Natural Resources Committee on Nov. 24th, 2022

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

Whitecap Resources, in southeastern Saskatchewan, for stages 1 and 2 combined, in their 2021 report, were at about negative 740,000 tonnes. That is for scope 1 and scope 2. It is possible. It does happen. They use enhanced oil recovery for it, which is something that the Americans have included in their plan. This government doesn't have it in its plan. If we get to negative emissions, does it really matter?

I appreciate your input on this.

Mr. Muir, you were talking about American subsidies, what they are doing and what we are doing here in Canada. I'm just wondering if you want to elaborate a little further on what we should be doing with the carbon capture, utilization and storage to make it more competitive with what other countries are doing.

[Stewart Muir]

We've already seen one good Canadian company locate most of its activity in the U.S. where the climate is more welcoming. I forget their name but they are based in Squamish, B.C. Most of the growth has been in the States because there has been a greater impetus to create market conditions. We talk about subsidies. We should also be talking about incentives to decarbonize.

You mentioned Whitecap Resources. I've mentioned the Pathways initiative. I would challenge anyone to go into the regulatory filings of pretty much any publicly traded company in oil and gas in Canada and have a look at what they are doing in the field. All of them are working to reduce their carbon footprint. They know, and I think they take pride in being part of that story. The whole sector is mischaracterized as having some inherent pernicious, evil aim, and that runs through some of the subsidy polemic we've heard today. It is very misleading.

If United States President Biden, a Democrat president, has laid down a large bet on carbon capture, that's going to potentially draw more of the innovation from Canada to the United States, and we will lose it from our small energy start-up sector. We need to be competitive to keep that know-how here.

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

Yes, exactly. Thank you.

If any of you have more that you want to add to any of these issues, could you submit a brief to the committee as quickly as possible? We would appreciate that.

Mr. Helin, I'm just wondering if you could talk a little bit more about the importance of natural resource projects for indigenous communities and their ability for self-determination.

[Calvin Helin]

Thank you.

Most of the indigenous communities across Canada are located in very remote places, and the average unemployment rate among all of the reserve communities in Canada is over 25%. That's worse than the Great Depression numbers in the U.S.

People have been living on their land for 10,000 years or more—the people I come from, 14,000 years—and there are very few opportunities. That doesn't mean they're going to jump at any opportunity and abandon the environmental stewardship they've taken over the land for all of that time. That is always at the forefront of their consideration in entering into any project. When projects are proposed for their territory, they look at them very carefully. They examine them from a social and environmental point of view. When they decide to enter into those projects, that may be the only opportunity they would have for any kind of development.

In the community I'm from, Lax Kw’alaams, on the north coast of B.C., there was an LNG pipeline proposed. At that time, my brother John was the elected chief of the community, and the community voted 70% in favour of the project. The project would have flowed, over a period of time, about a billion dollars in benefits to the community. That included monies for education, training, housing, roads, all the things that most indigenous communities direly need.

When they vote to support a project, what really irks them is what they see as the meddling and interference from people who have been termed eco-colonialists, these groups whose only interest is in stopping projects, and government interference, where the government is only listening to the side of the project that supports their politics.

They feel it's very unfair. They feel that a lot of opportunities have been snatched from them. The feeling is so strong in western and northern Canada that in fact there's an event being organized on this very topic, called Indigenous Nexus 2023. It's—

[The Chair, Liberal, John Aldag]

I'm sorry, Mr. Helin, but I have to ask you to wrap up. We're well over on the allotted time for this one, and I still have more questions I need to get to.

[Calvin Helin]

Okay.

[The Chair, Liberal, John Aldag]

Thank you.

We'll jump now to Mr. Sorbara, who will have five minutes for his questions.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair.

Welcome, everyone. Obviously, this is a very important discussion that we're having this morning.

With regard to the ongoing transition that's happening not only with Canada's economy but with the global economy in terms of energy, I would frame the issue as a little triangle—energy security, energy affordability, and then layering in the goal of reducing greenhouse gas emissions to where we get to a net-zero world by 2050, or the countries participating in such. We obviously have developments along the way, such as the war in Ukraine, in terms of putting in place not only energy security and energy affordability but also food security and food affordability.

I would say that the Biden administration has been deft at putting in place legislation that has changed the economic landscape, both here in North America and globally, with the infrastructure act, the CHIPS and Science Act and the $250 billion there, and the Inflation Reduction Act, which, from reading all the commentary out there, is potentially a catalyst for north of $2 trillion of private investment that will combine with the $497 billion or whatever the number is. North of $2 trillion of investment may flow in renewable energy and sources there.

Layered on top of that, the United States is the largest producer of oil and gas in the world and is actually a net exporter of resources. Starting with the Obama administration, they have built I believe four to seven LNG facilities to export LNG. We're building LNG Canada, which I'm very happy will be put in place in the area of the world that I'm familiar with, because I grew up there.

With regard to the projects that are currently in place here in Canada, I have a question for Mr. Muir. When we think of investments, whether it's on TMX or on the private or public side, a lot of folks may get tied up in looking at one side of the ledger. They're not looking at the other side—the multipliers of the economic benefits of various projects upstream or downstream with regard to oil and gas revenues that come into Canada and the nearly one million Canadians who work in the sector.

How important is it that we make sure that we look at not only one side of the ledger, if I can use that term, but also the other side in terms of the ramifications of the multipliers to Canada's economy of both the renewable and the non-renewable side of our economy?

[Stewart Muir]

If anyone here is a soccer fan and watching the World Cup across the world, there's a great example of what LNG can mean to an economy. Until recently, the biggest LNG exporter in the world was Qatar. The U.S.A. is now. We let them get that opportunity. But in the last 10 years since announcing the World Cup, $250 billion has been spent by a country with 300,000 citizens. They have spent $10 billion on stadiums.

One might wonder where they got that money. They got that money by monetizing natural gas onto the global market. Recently, during the high prices for LNG in Europe at the early peak of the Ukraine crisis, we were seeing cargos.... It's very hard; the LNG industry globally is not very transparent. They don't talk about the value of cargos in ships, but you can glean things if you keep an eye on things. There were single shiploads of LNG changing hands for up to $200 million on the high seas going to different ports.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Muir, I'm going to interject there. I want to ask you for another comment, and I know you could go on for a bit.

One of the comments I heard today, and I believe you had referenced it, sir, was about comparative advantage. As an economist, I learned quickly in my studies that there's absolute advantage and comparative advantage in trade. Canada will need to find, and is finding, its place on the comparative advantage front when it comes to the ongoing transition.

For example, in the battery supply chain, we're ranked number two in the world, according to BloombergNEF, down at the G20. We are finding a comparative advantage there. With regard to LNG, we will need to find our comparative advantage, and we quickly are.

I would like to hear from you, sir, on how important it is—in the FES we've taken a number of steps in response to the IRA, although there's obviously more we have to do—to make sure we are flagging our comparative advantage.

[Stewart Muir]

The comparative advantage in theory from resources that are known to exist here versus what we're able to do or what we're doing.... In British Columbia, I know that the average time to develop a mine through permitting is 13 years. The amount of critical minerals and other metals we need is so vast that it would be very difficult, impossible. The Ring of Fire in Ontario is viewed in industry, I think, as a stalled opportunity. There are very complex issues there, which we're all aware of. If we don't solve them, we won't have the wherewithal to have the clean energy future. It's a big worry.

LNG is sought after in parts of the world that must rely on more emissions-intensive fuels. I know there is a determination by some voices we've heard that if a solution is not 100% effective in solving a problem, then it mustn't be pursued. I don't think that's how most of us approach anything in our lives. LNG will cause considerable relief for nations that are looking at ways...whether it's nuclear or firing natural gas instead of coal in their electricity sector, be it Korea, Japan, Malaysia, Indonesia or India. They really want this, and they also want energy security. They don't want just to rely on a single country in the Middle East to supply all of it because that's a poor principle, as they've found.

Canada has a role—

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I think we're done there.

Just for the record, in the fall economic statement, I believe we've started down a path where there's a very effective response to IRA, and I applaud the Deputy Prime Minister—

[Mario Simard, Bloc, Jonquière, QC]

Excuse me, Mr. Chair, but the discussion has gone on for a while. I want to be generous with time too.

[The Chair, Liberal, John Aldag]

I've been pretty generous with everybody, and we have time now to go into our third and final round.

That starts with Mr. Dreeshen, who will have five minutes on the clock.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much, Mr. Chair.

Certainly, thanks to all of the witnesses who are here today as we take a look at subsidizing different aspects of...or federal assistance into our natural resources.

If you don't want oil and gas from Canada, you do your level best to demonize it around the world, but I want to take the opposite position.

We do have this abundance of natural resources. We've been leading the way globally with clean technologies and advancement in the oil and gas sector. I think people should realize that 75% of the clean technology investments in renewables come from our oil and gas sector. It's because they are understanding that they are energy companies; they're not just oil and gas companies. I think that's the important part of it. You can't promote renewables unless you advocate for a responsible hydrocarbon industry. I think that's really the critical part of it.

Mr. Helin, I appreciate your work. I spent many years on aboriginal affairs and northern development. I've read your book Dances with Dependency, and I've also seen the work that you've done with first nations.

I'm wondering if you can speak briefly to what needs to be done by governments in order to give opportunities to indigenous communities, specifically looking at the red tape and regulatory burdens that your industry faces. What are the biggest culprits and the main things the government could do to get more investment to come to Canada so that you can be engaged with that?

You did mention before that one of the key components and one of the key problems that exist, of course, is that, quite frankly, environmentalists don't know what is best for indigenous communities, nor do all industry leaders know what is best. We need to work together to get past what I call “environmental colonialists”, which you call “eco-colonialism”.

I'm wondering if you can lay out your vision and some of the frustrations you have with the way in which your industries and the opportunities for your people have been challenged over the last number of years.

[Calvin Helin]

Thank you for the question.

The kind of frustration that's felt was characterized when the German Chancellor arrived in Canada asking for our LNG. I don't know in my lifetime when a German Chancellor ever arrived in Canada to ask for something. We're supposed to be supporting our democratic partners in Europe, and he was sent away with the promise of hydrogen in, I don't know, 10 or 15 years.

I think there has to be some kind of reality in the position we're in. From a geopolitical strategic point of view, Canada is in an excellent position. We have the resources everybody else needs, while all of our partners' resources are tied up in this war in Ukraine from Europe.

I think the best thing, from an indigenous people's point of view, is that the government can get out of the way and stop slowing and stopping everything. We have an environment in Canada where we have some of the strictest environmental regulations and a very good social environment. Indigenous people are coming forward and saying what they want.

It's time, I think, for the government to listen to people from different regions of Canada, because it's creating a lot of division and a lot of anxiety. If someone doesn't agree with your opinion, listen to them, because you've been elected to represent them. Indigenous people are clearly saying, “We want to be part of the economy. Because we were taken off our lands, we don't have any basis for raising capital.” There needs to be some kind of sensible financial incentive.

The Alberta indigenous opportunities fund is one that's just lent $1.12 billion to 23 first nations to buy into Enbridge's northern pipeline system. That asset will provide revenue for them long into the future.

To make a little sports comparison, I was watching a program on TV about the American basketball—

[The Chair, Liberal, John Aldag]

Sir, we're going to have to end it here. I'm sorry to interrupt you, but we are out of time and I have others I need to get to. You have my apologies.

We are going to jump to Mr. Maloney, who's going to take over the next questioning for five minutes.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Thanks, Chair.

Thanks to my colleague. I may not use all the time, but we'll see how it goes.

I'm glad to be back on this committee. It's been a while since I've been here. It brings back a whole range of emotions. I won't tell you what they are. They vary, depending on the moment and time in the committee.

Having said that, Mr. Muir, I have some questions for you.

I was intrigued by a couple of answers you provided. In response to Mrs. Stubbs about the investment climate, I interpreted what you said to mean that it's a darn good thing the government stepped up and bought TMX. When Mr. Falk was asking you questions about cost overruns, you seemed quite enthused about being able to identify the reason for those cost overruns.

One of the things people know about me is that I like to try to cut through the political nonsense you see in a lot of these discussions. Blaming cost overruns on Liberals, as if they would have magically disappeared if the Conservatives were in power, is, of course, entirely mythical.

What I'm asking you is this. If you accept the fact that we needed to get that pipeline built, am I correct in interpreting what you said as you being happy about the fact that the government stepped up and bought it so it could go forward?

[Stewart Muir]

The fact that it's being built is a positive thing for Canada. The economic impacts will far outweigh the costs of building the project.

Had the question been asked before the acquisition whether anyone wanted the federal government to go and do this, I don't think anyone would have wanted it to. The fact that it happened and that this acquisition was made to save a nation-building project was a difficult political decision. I can only imagine what the cabinet discussion was.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

But it was the right decision. That's what you're saying.

[Stewart Muir]

They landed in the right place, because had they not—

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Okay, thank you. I'm glad I was able to confirm that.

[Stewart Muir]

Indeed.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

The reason that Kinder Morgan didn't go ahead with it.... We can talk about the regulatory context and whatnot, but that regulatory context didn't start on October 19, 2015. When I was elected then, along with many of the people around this table, I was hearing about all of these regulatory obstacles that were in place, and I continue to hear that today. The fact remains that it was necessary for the government to do that.

Had Kinder Morgan decided to go ahead and build this pipeline, they would have encountered the same cost overruns that the government is facing. Isn't that fair?

[Stewart Muir]

Yes.