Natural Resources Committee on May 10th, 2012

[Michel Chenier]

I apologize, but I have to ask you to be more specific when talking about agreements. We have comprehensive and territorial agreements that impose obligations on proponents and on the Government of Canada. Clearly, those are agreements we continue to implement. As for the rest, I must admit that it is not very clear to me—

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

I am concerned about any future agreements you may conclude. I greatly appreciate the work you and your department do. I am confident that the department makes good decisions. However, I am worried by the possibility that all that good work may be completely set aside because of economic arguments. That bothers me a bit.

Could you explain to us—

[The Chair, Conservative, Leon Benoit]

Mr. Nicholls, your time is well past. We'll have to leave it at that. If you get another chance you can ask that question.

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

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

Thank you, Mr. Chair.

I find it interesting how over the years the oil and gas industry has evolved. Just a few years ago we were talking about importing LNG into North America, and now an article I have pulled up on my BlackBerry talks about a price, and this was a little bit back, of $2 per million BTUs. Things have changed.

With that in mind, I was interested that in your notes you indicate that in June of last year, 11 new licences were awarded based on bids of work expenditure commitments totalling $534 million over the next five years. That represents $100 million a year, not a big amount of money in some respects.

It got me to thinking. What are our strengths and weaknesses up north as far as drawing industry there, with the price now? If I'm Encana or somebody, I'd look at the shale play in Pennsylvania, Texas, or Arkansas, or something of that nature. I can think of some of the weaknesses up there. Weather is a little difficult. It's a bit of a distance to markets. What are our comparative strengths and weaknesses in Canada's north? From there, I'll follow up with the question as to what we can do to enhance our comparative strengths.

Lay out for me what our strengths are, because I have seen some of the weaknesses, and if I haven't seen some of the weaknesses feel free to throw them in, all in 60 seconds or more.

[The Chair, Conservative, Leon Benoit]

Ms. Fortier, go ahead.

[Mimi Fortier]

Very quickly, the north has a wealth not just of natural gas, and you quoted natural gas prices, but of potential oil resources. What I quoted was the interest in oil in the shale. The shale is the source rock of the big Norman Wells oil field, which is producing still. There's a pipeline from Norman Wells for the oil down to Alberta. You do have that infrastructure if the shale play turns out to be very lucrative. You do have an oil pipeline. On the other hand, you don't have the other types of infrastructure, such as all-weather roads that can handle a lot of shipping of the materials needed, for instance, for the fracking technology.

I think some of your members have already pointed out that there's a small population and limited capacity. While they are very engaged and very interested in the benefits from that development, and they have extracted access and lucrative agreements with the potential explorers and developers, there are going to be some strains on the capacity to participate in that economy as well as in the regulation of that activity.

The other strength, or weakness, if you will, is we have a major petroleum basin that has been proven in the offshore, but as has been pointed out, we have a lot of challenges, obviously. As we go into the deeper waters, we have the challenges they have in other parts of the world. Most oil basins in the world are offshore.

We have a great deal of knowledge, a great deal of experience in the Beaufort. Canada has been the lead in regulating in cold waters. We were the first country to institute in the 1970s the same-season relief well policy. We have a great deal of wealth. We have also the strength that we don't have a huge number of applications coming at us. There's a lot of time and we can pace the regulatory review of those applications.

Those are just a few of the strengths. I'm not sure if I'm really addressing some of aspects you wanted to get at.

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

No, I think that's quite good. I have just one side question. Is the Canada-U.S. dispute we have up there influencing this in any way? Whenever I did Canada-U.S. work, it kept coming up and people looked at it. It was vague whether or not it had any influence on what's going on up there.

[Mimi Fortier]

There is a sense that there is oil and gas potential in what we call the “wedge” in terms of the maritime dispute on the boundary. We do have Canadian leased licences in that area, but there has been imposed work prohibition on those licences for a couple of decades now. We won't see activity, presumably, until we have that maritime dispute.... But there's no pressure from industry currently to actively explore that region.

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

If oil prices continued to stay relatively high and we didn't have to worry about a price differential to ship it out to Alaska or whatever fairly quickly, that could potentially become something we need to look at.

[Mimi Fortier]

There could be increasing interest. We've certainly seen reconnaissance seismic interest in exploring that area.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost. Your time is up.

We go now to Ms. Liu, for up to five minutes.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

Ms. Fortier, you talked about shale gas. As you know, that is an important and topical issue in Quebec.

You talked about workshops or information sessions you provide to northern communities. You know as well as I do that social acceptance of resource demands is of key importance. When I talk to natural gas industry representatives, they say there are gaps in the scientific knowledge regarding that development. I think there is room for improvement.

Industry representatives are also saying they are in favour of the voluntary disclosure of chemical products used in shale gas development. I want to know whether progress has been made in terms of forcing companies to disclose what kind of chemical products were used.

[The Chair, Conservative, Leon Benoit]

Mr. Chenier, go ahead.

[Michel Chenier]

Thank you for that good question.

Before I give a specific answer, I would like to mention that, in the Northwest Territories, one of the areas the industry is currently interested in has been explored and developed in the past. I am talking about the area referred to as the Sahtu region. That region is located in the central part of the Mackenzie Valley. Infrastructure is already in place there, and some production has begun in Norman Wells. If we compare it to other Canadian regions, we can say that we are fairly familiar with that area in terms of oil and gas activities.

That being said, there are some new developments when it comes to shale gas and oil. As Ms. Fortier said in her remarks, we have already organized awareness-raising sessions and information sessions to provide communities with information on the ins and outs of those activities. Your question is about product disclosure, and it is of a more regulatory nature. That element comes under the jurisdiction of the National Energy Board, which is supposed to get involved when specific activities are put forward. As I said earlier, each project or activity is unique. The products and techniques used also vary from one company to the next. That part of your question should be put to a representative of the National Energy Board.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you.

Also with regard to the environment, could you tell us which department is responsible for the monitoring of mine site reclamation?

[Michel Chenier]

As I mentioned, we take care of management in oil and gas. That said, reclamation comes under the same organization. The Northern Affairs Organization within the Department of Aboriginal Affairs and Northern Development is in charge of a reclamation program for contaminated sites. That program covers the implementation and management of specific reclamation projects in the north, such as those that have lately been mentioned in the media and were also the subject of a recent report.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Merci.

Mr. McGowan, thank you for appearing today. Your testimony will be valuable to this committee.

I was wondering if the Alberta Federation of Labour has made some observations about the new regulations around environmental assessment, notably on downloading from federal assessments to provincial assessments.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Liu.

Mr. McGowan, go ahead. We have about 15 seconds left. If you can do it in half a minute that would be great.

[Gil McGowan]

The big concern we have about the downloading is it will result in less rigorous oversight. They'll be handing responsibility from the federal government to the Alberta Energy Resources Conservation Board, which in some circles is referred to as their approval board. They almost never turn down a project. They work very closely with industry. Frankly, we're skeptical they will ever become an effective watchdog for the industry. They're simply too close to the industry to have confidence in them.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

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

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

Thank you, Chair, and thank you, witnesses.

I'm going to follow on a bit about the northern areas, in terms of the aboriginals and folks like that.

We heard witnesses come in and tell us earlier that the aboriginal communities have difficulties in migrating from their normal pursuits to these technical challenges of the energy industry. How involved are they? Are they being educated enough? Do the northern regions have the necessary workforce and expertise to carry on and support these industries?

[Mimi Fortier]

It's not one size fits all; there's certainly a great deal of variability across the north, just as there would be in Canada. As I mentioned earlier, for instance, the Inuvialuit are one of the earliest aboriginal groups in Canada to agree to a land claim agreement, so they're very organized. They've built up a service sector, for instance, in joint ventures with service suppliers. But they do continue to have challenges because of the cyclicity of economic opportunities in the north, to keep the education and train for graduation from secondary school.

Again, the industry continues to work closely with the organizations. There definitely is a close connection that doesn't necessarily involve government, to try to look at opportunities, even to hire northerners for operations throughout the world, particularly in Alberta, so that they gain experience and can take it home. Over the years, since there have been cycles of exploration activity in the north, there's been a lot of experience among a lot of the population. Sometimes it's been the only opportunity for that kind of employment. So there is a great deal of experience, but it is scattered, definitely, according to where the resource is.

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

Thank you.

Mr. McGowan, we've talked about and you've talked about a lot of the skills gaps and the jobs being taken by foreign temporary workers, etc. Since you're leading this big organization, can you tell us what sorts of apprenticeship programs, how many apprentices or trainees, other qualifications, technical stuff, are being produced by your organizations each year to try to fill the skills gap?

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. McGowan.

[Gil McGowan]

The federation itself is an umbrella organization for unions, so we don't train directly, but many of our affiliates do. In fact, when it comes to taking on apprentices and training them for the jobs in the oil sands and elsewhere in construction, the building trades unions do the lion's share of the training.

One thing we've seen over the last number of years is efforts made by non-unionized construction firms to poach the well-trained people who are working for unionized construction firms. It's a big battle, and often ends up in a bidding war, because a lot of the non-union construction companies simply aren't investing in training in the same way the unionized firms are. It's a priority, but the reality is that simply too many projects have been approved at once. We just can't keep up with the demand.

Alberta has more apprentices in training as a proportion of our labour force than has any other province. In response to the big demand for skilled trades, our unions have stepped up to the plate, and they remain the biggest trainers of skilled trades in the province.