Natural Resources Committee on Feb. 27th, 2014

[Geoff Regan, Liberal, Halifax West, NS]

That information would be interesting. Maybe you could provide the committee with that as well, but that's not what I was looking for.

Maybe you could talk about the effects at the community level of the oil and gas sector. Would you say it is the view of the department that those effects are uniformly positive?

[Jay Khosla]

In terms of the economic benefits to local communities across the country, or within Alberta? Is the question across the country or within Alberta?

[Geoff Regan, Liberal, Halifax West, NS]

What are the effects at the community level of the activities of the oil and gas industry across the country?

[Jay Khosla]

As I mentioned off the top, in terms of my presentation, we see huge economic benefits across the country and locally within Alberta of oil sands development. We see big dividends, whether it be in Alberta, Quebec, or Ontario. For example, in Ontario, $600 million was invested in oil sands activity. That will have secondary and tertiary impacts—indirect jobs, induced jobs, so on and so forth.

In terms of Newfoundland, if you want to talk about the offshore oil and gas industry, certainly there are impacts there. In B.C., there's the LNG play, and we could go on and on.

As Terry had said off the top, we really do see hotbeds of activity across the country and directly linked also to oil sands activity.

[Geoff Regan, Liberal, Halifax West, NS]

Is it the view of the department that the effects of the oil and gas sector at the community level are uniformly positive?

[Jay Khosla]

Uniformly positive, in the sense of the economics of the equation, or universally positive—?

[Geoff Regan, Liberal, Halifax West, NS]

In my asking about the effects at the community level of the oil and gas industry, you can understand it would have broad effects. I'm asking whether the department thinks they're uniformly positive.

[Jay Khosla]

In answering directly to the question, I would say generally yes. In terms of economic benefits across the country, they're uniformly positive.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Regan.

We'll go now to the five-minute round.

First in the five-minute round is the parliamentary secretary, Ms. Block, then Mr. Trost, and then Mr. Julian.

Go ahead, please, Ms. Block.

[Kelly Block, Conservative, Parliamentary Secretary to the Minister of Natural Resources]

Thank you very much, Mr. Chair.

I will echo my colleagues' comments in welcoming our officials here this morning. I certainly do appreciate the expertise that is represented at the table. I have come to understand the commitment that you all bring to the responsible development of Canada's natural resources, and I appreciate that very much.

Mr. Khosla, I heard you say earlier in your presentation that this is a time-limited window. I'm intrigued by that. My question is on whether there is an imperative to act. What is the impact, if we don't? Thirdly, how does the responsible resource development plan help us act in a timely way?

[Jay Khosla]

Thank you for the question.

In terms of the time-limited opportunity, there are a couple of points that I'd like to make. The first is what was in the presentation. We know very well on our end that in the United States there's been a technological revolution in energy development, especially when it comes to oil and gas. Many forecasters, the International Energy Agency, CERA, and a few others, are saying they'll be self-sufficient by the year 2035. You combine that with the fact that we're increasing our production and that they're our biggest customer, and you can imagine what we need to do between 2020 and 2035. We need to diversify our markets. That's one of the timelines on this.

Another one is that when you look at B.C., a lot of forecasters on the LNG play are saying there's a race across the world. But B.C. is not the only area within the world that's chasing liquefied natural gas.

We've been lucky enough to have engagements with countries like Japan, Korea, India, and China. Frequently when we meet with those countries, their point to us is that they like what Canada does and they believe Canada does it responsibly. But they're also going to other hotbeds of activity, such as Australia and Malaysia, for the same product. If we can meet their needs quickly, they would like us to do it. They especially like the way we do it because of the certainty and predictability we have in our system, the competitive tax base and so on. I'd say that those are two angles on the time element.

In terms of responsible resource development, as you know, a few years ago the government put time limits on the reviews of major natural resource budgets, and those are primarily energy projects. It was a direct result of thinking through the potential for ensuring transparency and predictability for the industry. But it was also to show the world that we are able to develop these assets in a time-oriented way to meet the growing demand. With all of that in play, responsible resource development has been acknowledged.

I want to come back to the point about meeting with various other countries and them saying that we do this with the highest standards. It brings with it a host of environmental protection initiatives. As a result, we're attracting some attention outside of our own country to develop these resources.

Terry, did you want to add to that at all?

[Terence Hubbard]

Thanks, Jay. I think you covered things quite well.

To reiterate, it is a global market that we're competing against. If we don't move forward and capitalize on this opportunity we have here in Canada, our competitors will. There are significant opportunities and significant proposed investments, in the United States, in Australia, in other countries, in terms of oil and gas development. The market for these products is limited, so those first to market are going to capture those long-term opportunities presented by the growing demand, in the Asia-Pacific region in particular.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

How much time do I have?

[The Chair, Conservative, Leon Benoit]

Half a minute actually....

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

So then the impacts on our economy, on the benefits that are experienced uniformly across the country to communities, would definitely be negative if we weren't to capitalize on the opportunities we have today.

[Jay Khosla]

Yes. In the deck we talked about the IMF study, which is a pretty groundbreaking study. Essentially it showed that by diversifying our markets in the year 2020 we have the potential to grow 2% of our GDP, which is considerable as you know. I think the reverse is also true. I can't remember the exact figure in the study but it did indicate that were we not to, we would suffer some consequences. That's just in 2020.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Block.

Very short, Mr. Labonté....

[Jeff Labonté]

Just looking at the example of British Columbia, the pipeline projects that are proposed in the west coast look at a combined GDP contribution of almost $17 billion to the Canadian economy over the period of growth, with over half of that accruing to British Columbia. The LNG projects have a cumulative GDP effect of $171 billion. That's $386 billion when you include the upstream development of the gas resources in Alberta and British Columbia with the 43,000 jobs proposed. The impact to provinces across the country other than Alberta and B.C. would be $10.8 billion. So these are substantial, staggering amounts of money to the economy over the period of those 20-year horizons.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Block.

Mr. Julian.

Oh, Mr. Trost and then Mr. Julian.

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

Mr. Chair, I'm a little concerned you're confusing Mr. Julian and myself.

[The Chair, Conservative, Leon Benoit]

I never could tell you apart.

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

You seem to be more progressive.

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

Anyway, before we wander too far along the rabbit trail, part of the reason behind having this study was to look at areas of the country that are impacted by the oil and gas sectors that aren't always what we first think of—the offshore in Newfoundland, Alberta, Saskatchewan, the western sedimentary basin. With that I'm going to ask about the impacts in a couple of provinces that we don't normally think of tying with oil and gas industry. Perhaps it's because I'm sitting in what is Mike Allen's seat here, I will ask about New Brunswick and Quebec, for example.

What are the impacts going forward? What is the potential? What is the forecast? I realize depending on decisions that are made this will vary. But when you look at those two provinces, which are traditionally not at all tied to this industry, what sort of potential is there and what needs to be done to develop it so that their citizens can enjoy benefits from this industry?