Evidence of meeting #77 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was product.
A recording is available from Parliament.
Manager, Oil Markets and Transportation, Canadian Association of Petroleum Producers
It is separate and distinct. I know from my dealings that there is sometimes confusion.
As I mentioned earlier, too, there was very brief consultation, and I think in light of the impact that it may have on our ability as producers of both natural gas and oil to reach tidewater, there would be some significant economic impacts if the bill were to proceed.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Thank you.
I'll follow that up with another comment and question. There's no question in the minds of those of us sitting here representing our Conservative caucus that this is not a moratorium on oil tanker traffic, but it's a moratorium on the production of the oil sands and on a port. This definitely addresses, as you've said, the loading and unloading of oil on tankers in that area, so I'm wondering if you could tell us how Canadian laws and regulations regarding the loading and unloading of oil tankers compare with other countries?
President and Chief Executive Officer, Canadian Energy Pipeline Association
In terms of the maritime movement of oil cargo and so on, there are international standards and there are processes. Canada abides by them. The international shipping coordinators and regulatory bodies have those regulations in place. There are thousands of vessels all over the world moving in and out of ports, moving hydrocarbon and oil on water all over the planet, so Canada will fit within that framework, and as we usually do, we'll be the best at it.
Manager, Oil Markets and Transportation, Canadian Association of Petroleum Producers
I may not be able to offer some specifics. The danger that I foresee is that when you're making a policy or a significant action that is not based on science, there's a danger of creating a precedent. There's also I think a danger in terms of reputation. Canada is party to international agreements, so we know that it has not been very well received because they are perceiving this as a restriction of movement to and from Canada.
In terms of loading and unloading, I would not be able to offer you any specifics. It is not within the sphere of my expertise.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Ms. Block.
To our witnesses, thank you very much for helping us out today as we continue on with our study of Bill C-48.
We will suspend while we switch our video conference folks around and our witnesses.
Liberal
The Chair Liberal Judy Sgro
We'll call the meeting of the Standing Committee on Transport, Infrastructure and Communities back to order.
Welcome to our witnesses. We have Janet Drysdale, vice-president, corporate development at CN. Nice to see you again, Janet.
We also have Ross Chow, managing director of InnoTech Alberta; Scott Wright, director of response readiness, Western Canada Marine Response Corporation; Kate Moran, president of Ocean Networks Canada; and Greg D'Avignon, president and chief executive officer, Business Council of British Columbia.
Welcome to all of you. Sorry for the delay of a few minutes. We had to get everybody connected.
Ms. Drysdale, we'll start with you. If you could keep your comments to five minutes or less, it would be appreciated.
Janet Drysdale Vice-President, Corporate Development and Sustainability, Canadian National Railway Company
Good afternoon.
My name is Janet Drysdale, and I am vice-president of corporate development and sustainability at CN. I am making this opening statement on behalf of both CN and our research partner InnoTech Alberta, which is represented via teleconference by managing director Ross Chow. We appreciate the opportunity to appear today to add our perspective to your study of Bill C-48.
CN is the only railway that services the ports on the north coast of British Columbia. The Port of Prince Rupert is an important and rapidly growing part of CN's network, and over the past 10 years it has become a key gateway for Asian goods moving to the North American market. In addition, we serve the port of Kitimat, also on the B.C. north coast.
CN currently moves intermodal traffic, coal, grain, wood pellets, and lumber through terminals at Prince Rupert, and we are in active discussions with customers interested in moving a variety of other export products through the port. We also operate a rail barge service out of Prince Rupert, which serves the Alaska Panhandle. CN does not currently move any product to the B.C. north coast for export that would be affected by the provisions of Bill C-48.
For the past three years CN has been working with InnoTech Alberta to develop a process to solidify bitumen. InnoTech is part of the Province of Alberta's research and innovation effort and is an industry-leading expert in the fields of energy and the environment. Together, CN and InnoTech looked at many different ways to solidify the entire barrel of bitumen, with no refining involved. Frankly, nothing worked.
However, in reviewing the numerous methods we tested, we realized that if we combined several processes, we could create the solid, transportable product we were seeking. Through this research, we have now developed a patent-pending process to successfully solidify bitumen.
The process involves adding polymers to the bitumen to form a stable core and then creating a polymer shell around the bitumen-polymer blend, enabling us to create something that loosely resembles a hockey puck. Importantly, the bitumen-polymer blend is easily separated back into its bitumen and polymer components. The process does not degrade the bitumen, and the separated polymer can be subsequently recycled or reused in the solidification process. We have named the product “CanaPux”.
The key point for this committee is that CanaPux will not require tank cars for movement by rail, and the product will not move in ocean tankers to end markets. CanaPux will be transported much as are any other dry bulk products, such as coal and potash, in gondola cars on the railway and in the hull of general bulk cargo ships. At ports, CanaPux could be transported to ships utilizing existing bulk-loading infrastructure.
From a safety and economic point of view, CanaPux do not require diluent in order to be moved. As I am sure you are aware, diluent—or condensate, as it was referred to earlier—is a lighter, more volatile petroleum product used to dilute bitumen in order to make it easier to move in pipelines.
Unlike pure bitumen, the inclusion of the polymer ensures that CanaPux float in water, making recovery in the case of a marine spill straightforward. I do have a sample with me, if anyone is interested in looking.
To date, we have successfully proven the chemistry and the concept of CanaPux. In addition, we continue to work with InnoTech on scientifically confirming the environmental aspects, including its fate in the environment, as well as the GHG life cycle.
Of course, we also need to demonstrate the commercial viability. In other words, we need to show that we can create CanaPux at high speed and high volume. This is essentially a straightforward manufacturing question, and CN is currently leading the development of a pilot project that will answer that question. The pilot will allow us to demonstrate the technology to interested producers and global refiners. It will also allow us to quantify the actual costs involved and will create scalable engineering work that can be used to commercialize the technology.
We believe the pilot will demonstrate that CanaPux is a safe and competitive way to move bitumen from western Canada to offshore markets.
We briefed various officials from numerous departments in the federal, Alberta, and British Columbia governments before moving forward with the patent process.
Given that CanaPux would move in freighters rather than tankers, it is our understanding that the movement would be permissible under Bill C-48, thereby allowing the safe movement of bitumen while extending market options for Canadian producers. We believe that, given the environmental properties of CanaPux, this is appropriate.
Environmental protection of our coastlines is extremely important. Market access for Canada's rich natural resources, which provide economic opportunity for all Canadians, needs to be balanced with that protection.
CN and InnoTech are very proud to have taken the lead in the development of CanaPux. We believe that the safety and environmental benefits of the product will be of great benefit to Canadians.
We thank you for the opportunity to comment.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Ms. Drysdale.
You said you have a sample here for the committee?
Vice-President, Corporate Development and Sustainability, Canadian National Railway Company
Yes.
Vice-President, Corporate Development and Sustainability, Canadian National Railway Company
It is in a zip-lock bag because it is oil and it smells like oil, so you can open it, but that's the disclosure.
Liberal
President and Chief Executive Officer, Ocean Networks Canada
I thought I'd bring the ocean to you since you're talking about the ocean.
I'm appearing today representing Ocean Networks Canada. I'm the president and CEO. I've been in this position for five years. Prior to coming to Victoria, I served for two years in the U.S. as an assistant director in the White House Office of Science and Technology Policy, serving under President Obama's science adviser, John Holdren. During my secondment there, I was selected to be on Secretary of Energy Steven Chu's eight-member science team that oversaw shutting down the flow of oil from the Deepwater Horizon.
At Ocean Networks Canada, I lead an exceptional team that operates the world's leading ocean observing systems. Ocean Networks Canada delivers the Internet-connected ocean by observing and monitoring primarily the west coast but also assets on the east coast and in the Arctic. These are observatories that continuously gather data in real time for scientific research, but they are also important in helping communities and managers make decisions and, for example, in informing decisions such as those you're making today with regard to Bill C-48. These decisions are really important to protecting the ocean now and in the future.
The locations, as you know well, that would be most impacted by an oil spill accident are our oceans and coastlines. At best, coastal oil spill cleanup tools recover less than 10%, sometimes up to 15%, of the oil spilled, which everyone agrees is a pretty dismal record. These facts alone provide support for the intention of Bill C-48.
Seven years ago, the blowout in BP's Deepwater Horizon opened up that spouting spigot of oil into the Gulf of Mexico, marking the beginning of the world's second-largest oil spill. We all watched oil spew from the spigot on 24-7 cable news. I was watching it as we were trying to shut it down. That lasted for months, with feelings of both aversion and shame. After months of work, the spigot was shut, but not before almost five million gallons were spilled. Now, this is totally different from what we're talking about here in terms of tankers, but just bear with me as I talk about these other accidents.
Over 20 years earlier, the Exxon Valdez spilled 42 million litres of crude oil in offshore Alaska, which remains today one of the most devastating spills because of its remote location, the type of oil spilled, and the negative impact on the area's rich biodiversity. Most coastal waters in B.C. resemble those in Alaska where the Exxon Valdez spill occurred. They are remote, the waters are relatively cold, slowing down the breakdown of crude oil, and they consist of many narrow inlets and channels characterized by large tidal ranges and strong tidal currents. These waters are similar to those in B.C. that are home to seabirds; salmon, and other harvestable fish species; sea otters; seals; and resident migrating whales, most notably gray, humpback that are increasing in numbers, and both orca and transient orca whales.
To pause there for a moment, in response to the Exxon Valdez, the tanker industry has done considerable work in reducing accidents with tanker spills, which I'm sure you've heard from other people appearing before you. There were many lessons learned from the Exxon Valdez, which have reduced the risk of tankers going aground in these kinds of waters.
Let me talk about, most recently, the tug Nathan. E. Stewart, which foundered and sank along the rocky coast of B.C. Although the fuel barge it was powering was empty, the tug itself carried 220,000 litres of diesel fuel, and thousands of litres of petroleum-based lubricants. The result is that the pristine coastline and the Heiltsuk First Nation have been negatively impacted, and that impact is still being assessed. We don't know the full impact of that, but certainly the first nation is claiming that there was a significant negative impact.
How could these accidents have happened? When I worked on the BP accident, I was stunned at how the oil industry assured us—as they do today—that their technology advances allowed for safe development and transportation of oil and gas even in the most challenging environments. The simple answer is that each of these disasters was caused by a combination of human error, weak regulations, and a paucity of oversight that relies on robust monitoring.
I think Bill C-48 begins to strengthen the regulation gap and is a positive move forward. It supports, perhaps for the first time, Canada's use of the precautionary principle outlined in the London 1996 protocol to the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter.
Ocean Networks Canada recently completed—
Liberal
The Chair Liberal Judy Sgro
Ms. Moran, I'm sorry to interrupt. Could you make your closing remarks, and then get some of those other comments in when you're responding to members?
President and Chief Executive Officer, Ocean Networks Canada
I'm sorry. I've gone over time.
Liberal
The Chair Liberal Judy Sgro
Maybe you can just get everything added in. I'm sure you'll get lots of questions from the committee.
Liberal
The Chair Liberal Judy Sgro
Whatever you weren't able to get in, we could get in at the committee level.
President and Chief Executive Officer, Ocean Networks Canada
My main point is that Bill C-48 doesn't change anything that's now existing in terms of our tanker traffic on the coast. It doesn't impact the small communities in terms of needing oil, but we do see significant traffic of car carriers and cargo. Those are the ones that are most at risk.
October 26th, 2017 / 4:50 p.m.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Ms. Moran.
Mr. Wright, director of response readiness, go ahead, please. Please try to keep your presentation to five minutes or less if you can.
Scott Wright Director, Response Readiness, Western Canada Marine Response Corporation
I'm here today to talk to you about marine spill response in Canada.
We are here neither to support nor to oppose the tanker moratorium. Our mandate, under the Canada Shipping Act, is to be prepared for spill response on the west coast of Canada regardless of where the spill happens. While we neither support nor oppose the bill, spill response and our ability to handle spills have played a central role in the conversation around energy export, market access, and shipping volumes.
In 1976 WCMRC began as an industry co-op under the name Burrard Clean Operations. At that time, it was our duty to provide spill response within the Port of Vancouver. Following the Exxon Valdez incident in 1989, the Canadian government established a public review panel on tanker safety and marine spill response capability.
The panel's first report included 107 recommendations that ultimately informed amendments to the Canada Shipping Act in 1995. The changes created an industry-funded and government-regulated spill response regime for all of Canada's coastal waters. WCMRC became the only dedicated response organization on the west coast.
Our state of preparedness is funded by membership fees from shipping companies and oil-handling facilities that operate on the west coast. Vessels greater than 400 tonnes are charged an annual membership, whereas charges for oil carried for commercial trade are based on volumes. In the event of a spill, the polluter is required by law to pay for cleanup costs. Should the spiller be unable to pay, there are international and Canadian funds available to pay for spill cleanup and claims related to spills. Those funds are the result of levies placed on industry.
The Canadian government sets the standards, and industry pays for the response organization, the role of which is to meet and exceed the standards. The Government of Canada requires them to pay for it so that Canadians do not have to.The spirit of the regime is that Canadian taxpayers are not responsible for the cost of response. For those who are concerned that industry ownership somehow impacts our ability to respond, know that the federal government sets standards and provides oversight to the regime and response. It is an excellent model, and the federal government is in the process of improving the regime.
The Canada Shipping Act requires that we recover up to 10,000 tonnes of oil off the water in 10 days. Tiered response times are also defined by the Shipping Act. For example, within the Port of Vancouver, WCMRC is required to be on scene responding in less than six hours. Currently, the Port of Vancouver is the only designated port on the west coast. WCMRC exceeds those planning standards on every level. Our average response time in the Lower Mainland over the last 10 years has been 60 minutes.
WCMRC has offices and warehouses located in Burnaby, Duncan, and Prince Rupert, and more than a dozen equipment caches strategically located along B.C.'s coast. We have a fleet of 42 vessels and booming capability along more than 36 kilometres. We have a skimming capacity of 550 tonnes, which is 20 times the Canada Shipping Act standard. WCMRC has successfully responded to both light and heavy oil spills. We have a range of skimmers that can handle all types of oil transported on the coast. We also train hundreds of contractors every year.
In the event of a spill, our organization is contracted by the polluters to clean up the spill on their behalf. The entire response is managed by a range of federal, provincial, and municipal partners, including first nations, health authorities, the Department of Fisheries and Oceans, Environment Canada, the B.C. Ministry of Environment, and others. The Canadian Coast Guard monitors the response and takes command if the polluter is unknown, or unable or unwilling to respond.
Currently, Transport Canada and the Canadian Coast Guard lead four pilot projects in Canada to develop area response plans based on risk assessment.
In B.C., the pilot project is focused on the southern shipping lane and includes partners from Environment Canada, Fisheries and Oceans, and the B.C. Ministry of Environment.
The development of—
Liberal
The Chair Liberal Judy Sgro
Excuse me, Mr. Wright, but I have to cut you off. Please try to get your comments added on to the members' questions.
We now have Greg D'Avignon, president of the B.C. Business Council.
Please go ahead, Mr. D'Avignon.