Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 2 - Evidence - February 23, 2016
OTTAWA, Tuesday, February 23, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5 p.m. to study emerging issues related to its mandate.
[English]
Senator Grant Mitchell (Deputy Chair) in the chair.
The Deputy Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
[Translation]
My name is Grant Mitchell: I represent the province of Alberta in the Senate and I am the deputy chair of this committee. Senator Richard Neufeld, the chair, regrets that he was unable to attend today's meeting.
[English]
I would like to welcome honourable senators, any members of the public with us in the room, and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and also available via webcast on the sen.parl.gc.ca website. Nobody wants to miss watching the webcast on that website. You may also find more information on the schedule of witnesses on the website, under "Senate Committees.''
I would now ask senators around the table to introduce themselves. Before I do that, I would like to introduce our staff who are with us today and who are essential to our success and the work that we do, beginning with the clerk, Lynn Gordon, on my left, and our two Library of Parliament analysts, Marc LeBlanc and Sam Banks. Perhaps, senators, you could start to introduce yourselves.
Senator Seidman: Judith Seidman from Montreal, Quebec.
[Translation]
Senator Rivard: My name is Michel Rivard, and I am a senator from the Laurentian region, in Quebec.
Senator Bellemare: My name is Diane Bellemare, and I am a senator from Montreal, Quebec.
[English]
Senator Eaton: Nicky Eaton, senator from Ontario.
Senator MacDonald: Michael MacDonald, senator from Nova Scotia.
[Translation]
Senator Massicotte: My name is Paul Massicotte, and I am a senator from the Lanaudière region, in Quebec.
[English]
Senator McCoy: Elaine McCoy, Alberta.
[Translation]
Senator Ringuette: My name is Pierrette Ringuette, and I am a senator from New Brunswick.
[English]
The Chair: The mandate of this committee is to examine legislation and matters relating to energy, the environment and natural resources generally. Today I am pleased to welcome, by video conference from Calgary, Tim McMillan, President and CEO of the Canadian Association of Petroleum Producers. Thank you for joining us today, Mr. McMillan, to provide us with the current status and outlook of the oil and gas sector in Canada. As you know, in our invitation to you we expressed an interest in hearing from you about the major challenges facing the sector, including proposed projects relating to LNG exports and crude oil pipelines. Your organization's views on energy price, shifts in international demand for resources, global commitments to GHG reductions and how the industry is adjusting are also of interest to the committee and, I expect and am certain, of interest to Canadians.
Please proceed with your opening remarks, Mr. McMillan, after which we will go to a question and answer session. Welcome, and thank you for being with us.
Tim McMillan, President and CEO, Canadian Association of Petroleum Producers: Thank you very much, Mr. Chair, and thank you to the senators on your committee for your interest today.
I was going to give a few comments off the start that will address some of your questions, but I certainly look forward to more in-depth and direct questions after my opening comments.
I represent the Canadian Association of Petroleum Producers. We represent 90 percent of the oil and gas that is produced in Canada today. We have operations from British Columbia to Newfoundland — onshore, offshore, conventional, unconventional, which would be considered multi-stage fracking with horizontal drilling, oil sands —, and our association represents the upstream. So we don't represent the pipelines. We don't represent refineries, and we don't represent LNG. That being said, we work very closely with those groups. We rely on them a great deal, and the challenges that we are facing as an upstream are very much related to the ability to get our product to market.
We have world-class resources. We have the third-largest oil and gas resources in the world, and we are in a business which has increasing demand but in new locations. Traditionally, we have had one customer, the United States, where we have sent almost 100percent of our exports.
Today and over the last few years the United States has, through the use of technology — much of the technology we are using here — turned from one of our largest customers to one of our largest competitors. The world has an increasing demand for oil and natural gas. That demand is not growing in countries like the United States. It is not growing in Europe. However, in countries like China and India and in countries that want to move their populations from, sometimes, poverty to the middle class, providing their citizens with higher-quality diets, more freedom of movement, that is what our products do for people. The challenge we face today is getting our products to market.
Your question about giving a bit of an update on pipelines and on LNG is very appropriate. I will be happy to talk about that later on.
For a little context about the oil and gas industry, we are the largest investor into the Canadian economy. In 2014, we invested about $81 billion in capital expenditure into the Canadian economy. With the declining prices that we saw last year, that number dropped by about 45percent, to $48 billion. The reduction from $81 billion to $48 billion would be the equivalent to seeing the entire forestry sector and manufacturing sector leaving the Canadian economy. So it was a very substantial reduction if you put it in those terms.
We expect that to continue this year as prices have not recovered. We see that reflected in jobs, about 40,000 direct jobs — 100,000 when you consider direct and indirect — being felt across the country in regions in which we operate and produce oil and gas, in our supplier network, which spans the entire country and in the workforce that is employed in the oil and gas industry. It was 550,000 Canadians. Today, we expect that number is below 500,000 at 450,000 Canadians, and that is being felt across the country.
To address some of your questions briefly, the LNG export facilities are crucial to our industry. While oil transports are traded on a global market, shipping of oil by tankers is commonplace. Canada has not had a meaningful liquefied natural gas facility, nor has the U.S., so we have traded our natural gas in a North American market. With the advent of horizontal drilling and multi-stage fracking, today we have a substantial amount of resource — hundreds of years of potential supply. Current technology — and technology continues to develop — has revolutionized and changed our perspective where we now believe that Canada and North America should be reaching in and providing energy to countries, potentially offsetting the use of coal and providing heat, transportation and higher-quality diets by getting our natural gas to those growing markets.
We saw Canada was a leader in the movement toward LNG facilities. We have about 20 projects which are currently under development at various stages. However, we have been passed by the United States, which may have started looking at LNG potential after we did. Today, I would say they are ahead of us. In fact, I believe the first United States LNG facility is or will shortly be loading its first ship. We haven't got a final investment decision on a Canadian project yet.
That being said, I believe about 20 are currently in the pipeline in different stages of development. That will be very important to us.
Having access off the North American natural gas market is important for the upstream, which I represent. If it is leading through the United States or through Canada, both are of benefit to the natural gas industry in Canada. Some projects are being developed on the West Coast in the United States, which would almost certainly be using Canadian gas if they go forward. That would be the majority of their supply. Those are yet to come on stream, or the ones on the West Coast of Canada or on the East Coast of Canada, which are also going to be important as they move forward.
On the pipelines piece that you asked me to make some comments on, this is something where we continue to grow our productive capacity. New technology continues to make Canada a larger player in the global oil industry. We have added over 1million barrels a day at capacity over the last five or six years. That largely was incremental, system improvements and de-bottlenecking. However, we have several large projects that are in different stages of review, from Kinder Morgan's project, Northern Gateway, Energy East, Trans Mountain, Keystone XL, which I think everyone is aware had a presidential permit denied earlier this year. Those projects are crucially important as well. As Canada continues to develop its upstream potential, getting access to existing and new markets will be very important.
The economic impacts on Canada have been huge: hundreds of millions, if not billions, of dollars of royalties forgone to governments; jobs forgone; and investment opportunity forgone. The differential, that is, the price that we get for our commodities relative to what other jurisdictions get for theirs, continues to put Canada at an investment disadvantage. Moving good projects forward to meet the high environmental standards Canada has is crucial. Canadians can be very proud that we have one of the most robust regulatory systems in the world. I would point the senators and committee members to look at the WorleyParsons report that came out late in 2014, which benchmarked our regulatory system with the best regulatory systems around the world. Canada really was at the top of the list. They looked at many different methods, but Canadians can be very proud of the regulatory system we have of upstream, downstream and pipelines.
The panel also asked that I make some comments on our views on energy prices. That is one area where we as an industry association deliberately do not comment for several different reasons. We leave that to the big banks. Today, the price of oil is in the low $30 range, and that is having a large impact on the investments that we are seeing in Canada.
We are also seeing pullbacks on capital investments around the world. The oil and gas business has pulled back through this low-price environment, but I think it is important for senators to know that Canada has pulled back faster than the rest of the world, that we have seen a larger decline in our capital investments than our neighbours and competitors, the United States to the south of us, or many of the other large oil producing countries around the world. That is something that we need to be conscious of and look at how to reposition ourselves to be more competitive, not just in this period but in the period going forward.
There were some questions about the global demand for oil and gas. The best source that we utilize is the International Energy Agency, which is based out of Paris, France. They put forward on an annual basis a forecast of oil and gas consumption for the next 25 years. Their most recent work shows that they expect the demand for oil and natural gas to increase out to the end of their survey. Each year will incrementally grow. I believe it is just under 1 million barrels a day growth on an annual basis that they're looking at. They put forward the countries they thought had potential to meet that demand: Brazil, Canada and Iraq. But Canada, obviously, needs to meet its challenges of getting access to market and getting pipelines approved if we want to be that supplier.
I believe strongly that Canada should strive to be the supplier of choice, as we look at the other 10 largest global exporting nations that are today meeting the demand: Saudi Arabia, Russia, United Arab Emirates, Canada, Iraq, Nigeria, Kuwait, Angola, Kazakhstan and Venezuela. If I looked at that list of 10 and were assessing which country I had the most faith in of meeting their environmental challenges, of utilizing technology, investing in research to make oil and gas as responsible as possible and having an ever-improving environmental performance, I would pick Canada every time. The opportunity we have is to continue to lead on the global stage.
Another question that the panel put forward was the greenhouse gas reductions that we are all, as a globe, challenged with, coming out of Paris with the agreement of almost 200countries to improve performance. Where does Canada stack up and where does the oil and gas industry fit into that?
I think our industry has been a leader on this front. We have had a carbon price in Alberta and British Columbia, the two provinces in which we are large producers, for a long period of time — well before any of the other regions that are also producing and exporting oil and natural gas.
As an industry we continue to improve our performance by using new technology and investing in research. Since 1990, we have been able to decrease the amount of greenhouse gases per barrel out of the oil sands by about 30percent. We continue to invest substantially in improving that performance through individual companies' work but also collectively through organizations like COSIA, the Canada's Oil Sands Innovation Alliance. COSIA is a model where I believe 13 large oil sands companies have collaborated to share research and development. They resolve that they can compete for labour, resources and land, but when it comes to environmental performance, being able to share technology improves everyone; it improves our industry and our country's performance.
Through COSIA, they have shared 814 patents valued at about $1.3 billion. Today, there are about 150 projects currently under way with a value of about $500 million for that work — again, to continue to increase our environmental performance. That is for land, water, air and greenhouse gases.
With those comments, Mr. Chair, I will end my opening statement. I'll be happy to answer any questions about this or other items that would be of interest to your committee.
The Deputy Chair: Thank you for that comprehensive presentation. We will begin our questions, then.
Senator MacDonald: There are some areas we could divert into, but I am going to speak about natural gas, particularly natural gas supply in Eastern Canada. When the Energy East pipeline hopefully goes through, it will cut off access of western gas to Eastern Canada, making Central Canada completely dependent upon American gas, at the moment, for its gas supply.
There seems to be a lot of myth around American gas supplies. There are a lot of experts now who are analyzing American gas and who say production should peak in 2020, and that of all the producing fields, only the Marcellus field will continue to produce at a good level. They are bringing on all kinds of LNG plants to export natural gas. It would seem that the access of natural gas in Eastern Canada will be completely dependent upon American gas and will be expensive gas in a decade or so.
Yet in Eastern Canada, in the Maritime provinces alone, we have on land about 135 trillion cubic feet of gas. The biggest play in the U.S. is the Marcellus Shale, which is 88 trillion cubic feet.
Efforts to frack in Eastern Canada have failed, even though there is a fracking ban. I think the ban is somewhat moot, because the fracking wasn't getting the gas.
Has the Canadian Association of Petroleum Producers taken any position with regard to the potential of onshore development of gas in Eastern Canada, and are you familiar with the amount of gas that is available in Eastern Canada, onshore?
Mr. McMillan: Yes, absolutely. We have producers in Eastern Canada and are affected by the current legislation.
We think there is substantial potential in Eastern Canada, in Quebec, to develop the resources that are currently in place, both onshore and off. I am not an expert on TransCanada's project, but with the conversion from gas to oil, my understanding is that a portion of their pipe would be converted to oil, but they have multiple pipes that comprise their main line. There still would be some access for Western Canadian gas into the eastern market.
Again, however, that is falling outside of my area of expertise. TransCanada could define exactly what portion of their pipes will be converted under their proposal.
Back to your point, I think we have substantial opportunity in Quebec and in Eastern Canada to develop Canadian resources to fulfill the Canadian demand.
Senator MacDonald: Yes. Getting back to that, you mentioned the meeting in Paris where we agreed to do some greenhouse gas reduction. The Manhattan Institute reported last week that 20percent of the emission reductions in the U.S. occurred because of the substitution of fuel oil and coal for natural gas; that is, natural gas drove the reduction in greenhouse gas. Solar was responsible for only 1percent of the reduction.
My point is that it seems to me that if we are to reach our greenhouse gas reductions, one of the easiest, quickest and most efficient ways to get there would be to use natural gas wherever we can to replace other carbon sources, such as coal and furnace oil.
Again, when it comes to natural gas production in Eastern Canada, and gas in general, are you familiar with the differences in the geology in Eastern Canada? They are all lake shales. All of the geologies produced in the U.S., like the Marcellus Shale, are all ocean shales. It's sort of like comparing peanut brittle to peanut butter when it comes to drilling in these geologies.
My point to you is that I would like to see CAPP be more active in trying to drive new technologies in Eastern Canada to gain access to these gas resources, because I am not convinced that the country will be in a good place in a decade if it is totally reliant on, perhaps, diminishing levels of American gas, which, of course, will get more expensive, particularly if they are exporting what they have as LNG.
Mr. McMillan: My first comment is that the geology side falls somewhat outside of CAPP's mandate, but we have member companies operating in Eastern Canada.
The whole technology development that has allowed us to unlock the shales continues to evolve; we are getting more efficient and more effective with that. Each way is different. But I think that is important to do. I absolutely agree that where we have these opportunities where we can be self-reliant and not relying on our neighbours, we should be. If we have seen anything through Keystone XL and with our largest trading partner, we were not able, over a long period of time and a substantial amount of work, to get that pipeline approved.
I think it is a bit of a wake-up call for us to find our own destiny, be that to find our own markets to connect to ourselves. Natural gas is one example where we have potential to develop natural gas in Eastern Canada to supply Eastern Canada with natural gas.
It is also worth noting that when it comes to oil, Quebec and Eastern Canada import 80percent of the oil that their refineries are using. At the same time, they are paying a world premium, while Western Canada is getting a discount and is unable to reach those markets; so if we could connect Canadians with Canadian products, all of us would be better off. Whether it's developing resources in Eastern Canada or Western Canada, all of that benefits Canada as a whole.
Senator Massicotte: Thank you for being with us today. Obviously, it is a very important topic in our country for all kinds of reasons, including economics. You talked about the International Energy Agency, and I think they came out with a report last week saying that their projection is that other than the oil sands projects currently under construction, if you wish, there will not be any further development of the oil sands, and two years from now the increase of oil supply is going to cap at around 200,000 barrels more than today. Is that your view also? It's obviously a very credible agency. Do you want to put that in perspective?
The minister of energy in Saudi Arabia had a conference in Texas this morning, and he showed no flexibility on price, and he hopes all high-cost producers disappear from the map as soon as possible.
Mr. McMillan: I can't speak directly to the piece in the report that the International Energy Agency put out. The International Energy Agency did look at the growth that they're projecting over the next 25 years and signalled that Canada was likely one of the top three to contribute to supplying that increased growth.
I'm reading into this, but I think there is a recognition that our cost structures make it very challenging today, that the shale revolution which has happened in the United States and Canada, which is what the OPEC nations are pointing at as to why they are making the market decisions they are, will have a long-term effect.
It's a wake-up call for Canada, for the oil sands, to ensure that we are operating as efficiently and effectively as possible, if we want to compete in this new price environment, because this may not be a short-term phenomenon. If technology has fundamentally changed, the price has likely fundamentally changed. It may be in the $30 range, we don't know, but if it does bounce back into the $50, $60, $70 range, how competitive will Canada and the oil sands be? It's times like this that historically we have pulled up our bootstraps, gone to work and found more efficient ways to operate. We've implemented technology, built pipelines to clear access to our market, and competed. We do need to compete.
I think the CEO of one of the oil sands says that hope is not a strategy. It most certainly isn't in this case. A lot of hard work is what will get us back into the competitive zone. We do have world-class resources; we need to be more efficient in getting them to market.
The comments coming out of Houston —I think it's the IHS CERAWeek that the person was speaking at — we can't control the world price of oil. We don't know what's going on behind the scenes in the other producing countries. What we can control is our costs and our competitiveness. I don't think anybody in our industry is sitting on their hands waiting for prices to improve. Everybody I work with is working very hard to make their companies competitive and to protect their workforce and grow their businesses.
Senator Massicotte: There is the issue of the greenhouse gas effect; it's probably one of the most important issues facing the world. In my opinion, we're failing on it to date, and I hope we'll find a solution because our grandkids will be asking us where we were when we screwed up so badly.
One of the best solutions that I think your organization supports is carbon pricing. It is somehow pricing the indirect costs of pollution into our atmosphere and planet. You referred to that and publically support it. If you could find a solution where everybody was taxed the same, would it matter to you? If that cost is fairly applied, I suppose it will be passed on to the consumer, which is what is desired. Is that a good hypothesis?
Mr. McMillan: Your question was if it were applied to everyone, would it all balance out in the most competitive projects and companies moving forward? I think that would be the case.
When we look at the other top 10 exporting nations — Saudi Arabia, Russia, Iraq, Kuwait, Angola, Kazakhstan and Venezuela — it would be too much to ask. Canada has not waited for others to join us. We have been the leaders for a decade, and we have been investing for decades in technology to improve our performance.
My expectation is that we won't see a meaningful carbon tax in the other nine global exporting countries, but that has not stood in our way in the past. We have invested in technology. We've reduced our greenhouse gases per barrel by 30percent. And today there are technologies around using solvents instead of heat to separate the sand from the oil, potentially using space satellites to analyze methane emissions coming off of tailing ponds. COSIA and NRG have an XPRIZE on how to utilize carbon that is extracted into making products that are useful, as opposed to leaking into the atmosphere. Shell just opened up their Quest carbon capture facility.
There are many different projects to improve our performance. We aren't going to wait for some of the large exporting countries to implement and catch up.
Senator Massicotte: When you refer to the world price of oil, and you basically say that when the tough get going, because you are being challenged as an industry, you say it's in these circumstances where you get more efficient and find real solutions. You said you're in favour of the carbon taxing. I think you're referring to $10 or $15 a tonne, which is in discussion.
In theory the price of carbon should go as high as possible to cause a replacement for it, or to cause another player in the world who can consume less, and it becomes neutral. When you look at the innovation that's possible, the carbon pricing to achieve that equilibrium is probably close to $100 a tonne. You said your industry is innovative and you would find solutions. If the government were to impose a $100 tax per tonne, would you still be as innovative to find solutions to decrease the CO2 and everybody will be happy?
Mr. McMillan: It links back to your earlier question. If Venezuela, Angola, Kazakhstan, Kuwait and Iraq were competing under the same rules, it's a different model than we have today. Today we are exporting and competing against those countries for markets. We're doing it with innovation and with technology to enable us, and we're doing it in a carbon-priced world. That isn't the case for the other countries we're competing against.
I would say even our neighbours to the south — California has several oilfields that have higher carbon emissions than our oil sands do, and while they have a carbon tax in California, they've specifically exempted their oil and gas industry. In Alberta we have a carbon price, and it has only been applied on large emitters, being our oil sands and some of the other industries. We have two different paradigms, even with our largest trading partner, the U.S.
What does $50 per tonne of CO2 taxation equate to at the pump for the consumer, price per litre? What does it mean?
Mr. McMillan: Off the top of my head, I couldn't tell you how that would translate to the consumer and whether it was applied on the pump price or on the export barrel. I think that would be something we would want to consider. The export barrel is the one that is competing directly with Venezuela. On the carbon price side for consumers in Canada, that's a slightly different model.
Senator McCoy: Thank you, Mr. McMillan, for being with us and giving us a good grounding on the current conditions that are facing an important industry in Canada.
I will go back to your plea for, really, what is a market access plan. I think, as you say, we've been slow to get off the mark. Others have come together and managed to get their products into the international markets much faster and more efficiently than we have to date.
By way of preface, I think I'll just note that this committee published an energy study. What year was that, 2012? It was last year or the year before, or both, that a Canadian energy strategy was indeed settled amongst the premiers at the Council of the Federation.
I'm wondering whether it wouldn't be useful now for an organization like ours to call people together to develop a more practical, step-by-step analysis of what it would actually take for us to get a market access plan together and whether you would be supportive of an approach of that nature.
Mr. McMillan: I am supportive of anyone who is working to positively move the market access issue. I think the work that your committee has done through those reports has been part of the work to this point, as have the premiers, through the energy strategy last year, referencing the importance again of getting our products to market. Everyone, right down to the Canadians who are part of our Canada's Energy Citizens, who talk about pipeline issues with their neighbours and friends. I think it takes all hands on deck if we want to have this national discussion. This is a nation- building exercise, and none of us should take that lightly. These are big projects that will have benefits for Canadians for decades and, potentially, in the centuries to come. So any support and efforts that you and your committee can contribute would be well received.
Senator McCoy: It seems to me there's much benefit in convening people, as you say, to have the conversations and to ascertain how each of us can benefit from nation-building projects of this nature.
One thing I thought I should mention, for example, is that we were struck by negative comments on Energy East coming out of the city of Montreal a couple of weeks ago. What is not so widely known is that 59percent of Quebecers, everyday Quebecers, actually favour having oil imported from Western Canada. So, if we had a forum where everyday Quebecers could come forward and share that information with us, as well as senators from la belle province telling us those facts, it could indeed further Canada's interests as a whole. You may wish to comment further.
Mr. McMillan: Absolutely. With the responsibilities that you have at the Senate, you have a unique opportunity, I think, to engage with all Canadians. On this issue, I'm glad you referenced the poll that came out last week because I think that was an important question. We are all striving to consume less, to use lower carbon fuels in our day-to-day lives, but we know that the transition is going to be decades or longer before we no longer utilize natural gas to heat our homes or as oil for transportation or to travel by air.
So, if we are going to be utilizing oil and natural gas, where would we most like to source it from, Angola and Nigeria, or Saskatchewan, Alberta and British Columbia? The poll that came out with 59percent wanting Canadian products and only 13percent wanting from offshore, I thought that that was an important question to ask and have answered, so thank you for acknowledging that as well.
The Deputy Chair: I should just mention that we started at about 10 minutes past five o'clock. We'd normally go about an hour. Maybe we could have five minutes, but you can see, Mr. McMillan, that there are long preambles because people have engaged deeply on this issue on this committee. I'm encouraging shorter preambles and getting to the question.
[Translation]
Senator Rivard: Mr. McMillan, allow me to reassure you — I belong to the 59 percent of Quebeckers who are in favour of importing gas from Alberta and Saskatchewan.
That said, I am looking at the document before me, which refers to liquefied natural gas, or LNG, and I realize that there is only one marine terminal in Canada: that means, therefore, that we import but do not produce LNG, if I understand correctly. Please let me know if I am wrong. Is that correct?
[English]
Mr. McMillan: I believe that we have quite a small LNG facility today that isn't a meaningful export facility. If we're talking about large-scale, no, today we don't. In fact, a decade ago we were looking at how we could import liquefied natural gas because the technology hadn't been developed to access our own resources, and today we're looking at how we can get it offshore. We're developing new terminals.
In the case of Nova Scotia, they were one of the places that had an import facility they were contemplating. Today, they've turned that around with the potential for export.
No, you're correct; we don't have a meaningful export facility.
[Translation]
Senator Rivard: There are a great many players in the energy sector: natural gas, traditional crude, shale oil, and electric power. Who are the LNG consumers? Certainly not households and small operations. So who are the large LNG consumers? Which businesses or industries are they?
[English]
Mr. McMillan: For most of the markets for liquefied natural gas, it would be loaded on ships and taken to Korea, Japan. Countries that aren't rich in resources are wanting a diversity of supply. Some are very leveraged with Russia, and they want to have the option to bring it in by ship. It gives them options. China is another country. Largely, it would be utilized in displacing coal-fired power plants. Liquefied natural gas can be used there. It has an economic benefit and an environmental benefit, and we have some opportunities.
That being said, there is an opportunity, potentially, to supply natural gas to communities that today don't have access to natural gas. They may be northern communities or very remote that have to heat their homes with diesel fuel or heating oil. By liquefying natural gas, you shrink the volume to such a point that it becomes more economical to transport it. There are many companies looking at that and communities that would like that option.
[Translation]
Senator Rivard: I would like to put one last quick question.
As president of the Canadian Association of Petroleum Producers, and given the current situation where consumption of petroleum products is low, do you have any idea of the losses oil companies incurred in the year 2015? These companies are quoted on the stock exchange, and we are now in mid-February. So do you have any idea of the overall losses the oil companies incurred in 2015? Are we talking about $200 million, $300 million, or $400 million?
[English]
Mr. McMillan: We don't get into the economics of our member companies specifically. Where we do have expertise is on the capital expenditure, the amount of drilling and development of projects within Canada, and that number we saw decline by almost half compared to 2014. They are larger declines on the conventional side that we do on the oil sands, but as far as the budgets of individual companies, we don't get into that.
Senator Eaton: Thank you. I'm glad you made the point about California crude being as dirty as the oil sands or much dirtier. This brings me to my question.
We seem to have lost the game not because we're not innovative or not good at what we do, but because the industry as a whole has not engaged politically with the communities along pipeline routes. The energy sector as a whole has not fought back. When you have Nancy Pelosi, of all people, representing California, coming up here and looking down at the oil sands, saying, "Naughty, naughty, disgusting,'' and you have Leonardo DiCaprio and all those people suddenly come out of the ether, we seem to now have our backs against the wall. We've let activists paint us into a corner.
If it's not CAPP and individual companies, who should pick up the political ball? Mr. Coderre came out and made his statement, but I heard that TransCanada wouldn't give him a meeting. Why are we so foolish politically and so backward from a public relations point of view, when countries — you talk about Venezuela, Nigeria, Angola — are dreadful? They have a dreadful record on human rights, and well to wheel they're not much cleaner than the oil sands, yet we don't seem to fight back.
Mr. McMillan: I think you made some very valid points there.
The Deputy Chair: I am going to postpone the meeting due to technical difficulties, and hopefully, Mr. McMillan will accept a future invitation — I wish he could hear me, but he can't. We will call him back and make a special point of having Senator Eaton back, because we want to get an answer to her question; that is for sure. We will reconvene this meeting with Mr. McMillan at another time.
I will adjourn the meeting at this time. Sorry for the technical difficulties.
(The committee adjourned.)