Natural Resources Committee on May 16th, 2016

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Tan, over to you.

[Geng Tan, Liberal, Don Valley North, ON]

Thanks, Chair.

I'll direct a question to Suncor. The Canadian Association of Petroleum Producers very recently told the committee that the era for megaprojects in Canada's oil sands is probably over. What is Suncor's view on that statement?

On one hand, we're talking about pipelines and how to get the resource to tidewater, the environmental assessment, and public engagement. On the other hand, that statement has painted a less-optimistic picture for our oil and gas industry. How do you put these two pieces into one picture?

[Steve Reynish]

We have an interesting example that I briefly mentioned at the start. We have the Fort Hills project, a capital investment of $15 billion, due to come online at the end of 2017. We have decided, together with our partners, to keep progressing on that project even through the downturn. I can tell you the capital markets have looked very closely at that decision. We believe this project is important. We believe we have ways to get that product to market, maybe using some rail, at a cost disadvantage.

But I think it is difficult under the current circumstances to visualize another $15-billion capital investment following on behind Fort Hills anytime soon.

Does that mean there will never be another megaproject? I don't know. But I think under the current environment's combination of greenhouse gas regulations, access to markets, and the price of oil, it's difficult to see where the next big project will be coming from at this point in time.

[Geng Tan, Liberal, Don Valley North, ON]

Thanks.

Now I have a question for Mr. Boivin. The committee has heard quite a debate about innovations from different angles—from industry, from associations, and from academic researchers. You manage hundreds of projects, and you give people funding.

Can you provide us with an overview of the status of innovation in green technologies? How important is that continued support from the government? What are the challenges or opportunities? How much benefit can we expect from those investments in the near future?

[Chris Boivin]

Sure. I can start with the benefits and then work my way through to our views on what's needed going forward. I think that's what I'm inferring from the question in terms of innovation support. Would that suit you?

[Geng Tan, Liberal, Don Valley North, ON]

Okay.

[Chris Boivin]

Actually, there are some of the benefits that we've seen in our own portfolios. Of those over 300 projects that we've invested in to date, 70 of the companies behind those are in the market today. That means that they are registering revenues from the products that they developed through their SDTC funding or they're in the hunt for their first commercial sale, so they've produced commercially viable products. Our estimate on the value of those annual revenues today is in excess of $1.1 billion per year. In fact, we think for 2015 it's going to be about $1.4 billion, and we also estimate, based on data from our portfolio companies, that this has created over 8,500 jobs.

Furthermore, on the emissions side, so GHG emissions, as an example, we estimate that our portfolio today is contributing to reductions of about six megatonnes per year. That's across the whole portfolio, primarily the ones that are in the market today, and those are from the global deployment of that technology. But that's just the starting point. We've had quite an increase. Just over the past four years we've gone from roughly one megatonne in 2011 up to six, so a sixfold...within four years. We expect that to continue as the number of portfolio companies in the market increases, and as their technology solutions diffuse more broadly globally. We are definitely seeing results today, and some of those are in the oil and gas sector, but as I said, they are across all sectors.

In terms of innovation support needs going forward, if I captured the question correctly, we certainly believe—

[The Chair, Liberal, James Maloney]

I'm going to have to ask you to do this very quickly.

[Chris Boivin]

Sure. We believe that there's a need to continue support for instruments like SDTC, but there's also a need for earlier-stage support, so primary research to develop new ideas that we can then foster and bring to market. We also see a strong need for late-stage innovation support. So first, we see a lack of funding support for commercial, large-scale, high-capex deployment of technologies, which is leading to delays in their eventual deployment in the market.

[The Chair, Liberal, James Maloney]

Thank you.

Ms. Stubbs, it's over to you.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thanks, Mr. Chair.

Thank you, witnesses, for taking the time to be here.

I would like to echo my colleagues' comments to Suncor about the incredible efforts your company and your employees took to help the people who are employed both directly and indirectly by you. I also know that for many people who are not employed by you, you also assisted in the evacuation efforts from Fort McMurray. My riding is just south of Fort McMurray. It spans northeast Alberta, so there are many heavy oil and oil sands developers in my constituency. In speaking to many evacuees from the area, they said, as you pointed out, that if anybody is wondering about how an orderly evacuation of more than 80,000 could happen in the face of the biggest natural disaster, certainly, in that province's history, it was very much because of the high level of skills and training in safety procedures and emergency management of the people who are all directly or indirectly employed by oil sands companies there.

I just want to touch on two points that we've been discussing at this committee today. Sometimes I feel like I'm in a bit of a twilight zone in this committee because we often speak about regulatory issues around energy development, particularly with regard to regulating and monitoring greenhouse gas emissions as well as advancements in innovation and technology, as well as community and first nations consultations, as if they're new, as if this is something that has never been done before in energy development or in oil sands development in particular.

Of course, it's not at all the case for those of us who are from northern Alberta and are familiar with oil sands and energy development. We can cite examples like the Fort McKay Group of Companies, the Cold Lake First Nations companies, and so many of the service and supply companies that are long-term, significant partners with energy developers in that area.

Mr. Reynish, if you have any examples to share about your experience working with first nations communities, both on gaining their co-operation and investment in energy development in those regions, as well as on employment and contracting, I'd welcome you to do that.

[Steve Reynish]

Thank you very much for your comments about the evacuation. It was very much a community-based effort, including, as you well know, the first nations communities. It was not just Suncor Energy Inc.; it was all of the companies, the whole community, and our neighbours in the first nations as well. Everybody pulled together, and I think you know how resilient some of those communities are and continue to be.

I think you're also right that we are trying to rationalize regulatory developments and innovation that are quite exciting in many respects, and the importance of consultation.

The example I think of with respect to first nations, which we are hoping to make progress in over the next number of years, is industry participation by the first nations in the oil and gas business. There has been some of that, obviously, over many years. We'd like to see that continue to increase. We'd also like to see that increase in the area of equity participation in some particular projects. I do think there are some interesting and exciting developments with potential in that particular area, and I think we'll continue to see more collaboration and more involvement—perhaps more direct involvement—from the first nations. Let's hope so.

[Shannon Stubbs, Conservative, Lakeland, AB]

I hope so, too. We look forward to that, of course. One of the oil sands' companies is the highest per-capita employer of first nations Canadians of all private-sector employers in Canada. There are countless examples of first nations communities throughout northern Alberta that are active participants and partners in energy development there. It's the lifeblood of their communities in many cases.

I just want to go back and allow you the opportunity to clarify and maybe expand on your comments regarding how important regulatory certainty is to energy development, particularly in the oil sands, given some of the challenging aspects of recovering that resource.

I invite you to comment, too, if you'd like to, on the regulation and monitoring around greenhouse gas emissions, which is already done provincially. Oil sands companies have made great strides in supporting innovation to increase the energy efficiency by decreasing greenhouse gas emissions and water use. Of course there are all the additional successful efforts they have undertaken in terms of land reclamation for those projects' end of life.

[The Chair, Liberal, James Maloney]

We are actually out of time here.

[Steve Reynish]

Am I okay to answer, Mr. Chairman?

[The Chair, Liberal, James Maloney]

Well—

[Shannon Stubbs, Conservative, Lakeland, AB]

I think you gave Chris an extra minute earlier, so maybe we could—

[The Chair, Liberal, James Maloney]

I'll give you 30 seconds to try to respond to that.

[Shannon Stubbs, Conservative, Lakeland, AB]

Sure.

[Steve Reynish]

Very quickly, I think the industry has made great strides on water extraction. We're taking much less out of the river than a number of years ago. We've made great strides on the land reclamation point that you made. Greenhouse gases are, I think, the next big frontier for us to make some improvements on, or add improvements to those that have already happened.

We are supportive of Alberta's cap on emissions. I think our request, if we have one, would be alignment between provincial and federal regulation. Again, it goes to that point about potential uncertainty going forward. That would be my comment.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. McLeod, over to you for five minutes.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

Thank you to the presenters for their very interesting presentations.

I was especially happy to hear Mr. Brennan's comments. I was actually excited to hear some of the comments regarding developing refineries in order to maximize employment. That's not a new idea; it's been around for a long time. People right across Canada have been watching and making that observation.

I was also very excited to hear your comments on how aboriginal governments need to be included. There has to be a new approach. I think we can all agree that working with indigenous people up front and involving them from the planning stage to production is always a lot better. We get better results, and people will move forward in partnership a lot better than if we ignore them, pretending they don't exist. That would always end up in litigation or protests.

I think there has to be a lot more work done in both areas of creating employment and working with aboriginal people so that they're not viewed as a threat. We certainly have to provide more education on all fronts and demonstrate that there's opportunity to do so.

I like the idea that your organization is developing an energy policy. I'm hoping there's going to be some reference to aboriginal people, maybe a chapter. I totally agree with your recommendation that Canada, provinces, and territories should work on a co-operative national energy strategy.

My first question is to you, Mr. Brennan. Perhaps you could expand a little more on the refineries and on including aboriginal people. I think aboriginal people should be included, right to the point even of the regulatory boards, as we do in the Northwest Territories.

Thank you.

[Jordan Brennan]

Thanks for the question.

The difficulty is that governments structure markets. If you want a different set of outcomes, you need to restructure markets. This is not an easy thing to do. It's obviously very controversial.

The idea that we're just going to let the free market rip, and automatically from that, we're going to have lower greenhouse gas emissions, get aboriginal participation and approval for these projects, and maximize the economic benefit is just wrong. It's not going to happen.

We deregulated our approach to energy in the late 1980s. It was the Mulroney government, primarily, through the Canada-U.S. Free Trade Agreement, and we've been closing refineries as if it's our job. For every refinery we close, we become more dependent on export-oriented pipelines, and we're sending good jobs elsewhere. We need a new approach to our national energy development.

Norway offers a very promising model. Norway is very similar to Alberta demographically. There's a similar number of people and similar energy resources, but there's a very different approach to energy development. Obviously, it doesn't have the same challenges. We have a federal government where provinces are in charge of natural resource development. That obviously poses a challenge.

Regarding the aboriginal people, incorporating aboriginal people into this process is huge, but I don't have answers on that latter question about how to do that. That is something we have to seriously think about. I have all the questions this committee has. What does it mean now that we've signed on to the UN declaration? What does free, prior, and informed consent mean? These are all huge question marks.

The status quo does not seem sustainable, in the fullest sense of the word, sociologically and ecologically. As I said, we're still in the early stage of trying to work out a coherent policy.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you.

I certainly hope we're going to see a new approach on developing some of these big projects as we move forward.

My next question is to Mr. Boivin regarding the amount of money being spent on de-risking projects—I think you used that term—$850 million in 304 projects.

This is interesting. In the Northwest Territories we have many challenges: extreme cold weather, high cost of transportation, and very remote areas where the projects are usually set up. Could you tell me if there was any investment in any of the three northern territories in this area?

[Chris Boivin]

Sadly, there hasn't been a demonstration project in any one of those territories, nor a lead applicant from any one of those territories.

I would say, however, that we have funded several technologies that have applicability to the north and particularly to remote communities and remote industry. We also have listed, as one of our current investment priorities, utility systems for remote applications. This is electricity, water, waste management, etc., systems that are somewhat modular, cost-effective, and better than the status quo for those regions.