Transport Committee on Oct. 31st, 2017

[Misty MacDuffee]

It's a really good question. I think there is a transition to try to move away from the reliance on these fuels. I think what we have to do is not increase any more transport through this region. It's already at high risk, and we have to work to reduce that. That will largely occur through communities transitioning away from petroleum fuels to power their communities.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Would anybody else from the panel like to add to that?

[Robert Lewis-Manning]

If I may, Mr. Iacono, I think one of the key aspects, which is why I brought it up in my remarks, is that we've traditionally had a separation around marine protection and risk planning. One of my concerns with this piece of legislation is that it actually doesn't encourage the integration of those two functions, both within the federal government and with affected stakeholders. There really is a need to do that. I believe it is the intention to do that under the oceans protection plan, but we haven't seen that yet. This is a key aspect of how we protect and manage our coasts.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

I'm going to give the rest of my time to my colleague to Mr. Hardie.

[The Chair, Liberal, Judy Sgro]

Mr. Hardie.

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

Thank you, Angelo.

Mr. Lewis-Manning, in the previous panel, we heard concerns expressed about the articulated tug and barge combination. This was apparently the case with the Nathan E. Stewart. Although the barge itself didn't spill anything, the tug did. Had that barge been loaded, perhaps it would have been a much more difficult situation. Is there something inherent about a tug-barge articulation type of set-up that creates additional risk or peril?

[Robert Lewis-Manning]

On the face of it, no, but just reflect on my last comments. We haven't seen a report from the transport safety board, so I don't want to speculate on what the causes of that accident would have been, or are, but I would say it's a specific aspect of marine transportation on the coast that does deserve study. It was studied immediately after the grounding by the Pacific Pilotage Authority with respect to pilotage waivers, but I think we need to go one step further. Maybe I am repeating myself, but the need to integrate marine protection planning, which understands impact, with risk planning is an important element. It needs to be increased in our capabilities on all Canadian coasts but I think accelerated in the context of B.C.'s north coast.

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

I have a longer question that I'll have to save, hopefully, for another opportunity.

Mr. Leach, we had calls to include all petroleum products in the ban. What do you know about the segmentation we've done here, of the persistent oils or products versus the others, that would make the list not included in the act acceptable, in your view? What are the properties?

[Dr. Andrew Leach]

Again, I'm by no means an expert in spill response or behaviour of spilled petroleum, so I want to avoid making any comments in that area.

In terms of where I highlighted the list and where I think there are some issues, first of all, insofar as it would relate to any potential refining asset on the west coast, understand that those refineries produce a wide slate of products. It's not simply a matter of saying that we want the high-value stuff and we don't want the low-value stuff, or that we want the light ends and we don't want the heavy ends. You want to make sure you have options to move those products. A lot of those refinery products tend to be products that have thinner markets, the ones where you would be able to take advantage of having an export market.

We saw the most recent National Energy Board forecast. Fossil fuel demand in general and refined product demand are forecast to peak in Canada. Gasoline has already peaked, according to their analysis. We're going to see more of a push, even from our existing refineries, to be able to move those products to markets. Where are those markets? They're not in the U.S. The U.S. is seeing the same changes we are, and they're already a big net exporter of products. If we want those refineries to continue to have markets for their products....

It's a gasoline, diesel, and jet business, but you want everything to be able to move to its highest-value market to make those businesses as viable as possible.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Leach.

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair. I'm going to have a couple of quick questions, and then I'm going to pass it to Mr. Hardie, as this is, I'm sure, of great interest to him, this being his area and jurisdiction.

With respect to the voluntary moratorium, it's been in place since 1985. Within that time, we've seen environmental assessments that have taken place, and environmental assessments that have in fact attached themselves to economic assessments, and with those came recommendations involving communities, municipalities, first nations, etc.

My first question is, what do you think is going to change if the moratorium bill becomes an actual act?

[A voice]

Is that to me?

[Vance Badawey, Liberal, Niagara Centre, ON]

It's to anyone who wants to answer.

[Dr. Andrew Leach]

I think the biggest difference here is that the exclusion zone is transit, not port call, whereas this is a port call bill. It's not an innocent passage bill; it's a bill that prevents what the exclusion zone does not prevent currently, which is large vessels moving into harbours, principally in Prince Rupert but in other deepwater harbours as well.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you. The Coastal First Nations Great Bear Initiative commissioned an environmental assessment, an economic assessment of the development of the Pacific north coast to identify the economic, traditional, and substance activities taking place within that region. I'm sure you folks are aware that's being done. As well, they evaluated the impacts of the oil spill on the coastal first nations commercial and traditional activities.

What I was getting at is that with the analysis being completed, they also identified that the costs of one spill—one spill—could exceed the benefits derived by the overall community over a project's lifetime. How should municipal organizations and petroleum companies account for and seek to mitigate these risks?

[Dr. Andrew Leach]

Do you want to start?

[Robert Hage]

Yes. Back to the question about what the change might be, I think that's exactly right. The tankers can avoid the ports. If they want to ship in that area, they simply won't ship out of a Canadian port, but they'd still have the right to navigate and ship the contents through that whole area. In a sense, that's not what you want, but that's what you're likely going to get from this.

[Vance Badawey, Liberal, Niagara Centre, ON]

Can you answer the second question?

[Robert Hage]

On the second question, it depends. I think there are measures, obviously, you can take to respond to that. I referred to the Eagle Spirit, and I think you're going to hear more about that on Thursday. There is a group of nine first nations that are prepared to put in a system that will take oil to north of Prince Rupert. That's going to be something. You can ask them how they plan to deal with that particular aspect. In a way, it's the only game in town. What's there now is that you're not going to have terminals on the Pacific coast, not because of this legislation but because the government has control over it. Again, I think you have to ask what the purpose of this legislation is.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you.

I'm going to pass it to Mr. Hardie now.

[The Chair, Liberal, Judy Sgro]

You have one minute left.

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

Mr. Leach, I'd like you to expand a little bit on the area you touched on. We have certain things that we won't allow to be shipped out by a tanker; other things we will, which would be present at a port, especially if we had a refinery there. If we had a refinery there, would there be by-products of that process that you'd have to somehow deal with that would make a refinery basically economically unsustainable?

[Dr. Andrew Leach]

I guess the question would be, under what view of future refining margins? Building a new refinery—and I've written on this a lot—is an economically challenging proposition unless you create restrictions that make it economically viable. In a way this legislation would change the economic case for a refinery because one way to avoid—

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

Would that be for the better or for the worse?

[Dr. Andrew Leach]

It would be for the better, at the expense of the value of our crude. It's not creating value; it's just transferring value in the supply chain. If you can't move out heavy fuel oil, light fuel oil, waxes, lubricants, or whatever else you want to produce in an economically efficient way, then you're cutting at that value of the refinery.

To pick up a little bit on Mr. Lewis-Manning's point, a lot of these ships that are going to move those things in an efficient way might not be moving a large cargo directly from that refinery but are picking up from a variety of places along the coast and then moving that product out. By preventing the access of that vessel, even to pick up a relatively minor commodity out of either a refinery in B.C. or from rail equipment in Alberta, you are potentially restricting the value of that processing.