Natural Resources Committee on April 8th, 2014

[Peter Turner]

It's an interesting question.

Because we only have a population of 37,000 people here in the Yukon we have to recognize that for industries that require specialized expertise we will have to be turning, in addition to our own population which is very limited, to hiring people from the outside.

We already see that in the mining sector up here. We have a number of people who are in fly-in/fly-out situations coming from Alberta or British Columbia which obviously is to the benefit of those two provinces, but at the same time there is a very active effort made by mines here to employ locally. There are a number of partnerships between the mines and the first nations development corps to look for business opportunities, for employment as well as investment and engagement.

I think you certainly hit on a challenging point. Were there an oil and gas industry up here, certainly they too would be competing for a finite pool of employees.

On the other hand I should say that, as Mr. Leef alluded to, a school was recently established with Yukon College to train people in terms of mining expertise. That's to the tremendous benefit of the Yukon population, particularly the first nations population. I could see a similar sort of approach being used to create workers for an oil and gas industry were that opportunity to come along.

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

What action plan would need to be put in place to enable you to take full advantage of that resource development? Socially speaking, what measures would help you meet the demands?

[Peter Turner]

I think we would have to go back to look at the criteria and approach that were used to establish the mining centre here at the Yukon College. I think this is probably a model that would provide us with a guideline; however, I'm not familiar enough with the actual approach that was used to establish that mine training facility at Yukon College to be able to speak in a terribly informed way about it.

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

Development in one sector generates a lot of jobs, which in turn generates jobs in the service industry. More nurses, doctors, daycare workers, teachers and so forth are needed. With that in mind, how do you plan to recruit the human resources you need to ensure integrated, not disorderly, development? How are you going to find professionals to fill all those spinoff jobs?

[Peter Turner]

I think that's certainly part of the challenge: how do we create healthy growth in any community? I think the benefit we do have is that more and more people who are in a professional capacity—doctors, lawyers, and teachers—are beginning to recognize that, particularly, the Yukon in the north is a very attractive place to live and far more like it is living in, let's say, Canmore than it is living at the North Pole. I think that we have a benefit there, quite frankly, in terms of the growing awareness of what a terrific quality of life you can have up here. I think we would rely, certainly partially, on trying to get that word out. People come where there's employment, and if you have the added bonus of a wonderful place to live and a high quality of living, I'm fairly confident that we can attract the support infrastructure that we need in terms of people and expertise.

[The Chair, Conservative, Leon Benoit]

Merci, Ms. Moore.

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

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

Thank you, Mr. Chair.

My first question is for Mr. Streeper and I guess our other guests from northern B.C. can answer this, as well.

Mr. Streeper, you had talked about the royalties that are generated for the Province of British Columbia by the natural gas sector, and it was a little unclear regarding LNG, natural gas, the time lengths, and so on. Do you have any idea what percentage of those royalties is spent in the northern B.C. area, in the area that is essentially the producing area of natural gas and oil in British Columbia? And what percentage of those royalties is spent in other parts of British Columbia? I guess I'm trying to get a grasp on how the tax and royalty benefits are spread throughout your province.

[Bill Streeper]

The benefit of that is paid to the government, which does go into general revenue. The revenue is not necessarily paid back according to where it comes from. The resource of the natural gas and oil in British Columbia, of course, is owned by the citizens of the province. We do collect money back from the province for this, but it's the age-old controversy of taxation. We always claim we don't collect enough back, but a lot of the southern part of the province has great ability. We do get money back. This money also goes to pay for health and education. And there's the aspect too that being that we're a northern community a lot of the people with intensive health problems have to go south. We're going into hospitals and we're going into clinics that are being funded by the provincial government with a lot of money that comes out of the gas industry.

Like I said, our community and all the communities in the northeast are getting direct grants back from the provincial government. Fort St. John, of course, is the biggest—

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

Mr. Streeper.

I guess the point I was trying to make is that other areas of the province benefit enormously from your area. You get, we'll even say, twice as much on a per capita basis, but it would be more or less distributed by population. Those would maybe be a couple factors for the north. Would that be roughly correct?

[Bill Streeper]

Yes, that would be correct.

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

Okay.

Do some blue sky in here for me, again to both of our witnesses from northern B.C. With expanding technologies in the oil and gas sector, your region continues to have greater and greater potential every time it's looked at. What is necessary to unlock that potential? How can those benefits be unlocked? What needs to be done to realize the benefits, not just your region but for all of British Columbia and in effect all of Canada?

[The Chair, Conservative, Leon Benoit]

Could we start with Mr. Turchanski this time?

Go ahead, please, sir.

[Dave Turchanski]

I appreciate the question. As far as benefits that are realized up here in the north country, we know what we need and what's required with the shale gas plates that we are sitting on up here today. A lot of people live south of the mountains here in the province of British Columbia. I don't think they realize the opportunities that are available up here as well as across Canada. To attract those people here, I think, would probably be a big gambit not only for the province but for all of Canada.

[The Chair, Conservative, Leon Benoit]

Mr. Streeper.

[Bill Streeper]

Going by that, one thing about the oil industry that we do need here in B.C.—and it is being looked at—is, of course, the access to markets. Hopefully in the near future we will see access to markets. I know that the federal government is working a lot on it. Going by the amount of gas here, we do have a surplus and we're patiently awaiting the advent of the development of LNG, which would be a very big benefit for the province of British Columbia and especially for the northeastern corner of the province.

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

Mr. Chair, as I end my time, could I ask for the analysts, if it would be possible, to look up and give us an explanation of the royalty numbers for natural gas in British Columbia? I understand what Mr. Streeper said, but royalties can be divided and organized in various different ways: particular time periods, LNG, non-LNG. If the analysts could get back to us on that, I think it would be helpful to get some context to Mr. Streeper's remarks.

[The Chair, Conservative, Leon Benoit]

Yes, they have noted that and they will get that information.

Thank you, Mr. Trost.

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

Go ahead, please.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks.

Mr. Turner, I have a question for you and then I would like Mr. Streeper to tie in.

Mr. Turner, you mentioned the challenge in Yukon for the supply of electricity and that Yukon would like to get off diesel, to your credit, and switch over to other sources, natural gas certainly being a good, cleaner option.

Well, I have two questions, Mr. Turner. One is, for the proposals for the unconventional gas development in Yukon, are those projects being costed based on an export price for the gas or are they being costed on providing at least a portion of that gas for use in Yukon, including for providing electricity?

[Peter Turner]

First of all I'd like to be clear that at the moment I'm not aware of any projects that are being planned using unconventional extraction methods, i.e., fracking. Any extraction that's gone on to date has been using conventional approaches. As I said, I'm not aware of any proposal being put forward by any of the exploration people to do fracked natural gas within the Yukon. I want to make that clear.

Second, as far as the pricing is concerned, I think it's probably too early in our development of natural gas resources up here to imagine necessarily how prices would be based on world market or our local consumption. Certainly there'll be tremendous benefit to Yukoners to being able to source natural gas locally, particularly if we're converting some of our diesel electric backup generators to natural gas. I'd certainly much rather be burning natural gas that's extracted here in the Yukon by companies employing Yukoners and being transported perhaps 100 or 200 kilometres than transporting liquid natural gas 1,500 to 2,000 kilometres from Alberta or British Columbia to the benefit of those provinces and to the detriment of the greenhouse gases associated with 2,000 kilometres worth of transportation up to the Yukon.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Turner, have the chamber of commerce and others been also pursuing opportunities for demand-side management or investment in renewable power, including geothermal? Would that free up more of the electricity supply for resource development?

[Peter Turner]

The Yukon chamber actually hosted a series of about a dozen workshops beginning in October of last year looking at a broad variety of potential sources of electrical generation, including wind, geothermal, biomass, in addition to hydro and more conventional sources. The challenge we found is that our geothermal sources are somewhat limited and quite frankly, distant from our existing power grid.

We also have to factor in the costs associated with bringing any electricity generated from where the windmill is, or where the geothermal source is, to the power grid. That can be hundreds of kilometres of transmission wires, which of course has to be folded into the cost of the project. It's also, in the example of wind power, not on demand.

Quite frankly, about 100% of our hydro capacity today is being tasked to supporting environment, our electrical demand here in the Yukon. The oil and gas or the diesel generators that we currently have, that we're proposing to swap out with natural gas fuel generators, would be currently used only for backup if we have a hydro failure, or to address peak demand periods like when it gets down to minus 40 degrees here, and people are firing up their baseboard heaters.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I have a question to Mr. Streeper connected to that. I understand that there are some discussions about the possibility of tankering gas. I presume it would be compressed natural gas from your area up to Yukon.

Would that involve the necessity of some kind of compressed natural gas facility in your community and then a decompressing for use in Yukon? Can you tell us who might cost that? Is anybody actually pursuing that?

[Bill Streeper]

Yes, there is. Just for clarification, it's not compressed natural gas. It's liquefied natural gas to be liquefied in the community and transported by road to Yukon. The use of liquefied natural gas compared to compressed natural gas is way more efficient and more economical to transport.

We have had people in the community looking at the aspects of doing a two-stage liquefied gas process. One is a smaller facility for use in transportation vehicles, from cars, pickups, up to the large trucks, and another facility to liquefy it to be used and transported to Yukon and Northwest Territories. We had interest from the big diamond mines in the Northwest Territories about obtaining LNG for primary use in electrical and secondary use in some of their equipment. This process is ongoing—

[The Chair, Conservative, Leon Benoit]

Thank you, time is up.

Mr. Calkins, for up to five minutes.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thanks, Chair, and I'd like to thank our witnesses today.

Just to let you know who I am, I'm a central Alberta member of Parliament. I've been on the natural resources committee for quite some time. I had the pleasure of travelling to Yukon for the first time in 2012 with my family. It was our summer vacation. We drove the Alaska Highway. I pulled my holiday trailer and at various locations along the highway replaced tires as needed on that holiday trailer.

Sad to say that the worst part of the highway was actually in Alberta between Mayerthorpe and Grand Prairie, simply due to the materials that were used in the construction of the highway. I certainly have fond memories of driving through Fort St. John and Fort Nelson as well. I'll start my questions there.

As an Alberta MP, I want to preface by saying that a little while ago Alberta was in a very excellent economic position due to the royalties it received from natural gas exploration and development. In the past few years we've seen natural gas prices—because there's a glut of natural gas in the marketplace in North America—discounted within North America. I think it's a quarter, basically, of what it's selling for in the Asian markets and so on. We've seen Alberta have some budget-balancing issues as a result of that, but still Alberta remains a “have” province.

Mr. Streeper and Mr. Turchanski, do you know which four provinces in Canada currently are considered “have” provinces when it comes to equalization calculations?