Natural Resources Committee on April 18th, 2013

[Ryan Leef, Conservative, Yukon, YT]

And the coal is expected to decrease in the upcoming years—is that correct?

[Jonathan Will]

I don't have a percentage for coal, but the government has imposed restrictions on the emissions of new coal facilities. This puts downward pressure on coal going forward.

[Ryan Leef, Conservative, Yukon, YT]

Without forecasting too much, do you see that shifting any one of the other sectors up, like a draw on hydro, or do you see diversification then starting to lean toward wind, or biomass, or a combination of those things? I don't necessarily need numbers, but you might have a market viewpoint on that.

[Jonathan Will]

In terms of the future outlook, I don't have an exact breakdown of how it would look under current policy conditions.

I forgot to mention, of course, that a lot of electricity of the non-emitting 77% is generated from gas too.

[Ryan Leef, Conservative, Yukon, YT]

From an international perspective, you've mentioned that Canada is a global energy leader. In terms of our market diversification strategies, our product diversification strategies, and where we want to go with that, what would you say that other countries would say about Canada's path forward on this?

Where would they see us in terms of having these resources and our utilization of them? Do you think they would see us as doing a pretty good job or as underutilizing them? Is there any sort of external advice we're hearing that might help guide this discussion and stop us from having to reinvent the wheel, so to speak? Are there any helpful things that you might hear on an international stage?

[The Chair, Conservative, Leon Benoit]

We need a very short answer, please.

Mr. Labonté.

[Jeff Labonté]

Internationally, I think Canada is viewed by any other country as extremely favourable. I don't think there's a country in the world that has the assets we have from an energy point of view.

Most of my colleagues who I speak to at the International Energy Agency Governing Board would die to be Canadian, to have these energy assets at their disposal, and be able to have those. If you look at the foreign investment in our energy infrastructure, you see that other countries and companies from them countries are investing billions of dollars. The climate is attractive. The assets are world class. The capabilities of Canadian workers and Canadian regulatory systems to support development are very strong.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Mr. Leef.

We'll go now to Monsieur Blanchette for up to five minutes.

Go ahead, please.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you, Mr. Chair.

Thank you to our witnesses. Their comments are very informative.

We're discussing diversifying markets, products and so forth. I would like to know whether the various government departments and agencies responsible are working together to promote market diversification. Is there some sort of task force studying the issue to determine where we should invest and how the federal government should be involved?

[Jeff Labonté]

That's a great question. The discussion is ongoing at a number of levels. There are cabinet and government directives, as well as the decision-making process addressing relationships and international affairs.

At the same time, we have our Foreign Affairs focus on international trade.

But, as regards energy, generally, we do not have a committee.

[Denis Blanchette, NDP, Louis-Hébert, QC]

So there aren't really any coordinated efforts or investments in that regard. You monitor what happens in the market and you take note. Does that about sum it up?

[Jeff Labonté]

I wouldn't say that was the case. There are specific activities happening within our department. Some of them involve the minister and others involve the deputy minister as well as senior department executives. In addition, the international offices have cooperative agreements with China, India, Europe, the U.S., Brazil, Chile and others. Discussions on science and technology are happening.

[Denis Blanchette, NDP, Louis-Hébert, QC]

But, from what I gather, there isn't really any program or fund dedicated to diversification, specifically.

[Jeff Labonté]

There is no funding, no.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Very well.

I see that there are quite a few oil pipeline projects. It's a bit like the real estate market: developers want to build a lot, and then one day, the market dries up and they're stuck with all those building projects. I get the sense that if all the projects go forward, we'll have an overcapacity problem on our hands. Am I wrong?

Let me give you an example. It pertains to eastern Canada, Quebec and the Atlantic provinces. The pipeline projects alone exceed our refining capacity out east by 33%. With that in mind, I have two questions.

Given that all the major producers and exporters are already on the Atlantic coast, can it be used as an export channel?

I would also like to know whether what we want to put in the pipelines bound for eastern Canada matches what refineries out east can do in terms of their capacity, without a major investment? Do we know whether refineries out east have the necessary capacity? Was that considered?

[Jeff Labonté]

Certain parts of that question are rather complex. It is, however, true that a very large number of projects have been proposed and that the markets will indeed determine which ones are carried out. So there are more projects than the market is able to handle, yes.

It is complex, though, because some of the proposed pipelines are designed to transport types of crude oil that are naturally in line with refineries in Quebec and New Brunswick. There are also tensions in terms of which type of product goes to which refinery.

As far as refineries in eastern Canada go, we are talking about mostly light crude oil. However, light crude is an abundant resource in Canada. We currently produce roughly 1.8 million barrels a day, and that's a lot. There is also Bakken, in the U.S., which is a major reserve, a key production area. So Quebec's refineries may benefit from North America's light crude oil.

It is also possible to access other investments to create a process to treat heavy oil or bitumen.

Lastly, Quebec City and Saint John, New Brunswick, could use vessels or tanker ships for export.

So there are definitely possibilities.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much, Mr. Blanchette. Your time is up. That being said, those were very good questions.

I will now turn it over to Mr. Anderson.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair.

I've heard a little about the importance of infrastructure and the importance of market promotion. It strikes me that we've got some well-defined products here. We've got a world market for our product. We're recognized around the world. Do you see the issue as being the necessity of our promoting our product in the marketplace or is the issue a lack of infrastructure to get the product to the marketplace?

[Jeff Labonté]

I don't believe there's an issue about people not understanding Canadian crude products. I think it's about the infrastructure. That needs to correspond to the growing production.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Is the most critical element of what we need to do to diversify our markets the expansion of infrastructure?

[Jeff Labonté]

From a commodity perspective, yes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

What would you think from a trade perspective? Would you agree with that? We are recognized around the world. We've talked about our capacity and the great resources we have. Is an issue you face the fact that we can't get our product to the marketplace?

[Carolyn Knobel]

To confirm with my colleague here, yes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I want to talk a bit to you, Ms. Knobel—and the others can answer. The question is, how can energy market diversification be sped up through trade, trade relations and arrangements? Do they help speed up our ability to diversify our marketplaces?