Transport Committee on Nov. 21st, 2017

[Sean Fraser, Liberal, Central Nova, NS]

Then there's no risk that you're under-resourced to actually carry out enforcement activities.

Finally, Ms. McCready and Mr. Bernier, we saw a new technology called CanaPux. It's a really neat thing. It looks like a thick hockey puck. It's able to transport oil products. Apparently it floats. Are you aware of this product or other new technologies, and how do you test new, innovative technologies that may potentially fall on the schedule but might not be that harmful?

[Marc Bernier]

We've heard about it. I don't have a whole lot of information as an expert within that field.

[Dr. Carl Brown]

I'm the same. I've heard about them. They purportedly float in the water, but we haven't been involved in the testing.

[Sean Fraser, Liberal, Central Nova, NS]

I have to share my time with Mr. Badawey now.

[The Chair, Liberal, Judy Sgro]

You have one minute, Mr. Badawey, just because it's almost 4:30.

[Vance Badawey, Liberal, Niagara Centre, ON]

I'll be quick and I'll wrap my questions up in one question.

The moratorium we're about to introduce looks at future impacts. Looking at the past, and contrasting the past with the future, if anything does and can happen, especially in other areas, have there been any records of site condition on lands or shorelines, site-specific risk assessments, phytotoxicological reports, lessons learned, and therefore protocols that are established or that are expected to move forward? As well, is there an expectation from the Department of the Environment for remediation with respect to incidents of the past over time, and of course for incidents that may happen in the future in other areas?

I know that's a loaded question.

[The Chair, Liberal, Judy Sgro]

We can give you 30 seconds for an answer. How's that?

[Dr. Carl Brown]

If I understand your question correctly, you're asking if we are learning from the past to help for the future. Certainly we have. After a heavy oil spill in Chedabucto Bay in Nova Scotia in 1970, part of that was cleaned up and part wasn't. It was left intentionally so that we could learn from it.

[Vance Badawey, Liberal, Niagara Centre, ON]

When you have a record of site condition on a piece of property, what is the expectation then from the Department of the Environment with that property? Obviously the expectation is remediation, but who takes responsibility for that, especially if it's crown land?

[Dr. Carl Brown]

If it's on crown land, the crown would be responsible for it, if they were the spiller.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Thank you very much to all our witnesses. We very much appreciated having you here to help the committee with this particular issue.

We will excuse our witnesses and suspend for a moment.

[The Chair, Liberal, Judy Sgro]

I call the meeting back to order.

Before I introduce the witnesses, the clerk has given us a project budget for our clean water study.

Are there any comments or questions on that? Otherwise, I would ask that the committee move adoption of the budget that's before you.

[An hon. member]

I so move.

[Some hon. members]

Agreed.

[The Chair, Liberal, Judy Sgro]

Thank you all very much.

Madam Clerk, there you go.

Hello to our witnesses. On this segment we have, by video conference from Prince Rupert Port Authority, Ken Veldman, director, public affairs, and from the Vancouver Fraser Port Authority, Peter Xotta, vice-president, planning and operations.

With us in the room we have Royal Vopak representatives. We have Marina Spahlinger, manager, regulatory and stakeholder relations, Canada, and Joel Smith, operations manager, province of Quebec, Vopak Terminals of Canada.

Would you like to start, Mr. Veldman?

[Ken Veldman, Director, Public Affairs, Prince Rupert Port Authority]

I'm happy to. Thank you for inviting me here today.

I'll be focusing on the legislation's potential impacts on both current and future port operations and Canadian trade.

Measured by the value of trade that it facilitates, the Port of Prince Rupert is the third-largest port of Canada, and its volumes employ over 3,000 women and men in northern B.C. Competitive Canadian trade gateways not only add value to the industries, which use them for market access, but are significant economic generators themselves.

With respect to creating a moratorium on crude oil tanker traffic on B.C.'s north coast, we understand that protection of the marine environment is of paramount importance to Canadians. The environmental, cultural, and economic values associated with it are enormous. PRPA shares those values and considers environmental protection of lands and waters within the port to be a key element of its mandate.

It should be noted that the navigational approaches to and from the port are among the safest in Canada. This is a result of several factors, including relatively low marine traffic volume, uncongested and unrestricted marine approaches, a deep natural harbour, and short inland water transit times from the Triple Island pilot station. The low level of navigational risk has been quantified and validated by third parties.

Navigational risk is further mitigated by positive steps taken by PRPA, including investment in shore-based radar, navigational aids, real-time navigational data, and best-in-class practices and procedures that clearly describe rules to marine carriers for safe access to and from the port.

With that as context, I'd like to focus on the proposed schedule of products found in Bill C-48.

The list found in the schedule is very broad and has not been accompanied by demonstrable evidence as to why items have been selected for inclusion. There are potentially several trade opportunities that may be negatively impacted beyond the core objective of bitumen. In fact, the legislation has the potential to eliminate existing supply chains and proposed marine services, as well as unintentionally impact future Canadian imports and exports through Prince Rupert, which would have significant economic consequences for the country.

For example, the inclusion of slack wax, a feedstock that's used to create petroleum wax products for Canadian manufacturing, impacts a service and existing capital plant and equipment that has been successfully operating in the Prince Rupert harbour for decades without incident. A vessel that transports slack wax only discharges a portion of its cargo in Prince Rupert, usually below the 12,500-tonne threshold being proposed. However, the total volume carried by that vessel would be impacted by the moratorium, and this could eliminate the service from the port.

The legislation also does not recognize the potential for port services that handle, but are not exporting, heavy oil. For example, a proposed marine fuelling service that includes a 12,500-tonne bunker fuel storage barge in the harbour is currently undergoing an environmental assessment. The capability to fuel large marine vessels at anchor in the port is a critical strategic service that the port needs as it strives to grow Canadian trade. An arbitrary storage limit is a potential hindrance to the development of these kinds of services.

The committee should also be aware that the production of refined petroleum and natural gas liquids is forecast to expand in Canada. In the case of refined petroleum products, while the bill's schedule omits several refined products, it also includes many of the products of the same production process, such as heavier oils and lubricants. The inability to market and maximize value for those heavier products would negatively impact the total economics of the refinery. Similarly, the inability for a future liquid bulk terminal to offer a full slate of refined and natural gas liquids would negatively impact its investment case as well.

Lastly, Transport Canada also notes that amendments to the schedule could be considered, following a regulatory review that would primarily assess whether the ability to clean up a spill has improved. While these criteria are rational to include, the exclusion of criteria specifically related to the empirical risk of an incident spill is a significant oversight. In an extreme example, conditions could be created that eliminated all risk of an incident, yet a product would still be banned under the moratorium because of the challenges of cleanup. Given the strategic attributes of Prince Rupert and our advantage of being arguably the safest port on the west coast of North America, this is a significant oversight in the legislation.

We have the recommendations that follow for amendments to Bill C-48.

Number one, the legislation's schedule of commodities should be reviewed to ensure a full understanding of the trade, economic, and operational impacts of their inclusion.

Number two, the review should be based on demonstrable evidence for their inclusion and include robust consultation with industry and marine transportation experts.

Lastly, number three, the legislation should contain language that requires periodic quantified assessments of the risk of marine incidents in order to provide an improved context for the regulatory process of reviewing the schedule on an ongoing basis.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Veldman.

Mr. Xotta, would you like to go next?

[Peter Xotta, Vice-President, Planning and Operations, Vancouver Fraser Port Authority]

Thank you very much, Madam Chairman.

Thank you for the invitation to make some comments. While the oil tanker moratorium act does not directly impact Canada's largest port from an operational perspective in Vancouver's Lower Mainland, the Vancouver Fraser Port Authority is pleased to provide our perspective and to respond to any questions the committee may have.

For context, the Vancouver Fraser Port Authority, like other Canadian port authorities, is established by the Government of Canada pursuant to the Canada Marine Act and is accountable to the federal Minister of Transport. Our mandate is to facilitate Canada's trade objectives by ensuring that goods move safely while protecting the environment and considering local communities.

With regard to Bill C-48, the Vancouver Fraser Port Authority assumes that government understands the potential economic impact for such a moratorium, given that there are very few suitable locations, particularly on the west coast, for movement of petroleum products, as was articulated by my associate from Prince Rupert.

Notwithstanding the fact that any future proposals would be subject to government's rigorous environmental and regulatory review process, this moratorium could create pressure on the southwest coast of British Columbia to develop capacity for future energy projects. In turn, that pressure could constrain capacity for other commodities that must travel through the lower gateway of the port of Vancouver, such as grain, coal, and containerized consumer and manufactured goods. Supply chains are complex, with multiple participants, and it's important to understand that other ports could not necessarily easily pick up the slack for one commodity or another.

Turning to the matter of tanker safety, I want to point out that tankers have moved safely into and out of the port of Vancouver for decades. Our related procedures go above and beyond the baseline requirements, and we revisit them regularly and update them. I'd be happy to go into more detail on that.

Even with the moratorium, the risk of spills from vessels with less than 12,500 metric tonnes of oil requires excellence in spill response. The port authority echoes its submission to the tanker safety panel of 2013, noting that the government has taken significant strides to address recommendations raised by that panel and by contributors like the port of Vancouver.

The oceans protection plan goes a long way to addressing our concerns. We're aware that the government is aggressively moving to ensure the Canadian Coast Guard is adequately funded to respond to and manage spills in local waters, including being trained and resourced to provide comprehensive leadership.

We also recommended that local communities and individuals, including aboriginal peoples, must be involved in spill response plan development, oversight, and response, and fisher personnel and their vessels must be incorporated into a response strategy, particularly in remote locations, to provide an additional level of support. We're certainly pleased to see government acting in this regard also, through the oceans protection plan.

We reiterate the need for strategic placement of appropriate spill response equipment in locations of higher risk, which would lessen response times and improve response capabilities. The announcement of new Coast Guard stations on the west coast is an important step in the right direction, if they are in a position to provide such response.

The port is also optimistic that government will continue to implement the recommendations of the tanker safety panel. We believe there is a good level of understanding that the moratorium is only part of the puzzle in protecting our precious coastlines.

Lastly, the port authority encourages the committee to consider the work of unbiased voices, such as the Clear Seas Centre for Responsible Marine Shipping, an independent research centre that promotes safe and sustainable marine shipping in Canada. Clear Seas has now been established for over two years and is well positioned to provide support to government in the event that it may need to consider future policy changes with regard to Bill C-48.

Again, thank you for the opportunity to comment. I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Xotta.

We will go on to Royal Vopak of Canada.

[Marina Spahlinger, Manager, Regulatory and Stakeholder Relations, Canada, Royal Vopak]

Thank you, Madam Chair.

On behalf of Royal Vopak, I would like to thank you for the opportunity to provide comments regarding Bill C-48.

We are an international tank storage company with a 400-year history and a strong focus on safety and sustainability.

As an infrastructure and service provider, we ensure efficient, safe, and clean storage in the handling of bulk liquid products and gases for our customers around the world. Our purpose is to store vital products with care. We currently operate 66 terminals in 25 countries, with a combined storage capacity of 35.9 million cubic metres. Four of these terminals are located in Ontario and Quebec, and we recently expanded our business to British Columbia, where we have a 30% interest in a new propane export terminal that is currently being built. Including our joint ventures and associates, we employ a work force of over 5,500 people globally.

Canada is a beautiful country, and we feel privileged to be doing business here. We appreciate Canada not only for the business opportunities it presents but also for continuously striving to be an environmental leader. We certainly enjoy Canada's pristine environment and we perfectly understand why you want to protect it.

That said, many of our terminals around the world are located in or near pristine natural environments, and our experience has shown that economic development and environmental protection can go hand in hand.

Let's consider the economic context of this moratorium. According to Natural Resources Canada, Canada was the sixth-largest energy producer in the world in 2016, yet 97% of oil and gas exports from Canada were sent to the U.S. The National Energy Board projects that net exports of Canadian energy will continuously increase until 2040. However, domestic petroleum consumption in the U.S. is expected to remain relatively flat over that same time frame.

Meanwhile, the U.S. Energy Information Administration projects that China and India will drive a 39% growth in liquid fuels consumption in non-OECD countries from 2015 to 2040, and that's due to rapid industrial growth and increased demand for transportation.

The moratorium as it is currently proposed would cut off a direct route to take advantage of this Asian market. This will continue to expose Canada to steep discounts on energy products that it can only sell to the American market. This raises the question of why Canada would expose itself to such a serious economic risk, particularly when you look at other economic consequences of such a decision, such as forgone tax revenues or employment opportunities.

As it stands, the moratorium is not supported by an independent scientific risk assessment that justifies why crude oil or persistent oils are included in it. This creates uncertainty for us and leads us to wonder what other items could be included in the future.

Additionally, there is no end in sight for the proposed legislation, as it does not include an end date. It is safe to say that this moratorium, if implemented, would set a worrying precedent that could make it riskier to conduct business in Canada.

Seven initiatives are currently being conducted by the Government of Canada to increase marine safety that we hope are being considered as part of the development of this legislation. These include, for example, the creation of lower-impact shipping corridors in the Arctic and aerial response planning pilot projects to help Canada adopt a regional risk-based marine preparedness and response system.

At the very least, we respectfully ask that Bill C-48 be amended to include an end date to the moratorium, as well as the process and the criteria for the inclusion and removal of items from the list of persistent oils.

Madam Chair, Vopak is keen to contribute to both economic growth and environmental protection. We would therefore be happy to engage in further discussions and share our expertise, should that be of any use.

Thank you again for the opportunity to talk to the committee.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Ms. Block for six minutes.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

I want to thank all of you for joining us today. I've appreciated your testimony.

Mr. Xotta, it is my understanding that Canada has one of the safest, most stringent oil tanker loading and unloading regulatory regimes in the world. Can you comment on that?

[Peter Xotta]

A number of provisions are in place, and there are probably experts in the room whom you've heard from who could go into more detail. I think our track record of performance, particularly on the west coast—obviously I'm familiar with Vancouver most—is exceptional. In addition to that, of course, the additional scrutiny that many major projects have brought to the west coast, in particular in Vancouver, has renewed the effort to bolster the provisions in place for marine transits such that we are very confident that we're leaving no stone unturned with regard to improvement and aids and protocols for accessing the various areas under our jurisdiction.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Okay. Thank you.

Does the port authority have any responsibility for reviewing these procedures, or is that something that is done by a federal department?