Transport Committee on Oct. 26th, 2017

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

What does that say about the long-term economics for your product to ship through Prince Rupert? You would either have to have a pipeline or a pretty massive rail shipment of the product. Is there a world market for that level of additional product coming out of Canada? What is your long-term prognosis about the investment you'd have to make to make that happen, even if we did allow it?

[Nancy Bérard-Brown]

If we look at the most recent forecasts that have been prepared by the International Energy Agency out of Paris, there is growing global demand for oil. The purpose of producers, and our desire to reach tidewater is to be able to satisfy those markets.

In response to your earlier question, our expertise is to produce the resources. If there's a desire and a demand and a refinery to purchase our product, we would be indifferent. My understanding has been that the reason refineries close is that the price differential over the last number of years has not justified having a refinery built. From a producer's perspective, we have growing resources, and if there's a demand, we are prepared to sell our resources and fetch market prices independent of the purchaser.

But there's definitely a growing demand, and I know that all our exports are currently to the U.S., so we need to diversify.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

On balance, there's also a demand, though, that this be done carefully. The experience they had in Burnaby said that even crude oil, which I understand you'd like taken off the regulated list, can create one hell of a mess—pardon my French—and it's the type of thing this moratorium is meant to address.

[The Chair, Liberal, Judy Sgro]

Could you provide just a short response, please?

[Nancy Bérard-Brown]

I just want to clarify that the reconsideration we've asked for is for condensate, which comes from the production of natural gas. It is not a heavy oil or comparable to a dilbit.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cullen.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair.

I want to put on the record my apologies to all our witnesses for being late. To our friends from Victoria and Burnaby, hello as well.

Madam Bérard-Brown, I'll start where we just ended, if you don't mind.

I represent northwestern British Columbia, the place for much of the conversation around the northern gateway, and for the last 40 years, the conversation around whether supertankers can move safety through our waters with oil.

One of the questions that came up consistently, that even just recently I'm still not able to get a sufficient answer from the government on, is the nature of diluted bitumen and the nature of diluted bitumen when it touches water, salt water and fresh water. Do either of your associations have research that tells us what that nature is?

Of course, answering that question first dictates how we manage, how we do safety protocols, cleanup protocols. Parenthetically, that was never answered through the entire northern gateway process, yet the government of the day still released approval despite not knowing what we would do if a cleanup was required. Do we have research from industry?

[Nancy Bérard-Brown]

That is a very excellent question.

As I mentioned, there was a significant gap identified. The Canadian Association of Petroleum Producers and the Canadian Energy Pipeline Association, a few years ago, commissioned the Royal Society of Canada to conduct a study and to explore what was the state of the literature in terms of fate and behaviour of various crude oils. They identified a gap. That is the study that I referred to earlier in my remarks.

We have undertaken jointly to hire a consultant to proceed and do some further research on the fate and behaviour of crude oil under various environments. Those results will be available next year and they will be public.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Just to be clear, is it crude oil or diluted bitumen? It's an important distinction.

[Nancy Bérard-Brown]

It will include crude oil that currently moves through North America, so it will include some light, heavy, medium, conventional, unconventional, bunker C fuel, and condensate.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

And dilbit...?

[Nancy Bérard-Brown]

Yes, dilbit, synbit, and dilsynbit.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It's an interesting process that we have in Canada. We've been moving diluted bitumen for not a long time but quite a while now, and the prospect of going through Mayor Corrigan's part of the world is to move more of it in large quantities. This is product from northern Alberta that's put in with condensate and allowed enough viscosity to move it through the pipeline, yet changes the composition and nature of the product, it is fair to say, especially if the product goes into water and is then weathered.

Mayor Corrigan, has this been brought up in the conversations within your community, and between your community, your office, and the federal government, in the way that we have done the environmental assessment with respect to the next pipeline, the Kinder Morgan project, and the Liberal government's decision to approve that?

[Derek Corrigan]

It has been a subject of great concern in our city because little is known about dilbit and the ultimate impact of dilbit if there is a spill. Certainly the condensate is said to be a proprietary secret as to exactly what chemicals are in the condensate that allows them to have the viscosity to move through the pipe, which is again an issue of significant concern because there are a great many unknowns as to the impact this might have on our ecology.

Ultimately, the federal government does have the power to do this. You heard the industry saying, “Well, if someone is going to refine it and we can sell it to the refinery, we'll do that,” but the problem is that there's no responsibility being taken by the industry for building the infrastructure here in Canada. It would provide a secondary industry, and one that would make products safer to move, wherever it was going to go. I don't think there has been an adequate explanation of why we shouldn't take the environmental responsibility for making that product safe to use right here in the country that's producing it.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Isn't this just about money—

[Derek Corrigan]

Yes, it is all about money.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

—why we don't refine, why we haven't built any significant refinery infrastructure?

We've built one significant refinery and one upgrader maybe in the last 35 years in this country, while the number of millions of barrels of export has gone up quite a bit.

To Councillor Isitt in Victoria, the connection through now turns primarily to salt water; if we go to the interior, it's fresh water.

Do the conversations you have with residents in Victoria and the greater Victoria area reflect some of the conversations that Mayor Corrigan talked about, in terms of imagining Kinder Morgan going ahead? It has been approved by the federal Liberal government. Tankers start plying the waters in sevenfold increase, and what do we do if an accident happens? Can we clean it up, given the nature of dilbit?

[Ben Isitt]

The short answer is no, and that is why the City of Victoria and the Capital Regional District have adopted a position of opposition, both to the Trans Mountain pipeline expansion project application and to other policies or infrastructure that would result in increased fossil fuel transport along the coast.

We've heard from our fire chief that coordination between government agencies is wholly inadequate. The current model of federal oversight of fossil fuel shipments is totally inadequate, in terms of Transport Canada and the Canadian Coast Guard delegating and abrogating responsibility to Western Canada Marine Response Corporation, which is controlled by industry. By its very structure, its interests are aligned with industry, rather than with the public interest of protecting people, property, and the natural environment from harm.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Councillor.

We are moving on to Mr. Sikand.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you, Madam Chair.

My first question is for Mr. Bloomer.

You mentioned that your success rate of moving oil is 99.9%. Is that right?

[Chris Bloomer]

There is one more nine.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

That's what I thought.

The odd time, the 0.01% when something goes wrong.... Actually, I'll just backtrack. What is that based on, the volume or the number of shipments? How is that percentage calculated?

[Chris Bloomer]

It's calculated based on the actual volume. Annually, there are about 1.2 billion barrels of oil shipped, and about five and a half trillion cubic feet of gas. That's what the numbers are based on.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

The odd time there is a disaster or something goes wrong, do you have numbers associated with that—cost of cleanup, damages?

[Chris Bloomer]

The most recent was in 2010, in Kalamazoo, Michigan. It was in the billions-of-dollars range, but it was cleaned up. It's back to its original state.