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Evidence of meeting #24 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 pipeline.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Christopher Smillie  Senior Advisor, Government Relations, Building and Construction Trades Department, AFL-CIO, Canadian Office
Larry Hughes  Electrical and Computer Engineering, Dalhousie University, As an Individual
Jack Mintz  Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual
Michal Moore  School of Public Policy and ISEE Core Faculty, University of Calgary, As an Individual
Brenda Kenny  President and Chief Executive Officer, Canadian Energy Pipeline Association

9:50 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

Was there any discussion at that time about the contents or the origin of the pipeline?

9:50 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

No, that was not of issue, except from a marketing perspective. There were some discussions with regard to tanker safety, as I recall, but none specifically of any significance with regard to pipeline safety, and I am an engineer, so that was the part I worked on.

9:50 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

With respect to the upcoming discussions that are going to be happening some months down the road, and as you're uniquely positioned as the head of the Canadian Energy Pipeline Association coming from the National Energy Board, could you give us any insight as to why it would take so long for the National Energy Board to have hearings on this?

9:50 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

No, I cannot. I know they went out for public comment and they made a decision, and a few folks wanted to discuss origins of oil and a couple of first nations groups raised their hand as well. But on the matter of substance, given that it's existing infrastructure, you'll have to ask the NEB that. I believe they are appearing before you next week.

9:50 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

So the discussions you are expecting at this particular public hearing will be on the origin of the oil, whereas in the very first reversal that wasn't even a consideration. Is that true?

9:50 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

I don't know what issues could possibly be raised at this juncture, given that the scope of the application simply has to do with that piece of facility.

9:50 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

Would you say that in the past pipelines have been seen by the Canadian public as relatively innocuous? We have hundreds of thousands of kilometres of pipelines. I have a pipeline delivering natural gas to my home to heat it and to give me hot water, as do most homes in western Canada. We have pipelines between major facilities, whether they are natural gas extraction points, through mid-stream processors or upgraders, refineries, and so on, and they have been relatively innocuous until recently. Would you not agree with that statement?

9:50 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

Yes, I would agree with that. I would say that many Canadians are really unaware of pipelines, given that they are buried. In fact, we did a recent survey, out of interest, of 3,000 Canadians. A very large percentage still believe that they are above ground, and since they never see them, they don't think they're really there, which is interesting. I think that goes to the heart of the fact that they are largely very safe and operate daily without any awareness for folks around them that they're actually there.

I would add that in the history of public hearings it's noteworthy that the types of issues raised into the late 1980s were largely economic rather than anything related to land. So there's a very important environmental awareness, issues that should be addressed with respect to the pipeline construction, but we do need to be very deliberate and clear about the scope of those decisions and what really matters at the time.

9:55 a.m.

Conservative

Blaine Calkins Conservative Wetaskiwin, AB

You explain the sudden interest in pipelines. We had the major decision made by President Obama with the Keystone pipeline. We're now having discussions about the Gateway pipeline. Discussions that would have normally been innocuous 20 years ago are now, for some reason, seemingly tenuous political decisions. What, in your opinion, is driving this debate? Does it have any merit at all?

9:55 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

I would observe over the course of a number of hearings—and I'll include the Mackenzie Valley hearing, which took virtually six years to get through—that sometimes the pipeline decision attracts some other policy elements. In the case of the Keystone XL, for some reason unknown to me, American policy-makers chose to point their attention beyond their own borders and question things like GHG emissions from our oil sands, even though our total basket of crude here is better performing than even some Californian crude.

We are transparent and highly regulated in Canada. I think we do need to be very clear and deliberate about where certain policy discussions and regulation take place with regard to natural resource development and aspirations for trade or selling more Canadian oil into eastern markets. In my view, that is not a topic for discussion at the time that you're looking at a pipeline application. It is a reasonable policy question but one that's well-regulated at the provincial level.

9:55 a.m.

Conservative

The Chair Conservative Leon Benoit

Thank you, Mr. Calkins.

Mr. Allen, go ahead, for up to five minutes, please.

February 7th, 2012 / 9:55 a.m.

Conservative

Mike Allen Conservative Tobique—Mactaquac, NB

Thank you very much, Mr. Chair, and thank you to our witnesses for being here.

Ms. Kenny, I just want to follow up really quickly on one question that Mr. Calkins had. He first dealt with the integrity and safety issues of our existing pipeline network. Do you see any issues or problems with us safely expanding our pipeline network?

9:55 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

I would say no, not at all. Existing infrastructure crosses a wide variety of terrain and has done so very safely for decades. For example, discontinuous permafrost can be tricky, where you have some parts that are solid and some parts not. But we have the Norman Wells pipeline that's been operating since the late 1980s, going halfway up the Mackenzie Valley. We have an extensive gas pipeline network in northeast B.C., which is tricky geotechnically, and very little in the way of serious challenges because we've advanced technologies in Canada to address our terrains and our needs.

The new pipeline will be deploying the state-of-the-art steel technologies and coating technologies, and for any of our pipelines, including ones that have been in operation for quite some time, the technologies for internal inspection and surveillance over ground have advanced considerably as well.

9:55 a.m.

Conservative

Mike Allen Conservative Tobique—Mactaquac, NB

Mr. Mintz, in your article in the Financial Post of December 16, you talk significantly about the pipeline to the east coast and whether it would be economic. We've heard from several witnesses in our last couple of meetings about the reversal of the Enbridge line 9. In that, you said the line 9 pipeline was originally built to transport oil from Sarnia to Montreal in the days when western Canadian crude prices were regulated to be lower than importer prices under that dreaded national energy program that we had.

Can you comment a little bit about the economics—you talked a little bit about the economics in the article—and whether maybe the economics would even be there for that reversal?

9:55 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

Actually, my comment on the reversal is that I think the economics are there, potentially. It's 150,000 barrels per day capacity. As Professor Hughes said, one can actually transport by tanker to the Irving Oil refinery in New Brunswick, or, alternatively, one could do the Portland reversal as well. That could take that capacity. We have to remember, though, that 150,000 barrels per day is really just 10% of what we're talking about—increased production—over the next four or five years from the Bakken and the Alberta-Saskatchewan areas alone. We're really talking about a massive increase in the amount of production that will need to have pipelines to get out, and the number of pipeline projects that are going to be needed as a result.

My comments about the economics had to do with trying to ship going east and going all around North America, through the Panama Canal, to Asia, and whether that's going to be economic. In my view, it won't be economic, although potentially there is another opportunity of perhaps turning the TransCanada pipeline that goes east into an oil pipeline and again taking it by tanker from Montreal and going to the gulf coast. However, the transport costs of doing that, including the marine costs, would be roughly $2.50 more than Keystone XL taking oil from western Canada down to the gulf coast as well.

If you try to go to Asia, you're competing with a number of different sources. In fact, my colleague Michal Moore might want to say a little bit about that because he investigated the pricing and the transport cost issues with respect to that.

10 a.m.

Prof. Michal Moore

I'll simply add one point, and that is that the likelihood is that export out of Portland would end up on the gulf coast and at most do something to displace current Mexican imports. It's not likely that it will have a tremendous economic advantage, as Dr. Mintz pointed out.

10 a.m.

Conservative

Mike Allen Conservative Tobique—Mactaquac, NB

Mr. Mintz, when you talked about the spreads between international and western crude prices, there was some concern about that as well.

10 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

Yes, and I do think that's going to be eliminated over the next several years. We've already seen, with the Seaway pipeline reversal that Enbridge purchased just recently, that it has already caused a shrinkage of that differential between the West Texas intermediate price and the gulf coast price. There are other projects that are in place, not just Keystone XL, that TransCanada is planning to put in. There are also two or three other potential projects that people are looking at in terms of either new pipelines or line reversals that likely will lead to the elimination of the differential right now that exists.

10 a.m.

Conservative

The Chair Conservative Leon Benoit

Thank you, Mr. Allen.

We'll go now to Mr. Stewart, for up to five minutes.

Go ahead, please.

10 a.m.

NDP

Kennedy Stewart NDP Burnaby—Douglas, BC

Thank you, Mr. Chair.

And thank you to all the witnesses for coming and giving great presentations, spurring on good debate.

Last week we had a representative from Suncor come, and he provided evidence on a variety of issues from the perspective of his company. Since Mr. Mintz is the director of Esso and Imperial Oil, I wonder if he might explain his company's position on Keystone XL and Enbridge. It's my understanding that Esso and Imperial Oil oppose Keystone and support Enbridge. If so, what's driving these positions?

10 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

First of all, as a director of Imperial Oil, I do not comment on any public policy issues. I leave that to the management of Imperial Oil.

10 a.m.

NDP

Kennedy Stewart NDP Burnaby—Douglas, BC

You can't clarify, as a director, the position on Keystone, which is public?

10 a.m.

Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual

Jack Mintz

I am not going to speak on behalf of Imperial Oil. I'd be happy to talk about my own personal points of view, as an expert, and I would like to maintain that.

10 a.m.

NDP

Kennedy Stewart NDP Burnaby—Douglas, BC

Okay.

Maybe we can move, then, to Ms. Kenny.

You were talking early in your opening comments about this idea of eminent domain. Since you've also served on the NEB—that helps us as well—I was wondering if you can comment on the rules surrounding expropriation of lands during pipeline construction.

10 a.m.

President and Chief Executive Officer, Canadian Energy Pipeline Association

Brenda Kenny

Eminent domain is always essentially a court of last resort, purely from a public interest standpoint. This is something that can be used by regulators and government if there's a sense that an overall national need is causing an imperative desire to see that infrastructure go ahead. In practice, what will happen in planning a project is that the company will actively work with landowners across a corridor or right of way and seek to negotiate an agreement. For the most part, the vast majority are agreed to easily and readily.

Honestly, I can't recall examples where eminent domain was actually applied. It would be no different if a new electric train system was going in or a new local road. Any kind of public infrastructure in a modern society does require that sort of facility for society to function effectively. I want to stress as well that it was Mr. Bernstein's point, not my own, but I was reflecting that it is a component of modern society because critical infrastructure is so fundamental to our being able to succeed.