplus?