Natural Resources Committee on April 18th, 2013

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

You show that in number 21, but do you have the same kind of chart for the Canadian demand, projected?

[Jeff Labonté]

We would be able to supply it to you. We don't have it with us.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Would you supply it to the committee? I'd like to understand where our supply and demand is going. If you look at the U.S., obviously we're going to be competing in the same market because they're going into a negative position.

[Jeff Labonté]

We are. Some of it actually just clarifies the flow between. Western Canada exports; eastern Canada imports. Some of it will remain that way. Net it might be zero, but it will actually have significant flows in both directions.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I appreciate that.

Mr. Will, I want to pick up on some of the discussion you were having before on the potential for market in the renewables area, whether it be hydro or others.

Are you aware of the work being done by utilities, energy service companies, and others to market themselves? On the trade side, Mr. Labonté talked about EDC and others as financing opportunities for companies that might be looking to build projects in these other countries. Can you talk about the potential for that as well?

[Jonathan Will]

As you mentioned, there are significant opportunities for Canadian companies, particularly from areas of strength for Canada. Hydro is one where there is a demand worldwide for it, and also long-distance transmission, which is the result of our large geography and the fact—

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Do you see us having the expertise that most other countries don't? You mentioned that before.

[Jonathan Will]

We do have expertise that other countries don't have, and there is—

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Including energy planning?

[Jonathan Will]

There are a number of Canadian companies that export and provide consulting services and project management services overseas.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

The second part of that is EDC. We had one company here that was in unconventional gas. They had different technologies, but they were looking at bidding on energy projects in other countries.

Do you see that as a growing market?

[Jeff Labonté]

I can say anecdotally that we have a lot of interaction with industry at conferences and fora, and certainly in our interactions we hear from a lot of companies that are pursuing business opportunities globally. It happens that given the way we develop our energy resources and the resources we have, they have great opportunities—the horizontal drilling and drilling technology companies, the engineering firms, the project management firms.

Even as we move across to electricity, the companies that do auditing and projects that look at conversion of different electricity, like lighting and heating, what you might call the mechanical side of homes and businesses...companies are creating products and selling them around the world. We hear about that quite frequently.

NRCan doesn't really track that part. It's more of an Industry Canada domain, but we certainly work with and hear about that.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Allen.

Mr. Trost for five minutes.

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

Thank you, Mr. Chair.

When I was first elected here almost nine years ago, we started an energy caucus, and some of the predictions we got there about where natural gas production prices, etc., were going have changed a little bit over the years.

In looking at news articles about some of the tight oil discoveries down in Texas, the article I was looking at on my BlackBerry said one of their finds has a recoverable 50 billion barrels—recoverable. With that in mind, from the best modelling we have, which again will change in a year, how can the tight oil discoveries that we're seeing stateside, and potentially here in Canada, start to affect where we're going to export and how we're going to plan for exporting oil? Could something very similar happen to our oil markets to what we're beginning to see happen in our gas markets?

[Jeff Labonté]

I would first say it's incredible that there isn't a resource projection I see on an annual basis that doesn't go upward. There are tremendous opportunities coming, and a lot of that is innovation and technology, those firms we were talking about previously finding better ways and finding better resources and estimating those.

The crude market in North America, light and heavy, the market for our heavy crude on the gulf coast, which would be served by Keystone, is pretty fixed cost in terms of its capacity. That's half of the United States' refining capacity, so that market will likely not transition much over the next 20 to 30 years.

The market for lighter crudes, in terms of refining complexes more in the eastern parts of North America, eastern Canada and the eastern United States—and we're seeing a lot of rail move to that market.... As the U.S. continues to produce its own domestic light sweet crude, the demand on Canadian light sweet crude will feel pressure, as will the demand for Canadian synthetic crude, synthetic crude being a complement or often a substitute for the light sweet crude, depending on the refinery output mix.

So there are some pressures on Canadian light crude. A fair bit of our—

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

Some of our product mix is fairly safe, as far as moving to the U.S. gulf coast, but there's an anticipation of pressures that will begin to push toward export to Asia or Europe on our synthetic and our light. Is that an accurate summation?

[Jeff Labonté]

That's accurate. So as these fields come on strength, there will be more supply, and as there's only so much demand in North America it will have to go elsewhere.

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

To change gears here a little, hydro.... I think it was the other night in the House we voted on a motion about hydro, involving Labrador and a few things like that. Where are the areas in the country—and again this is all provincial domain—where we still have potential for hydro development, and what tend to be the issues holding back hydro development? You can say political issues plus. I'm looking at more than the non-political issues. But excluding political issues, what tends to be holding back the maximizing of our hydro development in this country?

[Jonathan Will]

One of the most significant things holding back development of electricity is the long lead time for project approval. A hydro plant, if you talk to industry—the Canadian Hydropower Association, for example—takes significantly longer than putting in a gas plant. It could take up to 10 years to get through the environmental assessment process from start to finish for a hydro dam, while in the past it was gas, although with the new timelines for environmental assessments, that will accelerate.

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

With some of the changes that have been made in the last few years, is there the potential that we could actually lower that timeline from 10 years? I realize that you have a lot of studies to do when you're dealing in a remote area with a large geography. Is there a realistic prospect that we can lower that timeline from 10 years to something...? What are we looking at?

[Jonathan Will]

I'm sorry. That 10 years, I should clarify, includes construction. It does make developing hydro a long-term decision, though, when if you wanted to put electricity on the grid right away you could do it very quickly with gas. In terms of areas of the country, there are new projects in B.C., Manitoba, Quebec, and Newfoundland and Labrador.

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

So there are still waterways for our use?

[Jonathan Will]

There are still waterways. Generally, the most economical resources were used first, but that being said, there are still economical resources to be developed in Canada.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

Mr. Nicholls, you have a couple of minutes.

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

Thank you, Mr. Chair.

A few of our witnesses from our previous study mentioned the smart grid and really looking forward, and governments always have to predict what the next infrastructure will be. If we're going to be integrating different kinds of renewables, many of the witnesses said that we would require a smart grid.

Mr. Anderson mentioned the history and the history of governments in his province. When I think about the history and I look back 50 or 60 years, we don't seem to have advanced very far. We have a big problem that shouldn't be a problem: the overproduction of oil right now. We don't have any way to move that product, yet we import 50% of our oil into this country. It doesn't really seem to make sense.

Back in 1956 and 1957, Ernest Manning had a plan to detonate a nuclear device in the Athabasca oil sands. He talked about that with Mr. Diefenbaker. He said that they were marketing less than 50% of the oil that they were able to produce, so they contemplated actually detonating a nuclear device in the Athabasca oil sands. That was the level of innovation at that time.

Going forward and thinking about market diversification, I would hope that we're going to be more creative than they were back then in the 1950s, and that we're going to look toward what Canada's energy security needs are. We're going to ask the question: why haven't we prepared up to this point? Our infrastructure is aging and our pipeline infrastructure is aging, and that's part of the difficulty of gaining the social license.

The TransCanada pipeline, which today they're talking about converting over to oil, is the same pipeline that caused such an uproar in 1956 when the Speaker of the House—and coincidentally, the member for Vaudreuil—invoked closure on the debate surrounding the construction of the TransCanada pipeline.

I would hope, going forward, that in terms of market diversification we're going to look not to the past, but to the future, and that we're going to think about things like the smart grid. I wonder where we are on the idea of developing a smart grid, because I know that it will take about 20 years to do so.