Natural Resources Committee on May 16th, 2016

[Chris Boivin]

I'm not sure I can predict that. There are many factors there that are well beyond our control. I can maybe answer it by saying that within our own portfolio, and I believe there are investments being made by some of the larger players in Alberta as well, we see solutions that are either approaching market readiness or we consider to be market ready, so ready for their first commercial-scale deployment. But it's a difficult position right now to try to finance those projects given their scale and given the climate with depressed oil prices.

I would also point to the longer-term policy signals around carbon and decreases in carbon emissions, which have a horizon. If you look at the Alberta objectives, 2025 targets start to have some bearing on the sector. Even going beyond that to 2030 and 2050, if we're going to deliver on those promises and those commitments, those projects have to start to be planned now or within the next five years.

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

Will these innovations be undertaken on existing projects, or will it take effect only on new projects as they're built? Can they be retrofitted?

[Chris Boivin]

For some of them, they can be retrofitted. Some of the enhanced steam utilization technology, some of the technologies that address tailings waste, water waste, etc., those can largely be retrofitted. But many of the solvent-injection technologies, which are perhaps some of the largest plays in terms of the potential for both water savings and GHG emission reductions—in fact, we have one in our portfolio that's targeting emission reductions of about 70%—that will require new infrastructure and a new project to be developed. It would not be a retrofit application. Again, the time horizon, if you had all the capital at hand today, is that you're probably looking at three to five years before that project could have any substantial production, at a minimum.

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

Finally, for you, what is the amount of effort or funding that your organization puts into renewable energy projects versus oil and gas or other energy industries?

[Chris Boivin]

Yes, I'd say it's pretty equivalent. We largely mirror the level of GDP that comes from the sector. We do have a healthy power generation portfolio as well, which does have a significant number of both renewables but also other low-carbon routes. We recently invested in a couple of nuclear technologies that are next-generation nuclear, and are smaller, modular, with lower safety concerns, etc. We have a pretty diversified portfolio, but it's roughly commensurate to the level of GDP in the sector that we spread our portfolio.

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

If it's commensurate with GDP, you're not really trying to drive new renewables. Is it more just supporting them in their present...?

[Chris Boivin]

We certainly look to drive performance similarly on cost and efficiency, etc., of renewables. We're typically looking for the ones that can compete head to head with the incumbent energy solutions that are out there, so any time we see an opportunity that can disrupt the landscape like that, we would certainly foster it.

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

I just wanted to come back perhaps to Mr. Reynish and ask about UNDRIP again and free, prior, and informed consent. As I understand it, that is totally compatible with Canadian law and I just wanted to again ask your thoughts on that.

[Steve Reynish]

Anything that's compatible with law is fine by us. It's really the certainty piece, I think, that we were talking about previously. The greater the clarity we have, the better as far as we're concerned.

[The Chair, Liberal, James Maloney]

Thank you.

Over to you, Mr. Serré.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair.

Thanks to our three witnesses for their great presentations.

What I've heard from the three witnesses as we've talked about the long term is that the number one issue with the volatility is the low oil pricing. That's the number one issue that's affecting the oil industry. If I heard you correctly, we have an opportunity to get this right. I want to talk a bit or ask questions about the innovation agenda and the consultation.

First, Mr. Reynish, can you speak to our government's plan to invest in innovation and help resource natural development increase the sustainability of the pricing practices?

[Steve Reynish]

Yes. As I commented in my introductory remarks, hopefully, we do see the role of new technology as a very important component from both an environmental footprint point of view and a cost reduction point of view in oil sands and in oil technology.

We are making investments in those areas. We do have support from some of the government agencies, we welcome that, and we think there is more to do. We're looking forward to continuing to work closely with government. As I mentioned, Suncor itself is investing $200 million a year directly in new technology, including some of the technologies that Mr. Boivin has mentioned here, such things as the application of solvents and other technologies.

I think it's very important from a cost point of view and indeed for the environment. They tend to go hand in hand.

[Marc Serré, Liberal, Nickel Belt, ON]

Also, you mentioned the $200 million in new technology innovation for the future, so that's a great investment by Suncor.

I wanted to ask also about the consultation side. Enbridge's president indicated a few weeks ago about looking at needing more time because the company hadn't consulted the first nations and Métis community enough. We heard earlier from you, Mr. Brennan, when you mentioned that pipelines were being “blocked”.

I want to clarify that comment. When we look at reviewing the environment, you're reviewing the consultation with a first nations community. Can you elaborate a bit on that comment?

[Jordan Brennan]

Sure. I don't know if I said that pipelines were being blocked; I meant opposition to pipelines. There's good reason for that. I wasn't trying to denigrate that.

This fact isn't well known enough, though, which is that it didn't actually stop the shipment of oil. It just moved the oil out of the pipelines and onto trains, which is far more dangerous. That as well is a fact that we have to think about. That's in the way of clarification. I didn't mean to say this is ill-founded, or not justified, or what have you.

[Marc Serré, Liberal, Nickel Belt, ON]

What more can we do to consult our first nations and Métis communities?

[Jordan Brennan]

I wish I had a great blueprint for you to include. I don't know. Unifor doesn't have a.... We're not in the business of government. We would like to play a constructive role in that, but we're still a relatively new union, and I'm new to this file. I'm still trying to wrap my head around a very big issue, so I wish I had something more substantive.

There should be something. This is where we require leadership from Ottawa to set out some type of process to bring stakeholders together. I don't have anything else besides a high level of generalization.

[Marc Serré, Liberal, Nickel Belt, ON]

Mr. Reynish, what would you say is the greatest market opportunity for our Canadian crude products?

[Steve Reynish]

I think the greatest market opportunity at this point in time is access to tidewater for Canadian material and the establishment of new markets.

[Marc Serré, Liberal, Nickel Belt, ON]

Essentially, then, for Unifor, when we look at our government's investment in clean technology and the opportunity for job creation in both the natural resources and the tech sectors, what kinds of other spinoff benefits do you think we could have with that?

[Jordan Brennan]

With respect to the oil and gas industry, anything to reduce the overall emissions level, and the intensity level as well, will help. For one, right now we're burning coal to get bitumen out of the ground in northern Alberta. Why aren't we using our hydroelectric resources right next door in British Columbia? Right away, that will reduce the CO2 intensity of a barrel of Alberta's oil. I mean, that's not even a new technology. That's simply a new energy arrangement between the provinces. Right away, we would get our emissions down there.

I can't speak about emerging technologies and how they're going to reduce greenhouse gas emissions.

I do want to add something, though. This is an important part, a little clarification. Oil prices are not low right now. They're not low by any standard. If you go back to 1945, the long-term average price of oil in today's dollars was $34. Go back all the way to 1900, over the past century and more, the average price of oil was $32. We're above the historic average right now. I don't know why people think we're below; we're well above. Don't expect it to go back to $100. That was a blip. That was a momentary aberration. It may never come back again.

[The Chair, Liberal, James Maloney]

Mr. Barlow, over to you for five minutes.

[John Barlow, Conservative, Foothills, AB]

Thank you, Mr. Chair.

I want to take this opportunity, Mr. Reynish, to thank you very much for everything that Suncor has done in Fort McMurray in terms of housing those who were displaced. Your entire company and staff really stepped up in a very difficult time. My colleague and I spent some time in northern Alberta over the last few days speaking with evacuees and oil and gas companies and service companies and it really was heartwarming to see, in a very difficult time economic-wise, that everyone stepped up and did whatever they could for that community.

I wanted to say thank you very much for everything that Suncor did there.

My first question is to Mr. Brennan. You mentioned something that I thought was really interesting in terms of the number of barrels being imported into Canada and the economic impact of that. You were talking about a study that Unifor has ongoing—I understand it's not finished—but I'm curious. If we look at the number of barrels being imported into eastern Canada, about 740,000 barrels a day, your number was $20 billion a year leaving Canada's economy. Has your study or will your study include the economic impact of the energy east pipeline in terms of, hopefully, when energy east is approved, what the job creation would be from energy east?

You touched on it and it kind of piqued my interest that you would like to see more refining here in Canada. We have refineries in Nova Scotia, New Brunswick, and Quebec that have been shut down because of the lack of an oil source. Energy east would be that source. Would your study include anything, or would you be able to comment on what high-paying jobs would come from energy east being approved?

[Jordan Brennan]

Thanks for the question.

No, it wouldn't. We're trying to develop an energy policy. It wouldn't be a study. That is an interesting question, what the spinoff jobs would be, and then increasing the density of the industry in eastern Canada. Historically, Unifor and our predecessor union, the Communications, Energy and Paperworkers Union of Canada, which was the union that housed all the energy workers we now have at Unifor, opposed pipelines that were meant to only be shipping unprocessed or unrefined bitumen.

In principle, we could support pipelines that would be geared toward domestic upgrading and refining, and then the spinoffs in petrochemical manufacturing as well as in petroleum products. We haven't worked out the details, but in principle that's the type of responsible energy development we could support, where we treat this natural resource as a community development lever, not as something that's a quick buck while prices are high.

[John Barlow, Conservative, Foothills, AB]

I couldn't agree more. I look at a project like energy east as a nation builder, something that's going to be an economic driver, not only in Alberta but across the country.

Mr. Reynish, I'm going to switch over to you really quickly. You talked about not putting a price on upstream GHGs because pipelines do not produce GHGs.

Again, when we were touring some of the northern Alberta communities these past few days asking people what can we do as a federal government to help you get back up on your feet after everything is done, the number one response from everybody wasn't increased EI or anything like that, it was “Get us back to work”. The number one issue was that we do not need additional regulatory regimes; we need to have these pipelines go through the proper process in the timeline that was there.

From Suncor's position, is the regulatory regime that we've had in place for years—we can always improve, I understand that—but do you feel there are needs for additional reviews and regulations? I'm looking again at Trans Mountain pipeline and energy east. These projects could be delayed several months and maybe up to a year as we talk about putting in new regulatory regimes and reviews, even if we don't know what they are yet. I feel that the biggest obstacle we are facing right now is that unknown and that uncertainty. Can you comment on what obstacles that is putting in front of companies like Suncor?

[Steve Reynish]

As we perhaps touched on a little earlier, the uncertainty that you refer to is, I think, an important consideration and does form a barrier to investment. We do have some very thorough regulatory review processes. Consultation is a very important part of that. We're fully supportive of that.

I would just be careful. If I could offer a word of caution, obviously the timeline needs to be thorough in terms of review, but it also needs to be sensitive to the investment decisions we're trying to make. As I think you will know, other jurisdictions, for example the U.S., tend to move on a much quicker timeline than Canada. That would be my observation.

We'll develop and continue to modify our own regulatory requirements, but let's just be sensitive to the investment timelines we're trying to serve as well. We need the full package.