Natural Resources Committee on April 13th, 2016

[Michael McLeod, Liberal, Northwest Territories, NT]

I think we'd both agree to it.

Of interest is that both of your presentations included consultation with aboriginal people.

I find it very interesting, especially with the CSA group. I wasn't aware that it was something you did as part of your responsibilities.

In the Northwest Territories, you mentioned, Mr. Ferguson, the regulatory process and how it's a co-management style, where we have aboriginal people who are part of the process. I think that is the solution. That is the answer for the long term as we go forward, that we involve people, that we involve the aboriginal people, and that we don't just talk to them. We don't come in and tell them what we're going to do, but we ask how they're going to be involved.

I've been shaking my head for the longest time about why we don't have aboriginal people sitting on the National Energy Board or those types of agencies that make decisions. How many people involved in setting the CSA standards are aboriginal and know about aboriginal people?

Maybe you could explain a bit about what both your organizations do in the area of working with aboriginal people and in doing more than just coming to a committee and saying, “This is what we're going to do.”

[Kevin MacDougall]

We had lots of discussion around this topic when we were here a month or so ago, and all of our CSA senior staff spent a day or two on the Hill and had meetings with various members of the government specifically about what CSA could do to support these initiatives.

To your point, I sat in on discussions about water management, purifying water, waste water, waste management, and engaging these people. It was not just throwing a solution on the table and then driving back to Toronto, but staying with them and actually teaching them and showing them how to manage these aspects of life. One topic that came up was with regard to home inspections, and how home inspectors would go in and do a home inspection and come back and provide a report to somebody. You haven't done any good because you haven't sat down with the people and explained why things need to be the way they are, and why the electrical systems and the sewage systems and the water systems need to be maintained. It's a process of education and inclusion.

For us to be able to bring in indigenous people and people from the Northwest Territories and include them in the committees and make them part of the solution is hard because we're a nonprofit and we need funds. If we want to all try to get these people to participate, we're going to actually have to bring them down here. You're going to have to pay their expenses, and allow them to come down and participate in these meetings. The meetings do not happen in the far north; most of them happen in central or regional areas. Unfortunately, that's just the way it is. I think if we work on inclusion, make it workable so they can come and participate.... I asked the same question in Alberta. I'm from Calgary and worked in the energy industry for many years, and I said the same thing. Why don't we have more first nations, indigenous people on committees, either with industry or with CAPP, or with CSA? They just don't have the money. They don't make a lot of money and they can't afford to travel.

The other piece of it is providing information in their native tongue. You can't produce something that they don't understand or can't read. You have to work with them and provide that information so that they're capable of actually absorbing the information and providing a response and feeling like they're listened to.

[The Chair, Liberal, James Maloney]

We're going to have to move on here as we're running a bit over again.

Mr. Albas, We'll go over to you.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Thank you to all of our witnesses for your testimony today.

I'd like to focus on a couple different areas, so I guess we'll start with Mr. Ferguson.

Mr. Ferguson, about four pages in on your first deck it talks about the investment projections for new overall capital investments. Obviously, there's a big drop, $31 billion versus at one point just over $75 billion. That's a big drop.

For the capital works that will be done in 2016, how much of that would be maintenance versus new oil sands development?

[Alex Ferguson]

Very little would be brand new projects.

I think the important number that we've highlighted in a few conversations is the capital that is being deployed. It's not so much maintenance versus new, but it's how much of that is going into merger and acquisition activity as opposed to developing our resources. If you follow any of that, you'll see there's a healthy amount waiting in the wings right now for activities in acquisitions. Just moving capital around doesn't develop Canada's resources. It doesn't necessarily get people employed. We're concerned about that number.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Well, I'm very concerned as well, because I think one of the common themes I've heard here today is that it's not just our prosperity as a country. I've heard $1,600 per Canadian, per capita, is what we've lost in the last year because of oil price drops.

I don't like the figure per se for a number of different reasons, but I think it accurately points out that, as a country, we know we are in a much different state. One of the concerns I have is that oftentimes the prosperity that these projects, these investments, lead to is, on the flip side, what allows the funding for the Canadian Standards Association.

I've spoken about your organization a few times in the House of Commons in regard to the incorporation by reference. The work you do is internationally respected, and we don't talk about what you do enough, particularly on innovation, because innovation not only makes the industry more safe for workers and for communities but also causes the efficiency gains and productivity gains that are so important to creating real wealth on an ongoing basis.

When I hear that the Canadian Standards Association is seeing a drop in participation, that concerns me. When you're seeing a drop in funding, that very much concerns me. What solutions do you have? Obviously you must reach out to stakeholders. How do you deal with these kinds of drops, because again, if we don't have the investment that funds the kind of research that we see, in terms of commercialization and standardization.... How do you deal with that?

[Kevin MacDougall]

Let me first explain a piece of funding that we are not really concerned about at this point in time, and that is on the nuclear side. For that program, the funding is in excess of $2 million a year and it's all funded by the Canadian Nuclear Safety Commission, which is a federal organization. All the funding to develop, sustain, and manage that program comes from the federal government.

The funding on the other side, on the oil and gas program side, comes from industry or the NEB or the provincial regulatory bodies. As that funding starts to deplete, we can't grow the program. As I mentioned early on when I was providing information, the ask here is that the federal government provide funding through its agencies—the NEB or any other supportive agencies—to provide program growth and sustain the programs, and then we can continue to do what we do and be excellent at what we do.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

It's somewhat shocking to me, because we talk about the need for businesses to innovate, but when it comes time sometimes for government to actually say let's, especially when the economy is cooling in this particular area.... How can we find ways? Again, there might be efficiency gains that allow some of these projects to go forward. Innovation doesn't just happen because there's government funding. But I find it interesting that in some areas there is support and in other areas there's not, particularly with regard to the economy.

What were you going to say, Mr. Walker?

[Jeffrey Walker]

I was just going to highlight a couple of things. Funding for standards doesn't really fit in normal buckets. There's often money for research and for commercialization, but to build some of those building blocks, when you go and ask people for funding, whether it's industry or government, they say they don't have a program for standards. That's one of the issues we're dealing with, which is a little bit different from the fact that we are having those issues with industry not being able to fund, like our offshore oil and gas program.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you very much.

[The Chair, Liberal, James Maloney]

Thank you.

Go ahead, Mr. Harvey.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I want to follow on my honourable colleague's comments. I'm going to ask some poignant questions. We don't have a lot of time.

You mentioned earlier that the Middle East had not saturated the market, but that it's been a North American saturation of the market globally. With that in mind, if we talk about supply and demand and investment in the sector and new and ongoing projects, do you feel that the biggest challenges the sector faces within Canada right now are based on global supply and demand issues or pipeline access?

[Alex Ferguson]

It's pipeline access.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

With that in mind, are you saying that, if we were to see a pipeline built, either to the west coast or the east coast, today, that we would not have seen.... If we had the pipeline in place today to tidewater, would we see a measurable difference on the job losses in Alberta versus what we see today?

[Alex Ferguson]

We believe you would see a difference in activity. Although the differential has shrunk significantly, almost to disappear, you have to remember that the gross returns have also shrunk. So that differential means a lot more today to some of these companies than it did when we had $100 oil.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

If a pipeline was approved and built today, do you believe we would see renewed investment in new projects in the oil sands, or do you think we would see a return to the existing projects going on?

[Alex Ferguson]

As I said earlier, the investment community is a little anxious, so just getting a pipeline approved today—

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I'm saying if it were approved today.

[Alex Ferguson]

Yes, if it were approved today—but it wouldn't be built today.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Okay. If a pipeline were approved and built today, do you believe we would see a return to the amount of new project investment in the oil sands that we saw pre-oil drop?

[Alex Ferguson]

Probably not to the same levels.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

What level?

[Alex Ferguson]

Well, that I couldn't tell you. I would query the investment community. Broadly speaking, there is a lack of confidence right now in investing in Canada. A lot of our members will tell you today that for the last few years, where they've been going out on the road trying to attract investment, it's been a significant change from maybe 10 or 15 years ago. They spend a lot of their time now selling the merits of Canada, not just selling the merits of their project.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I have one other question. I think everybody agrees that no matter whether it's North American refineries, refineries in South America, or wherever, they all use a mix, combinations of different types of crude oil, to make that crude oil flow through their plant as efficiently as possible to reduce their costs.

I know they do that. I know that within the industry there's definitely been all kinds of talk about ways that Canadian crude could be refined to maximize the use within refineries everywhere. With that in mind, what do you think the measurable difference would be in refineries in North America on the east coast if a pipeline were built to the east coast?

[Alex Ferguson]

Nothing overnight. It would rely on the investment confidence in—