THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
EDMONTON, Tuesday, April 30, 2019
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-48, An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast, met this day at 9 a.m. to give consideration to the bill.
Senator David Tkachuk (Chair) in the chair.
[English]
The Chair: Honourable senators, today we are continuing our meeting on Bill C-48, An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast, the proposed “Oil Tanker Moratorium Act.”
We are happy to be here in Edmonton this morning to hear from witnesses on this bill, and before we begin, I will ask all senators to introduce themselves starting with the senator on my left.
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
Senator Busson: Bev Busson from British Columbia.
Senator Simons: Paula Simons from Alberta, and Treaty 6 territory.
Senator Tannas: Scott Tannas from Alberta.
Senator MacDonald: Michael MacDonald from Nova Scotia.
Senator D. Black: Doug Black from Alberta.
Senator Neufeld: Richard Neufeld from British Columbia.
The Chair: I am David Tkachuk from the province of Saskatchewan.
For our first panel this morning, we are pleased to welcome from the Ermineskin Cree Nation, Chief Craig Makinaw; and from the Regional Municipality of Wood Buffalo, Mayor Don Scott.
Thank you for being here today. We will start with Mr. Scott.
Don Scott, Mayor, Regional Municipality of Wood Buffalo: Thank you very much, and my apologies for my voice this morning. It seems to be coming and going every now and then.
The Chair: I have got one of those, so.
Mr. Scott: Thank you, chair, and good morning, honourable senators. My name is Don Scott and I am the mayor of the Regional Municipality of Wood Buffalo, which as some of you know, includes the oil sands and Fort McMurray, Alberta.
On behalf of my region, I want to thank you for the opportunity to share our concerns about this deeply troubling, and in our view, disastrous legislation. Bill C-48 may be known as the oil tanker moratorium act, but in reality, it is a systemic attack on the oil sands and Canada’s ability to export its oil to the international market.
Not only will this bill prevent Alberta’s oil from reaching tidewater. It essentially tells investors to put their money elsewhere and it delivers a devastating blow to communities like ours that depend on the economic investment, well-paying jobs, contracting services opportunities and economic spinoffs created by the oil sands and their development.
Before I get into our concerns, I would like to provide some context to my remarks. The Wood Buffalo region has been hit hard in recent years. The impact of lower prices for oil together with the economic downturn, the 2016 wildfire, the population decline, has brought new challenges and I would like to highlight a few.
Home prices have fallen sharply in my region. Between February 2015 and February of this year, the average sale for a single family detached home in the Fort McMurray region has dropped over 28 per cent. For many homeowners, that means a loss of over $200,000.
Traffic at the Fort McMurray International Airport has also seen a steep decline. In 2014, over 1.3 million passengers went through the airport. In 2018, this number fell to just under 640,000.
More people are struggling to make ends meet in our community. In 2014, the Wood Buffalo food bank provided almost 1,300 food hampers to feed 2,300 people. In 2018, around 7,800 hampers were prepared for almost 16,500. The food bank also reports that an average of 50 new clients used their services each month. From our perspective, that is the context in which this legislation should be viewed.
Honourable senators, I will cut to the chase. This bill should die on the Order Paper. It should never become law. The Canada that we enjoy today is the product of our pursuit of major products that brought the country together and served the national interest. But Bill C-48 is fundamentally divisive and threatens national unity. It pits West against East and industry against others and ensures Canadians do not fully benefit from their oil reserves.
It prohibits economic activity in one part of the country while allowing others to continue unimpeded. It places a higher value on the environment of one part of Canada’s coastline without regard to the rest of the country.
According to Transport Canada, 85 per cent of the oil tanker movements off the coast of Canada occur on the East Coast. However, Bill C-48 does not apply to tankers moving in those waters and it does not insulate those communities from the potential risks associated with tanker traffic.
Bill C-48 will not impact the economies of Eastern Canada but it will put a stranglehold on a communities in the West, undermining our ability to attract investment and preventing our resources from reaching lucrative emerging markets.
Let us be clear, honourable senators. This bill will not keep tankers out of the waters off northern B.C.’s coast. It has no effect on the hundreds of tankers transiting between Alaska and Washington state each year.
Other types of boats including ferries, barges, pleasure craft and cargo vessels are exempt from this bill. Yet data from Clear Seas shows that 78 per cent of all spills in Canadian waters between 2003 and 2012 came from other commercial vessels.
As others have noted, the only significant oil spill on the West Coast in the last 20 years occurred in 2006 when a ferry spilled fuel oil. Bill C-48 provides no measures to address such spills and would do nothing to prevent it from happening again. It does not even introduce measures to improve spill response capacity in the area or any resources to aid the clean-up and recovery should an incident occur.
The bill before you is not the product of an evidence-based approach to decision-making. It does not reflect data showing that the volume and frequency of oil spills globally have been declining since the 1970s. It ignores the long history and outstanding safety record of Canada’s shipping industry.
The bill also fails to recognize northern B.C.’s deepwater ports or include the risk mitigation measures that have been effective in Atlantic Canada, such as noise cancelling technologies and designated shipping lanes.
What Bill C-48 will do is keep Canadian oil from an industry that is regulated to the highest environmental and labour standards from reaching tidewater and accessing global markets. What it will do is ensure the price differential for our oil continues, ensuring that it can only get to market at a steep discount.
It will stifle investment and prevent several Indigenous communities from achieving economic prosperity and sustainability for their people. Finally, and without question, it will negatively impact the economic potential of Alberta and Saskatchewan.
As mayor of Wood Buffalo, I am deeply concerned about what it will mean for the hard-working people of my community who are already struggling from a fractured economy and are managing the stress of wildfire recovery three years after the evacuation.
It is clear that the reality of Bill C-48 will not play out in the waters of northern B.C. if it becomes law. It will play out in the lives of workers, businesses and young families in neighbourhoods across my community and in many others across the West. That, honourable senators, will be to the detriment of all Canadians.
Once again, I sincerely thank you for the opportunity to be here today, and I would be happy to answer any questions you may have.
The Chair: Thank you very much.
Now we will go to Chief Makinaw. He is accompanied by Mr. Swampy, who has testified before us before but is here just to assist in questions that we may ask. So Chief Makinaw.
Craig Makinaw, Chief, Ermineskin Cree Nation: Good morning, senators. I will make a presentation on this morning.
I would like to thank you for the opportunity to speak to you today and share my concerns about Bill C-48. I also want to welcome you to Treaty 6 territory, and I appreciate that you have taken the time to travel to Alberta to hear firsthand how the federal government’s policies are affecting my nation’s right to economic development.
My name is Chief Craig Makinaw. I am the chief of Ermineskin Cree Nation located about an hour south of here. We are one of the members of the Four Nations of Maskwacis. Ermineskin Cree Nation has a long and rich history, but it is our rich oil and gas deposits that bring me here today.
We have been producers of oil and gas since the 1940s. We have weathered many booms and busts, but we have seen technologies change. We have seen our own and other First Nations’ involvement in the oil and gas industry evolve from passive royalty recipients to partners in First Nations’ own projects. But never before has our industry been so deliberately and negatively affected by government policy, and that is why I am speaking out today.
I know there is a perception that First Nations people are all opposed to oil and gas and resource development. There is a lot of misinformation and fear-mongering about having pipelines cross your lands. But I want to tell you about how my nation has used our oil and gas revenues for good to make us into one of the most financially stable bands in the country.
Just a footnote that was not included in our brief. Our oil and gas royalties over the years, we have a trust. It is called Neyaskweyahk Trust and it was set up the same time as the Samson Cree Nation’s trust.
Our trust now has $358 million, and that was from our oil and gas revenues over the years. I think my neighbour’s is a little over $400 million. That is one of the good things that came out of this, and just something to keep in mind.
So in the Maskwacis area, we have been able to set up our own police service and health authority. We have several community recreation centres and schools, including our own Maskwacis Cultural College.
We do support our language and culture. We are able to exercise our sovereignty, and although we are known for oil and gas, we have used the revenues we have earned in that sector to diversify our economy.
We have a number of successful businesses. We have branched out into solar energy. We have commercial properties. We have been able to use our monies to set up the Ermineskin Loan Fund so our members can get access to loans that they cannot get through regular banks to build their own businesses and pursue their own dreams.
We are fully in control of our lands. We have the philosophy that when companies extract resources from our lands, they need to accommodate our opinions and requests, and we have been able to enter into successful and mutually beneficial partnerships that way. For example, with ATCO and Imperial Oil and Canadian Natural Resources, that benefits both industry and First Nations people.
These partnerships help us provide a revenue stream, training, employment and opportunities in subcontracting. We have even developed our own consultation protocol, a policy that protects the interests of our nation within traditional land-use areas when they are proposed for development by either government or industry.
And there are environmental impacts from oil and gas development that we have been managing through reclamation and remediation. We are doing that right now with Imperial Oil at Pigeon Lake, where we have brought in Cree aspects with reclamation. We are putting the land back to its natural state. That is often within what Western science deems necessary, but we add in a traditional way of looking at it by ensuring that traditional medicines we want to harvest and grow are considered, or that particular plants and trees or things which attract wildlife to restore hunting and trapping areas are included.
Our goal in having businesses and investments and in earning good revenues is to achieve self-sufficiency and sustainability and to be the authors of our own fate. We are far along that path but we still face many challenges.
Half of the Ermineskin members are under 19 years of age. We are thinking ahead for their tomorrow and for the next seven generations. We are also thinking what they need today. They need opportunities and jobs and hope right now.
It is not your right to block their economic opportunities, and that is what Bill C-48 does. Different nations were gifted with different resources and we were gifted with oil and gas, and we make the best use of it and develop it in a responsible way that fits with our values.
We need to be able to get it to market. To move it out of Alberta, and due to the current lack of pipeline capacity, we are not getting nearly the same investment and royalties and employment levels as we used to. I know environmentalists and others are talking about the risks from pipelines and tankers when they advocate for this bill, and I believe they exaggerate the risk out of fear and ignorance.
We have decades of experience with oil and gas extraction, and it has, overall, been positive for our nation. It is a very important part of our economy and our sovereignty, but it seems like Bill C-48, by cutting off market access for our oil, is choosing a very low risk, the minimal risk of an oil spill off the coast of northwest B.C.
I understand you heard from many experts on how these risks are mitigated and how spills from loading and unloading are prevented successfully in other parts of Canada and around the world. But it seems like Bill C-48, by cutting off market access to out oil, is choosing the very low risk, the minimal risk, of an oil spill over the 100 per cent certainty that Ermineskin First Nations like ours will be negatively impacted from loss of revenues and jobs. We are already harmed. We are already suffering the consequence of the government’s decisions and of their political calculations.
You are choosing winners and losers with this insistence of an all-or-nothing approach, and we are losing. My nation has 28 per cent unemployment and I want you to think very carefully of the social problems that come from having limited economic opportunities, from facing poverty, from being unable to provide for your family, from being dependent.
Imagine if your province had a 28 per cent unemployment rate how devastating that would be and how your political leaders would fight and push for any kind of business and job-creating opportunities, and how frustrated you would be if another level of government stepped in to block your best options to move out of that unemployment and poverty.
That is where we are at today. The economic harms of these policies are tangible, and we can quantify them. We can calculate our lost royalty revenues and lost investment and lost jobs. They are not hypothetical.
The federal government is supposed to have a fiduciary duty to us. But they are pushing this bill which is not in our best interests. This oil tanker ban, if passed, will interfere in our right to economic development and self-determination and we will remember that.
We have at times throughout our history had very difficult relations with the government in Canada. We have suffered as a result of your choices and decisions. Today, I am only asking that you be reasonable, that you find compromise and that you look for solutions.
Moratoriums and bans that isolate our resources with no access to markets are not reasonable solutions. Do not pick winners and losers. Let us find a way forward that we can all benefit, where we can all avoid harm.
I ask, senators, that you recommend this bill not pass. I am happy to answer any questions you may have. Thank you.
Senator Miville-Dechêne: Thank you, sir, for your presentations. I really do feel for both of your communities. Food banks in Fort McMurray, something we are not very aware of in my part of the country. I come from Quebec.
That being said, both of you are talking, Mr. Makinaw, of a compromise on Bill C-48. What are you thinking about? Because we are just back from B.C. where obviously you are saying this bill pits east against West, but it also pits B.C. against Alberta.
In northern B.C., the Mayor of Kitimat, the Mayor of Prince Rupert, both were for the bill, including nine of the 11 coastal nations in B.C. who say their fishing is at stake because you both said there is a risk, although not a great risk, but a risk of a spill.
You alluded to a compromise. What are you thinking about? It is a question to both of you. Mr. Scott, you did not speak of a compromise but what could be a solution.
The Chair: Who are you asking? Chief Makinaw?
Senator Miville-Dechêne: Yes, because he is the one who talked about a compromise.
Dale Swampy, President, National Coalition of Chiefs: Thank you, senator. We have presented options in the past to senators about what we think a compromise would be and that would be something that allows us to be able to have access north of Haida Gwaii through the Prince Rupert region to allow for an opportunity for communities that are in support of the oil and gas industry to work towards getting their own pipeline and terminal in that region while still protecting the Hecate Strait and other sensitive areas, as a compromise.
Mr. Scott: I am not a big fan of amendments, but if I was to suggest an amendment, it would be to create a traffic corridor so that we can get our products to market.
So if the Senate was to take a look at the entire coast and to hear the best evidence on what the best traffic corridor would be. There should also be a periodic review of this bill going forward, if it passes. I am not a fan of either of those. I would prefer to see the bill die, but there needs to be some access to markets.
If, as you say, there is a risk, then I would just ask rhetorically, I would suggest that the same risk exists in the east, and why is this bill not addressing that?
You know, we have addressed only the West, and there is obviously a traffic corridor in the East. It is more than a corridor, but if we have a corridor in the West, at least that allows us to get our products to market. It helps raise the standard of all Canadians.
Senator Simons: I want to thank Mr. Scott and Chief Makinaw for their very passionate presentations. Tansi.
Chief Makinaw, when we were in British Columbia, we heard from many impassioned First Nations leaders there about protecting their sovereignty and their territory. I understand that the arguments from Maskwacis, and Ermineskin are the opposite of that.
I wonder what words you would have for the chiefs and the peoples of the West Coast to reassure them. Would there be a way that you could explain a vision of this that would put their minds at ease? Is there something you think that could be offered in terms of financial support for people who are worried about the impact of a potential spill on their resources?
Mr. Makinaw: I can make a general statement. The proposed Northern Gateway pipeline with all the Aboriginal partners from Alberta and B.C. that were involved was one of the options. That would respect their environmental concerns and other issues that they want addressed.
I know that the partners there were looking at addressing those issues, so I see it as a win-win because at the same time you are doing this work you are working with the local First Nations in B.C. addressing their concerns.
Even here in Alberta those issues come up in every project, whether it is a consultation, an environmental review or our traditional medicines. I am sure that they have similar concerns.
We are always looking at how to address those issues. Here in Alberta, we probably the most regulated and we are up to date with the latest technology. Things are getting better, so I see that as something that we could work at getting addressed.
Senator Tannas: I wanted to ask about consultation. We hear about it in certain circumstances and we have a pipeline application that the government is in support of — the Trans Mountain pipeline. They are consulting right now and have been consulting for years, as proponents, and now the government is the owner. A lot of consultation going on and that is great.
I wonder if you are aware, because I know that both of you, Mr. Swampy and Chief Makinaw, would know about Northern Gateway. A decision came to cancel Northern Gateway after years of consultation.
I wonder how much consultation went into the decision to cancel Northern Gateway? Are you aware of any Indigenous groups, yourselves as being impacted, that were consulted about the cancellation of that already approved project?
Mr. Swampy: Thanks, senator. I was working on Northern Gateway for more than eight years and I know when the cancellation came in November, it was only months after a decision brought down by the courts to redo the consultation. The judge suggested three options. One of them was to go back to the communities and consult on issues that were not resolved. In his opinion, that consultation would take only four months.
But Trudeau decided not to take any of those options, not to consult with us, and basically surprised us when he announced that he would be cancelling Northern Gateway. And for no particular reason except that he wanted to protect the Great Bear Rainforest, which in my mind is something that has been made up by the environmentalists funded by U.S. interests.
I think it is important to understand, and I submitted a letter along with all of the history of the consultation that we had with the NRCan minister, Mr. Garneau, and his refusal to speak with any of our 31 communities who were in support of the project.
Seventy per cent of the communities signed on as supporters of this project along the right of way of the pipeline for Northern Gateway, 70 per cent. He was telling the Canadian public, misleading them, saying that the majority of the Aboriginal people in B.C. and Alberta do not support this project, which is wrong.
The only way he could justify that was not by saying he did not know, he did not meet. Because they refused to meet with us. They took the same stance that the environmentalists always take and advised the chiefs that are against pipelines not to listen to the proponent. That’s because once the chiefs see how much effort, time, resources are applied to environmental protection, to integrity, to spill response, to safety, to Aboriginal consultation, they will tend to support the project. They will see that these people are not monsters, these are Canadians that want to do what is best for Canada, and what is best for Canada is proper protection.
And you are right, senator, we were not consulted. The proponent was not consulted and neither were the 31 First Nations and Metis leaders who supported the project.
Senator D. Black: Welcome. Thank you very much for being here and thank you very much for your presentations. I have a couple of follow-up questions.
In respect to the question of my colleague, Senator Tannas, on consultation, were you consulted at all in respect of the proposed tanker ban?
Mr. Makinaw: No, senator.
Senator D. Black: Thank you very much. Are you aware of any other First Nations group that were consulted in respect of this?
Mr. Makinaw: No.
Senator D. Black: Thank you very much.
Chief, another question for you, following up on the excellent question of my colleague, Senator Simons.
In a nutshell, what would you say to the First Nations communities on the West Coast who are so in favour of this bill? What would your message be to them?
Mr. Makinaw: As I mentioned earlier, if we can address the issues and concerns from the nations in B.C., then that is the way we should do it. We have to work together with the nations that are in favour of this to come out with the best solution. That is the best way.
Senator D. Black: Thank you, chief.
Senator Busson: Some of my colleagues covered the questions I wanted to ask, but I have a quick question for Mayor Scott.
I am wondering, you talked about a drastic economic and social downturn in your community specifically and in Fort McMurray, et cetera. Is an alternative economy available to Fort Mac if the oil industry keeps heading in the direction it seems to be going?
Mr. Scott: There is not. We are not diversified so what bills like this do is create incredible economic anxiety and some of the people that I have talked to almost believe it is revenge economics. They believe that it is a punishment of not only Alberta but our region.
We struggle with that. If bills like this pass, not only does it hurt all Canadians, I believe, fundamentally, that it will undermine the community of Fort McMurray and the oil sands.
Senator Busson: Chief Makinaw, I was wondering if you could comment, we all hear wonderful stories about First Nations and their care for the environment, et cetera.
How do you reconcile that vision of First Nations with the economic prosperity you are seeing? Do you see it as either one or the other? Or do you see these two things together?
Mr. Makinaw: I think you are seeing that right now here in the province with consultation, and I would say that consultation is stronger here in Alberta than federally. It still needs a lot of work. As we are moving along, it gets better, but it is going to take more time to deal with everything.
Previously, whenever a project started, we were not consulted right off the bat. Now I think it is getting better. A lot more work, meetings and discussions still need to happen, so things can be addressed, as we move along in the consultation process, instead of going to court. I do not see us going to court if we can start meeting and discussing things at the table.
Senator Busson: If I may, I have a supplementary to that. You talked about the way things are going; you see winners and losers in this whole process.
Do you see any kind of regime where there would be a win-win rather than winners and losers? Can you imagine what that would be and could you perhaps offer that description?
Mr. Makinaw: Well, it is going to take a bit of work from all parties, especially from the federal government in dealing with the environmental issues and consultation and bringing it down to band level. It is going to take a bit of time.
Having meetings like we are having today, and talking about it is a good step forward. But there still needs to be a lot more work, a lot more things to be done.
Senator MacDonald: Good to see you again, Mayor Scott. You, Mr. Swampy, we met before, and Chief, good to see you.
I grew up in a sailing family on a seaport, and Canada has one of the longest coastlines in the world, we are a maritime nation. In fact, if you look at the country historically, the old Canadian Red Ensign which flew for 97 years was an adaptation of the British merchant flag with the Canadian coat of arms on it, because that is the type of country we were. We sailed all over the world. Our flag was known all over the world.
I think this is one of the strangest bills I have ever seen in Parliament. It is hard to believe this bill is actually before Parliament, but we have to deal with it.
I would like to ask you — even though my instincts are to kill this bill because I think it is atrocious — if given the choice between having to put up with this bill or getting it amended to allow for some sort of a channel or a gateway where we can access the ocean on the West Coast, what would your preference be? What would you want us to do?
Mr. Makinaw: If you kill this bill, you are going to have to wait until after a federal election and the next session of Parliament to come in, which will be another four years or longer. I don’t know if that is the way to go.
I don’t know if bands would want to wait another four to five years, going through the whole process again; three readings, going through the Senate and Senate hearings. For time’s sake, amend the bill, making it better where all the concerns you heard across the country from premiers, chiefs, mayors and other concerned members across Canada, are considered.
That probably would be the fastest way to do it, but then I guess if you are going to make amends to it, you have to look at the areas where there is the most concern. That might be the way to go, depending on when you decide and come up with a decision soon.
Senator MacDonald: If I was confident everybody in the Senate and on the committee thought the way I did, I would not be concerned about killing the bill, it would be killed. But it might be easier to get an amendment, get it amended, than to get it killed. I just want to make sure that we are open or not open to that concept. Mr. Swampy?
Mr. Swampy: Yes, I have a comment on that. I have to go back to my days with the Northern Gateway when I first started there after coming off what at that time was the biggest pipeline in the world, Alberta Clipper and Southern Lights.
I asked the president of Northern Gateway, since we had such a large consultation plan, do the communities have a veto to this project, since they comprise most of the population within the northern coast. I remember him commenting that legally, no, they do not.
As we went through the years, and 10 to 12 years passed, we found decisions like Tsilhqot’in and other decisions by the Gitxsan and the treaty agreement with Nisga’a, have all forged rights for Indigenous people, First Nation people in that area.
Like we discussed earlier, a lot of First Nations are taking advantage of the influence they have now with proponents to get better agreements, protections, traditional rights acknowledgment and so forth.
So I think we take the most prudent path, and that is to recognize the people out there, like in the 1970s when the U.S. government recognized the Alaskan First Nations. Basically, thirteen bills of Congress forged an agreement that any resource development there had to be 50 per cent owned, operated and constructed by First Nations.
When First Nations developed these corporations, some of them went bankrupt seven times. But today, they run a very profitable organizations. They run the biggest coastal protection fleet in the world, one the biggest coastal protection islands suited just for doing that.
With the Valdez spill, there was not a lot of protest from First Nations out there because they were out there cleaning it up, right?
I think that we recognize that right and we consider the idea that we get rid of the tanker ban, but if we want proponents and oil and gas companies to build projects out there, it has to be with the full participation by First Nations in that region, so it does not go without First Nation approval.
I think that is what First Nation chiefs and leaders are looking for. A seat at the table so that they can take control of what goes on in their back yard, rather than businesses coming through and governments developing laws and regulations to either hinder or plow right through their lands.
Senator MacDonald: I just want to add that I have been up to Alaska and Valdez and visited facilities up there. What a great success story. Half a century of building a pipeline over some of the most difficult terrain in the world, top to the bottom. I do not know how many ships leave there a year, but it must be close to 1,000 ships that are taken out of there safely.
It is a great example to follow, I would think. Have any of the First Nations up in this part of the country discussed with the Alaska First Nations how they put their plans together up there, how it works for them?
Mr. Swampy: Sure. We have the Aboriginal Equity Partners who formed the National Coalition of Chiefs in early 2017, and we have had speakers from Northwest Territories, Yukon and Alaska come down and advise us on the successful business opportunities and ventures they have gotten into.
It is surprising because I get chiefs calling me saying they cannot believe a national assembly does not have any oil and gas, mining or hydro companies sponsoring it.
When you go to the States and you attend, this last March 2019, there were over 500 companies there because they want partnerships with First Nations. We are so behind, it is incredible.
When one of the bands bought transmission lines, it was showcased in the newspapers, “Oh, what a great thing.” In the United States, that is their prerogative. If there is a transmission line going through their area, that First Nation builds it, owns it and operates it.
Seven hundred miles of pipe go through the Navajo Territory in the Four Corners, United States. They own and operate that pipeline. Kinder Morgan just bought most of the rights to the contracts of that organization and they understand the importance of that type of ownership and participation.
So I think that’s the solution for northeast areas, to get them fully involved in these projects and to make it a bill like the United States did.
Senator Miville-Dechêne: One of the differences between the East Coast and the West Coast is that there are no tankers at this point in the zone we are talking about. The tankers are going around the voluntary exclusion zone, which is far enough, it seems, that if there were a spill, it could not go to the shore.
The coastal nations are saying they are the only ones to bear the risk of an eventual spill if there is one. Is it not true that upstream, investors in an eventual pipeline, either Aboriginal tribes or non-Aboriginal, would profit from pipeline construction, and the only ones bearing the risk are the coastal nations because they rely on the fishery?
Following up on the question of Senator Simons, which is what kind of approach to take, because it is two ways of living. They want to live off the fish and have zero risk of an oil spill, and you want to live from the fruits of the oil industry. I do not see how the two can be reconciled. Regarding the risk of an oil spill, what can you say to them? Is it a question of compensation? I am not sure it is about money at this point.
Mr. Makinaw: Like I said earlier, you need a lot of discussion back and forth. It was done previously with our Northern Gateway partners and I think you have to use that same approach.
Once this issue gets settled and if that bill is defeated, then we have to come back to the table regardless and deal with the issue. As we move forward, we still need to have that dialogue, addressing their concerns and our concerns, coming back to the table and hopefully coming up with a solution that benefits everybody, one that deals with all the issues — environmental consultation and otherwise — they face there in B.C.
It is going to take some time, but we still need to meet and discuss these issues. I know some solutions could come out of it because, previously, they did have some good discussion with Northern Gateway. I am pretty sure they could still do the same thing moving forward.
Senator Tannas: I was captured for a minute by Senator Miville-Dechêne’s question because it is an interesting one. I suppose we could turn it on its head and say that the microscopic risk that is involved with coastal oil spills, and the fact that there are laws in place that provide no-fault requirements of oil transporters to pay up to $1 billion, and then the government steps in after that.
So everybody gets made whole financially in the microscopic case, which means that from a financial point of view we know that the coastal First Nations are made whole.
You are not getting a dollar from anybody, and nobody is proposing to give you a dollar for leaving your oil in the ground. So, who is the loser and who is made whole?
Is this a possible amendment, where we suggest that if a First Nation on the coast cannot find their way, for whatever reason, then somebody pays you to leave your oil in the ground? Is that a compromise that makes any sense?
The Chair: From the salmon fishery, maybe. I don’t know.
Senator Tannas: From the salmon fishery.
The Chair: But that is the way it would work.
Mr. Swampy: It is ironic or hypocritical for B.C. to suggest that they are taking 100 per cent of the risk while the rest of the country is taking 100 per cent of the benefits.
You have to remember that B.C. is the number one exporter of coal in the world and that the coal mines that operate in B.C. are on the border of Alberta. There are Alberta border coal mines as well, but the production is incredible.
We do not have Albertans saying we take the risk for coal mines that are being operated out there while B.C. takes all the benefits.
The fear-mongering has just gotten out of hand. It is incredible to think that First Nations along the coast are thinking that there is going to be a huge oil spill in their region and that it is not a question of “if,” it is a question of “when”.
There has never been a major oil spill in Canada in all of its history. Remember the Valdez was a United States spill, it was not on the B.C. coast. The odds of getting an oil spill on land, on the pipeline, was calculated by top engineers in the world who actually work in Alberta. They calculated one in 360 years.
It could withstand an earthquake of 8.5. When a 7.2 earthquake went off the coast of Haida Gwaii, chiefs were on the phone asking me what would have happened. Everybody was saying thank God there was not a terminal there because we would all be dead by now.
It is ridiculous fear-mongering. A 7.2 earthquake, even if it did create a tsunami, the terminal would be protected by the Haida Gwaii islands.
Now you are suggesting that we go to the northern coast, which is not as well protected from tsunamis unless you get further inland, which is going to cost more money for a pipeline route because of the terrain.
To suggest that they are taking all this risk is just preposterous. There are 16 pipes on the main line going across Canada today, pumping oil and gas throughout seven provinces. Nobody is saying that to Alberta, and those pipelines have been in business since the 1940s.
It is just preposterous to suggest that one pipeline is going to create all this risk for one area in Canada .
Senator Neufeld: Presently, I think the world uses 85 to 90 million barrels of oil per day. About 90 per cent of that is moved on water someplace in the world, and we have very few oil spills, in fact almost nil.
I am convinced that the safety can happen, but what interests me is in this bill, is that the government of the day has decided to shut down the west coast of British Columbia. Not so much for environmental reasons, I believe. It is more about shutting down the oil and gas industry. That is my personal thought.
We are also dealing with Bill C-69, part of which deals with the issue of “standing.” That means who has the right to actually be heard from the panels. Well, the National Energy Board now says that those that live the closest to the project would have the greatest say. The government is saying no, we want that to be open to the world. We want the world to come in and tell us what they think.
It is interesting to me that we hear people saying, well, there are some bands on the coast that do not want it to happen. Yet, there are bands on the coast that want it to happen.
If you are actually going to apply Bill C-69 standing to everyone, you should have the same standing at that as what the First Nations do on the coast, regardless where you are at, because you are developing the oil and shipping it.
I would like you to maybe comment on that because, to me, it is a grey area. We hear a strong argument that we should just pay attention to those that do not want it on the coast and we are not including everyone.
So what do you folks think about that? Because Bill C-69 is another bill that is another nail in the coffin of the oil and gas industry, unfortunately.
Mr. Makinaw: You are right in your comments that there should be more representations from all sectors because if you only hear one side of the argument, then it is too one-sided, too biased.
For ourselves in Ermineskin, on another issue, we tried going to the Senate standing committee to make a presentation on languages act, and we were denied. That has happened to us twice over the years because, I guess, certain groups have more say than others. We need to be more fair across the world.
I agree with what you say, senator, that more people do need to be heard, because once you hear everybody at the table on both sides of the table, you will have a better understanding of the arguments and then you will have a more informed decision in the end. So I agree with your comments, senator.
Senator Neufeld: I forgot to say there are bands on the coast that want it to happen.
Mr. Makinaw: Yes.
Senator Neufeld: What the government is saying is, well, we do not care about you, we just care about this side of it. Because governments have to make decisions on the best interests of the whole country, not just one particular place.
Senator Simons: I am going to end with a question to Mayor Scott.
One of my frustrations with the debate around Bill C-48 is that it is happening at the same time that TMX is up in the air.
When we were in Prince Rupert two weeks ago, we met with the environment minister of British Columbia, who explained that he was very much opposed to TMX as well as in favour of Bill C-48, which would mean that Alberta would have no way to get any more products to market.
What would it mean for the economy and the businesses of Wood Buffalo if TMX is not approved and Bill C-48 goes ahead?
Mr. Scott: The combined effect of all these things will really hurt the national interest.
There was a time in Canada when governments were focused on building Canada and uniting Canada. They would build the Trans-Canada Highway, the railway across Canada. They were trying to lift everybody up through economic benefits.
The people in my region want jobs. I think every Canadian does. The effect of these bills and not getting TMX through in a timely way has diminished the opportunities that people have, and that is what I think every Canadian and every person in my region certainly wants is opportunities.
The myth and fear of an oil spill should not defeat the reality of the safety record. There is a real opportunity, I think, to get our products to market, get the best price. That is going to create benefits for everyone. Every Canadian benefits when we do that.
I would encourage the Senate not to pass the bill. I think it is really going to be a difficult thing, not just for my region but for all of Alberta and every Canadian, ultimately.
The Chair: I would like to thank our witnesses for appearing before the committee this morning.
We now have with us Mike Priaro, Professional Engineer and Independent Analyst; Mac Van Wielingen, Founder and Partner, ARC Financial Corp.; and Bartek Kienc, President, Canadian Energy Infrastructure Corporation.
We are going to start with Mr. Priaro and go left to right.
Michael Priaro, Professional Engineer, Independent Analyst, as an Individual: Thank you, Mr. Chair. I would like to start by thanking this committee for the privilege of speaking before you.
Bill C-48 in its current form sets back reconciliation by denying economic opportunities for Indigenous peoples and sets back national unity and economic progress by regionally blocking the sustainable exploitation of Canada’s immense natural resources.
Port Simpson, just north of Prince Rupert, is the safest location for a marine oil port on all of Canada’s Pacific Coast. I submit as evidence the federal government’s own report, Potential Pacific Coast Oil Ports: A Comparative Environmental Risk Analysis. This report exhaustively evaluated 27 different oil ports and shipping routes on the Pacific Coast according to navigational, biological, social and economic risk and other factors. It concluded Port Simpson was the safest of all 27 ports and routes evaluated.
It also concluded Port Moody, immediately adjacent to the Westridge Marine Terminal in Burnaby, for the Trans Mountain pipeline was the least safe of all.
Though the report is now 40 years old, its comparative risk analysis is more valid than ever due to increases in marine traffic, population, and in stresses to the ecology of the Salish Sea, where today more than 7 million people live on or near its waters.
Bill C-48 effectively blockades the First Nations-led Eagle Spirit energy corridor. This sustainable, multi-pipeline, multi-energy corridor proposal running from the oil sands near Fort McMurray and from Alberta’s Industrial Heartland region near Edmonton, through the heart of Peace Region hydroelectric power development, through the heart of the immense shale hydrocarbon resources being developed in northwest Alberta and northeast B.C., and through traditional First Nations lands has the leadership and approval of directly affected economically deprived First Nations. Calvin Helin, president of Eagle Spirit Energy, says his company has secured 100 per cent backing from local chiefs.
Bill C-48 also landlocks the immense hydrocarbon resources of northwest Canada. Albertans, in dire need of high capacity outlets to both east and West Coast tidewater to access new diverse world markets for their natural resources, believe there is an inconsistent regional imbalance and bias in Bill C-48’s effective ban of large oil tankers only on Canada’s Pacific north coast.
Bill C-48 does not apply to the crowded high liability waters of the Salish Sea on Canada’s Pacific south coast, nor does it apply to the Grand Banks of Newfoundland, to the ecologically sensitive Bay of Fundy and equally sensitive St. Lawrence River and gulf or to the rest of Canada’s Atlantic coast.
Low-carbon hydropower makes the Eagle Spirit corridor environmentally sustainable far beyond any other existing or proposed pipeline. Development and transmission of low carbon hydropower in Alberta and the Peace Region of B.C. makes environmentally sustainable: extraction, fuel processing and transmission of shale hydrocarbons; energy corridor operations; production of LNG at coastal plants; and potentially makes the oil sands much more sustainable by reducing or eliminating the 3 billion cubic feet of natural gas, and its greenhouse gas emissions, burned every day in oil sands operations.
Bill C-48 and the regulatory overkill blamed for scuppering Energy East, now enshrined in Bill C-69, both contravene the spirit of the United Nations Convention on the Law of the Sea. This international agreement to which Canada is a signatory grants all landlocked states the right of access to and from the sea and unencumbered freedom of transit and transport through transit states.
Justin Trudeau told reporters in April 2016, “ . . . the Great Bear Rainforest is no place for a pipeline, for a crude pipeline,” referring to Northern Gateway, which was to terminate at Kitimat. However, news stories reported that senior federal government officials said at the time that Trudeau’s comments were not meant to exclude Prince Rupert as a possible marine oil port.
The Great Bear Rainforest was a funding and publicity seeking marketing slogan dreamt up by professional environmental activist Tzeporah Berman and her cabal of Greenpeace eco-warriors, in her own words, “sitting around at dinner one night in a cheap Italian restaurant with a bottle of great wine,” in San Francisco.
Each of you on this committee has been given the opportunity to open the door by courageously embracing a vision for the future and by showing faith in the people of this country to the creation of the northwest leg of an environmentally sustainable energy corridor from coast to coast to coast, by recommending to the Senate that Bill C-48 be sent back to the House with an amendment to allow the export of crude oil and other liquid hydrocarbons using large tankers out of Port Simpson. Thank you.
The Chair: Thank you, Mr. Priaro. For those who have not been receiving emails from Mr. Priaro, if you have, I advise reading them, because I get them from time to time and I thanked him again today for sending them along to me.
Mac Van Wielingen, Founder and Partner, ARC Financial Corp.: Thank you very much. It is a real pleasure to be here.
I am here as a business leader, expert on the energy sector, investor and a deeply committed Canadian.
There are three specific areas that I wish to speak to in my introductory comments here, and each of them I have selected very carefully because they pertain to specific areas where I see and I experience incomplete understandings or misunderstandings. These points are somewhat contextual, and then I will offer a summary of Bill C-48.
The first point for people to see right now in the business environment is Canada’s energy sector is in a meltdown, and the critical contextual perspective, although, it is in a meltdown, we are in a meltdown and the U.S. is in a major expansion. So that is occurring at the same time.
We have had numerous major international companies leave Canada — Statoil, Total, Conoco, Marathon, Royal Dutch, Devon — and it is hard to imagine them reversing their decisions into the foreseeable future.
We are also seeing significant homegrown leading businesses such as EnCana, TransCanada and Enbridge shift their focus to the United States.
Investment capital is exiting. I have direct knowledge that some of our best equipment is exiting. I have direct knowledge that some of our most talented workers are exiting Canada for the United States. We have estimated 62,000 jobs have been lost. The Canadian energy industry, our industry, is distressed and at the same time, the U.S. is booming.
The second point I want to make, and it is one of my most important perspectives to you today, is we do not, in a sense, need to worry about a deterioration of investor confidence. We do not need to worry about damage happening. It is too late. The damage has happened.
There is virtually no investor interest in the Canadian energy sector at this time. New equity raised in 2018 of about $650 million in public markets was the lowest in 27 years, down 95 per cent from five years prior. The situation is beyond trying to mitigate the risk of damage.
The third point I want to make is with respect to Canada’s ESG performance and our carbon and our environmental and social governance performance. Much of the infighting within Canada is wrapped in concern about the industry’s ESG standards and performance, and it is quite extraordinary.
The perspective that has been lost, ironically, is that our ESG standards and performance are as good as it gets in the world, and we know that at ARC Financial and I know that because we advocate for the ESG record of Canada’s energy sector to investors globally.
It was no surprise to us that global engineering firm WorleyParsons concluded that Canada’s environmental assessment processes are among the best in the world, and there is an extraordinary amount of information that evidence that perspective.
I want to make a specific comment here with respect to ESG performance relating to the oil sands industry. Clearly, the relatively high greenhouse gas emissions in the oil sands industry has drawn controversy, but there are a few key points.
One is our oil sands contribute to only 0. 15 per cent of global emissions. It really is quite extraordinary, one seventh of 1 per cent.
Further, if we phased out our oil sands as the Prime Minister unfortunately said, our lost barrels would be replaced by other suppliers of heavy oil, notably Saudi Arabia, Iraq and historically, Venezuela and Mexico. These other suppliers also have a certain level of GHG emissions and we have calculated at ARC Financial that the net reduction in global GHGs associated with a phaseout of the oil sands would be 0. 03 of 1 per cent, or 3 one-hundredths of 1 per cent. It would be negligible.
Further, these other suppliers also have significantly inferior ESG standards. It is a reality, but it is a reality that I have discovered some people just do not want to see or acknowledge that Canada’s oil sands GHG emissions are immaterial to the issue of global emissions and climate change.
It is not to say we should not be driving for lower GHGs, and we have been and we are. Emission intensities for our oil sands are down 29 per cent since the year 2000 are anticipated to decline another 20 per cent, and very importantly, and this is a fact that is publicly available, but I find when I talk to people, it is not widely appreciated. Emission levels from new oil sands projects are close to, or below the average level of crude oil refined within the United States.
That is in the public disclosure material. Suncor, Cenovus, Canadian Natural and Imperial, they have made extraordinary effort over the last number of years to reduce greenhouse gas emissions and I do not think it has really being widely seen.
Greenhouse gas emissions for new projects are on par or less than the average refined in the United States, and this has very, very important implications to energy policy. Why should we be on the sidelines and watch the U.S. boom in the name of attempting to reduce emissions when our emissions are the same as the crude oil or less that they are burning in that market? And that comment actually applies to any energy market globally.
Bill C-48 is another self-inflicted blow to our strategic competitiveness. It is hostile to our strategic need, Canada’s strategic need to open up new markets. It is a definitive shutting down of additional market access.
I believe it is misleading in its expressed intent. It is not a tanker moratorium. It is a moratorium on new tanker ports. It looks discriminatory against Alberta and Saskatchewan. Indeed, it does look like a blockade, as some people in Alberta are saying.
It is a message of no confidence in our own world-class marine safety systems. It is inconsistent with the realities of existing tanker traffic on the East Coast and on the West Coast from Alaska down to the refinery complex in Washington.
It is confirmatory of what investors are thinking about Canada, the negative views that they have, that we are not open to business, and we are not reasonable in terms of our willingness to attract capital and to pursue high quality development opportunities. It will fuel dysfunctional political counter-reaction within Canada.
The Chair: Sorry. This is a darn interesting presentation, but at the same time —
Mr. Van Wielingen: I am literally at the end, and I apologize if I went too far.
The Chair: No apology necessary.
Mr. Van Wielingen: I am literally at my last point here. This is the great irony, this point. I had the opportunity to talk to Gerry Butts about this a month before he resigned, and this was one of my key points to him is you do not need this legislation. You already control new project development through existing political, legal and regulatory processes. This is something that is not necessary.
Having said that, the idea of a marine corridor I think is very constructive. Thank you very much.
Bartek Kienc, President, Canadian Energy Infrastructure Corporation: Good morning, senators. I am honoured to be here today. In fact, my mom cried when I told her where I was going today. I do not know if it was fear or pride.
As President of the Canadian Energy Infrastructure Corporation, I work closely with First Nations, industry and governments on issues surrounding development of energy infrastructure projects, including LNG terminals, oil and gas pipelines and oil export and import facilities, mostly on the West Coast.
Before launching this company in 2016, I was the special adviser to the Premier of Alberta on market access, and before that, I dealt with energy infrastructure at CIBC World Markets and at the ministry of energy here in Alberta.
I mention this because for more than a decade, in both the private sector and the public service, I have worked tirelessly to help strike the right balance on the energy export front. The issues underpinning responsible infrastructure development are complex and requires thoughtful policy solutions.
Unfortunately, Bill C-48 does not fit into the category of well-thought-out policy solutions. Quite the opposite. It appears to be an arbitrary policy choice drafted in haste to address a non-existent problem by not actually addressing any of the existing risks.
Based on the federal government’s own statements and submissions to both the parliamentary committee and to this Senate committee, it is difficult to find any scientific evidence that suggests this policy solution is the right one or even the necessary one. Moreover, in Transport Canada’s formal response to B.C.’s policy intentions paper related to spill management, the government’s own evidence undermines the need for such a sweeping legislative solution to be applied to the problems it claims to address.
Allow me to provide just a couple of highlights from the Transport Canada submission. In their response, the federal government takes issue with B.C.’s failure to acknowledge, and I quote:
. . . the robust federal safety regimes, the long-standing scientific expertise and significant recent investments made by the Government of Canada related to spill management in its paper.
On the marine regime specifically, Transport Canada goes on to say,
This regime has been highly effective in responding to marine pollution incidents in all regions of Canada . . . .
In short, Canada’s 80-page response to British Columbia outlines how our world-class marine safety and response regime can be relied upon to effectively deal with risks resulting from marine traffic, including tanker traffic, along our coastlines. This begs the question, how can the same world-class regime be held up as a reason to allow increased tanker traffic in the Port of Vancouver, one of the busiest ports in Canada, with some navigational challenges out by Vancouver Island, and at the same time, the same regime is being used to justify a tanker moratorium in Prince Rupert, for example, where navigational challenges are nowhere near the same as in Vancouver.
Could this also be the reason why no other jurisdiction in the world has chosen an outright ban or moratorium on tanker traffic as an effective solution to environmental risks? Not Norway with its own salmon fisheries and fjords, and not Australia with the Great Barrier Reef, and certainly not Canada along any other piece of our pristine and sensitive coastline.
During your study, you heard from scientists, government’s own researchers, technical experts and the Coast Guard. While everyone agrees we can always improve our existing systems and approaches, nobody was able to present any material evidence for this particular approach on this particular piece of Canada’s coast.
This brings me to my second point. Canada does have a robust evidence-based regulatory regime, a regime which extensively considers scientific expertise, social and environmental impacts of industrial activity.
If a project is deemed to result in unacceptable risks, our environmental assessment processes are the right venues for deciding against particular initiatives. And if that is the case, this would make this legislation redundant, as one of my friends here already mentioned. Either we trust in scientific evidence and experts to inform complex regulatory decisions or we do not.
As my final point today, I would like to take a moment to speak about solutions. Based, in part, on the testimony of various First Nation leaders and groups, I can understand the challenges with trying to be responsive to the needs of those who actually live on the coast.
While they all agree consultations on this bill fell well short of what would be satisfactory, there are First Nations for and against this bill, each with their own important reasons.
From my reading of these positions, there appears to be an opportunity to introduce a northern boundary in the legislation such that basically everyone gets what they want; namely, a northern boundary would establish a tanker moratorium where there was strong support for this kind of approach, which is south of Prince Rupert with a shipping channel well north of Haida Gwaii, while leaving areas where there is no support, or where important treaty implications have not yet been addressed, out of the legislation until a fulsome consultation process is undertaken or a future EA process necessitates a change.
In conclusion, this bill as currently drafted does not address any existing risks for marine shipping along British Columbia’s coast, and I would like to say this: Compared to everything else that is being shipped on the coast, from lithium batteries to uranium to sulphur to ammonia to chlorine gas, oil is really not the risky pollutant we should all be worrying about. But that is the only one mentioned in this legislation.
At a minimum, an introduction of a northern boundary should be considered for this bill to respond to some of the most valid and pressing concerns raised with this legislation. I look forward to your questions and thank you once again.
The Chair: Thank you. I have a couple of questions.
Mr. Van Wielingen, you mentioned the 29 per cent decrease in GHG emissions since — was it the year 2000?
Mr. Van Wielingen: Yes.
The Chair: That would actually surpass the reduction of GHG emissions for the country. In other words, we have not reduced GHG emissions since 2000 by 29 per cent.
Mr. Van Wielingen: Well, I am sorry, but just to clarify, that 29 per cent is on a per-barrel basis. It is GHG intensity per barrel, it is not the absolute level of GHGs.
If your barrels are growing, if your production is growing, then you are not going to get the same corresponding decrease in the total.
The Chair: Okay, thank you very much.
Just to clarify, we have had a lot of discussion here about the corridor, and you brought it up, Mr. Kienc, talking about an area.
But would the corridor not require study? In other words, you cannot build a pipeline to a particular place without having hearings through the National Energy Board and all of the rest.
To amend this bill and say this should be the corridor would require another two years of work, minimum, I would think, before people could establish exactly where the corridor should be.
Mr. Van Wielingen: I am not sure what the exact response should be to that perspective. I have always viewed it as, in a sense, an opening.
Basically, what you have been saying is that we have an opening here coming out of Prince Rupert. Should the industry or should project proponents have interest, they can proceed and then we would do all the environmental and regulatory studies. That is how I have always viewed it.
I have been interested in the idea of the corridor or a northern limit partly because it signals a green light, that we are open to business. We will consider proposals and we will consider assessments and we will look at it, versus something that looks totally rigid, which is what Bill C-48 does right now.
Mr. Kienc: If I could supplement, I believe we have a very deep understanding of where any potential port could be, whether that is Port Simpson, Prince Rupert or areas around Prince Rupert.
I think Kitimat is going to be challenging, based on our past with Northern Gateway and the Douglas Channel. If you had to come up with a boundary and it was somewhere south of Prince Rupert, I think you would be leaving 95 per cent of any potential port facilities, opportunities, if you will, for future consideration.
The Chair: Thanks very much. That is helpful to know.
Senator Simons: Mr. Kienc, several of us are also on the committee that is examining Bill C-69. It has occurred to some of us that if we are to pass Bill C-69, potentially with amendments, would that not make Bill C-48 even more redundant than it is now?
Mr. Kienc: If there was a way to make this bill more redundant, yes.
Senator Simons: When we were in Prince Rupert and in Terrace, we heard from the Nisga’a First Nation who feel very strongly that they were not consulted. They are not necessarily in favour of a pipeline through their territory, but they at least want the opportunity to weigh it for themselves.
When you say a corridor south of Prince Rupert, there was a fair bit of resistance in Prince Rupert. Do you think there is potential for a more northerly corridor closer to the Alaska border, which would then mitigate?
The Mayor of Prince Rupert is opposed to this, many of the First Nations, the Lax Kw’alaams are very deeply divided about this.
I am mindful, though, of the chair’s point that it is not our job to micromanage where a corridor goes, as opposed to leaving open the potential for some more northerly access.
Mr. Kienc: I think that is the right policy choice because you can only set the goalposts. There are a lot of questions in there. I think Lax Kw’alaams’ elected government, the one recognized by Canada, is on the record as opposed to this bill.
There are a number of other First Nations, for whom I cannot speak and nobody with a pale skin like me should that have different perspectives on how these issues can be addressed through a robust environmental assessment process.
There is one nation in the region that has a modern treaty that outlines all of those legal commitments the federal government has made to an environmental assessment process for making these kinds of decisions.
Senator Simons: That is the Nisga’a?
Mr. Kienc: Right. So the second part of your question, there are multiple deepwater world-class sites north of Prince Rupert that could be evaluated in the future, should there ever be an appetite for a project, which at the moment there is not.
Senator Tannas: I have a very quick question, and then I would like to ask you a little longer one.
The Standing Senate Committee on Banking, Trade and Commerce published a study inspired by the work of the School of Public Policy in Calgary around the northern corridor that would actually run from the East Coast to the West Coast. It would be a right of way that could potentially have all kinds of transportation in it, including fibre, electricity, train, roads for driverless vehicles, all kinds of things that we could think about. It would follow the southern tip of the northern boreal forest. Are either of you aware of this concept?
Mr. Kienc: When I worked in the Alberta government, this kept coming up in various formats. I think it is a great idea. I think it would really show that we actually are a country and not a collection of independent provinces.
I do not think we have 50 years though, and in particular, around Aboriginal issues which for decades have not been addressed by the government to establish the legal and policy aspects within which anything can get done with or on First Nations land.
Senator Tannas: Thank you for that.
Mr. Van Wielingen, first of all, your organization — and I want to congratulate you as one of the founders of it — has been incredibly valuable to Alberta, to Western Canada, with the work that you have done to attract capital from around the world, the tremendous analysis that you provide investors around the world, in addition to the work that you have done around this issue in helping us understand it.
Could you explain to us — the one thing that always strikes me in this and that people miss, including people on the ground with jobs — how quietly capital leaves? It does not make threats. It does not make a bunch of noise when it leaves.
In my experience raising capital, when you are in favour, everybody wants to see you. And when you are not in favour, they do not tell you that. They just do not answer your calls.
Could you give us an economics lesson, how that happens quietly and takes a long time to see some of the results, in jobs and planning at a company level?
Mr. Van Wielingen: Well, it is a great question, a very interesting question, particularly your emphasis on the fact that it leaves quietly.
The way it happens, as you have said, is an investor who has been with you perhaps for many years suddenly does not return a phone call. If they do return the phone call, they return it very late. Sometimes they follow up with an email and say, basically, that they have other priorities, other commitments.
One response we have heard from many investors is something like we do not have the internal resources — this would be international investors — to put on Canada to figure out your complexities and your entanglements, your political and environmental entanglements. It is not worth it to us, particularly because returns elsewhere are better.
That is part of the reason why I think it looks so quiet. It leaves without a lot of fanfare, partly because they are enthusiastically interested in other opportunities.
Yes, that is how it happens, and in public markets, in a way, it is even quieter. You do not hear anything. What you do see is less capital coming into public markets. You see values of publicly listed assets going down. The comments I made earlier relate more to private markets, which is where we operate. And yes, capital is fluid and moves around very quickly and quietly.
Senator Busson: Thank you all for being here. I want to first thank Mr. Priaro for the map that you have supplied. It very quickly gives a snapshot of what we are dealing with, and it is interesting.
You look at the stretch between Bella Coola and Prince Rupert, which represents over 1,000 kilometres of shoreline that would never be affected if there ever was the chance of a spill, and the fact that Port Simpson is far north of Prince Rupert where there would be, again, fewer opportunities for affecting fisheries and the Skeena, et cetera.
I also just want to ask a question to the other guests. You talk about economic downturn and the issues. We hear a lot about what is happening in Alberta and what is happening in Saskatchewan with the oil industry. Would any of our guests want to comment on the effect of this downturn on the Canadian economy, generally? We are hearing that the latest economic forecasts are falling short of estimates in the last quarter.
Can you talk with any kind of certainty about the data around the Canadian economy generally vis-à-vis the oil industry?
The other thing I would like to hear your thoughts on is the disparity between the scientific evidence indicating that spills do not pose a great risk and what people have come to believe as the truth here in Canada about the economy and the ecology. Because I think we all want to find that balance and want to find that win-win.
Mr. Van Wielingen: I am happy to take the first stab at that.
With respect to the economy, the oil and gas sector, if you include pipelines and if you include power generation, the whole energy sector represents somewhere between 10 and 11 per cent of the Canadian economy. Like any economy, it is integrated, and so there are a lot of other associated subsectors. This is one of the reasons why it is so difficult to draw a conclusion as to what the exact impacts are because how those tentacles reach out is always very difficult to assess.
The extraction industry itself and pipelines represent between 5 and 6 per cent of the Canadian economy, and it is quite extraordinary to observe that that is slightly larger than the entire banking and insurance and investment management business in Canada.
I am very familiar with those numbers because when I visit Toronto, I like to ask some of my Toronto friends who are in the investment management business if they appreciate that, and the banking business. So the subsector itself that I just described is actually the largest subsector of the Canadian economy. It is a primary industry in Canada.
The second question about the disparity of perspectives is a fantastic question, and I wish we could really get into it and talk about it, if we had the time, because I am also asking that question over and over.
It looks to me like perceptions, and I am going to say public perceptions have been heavily influenced, quite frankly, by a lot of the professional activists who every day go to work and are paid to engage in social media, contact the government, write articles and produce videos that are against and opposed to the energy sector in Canada. That is their job. Every day they come in and they do that, and they have been very effective at it. I believe that they have had a huge influence on our public impression, the impressions we all carry of our industry.
A lot of their work is truly not fact based. It is kind of hard to say that and to come before you, like how do I really evidence that? I could, but not as I am speaking here. I offer you that as my opinion when I look at a lot of their work.
I should also say I have had a lot of engagements with them, very specific engagements over many years, and that is the basis on which I offer that view.
Mr. Priaro: I would like to add that as an investor, I have seen for many years a strong correlation between oil prices and the value of the Canadian dollar and the performance of the Toronto Stock Exchange.
Senator MacDonald: Three great witnesses, I thank all of you.
I think I will go to Mr. Priaro first. We have not heard much in our hearings about the availability of hydropower along the Eagle Spirit route to help with the production and the development of the project. Can expand on that a bit.
Mr. Priaro: I see the potential sustainability of a northern energy corridor as probably one of its most attractive features.
Currently, British Columbia is developing the Site C project. I believe one of the motives behind that project was to provide power for LNG plants.
Refrigeration compressors demand a great deal of power, and currently, the normal practice is to burn natural gas. I have seen recently one proponent of an LNG project on the B.C. coast ask B.C. Hydro to look into providing electric power to run the refrigeration compressors. That would make that LNG project the greenest project in the world.
I am sure everyone here knows that when LNG is exported and displaces coal, it cuts the greenhouse gas emissions in half and eliminates almost all of the air pollution. Even if an LNG project increases the Province of British Columbia’s greenhouse gas emissions by a small amount, I am not sure if it would or not, but let us assume that it did, there would be a net benefit globally to our export of LNG.
Greenhouse gas emissions do not respect jurisdictional or geographic boundaries. If we can create projects that reduce global greenhouse gas emissions, then we are doing something very important and very useful.
Aside from the Site C project, there is a tremendous amount of potential in Alberta for hydroelectric power. There is also great potential in British Columbia for environmentally moderate projects such as run-of-river hydropower, which produces very small disruption to rivers.
There is also a great deal of potential in the Mackenzie Valley for hybrid projects that are between a run-of-river and a dam.
An energy corridor from the oil sands to the Prince Rupert area would provide a very efficient tie-in for an eventual Mackenzie Valley corridor with pipelines and electric power to help develop resources in the north.
Senator MacDonald: I will add, we had an environmental engineer in Quebec speak to this very issue. He made the same argument that if Canada produced enough LNG to replace all the coal-burning power produced in places like China and India, even though our emissions would go up slightly, theirs would just plummet. So the overall impact globally would be substantial.
This book that you have circulated, which is a government study on the most appropriate ports to manage heavy oil, and it is very obvious that it is the Prince Rupert, Port Simpson area, according to the Government of Canada’s own studies.
On the East Coast of Canada, I do not think we have a similar study. But speaking to the port authorities, speaking to the pilotage authorities, they all say that by far the best port for managing heavy oil and carrying heavy oil is the Port of Point Tupper at the Strait of Canso.
We have an artificial harbour there caused by the Canso Causeway, ice free, extremely deep water, good anchorage, low tides, not a lot of tide, and immediate access to the great circle route for all shipping.
I am just wondering if you can expand on that a bit because we have not talked about it much here on the West Coast.
Mr. Priaro: I looked at that in regard to Energy East. One of the facets of Energy East that a lot of people do not know is that there is a possibility of including a natural gas pipeline along with the oil pipeline to Nova Scotia.
I have looked at that area and I agree that Canso is probably the best location for an oil port on Canada’s East Coast. The Bay of Fundy is ecologically sensitive. I do not see a big problem exporting refined products from the Saint John Canaport, and of course, sending tankers through the Gulf of St. Lawrence and the St. Lawrence River is not a very good idea when you have a potential port which has a straight shot to the Atlantic Ocean.
From there, exports could be made to Europe and even to western India through the Suez Canal. One of the largest complexes on this planet to refine heavy oil is on the west coast of India.
Prince Rupert, Port Simpson, they also have a straight shot to the high seas. There are no islands to go around, no channels to navigate down. And we should be looking at the safest places on both coasts to export our resources from.
Senator Miville-Dechêne: I want to address my question to Mr. Van Wielingen about climate change.
I was a little puzzled by your last opinion, you stated it was an opinion, about what Canadians thought about climate change. And I would submit that there are proofs that our planet is heating up.
In Canada, it is going as fast as twice as the rest of elsewhere, from what I read. Oil sands are participating to the level of 8.5 per cent of the GHG emissions in Canada.
If Canadians are worried, and polls show they are worried about climate change, it is for good reasons. It is not only because of what you are saying environmental groups are saying. There is some evidence. I just wanted to put that on the record.
But I also want to ask you, because you said Canada has a very good reputation for doing its part, the oil sands that have decreased their emissions, and this is true.
But what about the promise of the new Premier in Alberta, Jason Kenney, who wants to get rid of the cap of 100 million megatonnes per year, the cap that Rachel Notley put in place in part to have the pipeline built, the TMX pipeline enlarged, and to satisfy this growing feeling in Canada that something has to be done for climate change?
Senator D. Black: If I may just interject, the new premier has not said that.
Senator Miville-Dechêne: He has promised, among the promises he has said during the campaign, he has said that he would get rid of the 100 megatonnes per year cap. He has said that.
Senator D. Black: You can clarify that this afternoon, senator, but he has not said that.
Senator Miville-Dechêne: Okay. Well, I may be misinformed.
The Chair: Okay, Mr. Van Wielingen, get into it before it becomes really serious.
Mr. Van Wielingen: I want to make sure that the point that I was making about climate change is understood clearly. I am in no way challenging the view that human activity and increased greenhouse gas emissions likely is a causal factor of climate change, and so that is not my perspective.
My perspective is one of materiality for Canadians to appreciate, inasmuch as we may be concerned about climate change, to appreciate that our emissions as a country are between 1 a half and 2 per cent of global emissions, and as you point out, oil sands are less than 10 per cent of that.
So when you go through the math, that is how you get to 0. 15 per cent are for the oil sands, and if you phaseout the oil sands, there is nothing.
It really is a perspective on materiality, and what I find so disturbing is that we are prepared to get into these incredible political battles within our own country, and from a leader’s perspective, what is the benefit that we are fighting for?
I mean if it really is GHGs and climate change, we might as well see the truth that we cannot really have an impact on it. It is a difficult feeling because it is kind of a feeling of powerlessness.
But we can keep driving for reduced environmental impact within our own country, but also including GHGs. I am not saying not to do that. I am simply pointing out, we are not as important as we think we are with respect to climate change.
Mr. Priaro: Excuse me, just to supplement, Canada’s total greenhouse gas emissions are less than the annual variation from year to year in China’s total greenhouse gas emissions.
Senator Miville-Dechêne: Okay, so obviously we will get the answer this afternoon, but what about this idea? Do you think we should keep this cap on emissions that was imposed by the Rachel Notley government?
Mr. Van Wielingen: Right, and I appreciate that question as well, I really do.
In my view, the cap is quite irrelevant. It is almost just a throwaway.
We are at about 70, the cap is 100, and given the way GHG intensities, GHGs per barrel are declining, there is a lot of room in there still for the oil sands business.
It is a little bit of a red herring, and rest assured Jason Kenney knows that. Quite frankly, it is almost more symbolic right now, is the way I view it.
My understanding, just to enter your little debate there, is that it was not part of his formal policy. He did talk about it. But if you look at their actual policy, it is not included as part of their policy, which might explain why each of you have somewhat different views.
The Chair: What is the largest contributor to emissions in Canada?
Mr. Van Wielingen: To emissions in Canada? Do you know the numbers? Otherwise, I will take a run at it. It is transportation and heating. Those are the two.
The Chair: Heating our homes and driving our cars?
Mr. Van Wielingen: Yes. It is basically the total transportation sector and space heating.
The Chair: I see some members of the audience shaking their heads.
Mr. Van Wielingen: Well, maybe somebody has better information.
Mr. Priaro: I have seen information that led me to believe that buildings was our largest use of energy.
Mr. Van Wielingen: The oil and gas sector itself is an emitter. It is a direct emitter, and so I do not want to ignore that.
Mr. Kienc: Mr. Chair, could I very quickly supplement that?
I am in B.C. three to four days a week. Not a single person has ever mentioned, gee, good thing you guys have the cap, now we can build the pipeline.
I very much second the notion that it is at the moment sort of irrelevant and I think all of those policies, when we talk about policy, need to be responsive. We are going to live in a carbon-competitive world. We do not need to be zero. We need to be carbon-competitive.
I think every government should always try to calibrate our response to what our trade partners are doing. You know, carbon tax might be a great idea if the U.S. is at 27 and we are at 30. But is it a great idea if we are at 30 and they are at zero? I think that is the calibration around policy choices.
Senator D. Black: Panel, thanks very much for the tremendous presentation. I am going to ask you to look forward three to five years, given a scenario I am going to point out.
If the Government of Canada elects in its wisdom passes Bill C-48. And you need to know that Minister Garneau has informed this committee that he will not entertain any amendments, so one has to assume it is their intention to pass Bill C-48 as it currently exists. So let us assume for the purpose of my question, it is going to pass.
Let us also assume that Bill C-69 passes, with limited amendments. What does that look like to you three to five years forward in terms of the economy of this country?
Mr. Van Wielingen: Now, did you say with respect to Bill C-69, without significant amendments?
Senator D. Black: Correct.
Mr. Van Wielingen: Yes, I think the scenario that would unfold is that there would be no significant new projects in Canada, new resource development projects in Canada.
When I say significant, no major proponent is going to want to incur hundreds of millions of dollars of costs to go through this process and to face their boards of directors and ultimately to see those projects get rejected for, in a sense, what might look like political reasons.
I think that new project build would — I mean I cannot say it would grind to a halt, because it already has. And Bill C-48 is really just extreme discouragement more than anything.
The confidence levels that exist today, which are at rock bottom, would just stay there. The problem with these initiatives is what we really need is a turnaround. We need a vision for Canada, we need a vision for our energy sector, and we need a turnaround in initiatives.
Canada, in the vernacular of the banking industry, is a workout for the energy sector. Forgive me, but I really want to speak directly and openly. This is my one opportunity to do so in front of you.
But we are. The energy sector is a workout. And it is distressed.
So we would just stay where we are. We would just drag along the bottom. There would be some ups and downs, some cyclicality and so forth. It is not an attractive picture.
Meanwhile, global energy demand will continue to increase.
Senator D. Black: Could I hear from the other two witnesses quickly on that question?
Mr. Kienc: If I may, we do not have three to five years to have a shot at the same market share in the Asia Pacific markets with our energy resources as we do right now. In fact, we are already on our back foot.
I believe LNG and any other energy export projects on the West Coast are the key to economic prosperity in this century in Canada. Europe, dwindling demand, dwindling economic growth. The East Coast is not really an answer.
If we do not figure out our West Coast export strategy yesterday, we are going to be displaced by others. All of it will happen, it is just we will not see any of the benefits.
Senator Smith: To follow up on Senator Black’s point, the three of you have joined as an advisory group to our group here. We have various opinions among ourselves.
We have heard those for and against Bill C-48. We have heard about the future of the industry. So the three of you, what would you suggest?
If you could put something together in 60 seconds, what should be our approach to try to manage the divergent opinions that we have listened to in trying to address the key question for our country?
Mr. Kienc: It is a different answer if you do not factor in the current numbers in Parliament. But I think you need to look at sweeping amendments to this legislation if you are not confident that you can kill it and have that be the outcome.
I think there are lots of ways to amend this bill. In fairness, if this was about environmental protection, you would be talking about which standards all of our coasts need to live up to under the Ocean Protection Plan and beyond in terms of recovery rates for spills, in terms of other pollution, in terms of bilge water treatment, in terms of all hazardous goods and materials that are transported on our coast.
That is something that includes ferries. It includes all of the First Nation boats that go out fishing and run on bunker and diesel, and all of the First Nation boats that go out chasing orcas with tourists. It includes all of those aspects and everybody’s really awesome yacht on the West Coast, something that is responsive to those issues and gives us ocean towing capacity for large ships which we currently do not have and is the primary reason for the exclusion zone.
Those are the things that would be in a bill that is meant to protect our coast. That is what I would be talking about and putting in this legislation or some other legislation.
Mr. Priaro: I think phasing out the oil sands would be criminally stupid. We are sitting not on the second, not on the third-largest oil resource on earth, but the largest. It exceeds the resource of Venezuela and Saudi Arabia, and if you apply normal reservoir engineering recovery factors to our resource, our technically recoverable reserves are larger than Venezuela’s and Saudi Arabia’s put together.
Mr. Van Wielingen: I just want to add that I think this bill is so offensive that it should be killed.
However, from a pragmatic perspective, the concept of a northern limit would be a pragmatic compromise. That would leave open Prince Rupert and everything north for opportunities, export opportunities.
The Chair: Thank you, witnesses, for a very interesting discussion.
We are now pleased to welcome Mr. Andrew Leach, Associate Professor from the University of Alberta; and Ms. Joule Bergerson, Associate Professor and Canada Research Chair in Energy Technology Assessment at the University of Calgary. Thank you for being with us today.
Mr. Leach?
Andrew Leach, Associate Professor, University of Alberta, as an individual: Thank you for inviting me to appear.
I am happy to speak to this bill. I have spoken to it previously during the House committee hearings, and I will try to keep my remarks focused on my areas of expertise, which are mostly crude oil markets and Canada’s actions and global actions on climate change.
Just a summary of how I see the bill. Basically, the proposed ban prevents tankers carrying any combination of crude oil and heavier refined products, including synthetic crudes and anything heavier than diesel or jet in an amount greater than 12,500 tonnes from being shipped into or out of the coast of B.C. anywhere further north of the northern tip of Vancouver Island all the way to Alaska. Importantly, among others, that cancels out our deepwater ports at Kitimat, Kitsault and Prince Rupert for any of these activities.
In terms of what this means for global crude trade, a 12,500 tonne restriction is sufficient to eliminate any kind of economic trade in these commodities. The vessels that you would normally see used for global crude trade would be 60,000 tonnes and greater and the very large crude carriers we see now involved in most crude trade would be a few times that, up to 500,000 tonnes and beyond.
It is important that this act would ban that kind of trade. It would, however, allow existing supplies into communities and industries within the banned region.
I mentioned earlier that the tanker ban does not affect gasoline, diesel or jet imports or exports, nor would it affect LNG. I think that needs to be emphasized that this is not part of this act, despite what we heard in the last panel discussion about LNG.
That is of particular importance for Kitimat where there is at least one, depends on how you classify it, maybe two LNG facilities under construction in Kitimat.
For Alberta, the products that we produce, diluted bitumen, synthetic oil sands products, including upgraded or partially upgraded products, would be covered by the ban, as, importantly, would be condensates or the natural gas or hydrocarbon liquids that we use to dilute oil sands for transport.
Let me step back to the bill. On the one hand, the rationale for the bill is pretty simply stated, but it is I think a little bit hard to reconcile in general.
Minister Garneau, when he introduced the bill, said it is designed to protect the Great Bear Rainforest, the 400-kilometre stretch of coastal temperate rainforest running along B.C.’s northern coast, and fulfills the government’s pledge to formalize an oil tanker moratorium on B.C.’s north coast.
Of course, it does not actually formalize that moratorium completely because it does not prevent the passage of tankers in these zones. It only prevents their mooring. But as he said specifically, we do not want to allow massive amounts of tanker traffic to be operating in those zones going into Canadian ports. The bill is going to do that.
The Prime Minister and the minister responsible have each stated that the Great Bear region is no place for an oil pipeline, and I think this bill is essentially going to accomplish that. There is no way you are going to see an oil pipeline built to that market with this bill in place.
We have the bill, we know what it is going to do. We need to keep in mind what it costs, what it allows us to give up.
Prince Rupert and Kitimat have each seen a lot of attention recently with respect to oil trade. Kitimat, in particular, because of the Northern Gateway pipeline which was a proposed twin pipeline from Edmonton to Kitimat. Importantly, both aspects of that pipeline, the import of diluents and the export of diluted bitumen, would be impossible under this ban.
Trans Mountain is omitted from the conversation, but the initial plans for the Trans Mountain expansion also had a spur to Prince Rupert to allow export out of that port. That plan was nixed through the NEB hearings.
Last, but potentially not least, CN Rail has a great deal of service potential to Prince Rupert. They have said that they could move the equivalent of a Northern Gateway pipeline worth of bitumen to Rupert for export, and keeping that in mind is important.
Each of these, even though there is no proposed pipeline right now, provides an important option value.
A couple other pieces on that, I think the world has changed for the oil sands. In some cases we still talk about oil sands like we are back in 2012, 2013, 2014, when we needed all of the pipelines in every direction.
Currently, oil sands and other western Canadian crude production is well satisfied as long as we get the proposed pipelines, Trans Mountain expansion, Enbridge’s Line 3 and other network improvements on their network as well as the Keystone XL pipeline.
The other side of that — economists have to have two hands — is with those pipelines still being uncertain, there is still an important option value that we need to keep in mind for a low-cost route to Asia that would go to the northwest B.C. coast. If we did end up needing that West Coast option, routing it all through Vancouver is, potentially, suboptimal in this context.
Another quick note on that front though. The world does not look like it used to for oil sands and that is really true. The world is awash in light oil, and even though we have significant demand for heavy crude, oil sands growth forecasts are still about a million barrels or more per day below where they were in 2014 for 2035.
We have seen those forecasts, essentially, drop tremendously with the drop in world oil prices and the increased uncertainty.
You will hear a lot in this committee, you just heard it in the last session, about forecasts that say world oil demand is going to keep increasing, increasing, increasing. Yes, but those forecasts when they are increasing, increasing, increasing are conditional on the world not acting on climate change.
Once we take into account the world acting on climate change, those forecasts change, and if you ask the oil majors, if you ask the energy assessment agencies international or in the U.S., there is a consensus among them that so long as the world acts even moderately to stem climate change, global oil demand will peak within the next decade or two, and even sooner under the most aggressive forecast. So that changes the value of that option.
I am going to skip ahead and flag a few things for you.
We talk about oil a lot in this, but do not forget that new refineries could be affected as well. One of the banned products is vacuum gas oil out of a refinery and the new North West refinery in Alberta, for every 100 barrels of bitumen they run, they produce about 18 barrels of vacuum gas oil, which would be banned by this.
There are two proposed refineries on the West Coast, Pacific Futures and Kitimat Clean. Both of those have design elements that would process that vacuum gas oil so they would not directly, as designed and proposed, be affected by this ban. If the proponents decided to build a less complex refinery or somebody else wanted to build processing with less complexity, then that would, of course, be affected by this ban and you would have to rail the products back across the mountains to Alberta and the mid continent, which does not make a lot of sense.
One issues I raised before with this bill is the inconsistency of it, that we are creating a new class of marine protected area. I have had the opportunity to be out to the Great Bear Rainforest. It was a fascinating experience, I really enjoyed it and it is a magnificent landscape, but I note it is far from the only such landscape in Canada.
We heard from the last panel about oil tankers on the East Coast, the St. Lawrence River, the Fundy shore, et cetera, and many of those are in pristine locations, national parks, et cetera.
In order for this not to be seen as just a moratorium on oil sands, it would have been more beneficial to see that class of protected area formalized and made consistent by saying what it is about this area in particular — absent just the Prime Minister’s speeches — that make it worthy of protection that should not be extended to those other areas.
Thanks very much for inviting me. I look forward to any questions.
Joule Bergerson, Associate Professor and Canada Research Chair in Energy Technology Assessment, University of Calgary, as an individual: Thank you for your invitation to speak today.
My name is Joule Bergerson and I am an associate professor in chemical and petroleum engineering and a tier 2 Canada Research Chair in Energy Technology Assessment at the University of Calgary.
My research focus is on developing and deploying systems analysis tools to study the life cycle or supply chain greenhouse gas emissions associated with different energy technologies. As such, I would like to provide some context related to the greenhouse gas emissions of crude oil including pipeline and tanker transport as it relates to Bill C-48.
I provided some support material to illustrate the four points that I would like to make today.
The first main slide, figure 1, shows a basic schematic of the life cycle or well to wheel associated with crude oil supply chain. To understand the greenhouse gas implications of different decisions such as Bill C-48, I suggest that the full life cycle must be considered.
This gives you a very high level overview that we are looking across the entire supply chain from the extraction of the resource to processing, transport and use of the final products out of a refinery.
Figure 2 shows the life-cycle greenhouse gas emissions of 30 example global crude oil pathways. Each bar represents the life-cycle greenhouse gas emissions of a particular crude, measured in kilograms of CO2 equivalent per barrel of crude. Each colour or shade that you see represents a different life cycle stage.
There are six Canadian crude examples and 24 examples of crude oil produced and used around the world. This leads to the following insights: First, crude oil is not a homogeneous commodity. The differences in greenhouse gas emissions are due to different resource types, different extraction techniques applied and different refinery types used to process these crudes into different numbers of products, including transportation fuels, fuel oils and by-products such as sulphur and coke.
It is important to emphasize here that there are a spectrum of crude oil types being produced around the world, and Canadian crude oil has greenhouse gas emissions that sit across that spectrum.
The second point is that while oil sands products tend to sit in the upper half of this spectrum, you can see that different types of operations have different emissions. Additionally each of these types of operations have significant variability from project to project, and even within one project’s lifetime.
New technologies are being developed and deployed to reduce the emissions from extracting the resources such that the best performing oil sands projects are better from the greenhouse gas emission perspective than conventional oil and the worst performing projects can be worse than the U.S. average gasoline life-cycle carbon intensity by 30 per cent.
Therefore, painting the entire crude oil industry with one greenhouse gas emission brush can lead to unintended consequences.
The third point is that transport emissions are a small contributor to the life-cycle greenhouse gas emissions. Variations in where and how the crude is transported do not play a large role from a life-cycle greenhouse gas emission perspective.
You can see this in figure 2 in the small orange bars which is the lightest bar, and it is the smallest bar that you will see in those stacked bar charts. This is clearly different for other environmental impacts, but from a greenhouse gas emission perspective, the transport emissions are very small.
For that context in figure 2, we are looking at those 30 different types of crudes. Each bar is one of those crudes, and the emissions are broken down by the life-cycle stage.
Transport tends to contribute only a few per cent to total life-cycle emissions where the crude is being shipped by rail, pipeline or tanker. Therefore, changing the location of the shipping port, increasing the distance that the product is shipped by pipeline, et cetera, will not have a significant impact on the climate. There will be some changes to the overall greenhouse gas emission, but those will be relatively small in the life-cycle perspective.
The biggest potential impact of this bill will be broader climate impacts associated with the influence it might have on whether Canadian products access global markets or not. The impact of this influence is uncertain but could result in global emissions going up or down depending on how the global market behaves.
The fourth point is coming back again to the fact that crude oil is not a homogeneous commodity. Therefore, you cannot substitute a light crude oil for a heavy crude oil.
Figure 3 shows an example of a set of refinery types and associated process units that are operating around the world. The blue process units are those that are at the top of the figure, include process units that would represent hydroskimming or light processing refineries that would typically process lighter crudes only, so a Saudi light or a tight oil from the Bakken or the Montney region.
If the green process units, those in the middle of the figure, are included in the refinery, then it can process heavier feedstock, and if the black process units which are noted at the bottom of the figure are included, then heavy crudes can be processed. Not only can those heavy crudes be processed in these process units, but they need to be produced in order to achieve the designed level of operation that the profit margins are tightly coupled with.
One example, for context, is China, which is the world’s second-largest refiner of crude oil in the world. Seventy five per cent of China’s refineries are deep conversion, which means that they can convert heavy crudes into things like transportation fuels, and there is a trend in Asia, Latin America and other areas experiencing rapid growth and demand for light projects to build deep conversion refineries.
Once built, these refineries will seek at least a fraction of their crude input from medium to heavy crudes.
Given the dynamic global market for crude oil, how this demand is satisfied will dictate how the implementation of Bill C-48 will impact global and greenhouse gas emissions. It is not guaranteed that this bill will result in net global greenhouse gas emission reductions by reducing the potential for Canadian crude to access global markets.
I suggest that this be considered in your deliberations. If reduced climate impact is the goal, then a more explicit and comprehensive approach might result in a more certain and beneficial outcome. Thank you very much.
Senator Miville-Dechêne: I am going to ask this question in French because for the first time in our hearings here, we have somebody who speaks French.
[Translation]
Mr. Leach, thank you very much for your presentation. I want to hear what you have to say on two points in particular. Since the beginning of our hearings, on several occasions and in various ways, we have heard that the drop in oil prices and in oil investment in Alberta is completely related to the fact that opportunities in the Pacific are dwindling. I would like to hear your comments on this cause-and-effect relationship because it seems to me that, from what I have read, the increase in U.S. shale oil production also has something to do with what’s happening and it has nothing to do with market opportunities. That being said, in terms of opportunities, I want to hear what you have to say about the issue of “capacity” once more. I understand from your answer that the Trans Mountain pipeline — if the expansion project goes ahead, as we hope it will — would be sufficient to meet the demand and that, basically, there is no need for a pipeline in the north. Could you comment on both points, please?
Mr. Leach: Thank you. I will try to answer in French as well. I’m a little out of practice. I have been in Alberta for too long. In terms of the impacts on oil prices, we are seeing two situations. In Alberta, first, there is now a capacity constraint, which affects the price that Alberta producers can obtain for their oil. The lack of pipeline capacity has significant economic impacts in Alberta. All this is happening at the same time as a significant overall decline in oil prices and — which is key for Alberta industry — a decline in long-term forecasts of crude oil prices by the 2030s, 2040s and 2050s. There is also an overall decrease in investments in oil per se, particularly in the long-term oil investments in Alberta. Investments in the United States, which have since been... Most of the oil is recovered during the first two years of production. Those investments yield results more quickly than the long-term investments. So yes, our hope in Alberta today is that the pipeline capacity crisis can be resolved by —
[English]
I am going to switch.
The hope is it can be resolved in the short term by either Trans Mountain, KXL, Line 3, some combination, one or two of those lines.
In all the forecasts we have to date from industry, from the National Energy Board, et cetera, that into the 2030s with two of those lines, we would be in good shape. With three of those lines, we would be well covered.
Senator Miville-Dechêne: I want to be absolutely clear. It means that with what we are producing now, one extended pipeline, Trans Mountain, would be sufficient?
Mr. Leach: Correct.
Senator Miville-Dechêne: Why are we hearing so much that the future depends on what is happening in northern B.C.?
Mr. Leach: In part, when you think of the Alberta economy of the last decade and a half, it was not just an oil production economy, it was an oil sands site construction economy.
A lot of what we talk about as the boom in Alberta or the economic engine that was Alberta, it was because we were building new oil sands investments. That is what was pulling in the foreign direct investment. That is what was driving all of the jobs in around Edmonton, Leduc, et cetera, the camps up north.
Some of that is operational sustaining capital but a lot of it was new project capital, and that is what is not going to be there if you do not have that number one, surety of market access. To my second point, which was that it makes sense to make that 50-year bet on oil or 35-year bet on oil or whatever an oil sands plant is going to be.
Globally, we have seen the steepest drop-off in those really long-term bets. This bill does not markedly change our market access as long as those other pipelines are in place. Those would still allow for some expansion of our oil sands.
If those other pipelines came off the ledger, then all of a sudden, you are in a situation where that option value of another pipeline project comes back.
Senator Tannas: Just on that, the part you are missing is the oil price differential, right? All of the pipelines that you talked about being KXL and Line 3 are going in the United States and that is where our problem is, right?
Mr. Leach: Yes and no. If you look where the oil price differential was, we are always going to face quality differential. We are selling a heavy sour product.
But if you look at what WCS sells for today on the U.S. Gulf Coast, it does not sell at a discount. So with pipeline access in place, what would be our long-term price? It would basically be a Gulf Coast heavy oil price net a transportation toll.
With KXL in place, that is probably net $8 or $9, and that is what the differential was 2010 to 2014, was in that range.
If you are looking at going to the West Coast, would that improve the economics today? Absolutely it would. It would not improve it on every barrel. It would only improve it on the ones that move to the west, and it would change the marginal barrel a little bit.
What is most important is not ending up in that situation where a barrel needs to move by rail or by truck or, in particular, what happened in Alberta earlier this year. Junior producers were stranded with barrels that they have no storage, they have no ability to move it and they have either Canadian or U.S. majors coming to them saying I will take your barrels but you are not going to like the price, and you have got nothing else to do.
That is the situation you avoid with more pipeline capacity, anywhere. If you were to build pipeline capacity now, you would want it to the West Coast because that is where your highest value is. But those are dollars, like $1 to 2 per barrel effects, not the $20 effects that we saw with the constraint.
Senator Tannas: I have a question for both of you. I think maybe you have expertise in this, or at least you probably have enough expertise that you have wondered about this.
What would be the economics or the feasibility in replacing the GHG emissions used in the production in Fort McMurray with nuclear power? Have you ever thought about that as a replacement, which would then make us zero emitters in the production.
Number 2 is refined product export. I have asked this question of a number of different people. Why can we not export refined products? Why does it always have to be crude oil?
Have you ever seen or ever thought about a business case that challenges that, the way that our newspaper friend on Vancouver Island has done with Clean Kitimat?
Ms. Bergerson: Nuclear in the oil sands has been discussed and contemplated since its inception, actually. They considered using nuclear for different purposes, but about ten years ago, they were approached with small modular nuclear reactors to help provide steam and electricity in a modular format that could be moved around and supply that demand on site.
At that time, they were still relatively new technologies and their costs were uncertain. The regulatory process by which they would have to proceed was also in question at that time, and given the risk-averse nature of these large capital investments, it did not move forward at that time.
I know that there has been some ongoing discussion since then as the small modular nuclear reactors continue to develop, but as far as I know, that is not moving forward in any significant way.
It has the potential to reduce greenhouse gas emissions, as do a lot of other technologies that are being explored right now. On the extraction side, you likely could not get yourself right down to zero with that because there is a variety of energy services that are required.
You could very much get the bulk of what is needed but there would still be some emissions, but definitely could have a big impact. The cost and the risk that the regulatory system would have to proceed through would be two big barriers, I would say.
Mr. Leach: I would first add to Dr. Bergerson’s answer that right now, we do not have a huge value applied to becoming zero emissions in oil sands. A big barrier would be the financial one.
If I say to you, would you want to make this large investment, take all these risks, to collect what value? Unless we have a higher price on carbon, you are not putting very much value on zero emissions oil sands. So, that would be part of the answer.
In terms of the refined product question. In Alberta, think of where we were up to three or four years ago. We were talking about labour constraints, cost inflation and the depth of inability to hire people.
If you were talking about doing more refining, you would be competing for those same workers so you would be building what would be, potentially, the most expensive refinery in the world — we have just done that on a small scale — to try to compete in the global market of refined products.
North America is now a net exporter of refined products. To try to build something here that you could build, essentially, anywhere in the world and try to compete in that global market versus . . .
As I think you may have highlighted in the last session, the scale of our oil sands reserves, if we are going to spend money here, it has always been the better play to say you can only do the extraction here, you can do the refining anywhere. So let us devote our capital and labour to that industry, not to the refining side.
Senator Simons: When we were in Prince Rupert and Terrace, we heard a lot from people who said, well, why does Alberta need to export oil? Why do you not export refined products? I wondered if you could speak, both of you, in more depth about the economic and the environmental safety concerns about refining here, piping it all the way there and then loading it.
Ms. Bergerson: The current system is set up such that we locate refineries closer to where the demand source is so that we do that final stage of preparation close to where the demand is. Given the population of Alberta and the amount of energy that is being produced, we have about the right amount of refining capacity to satisfy the demand in the local region.
We have set up our infrastructure such that our pipelines are set up to transport the crude oil rather than the finished product. So the costs associated with shifting would be the infrastructure that you would have to then build or convert in order to ship those other products.
The other challenge with that is that we have a multitude of products that come out of the refinery, and therefore, you would have to handle each of those individually.
As a last point, if you are then going to ship by truck or by other means other than pipelines, you are missing out on those economies of scale that you get with pipelines, which is a very efficient way to ship energy.
Senator Simons: Dr. Leach, you referenced the northeast upgrader, about which I know you and I have spoken at length in the past. What are the economic barriers that stop us from doing the refinery and the engineering safety ones?
Mr. Leach: The ironically named North West upgrader, which is northeast of Edmonton? Yes, so a couple things.
First, we do have a precedent for serving other markets with refineries and pipelines. So the Gulf Coast serves the U.S. northeast with two somewhat unfortunately named Colonial and Plantation pipelines which ship refined products all the way up the East Coast.
We do have a precedent for doing that, but there is a lot of infrastructure involved in building it. Particularly with refined products, you are dealing with very specific formulations for specific markets, so it is a much more niche product than a crude oil would be.
In terms of why Alberta does not engage in this market, I think mostly the question is dollars.
Historically, we built upgraders not because it was, quote-unquote, “value added,” but because we needed to do it to meet pipeline spec. We had no way to get enough water and sand out of the bitumen to ship it in a pipeline and make it a marketable product that someone would put in their refinery.
If you boil it down and say, where is the most value added going to be, it is not going to be in the finished product. It is going to be in the extraction of the product and the preliminary processing.
Essentially, North West is an example of a government chasing a political project where we ended up spending. Somebody referenced in the last panel Jamnagar, which is the big Indian refining complex, and that refining complex on a cost basis, I believe, was somewhere in the neighbourhood of $25,000 per barrel per day of capacity.
You do not need to worry about that unit. Just know that the North West upgrader that we built in Alberta is about $125,000 per barrel per day of capacity.
If you think about what that means, you have to recover a whole lot more capital toll on each barrel or capital return on each barrel you produce in order for that to make money.
That is an extreme example. They went through a whole lot of problems with that facility, but even the other larger scale facilities that were proposed would have had similar capital costs, maybe double those of India. So, then you are building in, you have got to earn an extra 3 or $4 a barrel, probably, on your refined product.
Where is your market? Your market is actually now Asia or India or wherever. You have got to find a way to sell your refined product there for more than what they can produce it for themselves, which is a challenging market, especially given that you have to ship it all the way there.
The Chair: There are only certain places you can get oil, crude oil, but you can have a refinery anywhere, so that is the economic argument for us. Why would we build refineries when they can in another country have their own and assure themselves of supply? Right?
Mr. Leach: In particular, compete directly with your extraction industry.
The Chair: Exactly.
Senator MacDonald: I want to speak to a couple of things here. Senator Tannas brought up the pipelines that now exist and their potential to manage all the capacity. He also touched upon the fact that these are not going to export markets for Brent pricing. You mentioned that sometimes, the gap is relatively small but sometimes it is not relatively small. Sometimes it is substantial, even $30, $40, $50 a barrel.
The other side of this is the potential to take 283 million tonnes of heavy petroleum out of the waters of Eastern Canada by bringing the oil east.
The Bay of Fundy is a very sensitive ecological area with a huge shellfish industry there, lobster industry and right whales — they are endangered — giving birth there. Also northern humpback whales feed there four months of the year. All kinds of provisions have been taken to protect these species.
We mentioned Point Tupper earlier. The largest tank farm on the East Coast of Canada, in fact the largest one in the country is at Point Tupper and that site is the former site of the Gulf oil refinery.
We used to have two oil refineries in Nova Scotia, one in Dartmouth and one in Point Tupper. The reason they lost both of them is that when they were built when oil was selling for 99 cents a barrel and their capacities were small. By the time the price hit $40 a barrel or $49 a barrel, they had to shut them down.
Why we have no capacity in Nova Scotia is because we did not have access. The only oil we had access to was world oil. We did not have access to our own oil.
What we should also be looking at when it comes to managing this overall issue is the lack of a national coast-to-coast energy strategy.
Driving that oil east in a place like Point Tupper, you have a brownfield site there that is environmentally approved for a refinery. I am curious, you talked about moving oil to market and refining it and the economics of moving the heavy oil as opposed to the economics of moving refined oil.
If you had a place like Point Tupper which would be assured of 100 years of heavy oil, would not a place like that be a suitable place for a state-of-the-art refinery that could export refined products?
Mr. Leach: There are a couple pieces to your question. If you take a heavy oil refinery, to build a greenfield new heavy oil refinery, it would be cheaper in Nova Scotia to build than if you build it in northern Alberta, because you could tanker all the modules in.
But of course, that would make it a far less popular project with the workers of Nova Scotia, if they were ferrying in all the mods.
Senator MacDonald: No, I think it would be more popular than you think.
Mr. Leach: You are seeing some of this done with global energy right now, which is a fairly decent agreement between labour and the manufacturer.
Still, as you highlighted, you are in a premium crude oil market. If you are building a refinery, where do you want to build it? You want to build it where you can access cheap crude, and as you have highlighted, that is not right now a northeast Brent market, and where you could sell premium value refined products.
Right now the North American continent is a net exporter of refined products so we are trying to push our refined products out so our refined products, relative to other markets, are still at a discount.
A lot of the same economic factors that were present when Dartmouth shut down would be there still for a greenfield refinery, and you are making a long-term bet on new assets. So I think it is a challenge.
If you build a pipeline into that, I think it is important to think about what that means. If you said pipeline, someone has got to pay the shipping toll, so either your refinery on the Gulf Coast has to be willing to pay a big premium to Brent — $6 or $7 over Brent — to make it even for the producers in Alberta with a pipeline going west. Or producers in Alberta have to be willing to accept $6 or $7 less per barrel — $5 or $6 less per barrel maybe — just for the privilege of sending it east. We know how popular those types of policies have been in the past in Alberta.
Senator MacDonald: I am sure it would be as popular as selling it on West Canada Select or discounted price or WTI when it is $20, $30 or $40 below Brent pricing.
Mr. Leach: WTI, the only periods in which WTI has been significantly discounted to Brent was when they had a mid-continent pipeline reversal issue they had to solve.
Western Canada Select sells at a discount but it sells at a discount when we have limited pipeline capacity to the U.S., not because we have pipeline capacity to the U.S. Solving that problem, you get around the discount.
Senator Miville-Dechêne: Mr. Leach, I want to hear you on climate change.
You allude to the fact that production extraction is a factor that would diminish extraction of oil sands if we respect our climate change promises. Correct me if I do not quote you correctly.
I would like to know what you see as an analyst. We have a new government coming to power in Alberta that has alluded to the emission cap and has said, basically, they would get rid of the carbon tax.
How would that play out in Alberta with regard to climate change and the production of oil? What do you see coming in terms of Alberta’s reputation as an “oil sands producer.” How will the oil and gas industry, at the same time, say it’s responsible in terms of doing its part for climate change?
I am sorry, my question is not very clear but I think you get it.
Mr. Leach: There is a lot there. One of the witnesses in the last panel had said that for him, the oil sands cap was kind of a non-issue, and to a large extent, I agree.
Any analysis that I have done, if you take the production forecasts for our oil sands barrels, even our historic rates of improvement not being super ambitious on technology, you are not going to hit that cap.
Then if you got close to that cap, there are a lot of things we could do that would reduce the emissions at a cost that would be lower than the cost of just forgoing the production. Right?
So all of the doomsday, oh, well, we just give up the production, in a world where we hit that cap, it must be the case that global oil is booming at levels we have not seen before, the oil sands are way more valuable than we see today, and there would be many, many things you could do to avoid that cap. So I do not think the cap itself is a huge issue.
Importantly for Jason Kenney’s government, what he has said is I will keep the carbon price on oil sands. Unfortunately, he has also said he is going to change from a system where every oil sands facility is treated the same with respect to the output-based pricing system within that, to one which, effectively, gives more free emissions credits to higher emissions oil sands facilities.
If you can think of how that works against innovation, it says if I implement some of the technologies that Dr. Bergerson and her group are studying, then that means I would get fewer free emissions credits for the life of my project as a reward for doing better, which seems a little bit backwards.
If we see him improve that aspect of the policy — hopefully as we move to legislation — you will see that the signal will remain on oil sands emissions to keep pushing them down.
Senator Busson: Thank you both. You have been so informative, I have 100 questions I would love to ask but I am going to try to tame myself to maybe just one or two.
You did not speak about this extensively, but I am very curious if there is any data around Alberta’s response to the uncertainty of pipelines, namely to purchase more rail cars.
Do you have any opinions or data or any studies that would talk about that and how that certainly reflects on the ecology, the economy, or how that interplays with what we are discussing?
Ms. Bergerson: I can start from a greenhouse gas emission perspective.
When we look at the greenhouse gas emissions associated with pipeline transport as compared to rail, they are basically overlapping ranges. So there are ways you can operate your pipelines and rail systems such that you can be better or worse.
In general, the pipelines tend to be the most efficient way to transport crude oil, and so they tend to be lower. As I had shown in the figure 2, the transport itself is a relatively small contribution to the overall life-cycle impacts of these pathways.
There are differences. I think that the bigger differences are in terms of the economics as well as in terms of safety and other factors. From a greenhouse gas emission perspective, they are not significantly different.
The Chair: I was going to ask you a question, Mr. Leach. You had talked about world demand for oil.
I remember having a conversation with a number of people when the oil prices were well over $100. I always believed that they would come down. Not enough of a belief that I would ever short oil, but I believed that they would come down because I am a free enterpriser and I believe in the market system.
You say world demand in 30 years for oil is going to be less, and that therefore, there will be way less demand. That is a forecast, I think, is just based on wishful thinking. It is certainly not based on past evidence of world prices, which go up and down as we have all seen from the 1970s onward.
Who knows what the price of oil is going to be in 35 years, or the demand for oil, frankly, in 35 years. We have no idea, do we?
Mr. Leach: Generally, we do not but we can make forecasts. Importantly, what I said was that if you look at the consensus among both those who are making long bets on oil — the oil and gas industry, the energy information administration and the international energy agency — is that you are bending the curve down on both demand and on price with action on climate change.
All else equal, if you want to believe that the U.S. fracking boom is going to run out tomorrow and whatever other reasons, and oil prices are going to go up, okay. But that would have less of an impact on price in a world where we act on climate change.
The other thing that we know is we have a lot of crude reserves today that we did not know about ten years ago, right? If I would have been in my classroom in 2007, 2008, talking about 100 million barrels a day of $50 crude, people would have told me I was crazy. Probably I would have told my students they were crazy if they estimated that.
We do not have a lot of certainty, but what we do know is that with current forecasts, we have more crude, better substitutes, more gas and better renewables available today than any of the forecasts were holding ten years ago.
I think all of that cuts against the long-term, shall we say, investment thesis on oil sands in a way that was not there five or ten years ago.
The Chair: You are talking to a guy who lived through Jimmy Carter so I regard all that with great suspicion. Right?
Senator Tannas: Dr. Leach, I just wanted to make sure I heard you right and then ask you a question.
So you said if we get TMX, Line 3, Keystone XL, that would cover existing production in whatever is under construction. Is that right, that we would not need a Northern Gateway or something else to supplement the supply that we would have, obviously, from the oil sands and all the conventional production that is predicted?
Mr. Leach: That went a little bit beyond what is under construction, if you take account of CAPP’s 2018 growth forecast out to 2035, or National Energy Board’s forecast out to 2040 of oil sands production, you kind of touch the top end of that by mid 2030s.
Senator Tannas: Great. Would it make sense then to tie that to this moratorium? If we said, this moratorium comes into effect when TMX, Line 3 and KXL are completed?
Mr. Leach: I think I go back to what I said at the beginning, is I would rather see us decide why we need a moratorium and under what conditions we need a moratorium on crude oil transport in particular areas and enforce that. Otherwise, that just becomes very strange in the context of this bill. It would say that this is a landscape worth protecting only under certain conditions related to other infrastructure.
Senator Tannas: That assumes that this is a logical bill. We know it is not. We know it is not. Otherwise, as you have said, we would be focused on all kinds of wildernesses all over our coastline, and we are not. We are concentrating on the one wilderness that gets Alberta’s oil to a port.
Mr. Leach: That part is not necessarily the case, right? We still have a lot of other potential routes for access. Right?
Even if you look at all the pipeline projects that have ever been proposed, it is kind of one and a bit that is affected by this bill.
I would not say it squeezes out all of the Alberta market. It does push crude potentially more towards Vancouver or to the south or maybe to Senator MacDonald’s end of the world, but that would be the impact.
Senator Tannas: Your preference would be to go back to the drawing board and review absolutely everything in every part of the country with respect to the transportation of crude oil, coming and going, if we want to do this right. Is that what I am hearing?
Mr. Leach: My sense is if you are going to do an environmental protected areas bill, do one that is consistent across the country.
Perhaps there are specifics of this area which do not exist elsewhere, but those are not well defined by this process. I would be open to suggestions of what those specific things are that do not exist, for example, on the Fundy shore. We saw Energy East lose its potential “Port of Kikuma” over beluga whale breeding grounds. This is an area that we ply with import tankers, so I think there is a question there as to what we are defining here.
Senator Simons: When we were in Quebec City last week on C-69, as Senator MacDonald will recall, he and I had some back and forth with witnesses, one of whom said that her preference would be to import oil from North Africa, from places like Algeria or Nigeria, Kazakhstan, rather than accept any Alberta oil into Quebec, and I got all bristly and red-necked and very Albertan about that.
Looking at Dr. Bergerson’s chart, I am thinking, perhaps, my umbrage was overplayed, and I wondered if we could end by saying, when we hear from environmentalists that it is better to tank in oil from other places than to use pipelines to move our oil east, what do you make of that argument? How does that balance?
Ms. Bergerson: If you look at the figure, you will see that there is Nigerian crude at the top of the bottom end of the greenhouse gas spectrum, right, so it is not clear that you are getting a lower greenhouse gas intensive crude by doing that.
In the analysis we did with this, we had much better Canadian data, so we are much more confident in that. There are uncertainties and potential omissions associated with the data we used from those countries, which I think reflects some of the uncertainty associated with those products in general.
Lastly, I would just say that the other considerations beyond greenhouse gas emissions should also be taken into account. So the economics of our economy, but also the other environmental impacts, social impacts, those kinds of things.
Senator Simons: We have fewer beheadings here.
The Chair: Is it not a little dangerous to be depending on Nigeria to keep us warm in the wintertime? I do not know where that came from. Algeria? That would be the same. It would be just as bad.
Ms. Bergerson: We do not have it here. I do have it in my analysis, and I would say that we have some of the strictest venting and flaring regulations in Canada that are not implemented elsewhere. Algeria and other African nations that are producing light crude, when you actually get it into the refinery, it is low in emissions. Producing that, if you actually vent the natural gas that is produced with the oil, you can be at the top end of the spectrum.
The Chair: On that note, thank you very much, witnesses.
(The committee adjourned.)