Natural Resources Committee on Nov. 1st, 2018

[Marc Serré, Liberal, Nickel Belt, ON]

Keep them here.

[The Chair, Liberal, James Maloney]

Thank you.

[Ted Falk, Conservative, Provencher, MB]

Bill C-69 is going to create quite a bit of uncertainty. It's not only with the pipeline. It's going to create uncertainty right across the energy-resource sector. It's going to create uncertainty at municipal levels for things as simple as municipal drainage projects.

Bill C-69 is supposed to be an environmental bill. While I applaud the intent of it, it misses the mark in a bunch of areas. I want to highlight five different areas where there's definitely going to be uncertainty.

It allows for uncertainty in the area of political interference. It allows room for the Minister of the Environment and also the Prime Minister and his cabinet to directly impact the consultation process. That kind of political interference is something I thought we as a government were moving away from. It seems as though this bill will actually move even more in a direction of political interference than what we currently have.

Another important aspect is that it removes the standing test for participation in public hearings. In other words, right now people actually have to prove that they have a legitimate reason to make a presentation at a hearing when a project like this is being considered. They have to show that they are going to be directly impacted or that they represent a group that will be directly impacted by the proposed expansion.

Removing that test from the public hearing process, which is what Bill C-69 does, allows groups that could be from Sweden—it could allow activists from Sweden—to come to these committee meetings and make presentations. I don't know why we would allow for that kind of situation. It should be the individuals who will be impacted. It should be Canadians who make presentations on projects.

[A Voice]

We're not letting [Inaudible—Editor] It's not about the Swedes.

[Ted Falk, Conservative, Provencher, MB]

Well, the project is so far open that we're not sure who is going to be able to communicate on its impact here.

It also allows for endless, limitless extensions on timelines. What does that mean? That means that they could just increase the number of hearings, increase the number of witnesses and allow people who don't have any remotely close interest in the project to testify at these hearings, impacting the decision and delaying the process.

I'm a business guy. I wouldn't make an investment in a piece of equipment if I didn't know when I could put it to work, and have it sit on my yard and collect dust, cost interest, and absorb capital depreciation costs while it hasn't produced one hour's worth of value to anybody.

That's what we're asking our energy resource development companies to do. We're asking them to make an investment in the process. We know that Kinder Morgan spent over a billion dollars already, looking for approvals for the TMX project, and that that billion dollars hasn't generated any income. In fact, it has cost them lots of money. They've lost the ability to use that capital for other projects, because that money was sitting there completely unemployed, other than the fact that it had been spent on all kinds of consultants trying to meet the regulations in place so they could proceed with this project.

We know that lots of other companies have had the same experience. We know that whether it's Energy East or Northern Gateway, these projects have experienced the same amount of frustration and delay. Bill C-69 will exacerbate that, with limitless numbers of hearings and consultations. That's one area that is going to be very problematic if this bill actually sees royal assent.

Another thing it does is establish a new set of vague and ill-defined criteria against which projects will be assessed, and that's including social impact. Social impact hasn't been properly defined. In the absence of that, we could see a host and variety of concerns that really have nothing to do with building a safe, environmentally economical pipeline, because somebody has some kind of social issue they think is going to be impacted or that they may want to present.

There are some definitions there that really need to be tightened up and defined properly, regarding what those criteria will be when considering a resource development project like this.

The other aspect that concerns me is that there are major implications, as a result of what is going to be written into the regulations that have yet to be developed. We don't have a full and comprehensive set of regulations that are accompanying this bill. Those could be written in after the fact, which will make it virtually impossible for resource development companies to meet the threshold of those criteria. Without the ability to know what those regulations are ahead of time, I think it's ill-advised to pass this bill. However, it did go through the House and it did find its way to the Senate, but hopefully, the Senate will have the light turned on and will see some of the very problematic areas of this bill, as it relates only, in this particular situation, to the Trans Mountain Expansion Project. There are lots of other areas where this bill will have very negative impacts, especially in my home province of Manitoba, where I know that municipal drainage is a problem. Bill C-69 will even affect simple things like municipal drainage projects. They're going to have to go through all kinds of consultations and hearings, and it's going to take years, if it is at all possible, for some of these projects to happen, even simple projects that benefit agriculture and that benefit employment. It's going to actually create a situation where nothing happens. There are lots of concerns.

Yesterday, I was reading Bloomberg and I was really intrigued with what Robert Tuttle reported there.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

You should read the whole article.

[Ted Falk, Conservative, Provencher, MB]

It's very interesting.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

It's very interesting.

[Ted Falk, Conservative, Provencher, MB]

He talked about the highways of Saskatchewan being clogged up with oil tanker trucks, and he said that shows the desperation of Canadian oil producers trying to get their crude to market.

We're stewards of our resources here. We're nothing more than that; we're stewards. We've been given these resources by our creator, and we've been entrusted to use them responsibly, to look after the environment. We've been entrusted with that responsibility as well, to make sure that we look after the earth. We also have this resource that we've been blessed with as a country.

We need to make sure that we allow companies—in a responsible, environmentally friendly way—to develop these resources, and then we need to provide them with the ability to get these resources to market. That's something I take very seriously. I'm a steward of the land, but I'm also a steward of the resources. These resources are something that we need to make sure are developed in an environmentally friendly way, but also in an economically viable way.

Today, tanker trucks are journeying 500 miles from the pipeline and rail terminals. It says here:

It's a phenomenon that Ken Boettcher, president of Three Star Trucking Ltd. in Alida, Saskatchewan, started to see three or four months ago when oil shippers around Kindersley, near the Alberta border, began requesting trucks to move their crude, in some cases, as far as North Dakota.

He said it's “never been a common practice before. They can probably buy it cheaper and bring it down here and blend it.” He's referring to the Americans. The trucker traffic during 2018 has spiked to over 200,000 barrels of crude oil per month being moved by tanker truck.

You know, Bill C-69 is supposed to be an environmental bill. However, if it's going to prevent us from safely building pipelines to get our resources to market, there's nothing environmentally friendly about having to then turn around and use tanker trucks to uneconomically, with huge environmental liability, move our crude to market by hauling it down the highway. It doesn't even make sense that we would want to consider that.

In addition, the cost of doing that 500-mile trip is about $15 a barrel one way. If they have to come back empty—I don't know what you would haul in a tanker truck on a return route—it doubles. It's $30 a barrel cost to move that oil by tanker truck, as opposed to what it would cost by pipeline. That's very significant. I think the environmental liability and risk are much more significant in hauling it, and there's also the danger that is posed to traffic on the highway with increased loads. I think it's something that needs to be considered.

Without the Trans Mountain expansion project going ahead, I think we're going to see a continued exploitation of our producers by the Americans, by Donald Trump's oil companies. I think we're going to see more of that. It actually peaked in August, when there was a $52.40 discount for our oil over world price. That is significant. That's happening because our current structure allows us to have one customer, and that's the Americans.

As long as we're going to be in that kind of situation—

[An hon. member]

Roughly.

[Ted Falk, Conservative, Provencher, MB]

Well, we have a few on the west coast there, but they're insignificant to the volume.

We're willing to pay $70 a barrel for unfriendly oil coming from Saudi Arabia on our east coast, down our Saint Lawrence River to ports along the river there that are virtually unregulated, and then we're willing to sell our oil for $20 a barrel to the Americans. That doesn't even makes sense that we're leaving $50 a barrel on the table.

This is not only hurting our oil producers, it's hurting all Canadians, because this is money that could be left in the country. It is money that could be used to fund social projects. It's money that could be used to build schools, houses. I think we heard that every single day that we allow this kind of scenario to persist, we are giving up the equivalent of one brand new school per day, or one municipal hospital a week.

That's significant, committee members. We have to make sure that can't happen. That's why I think we need to have this study.

I think it's very important that we go ahead with the study to find out what the industry thinks about Bill C-69 in relation to the TMX, but not only just TMX. What does industry think going forward? Is it going to be willing to invest money here?

Mr. Chair, I could talk a lot further on the financial implication of buying a $4.5-billion project that has limited revenue opportunity at this point, on that money being sent down to Texas to the Americans instead of remaining in our economy here in Canada, and on putting taxpayers on the hook for $4.5 billion, and now the expansion project has been estimated to cost another $9 billion.

We could have seen that money coming into our country as an investment, and now it's going to have to be funded by Canadians. That's another $9 billion out of our economy, and that's not even part of the $4.5 billion yet. This is money that Canadians are going to have to be responsible for. It's going to come out of their pockets, and we as taxpayers are guaranteeing it. We're on the hook for it.

I just don't think that's a very responsible thing to do, and it's not just me. I would like to also quote some other people who feel the same way I do.

[The Chair, Liberal, James Maloney]

Can I interrupt you for just one second?

You have the floor, but we do have these people who have taken time out of their lives to join us. If you are going to consume the balance of our meeting time, I'll just let them go and apologize.

[A voice]

Do you know what?

[The Chair, Liberal, James Maloney]

Hold on, hold on.

[A voice]

If he goes five more minutes....

[The Chair, Liberal, James Maloney]

I'm just asking how much longer he is going to be.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

He's just going to reinforce our record.

[The Chair, Liberal, James Maloney]

So five more minutes, do you think?

[Ted Falk, Conservative, Provencher, MB]

Yes, five.

William Lacey, the chief financial officer of Steelhead Petroleum says, “The implementation of Bill C-69 does not create the stability that investors are seeking.” That's something I've already spoken to.

He continues by saying,

Rather than having a framework that is clear and transparent, it introduces tremendous uncertainty into the approval process....Further, though the discussion today may be about the approval of pipelines, this is about whether Canada is somewhere where capital can be deployed....and whether that investment is competitive versus other jurisdictions around the globe. Capital is mobile, and today it is choosing to leave.

We've seen $80 billion already leave the economy in the last year in the energy sector.

Rachel Notley, NDP premier of Alberta says, “Bill C-69 in its current form stands to hurt our competitive position”. She says that capital is already fleeing to the United States due to the challenges.

RBC president and CEO Dave McKay says,

We would certainly encourage the federal government to look at these issues because, in real time, we’re seeing capital flow out of the country.

We see our government going around the world saying what a great place Canada is to invest—yes, it is a great country, it’s an inclusive country, it’s a diverse country, it’s got great people....

But if we don’t keep the capital here, we can’t keep the people here—and these changes are important to bring human capital and financial capital together in one place.

The Quebec Mining Association..... Mr. Chair, you know I have a fondness for mining. I didn't even talk about the impact this is going to have on future exploration in the mining industry, and I'll refrain from doing so in the interest of time, but I will quote the Quebec Mining Association here: “The time limits introduced by the bill will be enough to discourage mining companies and weaken Quebec and Canada in relation to other more attractive jurisdictions.” That statement was made earlier this year.

Certainty and simplicity should be at the core of any sort of government policy. Bill C-69 provides no certainty and no clarity in actuality. Industry has no way forward with Bill C-69. The bill only seeks to add more uncertainty, as Bill C-69 does not demonstrate a Government of Canada commitment to project development.

The Trans Mountain pipeline expansion was cancelled. Bill C-69 will not add any more clarity to future projects in the energy sector or any other sector. The consequence is that the economy will suffer, as investment will continue to decline. Jobs are created and lost, but business investment shows what companies and people think about the future of our country. What people and companies believe of a country is reflected in the amount of capital investment for the future. Without wise and bold investment made for the future, the pool of jobs created today will wither away in times of economic stress. Bill C-69 will not help our economy weather hard times. Bill C-69 will only help our economy to get into hard times.

I urge the Standing Committee on Natural Resources to adopt my motion. I think it's important that the committee do so.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Maybe we should just reinforce the Conservative record here.

[Ted Falk, Conservative, Provencher, MB]

That's a very good time to do that. Thank you.

Our Conservative record, when we were in government, was that we built four new pipelines.

[An hon. member]

Hear, hear!

[Ted Falk, Conservative, Provencher, MB]

I think it's important, Mr. Chair, that be on the record. We built four new pipelines, and all of those pipelines expanded.

[The Chair, Liberal, James Maloney]

One person has the floor. Everybody else, please be quiet.

Shannon, Kent, come on, please. Ted has the floor.

[Ted Falk, Conservative, Provencher, MB]

We built four new pipelines, Kent.

I want to reiterate something I said before. That was that the Liberal government killed Energy East, Northern Gateway and an LNG project, but now they've kind of approved one. We'll see how that goes. We'll see if they can actually bring it to fruition.

Mr. Chair, it is very important—and I'm going to move now—that this committee dedicate six meetings to study the Trans Mountain expansion cancellation with regard to Bill C-69 and that this study be completed before December 31, 2018; that the committee report its findings to the House, a government response be requested, these meetings be televised; and that pursuant to Standing Order 109 the committee request that the government table a comprehensive response to that report.

I so move.