Natural Resources Committee on May 10th, 2012

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Mr. Chair.

Thank you very much for being here, Monsieur Chenier, Madame Fortier, and Mr. McGowan.

I don't think a lot of the rhetoric going on on all sides is particularly helpful for Canadians who are trying to find out the best way to proceed.

Madame Fortier, in the report the board released last December entitled “Review of Offshore Drilling in the Canadian Arctic”, which you cited it in your brief, I assume from that report there's been a take-up of a number of the issues that are reflected in the 17 research projects under way with BREA, the Beaufort regional environmental assessment, including the recurring issues on environmental assessments, and you go on to talk about cumulative effects and oil spill preparedness.

There's a general consensus that the Conservative government rushed through a certain number of these licences several years ago. At the time, I asked a lot of probative questions about the state of technology in terms of boom systems, containment systems, for example, in the event of a potential spill in the Beaufort.

Does the technology exist now to contain a spill in the Beaufort, given the volatility of those waters? Can you point to an existing technology for Canadians to have some sense of being able to deal with an accident there?

[The Chair, Conservative, Leon Benoit]

Go ahead, Ms. Fortier.

[Mimi Fortier]

I'll try to answer that question, but on a very high-level basis, because clearly a regulatory oversight body could give you better clarity in terms of that. Under BREA, for instance, it's the National Energy Board officer who is leading and chairing the working group looking at oil spill and emergency response.

A great deal of research on ice-infested waters and ice-covered waters has gone on over decades. You can look to many reports. The most recent report I saw only yesterday, and I haven't read it through. There's a joint industry program, and the American Petroleum Institute has laid out all of the research and studies and investigations that have gone on over the years.

Ultimately, I think you'll see that the NEB is going to require that response plans have a contingency of various types of techniques to deal with a spill, because there are going to be variables that change daily. You're going to have to look at being able to switch among in situ burning, dispersants, skimming, and recovery in those sorts of conditions. In some instances, many experts will say that ice containment actually facilitates recovery because it captures the spilled oil.

It's not a “one size fits all”. There are a variety of techniques. Obviously, in some situations it is more challenging than it is in the open seas, but clearly all of those techniques that you would use, for instance, in the Gulf of Mexico you would also use in the north, in the Beaufort, for instance.

[David McGuinty, Liberal, Ottawa South, ON]

Do you have anything you can send to this committee to summarize or to give some definitive evidence, given that, as you say, there are a myriad of responses, depending on the conditions of the day, the conditions of the spill. We're talking here about belugas. We're talking here about polar bear habitat. We're talking about some of the last remaining pristine coastlines in the world. Do you have a summary you can send us? We don't need to get into the details, but is there an evidentiary summary you can provide to this committee to tell us that Canadians should be satisfied that there is enough technology?

[The Chair, Conservative, Leon Benoit]

Mr. Chenier, go ahead.

[Michel Chenier, Director, Policy and Research, Northern Oil and Gas Branch, Department of Indian Affairs and Northern Development]

Thank you, Mr. Chair.

To respond to your query, yes, we can provide a summary of all existing research that has been undertaken in the Beaufort Sea. One component of that is specifically around emergency preparedness and response and, more importantly, around prevention as well.

Much of that work is actually undertaken under the auspices of a research fund that's called for in the legislation. The fund is called the Environmental Studies Research Fund, or ESRF for short. There is a vast history and there are vast volumes of research in that area.

[David McGuinty, Liberal, Ottawa South, ON]

Let me ask you a final question, because I want to turn to Mr. McGowan. If we lined up four engineers at this table and they read this research, would there be a consensus that a spill could be handled?

[Michel Chenier]

Very quickly, the way I would approach this question would be to say that each undertaking or each activity is actually different. The way the regulatory system is actually designed—and you may be aware of this—we have a goal-oriented regime. That is, the regulator actually expects all proponents to come forward with, in this case, as it relates to emergency preparedness, an appropriate response plan.

That response plan is then evaluated by professionals at our national regulator, which is the National Energy Board. It would be very project-specific.

So depending on what types of activities were required, you would have the engineers or environmental scientists being able to come forward and actually provide evidence to the regulator that their activities could be undertaken in a manner that was, first, safe for workers and, second, obviously, safe for the environment.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks.

I need to move on, if I could, Mr. Chair, to Mr. McGowan.

Mr. McGowan, I didn't understand your economic reasoning. You apparently built the case—I'm going to requote you—that “governments are stacking the deck” by mindlessly following the interests of industry. That's what you said. You said that the royalty regime—

[Gil McGowan]

That was a conclusion, right?

[David McGuinty, Liberal, Ottawa South, ON]

Yes, sorry. In your conclusion you said that the royalty regime, the pace of development, the question of temporary workers, and the government's politics were all having a very profound effect on the economics of the free market for the exploitation of this energy.

I didn't understand your argument at all. Can you slow it down a bit and explain to Canadians in simple, plain English? Are you telling us now that the economics of the exploitation of the oil sands are being impeded, in terms of a free market approach, by particular measures and decisions taken by Alberta and the federal government?

[Gil McGowan]

That's exactly what I'm saying. In particular—

[The Chair, Conservative, Leon Benoit]

Mr. McGowan, Mr. McGuinty's time is up. I'll give you 30 seconds to answer the question, so you'll have to be very concise.

[Gil McGowan]

Decisions made by Alberta and Ottawa are affecting the viability of upgrading projects in two ways. First, the rapid pace of development means that so many companies are competing for skilled labour that it's driving the cost up, so only the cheaper extraction projects are viable. So the pace is affecting the viability.

The other thing is that building pipelines to attach the bitumen market to the American market is designed to drive up the price of oil, which sounds like a good thing, but a higher price of oil actually means that the feedstock that's necessary to make our refineries and upgraders run is more expensive. Our competitive advantage on the upgrading side has been access to relatively inexpensive feedstock. So if you drive the price that we get for our bitumen up, which is the explicit goal of these export pipelines, then we're actually undermining the viability of upgraders.

Does that make sense?

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. McGowan.

We go now, in the five-minute round, to Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you, Mr. Chair.

As someone who's not a regular member of the committee, it's a real pleasure to be here today to address this topic. As an Albertan, I recognize how important natural resources are to our country, to the economy of my province, and to the economy of our country. That's why I'm so pleased to be here.

I look at our oil sands in Alberta, and they currently support about 144,000 jobs all across the country. It's predicted that over the next 25 years they will support about 900,000 additional jobs. We're talking about $2.1 trillion in terms of economic benefits for our country over that same period of time, and about $766 billion in tax revenues to all levels of government over that period of time as well. It's obviously a very important piece of our economy in this country, and one that is going to become even more important over the next while.

Of course our government is committed to making sure that we develop this resource in a safe, responsible, and sustainable way. That's very important to point out. It's certainly important that we develop these resources in the most environmentally responsible way, something that our government completely understands and is working towards ensuring. It's also something industry completely understands, and industry is working very hard to ensure that as well. The oil sands industry is one of the industries at the forefront of environmental innovations, and is ensuring that their resource is being developed in a very responsible way. I look at initiatives such as COSIA, Canada's Oil Sands Innovation Alliance, and some of the things they're looking to do through that organization, something our government is certainly encouraging as well.

I have to say that I'm troubled today when I hear a fellow Albertan disparaging our resources. It sounds very much like another Albertan who regularly sits in our Parliament, an NDP member in Edmonton, Linda Duncan.

[The Chair, Conservative, Leon Benoit]

Mr. Julian has a point of order.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Chair, the members of this committee are here to ask questions of our witnesses, not to make statements, and certainly not to disparage members of Parliament. I would hope you call your member to order.

[The Chair, Conservative, Leon Benoit]

Mr. Julian, I hope we're not going to get into a back and forth at this committee. The members asking the questions have been doing so respectfully, and I assume that will continue.

Continue, Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

While I appreciate the intervention, I was leading towards a question. Thank you, Mr. Chair.

I'd like to ask our witness, Mr. McGowan, from the Alberta Federation of Labour, a yes or no question. I don't want to hear any spin or anything like that. I just want a yes or no answer. Does your organization, the Alberta Federation of Labour, have any political connections or support any political parties of any nature?

[Gil McGowan]

First of all, let me address a comment you made—

[Blake Richards, Conservative, Wild Rose, AB]

Pardon me. Give me a yes or no on that question, please.

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. McGowan.

[Blake Richards, Conservative, Wild Rose, AB]

Do you have political affiliations or support any political parties? Yes or no.

[Gil McGowan]

We support parties that support job creation—