Great.
Good afternoon. Thank you, Mr. Chairman and members of the committee.
My name is Tim McMillan. I'm president and CEO of CAPP, the Canadian Association of Petroleum Producers. Our industry association represents both large and small companies on the upstream aspects of oil and natural gas. We represent about 90% of the oil and natural gas produced in Canada.
The goal of this bill is to improve accountability through increased liability by railways that carry crude oil and other designated goods. In this bill, provisions are made for appropriate insurance for railway companies, which will be available if accidents involving crude oil or other designated goods happen. Provisions are also made for a supplementary compensation fund—the fund for railway accidents, financed by crude oil shippers—similar to what is in place for marine transport.
To put the issue of rail transportation in perspective, today Canada produces about 3.7 million barrels of crude oil per day. We ship the majority of that on pipelines, but about 5%, 200,000 barrels a day, is currently utilizing our rail system. We expect that number to grow in the coming years. Canada has been endowed with great resources—valuable resources that contribute greatly to the prosperity of our country and its people. Maintaining the competitiveness of this resource is a key priority.
Safety is paramount to our industry. We are committed to the safe, environmentally responsible development of the resource, and, as such, operators are responsible for and face the liability for their decisions.
We are not alone in this business. Our industry relies on others to transport our products to market. Pipelines are responsible for the safe transport of oil that they accept for shipment. They face the liability if there is a failure and a loss results. The shipper may also see costs of the insurance reflected in the rates charged by the pipeline, but the liability is clearly on the pipeline. This reinforces accountability.
We support a system for rail transportation that also is based on the liability of the carrier, coupled with a regulatory system that ensures that the carrier's commitment to safety is achieved. In broad terms, we are pleased that steps are being taken through this bill to reinforce accountability to support the commitment to safety of rail carriers.
Canadian oil is not the only oil making use of the Canadian railway system. There has been tremendous growth of U.S. oil production, and that oil is finding its way to eastern Canadian refineries. In fact, imports of U.S. oil are substantially displacing offshore oil transported by ships in eastern Canada. We want to make sure that all oil carried on Canadian railways pays into the new fund. We also want to make sure that payment into the new fund is collected only once. We have pointed out areas where we feel the language in the bill could be improved to ensure that this intent is clear.
I should also mention that crude oil is not the only commodity moved by rail that is categorized as hazardous. There are many other dangerous goods transported by rail. We are firmly of the view that rail safety is not simply an issue of crude oil. We believe that all dangerous goods should be designated and contribute to the new fund.
In the event of an accident, there must be effective response and responsibility. These are matters of great concern for our members. CAPP has been supportive of and engaged in the many initiatives taken to enhance rail safety. It is the railway's commitment to safety that we all acknowledge and rely on. Likewise, it is the railways that are accountable and bear the liability. We believe that if a shipper contracts with a major railway company to carry a shipper's oil and the railway company makes use of another smaller railway where an accident occurs, then the liability under Bill C-52 should fall on both companies. This will make the higher insurance held by the larger company available to compensate for the loss.
While the bill contemplates that more than one railway can be liable for an accident, the bill is not clear on how that liability would arise. We have pointed out an area in our written submission where the language of the bill could be improved to provide more clarity.
In regard to the new fund for railway accidents, the equivalent marine liability fund is capped. We look to the government to place a cap on the fund at the $250 million target that was mentioned in the House on March 30, 2015.
With that, Mr. Chairman and committee members, thank you for your interest and for including CAPP and our perspective in your discussions today. Thank you very much.
I look forward to your questions.