Natural Resources Committee on May 16th, 2016

[Steve Reynish]

Yes, we export to the U.S. Other than that, we have exported very little. I think we may have tested some trial cargoes now and again over time, seaboard cargoes. But by far, most of our production goes into the U.S., either in the form of crude oil or in the form of products, as you state.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

I'm going to wrap up with a bit of a technical question.

One of the by-products of refining oil sands crude is petroleum coke. Which Canadian market is that petroleum coke sent to?

[Steve Reynish]

I don't think it has any use in Canada. We essentially put the petcoke that we remove from our upgrading site back into the ground. That carbon is put back into the ground. I know we have exported some of that from time to time, but as far as I'm aware it doesn't go into the product chain in Canada itself.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Isn't the quality of the petroleum coke good enough to be used by aluminum plants in the making of anodes, for instance?

[Steve Reynish]

I think it can be used in any process as a heat source. It tends to be a very high-carbon product, but as I say, I don't think we sell any of that for combustion in Canada.

[The Chair, Liberal, James Maloney]

Thank you.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Thank you.

[The Chair, Liberal, James Maloney]

Ms. Bergen.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

Thank you very much, Mr. Chair.

Thank you as well to our witnesses for being here.

The first question I'm going to ask to you, Mr. Reynish. You'll be on the hot seat again. I'm going to ask Mr. Brennan if he might have a comment on this. I don't think Mr. Boivin would.

With regard to the need for fiscal and regulatory certainty when it comes to building energy infrastructure, pipelines specifically, very recently the government signed and has talked quite openly about signing UNDRIP. There has been some uncertainty as to whether the government believes that means first nations would have free, prior, and informed consent, and whether that means a veto on natural resource development and energy infrastructure projects. Can you comment on what you know about that and what kind of certainty or uncertainty that's causing?

[Steve Reynish]

I'm afraid I don't have any insight into the specific example you've cited. I would say, though, that it's important to note that new projects, be they pipelines or other facilities, tend to be very long-lead, high-capital investments, and for a company such as Suncor to justify making that capital investment, we are trying to get as much fiscal and cost certainty as we possibly can. They're very long timelines.

When I say very long, we're talking 10-years plus, perhaps, in terms of the conception of an idea through to executing it on the ground, and there are examples of things taking longer than that. When we talk about certainty, we're talking about as much confidence as we can possibly get in justifying capital investment because of the long lead times and because of the high capital involved.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

I would think it would create a lot of uncertainty or certainty if the government would now give first nations the ability to veto a project.

For example, even with the additional five steps that the government has introduced, which include first nations consultation and community consultation, this goes a step further. Would you have any comment on that?

[Steve Reynish]

I would say we have very good relationships with the first nations, but the more examples of vetoes or opportunities for anybody to stop a project or extend the time taken to make a decision, the greater the increase in uncertainty and the more problematic the investment. That's how I would answer that.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

Mr. Brennan, do you have any comments on that? I'm sure your workers and the workers you represent are losing jobs and seeing some of these oil and gas jobs go now to our biggest competitor, the U.S. Are you familiar with this issue at all? Do you have any comment on this issue?

[Jordan Brennan]

I don't have a deep understanding of it, but Unifor's position is that aboriginal treaty rights will necessitate a new approach to energy development that would include consultation and full socio-economic participation.

As a side note, I mean this is just like a footnote with my little name attached to it and not necessarily Unifor's, you can't cut people out of prosperity for the entire history of the country and have all the other injustices people have faced and then think that aboriginal people will be jumping on board energy development. No one in their right mind would do that. We need a new approach to energy development that recalibrates the relationship with first nations people.

On the UNDRIP, my understanding is that these declarations have no legal basis. The Canadian legal system would have to enshrine it in our domestic law for it to be enforceable.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

So you wouldn't see it as a veto. You would see it as....

[Jordan Brennan]

I don't know what it means. Jeffrey Simpson wrote about it in The Globe and Mail this week. I don't think anyone at this point knows what it means.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

Our government, when we went ahead in principle, said Canadian law would usurp it, so it would not be a veto. We're hoping the government will clarify that one way or the other. I think we're hearing more and more that it's the uncertainty. Yes, it means a veto, or no, it doesn't mean a veto, is better than shuffling your feet and not giving an answer. In terms of the uncertainty that Mr. Reynish spoke about, that was one point.

On the refineries issue, I thought it was very interesting, Mr. Brennan, your discussions about refineries. I'm wondering, given the uncertainty, given the fact we can't get pipelines built, and given that we have pipeline proponents now having to answer for upstream GHGs, can you imagine anybody who would want to invest in a refinery in Canada? Is there an attractive place in Canada? Is there a regulatory...or a province, or would the federal government be...? Do you see that as something that's even going to happen?

It's an interesting idea. Just right now, given the current climate.

[Jordan Brennan]

I don't know the business case for it, but the energy companies seem to be saying we need to get this product out and pipelines are being blocked, so it's being shipped by rail. Why not upgrade it and refine it here in Canada? Right now we need to ship it out because we simply lack the capacity. Why don't we build the domestic.... We've been shutting down refineries like it's our national job. Why don't we refine it in this country and consume it domestically?

Right now the energy development model we have is the wild west. We embrace the free market mentality when it comes to it, with all the perverse consequences.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

I'll be quick, because I only have a moment left. Thank you very much for your comment.

Mr. Reynish, one more question, do you think pipeline builders should be responsible for upstream GHGs and be accountable in the regulatory process? We've heard a number of witnesses say that upstream GHGs should not be counted against pipelines, which are not major emitters.

[Steve Reynish]

I think we would say to look at the facility we're debating, and I don't think that pipelines should be included in that. Pipelines themselves are not greenhouse gas emitters, so I think it's difficult to argue that they should be included.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

Thank you.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Cannings, over to you.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thanks again to all of you for being here today.

I want to start with Mr. Reynish again. You mentioned a carbon tax and the Alberta climate action plan. I wondered, assuming a broad-based carbon tax across the continent at least, what kind of tax do you envision? For instance, would it be a revenue-neutral tax or something that would go to fund innovation? How high a tax would be needed to drive the market toward something where we would be meeting our COP21 commitments, for instance?

[Steve Reynish]

If the ambition is to drive down carbon emissions, and I think it is, then a broad-based carbon tax would help that objective. What we're trying to do is change behaviour and limit the amount of hydrocarbon that is being burned. That's the advantage of a broad-based carbon tax.

Whether it's carbon-neutral, or greater than that, is a function of how quickly or how thoroughly we want to change behaviour. I'll leave it for governments to make that determination.

We would like to see with whatever money is raised that at least a portion of that comes back in the investment in technology to reduce carbon emissions at the point of production. We think there is a bit of a virtuous circle in terms of increasing investment in technology. Overall, my take on it is that we're trying to influence behaviour.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay.

Mr. Boivin, you mentioned that part of the goal of your organization was to bring Canada, or at least the oil sands costs, both the monetary costs and the environmental costs, down into the range of other types of oil. I missed what the timeline there might be, or perhaps you didn't give it, but I'm just wondering if you could speculate in some crystal ball as to how long that might take.