Natural Resources Committee on April 18th, 2013

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

Wonderful.

Are there any funds available that go into market diversity, other than the integrated support fund?

[Carolyn Knobel]

Do you mean through the Department of Foreign Affairs?

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

Through any department, to your knowledge.

[Carolyn Knobel]

There is another fund within Foreign Affairs, which is called our client service fund. Again, it supports our missions abroad. I'd have to get back to you on the numbers for that. These are not specific to market diversification. They are to support the work of the Trade Commissioner Service, so supporting our exports of products and services abroad.

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

How do the 44 missions abroad prioritize their goals? How are they prioritizing?

[Carolyn Knobel]

It is a mission-based analysis based on their local knowledge of their markets through their contacts, their research, their analysis of the market, what they view are the best opportunities for Canadian products and services to be exported into that market.

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

What is the goal of the missions themselves, generally—the main goal?

[Carolyn Knobel]

The main goal of a Canadian mission in its entirety, or do you mean the trade aspect, more narrowly?

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

Yes.

[Carolyn Knobel]

The trade commissioner group within the mission would be there to support Canadian exports abroad. It would be there to attract foreign investment into Canada. It would be, in addition, to speak to Canadian values—for example, corporate social responsibility. The broader mission in its entirety is to speak to Canada's dialogue with the host state.

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

What are the results of these missions, and what kinds of metrics do you use to measure the results?

[Carolyn Knobel]

If you are referring to a trade mission, our trade programs at posts measure things such as service requests by Canadian business. They speak to the number of out-calls they have, the number of economic opportunities pursued—economic opportunities identified as a result of the connections they've been able to bring together between interested Canadian exporters and local buyers.

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

I have a last question about the slide that shows the benchmark prices, WCS versus Maya. I know you are not petrochemical engineers, but what is the difference between Maya and WCS? I know they're both heavy crudes, but are they similar in consistency in every way? Do they have different effects on the infrastructure they're moving through? Does one type wear out pipeline infrastructure quicker than the other, or are they basically the same? I know Maya is already passing through the line, through the Portland-Montreal line, and through Line 9 as well sometimes. Could you address that?

[John Foran]

Yes, I can talk about that.

Maya, of course, is produced by Mexico. It's heavy crude, mainly from offshore fields. It has an American Petroleum Institute gravity of about 23 degrees and a sulphur content of about 4%. Western Canada Select, or WCS, is a blend of bitumen, synthetic crude oil, and diluent, which has an API gravity of about 22 degrees and a similar sulphur content to Maya. They're very similar crudes. Maya is a slighter higher-quality crude because it's not quite as heavy, so normally it sells for about $6 a barrel more than Western Canada Select, but currently it's much greater than that.

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

One is not more corrosive than the other, I take it.

[John Foran]

NRCan has done work investigating whether different types of crudes are more or less corrosive within pipelines. The results show that heavy crudes are heavy crudes, and there's no real difference in terms of the internal corrosion rates with different types of crude oils.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Nicholls.

We'll go now to Mr. Allen, for up to five minutes.

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

Thank you, Chair.

Thank you to our witnesses for being here today.

Mr. Labonté, I have a two-part question. International Trade might want to chime in on this one as well.

On slide 6 you said, and then you reiterated in one of your answers, that under the most optimistic renewable scenario, demand for oil and gas represents 47% of global energy demand in 2035.

I was reading an EnergyBiz Insider article this morning that talked about China, looking at the significant investment and investment capital they're trying to get in for renewables in the next number of years. They're talking $65 billion to $70 billion next year, and then somewhere up to $200 billion by 2025. They're looking to be one of our major customers, or were looking to be a major customer, for oil exports.

Are we seeing a trend like that in other countries that potentially would be our exporters? In terms of that time window, if they're going to go to 15% of power from non-emitting sources by 2020, and then 30% by 2050, what is the risk, and is the timeline small, for us to get into that market?

[Jeff Labonté]

The analysis is extraordinary in terms of the rates of growth, China and India being primary drivers of that growth.

In terms of reference points, perhaps I can use natural gas as an example. China is growing at such a rapid clip, but the point at which they're growing from is also quite small. So with regard to the volume they're going to be consuming, even though the percentages of fossil fuels may be not as high as in other traditional economies, natural gas is going to quadruple, as you said, from about five trillion cubic feet a year now to about 20 trillion cubic feet a year in terms of consumption by 2035. That volume of gas consumption is....

I think we consume five trillion cubic feet a year here now in Canada. Four times what we consume today will in a short period of time be consumed by China alone.

Japan is transitioning from, for example, its different energy forms, and is rapidly growing its renewable base as well as its natural gas consumption; India similarly.

So all of them are moving, and they have the ability, given the size and the way their markets work, to invest heavily in renewables, traditional fossil fuels, nuclear, and even other alternative energy forms, such as wood pellets, synthetics, and other things.

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

The other side of this is that in our previous study, we heard some presentations made with respect to some of our renewable technologies bidding into foreign countries as well. I think this might be an International Trade question, but are there opportunities for the export of that renewable energy technology because of some of these trends in significant investment capital looking for renewables?

[Jonathan Will, Director General, Electricity Resources Branch, Energy Sector, Department of Natural Resources]

Thank you for that question.

There are significant opportunities for Canadian companies. Demand for electricity from 2010 to 2035 is expected to expand globally by 70%. That's an average of 2.2% per year, and over 80% of that growth is in non-OECD countries, with over half of that, 38%, in China specifically.

Canada has significant expertise in the electricity sector. We have significant expertise in the generation of hydroelectricity. We're the third-largest producer of electricity in the world. We have significant expertise in long-distance transmission of electricity due to the long distances of our hydro system, and we are a leading supplier and designer of those things. We also have expertise in the nuclear field, as well as a project done by SaskPower for putting a carbon capture and storage unit on a coal-generating facility at Boundary dam, which has the possibility of exports to countries that are relying on coal for electricity generation.

So a variety of opportunities exist for Canadian companies.

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

Thank you.

I have about 30 seconds left, and I just want to refer to your slide 7. There you talk about Canadian gas and Canadian oil production. One of the slides with oil production talks about an amount from eastern Canada, but the Canadian gas production to 2045 does not have a statement as to how much gas production we have projected from eastern Canada.

Is there a projection that eastern Canada will develop its natural gas resources? I don't see that in here.

[Jeff Labonté]

The projection takes into account the Sable Island and the Nova Scotia gas projects, which are expected to end at some point in the late 2020s should they not reach new fields and have new production.

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

Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Allen.

We go now to Monsieur Gravelle for up to five minutes.

Go ahead, please.