Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 10 - Evidence - May 27, 2008
OTTAWA, Tuesday, May 27, 2008
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:35 p.m. to examine and report on emerging issues related to its mandate. Topic: Northern Study (Northern Pipeline and Legal Issues)
Senator Tommy Banks (Chair) in the chair.
[English]
The Chair: Good evening, and welcome to the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Tommy Banks, and I have the honour to chair this committee. I will briefly introduce the senators who are here tonight: Senator Bert Brown, from Alberta; Senator Lorna Milne, from Ontario; Senator Elaine McCoy, from Alberta; and Senator Nick Sibbeston, from the Northwest Territories.
We continue our preparation for our Arctic visit next week when we will examine the impacts of climate change on the North. To help us to understand better what we will need to see and learn, I welcome our first panel of witnesses, Robert Reid, President, Mackenzie Valley Aboriginal Pipeline LP; and Brian Chambers, Executive Director, Northern Gas Project Secretariat. Mr. Reid and Mr. Chambers, thank you for taking the time to be with us today.
Mr. Reid, please proceed.
Robert Reid, President, Mackenzie Valley Aboriginal Pipeline LP: Thank you and good afternoon. We appreciate the opportunity to appear before the committee again to update you on the Mackenzie Valley Aboriginal Pipeline LP, or as it is more commonly called, the Aboriginal Pipeline Group; and to talk about the role that we play in the development of the Mackenzie Valley Pipeline.
The Mackenzie Gas Project accesses the closest frontier basin in North America. There are some 6 trillion cubic feet of gas proven reserves onshore and another 3 trillion cubic feet of gas proven reserves offshore, and they are not part of the current project. The initial capacity of the pipeline is 1.2 billion cubic feet per day. It can be expanded up to 1.8 billion cubic feet a day through the addition of compressor units. The total project cost is $16.2 billion.
The Mackenzie Gas Project has essentially four components: the gathering system north of Inuvik, which you can see on the map before you, accessing the three anchor fields, Niglintgak, Taglu and Parsons Lake; a processing plant located at Inuvik that will separate the dry natural gas from the natural gas liquids; and two pipelines south of Inuvik — one a dry natural gas pipeline that will extend 1,200 kilometres from Inuvik down to the Alberta border where it will interconnect with the existing TransCanada pipeline system and the other a 10-inch liquids pipeline that will carry the natural gas liquids from the processing facility at Inuvik down to Norman Wells where it will interconnect with Enbridge's existing Norman Wells pipeline.
The Aboriginal Pipeline Group, APG, is a one-third partner in the 30-inch dry gas pipeline only. We are not a partner in the gathering system, the processing plant or in the liquids pipeline. The Aboriginal Pipeline Group is a unique alignment of Aboriginal groups in the Mackenzie Valley, not only to support construction of the Mackenzie Valley Pipeline but also to be a part of it. Our mandate is to maximize the long-term financial return to the Aboriginal groups of the Northwest Territories through ownership in the pipeline. The concept for the Aboriginal Pipeline Group began at a meeting of the Northwest Territories Aboriginal leaders in Fort Liard back in January 2000. At that time, the leaders looked back to the mid-1980s when the interprovincial oil line was constructed from Norman Wells southward. There was no participation of Aboriginal groups in the ongoing operation of that pipeline. The leaders agreed that any future pipeline in the Mackenzie Valley must include Aboriginal ownership. This would provide long- term benefits to the Aboriginal groups of the Northwest Territories.
It did not take long — just six months later in June 2000 — for the APG to be formally established at a meeting in Fort Simpson. In October 2001 a memorandum of understanding was signed with the Mackenzie Delta Producers, comprised of Imperial Oil Limited, ConocoPhillips Company, Shell Canada Limited and ExxonMobil Canada Limited. In June 2003, approximately two years later, participation and funding agreements were signed by APG, the Mackenzie Delta Producers and TransCanada PipeLines Limited at a signing ceremony in Inuvik. At that time, APG became a full partner in the Mackenzie Valley gas pipeline.
APG is a business deal negotiated by Aboriginal people for Aboriginal people. We have negotiated the right to secure a one-third interest in this significant project. Once the pipeline is completed, APG will pay meaningful long- term dividends to its stakeholders for as long as the gas flows through the pipeline. This is not just a short-term deal to provide benefits during construction. This is a long-term arrangement.
The ownership through the regulatory approval phase, which we are currently undergoing, is APG with one third and Imperial Oil Limited, ConocoPhillips Company, Shell Canada Limited and ExxonMobil Canada Limited holding the balance of two thirds. As a full partner, APG has a seat on the board of the pipeline project. We participate in all subcommittees and have a direct voice in the development of this major project on behalf of our stakeholders, the Aboriginal people of the Northwest Territories.
Our ownership is shown on the next slide before you. The Sahtu Pipeline Trust is the largest single owner of APG with 34 partnership units; the Gwich'in Tribal Council is next with 20 partnership units; the Inuvialuit Regional Corporation holds 4 partnership units; and we have 34 partnership units set aside for the Dehcho Pipeline Management LP, who are in the process of joining APG.
You might ask how Aboriginal groups in the Northwest Territories can finance a major ownership share in a project such as this. Following regulatory approval, APG will be able to arrange bank loans for our share of the construction costs. We need to borrow both debt and equity. We have obtained an investment-grade credit rating from the Dominion Bond Rating Service, DBRS, and all major banks have expressed a strong interest in undertaking our financing.
The fundamental reason for this interest is the long-term contracts signed by the shippers — Imperial Oil, ConocoPhillips, Shell and ExxonMobil. The banks looked through APG to see where the money is coming from, and they have no problem with our shippers. They have excellent credit ratings. We have been assured by Canadian banks that financing our share will not be a problem.
In summary, the Mackenzie Gas Project is moving forward. Regulatory hearings were completed last November. We signed a new incremental shipper, MGM Energy Corp., so we now have a third party, non-owner shipper on board. I hope that will be the first of many.
APG is, of course, a significant participant in this project. We look forward to delivering on our mandate to provide significant long-term benefits for APG shareholders and to reduce the reliance on welfare and promote self-sufficiency for all Northern Aboriginals.
The Chair: Thank you Mr. Reid. I know we will have lots of questions for you, but we will hear from Mr. Chambers before we proceed.
Since our initial introductions, we have been joined by Senator Mitchell from Alberta, Senator Trenholme Counsell from New Brunswick and Senator Spivak from Manitoba.
Brian Chambers, Executive Director, Northern Gas Project Secretariat: Thank you for giving us the opportunity once again, as Mr. Reid indicated, to speak to you about the developments in the North, specifically in the Inuvialuit Settlement Region of the Mackenzie Delta, in regard to the proposed Mackenzie Gas Project.
The Chair: They have come a long way since the last time you were here.
Mr. Chambers: I believe it was a few years ago.
I will describe briefly the presentation outline for you. It will be familiar information to most of you. I will provide you with an overview of our role, a review of the Mackenzie Gas Project, the status of the project's environmental impact and regulatory review, and the next steps in the review.
I spoke with you in March 2005, in Calgary, as did Mr. Reid. Since that time, I have travelled extensively with the Joint Review Panel for the Mackenzie Gas Project and the National Energy Board, NEB, as they conducted public hearings throughout the Northwest Territories, Yukon and Alberta.
In regard to the public hearings, which the Northern Gas Project Secretariat organized on behalf of those two panels, it was determined early in the planning process by the parties establishing the review that the participation of the public, particularly the northern public, would be a key component in the success of a review of the Mackenzie Gas Project.
To that end, and in partnership with northern agencies, the federal government established the Northern Gas Project Secretariat, NGPS. Our mandate, in part, is to enhance public participation by providing a one-window approach to information about the review.
As part of this mandate and prior to the commencement of the public hearings, my staff organized and hosted information sessions in every community that was to have hearings by the review panels, those by the National Energy Board and those by the Joint Review Panel. Often, these information sessions were co-hosted by NEB and Joint Review Panel staff.
The NGPS has additional responsibilities with respect to the coordination of the regulatory phase of the review, which I will speak about later in my presentation.
I believe it can be said without reservation, having attended most of the hearings over the last two years, that to date the public has taken full advantage of the opportunities available to participate in the environmental impact assessment and regulatory review of the proposed Mackenzie Gas Project.
People of the North, as well as numerous other Canadians, participated in many and in some cases all parts of the environmental impact assessment that was being conducted by the Joint Review Panel.
The federal government, through the Canadian Environmental Assessment Agency's Participant Funding Program, enhanced the opportunities for this involvement by contributing $2.34 million to assist individuals and organizations to participate in the Joint Review Panel's process. This was, by far, the largest single allotment of funding for any project review under this program. The majority of these funds was distributed to individuals and organizations located directly along the area of the proposed Mackenzie Gas Project.
I want to make a small, but important, point for people who live in the Inuvialuit Settlement Region. The project is referred to as the Mackenzie Gas Project as opposed to the Mackenzie gas pipeline. There is a distinct reason for that. For the people who live in the Inuvialuit Settlement Region, none of the Mackenzie Valley gas pipeline to which Mr. Reid referred would be located within their region.
However, approximately one third of the total capital costs of the project would be constructed in the Inuvialuit Settlement Region. Those costs are associated with the development of the anchor fields that Mr. Reid referenced, well-heads, a gas conditioning facility and the Mackenzie gathering system that would bring gas from the three anchor fields to a gas processing facility in the Inuvik area.
It is important for those of us who live in the South and in the Mackenzie Valley to understand that for the people living in the Inuvialuit Settlement Region, it is more than a pipeline. It involves other aspects of economic development in the North.
The Joint Review Panel invited the public to submit comments in several phases of its review including commenting on the environmental impact statement submitted by the proponents of the project in 2004. The public also took advantage of opportunities to participate in the NEB process prior to its public hearings. However, it is worth noting that no similar participant funding program exists under the National Energy Board Act for public participation.
The public hearings phase of the Mackenzie Gas Project review began in Inuvik, Northwest Territories on January 25, 2006 with the National Energy Board hearing. The NEB adjourned its hearings on December 14, 2006 after 47 hearing days in 14 communities in the Inuvialuit Settlement Region, Northern Alberta and, of course, primarily in the Mackenzie Valley.
It is important to remember that the National Energy Board hearings are not concluded. They are adjourned until the Joint Review Panel completes its work, submits its report and that report is responded to by government.
The Joint Review Panel began its public hearings in Inuvik on February 14, 2006 and concluded on November 30, 2007. They heard from approximately 500 witnesses during 115 hearing days in 26 communities ranging from Sachs Harbour on Banks Island in the north to Edmonton in the south and Whitehorse in the west.
Generally speaking, the NEB is looking at the technical, safety and economic aspects of the proposed project, such as engineering, tolls and tariffs, while the Joint Review Panel focuses on the potential environmental, social and socio- economic impacts of the proposed project.
Both the NEB and the Joint Review Panel offered opportunities for the public to make presentations in person during the hearings. The nature of the public hearings varied from very informal community hearings to technical hearings generally held in the larger centres.
The public was highly receptive to these opportunities, evidenced when large numbers of community residents attended the hearings and made oral presentations to the panels.
Moving on to the next steps in the review of the Mackenzie Gas Project, since the completion of the Joint Review Panel public hearings, the panel has been busy drafting its recommendations and final report. This report will take into consideration the public record of approximately 5,000 submissions. In addition, the hearings themselves are recorded in more than 11,000 pages of transcripts. As the chair of the panel indicated in his closing remarks in Inuvik, the amount of information submitted to the panel during the review is immense. The issues that were raised during the environmental impact assessment are complex and numerous and have significant implications for northerners and all Canadians.
The panel is, therefore, committed to completing a report that reflects its commitment to a thorough, rigorous and unbiased environmental review of the proposed Mackenzie Gas Project. In this regard, the panel recently communicated through my office that it would not complete its report in this calendar year.
Once the Joint Review Panel submits its report, there are several steps that must take place prior to the National Energy Board making a decision on the proposed project. Following the report's submission from the Joint Review Panel, the government will make a formal response. According to the Cooperation Plan, the planning document from 2002 that established the review process, this response will take approximately four months. The Joint Review Panel report and the government response will then become part of the NEB's record, its evidence, when it reconvenes its hearing for final argument and compilation of reasons for decision.
This process as identified, again, within the Cooperation Plan, will take approximately six months to complete. Should the National Energy Board determine that the proposed Mackenzie Gas Project is in the public interest, other regulatory processes will formally commence and extend through construction and operation of the Mackenzie Gas Project.
During this period, prior to the submission of the Joint Review Panel report and the government response, regulatory boards and agencies continue to coordinate their planning activities in preparation for their part in the review process. For example, water boards have been actively engaged in preparing by increasing internal capacity in anticipation of their own regulatory review. As well, they have been working with the NGPS to develop a public- hearing protocol for the conduct of public hearings to ensure a rigorous yet disciplined process. They have also been actively participating in a regulatory steering committee and its component working groups. The steering committee is a body that was formed to coordinate efforts so that should the Mackenzie Gas Project be approved, regulatory processes can be carried out in a coordinated and timely manner.
One milestone to date for this committee is the completion of a detailed and comprehensive web-based Mackenzie Gas Project regulatory process map. This planning tool allows regulators to view the Mackenzie Gas Project regulatory regime from various perspectives. By viewing the proposed project through the lenses of these different regulatory levels, a complete picture of the regulatory sequencing and linkages assists regulatories and proponents to identify opportunities for realizing regulatory process efficiencies.
A more recent initiative in regulatory coordination has been the establishment of the Mackenzie Gas Project Office within Industry Canada. This office is responsible for federal interdepartmental coordination in relation to the Mackenzie Gas Project as the project review moves from the environmental impact phase to the licensing and permitting phase should the project receive NEB approval.
In closing, while I cannot presume to speak on behalf of individual regulatory agencies, I believe that the detailed and collaborative regulatory preparation in which they have engaged has prepared them well for the next regulatory steps following receipt of the Joint Review Panel report.
Furthermore, I would suggest that the continuing detailed planning for the next phase of the Mackenzie Gas Project review demonstrates their commitment to exercise regulatory mandates in a professional and timely manner.
The Chair: Thank you very much, Mr. Chambers, and congratulations to both of you on the progress you have made since 2005 when we met you in Calgary.
Senator Milne: Mr. Reid, on behalf of your group, the APG, how likely is this project to actually go ahead, given the latest questions about the need for a Mackenzie Valley pipeline?
Mr. Reid: We still view that there is and will continue to be a shortage of natural gas supply in North America. Recently, liquefied natural gas, LNG, from overseas is accessing the North American market. However, traditional growth — and that is growth primarily in the power generation sector, using natural gas as a fuel — is continuing, and the primary basins, traditional basins in North America are either mature or starting to decline, most notably, the Western Canada Sedimentary Basin. We believe there will be a need for this project in terms of adding to the portfolio supply in North America.
Senator Milne: Icebreaking tankers are now under development and construction in various countries around the world, and a decreasing amount of ice is being reported in the Northwest Passage. In fact, last week when we were out in the oil sands in Alberta, they were talking about the possibility of a pipeline to Churchill, loading the oil at Churchill and shipping it wherever. It seems to me that it is raising questions about the actual need for the pipeline.
Mr. Reid: It is important to distinguish between oil and natural gas. Natural gas is far more difficult to store than oil. Oil is a liquid and stores readily in tanks and on board tankers.
Natural gas, however, must be chilled significantly to convert it to a liquid, and it is a very costly process. I would agree that for oil resources, we will have to rely more and more on offshore oil. For natural gas, however, we have two basins in North America that are untapped: the basin at Mackenzie Delta and a larger one at Prudhoe Bay. I believe that there is plenty of the room for both of those projects in the North American market.
Senator Milne: If it does go ahead, you say that you will tie in somewhere to the Enbridge Pipelines Inc.'s network of pipelines. Where would that be?
Mr. Reid: To be clear, the natural gas pipeline will tie in to the TransCanada PipeLines' system in Northwestern Alberta. TransCanada PipeLines already has large diameter pipelines within about 60 kilometres of the Northwest Territories' border. The natural gas liquids will be separated from the gas stream in Inuvik, transported by a new 10- inch liquids line from Inuvik down to Norman Wells and then it will interconnect with the existing Enbridge pipeline at Norman Wells.
Senator Milne: Who will build the pipeline for you? You have a new incremental shipper, MGM Energy Corp., you said.
Mr. Reid: Yes, that is correct.
Senator Milne: Who will build the pipeline?
Mr. Reid: It will be built by North American pipeline contractors. Imperial Oil is the project operator today. They are managing the project. They are responsible for the design, construction management and operation and also for the regulatory process to which Mr. Chambers referred. Imperial Oil will hire reputable contractors to construct the pipeline.
Senator Milne: Mr. Chambers, after the entire regulatory review process and the decision by the NEB are completed, if this pipeline gets the go-ahead, who will oversee the environmental aspects of the construction of the pipeline?
Mr. Chambers: That is a very good question, and it was the subject, as Mr. Reid is well aware, of considerable submissions and evidence before the Joint Review Panel during the public hearings, as well as before the National Energy Board. The primary regulator for the gas project is the National Energy Board. They have a life-cycle responsibility for overseeing energy projects in Canada. In other words, they look at a project right from the time that it is first proposed, submitted and goes through the regulatory process. If it is approved and the owners decide to proceed, the National Energy Board will oversee the construction. During operation, various permits and licences will be issued to which monitoring requirements are attached. Again, it would be primarily the NEB who would have that responsibility as the primary regulator.
However, given the inter-jurisdictional nature of the Northwest Territories and the fact that there has been no devolution of management of natural resources to the Northwest Territories from the Government of Canada, federal regulators will be involved as well. They will have some of the responsibilities of monitoring the operations of the pipeline during its lifespan and beyond through abandonment and restoration.
Senator Milne: Will they be out there on site while it is being built?
Mr. Chambers: Yes, they will. One of the regulatory steering committee's, working groups is an inspections and enforcement working group. The inspectors and enforcement officers from the National Energy Board and from the federal department regulators, such as Fisheries and Oceans Canada and Environment Canada, are already planning for coordinating their efforts in terms of monitoring the pipeline and other aspects of the Mackenzie Gas Project should it proceed to construction and operation.
Senator Trenholme Counsell: Thank you, gentlemen. This has been a most informative presentation. I will be brief, because for me this is truly a learning experience.
One question popped into my mind about the Aboriginal Pipeline Group, Mr. Reid. It is impressive to see that your group has one third of the ownership. You said, and I read here, that it has a seat on the board. Does this tell me that the board has three or four members, or are you not proportionately represented on the board?
Mr. Reid: Three Aboriginal groups are owners or partners in the Aboriginal Pipeline Group today: the Inuvialuit Regional Corp., the Gwich'in Tribal Council and the Sahtu Pipeline Trust. We do have shares set aside for the Dehcho PL Management LP. They are the southernmost Aboriginal group. Each Aboriginal partner is entitled to two board members, so ultimately our board would consist of eight members. There is one independent member on our board. The last slide in my presentation shows our current board of directors. Peter Lougheed sits as the independent member on our board.
Senator Trenholme Counsell: I wanted to know about the representation, not only APG but your representation on the entire board of the pipeline. Imperial Oil, ConocoPhillips, Shell and Exxon would sit on that board. How many seats do you have on the board?
Mr. Reid: We have two seats.
Senator Trenholme Counsell: How many are on the board?
Mr. Reid: Each of them has two seats on the board.
Senator Trenholme Counsell: That is not quite equitable, is it?
Mr. Reid: The voting is based on ownership shares, so when we vote, we vote a one-third ownership share, and they vote a two-thirds ownership share, so it is proportional voting.
Senator Trenholme Counsell: Is it we versus they? Do you feel the one third is in competition with the two thirds?
Mr. Reid: On very few occasions have we voted against an issue. That has occurred, though. We do carry a voice, but we can be outvoted at that table.
Senator Trenholme Counsell: Obviously, with a one-third share.
I was involved — because I was in the government at the time — with the construction of the Confederation Bridge, and I see a few similarities. Some of the overriding questions were about employment post-building of the Confederation Bridge and about the impact on the fishery, but it was always the environmental assessment. At the end of the day, many people were not happy with the process. At this point in time, what is the level of comfort amongst the people you represent with this process?
Mr. Reid: The environmental review of this project has been extremely thorough. The Joint Review Panel has undertaken their responsibilities in a very conscientious manner by bringing the hearings out to the various communities — Mr. Chambers indicated a total of 26 communities up North — which made it easy for local people in the North to participate in the process.
Concern has been expressed about the construction of this pipeline. However, transporting natural gas by pipeline is one of the most benign forms of energy transportation. Natural gas is a gas, not a liquid, so the chance of having a major spill is virtually non-existent.
The concerns have been heard by the panel, and I cannot prejudge their conclusion. Their report will be issued sometime next year. All I can say is that the process has been very thorough and allowed for both sides to be heard in a fair manner.
Senator Sibbeston: Pipelines in the North have always been controversial. In the 1970s and early 1980s, when a consortium proposed to build a large four-foot diameter gas pipeline from the Arctic south, it was very controversial, and the government eventually appointed Judge Berger to look at it. A commission was held and a decision made that they ought not to proceed. After that, in the early 1980s, an oil pipeline was built from Norman Wells south. Again, that was controversial. Most of the communities were against it, but the project proceeded nevertheless.
I was in both Fort Liard and in Yellowknife when there were talks about the pipeline where Aboriginal people gathered. The tone and the spirit have completely changed. Whereas in the past, they wholeheartedly opposed it, this time around, Aboriginals were in support, in principle, of this gas pipeline. Much has changed in the North. Land claims have been settled, and Aboriginal people are more educated and more part of society in every way. Therefore, they can benefit and take part in a project such as this. This is the Aboriginal Pipeline Group that emanated from that. I think that is a positive step.
Just one group, the Dehcho group, has been opposed or has not really become involved in the APG. However, times change, and there has been some leadership changes, so the prospect is there in the future for them to become more involved.
I have always wondered about a pipeline from the North. To date, no talk or proposal for the communities to benefit from natural gas, which is generally cheaper and cleaner, have happened. Inuvik has an arrangement whereby they use natural gas. All communities have big power plants because people need energy sources.
Why have the communities not been able to negotiate or insist upon laterals from the main pipeline to the communities so they can have a cheap source of energy? Have you had to deal with that?
Mr. Reid: The project has provided for placing a valve assembly and a tap connection at each community. The transportation rate on the pipeline for gas delivered to communities is half the normal tariff. There is a preferred rate, and facilities will be constructed to allow distribution systems to be constructed in any communities where that might be feasible. As you pointed out, senator, there are distribution systems in Inuvik and Norman Wells.
The provision exists, but it is not part of the scope of this project to construct those distribution facilities. That is more properly undertaken by a distribution company, such as Enbridge or ATCO Gas.
The Chair: It could be undertaken by the communities.
Mr. Reid: That is correct.
Senator Sibbeston: Mr. Chambers, until now, only the Dehcho do not have a settled land claim along the pipeline route. All others, including the Gwich'in, the Sahtu and the Inuvialuit, have had their land claims dealt with. About 40 per cent or so of the route of the pipeline crosses Dehcho lands. There is a feeling amongst the people that a pipeline could never go across the Dehcho lands unless they had an agreement with the federal government.
What is your view? Can a pipeline of this magnitude proceed across Dehcho lands without a settled land claim? Would the federal government proceed with such a project in the national interest and supersede the Dehcho people's opposition to the pipeline?
Mr. Chambers: That is an interesting question and a difficult one to answer, as you know. I do not know that it is my place to provide an answer to it. However, I will offer some observations based on some of the submissions made during the hearings. Senator Sibbeston is absolutely correct: Those views were articulated at several of the public hearings held by both the National Energy Board and the Joint Review Panel in Dehcho territory to the effect that a pipeline, if it were approved, should not be constructed until the land claim is settled. I know that the federal government and the Dehcho First Nations are continuing to negotiate their land claim. Many people are hopeful that one could be concluded before the project proceeds. Whether that is possible, I do not know because I am not privy to those negotiations.
Let us take mining as an example. The development of major capital projects, although admittedly not of the same magnitude as the Mackenzie Gas Project, in the Northwest Territories in territory that is not the subject of a land claim is not unprecedented. As senators are well aware, the three diamond mines that collectively contribute up to 15 per cent of the world's supply of diamonds were approved and are constructed in territory that is not the subject of a concluded land claim. Rather, they were the subject of access and benefit agreements between the owners-operators of the mines and the First Nations of the territories. It is not unprecedented that capital projects do proceed if there is goodwill on the part of everyone involved. While I cannot say whether the project can happen prior to a land claim being settled, I can say that based on the experience of the diamond mines, it is not unprecedented if there is goodwill among the parties.
Senator Spivak: Mr. Chambers, how much gas is in the North Slope and wherever this pipeline will connect to? Will that gas be absorbed by the oil sands? Where will the end product of that natural gas be marketed?
Mr. Chambers: I respectfully defer to Mr. Reid to answer most of your questions. Your question is appropriate particularly with respect to the end use of the gas extracted from the anchor fields and whether it flows directly or indirectly to the tar sands to extract that oil. When I say, ``tar sands,'' I am repeating the logo and vernacular used during the hearings by many interveners. That question was asked many times by interveners during the review of the project. It is important for the North American market to understand how that works.
With respect to how much gas is there, I will defer to Mr. Reid to answer.
A question raised by several interveners during the Joint Review Panel hearings was the following: How long would the three anchor fields' supply of gas allow the pipeline to continue to operate before other sources of gas would be required as a source to flow down the line during its expected lifespan of more years than the anchor fields themselves?
Mr. Reid: With respect to the reserves, in the Mackenzie Delta today, there are a total of 6 trillion cubic feet of onshore proven reserves and 3 trillion cubic feet of offshore proven reserves, for a total of 9 trillion cubic feet. To put that number in perspective because it is difficult to imagine trillions of cubic feet, 6 trillion cubic feet is enough to supply every home in Canada for a period of 10 years. It is a significant quantity of gas.
The ultimate reserves are probable reserves, and in the Mackenzie Delta, they total 64 trillion cubic feet.
Senator Spivak: Is that in the Beaufort Sea?
Mr. Reid: That figure includes both onshore and offshore reserves.
Senator Spivak: How much gas would the oil sands need? When you say that it would service all homes in Canada for 10 years, how many years would that supply the oil sands?
Mr. Reid: I do not have that number handy, and I apologize. I am not knowledgeable about the demand in the oil sands. However, I am not aware of one single contract that targets the Mackenzie Delta gas or ties it in any way to the oil sands. The gas will flow down the Mackenzie Valley Pipeline and enter the TransCanada PipeLines system.
Typically, each and every day, gas is bought and sold many times on the open market. It is called the Alberta hub. Gas is traded on a daily basis and goes to buyers throughout North America. One of the markets is the oil sands, but there is also Eastern Canada, the Northeastern U.S., Chicago and California. Canadian gas accesses a variety of markets through the TransCanada PipeLines system.
Senator Spivak: I know the oil sands companies are trying to find different methods for the different types of mining that they do. How long after this pipeline is built do you estimate that the gas will begin to flow?
Mr. Reid: Our targeted in-service date is 2014 for this particular pipeline. My understanding is that the bulk of the oil sands expansion is occurring well before that date and will be supplied from other sources.
Senator Spivak: How does this compare to Russia's reserves? How does the cost of this gas compare to liquefied natural gas and gasification of coal?
Mr. Reid: To put this particular basin in perspective, I mentioned that there are 64 trillion cubic feet of probable reserves and 9 trillion cubic feet of proven reserves. The reserves in Prudhoe Bay, in Alaska's North Slope, are 100 trillion cubic feet. Therefore, the size of the Alaskan reserves is an order of magnitude larger than the Mackenzie line.
I do not have the facts at my fingertips on the Russian reserves.
With respect to liquefied natural gas, a number of LNG re-gasification terminals are either planned or under construction in North America. Liquefied natural gas is helping to make natural gas a world commodity. Until now, it has largely been priced within North America because it does not transport cheaply.
Now, with LNG becoming an economic source of supply, you will see incremental quantities of LNG accessing the North American market. However, TransCanada PipeLines had a proposed re-gasification plant in Gros Cacouna, Quebec. This community was welcoming the project. It received all of its appropriate approvals. Three or four months ago, the project was cancelled because of the lack of a liquefied natural gas supply.
There is a world shortage of LNG today.
Senator Spivak: I am particularly interested in gasification of coal. It is so abundant, and it would be better to gasify it.
Mr. Reid: Coal gas has been around for many years. If you go back to the early days in Eastern Canada and also in England, coal gas was a major source of energy in the early part of the last century.
Senator Spivak: However, there are better environmental ways now to gasify coal.
Mr. Reid: Yes, there are. With the coal reserves that we are fortunate to have in this country, coal gas could be considered a future energy supply.
Coalbed methane is another product. It is essentially natural gas that comes off underground coal beds. Coalbed methane is being accessed in the Colorado basin extensively in the United States and is starting to be accessed in Alberta. However, the productivity of each well is much lower. The wells are more expensive to drill because they are generally deeper. Therefore, it is a more costly resource to access.
Nonetheless, it is working out well in the Colorado basin, and I expect to see growth of coalbed methane.
Senator Spivak: Would the costs be comparable or more than the gas coming down the pipeline?
Mr. Reid: I would expect coalbed methane to be more costly.
Senator McCoy: In regard to the oil sands, Mr. Reid, we have the second-largest proven reserves in the world second only to Saudi Arabia. Vis-à-vis your earlier comment, the source of oil will not be offshore; it will be onshore. That is not your topic, but I thought I would include that.
I do not remember the exact numbers, but $16 billion is the current cost of the pipeline. You are experiencing what Alberta, China, India and everywhere else in the world is experiencing: incredible cost escalations. I understand these have threatened to put a halt to this pipeline project. Imperial Oil has said that they are not sure if they are proceeding.
Senator Milne's question was edging up to this, but let me be a little blunter. I have heard that TransCanada PipeLines Limited, TCPL, will take over the pipeline and that the government would be interested in facilitating that step forward to get the project completed.
If you are free to comment, please do so.
Mr. Reid: I can comment to a limited extent. At his address to the Canadian Gas Association here in Ottawa last June, Minister Prentice encouraged the project to reinvent or reconfigure itself. The project is actively undergoing commercial discussions both within the partnership and with the federal government. Those discussions are confidential, and I am not at liberty to discuss their nature. The publicly available words are ``reinvent'' or ``reconfigure.''
Senator Milne: As an aside, you must realize that Mr. Reid used to work for TCPL.
Senator McCoy: TCPL is highly regarded in this business, and so is Shell. I think it would be a welcome move from many quarters for your former organization to take the lead again.
Mr. Reid: Time will tell.
Senator McCoy: Are there impact and benefit agreements, IBAs, as well as the APG equity and participation?
Mr. Reid: Yes, there are. In dealing with the Aboriginal regions as landowners, Imperial Oil is obligated to execute access and benefits agreements, which includes the IBA portion of it, with each and every Aboriginal region.
Senator McCoy: When we are there, we will also have a better chance to learn the Aboriginal role for ongoing monitoring through their various regulatory boards. It will be interesting.
Mr. Chambers, could you share your thoughts with us. Your secretariat is really a facilitator; it is a logistical body that gathers documents, schedules people, et cetera. It is not a consultative body. There were high expectations that more extensive consultations would take place. A lawsuit came about that broke new ground in terms of elucidating constitutional Aboriginal rights.
I know you do not have time to fully explain that, but could you give me the name of that lawsuit and maybe a thumbnail?
Mr. Chambers: It was an application brought against the Joint Review Panel, the federal government and other parties by the Dene Tha' First Nation of Northern Alberta. That decision that was rendered by the Federal Court and subsequently by the Federal Court of Appeal was in favour of the Dene Tha' First Nation. Having said that, there was a subsequent settlement between the federal government and the Dene Tha' First Nation for compensation for what the courts had found was a lack of consultation by the federal government in the establishment of the process for the review of the Mackenzie Gas Project.
As you have suggested, it is far more complicated than that, but that is basically what transpired. As you have mentioned, the courts have successively raised the bar with respect to the obligation of governments and industry to consult with First Nations about to any project within their territory.
The federal regulators have ongoing obligations, should the project proceed, to consult with First Nations about any licences or permits that would be required by the project to move forward, specifically anything that includes fisheries authorizations, land-use permits, access permits for gravel sites and granular sites. Therefore, those types of permits and licences, at least for the federal government departments, do bring with them obligations to consult with First Nations, and they fully intend to do so.
Senator McCoy: The Dene Tha' First Nation is not one of the member groups in APG.
Mr. Chambers: No, they are not.
Senator Mitchell: Mr. Chambers, you indicated that the work of the panel will miss its summer deadline because of the complexity or the breadth of the environmental issues. Could you itemize briefly some of those issues? Are they written down somewhere in a summarized or credible fashion, or is it still too early to assess what they will be?
The Chair: Could the NEB commence its consideration before they get that report?
Mr. Chambers: The NEB must await the findings and recommendations of the Joint Review Panel because under the multi-jurisdictional approach that has been taken to review the Mackenzie Gas Project, because of the transboundary nature of it, the NEB has delegated the responsibility of the environmental assessment of the project to the Joint Review Panel. The NEB hearings have done most of their work. They are still waiting for that piece of evidence from the Joint Review Panel, which includes their recommendations.
I do not work directly with the Joint Review Panel on those substantive issues on which they are working to complete their report. Therefore, I am not able to comment on what they are addressing in the report and in their recommendations.
Having said that, certainly, the ``Environmental Impact Statement Terms Of Reference,'' which was the guidance document for the proponents for the submission of the environmental impact statement, as well as the Joint Review Panel agreement, which established the Joint Review Panel, provides the terms of reference and delineates those issues that the Joint Review Panel must take into consideration in submitting their report.
If I may take this opportunity to comment on a couple of comments that I have heard during the questioning — and I was probably remiss in not mentioning this — in terms of what has changed since Mr. Berger conducted his hearings and the hearings that have most recently concluded, many of the land claims have been settled in the Mackenzie Valley in the Inuvialuit Settlement Region. New environmental regimes have been established, resulting in northerners' involvement in the review of the project. Four of the seven Joint Review Panel members are northerners from the Inuvialuit Settlement Region, the Gwich'in Settlement Area, the Sahtu Settlement Area and the Dehcho Territory. Therefore, northerners are involved in the review, and they have an opportunity to play an important role in determining how this project proceeds, if it does.
Senator Mitchell: Climate change is changing the complexion of construction in the North. Is that being considered in the engineering of this project? What are its implications for cost? A second issue with respect to climate change is the question of what type of flaring will be occurring in the mining of this gas and its transportation, and how significant that will be in terms of emitting carbon greenhouse gases.
Mr. Chambers: Again, I will defer mostly to Mr. Reid to provide the answer, but the type of question you just asked was asked many times during the Joint Review Panel hearings and also the National Energy Board hearings. What would be the impact, for example, on permafrost degradation of an increase in average temperature? That would have an impact on pipeline design. Those types of questions were asked many times, but in terms of specific implications for pipeline design and how the project might be otherwise constructed, taking those factors into consideration, I will defer to Mr. Reid.
Mr. Reid: The impact of climate change or global warming has been incorporated into the design of the facilities for this pipeline.
At the macro level, 100 per cent of the construction will be undertaken during the winter months when the ground is frozen. The ground simply will not support heavy equipment during the summer months. With global warming, we are seeing shorter winters and shorter construction seasons for this pipeline. For that reason, in the planning, we extended the construction for the pipeline itself from two winter seasons to three winter seasons, and on top of that, there is an additional winter season for the construction of infrastructure that precedes the pipeline construction itself. This has been absolutely incorporated into the design.
Senator Mitchell: What about gas flaring?
Mr. Reid: Gas flaring is a practice that has become almost non-existent in the industry now. It is frowned upon.
Senator Brown: I was reviewing the notes that I had previously from the Calgary symposium. It seems all your figures are the same in terms of the total of 64 trillion cubic feet of probable reserves and 100 trillion cubic feet at Prudhoe Bay. Methyl hydrates were mentioned, and the figures were staggering. They said that what it really amounts to is gas that is frozen in ice. They do not know how to get at it yet, and they do not have a target date for when they would be able to access it and refine it, but their figures were 40,000 trillion cubic feet of hydrates. Has anyone studied the problem of trying to mine methyl hydrates or get it loose from its ice?
Mr. Reid: I am certainly aware of methane hydrates existing up there. The quantities that you have mentioned are certainly in that order — far more than we have in terms of our traditional natural gas reserves. To my knowledge at this point, no one has developed a process that would economically extract those resources. I would expect many people are looking at it, but I am not aware of any economic process.
Senator Milne: Unfortunately, the people who are looking at it are not in Canada. They are in Japan, and they are putting millions into research on methane hydrates.
The Chair: Senator Brown, does that finish your question?
Senator Brown: Yes, I just wanted to know if anyone was looking into it.
The Chair: Mr. Reid, you talked about the principal benefits being ongoing for the Aboriginal people. Will there, however, be benefits to them during the course of the construction over those three seasons you are talking about?
Mr. Reid: Yes, absolutely. APG's primary purpose is to deliver the long-term dividends through ownership in the pipeline but, because we have a seat on both the board and the committees of the project, we are able to ensure that specifications and so on for the supply of materials and services to the pipeline do emphasize the requirement to maximize use of northern resources — Aboriginal contractors and things of that nature. We are able to actually influence the development of this project by participating on these committees.
The Chair: The partnership units that you talked about add up to 92. Are there 8 missing, or is it really 92 partnership units?
Mr. Reid: Your math is absolutely correct. Initially, 8 units were set aside for possible allocation to other Northwest Territories Aboriginal groups who might not be on the right-of-way.
The Chair: Therefore, those units are in the treasury.
Mr. Reid: That is correct; they have not been issued. Our focus now is on the corridor groups.
Senator McCoy: One got 34 units, and the other got 10 units.
The Chair: One got 4 units.
Mr. Reid: If you ignore the 8 units that are set aside for the groups that are off the right-of-way, the on-corridor groups are allocated essentially according to the distance of the pipe through each Aboriginal region.
Senator McCoy: It is linear.
The Chair: That is the answer; 8 units are left over. If someone else comes to the table, they might be able to participate.
I want to plough the ground that Senator McCoy and Senator Milne asked about. I know that you have a bias, but this is not a done deal yet. You said that the banks have expressed interest; of course the banks would express interest. You also said that it is being reconfigured and redesigned. If the escalation of construction costs and all those factors continue, we have heard, before this committee, suggestions that the ship construction, which has now enabled ice- capable tankers to carry LNG, might obviate the necessity of a pipeline and make it economically uncompetitive with LNG carriers. Does that concern the APG?
Mr. Reid: It does not at the present time because we view LNG as a supply that is developing, and it will develop in a later time frame than we are developing these particular resources.
Senator McCoy: They have dibs on a ship in a big LNG processing plant.
The Chair: Just in case, yes, as a hedge. Mr. Chambers and Mr. Reid, thank you very much for coming before us.
We are joined now by the most highly recommended guest that we have heard from for a long time, Dr. Donat Pharand, Emeritus Professor of International Law at the University of Ottawa.
Dr. Pharand, as you have heard, we are travelling to the North, and the questions that we will be principally addressing have to do with the impact of environmental change — we do not like to use the term ``global warming'' so much as we do ``climate change'' — on the North, its people and on industrial development there. Of course, attendant upon that question is the one of sovereignty.
Dr. Pharand comes highly recommended; and he will speak to us about Canada's interests in the Arctic. Dr. Pharand, I invite you to inform us and be as concise and complete as possible.
[Translation]
Donat Pharand, Professor Emeritus, Faculty of Law, University of Ottawa, as an individual: Mr. Chair, I do not know whether there are any French speakers here besides myself. I have not heard anyone speak French, so I presume you are all English speakers.
In any case, please do not hesitate to ask me questions in French if you wish.
[English]
Thank you for inviting me. Since this is my second appearance in two or three weeks, I feel like a student who has failed his first exam and is now given a supplementary. In any event, I am pleased to be here, and I will do my best to be of assistance to the committee.
I have provided a short outline as well as a 10- or 11-page summary. I do not intend to read the summary. Rather, I intend to simply take the outline, which you have before you, and work myself through the seven numbers on that outline.
You mentioned the effects, generally speaking, of climate change and the warming of the Arctic. Before I begin, I want to mention the two main consequences with respect to the Arctic ice pack, which is not an ice cap — the only place where there is an ice cap is Greenland. On the Arctic Ocean, there is floating ice, which we call an ice pack, and, of course, there is less and less. The two consequences are, first, a thinning of the ice; and second, as a consequence of the first, a withdrawal of the ice toward the centre most of the time.
Coming now to my outline, Mr. Chair, it is 6:55 p.m. You have been most patient. I was supposed to begin at 6:30 p.m. How would it be if I were to go until 7:25 p.m.? Then, you will have whatever time you want to ask me any questions. My problem will be to answer your questions.
The Chair: Please proceed.
Mr. Pharand: My presentation is entitled ``Canada's Arctic Sovereignty and the Northwest Passage.'' One should always define one's term; certainly one who has been trained in the law, as I have — I have spent all my life trying to define terms. Last evening, I listened for about five minutes to an interview on CBC of Minister Lunn. The interviewer was obviously becoming a little mixed up insofar as Canada's sovereignty in the Arctic. He was covering three or four subjects, only one of which was really about sovereignty. Let us define ``sovereignty'' before we begin — territorial sovereignty, not political sovereignty. Territorial sovereignty refers to boundaries — the totality of exclusive jurisdiction of all possible subjects and topics that an independent state can have. It is exclusive jurisdiction, not only horizontally but also vertically. It does not mean that because I have sovereignty over the airspace that I will not give rights to other states to cross it. Indeed, Canada and most states of the world have no choice in that, of course, with today's global access increasing. It is to everyone's advantage. We have multilateral conventions providing for freedom of navigation in the airspace above one's territory. However, the principle of sovereignty is that it is total and that it is complete vertically and horizontally.
We have the islands and the water to consider. Let us make that distinction. There is absolutely no doubt about Canada's sovereignty over all of the islands constituting the Canadian Arctic Archipelago. Only twice has that sovereignty been challenged: First, in 1920, Denmark said that they thought their explorer Knud Rasmussen was right that Ellesmere Island was a no-man's land and that their Eskimos, as they were called then, from Greenland were entitled to hunt muskox on Ellesmere Island. In 1920, Canada was not an independent country and, therefore, asked Great Britain to send a little note, which it did. That settled the matter, and there was no question of sovereignty after that.
Second, in 1928, Otto Sverdrup, a wonderful Norwegian explorer, spent two years west of Ellesmere Island. There are three huge islands called the Sverdrup Islands. He could have claimed them for Norway, and, indeed, there was reason to believe that Norway would claim the islands.
Eventually, after a number of contacts and a bit of negotiation, a settlement was made. Canada reimbursed the disbursements that Sverdrup had made for a period of two years or more. The poor man died before the settlement was made; his widow received the settlement.
In 1930, Canada and Norway concluded a bilateral treaty whereby Norway recognized Canada's sovereignty over the Sverdrup Islands with a proviso. The note said, on behalf of Norway, that this does not imply any recognition of the so-called sector principle. Norway was absolutely right. Since 1904, Canada has been publishing maps with supposed boundary lines following the 141st meridian of longitude to the pole and the 60th meridian in the east. We said that we would not take part of Greenland and started only north of Greenland on the 60th meridian.
That is absolutely worthless in international law to base any claim of sovereignty be it on land or — much less — on water. However, it was a good idea. It looked good. In 1907, Joseph Bernier was there exploring for Canada. Senator Pascal Poirier, a fine Acadian senator and very patriotic, thought it would be much simpler if Canada was to claim everything between the 141st and 60th meridians. However, John Cartwright, who was the representative of the government in the Senate, thought they were moving too quickly. No one seconded the motion, and that was the end of the sector theory, although Canada did occasionally pick it up again. A number of politicians, even former Prime Minister Lester B. Pearson, suggested that Canada invoke the sector theory.
Insofar as the islands are concerned, there is no problem. Even the President of the United States, when he gave a press conference last year in Ottawa said that they have no problem with Canada's ownership of the islands. Their problem is with the waters. We will come to that later.
My third point has a mistake. The outline page does not conform to the text. It says, ``Canada's sovereignty.'' That is wrong. It is ``Canada's sovereign rights.'' You will see that on page 2 of the text.
What is the difference? The United Nations Convention on the Law of the Sea was adopted in 1982. However, it did not come into force in 1982 and was not negotiated only in 1982. Would you believe it took 14 years before it was adopted in 1982? Then, it did not come into force until November 6, 1994 after 60 countries ratified it.
Today, we have a total of 155 states parties to the convention. I have the list if you want to pose questions about who is party and who is not.
This convention is the law of the sea now. Very few things are not covered. Later I will mention a couple things about which states could not agree.
Why is it ``sovereign'' rights over the continental shelf and not ``sovereignty''?
We first have to address what the continental shelf is. It is the natural prolongation of the land territory under the sea. It is not any type of prolongation, but geological prolongation.
With respect to the waters above the continental shelf, the sovereign rights cover the resources of the seabed and the subsoil. They do not cover the waters above, except within the 200-mile exclusive economic zone. In the case of Canada, both on the East coast and in the Arctic, the continental shelf goes beyond the 200-mile limit.
However, even within the 200-mile limit where the coastal state has complete control over the resources and complete ownership of the resources, it does not affect the status of the waters. It does not affect the freedoms of navigation and overflight.
That is the reason I say that this is a mistake here in the document. It is not sovereignty. If it were, as the coastal state, you would have complete control over the airspace and the waters. I repeat: freedom of navigation remains, both on the water and in the airspace.
Of course, we have problems of delimitation. We have what I call lateral delimitations. The first is in the Beaufort Sea with the United States next to Prudhoe Bay. You will remember, in 1968 and then again in 1969, the crossing of the tanker SS Manhattan loaded with water, not oil, as a trial.
Following that, we tried to settle our maritime boundary. How will we determine where the boundary for the continental shelf is between the United States and Canada?
We also have a second problem of delimitation with Denmark in the Lincoln Sea. In 1974, we concluded a bilateral continental shelf delimitation agreement with Denmark. However, we could not agree on two areas: The first is in the Lincoln Sea and the second is in Nares Strait where there is a big rock called Hans Island. It has caused a lot of publicity for absolutely nothing, in my opinion, but that is the way it is.
How will you settle these problems of lateral delimitation? Unfortunately, the Convention on the Law of the Sea does not provide for anything specific. It says that two states, such as Canada and the United States, should come to an equitable agreement. Equity, like sin, is hard to define. Everyone is in favour of virtue and against sin, but try to define sin. My definition is probably a lot different from yours. Certainly it is different now from what it was when I was young.
In any event, what will you do? There is hardly anything in the convention — lawyers and politicians could not agree on anything specific — so now we have a number of decisions from the International Court of Justice in The Hague, and the more decisions we have, the more precision we are bringing. The court is presently drawing a list indirectly of so-called equitable factors, such as the length of the coast and the configuration of the coast. Is it convex, or is it concave? Have I made a historic use of a certain line? Canada says that we have used the 141st meridian for a little distance in order to determine the administrative jurisdiction between the United States and ourselves, so we think that it should be the 141st meridian. Since it is a concave coast on the side of Canada, it is to the advantage of the United States to say that it should be the equidistance line. Why? The equidistance line goes east, as it were, of the 141st meridian. However, it is no big problem. It will be settled by the international court or by a special arbitration tribunal, in the same way as the Lincoln Sea.
What about the sea? How far does the continental shelf of Canada go? By the way, the Lomonosov Ridge crosses just about at the geographic North Pole. It was discovered by a Russian scientist. Do not forget, the Soviet Union started in 1937 with floating ice stations to study the seabed, the Arctic basin. It is now, at the moment, on number 37. Way back in 1964, it published a geological map of the Arctic basin. I do not think that the United States has been able to produce anything more accurate since then, and it has made many studies. At the moment, Russia, Canada and Denmark are collecting geological data. First, on this side of the pole, even though there is a physical break, it does not mean there is a geological break if the Lomonosov Ridge is a continuation of the land territory of Canada, or of the shelf of Canada, more precisely. Russia is doing the same thing on the other side of the pole. It has already submitted its data to the United Nations seaward limit commission. It has another few years to go. Canada ratified the convention, and it came into force for Canada on December 7, 2003. Each state has 10 years to submit its data to the commission. Russia has passed its 10 years and was given an extension by the commission.
Let me say immediately that the commission does not have the authority or the jurisdiction to settle conflicting claims. All the commission can do is to make recommendations and hope that the parties will accept these recommendations. If the parties do not, there is a whole and rather complex system of settlement of disputes provided in the UN Convention on the Law of the Sea. All states that ratify the convention must accept one, at least, of the five or six — I forget how many — settlement of dispute mechanisms provided for in the convention.
The big problem at the moment is how far the continental shelf extends, meaning the continental shelf, the slope and the rise. The big question now is where the foot of the slope is.
The seaward limit of the continental shelf is determined in two ways: the geological method, which is determined by the thickness of the geological sediments; and the physiographic or geodetic method. You are entitled to either 350 nautical miles from the baselines from which you measure the territorial waters, or 100 nautical miles from the 2,500 metre isobath. Do not ask me to go any further than that. If you ask me questions, I will try to answer, but on that specific point, I will have to defer to a fellow such as Ron McNab, who is a member of the Canadian Polar Commission and who is a geophysicist. This is very complicated, indeed, even for a lawyer who might pretend to know more than he actually does.
With respect to the waters, yes, we do claim sovereignty over the waters, particularly since 1985. In the Polar Sea crossing in 1985, the American icebreaker refused to ask Canada's permission. Canada said, ``Ask permission and we will give it to you.'' They replied, ``No.'' We were challenged. Joe Clark, the Foreign Affairs Minister at the time, on the advice of a number of people around him, pushing him, adopted what we call straight baselines, which came into force on January 1, 1986. The Soviet Union at the time, had already adopted straight baselines as well in the early part of that same year of 1985.
You have straight baselines because you have an archipelago, and you do not have a nice, smooth border to measure your 12 miles. It is the same problem Norway had in 1951, in the Anglo-Norwegian Fisheries case. They went to the International Court of Justice in The Hague. The court said, ``Yes, Norway, you have a very deeply indented coast and also a series of islands. Therefore, you are entitled to draw straight lines across the indentations and also joining the outward islands, and measure your territorial waters 12 miles, and from the same baselines, measure your 200-mile exclusive economic zone.'' It used to be 3 and 4 miles, and now it is 12 miles.
Unfortunately, the United States contends that our archipelago does not point in the right direction, because both the convention and the court's decision say that it is supposed to be a coastal archipelago and that the baselines are supposed to be drawn along the general direction of the coast. The United States says that our archipelago goes north. It does not go along the East and West Coast of Canada.
It all depends on the map you are looking at. If you take the earth and flatten it out, of course you will have distortion. Without removing any credit to Mercator, who devised this type of projection, we now have, since 1988, a much less distorted projection. I had this produced for you. This is a world map that was produced by the National Geographic Society in 1988 by a geographer by the name of Robinson. It still has some slight distortion, but much less. The further north you go, the more distortion you have.
If you look at this map, you can say with quite a bit of accuracy that the coastal archipelago of Canada does follow the general direction of the coast. In any event, we still have this bit of a problem.
Another requirement was laid down by the court in 1951, and it is in the convention as well. There has to be a close link between the land and the sea, between the islands enclosed and the sea areas being enclosed. The reason for this is because the sea areas within the baselines, including those of the Northwest Passage, all of the sea areas enclosed, have the status of internal waters. This means that the coastal state has complete sovereignty over those waters in the same way and as completely as it does over the islands and the land.
To make you feel a little better insofar as the sea to land ratio, I had this measured by a hydrographer way back. Norway, which the court approved, had a ratio of sea to land of 3.5 to 1. Canada, after we drew the baselines in 1985, has a ratio of 0.822 to 1. The close-link legal requirement of the linkage between the land and the sea is a very good one indeed.
In spite of the fact that those are internal waters, they do include the Northwest Passage. The United States says that it is an international strait. Unfortunately, under the Convention on the Law of the Sea, we could not agree. What is an international strait? I was an outside adviser for the Canadian delegation, and I provided a definition that said that an international strait is one which has been traditionally used for international navigation. The United States, of course, would never accept that. They drew a list of straits — 113, if my memory serves me correctly — including on that list the Northwest Passage, in spite of the fact that at that time only about 50 transits by foreign ships had taken place. Even today, since the first passage, the first transit by CCGS Amundsen, which took three years, from 1903 to 1906, only 69 foreign transits took place all together up to the end of 2005. In the last couple of years — I have not got the precise figures — it is around 15 transits.
This is certainly not the criteria laid down by the only case that exists. As I say, no definition exists in the Convention on the Law of the Sea, so you have to depend on court decisions. In 1949, the court decided, in the Corfu Channel case, that there had to be, as it was found to exist there, a history of international commercial navigation in order for a strait to be called international. The convention refers to a strait used for international navigation. Those are the words used.
In other words, the problem between the United States and us is one of definition. They say that potential use is good enough. We say that actual use is necessary. I do not know how they can support their point of view. Let me be a little more precise.
To the end of 2005, we had 69 foreign transits; 20 were of these little yachts, the adventurers. The adventurers are causing quite a few problems, insofar as Canada is concerned, because they get stuck and need rescuing. Two transits in 1969 were the SS Manhattan crossing. We had 18 icebreakers, mostly American, and we had — this is becoming more frequent now — 29 cruise ships. In the last couple of years, I think we had about 15 or 16 cruise ships.
When I speak on point number 6 of my outline, about the possible internationalization of the passage, even if now, in 2008, there is absolutely no possibility that the international court would say that Canada has had a sufficient number of foreign transits to make the Northwest Passage and its seven possible routes an international strait, it is always very possible if Canada does not take more measures to control foreign navigation. It might not take very long for the Northwest Passage to become an international strait.
The difference, if this happens, is immense, and that is the reason why the United States contends that it is an international strait. The difference is in the types of right of passage. The new right of passage provided here in the convention is called transit passage, which looks inoffensive. It is not inoffensive at all. It is virtually the same freedom of navigation as you have on the high seas.
I say that because it applies to all ships — including warships, including submarines — in their normal mode of navigation, in other words, underwater; unlike the first convention of 1958, where warships, even when they had a right of passage, had to surface within the territorial waters. These are internal waters. Nevertheless, if foreign navigation is there to a sufficiently high degree, the new right of transit passage will apply and submarines will have a right of submerged passage. I do not think that is what we want.
Starting at page 8, I have listed 10 suggestions for what measures we should take. However, there are a couple, Mr. Chair, that I must mention.
Why we do not have a compulsory system of foreign ships being obligated to get our permission, or at least give us notice? It is unbelievable that, at the moment, the only system we have is NORDREG? NORDREG is a voluntary system. The proof that it is voluntary — not only that the regulations say so — is that when a foreign ship informs Canada that it is coming into Lancaster Sound, for example, Canada does not give the ship permission; instead Canada issues an acknowledgment. It is merely an acknowledgement that the notice was received. That is not good enough.
Another suggestion is for Canada to have a polar icebreaker. I do not mean 12 nuclear icebreakers similar to the Soviet Union. I mean at least one, if not two; a polar icebreaker like the class 8, which the government had authorized in 1985, and on which millions were spent in preparation because it takes four or five years. Then the following government cancelled it for lack of funds. Today we have nothing. The old workhorse Louis S. St-Laurent has reached the end of its days. The few others that we have are fine for a couple of months of the year. We have, of course, the Amundsen — which used to be the Sir John Franklin — which is a scientific ship. It is fine, but we have no icebreaker capable of exercising complete control over the waters that we claim to be our own.
We have regulations. We have the Arctic Waters Pollution Prevention Act of 1970. We had the regulations in 1972 providing for certain zones, such as the McClure Strait where the multi-year ice comes down. We do not have an icebreaker capable of operating in those waters. Of course, it has been a warming up, and occasionally, in the last two years, we have had more facility and more open water. However, do not forget that the McClure Strait has not been navigated until last year. The reason it is called McClure Strait is because McClure walked the half distance, and it was named after him in the sense that he discovered it.
The SS Manhattan found out in 1969. It went as far as about halfway and then had to come back and follow the Prince of Wales Strait. It could not go through. Even if the multi-year ice melts sufficiently and the McClure Strait becomes navigable for part of the year, the ice comes down the McClintock Channel and down Victoria Strait and blocks it.
I spent 28 days on board the Sir John Franklin in 1989, and it took us eight days to cross the Northwest Passage, but at a certain juncture, the ice had come down. During that one day where we were stuck there, we did not make more than perhaps 15 miles. Imagine, we made the whole Northwest Passage in eight days. The ice might be disappearing, but those huge blocks of ice are like a concrete wall, I can assure you. You cannot go through them, certainly not with a class 4, 5 or 6 icebreaker; a class 10, a polar icebreaker is needed.
Protection of the marine environment of the Arctic is special. A massive oil spill, whether by ship or pipeline or other, will damage the delicate ecosystem, perhaps irreversibly. That is why Canada adopted the Arctic Waters Pollution Prevention Act in 1970 and why the Canadian delegation worked so hard, along with the Soviet Union, on the United Nations Convention on the Law of the Sea, UNCLOS, on this one point: to have a provision in UNCLOS that will entitle a coastal state, such as the Soviet Union and Canada, to take special measures in ice-covered areas to ensure that ships traversing those areas are properly constructed, including double hulled and other necessary measures.
Indeed, Article 234 of UNCLOS is virtually an approval of the 1970 Arctic Waters Pollution Prevention Act and the 1972 supporting regulations. Article 234 says:
. . . exceptional hazards to navigation, and pollution of the marine environment could cause major harm to or irreversible disturbance of the ecological balance.
A number of measures are being taken through the Arctic Council, which Canada helped to found. The Arctic Council has already adopted an Arctic Marine Strategic Plan, an Arctic Marine Shipping Assessment and is in the process of adopting a code of uniform guidelines that would apply throughout the Arctic ice-covered areas to facilitate the enforcement by Canada of its own Arctic waters pollution prevention regulations.
I would be pleased to try to answer any questions.
The Chair: It is my understanding that the United States has not yet ratified UNCLOS. Is that correct?
Mr. Pharand: I am glad you mentioned that. The United States has realized that if it wants to take advantage of UNCLOS, which it does, then it has to ratify it because not only is there the Lomonosov Ridge but also another ridge north of Canada and another smaller ridge north of Alaska and Canada. The United States realizes that it needs UNCLOS and has put it before the United States Senate. As you know, the United States Senate requires a two-thirds majority for ratification. President Bush is finally in favour of it.
The Chair: The United States could only reasonably, in international law, pursue a claim to its continental shelf if it ratifies UNCLOS. Is that right, or could they do it otherwise?
Mr. Pharand: The answer is, yes and no. Yes, insofar as the lateral delimitation is concerned in the Beaufort Sea between Canada and the United States. There is enough customary law through the International Court of Justice decisions, including the 1985 decision in the Gulf of Maine case that Canada had with the United States, even though the United States does not recognize the jurisdiction of the court in the sense that it has not a general acceptance of jurisdiction, any state can go to the court for a particular case. The United States and Canada agreed in 1985 to have the Gulf of Maine case on the Georges Banks settled by the international court. The answer to your question is, yes, insofar as the lateral delimitation because of customary law. The answer to your question is, no, insofar as the new law of the seaward limit of the continental shelf.
The Chair: If they were to pursue that, it would be clearly to the advantage of the United States to become a ratified signatory to the UN Convention on the Law of the Sea.
Mr. Pharand: Absolutely. The shame of it all is that the United States delegation, throughout most of the 12 years of negotiations, was very helpful. They had all kinds of expertise on every single little point. They produced expertise overnight, and with it, they made a considerable contribution. Of course, they blocked a number of things, such as the question of straits, but, on the whole, it is a pity; they have expertise for sale.
Senator Sibbeston: Thank you, sir, for your interesting presentation. I come from the Northwest Territories. I am particularly interested in what you say with respect to sovereignty and the effect on or benefit to the Inuit people living in the Arctic. What do they contribute to the question of sovereignty?
Mr. Pharand: I am so pleased you asked the question. If I had had more time, I would have mentioned justifying the baselines. The United States is objecting not only to the baselines in general but also to particular baselines: the one across Lancaster Sound of 60 miles, the one across the McClure Strait and the one across the Amundsen Gulf, which is close to 100 miles.
Canada could do exactly what Norway did in 1951 in the Norwegian fisheries case. Norway invoked the traditional fishing rights that it had granted to local fishermen across an opening of over 50 miles. The United Kingdom said, ``Oh, oh, that line is no good.'' I am saying that Canada could do the same. It is well documented that the Inuit have used Amundsen Gulf, Barrow Strait and Lancaster Sound, those three areas in particular, from time immemorial. Talking about time immemorial, if there is a place where it applies, this is it. The historic use of those waters by the Inuit could be used to consolidate. I am not talking about a historic title that Canada claims, which, in my humble opinion, cannot be proven. However, it can invoke the Inuit traditional use from time immemorial of those waters to consolidate and solidify some of those lines in particular. You are absolutely right. I did not have time to go through the question of historic title before, so thank you for asking that question.
The Chair: We have all been to school, and we are very grateful to you because we now have an understanding far greater than we had before we came into the room and before you began to speak to us, for which we are very grateful. We are much better prepared for many of the questions we will be asking when we go to exactly where you have been talking about. If we have subsequent questions, which sometimes come to mind after the fact, I hope you will permit us to write you.
Mr. Pharand: Absolutely. I would be pleased. As you know, China is very interested not only in the Antarctic but also the Arctic, and it is intending to send a science ship across the Arctic Ocean and then down the Atlantic to the Antarctic. It should be leaving next month. The Ocean University of China has asked me to go and tell them a little about the legal status of the Arctic region in general. I will be away from the middle of June to the middle of July. However, if I can be of any assistance while I am here, I would be only too pleased to try to help you.
I thank you, Mr. Chair and senators. I enjoyed this very much. I have been retired for some 20 years, but I miss teaching. I used to love teaching, and in spite of my 85 years, or close to 86, you have rejuvenated me and given me a chance to do so again tonight.
The Chair: Thank you, sir. You have rejuvenated us.
Senator Sibbeston: Why not give us a chance to read the materials, and in a couple of weeks you can come back and give us a test.
The Chair: Thank you very much, Dr. Pharand. We are very grateful.
The committee adjourned.