Natural Resources Committee on March 9th, 2016

[Terence Hubbard]

I would say there is enormous opportunity, both in terms of the long-term interest in our oil industry and the gas industry going forward. The LNG industry is a tremendous prospect for us to capitalize on our natural gas resources. As the United States' domestic natural gas production increases, and for us to maintain Canadian natural gas production levels, we need to find new markets. The development of an LNG industry will help Canada to capitalize on the growing international market for gas.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Has there been or are you looking at a transfer of some of the resources that had been going toward the petroleum sector and, hopefully, channelling some of those government resources to assisting the LNG process?

[Terence Hubbard]

In terms of research and development expenditures, or resources more broadly?

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

In terms of capital expenditures and incentives that way. Last year our government introduced capital cost deferments and so on that assisted with the capital projects there.

[Terence Hubbard]

There have been steps taken over the last couple of years, and these efforts continue, to work closely with the government of B.C. and other provinces to support the development of an LNG industry here in Canada. Canada does have a competitive tax environment compared to other international players, and we do have a tremendous resource base. There is an enormous opportunity for Canada to capitalize on this LNG advantage, but we must recognize that it's a competitive international market and that there are a number of other countries seeking to capitalize on the same opportunity.

We need to continue to work with partners to create the conditions for the successful development of an industry like this.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you.

I don't know if I have any time left.

[The Chair, Liberal, James Maloney]

You've got just over 40 seconds altogether.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

I'll pass my time to one of the other members, if they have....

[Shannon Stubbs, Conservative, Lakeland, AB]

Given that certainty and timeliness on the part of government is important for developers and investment both in innovation and in energy production, are you able to give us any timelines in terms of finalization and clarity on the potential regulatory changes and any additional measures that could also expedite commercialization and technology?

[The Chair, Liberal, James Maloney]

You have 10 seconds or less.

[Frank Des Rosiers]

The consultations that were referenced earlier are on a six-month track, so one would envisage that by the late summer or early fall, hopefully, there will be consensus emerging. When the announcement will occur, it's hard to say right now.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Lemieux, you have five minutes now.

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

Thank you, Mr. Chair. I would also like to thank the three witnesses who are here with us today.

I would like to continue with the liquefied natural gas question.

In British Columbia, there is talk of building three LNG plants by 2020. What main challenges will the government have to face to follow the trend of British Columbia in regard to LNG exports?

[Terence Hubbard]

There are a number of private sector proposals. I think there are as many as 20 private sector proposals to develop LNG facilities in B.C. Certainly, based on future opportunities going forward in terms of overall market demand globally, not all of those projects will move forward. Canada has some tremendous advantages in developing these resources, both in terms of the resource base that we have in Canada and the shipping distances between Canada and primary markets in the Asia-Pacific region, to capitalize on the development of this industry going forward.

However, to realize and take advantage of these opportunities, we need to have a framework in place in which Canadians can be confident that these resources can be developed safely and in an environmentally sustainable manner. The government is taking steps to announce how it will make decisions on these projects going forward to ensure that investors have certainty on what the process will look like, but also to ensure that Canadians can have confidence in how the government will take into consideration factors related to these developments going forward, including the potential impacts of these development opportunities on things like climate change.

So there are a number of activities going forward both in terms of working with the Government of B.C. in supporting and advancing regulatory decisions on these projects as well as some of the activities that Frank had mentioned before in working with industry and other partners on the innovation agenda to support the development of these resources in the most environmentally and competitive manner possible.

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

Is the federal government also examining the possibility of building LNG facilities and setting up LNG projects in eastern Canada?

[Terence Hubbard]

That is correct. There are a number of LNG proposals in eastern Canada across various jurisdictions: Nova Scotia, Quebec, and New Brunswick as well. Again there are opportunities going forward for these projects to proceed. There's a lot of interest from international markets in Canada's ability to be a secure, reliable partner to supply energy for the long term. There are a number of proposals that have been moving forward, and we're working closely with those jurisdictions as well to understand what the opportunities are and how we can work corroboratively to support these development opportunities going forward.

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

I am very interested in renewable energy. In my region, Saguenay—Lac-Saint-Jean, there is much talk of building plants to produce metallurgical biocarbon from forest residues.

Has CanmetENERGY conducted any studies to date on the large-scale industrial production of metallurgical biocarbon that can be used in the Canadian steel industry?

[Frank Des Rosiers]

Yes. The CanmetENERGY team in Ottawa does conduct such studies. These are both socio-economic studies to see how such an industry could take shape and technology testing studies to determine whether those technologies deliver the performance indicators put forward by the technology developers and to test them in our laboratories or with our industry partners.

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

To date, have you not seen any industrial-scale projects in the world?

[Frank Des Rosiers]

Not that I know of, but we are rather at the stage of testing technologies and trying to refine them.

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

Okay, thank you.

[The Chair, Liberal, James Maloney]

You have 30 seconds left if you want to share the rest of your time.

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

I want to use the 30 seconds.

As you just mentioned and the slides indicated, there is a drive to increase the use of renewable energy. I'm sure right now that the percentage of renewable energy used for power production must be very low. But what is your timeline, let's say, after five years, or 10 years, or however many? What percentage of renewable energy would be used?

[Frank Des Rosiers]

As a federal government, we're not responsible for the energy supply per se. We feel that our job is to make good on developing those technologies and making sure that they can be brought to stream in a relatively smooth way. As you can appreciate, for an operator who has been used to that steady power source, whether it's any kind of coal production, nuclear, hydro, or something where you have to deal with so-called variable power and Internet power, or whether it's solar or wind, it does bring significant challenges for those operators, and that's true across all of North America. But we don't have a target for safer renewable energy power production, and we feel that is beyond our government's mandate.

[The Chair, Liberal, James Maloney]

Thank you.

I think we're out of time now.

Mr. Stetski, over to you. You have three minutes.