Natural Resources Committee on April 1st, 2014

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you very much.

Again, thank you to all of our witnesses for being here. These are always very interesting sessions.

We have some new members of the committee who might not be aware of some of the testimony we have previously heard about the feasibility of doing more upgrading, as they say, in Canada. We've had witnesses here who have made it quite clear to us that the margins are best in the areas we are currently utilizing them in, and that refineries are not the highest margin area or else they would be being built in Canada right now. Nothing is preventing them.

I just wanted to start out making that point, and also the point that the oil sands are the largest high-tech project in the country, providing the largest number of high-tech jobs.

I want to move from that to something you said, Ms. Annesley, about Oxford Properties Group developments. Can you tell us about the Ontario Municipal Employees Retirement System and the Ontario Teachers' Pension Plan investments in the oil sands, please?

[Janet Annesley]

Yes, few people realize the significant investments that major public pension plans have in the oil sands. It's hard to get the exact numbers in Canada, because our disclosure rules around pension plans are not very good. In the United States API did a major study. When people think about who benefits from oil and gas, they often think about a C-suite executive in Calgary, but it's really nurses and teachers. One of the largest pension plans that was invested in the AOSP, the Shell joint venture project I was involved with for many years, was that of a bunch of dentists out of California. Those are the people who are benefiting.

One of the criticisms of our sector is that while we came out of the recession looking pretty good, stock prices have not bounced back to the level we want them to be at, and our investors every day are saying that they want the maximum return. Many of these are your next-door neighbour on the street.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Is it fair to say, when we're talking about benefits from the oil and gas sector, which is the subject of this study, that when the oil and gas industry does well, then the pensions of average folks such as teachers and nurses and so on do well?

[Janet Annesley]

That's absolutely the case, as long as they're invested in our industry, as many of them are, for anywhere from 20% to 40%.

[Joan Crockatt, Conservative, Calgary Centre, AB]

How many did you say?

[Janet Annesley]

Many are invested in oil and gas. All have their ratios, but many invest in oil and gas, and oil sands specifically, from 20% to about 40%.

Again, if we had better disclosure in Canada we could be more accurate with those numbers.

[Joan Crockatt, Conservative, Calgary Centre, AB]

So, do most pension funds have 20% to 40% in the oil sands?

[Janet Annesley]

Again, it's hard to say because of the disclosure situation. Many of the public pensions will have their ratios. The asset managers we checked with in about 2011 reported about 20% to 40% exposure to Canadian oil and gas.

[Joan Crockatt, Conservative, Calgary Centre, AB]

That's pretty interesting.

I want to move from that to some of the benefits to aboriginals. Could you expand upon your comments about aboriginal employment in the oil and gas sector? I think this is something Canadians may not be aware of.

I'll ask a variety of witnesses to comment. Janet, you could start, and then we'll go to Jayson.

[Janet Annesley]

Sure.

Aboriginal employment in oil and gas, in my view, is a huge success story for the industry. The oil sands were developed back in the 1970s and with a keen eye to delivering local benefits, such that the development in that region was not to go forward unless local people could benefit. As a result, you see a lot of the innovative programs still around today at Syncrude or at Suncor, which now all the other producers have adopted.

I would also say that in terms of models of conflict resolution, the ability to work with groups such as Fort McKay First Nation, in the recent agreement that was reached in the Dover discussion around Moose Lake, shows that we can work productively, that we can reconcile with first nations and provide them with the economic development they need while respecting their treaty rights.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Mr. Myers.

[Dr. Jayson Myers]

I would add that this is more, I think, than an issue of getting approvals for projects or, on a transactional basis, of companies needing workers. What I see in aboriginal communities is not only a great deal of skills development, but of communities being intent on taking that and making the communities self-sustainable, whether the future is in oil and gas or in other resource development or in some other economic development area.

This is what I think is important in the future. The platform that oil and gas or other resource development provides for aboriginal skills development is really the platform for overall economic development and social development.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Ms. Crockatt.

We go now to Ms. Block for up to five minutes.

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

Thank you very much, Mr. Chair.

I would like to join my colleagues in welcoming you all here today and thanking you for your testimony. This has been a very informative study, and we're nearing the completion of it—I think we have three more meetings after this. But we have learned much about the benefits of the oil and gas sector to all of Canada.

My question is around our government's responsible resource development plan, and perhaps any one of you here in the room could comment. Our government has worked to streamline the regulatory process for major projects. This includes setting timelines for project reviews and simplifying the process to follow the model of one project, one review. I'm wondering if any of you are able to comment on how important streamlining the regulatory process is to your industries in particular.

[Janet Annesley]

I'll go ahead.

Streamlining the regulatory process provides a level of investor assurance that there will be a decision in a set time period. That is essential so that these projects don't move on and drag on for decades, as we've seen around some of the pipeline projects.

I would add that it's not just the oil and gas sector that thinks it's important. It's many other sectors. In fact, in the survey in the C-suite piece that Mr. Regan recalled from The Globe and Mail yesterday, people in that survey identified the streamlining of regulatory processes as the number one thing that can be done to support Canada's economy.

[Dr. Jayson Myers]

I totally agree. Around the projects themselves, it provides greater certainty. That just backs up all the way through the supply chain in terms of potential customers, potential business, which is extremely important.

I think what I would very much like to see is that same streamlined approach being applied to other approvals for development as well, both the approvals process and our very complex regulatory system in Canada. I see a lot of investment that we lose simply because of unnecessary regulatory compliance. That's not to say the outcomes aren't.... We need healthy, safe, secure consumer protection and environmental protection, but we add on all this complexity and high cost. If we could make regulation easy to comply with and less costly to comply with, you would get better compliance in the regulation.

What I see in particular, in terms of the ability of people or the ability of companies to move product across the country, are again significant barriers to internal trade within Canada as a result of different product standards, different standards for trades, and different standards for labour mobility and credential recognition in Canada. Foreign companies can take advantage of this market far more easily than other companies in Canada can, because they don't have to face the interprovincial barriers to trade that other companies in this country actually face.

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Larson.

[Roger Larson]

Thank you.

We haven't had a greenfield mine or manufacturing facility major expansions since, I think, the early 1990s, but the resource project management approval process has been primarily handled provincially, both for our nitrogen fertilizer manufacturing plants and our potash mines. Having said that, the one project, one approval process makes eminent sense to any business leader.

I would like to focus, as Jay Myers just mentioned, on regulatory compliance. If we're looking at NPRI greenhouse gas inventory reporting, a single window between the provinces and the federal government would be of tremendous support to our competitiveness, and outcomes for Canadians and to protect the public would be identical.

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

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Block.

We'll go now to Ms. Duncan, for up to five minutes.

Go ahead, please.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Chair.

Thank you to all. It's interesting testimony.

My first question will be to Mrs. Annesley.

Certainly, we do have high employment in Alberta. We also have the highest percentage of temporary foreign workers. There have been a number of issues in British Columbia and Alberta about the way this program is being delivered.

At the request of the ironworkers, I met with them several times last week in my riding. They shared with me the correspondence between the ironworkers and one of the major brokerage companies that bring in the temporary foreign workers.

In the case of Imperial Oil's Kearl project, it is now well known that close to 80 ironworkers were laid off and replaced with Croatian temporary foreign workers who, based on the correspondence by the broker, were less trained, and I presume, paid less.

Among the laid-off workers were first nations, who presumably were employed in accordance with benefit agreements. Only one third of those workers were rehired on the site, and most of them lost their equipment.

My question to you is about the brokers for temporary foreign workers. Are they paid when they bring the workers into Canada, or are they paid when they displace the Canadian workers?

[Janet Annesley]

I don't know how the contractual arrangements with the specific brokerages are made; however, I can speak to a lot of the engagements I've had with the UA and others who have had similar situations to what you describe with the ironworkers.

Although workers who are in the trades move from site to site, oftentimes there is that mobility that needs to occur. They might move from, say, the Kearl site, but there's certainly another job ticket waiting at another site. I'd really like to follow up with you to understand more about this situation, because that's how I understand the process works, at least in the case of the UA.

Overall, when we talk to our building trades colleagues, they reinforce to us that there is a skilled labour shortage. In fact, the UA, again, is one of the biggest groups bringing in foreign workers from the United States. They've even developed their own system with a travel card, where if you have a certain card in the United States, you can come to Canada, to Alberta specifically, quite easily. That is purely as a result of our skilled trades shortage.

So I think there are some wrinkles in the system, and I'd like to delve into this particular issue. But there is a skilled trades shortage, and we do need access to foreign workers.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks. I'm not sure I got an answer to my question, but I appreciated your effort.

To my second question, if there's time, I would appreciate a response from Dr. Allan, Mr. Priaro, and Mr. Myers. It's on the theme of economic diversification versus diversification of markets. Generally speaking, I think that people would agree that's currently what the economic strategy is in Canada—to find more diversified markets for our raw bitumen.

We had very heart-rending testimony from representatives from New Brunswick a few meetings back, particularly from the mayor of Saint John. When the question was put to him whether the people in New Brunswick were grateful for the jobs being provided in Canada, he shared the story that first of all, they lost the workers, and then they lost the parents of the workers because they wanted to be with their kids, and now they've lost the grandparents, who want to be with their grandkids who relocated to Alberta. They're trying to make a strong case that they would like a piece of pie, and obviously, they would support the east-west pipeline.

My question is to each of the three of you. Would it be fair to say that there would be majorly extrapolated increased benefits to Canadians, including in western Canada—Alberta, Saskatchewan—and eastern Canada, if there was upgrading in Alberta or Saskatchewan, for example, which would then allow the shipping of the crude and refining in eastern Canada, whether it's Ontario, Quebec, or the Maritimes?

[Dr. Jayson Myers]

Maybe I could go first and just say yes, clearly there would be. I think what we need to do is look at what could encourage that type of investment to happen, looking at all parts of the investment equation there. But clearly, providing more value added in the processing, as well as in all of the supply around that, is very important. We have a number of companies in New Brunswick that are very active in manufacturing there and exporting into Alberta and Saskatchewan.

But I think a part of your question too is this diversification of product versus market, which is key. It would take over 100 years of exporting to China to get the same benefit out of this great domestic market that we have in Canada. I'm seeing a tremendous amount of product innovation being driven as a result of that within the manufacturing community.

So the more value added, the more diversification of product. And if you diversify your product, you're naturally going to find new customers in new markets.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Ms. Duncan. Your time is more than up.

We continue the five-minute round with Mr. Calkins, followed by Ms. Moore, and Mr. Trost.

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