Natural Resources Committee on April 1st, 2014

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Chair.

I appreciate all the testimony that's been brought forward here. I've been trying to keep up with it. Ms. Annesley, you had a lot of interesting statistics, and Mr. Myers you did as well. I'm looking forward to reviewing some of the comments you made in your testimony before this committee. It's an incredibly staggering amount of information.

I'm going to follow up on what Ms. Duncan was talking about, opportunities in Atlantic Canada. But the first thing I want to highlight is unless you live in Fort McMurray, even Albertans have to get on an airplane or drive to work in the oil sands in northern Alberta. So it doesn't matter what part of the country you're from, even Albertans have to leave their families at home for good lengths of time to take advantage of those employment opportunities in the northern part of our province. However, that being said, we understand that it is a tremendous economic driver.

Ms. Annesley, you're a representative of the upstream or the extractive companies. This committee has heard from the refineries, from midstream processing groups as well, about the economics of value added. Some arguments are being made about whether or not regulatory changes or changing the subsidies or changing the incentive policies of the Government of Canada would get some of this cash that's sitting on the sidelines injected into the economy.

I'm not sure where we would do that in Alberta. Right now, the most common sign I see in my riding is “help wanted”. I constantly meet with business leaders in my constituency who say the biggest problem they have is finding labour and that's right across the whole gamut. It doesn't matter if it's somebody serving coffee at a restaurant or somebody doing engineering technology for an engineering firm: help wanted is help wanted, and those jobs are there and available.

The question I have is from an overall labour force capacity perspective. Ms. Annesley, you referred to the oil sands as almost like on-the-job university training at the workplace of tomorrow. Could you talk a little more about those impacts? I think you made some statement about how many people live in Alberta. There are only 4 million people in Alberta. Could you give us again some indication of the educational benefits to the oil sands?

[Janet Annesley]

Yes. In particular, people have the impression that the average oil and gas worker is an engineer or a geophysicist, but increasingly the average oil and gas worker is a graduate from a technical college or institute, a skilled tradesworker in essence or a power engineer or an engineering technologist.

The oil sands have been incredible in that, as Jay Myers and the CME outlined, they're essentially a manufacturing business. So when you have these very large construction sites of 15,000 workers, in some cases the project labour agreements have up to 20% of that labour force as apprentices. That provides an absolute scale of training and opportunities to move people quickly through their apprentice rankings and up to the full Red Seal. In that way, the oil sands is a skilled trades training powerhouse. With one third of the population we are turning out more apprentices in Alberta than the entire province of Ontario, and that has come as a result of many decades of very focused work by NAIT/SAIT, and the industry, as well as non-union and unionized workers.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

That's fantastic.

Mr. Myers, I think you touched on it, but there's been a significant regulatory...like one project, one review, streamlining. Could you elaborate a little more on how important that is to your member companies?

[Dr. Jayson Myers]

As Roger Larson said, it makes so much sense to have a one-window approach so that companies operating across Canada do not face a multiplicity of different compliance requirements. It isn't an issue about the regulatory outcome. We should be focusing on what delivers health, safety, better environmental management, and consumer protection. Those are the objectives.

We need to look at how we can simplify the compliance process so it's easy and less costly for companies to achieve those objectives. Right now we have a lot of duplicated and, many times, unnecessary differences in compliance requirements from province to province. As Roger said, if we could move on to a one-window approach, whether that's with respect to the environment or approvals or health and safety, that would be the best outcome.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I found it striking, your comment about foreign companies having less burden to deal with than the pan-Canadian companies dealing with interprovincial trade barriers. It's unbelievable.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Calkins.

We go now to Ms. Moore followed by Mr. Trost, and then another New Democrat member.

Go ahead, please, Ms. Moore.

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

Ms. Allan, my question is fairly simple. However, getting an answer to that question sometime seems less simple.

It is the question I hear most often when I am in my riding. People wonder about this. Given that we have an oil industry, why are they still paying such high prices for gas? Since we are extracting oil from the tar sands, they cannot understand why they as consumers are not benefiting.

Could you please explain that to them?

[Robyn Allan]

It's a very excellent question and thank you because I have the same question. Why is eastern Canada dependent on foreign imports when Canada has vast resources? It goes back to if we do not upgrade bitumen in Alberta and turn it into SCO so it can be used in eastern refineries, we will continue that dependence, and when we're dependent on foreign imports, they determine our prices. They determine our prices for inputs and they determine our prices for petroleum products. So Canadians across the country are paying world prices for petroleum products while refineries in western Canada are experiencing very high profits because we're paying prices in Canada as if we bought all our oil based on Brent.

So now we have a country where Canadians and non-oil producing businesses have huge costs for resources, and if those prices could come down we would stimulate the entire Canadian economy. We would not have the problems we have inter-regionally. Every single country in the world protects its economy. In China they have price controls for their consumers. OPEC nations have price controls for their consumers because they know that the costs people bear for energy have a tremendous impact on economic growth and stability. But in Canada we continue to pretend that exporting raw bitumen will stimulate this economy and it won't. It will increase our importation of condensate and it will get us the lowest possible value for our vast resources that we can't renew.

So I have the same question you do.

Thank you.

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

By doing things differently, would it be possible to lower their costs as consumers?

[Robyn Allan]

We could do things differently if we wanted to bring the cost down for consumers. In Canada there seems to be a huge resistance to having any form of protection of consumers and the prices they pay. So if you add value and stimulate the potential of our economy to maximize its value, then you strengthen the entire economy and so it has the same impact in terms of overall health and prosperity as if we had lowered prices. But until we have a value-added policy that protects our economy and does what every other major nation is trying to do for its economy, we will continue to have the minimum benefits from this resource and the maximum costs.

And we haven't even begun to talk about environmental costs.

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

I would like to ask Mr. Myers a similar question.

In the manufacturing sector, would it be possible to lower prices for Canadian consumers by doing things differently?

[Dr. Jayson Myers]

Definitely, by becoming more efficient, by increasing productivity, and this is important not only for consumers but for industry as well.... One of the biggest challenges that producers in energy face, and in resource development generally, is the need to lower the cost of the projects, bringing those projects in on time, and that is driving an awful lot of efficiency and innovation through manufacturing itself.

But I'd say we have to be careful because we can't be looking at putting in mandatory price controls or lowering prices or talking about cutting off our delivery systems to new markets, which would also reduce the price that is available, and at the same time expect companies to invest in new capacity or new technology, because those investments are being driven by expectations of a return on those investments. I think we have to be very careful.

Clearly, we have to look at how to incent new capacity, innovation, and more productivity, and that's what's going to deliver the benefits at the end of the day, to consumers as well as to the industry.

[The Chair, Conservative, Leon Benoit]

Merci.

Merci, Ms. Moore.

We have now Mr. Trost, followed by Ms. Charlton and Mr. Leef.

Go ahead, please, Mr. Trost, for up to five minutes.

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

Thank you, Mr. Chair.

Ms. Annesley, when you were giving your testimony, you used this phrase that I wrote down—I think I got it right—technological innovation going international. Could you expand on and/or give examples on what you mean by technological innovation is going internationally? How does it affect our companies, and how does that spin off into the broader economy?

[Janet Annesley]

As Mr. Myers has outlined, when you have a robust industry that's able to invest in new technologies, then there's a competitive advantage to these technologies, and we could have a situation where with COSIA and the pooling of intellectual capital and then intellectual property on an unprecedented basis in Canada we have billions of dollars of investments in oil and gas technology. We have heard some talk today about the merits of perhaps the private system of capital versus a more state-owned system of capital.

One thing that the private system does very well is innovation, as compared to the state-owned system. When you look at the world of oil, half of the free world's private investable oil reserves are in the oil sands. The technologies that we develop there in heavy oil extraction, particularly on the environmental front as it may relate to, say, non-aqueous extraction, or carbon capture and storage, these types of technologies, those are going to be highly exportable to other oil-producing countries, places like Venezuela and others where they just don't have the kind of innovation culture that private enterprise brings.

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

Does that technology development just take place in Fort McMurray, or is it spread out throughout the country? Is this something that's very isolated, or do we see benefits from Vancouver to St. John's?

[Janet Annesley]

That technology is spread out absolutely across the country. I sometimes say in jest that it's not the dot.com but it's the person who is going to find the solutions to fix tailings who is going to be Canada's greatest high-tech entrepreneur, that we need people coast to coast, and we have people coast to coast. In fact, recently I talked to a company in Quebec that is actually working on the tailings issue, and whether it's private companies that are innovating, or working with colleges and universities, we've brought in people from coast to coast.

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

My colleague here, Mr. Calkins, was making a comment at the end of his questions about how interprovincial barriers hold back Canadian business. I think it was Mr. Myers who had said that. So let me follow up on that and ask, is this one of the issues that's holding back the geographical dispersal of the benefits of the oil sands and the benefits of the oil and gas industry? Would we see more widespread benefits outside of the immediate oil- and gas-intensive neighbourhoods of Canada if we started to lower our barriers internally?

I'll open that up to anyone who wants to answer.

Mr. Myers.

[Dr. Jayson Myers]

Let me give you maybe two examples.

One is the difference in welding standards in Alberta. The qualifications for a welder in Alberta are so high that it makes sense for companies to manufacture and to weld outside of Alberta and to import into Alberta, increasing the cost of the projects, but also making it very difficult for manufacturers to make sense of doing a lot of production in Alberta. That's one example and it affects Alberta itself.

Another is pressure vessel standards. We should have one system of pressure vessel standards across the country that takes into consideration the differences in the use of those pressure vessels, but again one window that would make it much easier. So if you're doing business and if you are successful in Canada in doing business in ten provinces and three territories, you are regulated 13 or 14 times, versus someone who is outside of the country and who only needs to go through one standard approval to get the product into the market. It is a major barrier to our ability to capture the economic benefits of resources, and not just on the energy side, but of doing business across this country.

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

Mr. Larson, do you have any quick comment on that?

[Roger Larson]

Mr. Trost, our products are federally regulated to one standard, so we don't have a lot of interprovincial barriers on our trade. Certainly if you see some of the challenges that the agricultural industry has faced, it would encourage the continuation of a federal standard and consistency across Canada.

[The Chair, Conservative, Leon Benoit]

Thank you.

And thank you, Mr. Trost.

Ms. Charlton, you have up to five minutes. Go ahead, please.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much, Chair.

I'm happy to be able to ask another round of questions. I want to follow up. I think Mr. Larson was the only person who spoke in his presentation about the skill shortage, but it's certainly come up since then in conversation. It's a vexing problem for us right now, because we have high unemployment in some parts of the country and we have labour shortages in other parts of the country, particularly in Alberta in the oil sands, and we've certainly spent a bunch of time at the human resources committee talking about that unique circumstance.

One of the issues, of course, relates to labour mobility, which is a bit of a fix to that situation. I had put a bill before Parliament, C-201, which was supported by the building trades, and I'm sure, Ms. Annesley, your organization supported it as well, and many contractors did. It would have allowed building and construction trades to write off their travel and accommodation expenses if they worked more than 80 kilometres away from home.

I wonder if I could ask all of you if you support that kind of initiative as part of the solution. I'm not at all suggesting that it's the ultimate fix, but I would very much like to have your views on record on that.

Ms. Annesley, maybe we could start with you.

[Janet Annesley]

Certainly. We supported that when it was proposed, and we'd still like to see it go ahead. In fact, tomorrow I'm meeting with the UA and we're having a discussion about what other ways we, as an industry, should think about to support enhanced labour mobility. I think Alberta's pretty good. We have good access to Alberta for skilled trades from other provinces, but we have a lot to do. The job grant was a step in the right direction, but implementing and maintaining the rigour of the Red Seal program.... Sometimes in our industry, between the contractors, the building trades, and the construction project issues, there are different issues related to actually moving people through their apprenticeship and getting them to actually obtain their Red Seal; and we have to do a better job of that as well.

The engineers will say you also have to increase the funnel. So we just have to do a whole lot of work in attracting more people into the skilled trades. Sometimes I look at, for example, other women who might work in more low-paying jobs and I ask myself why they aren't training, especially with the job grant and the potential of an interest-free student loan to take a skilled trade. It's a 16-week training, and you can get on a site.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Can I ask you about the Canada job grant? I think one of the criticisms of the Canada job grant, especially as it relates to the skilled trades, is that you can't go through an apprenticeship in four weeks. The Canada job grant is a very time-limited support. Does it really help someone who wants to start an apprenticeship to actually be able to come out with a trade with a Red Seal certification?