Evidence of meeting #93 for Natural Resources in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pipeline.
A recording is available from Parliament.
9:40 a.m.
Liberal
The Chair Liberal James Maloney
—for just one second. You have the floor.
In the spirit of co-operation that we're so proud of here, I think it would be appropriate to dismiss these witnesses.
9:40 a.m.
Conservative
Shannon Stubbs Conservative Lakeland, AB
Sure. I have no doubt they agree with the importance of this issue.
9:40 a.m.
Liberal
The Chair Liberal James Maloney
Thank you for coming here. You're welcome to stay and listen, if you want. Our apologies. Sometimes circumstances change and are unavoidable.
We are very grateful for your being here today. We want you to know how much we appreciate your contribution to our study.
Thank you.
9:40 a.m.
Liberal
The Chair Liberal James Maloney
Now, just in dealing with Mr. Whalen's point of order earlier, is it a fair question to ask how much longer you might be? We do have more witnesses who are waiting, and I don't want to have them sit here if—
9:40 a.m.
Conservative
9:40 a.m.
Conservative
Jamie Schmale Conservative Haliburton—Kawartha Lakes—Brock, ON
Do we have any idea how the government is going to vote?
9:40 a.m.
Liberal
The Chair Liberal James Maloney
But that doesn't answer my question. We only have an hour, so if you're going to be an hour, I will dismiss them now.
9:40 a.m.
A voice
[Inaudible—Editor]
April 26th, 2018 / 9:40 a.m.
Conservative
Shannon Stubbs Conservative Lakeland, AB
I don't think so.
Thanks, Mr. Chair.
Today, this crisis is about more than the pipeline itself. It's about investor confidence and certainty in Canada overall. It's about Canada international and economic reputation. Perhaps one of the most compelling reasons for members of the natural resources committee today to support focusing our attention on the Trans Mountain expansion is the significant impact on Canadian energy investment and development, now and in the future. The escalating crisis over Trans Mountain is causing investors and proponents to speak out. That's relatively rare, so elected representatives should take note.
The CEO of one of the biggest midstream oil and gas operators in Canada, Keyera, said the following:
Canada is not looked upon as a good place to invest when it comes to oil and gas these days...partly because the U.S. environment is quite positive....If we don't have access to markets other than the U.S., we're going to be captive to a market that is going to need our oil and gas, and other products, less and less. We need to be thinking about market access, we need to be thinking about competitiveness, we need to be making sure we're not layering on additional costs that make it more difficult for us to compete.
Upstream oil and gas developers are calling on the Prime Minister to ensure that Trans Mountain can proceed. The president and CEO of Cenovus Energy said:
If the rule of law is not upheld and this project is allowed to fail, it will have a chilling effect on investment not just in British Columbia, but across the entire country.
The CEO of Athabasca Oil said:
I would tell him he has to show leadership on the pipeline file. And it's not just words. He needs to back up Kinder Morgan, the pipeline he's approved, and he needs to see it through to construction and make sure we can put shovels in the ground and get it built for the benefit of all Canadians.
The President of the Explorers and Producers Association of Canada said:
EPAC, on behalf of its 150 member companies, who invest billions of dollars each year in Canada, employ tens of thousands of Canadians and deliver one fifth of the nation’s oil and natural gas supplies, calls on the Federal Government to step up to show true leadership and deliver on its constitutional responsibilities.
This critical national project, approved by all relevant regulatory authorities and the Federal Government, has been allowed to be frustrated, harassed and blocked by the abject failure of the Federal Government to provide effective national leadership and government for all Canadians, particularly those in Provinces who need access to our national seaports to support their economies and their citizens.
Kinder Morgan’s statement that it is unwilling to risk billions of dollars of its shareholders money without a clear path forward is yet another devastating critique of Canada’s growing reputation as a state where the rule of law is not respected and enforced by national and subnational governments. Private sector investment is a key determinant of future economic prosperity yet Canada today ranks near the bottom of virtually all leading industrialized economies on this measure.
I know that will deeply concern every single member of this committee. It reinforces why we must undertake this study and support this motion as soon as possible.
Banks and investment firms are also warning that the delay and uncertainty about pipeline approvals, and particularly about the ongoing obstacles to the Trans Mountain expansion, are impacting confidence in investment in Canada.
The Petroleum Services Association of Canada warns that investment dollars are leaving Canada for countries “offering a more competitive environment for investment”. Investors would rather go to countries “where there is greater confidence in getting projects approved” but also—this is important—“completed.” That's their point. That's feedback from the Petroleum Services Association of Canada, which represents service, supply, and manufacturing companies in the oil and gas industry. Those are really the homegrown Canadian independent contractors, the small and medium-sized businesses. They are the businesses and workers and entrepreneurs who, along with individual contractors and the self-employed, are being hit the hardest by the massive losses of energy investment. My fear is that those are the companies and entrepreneurs who will be least likely able to recover.
CIBC Deputy Chief Economist Benjamin Tal said that “slowdown or uncertainty regarding a pipeline is clearly a major factor” impacting investment in the energy space in Canada.
The Royal Bank President and CEO said that “in real time, we're seeing capital flow out of the country”. He also said: “But if we don't keep the capital here, we can't keep the people here—and these changes are important to bring human capital and financial capital together in one place.”
The Scotiabank President and CEO said, “We're going to lose our competitive advantage on a number of things. Canada has a productivity issue and it has a competitiveness issue.” He also said, “I'm concerned about the resource-based economy, and access to tidewater for our product.”
The Scotiabank Senior Vice-President and Chief Economist echoes those comments, saying, “Reliance on the existing pipeline network and rail shipments to bring Canadian oil to market has a demonstrable impact on Canada's well-being, with consequences that extend well beyond Alberta.” That's why I'm hoping all of you here will agree with me about the urgency of this motion and undertaking this work on the Trans Mountain expansion here in this committee, which is appropriate, as was stated by a Liberal member of the finance committee.
Kinder Morgan's announcement prompted the Canadian Energy Pipeline Association president and CEO, Chris Bloomer, to warn that the energy sector is “in crisis mode now”, and that if people don't get that, they have “got to get there pretty quickly.” He warned that capital is fleeing Canada in real time. Incredibly, though, the day after he made those comments, the Minister of Natural Resources, asked whether or not this was a crisis, said he “wouldn't use or want to use any words that would escalate or inflame”.
Of course, in Fort McMurray a couple of weeks ago, the Prime Minister said, “This pipeline will be built”, and 48 hours later Kinder Morgan announced explicitly that it won't be if the challenges and obstacles aren't resolved by May 31. I hope again that the members will see how urgent it is that we undertake this work in this committee.
Among the most passionate pleas, of course, are from business owners in British Columbia. The president and CEO of the Business Council of B.C. said, “This is no longer about a pipeline but whether you can rely on government and the rule of law if you choose to invest.” He also said, “This can have lasting consequences.”
Laura Jones, Executive Vice-President of the Canadian Federation of Independent Business, said, “If uncertainty is allowed to continue, it risks doing serious damage to this country's reputation. We need to find a better path forward and we need to do it now.”
This should be of immediate and urgent concern to every single member of Parliament here, and I hope that it is, as members of the natural resources committee but also as legislators who have been entrusted by Canadians to act in their best interest.
The IMF predicts that economic growth in Canada will slow by next year and fall behind the U.S. In fact, in 2016 foreign investment in Canada fell by 42% overall, and it fell again by 27% last year. Meanwhile, U.S. investment decreased by half, while Canadian investment in the U.S. is up two-thirds since the last election.
The Bank of Canada clearly links slowed growth in Canada with energy investment, reporting that new energy investment in Canada will decline in 2018 and then drop to zero. This bleak future, I know, must be as deeply alarming to every member of this community as it is to all the people I represent in Lakeland. It follows on the biggest two-year loss of energy investment in Canada of any two-year period in 70 years following the 2015 election. Over $80 billion in energy projects in Canada have been cancelled.
Energy is the number one private sector investor in the Canadian economy. It is Canada's second biggest export. The impact of the energy sector on Canada's economy, on our prosperity, on our standard of living, and on our future cannot be overstated. I know that's another reason every member of this committee will support this motion and immediately undertake this work on the Trans Mountain expansion.
Hundreds of thousands of energy workers have lost their jobs in Canada, and that has rippled across all sectors in all provinces. Scotiabank analysts called the delay of new export pipelines and the large discounts it has triggered “a self-inflicted wound”. The sooner governments move to allow additional pipeline capacity to be built, the better off Canada will be.
Speaking of protecting Canadians and serving their best interests, I know the members of this committee want to support this motion to address the Trans Mountain expansion crisis, because Canadians know now the opposition to Trans Mountain is in part a well-organized and well-funded and orchestrated campaign specifically to subvert and undermine Canadian interests and to shut down Canadian oil.
The Financial Post, the Vancouver Sun, The Globe and Mail, and multiple other media outlets have reported on a leaked document dubbed the “Kinder Morgan Action Hive Proposal”, which outlines a strategy by a coalition of anti-energy activists to block the Trans Mountain pipeline expansion. The document was penned by 350.org, whose 2016 U.S. annual tax returns show they have received massive donations, most of them coming from just four sources: $4 million from one donor, $3 million from another, and two donations each of $500,000.
It's also the case that while all of us support every Canadian's right to peaceful assembly, protestors have violated the very reasonable limits set by the B.C. Supreme Court, namely to stay more than five metres away from and not block or impede equipment, workers, or the work at the two of the work site entrances. More than 200 protestors have been arrested since March and have caused injuries to at least four RCMP officers. That's the kind of coalition and activism we're talking about, which is being deliberately undertaken in order to undermine Canadian energy development, Canadian pipelines, Canadian jobs, and Canadian energy investment.
Media report that the Kinder Morgan Hive Proposal has been circulated among members of the Kinder Morgan strategy group, a group of anti-pipeline activists who met with the B.C. NDP environment minister the same day he announced the coalition's plan to limit shipments as a strategy to block the Trans Mountain pipeline. Of course, again, that would negate the very point of the expansion, which has been approved as being in the national interest, and with which I think all of us here agree, except for maybe one colleague. He has a right to do that. He has a right to do that and to advocate on behalf of his constituents.
Canada is almost wholly dependent on the U.S. as a customer for oil, but the U.S. has rapidly transitioned to become Canada's biggest energy competitor. The U.S. is predicted to supply 80% of the world's growing oil demand in the next five years, and 99% of Canada's exports of oil go to the U.S. This is another reason it is so crucial to ensure that the Trans Mountain expansion can succeed and proceed.
A lot of the expanded capacity will go to refineries and to the United States, but the expanded volume will also be able to be shipped to the Asia-Pacific. This is even more crucial because, of course, there have only been two new stand-alone proposals for pipelines to tidewater in recent Canadian history. The first was the previous Conservative-approved Northern Gateway pipeline, which was then vetoed by this Prime Minister after the last election, on the same day of course that he approved the Trans Mountain expansion using the exact same process and evidence.
It is true that the Supreme Court ruled that there should have been additional consultations with indigenous communities on the part of the crown in the consideration of the Northern Gateway. The Prime Minister had an option. He could have done the exact same thing that he did with the Trans Mountain expansion. He could have ordered additional months and consultation and the incorporation of indigenous communities, and then he could have approved the Northern Gateway pipeline, which was a multi-billion dollar investment and an opportunity for increasing exports to the Asia-Pacific. Again, despite the leftist narrative, it was supported by the majority of first nations communities and by the communities it impacted, and it had 31 indigenous community mutual benefit agreements worth more than $2 billion.
That opportunity to build a pipeline to tidewater, even though approved under the highest standards, the most rigorous process, and the most rigorous consultation in the world, was vetoed. It was the first time in Canadian history that a prime minister overruled and rejected the independent, expert-based recommendation of the regulator. Prime Minister Trudeau killed the Northern Gateway in its tracks.
The second new stand-alone pipeline proposal to tidewater was to increase exports to Europe, while also securing Canadian energy independence, bringing western energy resources to eastern refineries. My relatives in Nova Scotia, New Brunswick, and Newfoundland are forced to import 86% of their oil from foreign countries that have nowhere near the standards or the track record of environmentally and socially responsible oil and gas production that Canada has, and it's just because of a lack of cross-country infrastructure.
The energy east pipeline was proceeding. The application was done prior to the last election. It was proceeding through those years of the regulatory process. That was one of the applications that was frozen, and then there were months of delays and roadblocks, of disbanding of the committees, of restarting, of additional reports, and of additional adjudicators.
Finally, at the last minute, a double-standard condition was applied to the energy east pipeline. Multiple other energy projects, by the way, have been exempted of downstream emissions, which means holding a pipeline responsible for emissions of tailpipes and planes and vehicles, as well as upstream emissions, which of course are regulated at the site of energy production in provinces, as it is their jurisdiction. At the last minute, downstream emissions were added to the energy east pipeline consideration. They warned, they gave notice, and then they abandoned their application, which would have been one of the most significant and biggest infrastructure investments in all of Canadian history and would have tied our country together economically, symbolically, physically, and for this crucial purpose of diversifying Canada's oil export markets by allowing for shipping to Europe.
In addition to the loss of the Pacific NorthWest LNG project approval to Line 3 facing challenges in the United States, that's why we, as members of this committee, must support this motion and do everything we can to ensure the Trans Mountain expansion can proceed. It's the last opportunity to reduce at least some of the dependence on the United States, which is now moving ahead of Canada in terms of ramping up its own domestic energy production to secure its own domestic energy use and supply. Of course, because the U.S. recently removed its 40-year ban on exporting crude oil, it is becoming a major energy competitor to provide what will be the world's ongoing and growing demand for oil in the next decade.
Given the importance of the Trans Mountain expansion in that context as well, I'm sure all members of this committee are alarmed by the concept of intervention and activism against Canadian energy and Canadian pipelines by competitive interests. This would be a key element to study in an urgent assessment of the obstacles putting the Trans Mountain expansion at such serious risk.
Of course, part of why this is so concerning is that the Trans Mountain expansion has already been approved. Canada needs to demonstrate that big projects, big initiatives, and major investments can be done; they can go forward and be completed when they have been assessed with the highest standards and the most rigour in the world. TransCanada came out and said, as oil and gas developers do, that all three levels of government in this country, as we're seeing, can literally put them out of business, and it makes no sense for them to be unnecessarily combative with governments publicly.
TransCanada gave that warning, and then they said it was business reasons, but of course, quite clearly, it was ongoing delays, costs, and the political, legal, and regulatory deck deliberately stacked against them; they couldn't even make it out of the approval process in which they had already invested years and billions of dollars. Again, that's why this motion to ensure that we members of this committee do everything we can to assist the Trans Mountain expansion proceeding is so important.
Another pressing issue that calls for our attention, as members of this committee, is of course the interprovincial crisis escalating between Alberta, B.C., and Saskatchewan over the Trans Mountain expansion. As you may all know, the Alberta government tabled Bill 12 last week to give it the authority to control oil and gas shipments out of the province.
10 a.m.
Conservative
10 a.m.
Liberal
Nick Whalen Liberal St. John's East, NL
Earlier in her comments the member referred to four major donors to 350.org. I'm on their 2016 financials, and they list 90 or more donors—foundations, individuals, and organizations. Could she at some point in time table the information about the four primary donors and who they are?
Thank you.
10 a.m.
Conservative
Shannon Stubbs Conservative Lakeland, AB
When we support this motion and move forward with this study, absolutely, and I look forward to the comprehensive conversation we'll have about that.
10 a.m.
Conservative
Shannon Stubbs Conservative Lakeland, AB
When the motion is moved and we move forward with the study.
Another pressing issue that calls for our attention is this interprovincial crisis. Alberta's Bill 12, as you know, will give the Alberta government the authority to control oil and gas shipments out of the province. Saskatchewan premier Scott Moe said last week:
We do ship some energy products to British Columbia but not a huge amount. The majority of the energy products that are shipped to British Columbia come from Alberta,
but
What we're saying is if they (Alberta) turn off those taps, Saskatchewan won't be here to fill those (B.C.) fuel tanks.
The result is that Canadians and businesses are caught. They're at risk in the crossfire of interprovincial trade wars, of potential economic harm to themselves and to their families, and of increasing costs at a time when costs are already skyrocketing right across the board and families are struggling to make ends meet. Affordability is becoming a major issue for Canadians. They are now being caught in this escalating conflict between these provincial governments and are also at risk of threats to restrict energy supply between neighbouring provincial governments.
These provinces are linked geographically, economically, and intrinsically. Their residents are friends, families, and neighbours. They often have property, residences, or businesses in two or in all of the provinces, all together. Their views and their concerns about the Trans Mountain expansion are overwhelmingly that all the residents in all of those provinces support the expansion to go ahead. We, as legislators and members of this committee must support this motion and move forward with this study to fight for their interests, too, for all those innocent people caught in the middle, with neighbours, friends, and families pitted against each other and losing confidence in national unity in Canada.
Iain Black, President and CEO of the Greater Vancouver Board of Trade, said in response to this conflict, quote, “The B.C. NDP-Green coalition has created an impasse that is now challenging in the full view of the international investment community the very ability of our country to govern itself.” This conflict, of course, is the direct result of the stalled expansion. It's another major reason this committee should turn its full attention to this matter immediately.
Now governments, of course, are floating the concept of taxpayers financing or backstopping the Trans Mountain expansion. The suggestion is being made that the only way for the Trans Mountain expansion to proceed is either to subsidize it, to purchase a financial stake on behalf of taxpayers, or potentially to backstop it. That puts taxpayers at risk for billions, whereas Kinder Morgan was poised and committed, and has had to reinforce over and over that they are ready to go. They want to continue to proceed with the expansion. They just need political and legal certainty. They need the obstacles and the challenges to stop. They need leadership from political leaders who agree that this expansion is in the national interest.
It hasn't been required before. For example, the private sector has constructed pipelines successfully before, which were approved and constructed under the previous Conservative government, by investing billions of dollars in this crucial economic and energy transportation infrastructure. It has never been the case before that taxpayers would have to bear that risk in order for a pipeline to go in.
Again, the bottom line is that it doesn't address the uncertainty, the challenges, the ongoing obstacles, or the threats to limit the volume once the expansion is completed, if it ever does go ahead. It's a signal to private sector investment that even once they abide by the rules, meet the standards, and invest in doing everything asked of them in the most rigorous process and under the highest standards on earth, they may still not be able to proceed, even once cabinet has agreed with the recommendation by the independent regulator that a project is in the national interest.
I'm sure that all of us are chilled and alarmed by the precedent that might set and by the impact and the future consequences for private sector investment in the Canadian economy in the future. In fact, a professor from the University of Alberta, Laurie Adkin says, "I don't think the government owning the pipeline will get it out of its Constitutional responsibility, and it's going to make it even more difficult for the government to be seen as a neutral player".
Jack Mintz, from the University of Calgary's school of public policy says, "I don't think [the government's investing in the project] is a good idea at all,” and, “It really doesn't deal with the main issue. And the main issue is political uncertainty. What would be the value of the project given this uncertainty?"
That echoes all of the things that oil and gas proponents, businesses, investment firms, and banks are saying. This is about trust in Canada's systems, processes, procedures, and ability to succeed. The conversation around subsidizing or nationalizing a pipeline, as you can imagine, is very worrisome to Albertans who have gone through this before in our history but also to all Canadians, to all communities, and to the entire private sector right across the country. Again, it does not address what is clearly the problem as stated explicitly by the proponent and as seen repeatedly in the billions of dollars of losses of major energy projects throughout Canada, which is in fact legal and political uncertainty.
This is all happening in the wake of a vacuum around regulatory certainty between 2015 and when new legislation around the energy regulator was recently tabled, which oil and gas proponents and pipeline operators are warning will ensure that no new major oil and gas investments and no new major pipeline investments will be made in Canada in the future. Is it really any wonder that Kinder Morgan paused the expansion? The company says, “It’s become clear this particular investment may be untenable for a private party to undertake. The events of the last 10 days have confirmed those views”.
Before, they were never actually asking for tax dollars, financial equity, or financial backstopping. They were ready to go. They've met the requirements. They are complying with the conditions. They want to proceed on an expansion that is in the national interest and will benefit all Canadians in all communities.
It's our duty as legislators to figure out how we can solve these obstacles, stop these challenges, stop these roadblocks, and ensure that this crucial infrastructure can advance, because this pipeline expansion crisis is clearly urgent. It will of course benefit the Canadian economy, all provinces, municipalities, and indigenous communities. It will support energy investment in the future, which is crucial to all Canadians everywhere.
I thank you for granting me the respect and the time to make what I hope is a compelling, comprehensive, and thorough case to you. I really wanted to do that thoroughly and in good faith, with as much evidence and information as I could, to really compel each and every one of you as to why we should support this motion and proceed. I thank you for giving me the time to do that.
