Natural Resources Committee on Nov. 4th, 2024

[Greg Reade]

I don't know. We're here to talk about Trans Mountain. I'm sorry I'm not prepared to....

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Okay. Well, can you please table them with this committee?

[Jeff Labonté]

I think my colleague said the RIAS will be released with the draft regulations this afternoon. That's a publicly available document that talks about the economic impacts of the proposed regulation.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Okay.

When the minister was here, she said something quite fascinating in that she thinks she can get more than $34 billion for the Trans Mountain pipeline. Do you have any study papers or documentation that would show it is possible to get more than $34 billion for the pipeline?

[Greg Reade]

I mean we've already undertaken to provide you what we have, and so we will do that.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Do you have studies that show you can get more than $34 billion for the pipeline?

[Greg Reade]

We'll have to look at all the studies that we have.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Okay. Was she right to say she can get more than $34 billion for the pipeline?

[Greg Reade]

There will be a point in the future when this goes to market, and the market will decide on the value.

I think what I was trying to convey earlier was there are a number of things that will happen in the next couple of years that will be meaningful to understand the value of the pipeline when it eventually gets to market that we can't foresee yet. There are certain analyses that can be done. A cash flow analysis is one of them. We can look at and comment on specific assumptions and variables, but that's what we have at this point.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Really what we have at this point is pure speculation by the minister. It's not necessarily based on any hard facts and data, because we know the pipeline is not sellable at this point in time, right? For example, the CER hasn't finished coming up with the toll rate, but even with the toll rates the way they are, there's a lot of uncertainty around where this is going to land.

I think it's pretty wild that the minister would come in here and say she can get more than $34 billion. Just one more time, do you have any data that shows it can be done?

[Greg Reade]

We have lots of data that we've undertaken to provide, and we will do that.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Okay.

I'll give it to both of you guys to answer this. I'll start with Finance. I want you to try this first.

Did the minister ever ask the department to figure out how to reduce costs for the pipeline during construction?

[Greg Reade]

Well, yes, and my hesitation is only because there are a couple of layers that were overseeing the project. The Trans Mountain board and management built a pretty significant project management team, and throughout the life of the project, especially at points of cost increases, there was quite a dialogue between government and Trans Mountain. There was a special third party committee created by the Trans Mountain board to challenge and test at that level the plans and the progress to see if there were any efficiencies to be gained all the way along. That happened again when it came into government to approve revised corporate plans and borrowing plans that enabled the increased borrowing to finish the pipeline. Treasury Board took quite a long look and challenged on efficiencies and whether there was any more optimization possible and really just to understand the drivers of the costs.

Does that answer your question?

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Yes.

Natural Resources, were you asked how we can reduce costs?

[Jeff Labonté]

We're not responsible for the Trans Mountain Corporation. It's part of the Finance portfolio.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Okay. Thank you.

Was it ever brought to your attention about...? Again, we got to $34 billion, which is a jaw-dropping number. The private sector proponent walked away at $7 billion to $10 billion. Was there ever an analysis done to compare if the government building it could be done cheaper than the private sector could have built it for?

[Greg Reade]

I'm not aware of one, but we can look.

There were certainly a lot of analyses along the way that took into consideration not only the costs that had already been sunk, but also what the expected economic benefits were from the pipeline. Beyond the costs, there are some fiscal advantages, some economic advantages to finishing the pipeline, which was also part of the calculation along the way. But a specific as you describe it, I can certainly look. There are probably pieces for sure.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Okay, thanks.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now go to Mr. Jowhari for the next five minutes.

Go ahead, Mr. Jowhari.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Thanks to the officials for joining us today.

In my last line of questioning with Minister Wilkinson, I ran out of time, at least for him to respond to some of the regulatory uncertainties that played a key role in the delay, both from a timeline as well as the cost overrun.

Can you, Mr. Labonté, share with us what some of those uncertainties were and how it translated into dollars, as well as the timeline? What was the lesson learned? I'm sure our government is interested in building more nation-building projects. How would that help us?

[Jeff Labonté]

Thank you for the question.

There are a number of things that certainly added complexity to the project. One of them was the project decision being overturned by the court and the government needing to reconsider the project. In the reconsideration of the project, the government had to instruct the Canada Energy Regulator to re-examine the marine shipping, the environmental and safety aspects and all of the different components of the regulatory decision-making on the pipeline. At the same time, the court told the government it had not adequately consulted with indigenous peoples. The government had to reconstitute its consultation team to work and meaningfully engage and consult with indigenous peoples along the route of the pipeline.

Those things took more time because they added, I think, nine months' worth of examination by the CER, and it was close to 10 months, perhaps, for the government to reconsider indigenous consultation. Those two things happened in parallel. Doing so required a more thorough assessment of a number of the elements.

Of course, those come with benefits and they come with costs. The benefits would be a much more significant examination of marine shipping and the impacts of the proposed tanker traffic in the Salish Sea and the port of metro Vancouver area. There were much more sophisticated examinations on emergencies, species and a number of features.

At the same time, the consultations with the indigenous groups—128 of which happened with a team of federal officials from the Department of Natural Resources, Justice, Environment and Climate Change and Fisheries and Oceans—examined all of the different components that were raised as concerns by indigenous peoples.

Both of those things are examples of how it took more time and there was some regulatory uncertainty.

At the same time, the Province of British Columbia at the time had said it was opposed to the pipeline and wanted and expected a very different outcome. That was supplemented by the work the government did, as well as the consultations of indigenous peoples. It is something we've now carried on in other large, major projects, looking at that consultation using the benchmark the Federal Court of Appeal had, which was a meaningful and engaged two-way dialogue with indigenous peoples. That's been an important part of the reconciliation path for the federal government with respect to section 35 rights.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

Mr. Chair, at this time, I'd like to move that we resume debate on the abandoned well motion.

Thank you.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Jowhari.

Thank you to our witnesses.

We are resuming debate on a previous motion that was brought to committee.

Witnesses, I don't know how long this could take. It could be a—

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

I have a point of order.

[The Chair, Liberal, George Chahal]

Yes.

I'm sorry. We have a point of order.

Mr. Jowhari, I'll get back to you in a moment, because you have the floor, but we have a point of order.