Natural Resources Committee on Feb. 15th, 2024

[The Chair, Liberal, George Chahal]

I call this meeting to order.

Welcome to meeting number 86 of the House of Commons Standing Committee on Natural Resources.

Pursuant to the order of reference of Tuesday, October 17, 2023, and the adopted motion of Wednesday, December 13, 2023, the committee is resuming consideration of Bill C-49, an act to amend the Canada—Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act and to make consequential amendments to other acts.

Since today's meeting is taking place in a hybrid format, I would like to make a few comments for the benefit of members and witnesses.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mic, and please mute it when you are not speaking.

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Although this room is equipped with a powerful audio system, feedback events can occur, and these can be extremely harmful to interpreters and cause serious injury. The most common cause of sound feedback is an earpiece worn too close to a microphone. We therefore ask all participants to exercise a high degree of caution when handling the earpieces, especially when your microphone or your neighbour's microphone is turned on.

In order to prevent incidents and safeguard the hearing health of the interpreters, I invite participants to ensure that they speak into the microphone into which their headset is plugged and to avoid manipulating the earbuds by placing them on the table away from the microphone when they're not in use.

Remember that all comments should be addressed through the chair.

Additionally, screenshots and taking photos of your screen are not permitted.

In accordance with our routine motion, I am informing the committee that all remote participants have completed the required connection tests in advance of this meeting.

With us today for the first hour, from the Government of Newfoundland and Labrador, we have the Honourable Andrew Parsons, Minister of Industry, Energy and Technology, by video conference. Also joining us by video conference is Craig Martin, associate deputy minister of energy development.

We also have, from the Government of Nova Scotia, the Honourable Tory Rushton, Minister of Natural Resources and Renewables, by video conference. Also joining us by video conference are Kim Doane, executive director of the subsurface energy department, and Melissa Oldreive, manager of strategic priorities.

We will now proceed to our opening statements.

I will acknowledge for everybody online that I use these two cards. Yellow means you have about 30 seconds left. Red means your time is up. I will try to not interrupt you mid-sentence, but I will try to guide you when we get near the end.

We will start with Minister Andrew Parsons from the Government of Newfoundland and Labrador, for five minutes.

Minister, the floor is yours. Welcome to committee.

[Andrew Parsons, Minister of Industry, Energy and Technology, Government of Newfoundland and Labrador]

Thank you very much.

My name is Andrew Parsons. I'm the Minister of Industry, Energy and Technology with the Government of Newfoundland and Labrador. I appreciate the invitation to present today with respect to amendments to the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, or Bill C-49.

Our province is pleased that the proposed legislative amendments to the Atlantic accord implementation act ensure joint management of our valuable offshore wind resources, recognize exclusive jurisdiction of waters lying between the jaws of the land and certain coastal waters, and modernize provisions relating to the offshore oil industry.

Our government is committed to supporting offshore renewal energy projects that have the potential to contribute to the goal of net-zero emissions by 2050. Electrification and increasing opportunities to support decarbonization of the economy are essential to achieving these goals.

I would be remiss if I didn't state early on in my remarks that during the global transition to a net-zero economy, as the world transitions from hydrocarbons to renewable energy sources, it will continue to require non-renewable energy sources such as oil and gas.

Newfoundland and Labrador's offshore oil and gas sector is a major contributor to our provincial economy. We have made significant progress in positioning the oil and gas sector to meet the world's energy needs during the transition while taking steps to decrease the carbon intensity of the sector by participating in projects, initiatives and groups focused on decreasing carbon sector emissions. With high ESG standards and performance, our offshore is an important and reliable supplier during the energy transition. We also have so much to offer when it comes to renewable energy resources, whether it's meeting net-zero commitments, mitigating the impacts of climate change or growing clean energy jobs and supporting economic development.

The proposed legislative amendments to the act are significant for our province as we work to develop our renewable energy offshore. They will ensure that necessary measures are in place to support offshore renewable opportunities and allow for a fiscal regime that provides the maximum economic return to Newfoundland and Labrador. It will rename the C-NLOPB as the Canada-Newfoundland and Labrador offshore energy board and expand its mandate to become the lead regulatory body for offshore energy in the offshore area. This furthers joint management of the offshore area and builds upon the extensive expertise the board has in managing offshore projects. It will define the offshore area for offshore renewable energy that excludes areas within provincial jurisdiction to ensure that we can move forward to regulate developments within provincial jurisdiction waters. Finally, it modernizes provisions regarding the regulation of our offshore oil industry.

Using our wind resources, we have an opportunity to develop some of the first large-scale projects that will produce green hydrogen for export for global demand and for some of our own commercial operations. As early adopters in this industry, we are taking every step we can to move in the right direction.

As a province, we have the right ingredients to competitively produce and export green hydrogen, from strong wind to fresh water, deep seaports and proximity to markets. [Technical difficulty—Editor]

[The Chair, Liberal, George Chahal]

The minister's screen is frozen. We'll maybe come back to him, if that's okay with colleagues. He has about a minute and a half left.

In the meantime, we will turn it over to the Government of Nova Scotia....

You're back, Minister Parsons. Your screen had frozen.

Please go ahead and finish your remarks.

[Andrew Parsons]

All right.

We would like to take our world-class wind to build a new sector that will create jobs and reduce emissions. We've been moving forward with onshore wind development. This legislation will allow us to move forward with the development of our offshore renewable energy.

We're looking forward to building into this green economy for the long-term benefit of our province.

I'd like to thank you for this opportunity.

[The Chair, Liberal, George Chahal]

Thank you, Minister Parsons, for your opening statement.

We'll now proceed to the Government of Nova Scotia and go to Minister Rushton.

Minister, the floor is yours for five minutes. Welcome.

[Tory Rushton, Minister of Natural Resources and Renewables, Government of Nova Scotia]

Thank you very much, Mr. Chair, and good afternoon, everyone.

I'm happy to join you virtually today from Mi'kma'ki, the traditional territory of the Mi'kmaq people.

I'm pleased to have this opportunity to speak about the importance of Bill C-49 for Nova Scotia's transition to clean energy.

Our province has some of the most ambitious climate change goals in the country. These are legislated goals, and we're determined to reach them. By 2030, we'll be off coal and have at least 80% of our electricity from renewables. By 2050, we'll be at net zero. There is no silver bullet to achieve these goals. It takes a suite of solutions to make them a reality. We're focused on made-in-Nova Scotia solutions as much as possible, and Bill C-49 is key to helping us advance them.

We've released a number of plans to help us reach our goals. The clean power plan focuses primarily on greening our grid. The offshore wind road map focuses on harnessing the power of the world-class offshore wind of this province. The green hydrogen action plan focuses on the clean fuel that can help with the transition both at home and abroad. They all work together to move us towards a sustainable future, but offshore wind and green hydrogen in particular really go hand in hand.

Nova Scotia's offshore wind speeds are among the best in the world. They rival the winds of the North Sea, where the world's offshore wind sector started. We have an incredible opportunity here. That's why we set a goal of offering licences for five gigawatts of offshore wind by 2030. We're planning the first call for bids in 2025. We want the world to know that we are open for business, not just for offshore wind but also for green hydrogen. These sectors are tied very closely together.

We anticipate high demand for renewable electricity for green hydrogen production, so developers know they can pursue offshore wind projects at a scale that make them worth investing in. We're nurturing the development of both these sectors. They are key components of our plan to meet our 2050 climate change goals.

New sectors require new regulation to make sure they are safe and responsible for the environment, for workers and for other sectors working in the offshore. That is why Bill C-49 is so important for Nova Scotia. It will bring us into a new era of offshore energy regulation, an era that brings untold new possibilities for clean energy and for green jobs, not only in offshore energy but also in the broader ocean-tech sector.

My premier, my government and I fully support this bill. It will expand the role of the Canada-Nova Scotia Offshore Petroleum Board to include renewable energy and will rename it the Canada-Nova Scotia offshore energy regulator.

The board will be well positioned for this expansion in regulatory authority. It has more than 30 years of experience in responsibly managing the health, safety and environmental aspects of our offshore developments. It has the technical expertise and the administrative capacity to regulate highly complex marine environments. This skill set will be easily applied to offshore renewables.

Together with Natural Resources Canada, we'll continue to review the board's budget and capacity, and we'll make sure it has sufficient resources to effectively and responsibly regulate this new sector.

Further, we're working with our federal partners on the regional assessment for offshore wind, which focuses on identifying where and how these projects can be optimally developed. It will inform governments on future planning for this sector, and it's an opportunity for Nova Scotians to have their say in how the sector and projects should be planned. We've been encouraging Nova Scotians to take part in this process, and we're listening to their feedback. That's why we made a decision in the fall to pause any consideration of wind development in our provincial waters until we have a framework in place for our jointly managed waters. We're confident that with that framework in place, offshore renewables and traditional industries such as fish harvesting can coexist, just as we've seen with natural gas projects and with wind projects in other parts of the world.

Finally, I want to emphasize that Nova Scotia welcomes all the appropriate scrutiny to make sure that offshore wind projects are done safely and responsibly and that they can coexist with other sectors and interests. That will involve review and approval at federal and provincial levels, and there will be a lot of opportunity for public input and engagement with our first nations.

Again, I will state that Nova Scotia fully supports this bill. It is key to advancing our clean energy and climate change goals. We have complete faith in the board's ability to help safely advance these goals, and we urge the speedy passage of this bill so we can meet our timelines in Nova Scotia.

We cannot afford to wait till Christmas. Developers are weighing their investment options right now as this committee debates, and we still need to make amendments to our own mirror legislation in time for the call to bids.

Offshore wind is Nova Scotia's greatest economic opportunity since the age of sail. There are tremendous opportunities for our coastal communities, for our province and for our country. We cannot afford to wait.

Thank you.

[The Chair, Liberal, George Chahal]

Thank you, Minister Rushton, for your opening statement.

Colleagues, we'll now proceed to our first round of questions, for six minutes. We'll start with the Conservative Party of Canada and Mr. Small.

Mr. Small, the floor is yours for six minutes.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today to take part in this important study.

My first questions will be for Mr. Parsons.

It's been said that Newfoundland and Labrador has an embarrassment of natural resources. This is a very exciting time as we position ourselves to benefit from the emerging offshore wind energy sector with the development framework that's inside this revised Atlantic accord here, which also addresses changes on the petroleum side.

Are you familiar with Mr. Max Ruelokke, Mr. Parsons?

[Andrew Parsons]

I am aware of Mr. Ruelokke as an individual and as a former member of the board, but I do not know him personally.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Mr. Ruelokke has over 40 years of experience in the offshore oil and gas industry and is the former chair of the C-NLOPB, as you just mentioned. He says the offshore oil and gas industry is a competitive business worldwide. He says there are three main factors required in offshore oil and gas development. Number one is sufficient resource availability. Number two is economic feasibility. Number three is appropriate regulatory regimes that provide certainty.

Do you feel that Mr. Ruelokke speaks with authority when he says this?

[Andrew Parsons]

What I would say is that I certainly have respect for his knowledge as someone who's been in that field. Again, I haven't had this conversation with him, but what he's saying sounds like it makes some sense.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Last week, Mr. Ruelokke submitted written testimony to this committee which said, “Section 56 of this Bill puts any and all offshore areas at risk of being rendered unusable for resource development, even though such activities may already be underway, and with appropriate regulatory approval.” He then goes on to say that “no corporation will risk investing in an area where their...production activities can retroactively be banned”.

Do you agree with his statements here?

[Andrew Parsons]

I would agree with a portion of the statement, which is that it will be hard to invest or have a retroactive that would have an effect. I do not agree with the beginning of the commentary, that this particular section or bill will have that effect, given the fact that nothing can be done without provincial approval as it relates to our offshore.

That's not an issue we have generally been too concerned with.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

How many offshore parcels were up for bids in 2023, Mr. Parsons?

[Andrew Parsons]

I don't recall the number. It would probably be in the range of 30 to 40.

From what I understand, Mr. Tessier may have spoken earlier, so whatever number he says I would certainly stand by as being accurate.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

It was a record number. It was in the 40s.

How many bids did you receive from the industry this year and at what dollar value?

[Andrew Parsons]

I believe there were zero bids.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Do you think it's merely a coincidence that after this bill was tabled in May, with a record number of offerings to the petroleum industry, not one bid was received?

[Andrew Parsons]

I've had no indication from developers, from the local industry or from people I deal with on a day-to-day basis that this bill has had any effect. It has not been mentioned to me in any way, shape or form that this bill had that impact, nor am I shocked that there were no bids this year. It is unfortunate, but it was not surprising.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Would you be shocked to hear that Texas received 382 million dollars' worth of bids for offshore parcels in the Gulf of Mexico in 2023?

[Andrew Parsons]

No. I believe I've seen that number, actually.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Is it possible that a clause like section 56 in the new Atlantic accord has created enough uncertainty for investors that we're starting to render ourselves uncompetitive in the world of offshore petroleum development?

[Andrew Parsons]

No. I can give you only my particular view that I don't believe this particular section or legislation has had that effect, and I can go only by the commentary that is made to me. I will say that, generally, in my three and a half years in this role, most operators or people in the industry do not shy away from telling me how they feel.

It may relate to general uncertainty, sometimes, as we talk about a global shift, which has been going on since 2020 and has had some impact. Again, maybe there is something I am not aware of, but I can only give you my perspective on this, as I laid out.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Mr. Parsons, do you intend to mirror this version of the Atlantic accord, or will you push Minister Guilbeault and Minister Wilkinson for amendments to address concerns that I'm quite sure you've seen put forward here by witnesses from the fishing industry and the oil and gas industry?

Will you have a look at addressing their concerns, or will it be, in the words of Max Ruelokke, the “death knell for...future offshore oil and gas”?

[Andrew Parsons]

I think the term “death knell” may be a bit of hyperbole.

Again, as it stands, we were very co-operative with the federal government when it came to the development of this legislation. Certainly, there were conversations between ministers, premiers and officials as they related to this, but again, I do not speak for the entirety of the government as it relates to how legislation is to go.