Natural Resources Committee on Feb. 7th, 2013

[Dr. Brenda Kenny]

I think anything that goes toward transparent, effective improvements in performance contributes to social licence to operate. That is exactly the path we have been on for a number of decades, and the numbers are clear. At this point, we need to continue that journey and press forward, particularly on prevention of incidents. They are driving towards zero, and that's our goal.

We need to help people have that information available to them, so in our world we have launched something called aboutpipelines.com, a go-to place for pipeline information. We'll continue to host the international pipeline conference every second year in Calgary, which is the world go-to pipeline conference, and—

[Joan Crockatt, Conservative, Calgary Centre, AB]

Excuse me. May I interrupt you?

[Dr. Brenda Kenny]

Yes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Can you tell us specifically what the public does not know about the innovations, which I know are ongoing and myriad? What don't they understand about the way pipelines are being operated today in terms of innovations?

[Dr. Brenda Kenny]

Firstly, I think that for many folks in the public, pipelines have been out of sight and out of mind for so long that they have never really understood the scale of them, and that's our fault.

They've also been subjected to some terrible myths, one of which is the diluted bitumen myth, which is ridiculous. We almost never get any problems with internal corrosion. We absolutely do not get any problems with abrasion. All the sand stays in Fort McMurray. The bumph around diluted bitumen has been a construct purely to breed fear. I think that also undermines the social licence to operate, which I suppose was probably the design of that action.

For ourselves, first and foremost, innovation on continuing to improve the quality of materials going into construction and the internal line inspection to know exactly what we're targeting for maintenance. All of that information is readily available, and we're happy to answer any questions on it in detail.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay.

Now, can you tell me, if you do have a release.... I understand you've said that the numbers of your releases have gone way down and that the amount now being reported is a very, very small amount, so people might have a view that it's more than it is, but what is the recovery rate of oil that your members can deliver if there happens to be a spill?

[Dr. Brenda Kenny]

We are working on getting clarity on that number. We have initiated case studies that are telling us the numbers are pretty good. The numbers are available through regulators who oversee any and all cleanup, even in a large incident such as the one in Michigan, outside of Canadian territory, but nonetheless a very proud and stable Canadian company, Enbridge. It's in a state of remediation, where sections of that river are progressively being cleared, and then they are approved by their EPA regulators as clean.

In the work we have looked at so far, we see that the majority of cleanup is a very high percentage after just two or three years. We want to gather more and clear evidence of that and make sure it's transparent to the public. We are still working on that now. We're not going to hide anything. We just have never, at an industry level, tried to pull those numbers together.

[Joan Crockatt, Conservative, Calgary Centre, AB]

We don't actually have a number for that right now, then, the cleanup percentage that you're at now.

[Dr. Brenda Kenny]

What I can tell you is that of the case studies we have done, the two more significant Canadian incidents that we looked at were close to 95% recovered after two years, but I would not want to count on that as an unequivocal figure on average. Of the cases we've looked at so far, that's what we're seeing.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay. I want to go quickly because I have two more questions that I'm hoping we can get to.

Is it in your self-interest as pipeline companies to operate them safely?

[Dr. Brenda Kenny]

Absolutely, yes. Our shippers need us to be reliable. It is absolutely the ethical thing to do. These people wake up every day and that's what's on their minds.

Let's face it. A spill is extraordinarily expensive, not only for the shutdown entailed, but of course for the cleanup, to do it well, which we're committed to doing right through to the end. It's the kind of cost that people will work very, very, very hard to avoid. So even in the most crass sort of corporatist view, which is, I can tell you, not at all the only thing on people's minds—there's a lot of responsibility that goes into this—the actual dollars and cents drive you to push forward on these innovations.

We have to get to zero. It's the right thing to do and it saves money.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt. Your time is up.

Mr. Calkins, you have up to five minutes. Go ahead, please.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I'm going to ask Ms. Kenny some questions and if I have some time, I'll go to you, Mr. Thompson. I've got a couple of questions about the testimony that you gave.

To the other two witnesses, you did a great job, but I've only got five minutes and I don't know if I'm going to be able to get to you. But thank you all for coming.

Ms. Kenny, are you familiar with the report by the Canada West Foundation that says the projects that we're not getting done cost anywhere between $30 million and $70 million? This is called the pipeline squeeze. Are you familiar with that report?

[Dr. Brenda Kenny]

I am somewhat. I've not read it in detail but I'm certainly aware of the general issue.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Are your member companies able to keep up with today's current market demand?

[Dr. Brenda Kenny]

Clearly, no. I think it's well understood that there is a market distortion due to a shortage of pipeline capacity at this point in time that is costing Canadians billions of dollars every year.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

And that's a cost directly associated to our economy. People could be at work supplying that demand, and of course, this artificial demand that is being created by a lack of ability to get product to market is increasing costs for consumers as well. Is that correct?

[Dr. Brenda Kenny]

Yes, that's correct. What is happening right now on any given day—and the numbers change depending on the price of crude, but for the sake of argument this is what happens on a typical day—we are essentially giving to our American friends $40 million of Canadian dollars. We're getting ripped off and that money in sum total through the year leads to many billions of dollars being either tax revenue or recycled and reinvested.

Let's keep in mind that for the upstream oil and gas, as I've been told—you can confirm this—the cash flow reinvestment rate is the highest of any sector in Canada, upwards of about 80%. So when you see tens of billions of dollars flying down south of the border, that's a reinvestment that is a direct job creation that is lost to Canadians forever.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you.

You touched on line location being an issue. Most of the incidents that have happened recently have probably.... I don't remember this...a catastrophic event being caused by a rupture from excavation or whatever the case might be.

Line location is very critical. As an Alberta MP, I know lots of line location companies are out there. Can you speak a little bit about any advancements in the technologies for line location or geographic information system mapping so that we know where the pipelines are? Have there been any innovations in leak and pressure detection which would increase or speed up the response to a loss of pressure event in the pipelines, which would then reduce the amount being spilled?

And Mr. Thompson, if there's time left over and if my more than gracious chair doesn't cut me off, you talked about unsettled land claims being one of the issues that's a barrier to economic development for geothermal. Could you elaborate on that for me, please?

[Dr. Brenda Kenny]

I'll try to be quick to leave Mr. Thompson some time.

First, I have a correction. There have been very few oil spills but of the ones in Canada over the last five to 10 years, the one that occurred in British Columbia was directly related to a third-party hit. That was a municipal worker, a contractor, who hit the Kinder Morgan line in Burnaby. Fortunately, no one has been killed but it is something that is entirely avoidable.

Leak detection is something we are working on. I mentioned that in my testimony. It is an area that we can work harder on. We have met, for example, with the space agency. There are some really interesting technology innovations that we could use, going forward. Acoustics is another one we are looking at. They are very important.

Third, in terms of line locations, certainly better mapping is being done periodically, particularly in dense urban areas as we work with cities and over time get more accurate maps. That's a very positive thing. It's not the only solution, though, to third-party damage because even if you had very accurate line location, if you still have somebody who decides to put in a fence post and not call before digging.... We're not going to have markers running across every field, and with 110,000 kilometres of buried utility across the country. A lot of it has fence post markers, but we need people to call before they dig.

[Timothy Thompson]

On my end, with regards to geothermal permitting, in B.C., unlike an oil and gas permit that is issued which will have pre-cleared first nations approval, a geothermal permit does not have that. This means the first step in my business plan when I go to seek venture equity is to negotiate a deal with first nations, and I have to put a number on that and a timeline on that. That is a very difficult thing, no matter what number or time I put on, for private equity investors to swallow.

Does that address your question?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

It certainly does. Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Calkins.

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

Go ahead, please.

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

Thank you, Mr. Chair.

I would like to thank the witnesses for their presentations. They were very informative.

First, I would like to point out one thing. I know, Mr. Chair, that you wrote a letter last week to the Royal Canadian Mounted Police. It is very difficult for me not to say something because that letter affected me deeply. I think this matter seriously calls into question your ability to lead our work. You said that you were not sure about the meaning of the letter you signed. If that is true, that's worse, because it shows that we cannot trust what you say.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Chair, I have a point of order.