Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 21 - Evidence - Afternoon

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 1:10 p.m. to examine such issues as may arise from time to time relating to energy, the environment and natural resources.

Senator Nicholas W. Taylor (Chairman) in the Chair.

[English]

The Chairman: We are fortunate to begin our afternoon hearing with a presentation on entrepreneurship. In that regard, we have with us Mr. Steven Millan of the Canadian Imperial Venture Corporation.

Mr. Steven Millan, Chairman, President, and Chief Executive Officer, Canadian Imperial Venture Corporation: Thank you, Mr. Chairman and honourable senators for giving us the time to talk to you. As a small company, we tend to be lost in the background, to a certain extent. As this oil and gas development on the east coast rolls out, we believe that small companies will, as they have done in places like Alberta, play quite an important role, especially with regard to the localization of benefits as the industry moves ahead.

In my presentation I will concentrate on what we are doing. In my long career I have worked for governments, large industry, and I have worked for a university. I now work for about 3,000 shareholders in a small company. I have seen most things come and go several times, and I have also seen several sides of the same game.

We recently put together a brochure that has some good pictures, which will eliminate the need to use slides.

I would draw your attention to the cover. Our most active project now is at Garden Hill on the Port-au-Port Peninsula on the west coast of Newfoundland. In the brochure you will see a picture of our rig drilling at night. Our slogan, "A turn in the right direction," is not meant to be a political slogan, but just in case anyone has any designs on it, we have trademarked it so it cannot be used without our authorization. This is a play on words. When things are going well in the drilling industry, we say we are turning to the right. In fact, we are turning to the right. As a small company, we are doing some things right. We are taking our fate into our own hands in terms of the development of oil and gas in Newfoundland. We are not waiting for other folks to come in and do it for us, and then work for them. We want to drive it from the top down.

Although there are a couple of other companies in Newfoundland, we probably have the lead here. A company in Nova Scotia called Corridor Resources is our counterpart in that we know each other, and, in general, we collaborate. We think that is important.

I will concentrate my remarks on Garden Hill, but we do have a couple of other projects. On the inside cover of our brochure, you will see a brief "History of the Play." In fact, it is 170-year long history. There are oil and gas seeps up and down the west coast of Newfoundland. In fact, at the end of the First World War, there was a famous publication called Oil Fields of the British Empire, in which there two areas were a signal for bunkering ships of Her Majesty's navy. One was the Parson's Pond area on the west coast of Newfoundland, and the other was my former home in Trinidad and Tobago. Trinidad has been producing for over 100 years. We would hope to have that kind of development on the west coast of Newfoundland.

I would draw your attention to a couple of items in our mission statement. Being a small company, we have some advantages and many disadvantages. Being small, we can be quick, and we must be smart. That is why we have included words in like "agile," "innovation" and "knowledge" in our brochure.

I also draw your attention to the technology. One of the changes that is taking place in the oil industry is that even companies of our size have access to excellent technology. In the old days, these things were locked up in large companies, but today they are available to even companies like ours.

On the subject of our objectives, I would note that we have no fear of getting involved in a vertically integrated industry. In other words, if refining our product on site makes sense, we will do it. We do not have to worry about how it will affect our other refineries elsewhere in the world because we have none. That is a consideration for large companies. This demonstrates, in terms of local participation and local benefits, the advantage of having a locally or regionally based company or industry.

The brochure also touches on opportunities where we have an advantage. Our knowledge of this industry, both technical and social, makes us attractive to incoming industries in that we can operate without causing too many problems.

In order to do this, of course, we need access to people, technology, and know how, and we have achieved this through operating alliances that complement our strengths, and extend our reach.

On page 2 you will see some maps showing where we operate. We operate on the west coast of Newfoundland. The play extends between Newfoundland and Quebec. It came about in about 500 million years ago - and here is a switch for you - when Newfoundland first separated from Quebec. This is nothing new. There are two major basins, one on top of the other. We operate in the lower basin, the Anticosti Basin. On top of that is a younger basin, the Maritimes Basin. Both basins are underexplored and both represent the next generation of exploration plays that have to be addressed in this area.

The west coast of Newfoundland, and the Port-au-Port Peninsula, in particular, is an economically depressed area. In the last few years, we have spent a lot of money in that area, and part of our undertaking to the province and to the community is that we will optimize on the use of local goods and services. We do that because we are part of the community. I think that we are well regarded because of that.

Our Port-au-Port Peninsula play is our most advanced one. Yesterday, in fact, we spudded a second well on what we call our Harry's River Block and, as of this morning, we are down at 24 metres. We are just starting that one. This morning, at the Garden Hill play we are down to 3,762 metres. That is a very deep well, and it is an expensive one. We are pushing ahead in both of them. We also own approximately 800,000 acres offshore in the basin. If the area is offshore, we come under the jurisdiction of the Canada-Newfoundland Offshore Petroleum Board. Onshore, we come under the jurisdiction of the province.

We are the first corporation to do this, and that makes it difficult. We are testing all of the regulations for the first time. I, for my sins, was responsible for some of those regulations, and I can tell you that many of them are in dire need of rewriting. I recognized that once I tested them. We have recently received approval from the government to go into production, and to get a production lease over most of the play that we control.

We are working what is the northern extension of the Appalachian Mountains. The Port-au-Port Peninsula represents the thrust front or the start of the mountains of the ancient system. The area between Port-au-Port and Quebec represents the prairie region. If this were the Rockies, it would be turned 180 degrees. The mountains are to the east, the plains are to the west. There has been no drilling in the plains area. Some major structures have been identified on that side. By "major," I mean in the several-hundred-million-barrel range. This means that, should this develop the way we think it will, we will be dealing with a major industry, a major potential industry, and that could be a shot in the arm for this entire province, and, indeed, for the region.

On page 4, you see a picture of the Garden Hill site as it stands today. It is a very beautiful site, which is right beside a main road, so we cannot hide anything from anyone. It was discovered by Hunt and PanCanadian in 1995. We farmed into it, and Hunt and PanCanadian remain our partners. In fact, they have a 50 per cent working interest, but we operate it on their behalf. It is comforting to us to have some strong, independent companies like them working with us.

The Chairman: Are they full partners with you now, or are you still earning there?

Mr. Millan: In about two weeks time, we will have earned. We are drilling the earning well right now.

The Chairman: In about two weeks time will they become full partners, or whatever the percentage is to be?

Mr. Millan: Yes. They will be a 50 per cent working-interest partner.

The Chairman: Will they have to put up their share?

Mr. Millan: Yes. Currently, we are paying 100 per cent.

The Chairman: Is there any indication that they might want to increase their share, or want to re-farm?

Mr. Millan: There is hope, and there is reality. They are kept completely informed about what we are doing. On the technical bases, we know that they are quite enthused with what we have. However, I cannot read what goes on at their corporate level.

The oil is extremely good quality oil. It is 51 degrees API, which means it is in the same range as diesel or aviation gasoline. It would need very little processing in order to be a saleable product. This is why I made the comment about processing on site. That is a real possibility.

On pages 8 and 9, we have an artist's concept of what Garden Hill might look like in due course. This is a reminder to me as of the many things we will have to put in place as we prove up more and more reserves. Right now, it is a green field site. Everything that is there, we have put there. There are no transportation systems. When we have been testing this oil, we have trucked it to Come By Chance, which is a very long way away, and it is an expensive way to go. That is why in the artist's concept we show a port and a boat. The sooner we can load the oil into a ship, the better. That will gives us some flexibility in terms of who we sell it to and at what price.

Senator Cochrane: Will that port be in Lower Cove or Stephenville?

Mr. Millan: Lower Cove seems to be the most reasonable place to put it. As you know, there is already a loading facility there for limestone. It will need to be extended. Lower Cove is not very far from where we are, so a small pipeline to Lower Cove is a real possibility. Once we get to Lower Cove, and we start talking about shipping, we are into federal jurisdiction, and a whole host of challenges have to be met.

There is a fairly large built-in market for reasonable volumes of oil and natural gas in the Stephenville-Corner Brook area. For example, Abitibi Price has a very good plant in Stephenville. Their one problem is the cost of energy, and we have been discussing with them the possibility of putting in place a co-generation facility where we would provide process heat to them, and the excess would go to providing electricity for the grid.

There is a fair sized local market, but if this is as big as we think it is, it will become a regional market, at least. For that reason, we have entered into a joint venture with Emera, the former Nova Scotia Light and Power Company. They have ambitions to get involved more broadly in the energy business. The up side for them is in oil and gas. In fact, they own a piece of the Sable pipeline. We mesh quite nicely with them. In fact, we did this about four or five months ago. I have scheduled a meeting with them next week.

Harry's River is in a different play type, but it has the same general, lower Ordovician group of rocks, and we spudded that yesterday. We are doing that in conjunction with a company called Contact Exploration out of Calgary. At the most recent offshore land sale, we picked up two large parcels offshore, one of which has a major - and by "major," I mean a Hibernia-size structure - to be tested offshore. We will need to joint venture with some fairly large companies in order to afford the $20 million it would take to drill a well offshore.

The other block we picked up contains the extension of our field, our onshore field, and we think it is reachable by directional drilling from onshore.

In this regard, I should also mention a key joint venture we have with Baker Hughes, which is one of the three large providers of oil field services. We needed to marry up with a group that had the technical depth that we do not have. This has been a most successful strategic joint venture. They do not own equity in our company, but we work together. This is meant to be a long-term arrangement. The benefit to us is that we have access to technology which is being used offshore, and which is normally too expensive for onshore people to use, but because it is here, we can use it. This is a concrete example of technology transfer taking place on a local level.

Two other projects are dealt with on page 13. There is a little picture of one of them. In 1998, I did a study for the Newfoundland Ocean Industries Association and for Atlantic Canada Opportunities Agency, ACOA, on natural gas in Newfoundland and the utilization of natural gas in Newfoundland, which has led, as you may have heard from Leslie Galway this morning, to a number of other studies that followed up on it, all with the intent of trying to set a groundwork for a natural gas strategic plan to bring natural gas on stream.

We were so convinced that this was worth doing that we took two steps. We have done a joint venture and done a significant amount of work on an alternative transportation system to either pipelines or liquefied natural gas, LNG, which are the two established transportation systems for natural gas. We have been considering compressed natural gas, which, for shorter distances, seems to have an economic edge over LNG. In fact, the general point is twofold. One advantage is that if natural gas is to be brought from the Grand Banks to market, we must be innovative in how we do it and pipelines may not be the answer. This is where research on the part of governments, academia and the industry could be extremely useful.

On the assumption that gas will be delivered to Newfoundland at some point, I considered, from a part of my own background, what the Island of Trinidad did to natural gas about 25 years ago when Trinidad was faced with a classic conundrum - which Newfoundland is faced with - which is the markets are too small compared to the size of the natural gas deposit and the cost of bringing it to market. Trinidad created a market for natural gas. The market was in the form of a natural gas based industrial park where the natural gas was used as an input into value-added processes. The value-added products were exported by ship to the northeastern United States and to Europe.

We have done a joint venture with the Management Authority of Argentina on the former naval base on the South Coast of Newfoundland, which is ideally situated on a great circle route for shipping to either Europe or to the U.S. We have a 640-acre site set aside there for value-added processes, if and when natural gas is brought to shore. We hope - and we believe - that it can be sooner rather than later. It will not be if it is just left up to the devices of the oil companies.

I will be very pleased to take your questions.

The Chairman: I believe Senator Cochrane lives in the backyard of that development and probably can see the rig from her living room window. I will turn the first question over to her - or the first couple questions.

Senator Cochrane: We are not that close, Mr. Millan, but we are pretty close. My husband and I have gone out many times just to look at what is happening at this great development at Garden Hill. We have seen the flares that have gone up and we have been there sometimes when there are no flares and wondered what was happening so very close.

Thank you for coming and sharing your expertise with us and for giving us some insight. I am curious about something that perhaps you can help me to understand. You have made note in your booklet at page 14 of your partners, Hunt Oil from Houston, and PanCanadian. They drilled two onshore wells, as you have said, one at Garden Hill, just off Cape St. George and the other at Long Point.

All these names refer to the same place. Long Point and Blue Beach are the same. One offshore well was also drilled in close proximity to the onshore one that you are drilling now. It was located at the bellow, at Cape St. George. Six years later this abandoned well - abandoned by Hunt Oil and PanCanadian - is subject to further testing by your company. As a resident of that area, I am really interested as to why they left and capped it and then you came in later, as a smaller company. I do not have to tell you how big Hunt Oil and PanCanadian is. I am just wondering where you are coming from here with your company. Why did they cap this well when you, as a small company, came in and started going down through those same holes?

Mr. Millan: Senator, you are very polite in the way you put that question. It is usually put to us much more bluntly: What do you think you are up to as a little company when these companies could not do it?

I would like to point out a few things. There are actually a total of four deep wells drilled in that entire play, and on the entire basin. That is not a lot. There were 50 wells drilled before Hibernia was discovered. Striking oil does take a while.

The Garden Hill well at Port-au-Port was actually never abandoned. It was always suspended. It was judged by Hunt Oil and PanCanadian to be below their level of interest because they were looking for very large finds. At the time, with the mapping and geophysics that they had, they thought that this was a little bump, just a small deposit with probably 10 million barrels, or something like that. They saw it as being an adjunct to any other discoveries that they might have had, so they kept the well in the position where it could produce. The well that they really thought was going to come out positive was Shoal Point. That was the last well they drilled there.

At a presentation made locally they said, "When Shoal Point comes on, we will be tying Port-au-Port into it." A little bell went off in my mind that said, "Port-au-Port is there and is ready to produce." When Shoal Point did not come in, we were through the company doors the next day saying, "Okay, we now have an orphan. Can we take it over on your behalf?" It took us six months to negotiate that because big companies do not necessarily like working with small companies. On the other hand, they saw that my board of directors and I and so on had certain credentials, and we convinced them to give us a chance. They have been very good partners ever since.

I might point out that this is done all the time in the oil industry. Companies go in and give their best shot and if the outcome is not what they expected, they farm it out and retain an interest, so that if we win, they win.

Senator Taylor asked earlier, "When do they start paying their buck?" They have to - or will have to - in about a month's time or they lose their entire interest.

They have since moved on to do other things. They have moved across. It is worth noting that PanCanadian has made the only new discovery in this region for a decade. Most of the discoveries that are being developed now were discovered in the 1980's. I sometimes taunt my old colleagues at Petro-Canada and say, "Ever since I left, you have not found a damned thing." It is somewhat true.

If, indeed, exploration does not result in discoveries, then we will plateau out very quickly and start declining. The broad issues would be what must be done to keep exploration going. There are things Canada can do. In my view, the most important would be to lessen the tremendous regulatory burden. We must keep exploring.

Senators, I am sorry for this long response to a short question.

We keep these companies informed. They like what we are doing, and they are still actually part of it.

Senator Cochrane: Do you think they should have drilled more holes before they gave up?

Mr. Millan: Some individuals, who will be unnamed, have said, "You are doing exactly what we should have done. We should have followed up a discovery." You see, once you have a discovery in a basin, it removes a whole lot of unknowns. We know that oil is there. We know the quality of the oil. We know it will produce well. These were all unknowns before the Port-au-Port, No. 1 Side Track well - the very first well - was drilled. We never believed it was small because, if you think intuitively, what is the chance of poking an eight and a half inch hole down almost four kilometres in the middle of nowhere and striking a small target? I would say the chances are next to nothing, in a statistical sense.

That was a gut feeling that I had. We then shot a geophysical program that said, "No, no, this is not small. It is a large structure, and, in fact, it is so large that we have not defined it because we did not run our lines long enough." This is why we picked up the offshore acreage because it is a structure still rising to the west.

With the testing that we have done there, our reservoir consultants have said they cannot tell how much is there because there is not enough information at this point, but they can conclude that the quantity is not small. They can conclude that because if it were small, we would have produced enough to start getting responses from the reservoir. We have produced enough, but we have had no responses. That means that the reservoir, according to our testing at this date, is infinite. No reservoir is infinite. That just means we have not produced enough.

Senator Cochrane: How much more testing is needed in order for you to be satisfied that there are commercial quantities of oil and gas in that particular site?

Mr. Millan: Maybe I should tell you what our plan is there. We are drilling the first step-out well. Really, we need more wells to extend what is, in fact, a point of information now to obtain some more aerial information.

I would be happy if initially we had between five and ten wells. That is what we would need. Typically, onshore fields are developed well by well by well. It is not like offshore where you define everything and then you make the huge economic decision to build a gravity base structure, GBS, or platform, or a floating production system, FPS, or whatever.

What we hope to do as soon as we are finished drilling here, is to put our Port-au-Port No. 1 well on production. We now have permission from government to do that. That will give us two things: cash flow, which is important to us, and more reservoir information.

Senator Cochrane: Do you hope to ship the oil out? What do you hope to do with this?

Mr. Millan: We have permission from the government to truck it to Come By Chance.

Senator Cochrane: Yes, I know that, but what happens after that?

Mr. Millan: Everything needs a whole bunch of studies and we are not the kind of company that can just throw money at studies. Conceptually, we are looking for a port somewhere on the Port-au-Port Peninsula. It may be across in the Piccadilly area or it may be at Lower Cove. This really is a marine type of issue because that is a very exposed coast, as you know, and safety has to be paramount. An interim measure may be to truck it to Stephenville where there is useable tankage left over from the air base, which already is piped out to the jetty in Stephenville. That may be an interim way of trucking to Stephenville - which is a lot shorter distance than Come By Chance - and putting it into a ship there. Eventually, we would like to have something offshore. That could be a mooring buoy, a catenary anchor leg mooring, a so-called CALM buoy, moored offshore from which a tanker could take out the product.

The Chairman: You mentioned trucking it to Come By Chance, but as I recall, this is a paraffin-based crude. Is the crude that goes into Come By Chance not asphalt based? Is that a problem?

Mr. Millan: It has not been a problem because our amounts are so small. If we were producing 30,000 barrels a day, for example, it would be a problem. A more important point for us, however, is we do not get a quality differential, as we should, from Come By Chance because that light crude is not needed. The facilities are designed to crack heavy, oily, "asphalty" crude.

The Chairman: I was just curious. Usually paraffin crude is not allowed to get within a lap of asphalt crude.

Senator Cochrane: I have one more question, Mr. Millan. What would be a realistic time frame for bringing commercial quantities of natural gas to market?

Mr. Millan: Our first step is to use what oil will be produced for two purposes. One purpose would be that we have certain energy needs within the production process itself, and the second would be to produce electricity at the site and put it into the grid on the Port-au-Port. The existing grid, which is adjacent to our site can probably only take up to about 8 megawatts of power. Beyond that, we will have to take it down to the main substation, which is just beyond Lower Cove. Then we can put it into the main grid. That would be one use for it, but at some point, with the type of reservoir we have, we must re-inject the natural gas - a lot of it - to achieve maximum recovery from that reservoir.

Senator Cochrane: Do you have a time frame?

Mr. Millan: We are dreaming a little bit, and we have to dream on this. I should make it very clear that none of this is a given. There is risk in every step we take. We are at the start of a process, therefore, the risk is relatively high.

We think that by the end of 2002 we could be producing in the order of 10,000 barrels a day. Concerning the gas to oil ratio, we will produce 2,500 cubic feet of gas for every barrel of oil that we produce, which is a significant amount of gas. Do not ask me to do the math right now, but that is quite a lot. That would be more than 8 megawatts of power. We will either have to re-inject at that point, or we would have to transport it to the grid in a different way.

The Chairman: I did not quite follow you on the new method of getting gas ashore. Did you mention compressed gas?

Mr. Millan: That is right, yes.

The Chairman: Why would compressed gas be any better than LNG, or compressing it until it is a liquid? Is money the consideration?

Mr. Millan: It is a matter of upfront costs. What you are trying to do either with LNG or compressed gas is to concentrate the amount of energy per cubic foot or whatever. The problem with LNG is twofold. You need liquefaction facilities at your point of production, which are very expensive, and, in fact, take up a lot of room. Nobody is doing that at sea anywhere. It is always done on land.

The Chairman: Could you compress at sea then?

Mr. Millan: Yes. For example, there are already huge compressors on the Hibernia platform. You could compress it to about 3,000 pounds per square inch, which is not far beyond the compression that is being used now to re-inject the gas. You just put it in a specially designed tanker. There are several designs in different stages of development. The design we considered most was that of a Calgary company. What it basically has is a floating pipeline. It is a coiled pipe, which is a big coil of pipe in the hold.

Senator Adams: How can you start such a company as yours? At Nunavut there may be interest in a type of small business that the locals can get into as some kind of shareholders in a private business or something like that. Maybe you can explain this a little bit. Must you have a big corporation to back you up as a start for your shareholders and company?

Mr. Millan: That is an interesting concept. I should tell you that in the past, I was on the board of IPC Oil and, being responsible for Petro-Canada's frontiers, I am a little familiar with this. I have worked the Arctic as well and a lot of the issues are very similar. One of the big conundrums always is: The resource is here; the control is usually somewhere else. There is always a fight between who gets what share of the pie along the line. This happens all over the world. It is a real problem. In Newfoundland we complain that everything is flying out of the area. There is a lot of disappointment with the benefits to date that have accrued locally.

The same thing is true of Nova Scotia, judging from what I read. Participation is one way of doing this, and it does not matter what the background is. If you are small, you need the same things; the only weapons you have are being clever, quick, and smart. Also the industry has changed tremendously to the point where you have super majors that have a huge problem. Their huge problem is that they are not replacing their reserves. They have been buying reserves all over, but they are not finding any. Discovery is taking place in smaller groups where innovation can come to the fore.

Senator Adams: In the meantime, do your shareholders deal with the banks, or do you get into the stock market?

Mr. Millan: We are a publicly traded company. We are traded on the CDNX, which is the Canadian Venture Exchange. We have a lot of shareholders. We have approximately 1,500 shareholders in Newfoundland. We were a private company at first. We raised our initial capital within Newfoundland - not a lot of it - and we obviously needed to go further. We saw the public markets as the only place to do this. We went public about two years ago. Since then we have raised in the order of $15 million, all of which has gone into the ground to really build for the next stage.

The market requires and instils a lot of discipline and a lot of disclosure, but it also provides a way to raise money and for the investors to get money back.

Senator Adams: You said that since 1980, with all the activity going on between the Arctic and right along the coast of Newfoundland and Labrador, you have better new technology today so that wells that were drilled in the past without success, might more likely succeed today.

Mr. Millan: There is no doubt that with technology, especially geophysical technology, oil exploration has leaned to that side. Technology is an order of magnitude better than it was in 1980.

In the particular area where we are operating in the Gulf of St. Lawrence and in the foothills, until about 1990 there was almost no useable information that could be obtained from geophysics. Once computers and the acquisition systems improved, people began to understand the geological model that we are dealing with. That, I am sure, is true elsewhere. This is what is making sense now with regard to places like the very deep water offshore in Nova Scotia and Newfoundland, which are being explored now, and in places like the St. Laurence sub-basin. People can now make projections that, a little while ago, would have been almost pure guesses.

Senator Adams: I was a board of director member at one time at Panarctic Oil until Mulroney came to power and kicked me out of the directorship. My neighbour here was a premier at that time.

Thank you very much.

Senator Buchanan: I want to ask Mr. Millan a few questions because - you are not going to believe this, Mr. Chairman - Mr. Millan also was Petro-Canada's exploration person for Nova Scotia.

The Chairman: How did you get that job without having a mother, an uncle, or an aunt from Cape Breton?

Mr. Buchanan: How do we know? He may have. I knew him before he came over here.

I find it very interesting that you are so far advanced in onshore drilling, and, hopefully, very soon, will be into production in Newfoundland. I was not aware of that.

As you know, we have been trying for years in Nova Scotia in Cape Breton, Pictou County, and Cumberland County to do the same thing, with some results, but not enough to make it even close to going into production. The effort has started again. As you are aware, Norm Miller and a group are doing some work in Nova Scotia again, and, hopefully that will pay off.

Have you any idea what they are doing over there? Have you heard what is going on with them?

Mr. Millan: I was more aware of what they were doing in New Brunswick. What is stimulating all of that is the fact that there is now a delivery infrastructure in place. There is a pipeline infrastructure for natural gas.

Senator Buchanan: Yes, there is.

Mr. Millan: It was fairly well known that there were good prospects for natural gas in Nova Scotia, New Brunswick, P.E.I, and also in Southwestern Newfoundland. Two friends of mine are getting ready to drill in the carboniferous basin of Newfoundland in the spring. This would be complementary to the kind of work Norm Miller and the guys are doing in Nova Scotia. It is not an easy play, but, in time, someone will find the key that unravels.

This is a business that works on information. There is an interesting phenomenon taking place, which is a shift towards the east. For example, we have a partner from Calgary in with us on this new well that we spudded yesterday. This is a junior out of Calgary, whose bread and butter before this would have been in shallow wells. Those are no longer giving return because the results of exploration in the western basin are that the pools are smaller, and smaller, and smaller. The basin is in decline, and has been in decline for more than ten years. Although there is still a lot of economic life there, people must start to search elsewhere. There is a general shift to the East Coast.

We were part of an East Coast group that presented to the money people in Toronto six months ago. We were very well received. We raised money. We will be back there next week. Strangely enough, we are getting more support from the financial community in Toronto than we are in Alberta. Part of the reason is there is a little resentment that there is a refocusing concerning oil. Along with me, there are others that are seeing the upside. If it were easy, everybody would be doing it. It is not easy.

The Chairman: Before we let you go, as a geologist in the late 1950s, I walked over a great deal of this country. That, nevertheless, does not mean I have walked over many more oil fields than I have found in my life. That is the first thing I can tell you.

When you mentioned the two wells that were drilled a little earlier there, which were drilled by a couple of Texans, I thought to wish you all the luck. At that time crude was $1.70 and the seismic was not too good. We felt that you were going to have a great problem getting anywhere with permeability there, although you might get a lucky fracture. I am curious about whether you have thought at all about horizontal drilling? You talked about fractured limestone, which this is.

Mr. Millan: These fields are related to similar age and lithology fields in Texas and Oklahoma, the Ellenberger fields. There the porosity and permeability are derived from two sources. One is that the limestones have been changed to dolomite. The other is that there was an extensive cave system developed, which presents unbelievable permeability. They can be extremely permeable and porous if you find the right place.

Mr. Chairman: Thank you very much for giving us a look at the blue sky that is possible onshore. If you are successful there, of course, there is the Gaspé Bay and all the rest of the area around that gulf.

The Chairman: Next, honourable senators, we have with us Mr. Edward Smith from the Newfoundland and Labrador Environmental Network, which I think is mostly connected with waste management. We are very interested. You just heard the previous speaker talking about bringing gas from Hibernia. Have you done anything at all about collecting gas or methane from your dumps here?

Mr. Edward Smith, Chair of the Recycling and Waste Management Committee, Newfoundland and Labrador Environmental Network: Let's not go there. That is certainly a viable project.

The Newfoundland and Labrador Environmental Network is one of the many groups across Canada that are funded by the Canadian Environmental Network, which is, in turn, funded by the Ministry of the Environment. We are grateful for the funding. Of course, we always wish we had more, but each network gets $18,000 a year.

The network itself does not speak out on issues per se. We are a network. We share information and communication with other groups who come and ask us questions like "My neighbours oil tank has broken and spilled; they will not clean it up, so what do I do and who do I call?" Another major issue in the province has been Main River.

I am the Chairperson of the Community Recycling and Waste Management Committee. We are a volunteer non-profit group, and we are working hard to address some of the major environmental concerns in this province.

I am frustrated as an environmentalist. My background is education. I taught for 15 years. I have trained as a counsellor as well and worked on many different social justice issues around addictions. I have worked with people with AIDS, and I really hit a brick wall with a lot of social structures that could not be budged or could not be moved. I have lived in Ontario, Nova Scotia and Quebec, where I really got a sense of the country itself. I learned to speak French in 1973 at Laval, and I felt compelled to do it.

I have just come back to Newfoundland. We have the perception in this province of a pristine environment, a lot of land, fresh air, clean drinking water and endless forest resources, but I am here to tell you that nothing could be further from the truth.

As a "have not" province, we have fallen far behind. There are real threats to human and animal health here, and staggering unemployment. Our young people are leaving. Our population is aging. I know that is similar to other parts of Canada, but we feel that those problems are more profound in Newfoundland. With the collapse of the fishery, and it is getting harder to attract industry. I say that because we have a shrinking tax base due to the reasons I have just mentioned, and municipalities are finding it harder and harder to make ends meet.

I think that some of our waste management programs are out of control. In some communities, the waste management strategy is a box of matches to be used to ignite a dump. That is essentially it. It is pretty frightening that in the 21st century we are still doing that in Newfoundland, not because people in rural or "outport" Newfoundland are mean-spirited, but they just do not have the money to create programs.

Unbelievably, we have 220 dumps for a population of 500,000 people. That is staggering. We have 52 teepee incinerators, which is an inverted cone that sits on a dump. You throw the garbage in and ignite it. In doing so, you ignite your plastics, which give off dioxin.

According to the federal Canada-wide standards, 40 per cent of all the dioxin in Canada comes from Newfoundland, so we are really in a tight spot now. That dioxin comes from the burning of plastics, and dioxin has a proven to be a causal link to cancer.

Only one night ago, just as we were having our community recycling committee meeting, someone brought up the fact there were three people with Lou Gehrig's disease in a community not far from Corner Brook. They were all diagnosed within the same time, and in this community there is a teepee incinerator that spews toxins. The community is downwind from the incinerator. This situation is certainly raising concern. There is cancer in my family, and I know a lot of people in our community of Corner Brook who have cancer. It is a place for some research to be done to find a causal link to what is going on in an area 15 or 20 kilometres from the incinerator.

I would like to see tougher standards for dioxin emissions. I have put in my notes here that we must do proper, thorough and in-depth research. We are just a part-time organization. We are volunteers in a community recycling group, and we most certainly would be willing to go and find that information for you.

We have spoken out against incineration in our region. Last year we were told by some of our community councils about a new high-temperature incineration that the regional committees wanted to bring to our community, namely, the Western Regional Solid Waste Management Committee in the Humber Valley and the West Coast of the province. It tried to convince communities that these new high-temperature incinerators were wonderful. They suggested that the new incinerators have scrubbers in the stacks so that the dioxins would not be coming out. However, the reality from the research I have done is that this new system leaves behind a highly toxic ash. The old teepee incinerators reduce waste by half and you throw the rest in the dump. The new high-temperature ones might bring the waste down by a greater percentage, but the ash that is left is highly toxic. We do know that the fine particles end up getting into kid's lungs and causing leukemia. That has been proven in the research that I have seen.

These supposedly cleaner-burning incinerators have been banned in other countries and in Europe because they leave behind the heavy metals lead and cadmium.

It is my understanding that these new high-temperature incinerators must be checked according to standards which, I believe, are federal. The emissions must be checked four times a year. However, but we are finding - and P.E.I. is a good example from what I understand in speaking with environmentalists there - that small communities cannot afford to pay for these very expensive tests. One test presumably costs $25,000. Multiply that three or four times a year and the cost is frightening.

It is ambitious, but I wonder if it is possible to ban the incineration of household waste right across Canada. I am sure many of you already know that this has been a big issue in some provinces. I lived in Toronto. In the Q-Beach area, I believe, there is an incinerator and the public is very upset. It was started up.

Our committee is a cross-section of men and women from different age groups, students of environmental technology and environmental sciences, seniors, and educators like myself. We have tried to go out and educate the community about the need for recycling and composting. On January 31, we sent in an application to the Multi-materials Stewardship Board here, the MMSB, which collects the deposit from pop cans. We pay eight cents and they give us back four. They keep four and put it in a big pot called the Waste Management Trust Fund. This money is supposed to be kept for green projects. Ordinary community people can come and say, "Hey, we have got a great idea to divert waste. We will roll up our sleeves. Give us a few bucks for the materials and we will go out and do it in our community. We will keep it all above board and do it properly according to the criteria that you set out to adhere to the proper financial standards."

Our project was to give out 500 free composters, but things were done a little differently in Nova Scotia. In Halifax, they said, "Give us $10 and we will give you a $40 composter. Put it in your garden, and this his how it works. If you have any questions, call this number." They have given out thousands.

In Corner Brook, with two other members of the committee, we put together this application to give out 500 composters. There are 8,500 households in Corner Brook.

Surprisingly, my landlady asked me one day what that black box was in my garden. She did not know what it was for. I said that it was for compost. She asked, "What is compost?" I thought, gee, I get my head wrapped around environmental issues and I forget that there are ordinary men and women in Newfoundland who do not understand the process of composting and do not know can you put eggshells and coffee grounds in a composter.

Another project idea was to divert tonnes of waste from Wild Cove, which is just outside Corner Brook. The dump is filling and has only five or seven years remaining. We have had some big box stores come to our community, so we know that the time period is getting shorter. We thought it was a great idea.

A consultant's report was done in 1998 by BAE Newplan Group Ltd., and they even recommended backyard composters. It is not the answer, but it will go a long way to get people thinking about recycling and composting.

We got a letter from the Western Regional Solid Waste Management Committee to get their stamp of approval. We got a letter from the city, and we got a member of the provincial House of Assembly, the Honourable Eddie Joyce, to write a letter in support. We did everything: a clear, detailed proposal that contained all the copies of supporting documentation. It went to the government, and on November 15, Mr. Gordon Seabright, Chair of the MMSB, wrote me to say that our project had been rejected.

Here we are, trying to do our best. Our proposal is a win-win scenario for the city, for the region, for a volunteer community, and for the provincial government. It is a feather in their cap because they can say, "Look, we are doing something good for your community." Still, the proposal was turned down.

The word on the street is that the MMSB is stacked with government bureaucrats, deputy ministers and members at large, who are friends of government, but they are not fair and objective in their assessment. I talk about that at the bottom of page 3 of our brief.

The MMSB has no outspoken environmentalists like myself coming here today from Corner Brook to speak out. I want to ensure that there is a voice for environmentalists. It is my belief that this money is being mismanaged. I hate to say that, but that money is simply being redirected to the ridings of preferred members of the House of Assembly or the consultants and engineering firms which, by the way, can claim all their administrative expenses and labour costs under this fund. We are told as environmental groups that we cannot claim any of our rent, phone expenses, postage, and that we have to give 50 per cent of our labour cost if we are going to go out and do a project like give out the composters.

I am scratching my head, asking myself what is wrong with this picture because, in contrast, there is the Nova Scotia composter project.

I just do not believe our provincial department officials have the background in environmental technology or environmental science and bureaucrats are making the decisions. I neither endorse nor oppose any political party, and I hold great respect for and have a clear understanding of the political process. However, when the basic right of obtaining public funding for green projects is violated, I really get angry. There must be a better way. Our province is in a terrible environmental mess. All you have to do is lift a rock and see what is going on here.

All of our members are volunteers. They do not want any money or payment for their services. They are willing to give to the community to be of service. We just want to help protect the environment.

I am ashamed to say this, but I have gone on open-line shows with our Minister of the Environment. I do not wish to slight him in any way, but it seems that you do not get an answer until you really rattle a cage and pound on the table.

Why can we not work together as citizens by talking things over and reasoning things out, by sharing public green funds and by appointing fair and objective board members who will assess project applications based on merit, not on the name that is on the application. I think that I am being fair and objective when I say that.

I have fought with members of our city council, but it is getting better. We have just had municipal elections. Thank God for elections. We get fresh, new people with new ideas. I have fought with members of the House of Assembly, and even MP Gerry Byrne. I have gone to him for assistance and just was not welcome. I was labelled an environmentalist. My sense is that that is not a good thing for some reason.

To combat the provincial government's disregard for environmental activists like myself, our committee tried to obtain status as a registered charity from the federal government. We said that we would raise funds and that we would go and get the money ourselves for environmental projects in our community. We said that we would not bother the provincial government. We discovered that the Government of Canada holds strong reservations about environmental groups that request registered charitable status.

This matter was raised December 4 on the CBC show Disclosure. George Barkhouse from Toronto was interviewed and wanted to go into the whole story. We only saw one side of the story perhaps, but the show did provide information that the Government of Canada does, indeed, scrutinize environmental groups that ask for charitable status. I have contacted other environmental groups across Canada and have found that they, too, are having trouble getting registered status.

Therefore, I call on this Senate committee to introduce a bill in the house to make it easier for community environmental groups to have the same status as a registered charity in Canada, even if it is only on a probationary basis, so that we can show the federal government that we are not crazy. We want to show the government that we are legitimate in terms of our operations and that we are genuine in our efforts to raise awareness on environmental concerns.

Senator Buchanan: There are none in Canada now?

Mr. Smith: Some environmental groups have charitable status in Canada. Apparently the word "advocacy" trips up the federal government. My understanding is that a group is allowed to have 10 per cent political activity, but some environmental groups and/or other groups that are registered charities are using more than that portion of money according to the CBC story. Some may be bending the rules a little too far. They are not into environmental awareness, but they are rattling cages, which needs to be done, too.

We must also knock on the doors of corporations. If there are legitimate groups that want to go out and help the community, why can we not get charitable status?

Senator Buchanan: I might be wrong about this, but I think the Ecology Action Centre in Halifax has charitable status. I think they give out tax receipts.

Mr. Smith: Is that right?

The Chairman: I think the witness has a point regarding advocacy because I have run into that problem in the past. They worry about advocacy, but it is not only environmental groups. There have been groups that talk about social things like abortion, and a few others that have had the same problem. Their argument is that they are trying to sell a concept.

This is a very technical area, and it is also one that maybe the Senate is not the right place to deal with it. The Senate can introduce bills, but it cannot introduce a bill that deals with money deals with spending money. The Senate can tackle constitutional change and moral issues, but it cannot introduce bills that cost the taxpayer money. However, that still does not take away from your points, and I think they are something we will investigate. If you are talking about the interpretation of a regulation that is already in place, we might be able to do something.

Mr. Smith: The word, Mr. Chairman, is "education." We found out that a consulting group called IMPACS went across Canada. It is putting together a report. We did have a meeting here in St. John's about six or eight weeks ago, and we are finding that people sending in applications will get different responses from different individuals.

The Chairman: It may be wise to investigate whether you could merge with group that already has charitable status. That may be one way of getting around the problem. There are probably groups in Newfoundland that are not very active but that have a charitable receipt number.

Mr. Smith: That is a very good suggestion that we have already heard. People have put on their thinking caps and said that merging with established registered charities would be a way for us, as an environmental group, to start partnering with other environmental groups.

I assume the Senate does not like to speak to provincial issues, but the environment is a federal issue.

I do not know what to do. You do your best as a citizen and submit applications. I am familiar, obviously, with the political process, but frustration levels are sky high. I work with other environmentalists who have been at this for 20 or 30 years who say get used to it, but I do not know why we cannot slice the pie a little bit. Any feedback on strategies, suggestions and ideas that have worked elsewhere would be appreciated.

The Chairman: We will try to lend a hand down the road. I want to congratulate you for batting your head against the wall. Sometimes the wall falls down. We will help you as much as we can.

Senator Adams: How many members are there in your organization?

Mr. Smith: We have 22 members.

Senator Adams: Many organizations that come to Ottawa to lobby the government, such as animal rights groups, are very forceful.

Mr. Smith: I try to be respectful of the fact that many of our members are conservative people. They like to go to meetings to raise issues. They are not the kind of people that will grab placards and storm City Hall and pound on the tables. I have pounded on the tables of City Hall, and I have gotten action, but I do not want my approach to be their approach. They are much more laid back and tend to want to follow the proper course of action, like making an application and waiting for the results.

When we dig deeper, we find that we are being constantly turned down because we are just not of the right stripe, or flavour, or colour. Yes, a lot of money is being diverted to municipalities that need it, but this green fund was meant for community projects, not to replace government funding.

Senator Adams: You talked about composters. Perhaps residents in your communities need more training. They need to know that a large percentage of their garbage could be composted.

Mr. Smith: Yes.

Senator Adams: Do you have any idea of the percentage of waste that could be reduced in the future? You said that there are 220 dumps in your province.

Mr. Smith: Yes, 220 dumps right across the province, including Labrador. The piece of the pie, as I recall it, is that 30 per cent of garbage is organic. Cardboard represents another big chunk of the pie. That is where the smell comes from in dumps - rotting organics, not the decomposing ones.

Certainly there is a smell in our compost, but so what. Most people put composters at the back of their yards, and you can put leaf and yard waste in them as well. That is a good thing, and the whole family can get involved. However, we know it is not "the solution" for our community. A municipal composting program would be best, but that takes time to implement. Right now, we would like to just massage the community and get them thinking in an environmentally friendly way.

As I said, our culture in Newfoundland is to ask: Why not just build another dump? There is lots of land.

We say, no, we cannot take away the habitat of animals. People are starting to get the idea, and it is projects like this that will get people thinking.

Many children are already on side in some of our schools. C.C. Loughlin School in Corner Brook has composters right in the classrooms of grade 2 and grade 3 students, who are going home and telling their parents about them. We know that children are the best advertisers. McDonald's advertises to children, not to parents, because children direct parents. That is what the schools are doing here, at least one of our big elementary schools in Corner Brook.

We think we have good ideas, but we are missing a link in the chain when government does not respond. I went up to the House of Assembly today and tried to meet with the minister. I will go back again after this meeting and speak peacefully and respectfully to him about how can we work together.

Senator Adams: What about the restaurants like McDonald's or Burger King? They recycle. What about municipal bylaws?

Mr. Smith: We have lobbied effectively for a cardboard ban in our community of Corner Brook, and that begins January 1, 2002. That is where some of the table pounding came in on my part, and certainly the lobbying on the part of the other members of our committee.

We are working on municipal composting, and this composting project would have been a step in the right direction. Some of the onus does fall on the community councils, in our case the city council, but, again, we have to do some work in terms of educating people who work at City Hall. They always tell us that there is no money from the province. When we go to the province, they tell us that they are not getting enough money from the federal government. We do not know why the surplus Employment Insurance Fund cannot be used in a way for green projects such as sewerage treatment plants. This would create employment, benefit the community. We do not want to waste dollars on cutting trails or other make-work projects.

Senator Adams: You talked about incineration. Where I live in the Arctic, it is very cold and we have trouble getting rid of our garbage. Because of the cold temperatures, garbage could be in the ground for hundreds of years and not rot. You said that high-temperature incineration is not high enough to get rid of ash containing dioxins. Do you have other concerns with respect to high-temperature incineration?

Mr. Smith: My understanding is that the people who sell high-temperature incinerators will tell you that they work. When we talk to environmentalists in Europe via e-mail, they tell us that the high-temperature incinerator salesmen are crazy, that the scrubbers and all these mechanisms that are in the stacks do not prevent all the dioxins from escaping. Even if they did, you are left with a bottom ash, and what would we do with that in Corner Brook? We would take it right to the dump. As well, we have prevailing winds and the very fine particles get into children's lungs.

A lot of research has been done, as I say. I could have attached notes, had I had a little more time for preparation, to show you some of the staggering research results. Some countries have simply banned these high-temperature incinerators. They are simply not the be all and end all.

The Chairman: On the second page of your brief, you mentioned the 220 dumps and the half a million people. You indicated that 52 teepee-type incinerators generate 40 per cent of all dioxins in Canada. With the prevailing westerly winds, can these dioxins travel as far as Ireland? What happens if they get into the ocean? Is there evidence that the sea life is picking up these dioxins?

Mr. Smith: Six to eight weeks ago, there was an article in The Western Star, our local daily newspaper, stating that cysts were found in the meat of either a moose or a caribou, which scared people. We are wondering if the dioxins are falling on vegetation. Animals eat the vegetation, and this may be the result.

With respect to the other part of your question, I do not know, to be honest. I will find out.

The Chairman: Dioxins have a habit of showing up in marine life very quickly, either in streams or in the ocean. The Grand Banks supply food for a good chunk of Western Europe, so if the Europeans thought dioxins were getting into the food supply in that area, maybe that is where you could find the political pressure you are looking for.

Mr. Smith: That is a very good point.

The Chairman: I might mention that Senators Sibbeston and Adams are good people to listen to because they come from our northern part of our continent. It is as sparsely populated as Newfoundland and I think has a lot of similar geology so that dumps do not drain very well. It is a combination of frost and Precambrian sediments.

Senator Sibbeston: There is the impression that the North is pristine. It is far away from major industries and all the pollution that is occurring in our country, but I am amazed to find that up in the Arctic, in particular, there is a lot of pollution that is brought by prevailing winds. These winds take the pollution that is created in the industrialized parts of our country and carries it to the North, where it gets into the fauna and then into the caribou, in particular, that eat the fauna. Because people in the North eat a lot of caribou and meats of that sort, the pollutants eventually get into the human system. I have read reports of women's breast milk being affected. In turn, the children are affected.

While we think we live far away from pollution, the North is slowly being polluted by the industries and the people living in the South. I am concerned about the extent of the pollution.

With respect to your situation, it is sad to see that you are frustrated and that you do not feel that the governments are very concerned. Is that because there is not enough money? We share the view that Newfoundland is one of the have-not provinces. Is it really a question that money is in short supply, or is it just the mindset that we live in a country like where there is a fair amount of space and is not overly crowded? Is there a complacency about the pollution issue with respect to the less populated regions of Canada?

Mr. Smith: No. The Waste Management Trust Fund has a fairly healthy pot of money. My understanding is that there are $3 billion to $5 million dollars in it. The problem appears to be how the money is shared.

The understanding of environmental issues is beginning to change in Newfoundland. Some communities are much stronger and are aligned with an understanding of what is now environmentally friendly. You will see the old skippers in the rural communities collecting cans and going back to get their refund because they know this is good for the environment. At the same time, however, we need to do a little more education because some of them are going back for the money. They are not going back because it is good for the environment.

We often hear people ask us to recycle our cardboard. We ship it to Hantsport in Nova Scotia, actually to be reprocessed here. People first ask if they will get any money if they bring it in, Well, no. They should be doing it for the good of the environment.

The fund has been controversial. In Nova Scotia, my understanding is they did quite well in terms of distributing the money from the deposit on bottles and cans. We need to do things better here. In fact, Nova Scotia was the only province in Canada reduce waste by 50 per cent as of the year 2000.

Six months ago, we brought to Corner Brook two of the key experts from Nova Scotia, Mr. Barry Friesen and Mr. Brian Smith. Barry Friesen is a waste resource manager in the provincial government; Brian Smith is a waste resource manager for the Halifax Regional Municipality. We asked them, What did you guys do to be so successful?" The short answer? "It is going to cost you."

We are a province that needs employment and our people like to go out and do a good job. It seems to be such an easy solution to me to lend part of the EI fund. I do not know how that would work.

The understanding is changing because environmental issues are being addressed in primary, secondary and elementary schools. However, access to funding is a problem because municipalities tell us that they do not have the money, for example, to clean up the raw sewage that is running into the Bay of Islands at Corner Brook. Yet, our tourist industry wants to bring in tour boats. There is a new breed of tourist - an eco-tourist. When they go to a resort, the first thing they ask is, "What do you do with your waste? What do you do with your sewage?" You have to tell them, "We just sailed over it." The response is, "Oh, we are not sure if we are going to come back."

Senator Sibbeston: Newfoundland generates 40 per cent of the dioxin in Canada. What are other jurisdictions doing so that they are not emitting so much dioxin?

Mr. Smith: In the case of Nova Scotia, the province was divided into six pieces and waste management committees were established. Composting facilities and recycling depots were established. Videos were developed. Information material was published to teach people.

The people of the Halifax Regional Municipality wanted to build a brand new big dump. The people said no, that they did not want it and that they wanted a better way. That was a catalyst to the process, and now Nova Scotia is the leader in this field. I understand that Ontario has a strong recycling program as well.

I do not know how the jurisdictions work with respect to incineration. I believe in one of the last government changes, one of the administrations wanted to bring back incineration as a cheap, effective way to get rid of waste, but there was opposition for health reasons.

Out West, I know that some incinerators burn household hazardous waste, which is a real conundrum. What do they do with paint solvents? Perhaps there are other methods of biologically breaking them down, more environmentally friendly ways than burning them or incinerating them to get rid of them. Right now, this waste material is going to our dump in Corner Brook. Insecticides, battery acid, paint thinner, paint, everything is being dumped in the landfill.

Other provinces are more progressive in terms of recovery rates. Alberta and Saskatchewan rate high in terms of people bringing back containers under their deposit/refund system. They have become very efficient at it. We are getting much better in Newfoundland because the rate of return was increased to eight cents now from six. These changes just came in during the past year, so there is progress.

We have a tough nut to crack in Newfoundland because our communities are stretched so far apart. How do we make it work? Is there an innovative way to collect our recyclables, encourage composting, but yet still deal with the long distances between communities? We do tend to import recycling programs that are used in high-density areas, and they do not work so well in smaller communities.

The Chairman: I am aware of a process that was developed in Edmonton. It seems to be at the cutting edge in terms of dealing with waste. Senator Taylor perhaps is more familiar with it. They have a cost-effective way of dealing with waste and there is money to be made in that system.

Toronto wondered what to do with all of its waste, whether it would send the waste by train to Northern Ontario or into the States. They looked at Edmonton to see what was being done there. It seems to me that there are jurisdictions that have been successful in dealing with their waste.

Mr. Smith: Absolutely. Guelph, Annapolis Royal and Nova Scotia are other examples. All of them have found innovative ways to deal with their waste. In our province, it seems that funding is the tough nut for municipalities to crack because they are just making ends meet.

One of our problems in regard to funding is that our population is shrinking. Our town has dropped from 30,000 residents to 22,000 since about 1980. We also have an population aging. Many of our young people are leaving Newfoundland after they go to our local university or college. The environmental movement is affected because the tax base also shrinks. There is less money to create recycling and composting programs.

The Chairman: We have hazardous waste disposal in Alberta. I think that they put extreme heat on the furans to break them down. The temperature in the incinerators is brought way up over 1000 degrees, which I think breaks down the furans. Are you at all familiar with that?

Mr. Smith: Just vaguely. I have talked to people who attended the last environmental conference in Antigonish, Nova Scotia. From the research we have seen from Europe, my understanding is that, yes, furans might be broken down, but dioxins can still form at the top of the stacks and, again, in the ashes. I wonder what they do with it.

The Chairman: I think they slurry it in saltwater and put it underground, maybe a mile down, to make a saltwater aquifer. I suppose down the road someone might have a use for saltwater, in which case it would have to be recycled somehow.

The other day we were talking to people who dispose of waste material from nuclear energy plants. France is now using about 75 per cent of its waste. In other words, you can get rid of your waste, but the smart thing to do is to develop methods of reusing the waste products to manufacture something good. Cyanide, for example, is used in the mining of gold.

There have been complaints about transporting hazardous waste. People are worried that their car or truck will have an accident and that the waste will spill on the road. However, disposing of the waste by superheating it seems to be working well.

Mr. Smith: Yes, but not using certain products in the first place would be the ideal solution. We need to change our thinking. We can use baking soda instead of common cleansers to clean something, but some people swear that they have to use these products. We do not need to use them all the time.

Senator Eyton: I have read your material. Your network seems to me to be an admiral and a useful thing. I cannot imagine anyone saying that it is a bad thing or that it is not a good thing. The people in your network share a great interest, and it is important that they have a way of communicating their concerns in a province where the population is widespread and where it is often difficult for people to get together.

Your network seems to me to be not only a good one but also a low-cost one. Any fair-minded person looking at it would say the same thing. It should be encouraged because it costs very little money. The question is: How much money do you need to make it grow and be effective? What kind of funding are you talking about because funding is clearly a problem in your material. It does not seem to me like a whole lot of money.

Mr. Smith: We receive $18,000. That covers my salary, the rent, stationery, postage, every single expense. Given that amount, we can only operate for four hours a day. We are grateful for the money that is given by the Minister of the Environment to the Canadian Environmental Network, which is the umbrella group. It has a written agreement that has just been signed to duplicate the last amount of funding. I forget what it is. I believe it was $900,000 for all of the networks.

Senator Eyton: Is that federal funding?

Mr. Smith: It is federal funding that goes from the Ministry of the Environment to the Canadian Environmental network.

I wear two hats. I am the coordinator of the network, but I am also the chairperson of a community recycling group. The Newfoundland and Labrador Environmental Network does not speak out on issues -

Senator Eyton: I saw that in the material. I read it.

Mr. Smith: We need more money. We might be able to survive on double that amount, in which case we could open for eight hours each day.

Senator Eyton: I gather that you have asked the province for money and that none has been forthcoming.

Mr. Smith: There has been none forthcoming. This is my second year with the Newfoundland network. I moved back to the Island in December 1999 and started working in November 2000. There are no provincial pots of money that I am aware of.

I think sometimes we are perceived as the enemy, even though the network itself just shares information and brings people together.

Senator Eyton: I was going to get to the "enemy" point later on.

A good presentation to the province would be to say, "Look, if the feds are going to put in $18,000, you should match it." Then you would have a network with members you can talk to.

Mr. Smith: Yes, a strong alliance with the provincial government is an excellent idea. We will bring that suggestion to our steering committee and ask if they might be interested in moving it forward. My sense is that given some of the struggles that the member groups have had in trying to get funding, as in the case that I have illustrated here, we are tired knocking of the door.

Senator Eyton: You refer in your material to the fact that you find it difficult to get charitable status. Most people support you. Surely you fit within any ordinary definition of "charity." I have great trouble understanding why that is not so. It seems to me that your suggestion of even a probationary designation, subject to a cancellation or trial period, has to be reasonable. I do not know why the committee would not say this is something that should be done. It seems to me to be a natural progression and not a stretch.

Mr. Smith: Absolutely, and we will prove that we are worthy. We will prove that we are out there to raise environmental awareness. We are slowly learning as we go around asking all of these groups if they applied and which group was accepted and which one was not. That word "advocacy" really trips up the federal government because it scares them.

Senator Eyton: You are a network, and I cannot imagine why you are not supported. I think our committee would readily agree that you have to beat them up a little, maybe. That is something that should be done.

This morning we heard from the Newfoundland Environmental Industry Association, so the word "environment" has appeared before us twice today. We have heard spokespeople on behalf of both the industry association and on behalf of your network. Obviously you know them. Do you work with them? If so, is it a positive, useful relationship?

Mr. Smith: Are you referring to Charlie Riggs?

Senator Eyton: That is right.

Mr. Smith: I have spoken to him. Again, I have only been back in the province for two years. Our recycling committee collaborated with the NEIA when we brought in the two experts from Nova Scotia. We collaborated with one of the ministerial officials in the Department of the Environment here and asked if they would like to get on board. We asked NEIA if they would like to hear these two experts from Nova Scotia, and they agreed.

The two experts had breakfast with NEIA representatives after they arrived in St. John's and after they did a tour of Corner Brook. Some good alliances were built there because we had engineers and consultants talking to other engineers and consultants, asking how Nova Scotia did it.

Senator Eyton: I would have thought that it would have been just a natural association. They operate in the area of the environment, in effect trying to promote the business that relates to the environment. You are a network composed of environmentalists and those dedicated to supporting the cause. An alliance such as that is something you should work at.

Mr. Smith: Absolutely. I think the NEIA is certainly open to those things. We wrestle with the other parties, and it is sometimes like wrestling with a bear.

Senator Eyton: But you look for your allies first. The industry association is a significant ally with a large membership. You have 38. Locally, they have a pretty strong membership, one that I think is growing. They talked about 2,000 jobs and $115 million of annual revenue in that sector. That is a heck of a thing. You have to say, "Here is what we do and we are going to do it."

I am associated with Pollution Probe, a national organization based in Toronto. It has had great success because it is composed of dedicated environmentalists, working in a variety of areas to make our environment cleaner and healthier. These people have taken on the task of working with businesses, not working against them. They are working to make business practices better. As a result, Pollution Probe has achieved quite a lot. The board of Pollution Probe is composed of almost purely environmentalists, but the financial support and a lot of missionary work is being done by the private sector, which sees Pollution Probe not as the enemy but as an organization it can work with in a positive way. That is one example.

I would have thought that your network could work with an organization like the Newfoundland Environmental Industry Association, which in fact is inclined to do exactly that.

Mr. Smith: Certainly, that is my sense of working together. In a community, you just sit down with like-minded people. The NEIA is a group of consultants that has much to gain as well from the funding that will be coming out to do studies, and we are more than willing to sit down with them.

Senator Eyton: Everyone is happy and you can make a little money on the side. That's good.

The Chairman: On page 2 of your brief, the second bullet, you call upon the government to ban the incineration of household waste in Canada so that we may protect human and animal health from the threat of toxic emissions. That is some of the type of thing that the Senate can help with.

I have lived in a few areas where incineration is banned, but this seems to be coming out of the municipalities, which are creatures of the provincial government. Have you done any research to say that the federal government has any input in this at all or would it just strictly be the provinces?

Mr. Smith: I know that there are provincial environmental assessments. I think that the federal assessments are only triggered under certain instances. Environmental assessment regulations are in place both federally and provincially, but I think they cover different aspects of environmental issues. Building a bridge across a river would be different from building an incinerator in a town.

The Chairman: I think we will research aspect a little further because that might be something we can do. Air pollution comes under federal jurisdiction, as does water to a limited extent, although we found that water within a province is supposed to be the province's responsibility. Only when it crosses a boarder does it become a constitutional problem. I think we might have a constitutional problem with pollution, too, only across the border.

We have found that the only area in Canada where the federal government can really get in and throw its weight around is the fishery, such as the trout or the stream fishery. The federal government can come in to protect that water. You are not allowed to protect water for people, but you are allowed to go in there and protect water for fish. If you can somehow or another sprout fins, then this would become a constitutional issue.

Mr. Smith: Yes. The Navigable Waters Protection Act is federal legislation, too.

Mr. Chairman: Thank you for coming out today. You are doing great work. I know that a dollar will buy a cup of coffee, but the point is that we want you to get out there and pull the rest of your hair out trying hard. Having people like you working in the voluntary sector and working on environmental issues helps make Canada a better place to live.

Mr. Smith: Mr. Chairman, I appreciate your comments. Most of my hair is gone, but I will be continuing the good fight.

The committee adjourned.