Natural Resources Committee on May 21st, 2013

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone.

We're here to continue our study on market diversification in the energy sector. This will be our last meeting of witnesses on this topic. We have an excellent panel here before us today. I'm very much looking forward to hearing from them.

First, we have from the Montreal-East Industrial Association, Mr. André Brunelle, president, and Mr. Dimitri Tsingakis, general manager. Welcome to both of you.

We have from the Canadian Electricity Association, Mr. Jim Burpee, president and chief executive officer. Welcome to you, sir.

From the Canadian Manufacturers and Exporters we have Mr. Martin Lavoie, director of policy, manufacturing competitiveness and innovation. Welcome to you.

From the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada—which tells a story in itself, a good title—we have Mr. John Telford, director of Canadian affairs, United Association Canada. Welcome to you, sir.

First, thank you all very much for coming. We do appreciate it. We'll have the presentations in the order you're listed on the agenda for today.

We'll start with the gentleman from the Montreal-East Industrial Association.

Go ahead with your presentation. You have up to seven minutes.

[André Brunelle, President, Montreal-East Industrial Association]

Good afternoon.

Can I do it in French?

[The Chair, Conservative, Leon Benoit]

Sure.

[André Brunelle]

Thank you very much for your invitation today and for giving us the opportunity to speak with you a little bit about what is happening in Montreal East.

The Montreal-East Industrial Association, or AIEM, currently comprises 13 companies located in east Montreal. This association was founded in 1960. On the slides, you will see that we began our work in the 1960s. We first dealt with air quality and then moved on to risk management and building relationships with the community.

Over the last few years, especially after recent events in the economic sector in Montreal East, we have focused our efforts on the economic aspect. There are really always three aspects to sustainable development. There is of course an economic aspect, a social one and an environmental one. Obviously, an association such as ours could not work if we did not think about the economic side of things.

I would like to draw your attention to one element. We could, of course, talk about numbers and contributions to the GDP. However, I would like to say a little bit about the close relationship between the companies that make up the AIEM. You can see from the slide that there are many arrows and links between the companies in Montreal East.

The next slide shows you how things evolved on our side. You can see the report that was published in 2003 entitled “Profil industriel”, or industrial profile. The Xs represents businesses that have unfortunately disappeared from Montreal East since that time. In 2010, when the Shell refinery decided to close, there was a reassessment of the situation. We saw that something was happening and that we should take a closer look. The message the AIEM received was that a number of things had already occurred in Montreal East and that not enough attention had been paid to them.

On this slide, it is interesting to note that, in the petrochemicals sector, there were really two significant streams in Quebec. One was the olefin stream, which means everything related to polyethylene and polypropylene. There was also the aromatics stream, related to the polyester chain, which still exists in Montreal East.

Unfortunately, Quebec lost its entire olefin sector when Pétromont and Basell closed down. Not only were they closed down, but they were also completely demolished. We no longer have these plants in Quebec.

What we have left is the aromatics stream, and we would like to draw your attention to it. You will see it on the next slide. There are four companies in Montreal East that are interconnected and that make up the only polyester chain in Canada. You will see the word “polyester” on tags on shirts, hockey jerseys and fleece. All of these fabrics are made of polyester. The chain you see on this slide is the only one of its kind in Canada. There are no others.

This chain is made up of four companies. It all starts with a refinery, because our feedstock comes from there. Para-Chem refines and manufactures paraxylene, which is sent to Cepsa which produces a white powder called PTA. This powder is sent to Selenis to be mixed with a glycol to produce an ester. This is then polymerized to produce polyester and plastic beans which, when stretched, can be made into thread and fabrics. When welded, they produce packaging material.

If you look at a bottle, you will see the number 1 on it. This indicates that it is made of PET. That is polyester. These molecules are made in Montreal East. This plastic is completely recyclable. When you put it in your recycling bin, you are giving it value. It is important to mention that.

Today we also have to talk about the supply issue. Someone mentioned the saying about the bear. Let's say that I am a refiner and that Dimitri is also a refiner. We are both being chased by a bear. I do not need to run faster than the bear; I just need to run faster than Dimitri. This is what is happening in North America. There probably will not be any new refineries, but others will close.

The next slide shows that many of the refineries in North America are already using oil from the west, which is cheaper. We hear about this every day. We are currently trying to have more options for where we get our feedstock, because even if you have the best plants in the world, your opportunities will be seriously compromised if you have no flexibility in your feedstock supply options.

To illustrate this, on the next slide, we show that since the Shell refinery closed in Montreal East, other refineries also closed. Rationalization continues.

I would like to add an extremely important point. Although the refineries have been shut down in the east, a lot of equipment and products that can supply the markets do come into the port of Montreal. We are convinced that we have leading-edge facilities and that we are able to produce products well. As long as we are the ones who will be using these products, we are better off producing them locally so that we can get some added value rather than turning to others, elsewhere in the world, to have them manufactured for us.

By having raw material options, we can safeguard the petrochemical cluster located in Montreal East, enabling us to contribute to Canada's GDP. This is more or less the message that we wanted to convey to you today.

Obviously, there are many challenges that need to be addressed. Indeed, this is not only about having access to raw materials. In a competitive market, if we do not have any raw material options, it would be very difficult to ensure the survival of the entire polyester chain.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

We go now to the second witness, from the Canadian Electricity Association, Mr. Jim Burpee, president and chief executive officer.

Go ahead, please, Mr. Burpee.

[Jim Burpee, President and Chief Executive Officer, Canadian Electricity Association]

Good afternoon. My name is Jim Burpee. I'm president and CEO of the Canadian Electricity Association.

We are the national voice of electricity in Canada and have been since 1891. We represent all industry stakeholders—including utility companies, energy traders, and representatives from the full electricity value chain—that provide electricity generation, transmission, and distribution services to industrial, commercial, residential, and institutional customers across the country.

I'm pleased to be here today to speak to market diversification in the energy sector. I noted that in most committee meetings on this topic thus far, the main focus has been on resource development and diversification of the oil and gas sector. Of course, this is not surprising given the current political climate and the pending approval of Keystone XL. However, I do want to stress that, as governments across the country continue to focus on resource development and diversify into markets in which Canada exports its oil and gas, it is imperative that we also focus on the backbone of all resource development and the whole economy: electricity.

Canadian families and businesses depend on electricity each and every day. Without thinking about it, when you walk into your home, you turn on the lights and the television or crank up the sound on your stereo. Businesses depend on electricity to power the lights in their offices, but also to power new projects. As time goes on, we all become more and more dependent on electricity to power our smart phones, to keep our computers running, and even to wash our dishes.

As governments and businesses look to do more resource development and embark on large-scale projects like Keystone XL and the west-east pipelines, they will expect electricity to be there as it always has been, powering these projects as they move forward. However, most of Canada's electrical power grid was built well over 25 years ago to serve a population of 20 million people. Today, that population exceeds 34 million, people whose lifestyles are increasingly dependent on electrical devices.

As an industry, we are embarking on new, ambitious, and transformative projects to bring electricity in line with the needs of the 21st century. According to the Conference Board of Canada, investment in Canadian electricity infrastructure will be as much as $350 billion over the next 20 years. This is a huge investment, one that will result in an average of 156,000 jobs each year over the same time period. With Canadians using more and more electricity and governments looking to expand resource development, these upgrades in Canada are vital to ensuring that Canada's energy grid can handle the increased demand.

In order to achieve this, we need to look at diversifying our markets right here at home. This means looking at different ways of doing things, including finding more efficient, effective, and cleaner ways of powering our homes and businesses. A key part of this will be looking to develop and access new regional markets across the continent. How do we do that? It's simple, really. We all recognize that electricity is central to our lives at home and at work and to our prosperity as a nation, and we are proud to have a sophisticated electricity system that has for years given Canadian industries a substantial competitive advantage over other countries. To move forward this competitive advantage, with a system that Canadians can count on day after day, we need investment and cooperation.

Decision-makers at all levels need to have a frank discussion about electricity development over the coming years. Now more than ever, the electricity sector needs long-term policy and regulatory certainties to support the necessary long-term investments. There is a need for federal leadership and a comprehensive pan-Canadian energy strategy, one that understands that investing in our electricity system for future generations is essential to economic growth and prosperity across the country. It requires an approach that is sensitive to jurisdiction but supports interprovincial cooperation and efficiencies.

A great example of interprovincial cooperation, federal leadership, and development of new regional markets is the Lower Churchill project. This project, supported by a federal loan guarantee, will bring clean hydroelectricity to two Canadian provinces: Newfoundland and Labrador, and Nova Scotia. Additionally, it will create jobs and growth in the region, reduce greenhouse gas emissions, and increase trade opportunities with the United States. More regional markets like this one can be developed. For example, Canada's north has an abundance of resources and land, but lacks adequate electricity for major development. We urge governments to work together as we all cooperate to upgrade Canada's electrical infrastructure.

While we continue to look to diversify markets here in Canada, we are also strengthening our relationship with our neighbours to the south. Unlike the oil and gas sector, which is looking to diversify away from the United States, the electricity sector is looking to enhance the opportunity for electricity trade with the United States.

Currently, Canada is largest supplier of electricity to the U.S. Our vibrant bilateral electricity relationship has been beneficial to both countries for decades. You may not know that our networks are interconnected at more than 35 points. This has allowed both countries to benefit from numerous advantages.

You may also be surprised to hear that depending on the time of day or other variables, Vancouver Canuck fans in British Columbia could have been relying on U.S.-generated electricity to watch the recent series on their TVs. Similarly, a car manufacturer in Michigan may not know that they use Canadian electricity imports to power their assembly lines.

Our electricity relationship with the United States is quite intricate and dynamic. We are trading electricity with our partners to the south around the clock. This healthy trading relationship provides for long-term capabilities in both countries. All the action can be seen on the trading floor just across the river at Brookfield Renewable Energy Partners. There you will see continuous trade in different time frames: hourly, futures, and real time.

Many people in the electricity sector say the North American grid is the world's largest machine. It underpins the economy, national security, and public health for the 350 million people it serves around the clock. Like anything man-made, our grid requires its fair share of maintenance and servicing. Simply put, investment is vital to having a modernized electricity system that ensures that North Americans can continue to enjoy their quality of life, and it's essential for businesses on both sides of the border that are looking to grow and expand their operations.

Governments and industry need to work together to inform the ongoing public debate about electricity that is happening across North America, with a special focus on price, value, and a need for infrastructure renewal. Canadian electricity is reliable and a pillar of our society and economy, yet often taken for granted.

The costs of increasing capacity to meet the growing demand from a growing population, coupled with the need to replace aging infrastructure, will result in price increases. A frank discussion is needed, but as we've seen through our work as an association, when presented with the facts, Canadians understand the great value of Canadian electricity and the need to maintain the system.

We all need to make sure that development of a 21st century grid is governed by 21st century regulatory regimes—less duplication, less red tape, and less administratively burdensome regulation—while, of course, ensuring proper security and environmental balances. Governments on both sides of the border need to remain vigilant to avoid erecting any additional barriers that may inhibit interjurisdictional power flows.

So what can the federal government do to help us as we move forward with our transformative projects to upgrade and enhance our electricity infrastructure? In Canada the federal government must take on a leadership role and begin a dialogue with the provinces and territories in a pan-Canadian approach to energy where electricity is the backbone. This leadership and dialogue will also allow governments at all levels to assess potential regional markets that can be developed to access cleaner and more efficient electricity sources.

In terms of upgrading the North American grid and enhancing our trading relationship with the United States, the electricity sector is urging governments on both sides of the border to avoid erecting barriers that may inhibit interjurisdictional electricity trade and remain vigilant in reducing red tape and duplicative administrative burdens on importers and exporters.

We also need the government's help in addressing some public misconceptions around investment in electricity infrastructure, as I mentioned earlier, by helping electricity consumers understand the value for money, but also address misconceptions around health and safety concerns. With this, we can ensure Canada's electrical system continues to be there for Canadians as it always has been, at a price they can afford for years to come. It will also ensure that new large-scale projects are properly supported. After all, electricity is a critical enabler for resource development.

More information about CEA's specific recommendations on these topics can be found in the material provided to you today. The first is a policy paper on the need for a pan-Canadian energy strategy that was distributed at a 2012 Council of the Federation meeting. The second is a recent policy paper on Canada's electricity relationship with the United States that offers recommendations for an enhanced North American grid.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

We go now to the Canadian Manufacturers and Exporters with Mr. Martin Lavoie, director of policy, manufacturing competitiveness and innovation.

[Martin Lavoie, Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters]

Thank you, Mr. Chair and committee members, for inviting me to appear before you in order to discuss the diversification of the Canadian energy market.

First of all, I would like to congratulate you for embarking on this comprehensive study, which is essential for our economy.

Canadian Manufacturers and Exporters is Canada's largest trade association. We represent about 10,000 companies across the country.

The manufacturing industry is quite concerned, in general, about energy supply and demand, and we strongly believe that the government has an important role to play in making sure that increased supply will meet the needs of our industry.

As large consumers of energy, we are concerned with the price and the diversity of energy available on the market. As manufacturers, we're also concerned with the transport infrastructure needed to make the energy more available and affordable for manufacturers. Finally, as exporters, we believe it is in our interest to make sure we don't limit our production capacity with inefficient infrastructure.

I'll say just a couple of words on the consumption of energy by the Canadian manufacturing sector. As you can imagine, energy is an important element of the cost structure of any manufacturer. Manufacturing accounts for about 68% of energy consumed by all industries in Canada—that excludes commercial and institutional consumption. In Ontario only, about 60 large industrial customers account for one-fifth of all electricity consumption in the province.

Let me talk about the sources of energy consumed by Canadian manufacturers. The dominant energy sources in manufacturing are largely electricity, at 29%, and natural gas, at 27.8%. They both account for 57% of all energy consumption in Canada's industrial sector. If you add all variants of heavy fuel oil, you have about 91% of all energy consumed by the Canadian industrial sector.

Let me say a couple of words on the cost of energy used by industry. That's, of course, a major concern in Ontario. I think we used to have a competitive advantage over the U.S. with respect to industrial electricity rates. However, in recent years the U.S. has quickly found cheaper sources of unconventional natural gas sourcing, using new, innovative methods—we've heard about fracking and other new, innovative ways of exploiting natural gas—which have made this source of energy more affordable to U.S. manufacturers.

Some observers are talking about a resurgence of manufacturing as a result of new forms of cheaper energy. The U.S. production of natural gas has increased by over 350% between 2007 and 2011, and it will continue to grow at least until 2040, given the size of export markets available.

Our competitive advantage is decreasing, especially in Ontario, as I said. While the province had cheaper rates than the average U.S. rates before 2008, we estimate that Ontario industrial rates will increase by 34% by 2017. As a result, the gap between the U.S. and Ontario industrial rate is expected to more than triple over the next five years.

In summary, we believe it is important for Canada to consider the cost of energy and its role in the economic development of the country. We believe that government policy should try to provide reliable and diversified sources of energy at competitive prices. That can be done through regulations, but also and more importantly, through the development of our own reserves of unconventional natural gas, as well as investments in the infrastructure required for transportation.

Let me talk about infrastructure and export diversification. We often refer to Canada as an energy superpower. I both agree and don't agree.

I agree because our oil reserves of over 25 billion barrels of crude oil, our 150 million barrels of economically recoverable bitumen, and our 40 trillion cubic feet of natural gas are amongst the largest in the world.

In one sense I disagree because if we don't have the capacity to extract, transform, and transport these resources, they will remain just a great asset on paper and we might never see the full benefits of them. In order to become a real energy superpower, we believe that Canada needs to increase its production and transport capacity.

In recent years, global investment in Canada has led to an unprecedented development of our oil and gas sector, to a point where our capacity to produce is coming close to surpassing our capacity to transport and export the resource in the same vein. At the same time, we need to diversify our markets. No longer can the United States be Canada's only market. While this may sound like common sense to many of us, increased production and export diversification mean that we need to significantly improve the transport infrastructure for these resources.

As the same time, new forms of extraction are allowing new competitors to rise, as well, in the U.S. In the not-so-distant future, Canadian producers and exporters in the oil and gas sector will face competition from new shale gas and oil producers in the U.S., who can produce at a significantly lower price.

Crude oil and natural gas liquid production in the U.S. is expected to increase by 74% by 2020. New crude oil production from North Dakota, Texas, Colorado, Wyoming, and Utica shale will add 1.5 million barrels a day to the U.S. production. These producers will compete with Canadian producers for access to the same refineries on the gulf coast, among others. Some reports suggest that the U.S. will become significantly less dependent on foreign sources of oil in the next five years, making an even stronger case for Canada to start looking at increasing exports to Asia.

In the natural gas sector, British Columbia is front and centre of the liquefied natural gas export story in Canada. The province has recently produced a liquefied natural gas strategy to guide the development of this new industry. There are now five proposed export facilities along the B.C. coast that would facilitate the export of liquefied natural gas to markets in Asia. Global demand for liquefied natural gas is expected to double by 2020, about the time when some of the proposed projects could be in operation.

In conclusion, I'd like to again congratulate the committee for undertaking this complex study. It is in our interests that any national energy policy that might come out of this study, or even further down the road, looks at the benefits of stable, diversified, and secure sources of energy for all industry sectors and, in particular, the manufacturing sector.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you, Monsieur Lavoie.

We'll go now to the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada. We have Mr. John Telford, director of Canadian affairs, United Association Canada.

Go ahead, please, with your presentation, for up to seven minutes.

[John Telford, Director of Canadian Affairs, United Association Canada, United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada]

Good afternoon, members of the committee, fellow witnesses, and Chair Benoit.

My name is John Telford. I'm the director of Canadian affairs for the United Association of Journeymen and Apprentices of the United States and Canada, commonly known as the UA.

Our association was founded in 1898. The UA is a multicraft union whose members are engaged in the fabrication, installation, and servicing of piping systems. In North America we represent 326,000 members. In Canada we serve over 53,000 members, including 9,000 apprentices. We represent eight major trade classifications, all of which work on natural resource projects both in new construction and maintaining the existing facilities.

Here are a few examples of the kinds of people we represent and the important work they do. Steamfitters and pipefitters are the people who build the massive refineries in the oil, gas, and power sectors. Plumbers are the people who control the quality of the water in these plants, the supply of potable water, and waste water removal. Instrumentation technicians and mechanics control the process and limit pressure for safe operation of plants.

Heating, ventilating, air conditioning, and refrigeration mechanics install and maintain the systems that control the temperature of the plants and the refining processes, along with the air quality. Sprinkler system installers—“sprinkler fitters”, as we call them—provide fire and explosion suppression systems for plant safety.

Metal trade workers work across the country in metal fabrication shops in Quebec, Ontario, New Brunswick, and many of the other provinces, all working on spinoff projects of the natural resource projects. Pipe welders are the people who build pipelines, and perform pressure welding on all high and low-pressure process systems.

We have 30-plus training centres across Canada, and spend nearly $30 million of members' money on training journeypersons and young apprentices every year.

Every day, 30% of our membership is engaged on Canada's natural resource projects. Natural resource projects and the continued focus on our energy economy matter to the men and the women, and their families, that I represent. Market diversification in Canada's energy sector, simply put, means long-term, well-paying careers.

You heard from the building trades on April 25. My remarks today build on those that Mr. Smillie made.

Market diversification means more secure opportunities for Canadians, their children, and their children's children.

In your study backgrounder, it appears that you are undertaking to understand three components: export market diversification for Canadian energy; product diversification in Canadian energy; and diversification of supply sources in Canadian energy.

When Canada exports more energy, diversifies product mix, and entertains new sources of energy, it means three things to the UA: more work opportunities for young Canadian tradespeople and registered apprentices; more training and work opportunities for Canadian youth; and the opportunity to work on policy measures important to the industry and our members.

Currently, my organization, the UA, works approximately 55 million man-hours a year across Canada. Our owner partners plan to invest $250 billion in new construction in Alberta alone in the next six to eight years. This does not take into account anything outside the province of Alberta. It does not take into account Ontario nuclear rebuilds and refurbishments, and offshore development in Newfoundland and Nova Scotia. It doesn't include Nalcor's Muskrat Falls project, or anything in Saskatchewan where resource development is booming.

When the UA is involved in a project, it means professionalism, accountability, and the development of a highly skilled workforce for the future.

The UA has launched a national recruitment campaign. In phase 1 we plan to invest close to $1 million of members' money finding 25,000 new members for our industry. This campaign really has two purposes: to meet the immediate needs of our industry partners in the natural resources sector, capital projects, and shutdowns in the oil and gas industry; and to create awareness for youth and their influencers—parents and teachers—to make sure that we are recruiting young Canadians into our ranks to be the workforce of the future.

As you can see, we are serious about growing and participating in the growth of the natural resource sector is an important part of that.

A growing percentage of our membership is of aboriginal descent, and many of our local union offices are developing formalized partnerships with aboriginal communities in their areas. A few of these are local 56 Halifax, Nova Scotia; local 67, Hamilton, Ontario; local 628, Thunder Bay, Ontario; and local 170, Vancouver, British Columbia. We are able to train and provide work opportunities for more aboriginal peoples on these large natural resource projects. Without this work, none of this is possible.

If Canada is going to get serious about expanding the breadth and scope of our energy extraction market, we also need to get serious about training and the development of skilled trades as a viable destination career for the future. We need your daughters to get interested. We need aboriginal youth. We need new Canadians to get involved in our trades.

Mr. Smillie covered the skill-shortage issues at another committee briefing last month, so I won't repeat any of that. We need help from the federal government to get workers to where the work is. Our contractors and owners, like Suncor and Syncrude, are spending tens of millions of dollars on travel costs for workers. We need the federal government to institute a travel-cost tax credit for mobility, or an EI grant to help people get to where the work is. I believe this proposal has been tabled already at the request of one of the committee members. This would address some of the regional skills-mismatch issues and also reduce industries' reliance on temporary foreign workers.

In summary, the natural resources sector is the backbone of our workforce. The skilled trades workforce is also the backbone of the natural resources sector. We need a predictable and steady partner in government to enable work opportunities for our members.

I look forward to taking any questions.

Thank you very much for the opportunity to speak here today.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

Thanks to all of you, again, for very informative presentations.

I'm going to do something I very rarely do and take the first seven-minute round for our party—and there may be some time left for Mr. Anderson. I'll be followed by Mr. Julian, and then by Mr. Garneau.

I just came back yesterday from a meeting of the NATO parliamentarians. If you wonder what that has to do with this meeting and the issues we're dealing with here today, I chair one of the committees, the economics and security committee, and at my encouragement, one of the issues we're dealing with is strategic oil and gas and how that's changing the world, especially shale gas production and tight oil/shale oil production. The name of the study we just started to look at is, “The Economic and Strategic Implications of the Unconventional Oil and Gas Revolution”. They call it a revolution—and when you look at the numbers, you can see why.

Looking at the United States alone, they have increased their natural gas production just in the last few years by 50%. As some of you have mentioned, electricity is being imported, but so is natural gas into Canada right now.

Australia, within the next year probably, will become the biggest producer of natural gas in the world, surpassing Qatar. So there's a huge change there.

In terms of oil, the United States, as of about a year ago, is producing about seven million barrels a day, and Canada about four million. The United States last year increased its oil production, due to tight oil, by 800,000 barrels. That's going to continue in the years ahead. It means that right now, in fact, they only import about 18% of their oil from the Persian Gulf.

So things are changing.

I have a couple of concerns resulting from this background information that this report laid out. The first is, what is Canada losing right now by the fact that we simply can't export more oil and gas?

Just last week the former Premier of New Brunswick, Frank McKenna, said at a Bloomberg conference in Toronto: ...[The] economy is being damaged by the delays in getting new pipelines built, yet the people who would benefit from higher investments in health care and transportation are “not part of the debate at all.”

He went on to say that “The value destruction in Canada is staggering” due to delays in pipelines.

Three of you have made comments that tie into this.

To the gentleman from the Montreal-East Industrial Association, you talked about the importance of the west-east pipeline, so we can have lower priced Canadian oil feeding your needs. So, first of all, what are your comments and thoughts on the importance of getting at this, getting these pipelines built so that we can get Canadian oil to market, and specifically to meet your needs?

[André Brunelle]

Thank you.

You are absolutely right. There is a big focus right now on energy. The United States is doing things very fast, and we have to take that into account.

In order for Canada, particularly eastern Canada, to be competitive, it is important that we have access to western oil through the famous reversal of the pipeline referred to as “line 9”.

As you can see from our slides, other locations in North America can already take advantage of this, but we cannot in eastern Canada. So we have to have access to it.

Exporting is also important. Canada and Quebec must have access to this oil. However, should the Americans become increasingly independent, we are going to have to find other export markets. That is clear to me.

Today, by coming to see you, we wanted to focus in particular on the fact that we need to export outside of Canada. It is important that we not forget that Canada is also capable of doing things well. We therefore have to export our raw goods, if we don't have any opportunities for using them here in Canada, otherwise we will be missing out on a quite incredible opportunity. That is in particular what we wanted to focus on today.

[The Chair, Conservative, Leon Benoit]

Thank you.

Monsieur Lavoie and Mr. Telford, you have also made it clear that there would be a real benefit to having these pipelines built sooner rather than later.

There is an additional problem—and this was something that was discussed at the meeting of this committee of the NATO parliamentarians—that if Canada doesn't get access, especially when it comes to liquefied natural gas, if we don't get involved quickly we could lose out entirely and simply not have a market for our liquefied natural gas.

Australia is a huge player. The United States has already applied for export licences, and I believe they've received one. That was the information we got at this meeting. They will become exporters.

The problem with natural gas even in the United States is that to change one of their import terminals to exporting requires about a $10 billion investment. In Canada it will be more than that. These are huge investments. So what we're probably going to see is the countries that want to buy the gas investing in exchange for long-term contracts, possibly 20-year contracts. You can see what is happening here. As other countries sign these long-term contracts, Canada could lose out.

One of the added benefits of Canada exporting gas, for example to China, is that we'd be replacing new coal-fired electrical generation plants. So it would be a good thing for the environment if we could export as well.

The time is almost up. Obviously I'm not used to this.

If Canada doesn't get its export plants built soon, will we miss out entirely on exporting? At the least it might make it more difficult for us to find the markets that we need.

I'd like your thoughts on that, Mr. Lavoie and Mr. Telford.

There's still almost a minute.

[Martin Lavoie]

I think you're right.

First of all, natural gas is a very volatile sector pricing wise, as is the energy sector in general. So diversification would also add some security in terms of supply and pricing. Right now I would say that there is a strong economic case to produce in North America for export to Asia, given the cost of exporting other conventional natural gas in other countries.

I agree with you on long-term agreements, because this is a market that is volatile both ways: it can go up and down. The business plans of electricity exporters 15 years ago were based on a price that doesn't make sense anymore in the U.S.

So with long-term agreements, you could lose out, but they could also offer some protection. It depends on the way you forecast price and demand.

[The Chair, Conservative, Leon Benoit]

Thank you.

My time is up, and if I had more practice at this I could maybe shorten my comments and get in more questions, but for now, I'll have to go to Mr. Julian for seven minutes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

Thank you to all our witnesses.

You have touched on many interesting topics. Each of you focused in particular on the importance of having a national energy strategy. We will certainly be getting back to this issue during our questions.

I'd like to start with you, Mr. Telford, because I'm a big fan of the building trades and I work with them a lot in British Columbia. The B.C. building trades tell me that they're very concerned about the rampant abuse taking place in the temporary foreign worker program. A lot of folks, including people in the building trades, are being displaced because the government is allowing pretty well any application for temporary foreign workers coming in.

Do you share the concerns that I'm hearing from the building trades in British Columbia about the abuse and the lack of any sort of oversight of the temporary foreign worker program?

[John Telford]

Yes, I would agree with you there. Not being in British Columbia every week, I depend on the people like Tom Sigurdson from the British Columbia and Yukon Territory Building and Construction Trades Council. Last week we had a Canadian building trades policy conference. We held it over on the Quebec side, and this was a major topic at our conference. There's a tremendous amount of abuse there. It's not just in that mining program that they were caught. There were other things going on, and I guess when you're living it every day, it's quite a bit different than if you're 3,000 miles away from it.

But I don't believe that it's any less rampant in Toronto. I don't believe it's any less rampant in Saskatchewan or anywhere else. They were caught in British Columbia, that's all. It's going on, and it is straight abuse. It is people drilling a tunnel for a roadway, making $500 a month—in 2011, in Canada. That's disgraceful.

I hate to go back to this, but it's something that really strikes me. In 2008 or 2009, we had three Chinese boilermakers die at Canadian Natural Resources when a tank collapsed on them. Nobody in this room knows their names because on the same day that those three workers died—a tank collapsed on them—we lost 1,500 ducks in a spill pond at Syncrude. That occupied the newspaper for two months, but nobody could tell you their names, and most people in Canada don't even know that those three Chinese workers died. What did they come here for? They came here to make a living, work safely, and get paid.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Do you think the government has failed in its responsibility to put in place a temporary foreign worker program that actually addresses temporary skills shortages in certain areas, as opposed to the rampant hundreds of thousands of applications that have been approved by this government currently? Do you think they fail in their responsibility?

[John Telford]

I don't think the government has failed; I think corporate Canada has failed. I think it's time that people stopped taking shots at underprivileged workers, or under-represented workers. I'm not saying that everybody has to be unionized, but everybody has to be treated with respect and dignity and go home with the same number of fingers they came to work with. Is it a government issue? I guess you could take it there.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

It's their oversight.

[John Telford]

A major coal producer, one of the major coal producers in the world, should have enough social conscience not to do that.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That's true, though the government is the one approving these applications.

But thank you for your comments; they're very helpful.

I'd like to move on. I want to consider the lack of refinery capacity. I'm a former manual labourer at a refinery that is closed now in British Columbia. There is a lack of new upgrading capacity, new refining capacity. This is a major problem. If we had in place a national energy strategy that put the focus on added value and, instead of importing into eastern Canada, put the focus on upgrading and refining here in Canada, would that make a difference to your members?

[John Telford]

Yes. There's no doubt that we're in full support of more refining, but we're also cognizant of the fact that refineries need infrastructure to support them. They have to have piping systems to get the refined materials out. So we're hoping that the gentleman in B.C., Mr. Black, can follow through with his program. He's talking about a refinery. We do know that we are going to get the Edmonton West upgrader at Scotford. That is started already. We're hoping that the west-east pipeline will start at least one or two refinery expansions in Sarnia. We believe there's one in Montreal for sure if we get the pipeline in. We've been told that Suncor will be expanding their refinery in Montreal. We're hoping for something in Quebec City, and there was a project by Irving Oil slated for about 2009, maybe 2010. It was called the Eider Rock project. It was shelved because of the price of oil and the ability to get oil—not just its price but the cost of getting it. That project was about three and a half billion dollars. That would have made Irving the biggest refiner on the east coast.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much.

I will go now to Mr. Brunelle and I will ask you the same question.

In your presentation, you recommended that our industries put the emphasis on value added. Do you in fact find that it would be preferable to implement a strategy that would emphasize value added, refining and processing here in Canada, rather than exporting crude oil?

[André Brunelle]

Business success relies on the will to do things well in terms of safety, of production, of units of production, etc. Access to the raw materiel is a key component. I don't want to make a bad pun using the term “conservatism”, but it is obvious that we have to be able to export because we have a lot of resources in Canada. But we also have to realize that there are industries, that they are capable of many things, both in Canada and in Quebec, and that we have to take advantage of it.

The port of Montreal, for example, allows for products to enter the country but also for them to be exported. It is a great asset for us, but also our greatest enemy, in a sense. It is true that it is easy to import products into Canada, but we also want to be able to export our own.

Within the framework of a strategy, if you make the raw material accessible to industries that can process it, the will to do things well in Canada will materialize. That primarily is the message we want to deliver today. We cannot simply say that we must stop exporting. I think that Canada needs exports. However, it is critical to realize that we in Canada are capable of doing things well and going beyond the simple export of commodities. If we put the puzzle pieces together correctly, we should be successful.