Natural Resources Committee on Feb. 12th, 2013

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

Okay. Disclosure is great, but when accidents happen, traceability and liability are pieces that are necessary to complete social licence.

The National Farmers Union in Alberta, at its last AGM, made some recommendations to the federal and provincial levels of government. One of those was to require companies to include non-toxic tracers in their fracking fluids so that potential groundwater contamination could be easily linked to a specific fracking operation.

Would you agree with that recommendation?

[Richard Dunn]

No. I believe we have significant understanding of the fluids we pump, so that in the event there was ever any groundwater contamination we would be able to tell, especially with the practices we've committed to in terms of baseline groundwater monitoring, in which we go in and take a sample of regional waters before there is any activity.

I must say, though, with all the wells that have been stimulated, there hasn't been a proven case in Canada of groundwater contamination, so that is an unlikely event.

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

Is Encana not currently in a lawsuit with Ms. Ernst of Rosebud, Alberta, regarding exactly this, the fact that there is groundwater contamination? Ms. Ernst is not an environmentalist, I should mention. She's a 55-year-old oil and gas industry consultant, so not exactly somebody who butts heads with the industry a lot, but someone who actually works with it.

I find it kind of puzzling that here we have this technology, and it's innovative.... Scientists at Rice University are looking at non-toxic tracers to clear this up for the public. Say you have two companies that are drilling in the same place and there is groundwater contamination. Wouldn't it be useful to know which company the contamination is coming from through the use of tracers?

[Richard Dunn]

It could be done. In my opinion, it would not be required, given that there has never been a proven instance in all the situations.... I believe the effort should be put into proper well-bore construction practices and baseline monitoring, and those will provide the public assurance.

To comment on Ms. Ernst, you're right, she has been raising concerns about contamination in the coal-bed methane realm for a number of years. She sued us and the Energy Resources Conservation Board, the regulator in Alberta. The Department of Environment in Alberta has come out definitively saying that there has been no groundwater contamination as a result of our operations in the Rosebud area.

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

Wouldn't a tracer in the fracking fluids clear up any frivolous claims made by people complaining about groundwater contamination, if indeed they were frivolous? If you had a tracer, it would make certain that it wasn't from a fracking operation. Wouldn't you agree?

[Richard Dunn]

It would be one other piece of information, but, as I noted, there are a number of pieces of information already there, which is the point of our reporting, why we've gone to disclosure.

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

Right. I noted before that you talked about partnerships with academia in terms of innovative technology, and I know there are researchers at the University of Alberta who are working on tracers. If your industry is not interested in adopting them, isn't it a waste of time for these researchers to look into tracing technology for fracking fluids?

Wouldn't it be more constructive to work in partnership with researchers at the University of Alberta to sort of advance this technology?

[Richard Dunn]

It would certainly be something to consider and to look into. I'd certainly agree with you there.

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

Thank you.

How much time do I have, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

You are out of time, Mr. Nicholls. Thank you.

We go now to Ms. Crockatt for up to five minutes.

Go ahead, please.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Mr. Heintzman, I was really interested in your statement that energy is a person's biggest environmental footprint. We've heard from a lot of sources, Mackenzie Valley Aboriginal Pipeline LP being one of them, that actually this is a personal decision: the two biggest things you can do, if you want to decrease that energy footprint, are to turn off your lights and insulate your home.

I'm wondering whether you have thoughts about why more Canadians are not making the decision to purchase renewable energy.

[Tom Heintzman]

I think it's a phenomenon that is not isolated to renewable energy but to environmental products generally. It's very difficult to ask people to pay a premium for a social good, but I believe you have to start somewhere.

There is a meaningful percentage of people who are prepared to do it today. If you roll the clock forward for 10 or 20 years, I think it will become increasingly the norm to make environmental decisions. I think what you're seeing is just the early phases of a curve that will continue to grow.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Given that no form of energy is perfect—there are some things to be overcome with all of them—and that natural gas power is much superior to coal, I wonder whether you would consider using natural gas as a cleaner and cheaper form. We have a glut of it right now in Canada.

How would you respond to that?

[Tom Heintzman]

When you say “you”, do you mean Bullfrog Power?

[Joan Crockatt, Conservative, Calgary Centre, AB]

Yes. It's a much cleaner source of energy; we've heard that we have a glut of it; the prices are low. Would you consider using it at Bullfrog?

[Tom Heintzman]

No, not for Bullfrog Power. The entire company is focused on renewable fuels.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay.

I'll switch over to Mr. Dunn, please.

You have talked about the U.S. market shrinking dramatically and have said that Canada needs to find new markets. What happens if we don't? What happens to Canada's resource, as far as getting value from it is concerned?

[Richard Dunn]

Well, effectively we'll stagnate. The industry will continue to shrink, as it has over the last three or four years. It has probably shrunk in terms of production by some 25% to 30%, and in terms of investment probably by 50% to 70%.

This is probably more a question for Mr. Howard, as he is working towards these narratives, but I believe there is a very likely chance that the Canadian natural gas industry will shrink to a very regional market in western Canada, supplying a certain amount of the U.S. northwest and the western Canada market, including the industrial market for the oil sands. By and large, the Canadian eastern markets would be taken up by U.S. gas. That's the likely outcome.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Mr. Howard, to follow up on that, you have said that 60% of our resource is still in the ground. Do you think Canada is at risk, especially with the development not only of shale gas but of shale oil, of seeing our oil and gas resource unused, left in the ground?

[Peter Howard]

First of all, let me just clarify this 60%. That's 60% of established or announced projects in the oil sands plus conventional resources—stuff like that. The actual oil sands resource is ten times that size.

The question I think you're asking is, if we can't build pipes and can't build LNG terminals, what happens to our energy?

Some of it definitely will continue to flow to the oil sands. There's a unique opportunity to possibly transition Canada's transportation fleet of long-haul diesel trucks over to natural gas.

[Joan Crockatt, Conservative, Calgary Centre, AB]

So we would transport it, instead of by pipelines, which are underground and safe, above ground on trucks?

[Peter Howard]

No, no. What I'm getting at is converting diesel trucks over to LNG fuels, railways over to LNG or CNG, and small-use trucks—stuff like that.

In essence, if we don't have access to markets, that energy will stay here in Canada, and rather than having several hundred years of energy supply we're going to have several thousand years of energy supply. Meanwhile, Alberta's royalty system would be where it is today, which is in trouble. Canada's GDP growth probably would pull back significantly.

Personally, I think it's not a good situation. I think it's something we need to pay attention to, to see whether we can access other markets.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt. Your time is up. It goes by fast, doesn't it?

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you.

[The Chair, Conservative, Leon Benoit]

Ms. Liu, you have up to five minutes. Go ahead, please.