Natural Resources Committee on May 9th, 2013

[Michael Edwards]

Yes, I do. I believe it should be used to move multiple products. I think the key benefit of having a corridor is having a route and having a discussion that deals with the local issues, for both pipelines and power lines, etc. Clearly, if you get those broader issues out of the way before you actually have a project, you can do it with less heat, as it were.

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

Does anyone else have any interest in that?

Please, Mr. Facette.

[Jim Facette]

Thanks very much.

Right now our energy corridor, if you want to call it that, comes from the west either by pipeline or by rail and through the Enbridge pipeline into Sarnia. Where we have a gap is into Atlantic Canada.

We could use some propane flow, as you have right now into Sarnia, into Atlantic Canada. Getting the excess supply I spoke about to that part of the region becomes a little more difficult because typically it has to go by rail or by truck. We don't have any pipeline to get there nor storage capacity of said pipelines in Atlantic Canada. Any kind of strategy that could enhance that would be welcome.

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

How do you see the future tied to propane in terms of exports? Like in so many other things, we're tied to the United States. What do you see as the future of your industry? We're talking about market diversification and exports. I'm talking both about products and markets.

[Jim Facette]

If you have an excess supply of your product you want to find a new customer. We're already seeing that among our larger members right now. Two of them have announced export opportunity plans: Pembina and AltaGas have gone public with plans to go to Asia with natural gas liquids, which include propane as well.

Our members are going to have to find new markets, both domestically and internationally, and we're seeing that already.

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

Tell me a little about Canada's shipping in the future. Do you see yourselves as having lots of competitors out there? How do you see that working and being able to get things to market?

[Jim Facette]

In one sense we're prepared to compete on an even keel, a level playing field, and we're happy to do that, provided we don't have to go up against subsidies as well—we can never compete against subsidies.

Right now a lot of the product goes by pipeline, rail, and truck. To get a rail car for propane is a two-year wait right now. Going forward, we're going to have to find some new markets and some new ways to transport it, either by rail or pipeline.

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

Are you seeing some commitment from the railways to developing some stock for this?

[Jim Facette]

Yes. Our members who use the railways generally have a good rapport with them, which isn't to say it couldn't be better; it does take some time.

Our cousin down south, with their increase in natural gas liquids due to shale gas exploration, has taken up a lot of those rail cars; hence, the two-year wait and the excess supply.

It's just a market thing that's going on right now, and it's all been within the last two and a half to three years.

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

Where is the best market potential for you over the next five to 10 years? We hear that if we can get to the west coast, there's great market potential in California as well as Asia.

[Jim Facette]

Do you mean export or domestic market?

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

We'll take both of those because both of them would represent diversification of your—

[Jim Facette]

As I outlined moments ago, if you look domestically, Atlantic Canada is a huge opportunity for propane. I think the mining sector continues to offer a great growth opportunity, as does fleet transportation. Canada Post is converting 300 of its fleet to propane.

Export-wise, South America continues to be a large customer of propane, which is dominated right now by our friends in the United States—and into Asia. We're also seeing the U.S. export to Europe, so if we want to go east of here, we'd better hurry up.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Anderson. Your time is up.

We go now to Mr. Nicholls for up to seven minutes. Go ahead, please.

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

Thank you, Mr. Chair.

I want to thank our witnesses for being with us.

Mr. Cloutier, I appreciated your comments very much. I found them very interesting, especially with respect to the importance of Canada's energy security. We support the idea of moving western oil to Montreal to be refined in our facilities.

Mr. Cloutier, we do have some concerns, nevertheless. I don't want to get into Canada's international reputation and the poor job the minister is doing in that regard. That's another story. We have no control over that. But we can control the government's priorities by sending the market messages.

When Suncor bought Petro-Canada in 2009, it shelved the $1.5-billion project to purchase a coker in Montreal. Without a coker, processing crude product from the oil sands isn't really possible.

Does the union support the purchase of a coker to give added value to the product, in Montreal?

[Daniel Cloutier]

We already process a bit of crude from out west. And a coker isn't the only type of equipment that can process crude oil from western Canada. A crude unit made of stainless steel can do similar work, as can an upgrader. That was the technology favoured by Shell. Montreal's Isomax unit may also have that capability.

With a coker, clearly, it is possible to significantly increase the quantity of western Canadian crude oil that we can process. We know that a project of that nature isn't totally dead and that, if it were back on the table, we would study it very carefully. We could support it, provided, of course, that it adhered to the highest environmental standards.

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

That is one of my constituents' concerns, for that matter. The fear is that the pipeline would be used primarily as a link between Portland and Montreal, purely for exporting the crude, rather than creating added value in Montreal. Is that something Suncor workers are worried about? Do you think the jobs will stay in Montreal in the long term?

[Daniel Cloutier]

At this point, we have no reason to believe the project isn't intended to supply crude to refineries in Quebec. As I mentioned earlier, we're hoping that the government will show some leadership in this sector. One thing is certain, however, our refining capacity is greater than what the pipeline can carry to us. So we are against the idea of the crude leaving the country without first being processed once, twice, if not three times, here.

At the moment, the idea seems to be to bring the crude oil to Montreal. It's not tied to the old plan of transporting it to Portland. What's more, two separate entities own those pipelines. We stand behind the current Line 9 reversal project, but we would oppose a project to transport the crude to Portland.

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

Very well.

Are the 500 jobs in question only at the refinery, or do they include positions tied to Montreal's polyester chain?

[Daniel Cloutier]

No, those jobs are strictly at the refinery.

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

Do you know how many jobs are tied to the polyester chain?

[Daniel Cloutier]

We know up to a point.

First, the product leaves Petro-Canada and travels to Parachem's petrochemical plant. We're talking about a hundred or so jobs. It also goes to CEPSA. So that's 150 jobs. Neither of those includes the subcontractors. Next, various plants take it back. There's a small facility on the former Shell site, with a hundred jobs or so.

Afterwards, the product travels in all the other directions, and I lose track of it.

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

So there's quite a few jobs tied to the value added processing of refined products.

[Daniel Cloutier]

Definitely.

As I said, if the Petro-Canada refinery were to close and if the market were such that Suncor decided to take its business elsewhere, it would have a very, if not wholly, negative impact on Parachem and CEPSA. That could bring the polyester chain in Montreal to an end.

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

My next question is for Ms. Kenny.

Ms. Kenny, you agree that the government has a role to play as regulator of pipelines, I take it.

I'm sorry. Is she getting my question, Mr. Chair?