Natural Resources Committee on Feb. 7th, 2013

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Leef.

We go now to the NDP. Mr. Julian, for up to seven minutes.

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

I'll be sharing my time with Mr. Nicholls.

Thanks to all the witnesses for their very interesting presentations.

I'd like to start with you, Ms. Kenny, particularly around the issue of safety innovations with pipelines.

I represent a province, as you know, that has real concerns about a possible proposal around Northern Gateway, and I think it's fair to say that pipelines, to a certain extent, have lost their social licence, at least in my province. There's a strong reaction from the public, and the reasons are quite valid. When we look at the Transportation Safety Board statistics on incidents, we've gone from about 30 incidents a year in 2002 to about 145 incidents in 2011. These are oil spills that are happening with increasing frequency, unfortunately, particularly larger ones of more than 1,000 cubic metres.

As far as safety innovation is concerned for the industry, people talk about double walled, they talk about pipe rotation, and they talk about a more rigorous replacement regime. From the industry standpoint, what do you think are the innovations that need to be brought in so we can turn this record around?

[Dr. Brenda Kenny]

Thank you for that.

First of all, just as a point of clarification, certainly the number of reported incidents over time have, in some cases, gone up. These do not all represent oil spills. The vast majority of them are within contained property and many of them are equally gas and oil. I would also point out that the rigour with which the industry has stepped forward to ensure that all reporting is handled means that you will see a pipeline company phone in if they see a smudge of oil on a valve stem, so the analysis of what these actually mean is very important before people get too alarmed.

I would take exception to your statistics with regard to the larger incidents. They are very few in number. Last year there was only one. We've had many years of zero. Granted, 2011 was an exception. There were five, and only one of those was a large spill.

First of all, yes, of course, I have deep sympathy for the concerns being expressed within your province in particular, but what we are doing specifically is both education and technology. On the technology, the detection from inside the pipe, just like the analogy of the medical technologies, is one of the most important breakthroughs. It has resulted in increasing safety in the sector over the last couple of decades and we're nearing some further breakthroughs in terms of the sensitivity of those instruments to guard against any unknown defects creating a problem.

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

You didn't answer my other question around double walled or pipe rotation and a more rigorous replacement regime. Are those things that the industry is looking toward as well?

[Dr. Brenda Kenny]

I would say that I've not heard of people looking seriously at double walled. That's a suggestion that is put out there without a clear understanding of what the actual safety risks are.

As far as retirements are concerned, the aggressive use of management systems and those internal technologies give us very good insights in terms of understanding which parts of the system can be safety maintained and run, and which would deserve some early retirement. We're very well aware of those and they're heavily regulated.

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

Okay, thank you.

I'll turn the floor over to Mr. Nicholls.

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

Mr. Bettencourt, the smart grid technology sounds very interesting. Has your organization done a cost-benefit analysis or value-for-money analysis for implementation of a smart grid to show the economic benefits that would come from this?

[Alex Bettencourt]

We have not done a study on the economic benefits for Canada. That's one of the things we want to ask for, and it's something we've already started to talk with NRCan about, doing an economic benefits analysis for Canada. Other studies we have done for the U.K., the U.S., but it's a large study and we need a lot of stakeholders engaged. That's one of the activities we have planned for this year—

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

With the collaboration of the federal government, it would give a clearer picture, basically a vision for the future for updating those assets, correct?

[Alex Bettencourt]

Yes.

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

Thank you.

Mr. Thompson, thank you for your testimony as well. It illustrates some of the gaps in the progress of the energy sector, certainly in innovation, and where we need to improve, and that's part of the purpose of this study.

In terms of geothermal mapping and modelling, there was a 2008 study done by one of your members, Michal Moore, of the Institute for Sustainable Energy, and the result of that study was that the federal government should commission a Canadian national survey to give companies a better idea of where they might best locate geothermal projects.

I think I heard correctly, but were you suggesting that the federal government give federal-backed loan guarantees to utilities wishing to explore geothermal projects such as they did with the Lower Churchill Project in Newfoundland and Labrador?

[Timothy Thompson]

I'd like to clarify something about Dr. Moore's study: he's not actually a member of CanGEA, he's a member of the ISEEE Group. However, he's a very august member of the geothermal community. With regard to his conclusion, yes, he is advocating that Canada engage in a significant mapping exercise. The expenditure that would be associated with that would be something on the order of $250 million.

With regard to loan-backed guarantees, while welcome at any corporate level, they won't necessarily unlock the development deadlock we have. I think there would be issues with higher priority projects.

Does that address your question?

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

Yes, thank you.

During the 2008 period, when that study came out, Shell was interested in looking at geothermal for oil sands operations, but it said it was about a decade away from realizing geothermal for oil sands production.

We're five years in from that prediction of a decade away. Do you think there's been any progress? Has Shell stayed interested in the idea of using geothermal?

[Timothy Thompson]

This may not be part of your briefing notes. In the intervening period, Shell has essentially backed away from the oil sands. It has reduced its contingent in Calgary with regard to heavy oil by approximately 90%. It's just maintaining its existing plants.

With regard to use of geothermal energy in the oil sands, it really was an inverted application, where it would be applied in a cooling function, to recapture the energy that comes up with the hot oil or hot bitumen in the separation phase. I don't think we've seen any material progress on that front.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Nicholls.

We go now to Mr. Hsu.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

The first question is for Mr. Wharton. Let me point out that I think I share something with some of my colleagues across the way, which is that TransAlta is generating electricity in my riding.

I want to talk about something that researchers in my riding have been working on. You mentioned using biomass in coal-fired power plants. One of the important issues in Ontario, economically speaking, is the availability of water transport for biomass, to make it economical to transport the biomass to the existing coal-fired plants.

I think a lot of your generation is out west and doesn't have the kind of water transport you might get on the Great Lakes. Is that a correct economic assessment of using biomass to replace coal-fired generation out west?

[Donald Wharton]

Thank you. That's a very insightful question.

The answer is yes. In fact, we've looked at using biomass in our coal-fired plants in Alberta. Clearly, the biggest factor is the transportation cost and logistics of moving biomass. We're talking about huge volumes. To give you an example, one coal-fired power plant might look at a volume of 200 or 250 truckloads of biomass to supply approximately 10% to 15% of the daily energy requirements to a typical coal-fired unit. So transportation is extremely important.

You're correct, we haven't looked at water transportation. I believe that if one could solve that problem, with water as a transportation vehicle, it would go a long way towards overcoming some of the economic barriers that face coal-firing today.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

I'll just mention something. This is not a question. Researchers in my riding have also looked at using pipelines to transport pellets of biomass in water from one place to another, so there's a lot of potential innovation.

Mr. Thompson, I want to understand a little bit better the number one request of the federal government, which is to help with the mapping of geothermal resources. Natural Resources Canada has mapped the wind resources on a large scale. For people building turbines, they need to measure wind resources on a smaller scale. That's very valuable on a proprietary basis.

I'm wondering if you could clarify for me if the same thing exists for geothermal resources, whether there's a place for Natural Resources Canada to do some large-scale mapping. Then, whoever's going to try to develop and finance a project might be responsible for the shorter-length scale mapping, the cost, and the value of it.

[Timothy Thompson]

Thank you very much, sir.

I understand that your question comes in two parts. The first part is, is there a role for NRCan to play? Absolutely. NRCan has some of the most well-informed and educated thermal geoscientists in the country, and we've always enjoyed their participation in the geothermal sector and would like to continue to do so.

With regard to mapping, the value to private corporations such as mine of very general maps is very low. Effectively, they tell me things such as there is heat in tectonically active areas, which is a very pedantic statement. At a certain level you need to go granular and when you go granular, it gets very expensive.

I would suggest that the way to do that is with a series of pilots. No one corporation seems to want to take the lead with regard to significant exploration expenses in this regard, but if the government were to prove that it could work in one instance, I think the industry would wake up, as we have seen in the United States. Does that answer your question, sir?

[Ted Hsu, Liberal, Kingston and the Islands, ON]

I think so, but it's suggesting to me that it's really proprietary knowledge to know a detailed map of thermal resources, and so it might not be good for the public sector to pay for it. Am I mistaken?

[Timothy Thompson]

I would define what's good for the public sector as being good for Canada and whatever creates a net benefit for the country. If the development of the geothermal sector, through some seeding efforts of the Canadian government—similar, for instance, to what we saw in the wind market—are to the net benefit of the country, I would define benefit that way, if you will.

With that in mind, I think there is a real role for the federal government to play.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Okay, thank you very much.

The last question is for Mr. Bettencourt.

I was intrigued by the possibility of exporting all the technology related to tools to run a smart grid. I know that smart grids are becoming more and more important as we have distributed generation from renewable energy.

I'm wondering if you can quantify or expand a little on your remarks about the possibility of developing that particular sector of our economy for export.

[Alex Bettencourt]

Sure.

The same renewal of our infrastructure that we're facing in Canada is also being faced in the United States and in Europe. They estimate that we'll spend tens of billions of dollars renewing our electricity infrastructure in Canada, hundreds of billions of dollars in the United States, and hundreds of billions of dollars in Europe.

Because these utilities are already spending these massive quantities of money renewing their infrastructure, and they will over the next 10 to 20 years, now is the opportunity to set the technologies that are smart grid, that are going to ride that wave of investment over the next 10 to 20 years. That's one of the reasons why a country like Korea, which has very few natural resources and has to import almost all of their energy, really sees the smart grid as a way of improving their national energy security, but also, if we make the technologies, we'll be able to sell these technologies abroad for the next 20 years, and that's a real cornerstone of their policies.

For Canada, I think the real opportunity is for us to take the investments we've already made. In Canada, we're also fairly unique in that our utilities are mostly publicly owned across the country; Hydro-Québec is owned by the Province of Quebec, BC Hydro is owned by the Province of British Columbia. These are crown corporations that are for the public good and they've already started to make investments in smart grids. Because of that, we have a nascent industry of smart grids in Canada that got early investments because of the early smart meter implementations in Ontario and B.C. and the early integration of renewables in Ontario.

Because these companies had real world experience cutting their teeth on Canadian markets, now is a good time to get in front of those other world markets so they can take advantage of it for the next 20 years.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Hsu.

We go now to the five-minute round starting with Ms. Crockatt, then Mr. Calkins, and then Ms. Liu.

Go ahead, please, Ms. Crockatt.

[Joan Crockatt, Conservative, Calgary Centre, AB]

My question is for Brenda Kenny. Hi, Brenda.

I think my friend talked about social licence to operate, and I'm wondering if you can let us know what innovations your members have undertaken that actually give you a social licence to operate.