Natural Resources Committee on March 25th, 2014

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

Just before we get to the main business of the committee today, we do have a little bit of business to take care of. Because Peter Julian is no longer on the committee, we have a new critic, a new member from the New Democratic Party, Chris Charlton, but she isn't here. So we will very quickly deal with the issue of electing a new vice-chair from the official opposition.

Ms. Moore, I understand you have a nomination to make.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

I would like to nominate Chris Charlton as vice-chair.

[The Chair, Conservative, Leon Benoit]

Thank you.

You've heard the nomination. Is it agreed that Chris Charlton become the new official opposition vice-chair of this committee?

(Motion agreed to)

You can inform Ms. Charlton. We'll see her next week, I'm sure.

Yes, Mr. Calkins.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I have no qualms with Ms. Charlton being the vice-chair of the committee. My only question, through you, Chair, to the clerk, is whether the appropriate documents have been filed in the House of Commons in order to make Ms. Charlton a regular member of this committee.

[The Clerk of the Committee, Mr. Rémi Bourgault]

It was done yesterday afternoon.

[The Chair, Conservative, Leon Benoit]

So it is in order, and it is finished.

Let's get on with the business of the committee. Today we are continuing our study of the cross-country benefits of the oil and gas sectors of the Canadian economy.

We have with us, from Analytica Advisors Incorporated, Céline Bak, president and co-founder of the Canadian Clean Technology Coalition. Welcome to you again. You've been before our committee before.

From the City of Saint John we have Mel Norton, mayor. Welcome to you, sir. It's good to have you here today.

From Enterprise Saint John we have William Teed, chair of the board of directors. Welcome to you, sir.

Thank you all for being here today.

By video conference today, from St. John's, Newfoundland and Labrador, we have, from Virtual Marine Technology Incorporated, Anthony Patterson, president and chief executive officer. Welcome to you today, sir, and thank you for being with us by video conference.

Also by video conference, from Fredericton, New Brunswick, from Maritimes Energy Association we have Barbara Pike, chief executive officer. Welcome to you, and thank you very much for being here today, Ms. Pike.

So those are the witnesses we'll hear from today. We'll start the presentations in the order the witnesses are listed on the agenda. We'll start, for up to seven minutes, with Céline Bak, president of Analytica Advisors Incorporated.

Go ahead with your presentation, please.

When everyone's given their presentations, we'll go to questions and comments from members.

[Céline Bak, President, Co-Founder, Canadian Clean Technology Coalition, Analytica Advisors Inc.]

Good morning, ladies and gentlemen.

Thank you for this invitation to appear before the Standing Committee on Natural Resources to address the important issue of the cross-Canada benefits of the development of the oil and gas industry on the Canadian economy.

We have circulated a presentation, which is available in both French and English. On page 2, we have summarized the exports of non-natural resources versus resource-related exports for Canada as well as the current account balance for Canada—just as a reference for the context of how important the development of our export capacity, both in resources and in non-resource-related areas, is.

On page 3, you'll notice that we've presented a framework that describes the different roles of players in this industry, from asset managers to technology integrators and solution providers. Today my presentation will be focused on solution providers, but there will be references to the obviously very important role that technology integrators and asset managers play in this industry.

I'd also suggest that there are some other important roles the committee may wish to consider over time in its deliberations. Those are found on page 4. You'll notice that in addition to these three main roles, there are also different funders that have important roles, including public sector funders like those you're very familiar with—Sustainable Development Technology Canada, and the Climate Change and Emissions Management Corporation of Alberta—but there are also export opportunities for infrastructure that are financed by private sector institutions, such as the World Bank. You'll notice that we've included the World Bank's logo.

I will not describe what's on page 5, but it is for your reference. You may recall past presentations on the broader clean technology industry. On page 5 we've included all of the subsectors we consider to be part of that industry. Three of those sectors are the focus of today's remarks: the extractive processes and products sector, the water and waste water sector, and the power generation sector. Within extractive processes, carbon sequestration, energy efficiency, soil remediation, tailings, and water treatment for extractive industries are all relevant.

There are other companies working in areas to do with desalination and water infrastructure that are now moving into the field of pipelines, for example. To the extent that, for example, in Alberta, large emitters are engaging in the development of renewable energy projects, power generation companies and those that provide technologies for that are also relevant to your work.

On page 7, I would like to draw your attention to the fact that within the clean technology industry, which is made up of about 700 companies, all of which have proprietary technology and three-quarters of which are exporting, there are some impressive economic credentials. These are impacted by the development of the oil and gas industry in Canada.

Current direct employment by these 700 firms is 41,100 employees. The rate of growth of employment in that industry is significantly higher than that of the economy, generally, at 6%. I think it's important to note that almost one-fifth of those employees are age 30 or younger. You will note, though, that the top skills gaps in this field are perhaps not what you're used to seeing. They include sales, capital raising, and international business development. These are companies that, while serving domestic interests and markets in the oil and gas industry, are very much focused on exporting in international markets.

I'll touch briefly on the credentials that are listed on pages 8 and 9. The oil and gas industry will benefit from the $1 billion annually that these relatively small companies invest in R and D. Three-quarters of the $1 billion is invested by companies that have less than $50 million a year in revenue. I think that's important to bear in mind. These relatively small companies are generating 52% of their revenues from exports. Twenty-two per cent of overall industry revenues are from non-U.S. markets, which is a very surprising finding.

I think one of the most important things for you to bear in mind for your committee's work is on page 10. These relatively small companies are not looking to be integrated in global value chains or to deal indirectly with very large companies via partners.

But if you look at the pie chart on page 10 to your left in the white box, you'll see that these companies that have modest revenues, in the $10 million to $25 million range, are very serious investors in R and D; 71% of them expect to do business directly with those asset managers that we mentioned earlier. That changes when the companies get a bit larger, when they reach from $25 million to $100 million in annual revenue. At that point they will more naturally do business with the systems integrators that were listed on the first page of the presentation.

These are important insights for your work because it is quite difficult for some of our Canadian companies to do business with the large oil and gas companies when they come from an R and D innovation-based perspective.

I'll touch very briefly on the export potential of these companies serving our domestic market. The smaller companies will have greater exports to the U.S. but still significant exports to Europe. But as the companies grow larger, you can expect them to have a very important focus on non-U.S. export markets, which is obviously of great significance because of the growth potential in those areas.

I'll conclude by suggesting that you take a moment to refer to pages 12, 13, and 14 of the presentation. These are the logos of some sample companies that are here to serve the Canadian oil and gas industry in various capacities. On page 12 you have companies that are publicly listed. On page 13 you have companies that are not publicly listed but are relatively mature and have large-scale demonstrations and credentials, some of them around the world.

As an example, I'll draw your attention to Eco-Tec as a company that has significant deployments in the Middle East, but has yet to have significant deployments in Alberta. Then on the final page, page 14, there are some newer companies. A number of these have been part of the Climate Change and Emissions Management Corporation investment portfolio. For example, there's Inventys, CO₂ Solutions, and Carbon Engineering. These are emerging companies that will benefit particularly from the investments being made in reducing the carbon intensity of the Canadian oil and gas industry.

With that, I thank you very much for your attention and I'm very pleased to take any of your questions.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation, Ms. Bak, and for keeping it on time. That is very much appreciated.

We go now to our second witness today, from the City of Saint John, Mel Norton, mayor. Welcome to you, Mr. Norton. Thank you for being here today. I look forward to your presentation.

[Mel Norton, Mayor, City of Saint John]

Thank you, Mr. Chair. Thank you very much to the members of the Standing Committee on Natural Resources and panellists. The City of Saint John is very grateful for this opportunity today. These remarks will include four points: the Saint John context, the energy sector broadly, the energy east pipeline, and natural gas.

Saint John was incorporated in 1785 via royal charter. It was the first city in our country to be incorporated, and from its founding, industry has formed the economic backbone of Saint John beginning with the timber trade and shipbuilding.

Following World War II, a variety of large-scale industrial enterprises emerged and in 1960 a new industry came to our city, oil refining. The refinery has become the largest in Canada. It has formed the basis for the city's reputation as an energy hub. The energy sector is key to growing the economy in Saint John. Our premier, David Alward, has called Saint John the economic turbine of the province.

As to the energy sector broadly, the energy sector as a whole has a tremendous impact on the Saint John economy. For the last several decades, the City of Saint John has played an increasingly important role in regional, North American, and international energy markets. Saint John is a proud home to Canada's largest oil refinery, the first deepwater crude terminal in the western hemisphere, Canada's first and only liquefied natural gas terminal, and one of the world's first refurbished CANDU 6 nuclear reactors.

The region serves as an increasingly important and diverse energy gateway including links to eastern Canada, New England, the Atlantic basin, and beyond. Our city supported in excess of $10 billion in energy exports in 2012, accounting for approximately two-thirds of the province of New Brunswick's entire export portfolio. The city's commitment to energy remains strong and was recently reinforced through the release of our region's renewed economic development strategy, True Growth 2.0.

As for the energy east pipeline, the City of Saint John is working closely with private sector partners, the City of Calgary, as well as federal and provincial counterparts to support the development of the energy east pipeline and Irving Oil and TransCanada's joint venture to develop and construct a new Canaport energy east marine terminal at the Irving Canaport deepwater marine facility in Saint John.

As many of the members of this panel will know, the energy east pipeline is expected to carry up to 1.1 million barrels of crude oil per day through 4,500 kilometres of pipeline from Alberta and Saskatchewan refineries to eastern Canada and a state-of-the-art marine export terminal in Saint John. The energy east project is estimated to cost $12 billion to complete and will generate over $25 billion in GDP for the Canadian economy over its 40-year operational life. Additional benefits may accrue to the Saint John region through a multibillion-dollar investment in value-added bitumen upgrading and refining investments once the pipeline is completed.

The Irving oil refinery in Saint John is a strong competitor in regional markets. It has a capacity to produce 300,000 barrels of finished petroleum products per day, accounting for 64% of Canada's refined petroleum exports to the United States. Our region's traditional focus on energy is being expanded to capitalize on emerging energy sources including natural gas, clean energy technologies, energy efficiency, and energy literacy and education.

The sector has created many innovative spinoffs including the University of New Brunswick's new energy certificate program offered by Saint John College, and industry partnerships with the Saint John fire department that allow the department to provide expertise and training to enable them to better respond to incidents across the city and to generate revenue through training programs.

The Saint John region remains a focal point within the international northeast region for value-added hydrocarbon processing, electricity generation, head office and back office-related operations, energy transmission, and energy innovation efficiency and conservation.

We are New Brunswick's only city with a vibrant industrial and port capacity combined with a diverse and robust energy knowledge sector. We have proven that we have the social licence for major energy projects, which provides an additional and powerful competitive advantage.

As for natural gas, New Brunswick's existing natural gas reserves are estimated to be in the range of 80 trillion cubic feet, based on current exploration and development activities in southern New Brunswick. These reserves are recognized as economically significant from a North American perspective and may become even more significant based on the outcome of ongoing shale gas exploration.

The development of these resources has also provided the potential to support new value-added energy investments in Saint John, including the potential conversion of Canaport LNG to an export terminal, and investment in new petrochemical and fertilizer production operations.

Recently Saint John Common Council unanimously endorsed a resolution supporting responsible development of natural gas exploration, and it is taking a proactive approach to support the development of New Brunswick's significant natural gas resources and energy assets.

Saint John council has submitted a letter of intent expressing the city's interest in pursuing membership in the World Energy Cities Partnership. The economic health of our region is a top priority for Saint John Common Council. The energy sector, and particularly oil and gas, is vital to Saint John. We have benefited from it greatly, and we fully support its further development. There is much appreciation for this committee's important conversation on the economic future of not only the country but particularly Saint John, in this case.

Thank you, Mr. Chairman.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Your Worship, for being here at our committee today and for your presentation. I'm sure you will have some questions and comments directed to you later.

We will continue now, staying in Saint John, with William Teed, chair of the board of directors of Enterprise Saint John.

Welcome, sir, and thank you very much for taking time out of your busy schedule to be here. Go ahead with your presentation, please. You have up to seven minutes.

[William Teed, Chair of the Board of Directors, Enterprise Saint John]

Thank you, Mr. Chairman and members of the committee, for allowing us to appear and to talk about the benefits of developing our nation's oil and gas sector, particularly the impact that such development will have on the economic well-being of my community of Saint John, New Brunswick.

I am the chair of Enterprise Saint John. Enterprise Saint John is the lead economic development agency for the greater Saint John regional community. We were established by the City of Saint John and surrounding communities. We're supported by the private sector also.

Our goals are very specific. The number one goal is job creation. We know that to achieve these goals we have to work with our network of other economic development agencies, government departments at all levels, and the private sector, but we are focused. Job creation is our number one objective.

We focus on six priority sectors in the economy, but the energy sector is one of the foremost. We view our location on the Bay of Fundy and our ice-free deepwater port as key assets that provide year-round connections to international markets.

In terms of value-added manufacturing and processing, Saint John is arguably the industrial centre of the Maritimes. We are home to Canada's largest oil refinery, as mentioned by the mayor; Canada's first and only liquefied natural gas storage and regasification terminal; three of New Brunswick's largest forest products mills; and two potash mines, which are close by. The refinery imports crude oil from around the world and western Canada. It exports approximately 75% of its output.

All of this industrial activity requires energy—lots of it. The greater Saint John area is home to three of NB Power's electrical generation stations, including the Point Lepreau nuclear generation station. We have two privately owned gas-fired merchant plants. We have gas lines that transport the gas from the Sable offshore energy project, the Deep Panuke project, and a small producing field that exists in southern New Brunswick operated by Corridor Resources. These industrial and energy installations have stimulated the development of an extensive supply chain to build, maintain, and service them.

The recent downturn in our economy has caused the supply chain to look elsewhere. We have been lending too many of our skilled tradesmen to Alberta and western Canada in recent times, and many of our professional services have had to look elsewhere also to survive. The Saint John industrial complex, together with the energy complex and supply chain, forms a critical base for the economy of New Brunswick. Saint John draws raw materials from our mines, our forests, our energy sector from around the world. We add significant value to these raw materials in some of the most complex, modern, and efficient manufactories in the country, and we ship finished products to domestic and foreign markets.

What is the impact of the energy east pipeline project? This project represents a real game-changer for New Brunswick, particularly the greater Saint John area, where the pipeline ends and where a bulk storage and marine terminal facility will be built and operated. There will be jobs—let there be no doubt—created in New Brunswick, and in Saint John, as a result of this project. It is anticipated that there will be approximately 325 direct jobs, 400 indirect jobs, and 125 induced jobs during the development phase. During operations they anticipate 120 direct jobs, 200 indirect jobs, and 60 induced jobs.

In terms of provincial revenues, we have a terrible debt situation. This project during the development and construction phase will cause approximately $265 million in additional revenue to the province, and $425 million during operational phase over 40 years.

With a stable, secure, long-term supply of crude oil from western Canada, we believe our oil refinery will be in a better position to consider expansion of its services, its production, and what's going on at that refinery. That risk factor being removed is huge. If we have, as we hope, these additional investments, that will have enormous positive implications for the further development of our industrial supply chain, our transportation infrastructure, and our next generation of skilled workers.

With regard to the implications of natural gas exploration and development, this also is a game-changer for Saint John and the province of New Brunswick. In approximately the last 15 years since the development of the Sable offshore energy project, we've seen an area of our country that never used gas now using gas at the domestic output level. There are days in the winter months when not one molecule of gas is sent from Canada to the U.S.

Our industrial complex, as well as our commercial and residential markets, have quickly become increasingly dependent on natural gas as a clean, efficient fuel source. We know that Sable is nearing the end of its useful life. Deep Panuke is a relatively small resource. LNG is increasingly used to serve high-priced markets in Europe and Asia. The northeastern part of North America still suffers from bottlenecks, huge bottlenecks, in the pipeline transportation and distribution system that has led to short supply and painful price spikes in times of peak demand: $9 a gigajoule to $29 a gigajoule, comparing one year over the next.

If New Brunswick is able to find and develop a stable, secure, and long-term supply of competitively priced natural gas from its deep shale formations, the results can be nothing but positive. It will de-risk a potentially critical input constraint. It will require the development of an extensive supply chain to serve the extraction and processing industry that's related to natural gas.

There will be investment and there will be job creation. They say per well, you will have approximately $13 million of direct investment, and you'll have between 40 to 50 individuals, whether direct or indirect, that are related with new employment for each well. Most importantly, we believe that this will open up the opportunity for further development of additional value-added manufacturing and indigenous natural resource, petroleum from western Canada, and the potash and forest resources will all be feedstocks for the next generation of industrial development in our city.

In summary, Mr. Chairman, members, the development of oil and natural gas are part of the bedrock on which the future prosperity of Saint John is founded. We are a value-adding city, an exporting city, and the industrial heartland of our province and our region. Oil and natural gas development are critically important factors to our present economy and to our future capability to attract further investment and create jobs. We want to become a “have” area, not a have-not, and we firmly believe that these projects will allow us to do that.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you very much, sir, for your presentation.

Members of the committee would notice that the focus of today's meeting is on Atlantic Canada, and we move from Saint John to St. John's now.

By video conference from St. John's, Newfoundland and Labrador, we go to Mr. Anthony Patterson, president and chief executive officer of Virtual Marine Technology Inc.

Go ahead, please, sir, with your presentation up to seven minutes. Thank you again for being with us here today.

[Anthony Patterson, President and Chief Executive Officer, Virtual Marine Technology Inc.]

Thank you, Mr. Chair. This is a great honour and pleasure to be before the committee, even virtually.

I'd like to talk about four things. One is just to touch on the macroeconomic position of oil and gas within Newfoundland. Then I'd like to jump into the perspective of one of the high-tech companies that's emerging out of our milieu, and how we have penetrated export markets and the crossover into adjacent industries. As I go along, I will be pointing out how our experience mirrors that of other similar high-tech companies that are emerging out of an ocean technology cluster in St. John's.

First of all, to be in Newfoundland right now is a very exciting time. Our GDP growth rate is higher than India's, lower than China's. Our unemployment rate is the lowest since 1973, and that is largely attributed to the growth of the oil and gas industry in our province.

To put it in context, the oil and gas fields off the Grand Banks are a similar size to the North Sea. So if you can combine Norway and the U.K., that is the type of potential that we have in our offshore. Unlike the North Sea, our offshore is virtually unexplored: compare our 200 wells with 5,300 wells in their jurisdiction.

The big barrier to growth in our area, I believe, is the harsh environment that we have to deal with, in particular, ice, remote distances, and high sea states. That demands that our offshore needs to be grown on the back of innovation and high technology, much of which is being developed in Newfoundland by companies like ours.

To give an example, through the Atlantic accord, there is a requirement for research and development investments in Newfoundland. As of 2011, with the figures provided by the oil industry itself, there's been roughly $200 million of investment by the oil industry in high tech in Newfoundland, mostly concentrated on Arctic operations and improving health, safety, and environmental performance for the industry.

When we look at Virtual Marine Technology, our company emerged from solving an offshore oil and gas problem. What we were asked to do, and eventually were able to do, was to train offshore workers how to launch lifeboats from platforms in hurricanes. That is something we managed to do. The initial investment for that came from the oil industry itself, and was levered by a number of co-investments by federal and provincial innovation funds. The program started in 2003, and by 2009, the first simulator was deployed for training. As of today, we have thirteen systems in three countries.

When we look at the export—very much as our first intervenor Céline Bak had said—our economy and our company has to be based on export. The Newfoundland offshore, at this time, is too small to sustain a high-tech company like ours and like many of our peers. Of course, we have eyed the export potential in other offshore jurisdictions. In this we are very fortunate, not only when we solve a problem for a local oil and gas player like Exxon Mobil or Husky, but also when there are very many Newfoundlanders who are participating in the global offshore oil and gas industry, mainly having been trained at the Marine Institute in St. John's. Through those connections and networks, companies like ours are able to get introductions with the main players around the world.

Our first export sale was in Mexico, in 2010, after an offshore incident they had that mirrored the Ocean Ranger. We have since targeted the Gulf of Mexico and the North Sea. We expect that our first exports into the Gulf of Mexico will occur this year, and into the North Sea next year.

As previously mentioned, many of the customers for the ocean technology companies in Newfoundland are the oil and gas majors themselves. The way that things are structured in the oil industry, we do not need to go through tiers as you would see in the defence industry in order to sell into the oil sector.

The final thing I would like to touch on is crossover into defence. Newfoundland and Labrador is not really a host to a very strong or large defence industry. However, our high-tech companies have been solving problems for the oil industry and many of these technologies have crossover applications into defence.

As a typical Newfoundland company like ours breaks out of serving the local oil industry and goes into a more regional market, we jump over into defence. An example of that would be our participation in the Halifax-class modernization program, which ultimately led to us being put into the supply chain of a major defence contractor and being brought into the German F125 frigate program as well.

Another interesting piece is that the Irish are spearheading a research program within Europe to help first responders operate in arctic conditions. Through our work with the oil industry, we've developed ice navigation modules for lifeboats. That is now being exported into Europe through Ireland—of all places—to be consumed in Norway and Sweden.

My final comment, though, I would say, is that there is a marked difference between defence contracting and oil and gas contracting. Companies like ours find it much more efficient and much easier to deal with oil majors in their procurement processes rather than with governments through their defence contracting processes. That's why you will probably see a lot of high-tech companies initially focused in our area on oil and gas and then switching to defence.

With that, thank you very much. It has been an honour to make this presentation to you.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation, Mr. Patterson. It was fascinating indeed.

We continue now in Atlantic Canada and are going to Fredericton, New Brunswick, by video conference, to Barbara Pike, chief executive officer of the Maritimes Energy Association.

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

[Barbara Pike, Chief Executive Officer, Maritimes Energy Association]

Thank you for the invitation to appear today and thank you for accommodating my schedule to allow my presentation via video conference from here in Fredericton.

By way of introduction, the Maritimes Energy Association is an independent, not-for-profit, industry group that represents companies that provide goods and services to the energy sector—onshore, offshore, renewable, and non-renewable—in eastern Canada. Some operators and producers are members, but for the most part our core membership are the local companies that employ thousands of people and invest hundreds of millions of dollars into our local economies.

Today I'll be covering the full energy spectrum the association does. The roots of the association really are in oil and gas going back more than 30 years, specifically offshore oil and gas under the acronym OTANS. I mention that to explain that we do have some deep roots and history in the oil and gas sector.

It should come as no surprise to you, and as you've heard so far today, when I say that the oil and gas sector has had a dramatic impact in Atlantic Canada, specifically from the offshore. The industry in the region directly employs 5,600 people and thousands more indirectly. As well, there are thousands more who work in the oil and gas industry in western Canada and commute home here to Atlantic Canada.

Since 1996 there has been $31 billion spent in Newfoundland and Labrador, again on the offshore. Over the same period there has been $8 billion spent in Nova Scotia, again offshore. Oil production amounts to roughly 30% of Newfoundland's GDP. Natural gas production in Nova Scotia is down to roughly 2% of Nova Scotia's GDP. It's estimated that the offshore industry supports more than 800 companies in this region.

The supply chain.... The Maritimes Energy Association has more than 300 member companies and they include everyone from law firms, to engineering companies, to environmental consultants, fabricators, accounting firms, transportation companies, logistics companies, and the list goes on and on. Few of them depend 100% on the oil and gas sector, but the oil and gas sector is an important customer for most of them.

On top of the money spent in the local supply chain, there's also the revenue from taxes and royalties. I'm sure I don't have to tell the committee members of the impact that oil revenue has had on Newfoundland and Labrador, royalties in the billions that have turned that province around. In Nova Scotia, roughly $2 billion has been paid in royalties in crown share over the past decade and that does have an impact on the provincial coffers.

That's all under the offshore oil and gas sector. Onshore oil and gas has also had an impact. We would like to have more of it here in New Brunswick and Nova Scotia and we're working on that, but even the small amount of onshore production that is here in New Brunswick has an impact. In the area of Sussex, where Corridor Resources is producing natural gas, dozens have full-time employment and dozens of companies work on that project. It could be hundreds of jobs and millions of local companies, if we can get onshore oil and gas exploration moving. But that's in the “what if” file and can be left for another day.

The impact of oil and gas development in western Canada is also felt in this region. While numbers are difficult to confirm, it's estimated that a few thousand workers commute back and forth to work in the oil patch in the west. They maintain their homes here, their families are here, so the wages paid by the oil and gas industry in western Canada make their way to communities around Atlantic Canada. We also have many member companies that work on contracts for oil and gas projects in western Canada and the projects on the books for eastern Canada including the energy east pipeline and up to three LNG export facilities. I would also be remiss if I didn't mention the downstream industry in this region and in particular of course, the Irving oil refinery, the largest refinery in Canada. There are roughly 300 direct jobs. The economic impact in Saint John has been covered by his worship and also by Enterprise Saint John so I won't go further into that.

The offshore oil and gas industry has also provided our local companies with the experience and expertise to work in the global supply chain. We have companies in this region who work in the North Sea, Greenland, the Gulf of Mexico, you name it and they're there. This is an important spinoff and one that I can provide examples of, but likely not the hard figures. Suffice to say it can be in the millions of dollars.

Again I want to thank you for the opportunity to appear. We talked today just about oil and gas. When we're talking about renewables, I'm sure we could be back to talk to you about that as well.

Thank you for this opportunity and I welcome any questions.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Ms. Pike, for your presentation as well.

Thank you to all of you again for being here, either in person or by video conference, for your very informative and helpful presentations.

We'll go now to the first round of questioning and comments, a seven-minute round. We'll start with Ms. Crockatt, followed by Ms. Duncan, and then Mr. Regan.

Ms. Crockatt, go ahead please, up to seven minutes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you very much.

I appreciate all the witnesses being here today. It makes us realize, I think, that we need to hear more from people from other areas of Canada. We would like to have been out there, on your turf, but thank you very much for being here on ours and those who are joining us by video conference.

[William Teed]

We would love to have had you here.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Being an Alberta MP, I also want to thank you very much for sending those human resources that have kept the industry going in Alberta and Saskatchewan for quite some time. But we're very happy to hear about the development there.

Mr. Teed, I wonder if I could just start with you. You talked about the “economic turbine” in Atlantic Canada. I think we're all concerned with jobs and quality of life and so on. You see the oil and gas sector as being a game-changer, with 40 to 50 jobs per new well. Is that your calculation there?

[William Teed]

Those are the statistics that were given to us through a study that was carried out by UNB. Yes, the natural gas development project has huge potential for job creation, there's no doubt about it, both direct and indirect.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Can you talk about that just a little bit? I'd like to get a sense of how people's lives on the ground have changed. How does this affect the average person? Can you bring it down to the human level?

[William Teed]

Let's put it this way. You've heard some comments on the number of people who travel to western Canada to have a job in the energy sector. When you get on a plane, no matter where you go you can tell that there are so many people on that plane who are going to work for one week, two weeks, three weeks, two months. The impact that's had on families has been tremendous. Everybody wants to make a good living, but let me tell you, most of the people who are going out west for a job to earn an income really would prefer to do that in their home province.

So from a very personal, grass-level thought, that's the huge impact these kinds of projects could have. New Brunswickers would be able to stay in New Brunswick to earn their living, to bring their families up, and to have a good family living.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay.

I want to ask the same question of you, Ms. Pike. Do you have any specific examples that you can talk about? You as well talked about the impact in general terms, but have you seen any examples, any poster children examples, of how the spinoffs are actually changing people's lives in Atlantic Canada from the oil and gas sector?

[The Chair, Conservative, Leon Benoit]

Go ahead, please, Ms. Pike.

[Barbara Pike]

I can probably give examples of specific companies. We can take a look at a company like Encanex, which is based out of Nova Scotia. It's a local company developed by a guy actually from Newfoundland. They're in the process of moving operations or having an office in Alberta, and that has dramatically changed the people who are working for the company. It's expanded. It has offices in St. John's, Halifax, and Calgary. We're basically talking about going from zero to about 150 people in the space of about two years.

If you look at some of our engineering companies, we have engineering companies that are working on projects with some of the oil sands companies and are actually in Nova Scotia or in New Brunswick working on those projects, coming up with the engineering schematics, and then procuring that locally with various fabricators.

If you're talking about west to east, you can take a look at a company in Moncton, a fabricator that is part of the Shell global supply chain and actually fabricates certain specific components for offshore production facilities in the Gulf of Mexico. There are 50 people working at that company that would not have such high-paying jobs if we didn't have those contracts into the Gulf of Mexico or into the Shell supply chain.

I was on a conference call yesterday with a company in Alberta. We'll be working with them to provide better procurement information for companies in eastern Canada to be able to tap into the potential contracts that are coming out in Alberta. As you know, your supply chain is beginning to max out and needs help from the east. But that's work that will be done here and then sent across the country.