Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 5 - Evidence, September 22, 2016 - Afternoon
VANCOUVER, Thursday, September 22, 2016
The Standing Senate Committee on Transport and Communications met this day at 1:20 p.m. to study the development of a strategy to facilitate the transport of crude oil to Eastern Canadian refineries and to ports on the East and West Coasts of Canada.
Senator Michael L. MacDonald (Deputy Chair) in the chair.
[English]
The Deputy Chair: Honourable senators, this afternoon the committee is continuing a study on the development of a strategy to facilitate the transport of crude oil to Eastern Canadian refineries and to ports on the East and West Coasts of Canada.
I would like to introduce our first panel from the International Union of Operating Engineers, Patrick Campbell, the International Representative; and from the Clear Seas Centre for Responsible Marine Shipping, Richard Wiefelspuett, Executive Director.
Gentlemen, please begin your presentations and the senators will then have questions.
Patrick Campbell, International Representative, International Union of Operating Engineers: I would like to extend my thanks and appreciation to the Standing Senate Committee on Transport and Communications for the opportunity given today to speak on such an important subject, and that is the development of a strategy to facilitate the transport of crude oil to Eastern Canadian refineries and to ports on the East and West Coasts of Canada. The effective development of such a strategy will be critical to maintaining and ensuring that as stewards of the world's third largest oil reserve the necessary thought and consideration are given to ensure that we as a nation get this right the first time.
As stated, my name is Patrick Campbell. I am a Canadian International Representative with the International Union of Operating Engineers, referred to as the IUOE. We are a trade union that was established on December 7, 1896, and to date represents approximately 440,000 members in 123 local unions throughout North America.
As an international representative for the Canadian office located in Ottawa under the guidance of Canadian Director Lionel Railton I have the privilege of working with our IUOE Canadian locals day in and day out as they represent the nearly 54,000 men and women that make up the Canadian membership of the IUOE.
Our Canadian membership is as diversified as our brothers and sisters south of the border and is made up of operating engineers who operate and maintain the heavy equipment the Canadian construction industry rely on and the stationary engineers responsible for the maintenance and operation of building systems throughout the cities and industrial complexes of Canada.
Whether it is the roads and bridges that you travel on or the hydroelectric dams, wind farms and pipelines that your communities and families have come to rely on for energy, our highly skilled members have their fingerprints on all of these critical pieces of infrastructure throughout Canada.
We pride ourselves on being a source of highly skilled tradespeople ensuring these projects are built to the highest standards. We accomplish this by constantly providing the most up-to-date training for our membership, ensuring they are all well versed in best construction practices. This training takes place at our eight provincially-based operating engineers training institutes located in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland, Nova Scotia and New Brunswick.
The operating engineers training institutes work collaboratively across all provinces with the common goal of producing highly skilled, productive and safe operating engineers. Common curriculums and sharing of best practices result in our members graduating with a skill set that ensures a national standard for operating engineers is maintained. As a result operating engineers located in Nova Scotia are trained to the same high level as operating engineers located in Alberta. This commitment to consistent training across the country is one of the key factors that our signatory contractors refer to when they speak of the union advantage.
The IUOE represents the men and women who play a key role in constructing and maintaining much of the current pipeline infrastructure in Canada. We want to make sure that our voices are heard by this committee.
To date this committee has heard from many experts from the rail industry, the oil and gas industry and various environmental experts, to name a few. Based on a fulsome review of all of the evidence presented to you regarding the transportation of crude oil we believe a critical piece for an effective strategy is an expansion of our pipeline infrastructure within Canada connecting our abundant resources to global markets. An example of a pipeline infrastructure project that would fit into such a strategy is the proposed TransCanada Energy East Project.
My understanding is that the committee has also been requested under its order of reference to examine how best to share the risks and benefits as broadly as possible throughout the country in developing the strategy that we are here speaking on. I would like to now focus on this aspect.
Let us look at the proposed TransCanada Energy East Pipeline project. This project consists of approximately 1,500 kilometres of new pipeline and the conversion of approximately 3,000 kilometres of converted pipeline, starting in Hardisty, Alberta, and ending in Saint John, New Brunswick. The scope of this project spans six of our nation's ten provinces and will result in thousands of jobs throughout the construction process. This project is truly national in scope. However this project is unique from any other proposed project.
To date the Energy East project is the only one of its kind which has committed in writing to all new pipeline and converted pipeline construction to be completed by well-trained, well-compensated Canadian union labour. This commitment came in the form of a historic memorandum of agreement signed on July 14, 2016, between TransCanada, the International Union of Operating Engineers, the United Association, the Labourers International Union of North America, the Teamsters and the Pipe Line Contractors Association of Canada. The parties also recognize the benefits of and are committed to the inclusion of local residents, local businesses and First Nations adjacent to the project throughout the construction process.
For the reasons I set out earlier in my presentation TransCanada has recognized the union advantage that comes from the use of world-class Canadian contractors and a Canadian workforce possessing a nationally consistent skill set. This approach will allow the project to be constructed to the highest standards from start to finish. This consistency of skilled labour and construction practices combined with the safety measures put in place by TransCanada as well as a thorough review by the National Energy Board will result in a project built to the highest standards.
The working terms and conditions for the project will be governed by the project labour agreement between the Pipe Line Contractors Association and the four unions. Although national in scope the terms of our collective agreement are provincially structured. As an example, when it comes to our provincial manning requirements under these provisions we can say with certainty that 90 per cent of the employees required will come from within the jurisdiction where the work will be performed. Provisions like these will ensure that the economic benefits will be shared as broadly as possible.
This will be a project built by Canadian-based contractors who will engage a skilled Canadian workforce to build the project to the highest safety and environmental standards, a project built by Canadians for Canadians.
On behalf of our membership we hope that this information will be given consideration as you prepare this important report on this critical issue. I would like to thank you for the opportunity to speak today.
Richard Wiefelspuett, Executive Director, Clear Seas Centre for Responsible Marine Shipping: Good afternoon. It is great to be here. Since you have begun this important study you have heard from some of the country's leading experts and I am honoured to be here before you today.
My name is Richard Wiefelspuett and I am the Executive Director of Clear Seas Centre for Responsible Marine Shipping. I find myself at Clear Seas after more than 30 years in the international marine sector. Most recently I have been the associate dean of BCIT marine campus. I am a naval architect and hold a Ph. in mechanical engineering and a Master of Science in shipbuilding and offshore engineering.
For those of you unfamiliar with our organization Clear Seas is relatively young. We started in 2014 and launched officially only in 2015. We were founded largely in response to the first Tanker Safety Expert Panel report and the opportunity it envisioned to balance the need to grow the economy while maintaining marine safety.
With that in mind our organization was formed with a national mandate and a concern for marine shipping in general, including but not limited to the transportation of hydrocarbons.
Today with arm's-length funding from Transport Canada, the Government of Alberta and the Canadian Association of Petroleum Producers we strive to be the leading provider of independent and unbiased research on the subject of safe and sustainable marine shipping practices.
As a nation dependent on marine transportation it is our obligation to improve the knowledge of marine shipping by providing government and the general public with the best research and information they need to make complex decisions in this policy environment. Our vision is of a vibrant marine shipping sector that operates under the highest safety standards and that Canadians feel part of and trust.
Our polling has shown that from coast to coast to coast Canadians are aware of the importance of marine shipping when it comes to our economy but in order to earn their confidence and trust it must be done in a safe and sustainable manner. We also learned that most Canadians have confidence in safety rules and regulations covering marine shipping but many are concerned about the enforcement of those rules and regulations.
While many of your witnesses may have addressed issues of rail versus pipeline for crude oil to reach tidewater, today I would like to share with you a perspective on what happens when that product reaches the coast. The oil becomes waterborne. Safety regimes, risk and impact scenarios change. Ships carry a lot of oil and are linked to a legacy of the largest spills in history. As a few of your witnesses have alluded to, many of the issues related to public confidence around market access can be directly related to marine transportation issues as well.
Like all industries the shipping industry relies on a certain degree of community support or social licence to conduct its business: social licence, public confidence or social acceptance. It has been called many things, but it is prevalent in any discussion about developing our natural resources while protecting our environment and shipping oil by tanker is no exception.
From the perspective of Clear Seas there are two principal means to address this challenge. The first is to continue to support evidence-based decision-making. Building public confidence in the marine sector necessitates it. How can someone possibly be confident in something they do not understand? Canadians do not know who to trust on these issues of great importance.
I modestly believe that Clear Seas as an independent organization can in the domain of marine shipping provide both the public and the government with the resources needed to make informed decisions.
The second area of focus I believe deserves attention is the prevention of marine incidents. Broadly speaking, marine emergency management is designed to address the period before a marine emergency, the period during and the period immediately following.
The National Oil Spill Preparedness and Response Regime addresses the response during an emergency. The Ship-source Oil Pollution Fund is a strong component of the recovery phase following the response. Prevention, the period before an incident, relies on safety layers and safety cultures. Our research indicates that there is a strong link between prevention and social licence. In fact social licence is earned through the demonstration of an effective prevention regime.
It is my opinion that the period before a marine emergency is currently the most under-addressed. At the same time prevention is the most critical component to fostering public confidence in marine shipping and not just because of the familiar proverb that an ounce of prevention is worth a pound of cure.
A refocus of the conversation about marine shipping on prevention provides the unique opportunity to highlight that Canada is not merely about the economy and growth at all costs but also fosters collaboration and protection of the marine environment.
When it comes to tanker traffic on Canada's coasts many excellent and effective safety layers are in place. Examples of these include our safe and efficient marine pilotage system and the large and very powerful escort tugs that can act as an emergency steering device in the event of a tanker rudder failure or as a very powerful handbrake in case of a propulsion failure.
Recent incidents like the Marathassa and the Simushir have also exposed gaps within the safety layers. Recent news reports on the state of the Canadian Coast Guard's staffing and fleet conditions further erode public trust in the existing prevention regime.
While these examples do not directly relate to tanker operations they feature high in the public debate about tanker safety, and herein lies the challenge of our mandate. We believe that by providing fact-based information, by supporting evidence-based decision-making and by promoting a strengthened prevention regime we will play an essential role in moving forward toward a vibrant marine shipping sector, one that operates at the highest level of safety and that Canadians feel part of and trust.
In closing, I would like to thank you again for having me here. I am happy to answer any questions you may have.
Senator Mercer: Gentlemen, thank you very much for being here. Mr. Campbell, as the son of a stationary engineer I understand the value of the 44,000 people you represent. My dad was not a member. He was a public servant but he would have been if he had been outside of the public service.
I want to correct something that you said, Mr. Campbell. You talked about this whole project affecting six of the ten provinces. From this committee's discussions over the past while we would like to expand that to seven of the ten provinces because of the testimony we have heard, particularly Senator MacDonald and I who have sought out testimony that would indicate the end of Energy East should not be Saint John, New Brunswick, but should be the Strait of Canso in Nova Scotia.
Our mission in life is to complete our ongoing education of the world. The reason we say the Strait of Canso is that it is the terminus right now for imports coming into the country. A large terminal is already in existence. The port is there. The difficulty with the Port of Saint John, New Brunswick, and the terminus that they are talking about building is that it will not be a land-based terminal. It will be out in the very ecologically sensitive Bay of Fundy, which is the home of many species at risk, particularly large whales that summer in the Bay of Fundy.
It is our ongoing effort to talk about the end terminus being in Nova Scotia. There is an existing gas pipeline close by that may be available in about 18 months to be reversed as we run out of gas and to save oil.
I do have one question, Mr. Campbell. One major group that will be participants and will be important to the negotiations and approval processes will be our Aboriginal people. How many members of your 44,000 members would you say are from the Aboriginal community?
Would you be able to establish programs to help train Aboriginal people as these projects move forward across the country, particularly programs aimed at young Aboriginal men and women to help construct these projects and to maintain these projects after they are constructed?
Mr. Campbell: With respect to the percentage of membership my origins come from the operating engineers Local 987 in Manitoba where I was the pipeline representative for that province for 12 years. In that time we had the Alberta Clipper Enbridge project come through the province of Manitoba. There was question with respect to Aboriginal content once we had dispatched our member to perform work. For Local 987 out of Manitoba we had 29 per cent of our membership that was self-identified as being members of Aboriginal communities, and that was without additional efforts.
This again goes to the importance of the operating engineers training institutes. At the request of the owner client in that project we engaged many of the Aboriginal communities and provided the training you are talking about, training that from our perspective does not only give a job but gives a career. Training and heavy equipment operation is not unique to pipeline construction so when these projects complete these same skill sets for operating heavy equipment can be applied in various industries such as road-building, sewer and water.
Our training institutes give us that advantage. Currently there are several courses being offered to Aboriginal communities outside of the pipeline industry that want their youth and their members to get the necessary skill set.
Senator Mercer: Would a large number of the other members you referred to that were involved in training in the previous project still be in the business? Do you know?
Mr. Campbell: For instance, just speaking from our experience with Local 987 in Manitoba, for a lot of the members that were given the opportunity to participate in the training membership into the union was optional. Several of the people who participated in the training went on to become members and were dispatched out to other projects as well. It speaks to the legacy of this kind of training.
Senator Mercer: Who exactly does the Clear Seas Centre for Responsible Marine Shipping represent? You talked about being independent and unbiased in giving advice but then you went on to tell us who funds you and you talked about the Government of Canada and if I heard you correctly the Petroleum Producers Association, et cetera.
Mr. Wiefelspuett: Yes.
Senator Mercer: I am not saying this but I anticipate that some opponents to the projects we are talking about would question the independence of the unbiased advice that you give because of the funding. Have you had that criticism?
Mr. Wiefelspuett: Oh, yes, it was the most-asked question after we launched last year. The fact is that our funding agreements do not have any strings attached. We are not told by anybody what we research. We are not told by anybody whom to talk to and how we talk about findings.
The funding provided by Transport, the Province of Alberta and CAPP, the Canadian Association of Petroleum Producers, was given at arm's length and meant to be seed funding. The idea to have an independent centre was highlighted in recommendation No. 45 in the first Tanker Safety Expert Panel report. If you read between the lines it said that we had lost the trust of the general public and needed to have an independent provider of information. That was the idea behind Clear Seas. That is why it was born.
We are in fact funded by the organizations but we are operating independently. I report to my board of directors.
Senator Mercer: That is a very good answer. I am happy to hear it. How was your board of directors chosen?
Mr. Wiefelspuett: We are a not-for-profit organization registered under the Societies Act of B.C. Members of this society are founding members of the support or associations around the support but they are very far away from us. They formed a nominating committee and the nominating committee then went out to look for board members. The board itself is a very diverse group of people. We have nine board members coming from different walks of life: from science, from industry, from oil and gas, from business and from politics. They are well described on our website.
This board is actually defending that independence. We realize that is our biggest asset and without that we would be just another association with an interest but we are not.
Senator Mercer: You described the board of directions but one group I did not hear you mention was someone from the trade union, the people who actually do the hard work at the end of the day.
Mr. Wiefelspuett: Yes, I think there is room for improvement in terms of the diversity of the membership. It is very diverse. We have an industry representative from Lloyd's Register in there so there is shipping knowledge but unions are not represented at this moment.
Senator Mercer: I would recommend that as you go through the process again.
Mr. Wiefelspuett: I will. I will pass that on. Thank you.
Senator Black: Gentlemen, thank you very much for your two tremendous presentations. I have a couple of questions for each of you, with the indulgence of the Chairman.
First of all, Mr. Campbell, I noted when you were indicating where your training centres were that you didn't have one in Quebec. That is my word; I am not sure you called them training centres. Did I hear that right?
Mr. Campbell: That is correct. Just on that question so that we are clear, in the province of Quebec anything dealing with training in the construction industry is governed by the province. All training is dealt with through the provincial agency. That is the reason Local 905 out of Quebec does not offer training.
Senator Black: That is really helpful. By way of background, being a senator from Alberta, I strongly identify and support the position that you have taken today. I enthusiastically support your agreement of July, this summer. This is a very good nation-building initiative.
This is where we are going to need your help. This is an Albertan speaking now. The opposition to energy principally rests in Quebec and Ontario. What do you believe you and your colleagues can do to assist the governments of both of those provinces to understand that this is a nation-building project? What do you intend to do?
Mr. Campbell: Our focus is to continue to participate in processes like this and to have Canadians become aware that along with three partners and our signatory contractors we are the group of Canadians that have the most experience in constructing pipelines in Canada, full stop.
Senator Black: That is why your voice is so important. You have the experience and you can address issues around safety and reliability. I would simply urge you and your colleagues to take an active and I would say quite aggressive advocacy position so that the point of view you are sharing here today is understood more broadly than in this kind of council.
Mr. Campbell: Yes, and as organizations we have recognized that has been a shortcoming. For some 62 years we have quietly gone about building a world-class pipeline infrastructure that all Canadians get to benefit from. Unfortunately or fortunately we are no longer able to quietly go about doing anything in the times we are now in. We now have to promote ourselves.
For instance, in the 2015 calendar year among all four trades we worked over seven million man-hours in pipeline construction. That was the fourth highest year in the last decade. In those seven million man-hours we had three lost time injuries. That is our safety record.
Senator Black: Tell your story. Go to the highest mountain and get the biggest megaphone in Ontario and Quebec and tell that story.
Mr. Campbell: We will do just that.
Senator Black: Thank you very much, sir. With regard to Clear Seas it is very interesting and extremely important work because you have hit the nail on the head. In large part people's anxiety around pipelines is what happens at the end of the pipe. I mean there is concern about that but the stats show that there is not a great worry about pipeline issues on land. The work you are doing is critical.
I have a couple of specific questions for you and then a more general question. In terms of the existing moratorium on the West Coast respecting shipping what is your view of that, please?
Mr. Wiefelspuett: The moratorium does not exist yet. It is coming up. We will learn about it in October. That is our information from Transport Canada. We have taken a position regarding the moratorium. We cannot influence it in any way but we said that if it happens we would like to be a solution to questions, answers and problems that might arise or might need to be answered during the period of that moratorium.
What is it that we need to find out during that moratorium that we do not know today about safe and sustainable marine shipping? There are some good areas for research that we could start and complete within I guess a period of five to ten years. We could then really present a solution for safe and sustainable marine shipping for oil and gas and for any other type of ships. The moratorium on the North Coast provides that opportunity.
We have tanker traffic already in Vancouver. We have the other pipeline discussion concluding sometime this year. Again we will have probably a lot of very controversial discussions and reactions about this pipeline event.
We will provide fact-based, evidence-based information on tanker traffic. As I said before we have accident safety layers in the tanker industry. We have excellent safety cultures in the tanker industry. We are working to substantiate that the risk of shipping in my view is in the areas where we have less supervised cargoes. A potash bulk carrier flagged in Panama would be in my view a ship that was carrying a high-risk profile. We see breakdowns in these ships more frequently.
The idea to present just information about tankers eliminates and refocuses the discussion to something everybody believes is risky anyways. The real risk in shipping is in the areas where we do not have such supervision or such deep safety cultures, and that is what we are working toward improving.
Senator Black: Do I hear you to say that in your scientific and professional view a moratorium preventing tanker traffic on the northwest coast of British Columbia is unnecessary?
Mr. Wiefelspuett: I am not saying that. I am saying it is an opportunity. Let me talk a bit more about how we work. In our work we are very keenly interested in learning from community at all levels about their concerns. We have developed an engagement process which we term an issues-based engagement process.
In that process we are identifying issues so tanker safety might be an issue. Then we identify regionally because very often it is regional issues. Who are the stakeholders actually engaged or concerned by that issue? Then we go out to talk to every one singly or by themselves to understand their concerns, listen to their concerns and understand their perceived risks.
We want to create a workshop where everybody comes together where we facilitate an information exchange, where we share what we have learned. In that workshop the ultimate objective is not to present a solution but to agree on the problem. If we can manage that then we can actually find solutions looking forward that other people will also agree on. If we agree on the problem we can agree on the methodology and we can agree on the solution and we can move forward.
We did not ask for the moratorium in northern B.C., but I would think there are some elements of the proposed shipping routes that are not fully and independently researched and presented. There are gaps in the presentations we have seen from proponents.
Senator Black: Do you understand that the Government of Canada is currently doing a consultation around the moratorium and the validity of the moratorium, et cetera?
Mr. Wiefelspuett: Yes.
Senator Black: Will you be presenting to that?
Mr. Wiefelspuett: We have already had contact with Transport on that. We have given our position and expressed our willingness to participate as an independent provider of information. We are also preparing a submission for that consultation.
Senator Black: Generally speaking we have heard from a number of witnesses that the current state of the ability to clean up in the event of an oil spill and all issues generally related to marine transport respecting Canada are as good as any in the world. Do you agree?
Mr. Wiefelspuett: I think we have a particularly interesting challenge in Canada. We have the longest coastline of any country in the world and we have a lot of ground to cover with rather few assets in place. Our assets are old. It is undeniable. That I agree with. We have fantastic rules and regulations and we have plans and processes, but we fall short on enforcing regulations because of capacity. We fall short on being able to respond to an emergency with the right capacity or with the right assets.
I don't know if you are familiar with the case of Simushir. The Simushir was a vessel that lost power off the coast of Haida Gwaii two years ago and drifted toward the coast. It was not a tanker. It was a general cargo vessel and it carried several hundred or maybe a thousand tonnes of heavy fuel onboard. It came very close to hitting the shore on Haida Gwaii. The ability to intercept or the ability to launch the tug of opportunity concept did not seem to be there.
The Coast Guard made a valiant effort. They sent a ship from Victoria up there. They got to the ship in time. They attached a towline and pulled it out a bit. The towline broke. They attached another towline. That towline broke too and the third line actually saved the day. They got the ship far enough out before a tug of opportunity could actually come and take over. Time was won, but it was really, really narrow.
I learned only recently that the last towline actually was not a towline but was a mooring line. They made a valiant effort. They threw everything they had at the battle, but ultimately I would say there was a response gap that we identified in that situation.
Senator Black: Prudently, in terms of the work this committee is doing, we should be identifying these deficiencies.
Mr. Wiefelspuett: I think so, yes.
Senator Black: Are you able either now or perhaps in a subsequent document to identify from your point of view what you think the deficiencies are in respect of the ability to clean up and patrol and protect our coastal assets?
Mr. Wiefelspuett: Our research is actually dedicated to addressing those right now. I can talk and give opinions but we need to be able to substantiate that. We are working on this right now. We have interesting work that will become available at the end of next year, but in the meantime we can release certain information about that particular issue.
Senator Black: Perhaps the clerk can connect with you to get that.
Mr. Wiefelspuett: Yes.
Senator Black: That would be useful because the point is that the marine industry directly impacts the ability to get pipelines built.
Mr. Wiefelspuett: Yes, absolutely.
Senator Black: If there is an issue there we had better flag and fix it.
Mr. Wiefelspuett: Yes. I would like to point out as I said in my presentation that we have some excellent safety layers and cultures in place. Marine pilotage is one of them where marine pilots come onboard and help the ships come in without hitting the rocks and of course there are the escorting tugs that actually are tethered.
We saw a reasonably advanced move by Kinder Morgan to say that beyond regulations we also need tugs around the southern tip of Vancouver Island. It is a very interesting decision they have made. It is a cost-carrying decision but they are proactive and that is an element of prevention.
My earlier point focusing on prevention is a very important part. It is not just talking about it. It is also doing everything we can to prevent bad things from happening.
Senator Black: That is very helpful. Thank you both very much.
Senator Neufeld: Mr. Campbell, I must have missed it, but tell me how many members you have in Canada.
Mr. Campbell: We have 54,000 members.
Senator Neufeld: Of that 54,000 are 27 per cent indigenous folks?
Mr. Campbell: No. I spoke to my experience with Local 987 in Manitoba and referenced one particular project dealing with who was actually dispatched out to work. That was where that number of 29 per cent came from.
Senator Neufeld: What would it be out of the 54,000 then?
Mr. Campbell: I do not have that number.
Senator Neufeld: Is there some way that you can provide that to the committee? Is there some way you could get that information?
Mr. Campbell: I could certainly look into that and provide it to the clerk.
Senator Neufeld: You can provide it to the clerk and in that way all of us would get that information.
You said another thing about First Nations folks. I am talking about Manitoba again and the 29 per cent. You said some of them decided to join so I assume some of them did not. Would I be correct in assuming that?
Mr. Campbell: It was voluntary, yes.
Senator Neufeld: If it is voluntary how many of the 29 per cent that self-identified actually joined your union in Manitoba?
Mr. Campbell: The 29 per cent that I referenced were not part of any initiative to have Aboriginal members participate in construction. That was 29 per cent of our membership in Manitoba. They were already members of the union working through the union.
Senator Neufeld: I am confused.
Mr. Campbell: That was 29 per cent of our general membership dispatched out to that project. No initiative was made on the part of Enbridge or the local union to augment those numbers. Those are the numbers for that project of our regular members that were dispatched out to work.
Senator Neufeld: And they are all members, that 29 per cent in Manitoba.
Mr. Campbell: Yes, yes.
Senator Neufeld: Then they would get dispatched to other jobs exactly the same as anybody else.
Mr. Campbell: That is exactly right.
Senator Neufeld: You made a statement that 90 per cent of the workforce would come from each jurisdiction if in fact it goes ahead.
Mr. Campbell: Correct.
Senator Neufeld: I have been around pipelines a bit in my life. I spent a good part of my life in the oil and gas industry. My experience has been that when it comes time to get the pipe built, you get on with it. At the end of the day they may come from all kinds of jurisdictions. I am speaking about British Columbia specifically. I mean if we do not have enough welders they come from Alberta. In fact they come from Alberta to start with even if some of our welders aren't working. That is the way you can cross borders.
What kind of a process will you put in place to actually make sure that the public knows and there is some way of identifying that actually 90 per cent of the workforce is coming from let's say Manitoba, Ontario, Quebec or New Brunswick? How do you do that? It is fine to say it. I mean it is great because everybody will love you for it, but at the end of the day there will be some people who say they are not working and there are too many from some other provinces here.
Mr. Campbell: I guess that is the accountability that comes with the collective agreement being in place. Just to clarify, the operating engineers union does not represent the welders.
Senator Neufeld: I am using welders as an example.
Mr. Campbell: Right.
Senator Neufeld: I will use heavy equipment operators because they come from Alberta to British Columbia.
Mr. Campbell: Right. As I stated the collective agreement governing pipeline construction is national in scope but it respects the autonomy of the provinces. For instance, Local 793 in the province of Ontario for that phase of the Energy East project would be governed by their manning requirements which set out that only 10 per cent of their principal operators can come and work from out of province.
It is kind of layered accountability. They have accountability to their membership to ensure that those numbers are maintained. That helps to assure that is the case. If the necessary skill sets can be found within that jurisdiction then those individuals are dispatched out to work.
Senator Neufeld: If you are short 500 equipment operators when you hit Quebec and it is over the 10 per cent and you do not have that many members in Quebec, what do you do?
Mr. Campbell: We have done labour capacity studies with respect to not only Energy East. The great challenge is that depending on the timing of a lot of these projects many of them could be layered one upon another. We have done labour capacity studies and we do not see us having a shortage of heavy equipment operators, let alone a shortage of 500 heavy equipment operators.
Senator Neufeld: I only use that as an example. I do not know about 500. I am just asking you as an example. Don't take that literally. I am just trying to figure out how you actually enforce the 90 per cent. Don't get me wrong. I think it is very good policy. It is just interesting how you would ensure that absolutely happens.
Mr. Campbell: I guess it would not be a policy that would be enforced. To your question, it would not be a provision enforced to the detriment of a particular project or a particular contractor. At the end of the day we are in the business of building these projects to the highest of standards in the necessary timelines. We have the ability to draw from a national workforce, but the focus or the point was that the offer of first employment would go to those individuals that call that province home.
Senator Neufeld: There is some wiggle room. I appreciate that.
You talked about a project and that happened to be Energy East. That is great. I have no qualms about that. Is that because they signed an agreement with the four unions and the other two projects, Kinder Morgan or Northern Gateway, which are just as important to the oil and gas industry, or at least one of them? Why did you pick Energy East? Is it because you had a signed agreement with TransCanada? It hasn't even started the process yet under the National Energy Board.
Mr. Campbell: It touched upon the order of reference that dealt with your study of the broadest possible distribution of the benefits. This project spanned six or seven provinces depending on your opinion. It had these built-in mechanisms for ensuring that the Canadians along those rights-of-way would get the opportunity to work. I just wanted to make sure that memorandum and its implications were understood by the committee.
We are in the business of getting our members out to work to build pipelines. I am sure that our contractors will be looking at the Kinder Morgan work just as they will be looking at this other work as well. There will be an opportunity for our members to get out to work, but I cannot say with the same level of certainty who may get that work because we do not know the results of the bidding process.
With the Energy East project we can say with certainty that when it comes to construction and it being at that shovel-ready process this is not going to be a circumstance where we have a multinational company from Italy or Spain potentially bringing in some of their own workforce to do the work. From the ownership to the supervision right down to the labour, this is going to be a project built by Canadians. I guess that is the point I wanted to drive home. It was not to take anything away from the other projects but just simply to make sure the committee was aware of this level of commitment to Canadians.
Senator Neufeld: I appreciate that. I have another couple of quick questions for the other presenter.
At least I am aware that the Canadian Coast Guard is woefully inadequate. We have done studies. I chair the Standing Senate Committee on Energy, the Environment and Natural Resources and we have heard testimony about that. I appreciate that when we are talking about Vancouver we are not talking so much about the Coast Guard. Is it not private companies that are engaged to provide cleanup and all of those kinds of services as compared to the North Coast, or do I misunderstand?
Mr. Wiefelspuett: No, you have the right understanding. The Coast Guard is not the response organization that actually has the assets, the booms and skimmers to get the oil back, but the Coast Guard will take a role as incident commander in case of those events.
I talked about safety. Safety in the marine environment is created by safety layers and safety culture. Safety layers are rules and regulations. They are the technology of the ships, the Coast Guard, Port State Authority that enforces compliance, navaids, navigational systems, communications and vessel traffic services. Those are all the layers around the ship that have to be fully equipped to function as it approaches or passes our coastline.
I do not know if you have heard about the Swiss cheese model, but if you can align the holes in all the layers, you pierce right through and then have an incident or an accident. There is room for improvement in padding those safety layers. The Coast Guard can play a much more important role than they are able to today. It is not for lack of willingness. It is just for lack of assets, capacity and staffing.
The response corporation is in my comment about marine emergency planning. It would be the second phase of an emergency. This is when it happened, when we failed in the safety layer regime. There we have private companies. On the East Coast and West Coast we have the response corporations. They are funded by the shipping industry. They have contracts with these organizations in place and they are benchmarked against international standards.
I am not saying they are not meeting these standards. I think they are doing even better than that on the West Coast for sure, but in the Greater Vancouver area there is a six-hour response time. That is what they are designed to do. That is their commitment. Six hours of response time is a long time for oil in the water. It does not matter if it is 500 litres or 1,000 litres or 10,000 litres. If a drop of oil hits Kitsilano Beach in Vancouver it is a massive public relations disaster for the city and for the industry. It does not even matter if it comes from a tanker. This is why I am saying we need to go toward prevention.
It is very important to talk about our safety layers we have and make sure everybody understands that we have those in place. We have to be honest about the gaps and change the narrative. Today we hear the widely-accepted statements many times that there is no such a thing as zero risk. It is true. We all agree with that. There is no such thing as zero risk.
Another statement is that there is no such thing as absolute safety. When we start talking about absolute safety we create a completely different mindset. It was very encouraging to hear Kevin Obemeyer, CEO and President of the Pacific Pilotage Authority, saying in a recent presentation that we had 99.99 per cent safe pilotage and that he wanted to live to see it be 100 per cent safe.
I heard the representative of a pipeline company in California talk about a spill. I cannot remember the name, I apologize. It was a land spill that seeped into the beaches and out into the water. After he described the intense cleanup they did, which must have been very expensive and was very thorough, he said we had a 99.999 per cent safety record and we could make it 100.
In the same way that we say zero risk does not exist we also know absolute safety does not exist. By talking about it and by making sure that everybody understands we are doing everything to prevent bad things from happening, we are changing the mindset completely around the issue. I think that is the important part.
Senator Neufeld: I think you are doing great things. For instance, on the North Coast Douglas Channel going into Kitimat or Terrace you can meet with organizations relatively easy because it is a small population. How do you manage in a city the size of Vancouver to get actual factual information out? How do you get that out to the general public?
That is what people are talking about. You do not have the social licence so most people have never heard about your organization or even the Coast Guard. They may say they don't like it because Fred told me that we should not be in favour of it. How do you get the information out to such a large group of people in a factual way?
Mr. Wiefelspuett: I am very proud to say that since our inauguration last June we have had many, many calls from different organizations to ask us to come and speak to them. These were from industry but also grassroots organizations and green environmentalist organizations. They all ultimately said they were happy we were there because they have somebody else to talk to about the issues rather than the Chamber of Shipping and so on. The independent part is really becoming very attractive.
We polled Canada. We asked, "Do you know or have you ever heard of Clear Seas?" We got a 12 per cent who said yes, they had or might have heard of Clear Seas. That is not a lot but for a young organization it was quite impressive. We are in the media. We are making our reports known. We have a website. We continue to engage.
After this meeting I will be heading out to the Port of Vancouver Community Liaison Committee in Delta. I have been engaging with many other groups in this area. We are beginning to spread out also across the country because we have a national mandate. It is really both feet on the ground, as many opportunities as we can have and approach people directly.
Senator Neufeld: Have you had any requests from any of the environmental agencies? Have you presented to Ecojustice?
Mr. Wiefelspuett: No, I have not.
Senator Neufeld: Have any others asked you, Dogwood or anything like that?
Mr. Wiefelspuett: I have presented in front of the, the Future of Howe Sound Society, an organization that combines the interests of the communities in Howe Sound and its different groupings. There are issues about LNG shipping coming there. There is the first export terminal we might be dealing with: Woodfibre. I have talked to them. I have been presenting at the Islands Trust. I have been presenting to the Georgia Strait Alliance that was quite outspoken against shipping. We are making connections.
This might sound a little extreme, but for us somebody who chains himself to an anchor chain of a boat to prevent it from going out is still part of the conversation. Even though that might be an extreme contribution we have to make sure that we engage with everybody and understand those concerns.
We believe we can find in our engagement process some common ground upon which we can build. That might not be easy in all cases and it might be easy in other regional areas but that is what we need to do to move this forward.
Senator Neufeld: I wish you all the best.
Mr. Wiefelspuett: Thank you.
The Deputy Chair: I have a few questions now. Mr. Campbell, I have a statement for you more than a question. It is really great to come to the West Coast to hear somebody make a pitch for Energy East. We enjoy the fact that people appreciate this is a pan-Canadian effort.
I want to clarify and maybe put a little more meat on the bones of what Senator Mercer referred to. There are in fact seven out of ten provinces involved in taking the risk and not just six. Nova Scotia has no problem in taking the risk. In fact we are prepared to take all the risk for the export of the product. We want to get a bit of benefit out of it too and of course the benefit would be more pipeline work. I am sure in the long run you can come to appreciate the value of that.
Most of my questions will be for you, doctor. Anybody can be a politician but not everybody can be a naval architect and have a doctorate in mechanical engineering. It is great to have you here because I want to ask you some questions about your organization.
What is the membership of the organization? Most of the oil handling in this country in ships' bottoms is in fact on the East Coast of Canada. Do you have representation from the East Coast? If you do, what professions do they represent or what parts of the industry?
Mr. Wiefelspuett: One of the board members comes from Halifax. That is Bud Streeter from Lloyd's Register. He has a very strong industry relationship. Lloyd's Register is a classification society directly involved in issues related to shipping safety, structural soundness and so on. That is the only member we have right now from the East Coast. It has been discussed in board meetings as well that we need to diversify that. It is a matter of time.
Board members right now are signed up for a period of three years. Some details may be different from person to person but ultimately that is it. There will be a call going out very soon to make sure that the board remains strong and more diverse. I already took the comment from Senator Mercer about the union representation and definitely it is our plan to be more representative across the country.
We discussed a funding model. It was conceived from the onset that we had to develop a sustainable funding model. We are putting a concept paper together right now. Once we have it in place the idea is for Clear Seas to branch out to having at least one-man offices in other important Maritime provinces in Canada, in Quebec and on the East Coast.
The Deputy Chair: I have a question about oil tankers. In terms of risk and the chance of the loss of oil my understanding is that most oil tankers now would be double-hulled.
Mr. Wiefelspuett: All of them are now double-hulled.
The Deputy Chair: In terms of the risk of losing oil what is the highest risk? Is it from collision? Would it be from the ship rolling over? Would it be from just a spill in loading or unloading, or would it be from the ship taking on water and rupturing? What is the highest risk today?
Mr. Wiefelspuett: It is about probability and impact. In terms of impact the amount of oil that could be spilled would be probably highest in the case of a grounding and then a structural failure. If it is a strong impact the cargo tank could be penetrated, but in terms of volumes that would be limited to that cargo tank. A collision with a fixed object would have a similar risk. Most likely maybe no spills at all because it might hit just the bow section.
The least foreseeable or least predictable outcome is a grounding. If a ship actually grounds on rocky shores, if it is supported in the centre, let's say, and if the low tide takes all the water away, the biggest risk would be that it might break apart. Those are the risks we have seen in the past s in the European Amoco Cadiz or the Torrey Canyon cases when ships actually structurally failed.
The Deputy Chair: I remember Torrey Canyon and we have all heard of the Exxon Valdez.
Mr. Wiefelspuett: Yes.
The Deputy Chair: Are you familiar with the Arrow in Chedabucto Bay, Nova Scotia, in 1970 or the Kurdistan that broke up in the Cabot Strait in 1979?
Mr. Wiefelspuett: No, I am not actually. I have heard of them but I do not know about the extent of the circumstances.
The Deputy Chair: I would love for you to look at those circumstances.
Mr. Wiefelspuett: Yes.
The Deputy Chair: The Kurdistan basically ripped in two. One-half stayed afloat and was towed in and the other half went right down to the bottom of the Cabot Strait between Sydney and Newfoundland. It was in the dead of winter, a very cold and very still February night. It is on the bottom with nothing coming out of it. There has been almost no damage to the environment. That is why I asked you those questions about structural damage and what are the greatest risks.
Mr. Wiefelspuett: Yes.
The Deputy Chair: I have one more question in regard to that. You mentioned about the assets being sparse and old in the country to deal with spills.
Mr. Wiefelspuett: The Coast Guard, yes.
The Deputy Chair: Yes. Would you agree with the statement that the more we can concentrate the movement of large quantities of oil to one or two fixed ports, the easier it will be to concentrate our assets on dealing with spills and that it is probably the best way to manage risk?
Mr. Wiefelspuett: There is something to that. If you concentrate your export/import terminals you have the ability to control them better through all kinds of measures such as fixed and floating assets and electronic vessel traffic management systems.
Another threat in the international maritime world is from ships that do not call on our ports but go past our coastlines. We need to be prepared to defend that as well in other areas. Some of our work I mentioned already will address that.
Once they come into coastal waters we are pretty confident that ships, pilots and escort tugs are doing a great job. It is very unlikely anything will go wrong. I am not saying it cannot but it is very unlikely. If it goes wrong it will be of lesser impact. It is those areas when ships go 25 nautical miles outside the pilotage and lose power and control. Those are pretty critical situations.
I mentioned before shifting away from tankers and going to bulk carriers. The industries are in a very bad downturn right now. The charter rates are low. Money is not being earned. Container ship companies are going bankrupt. You might have heard about Hanjin.
The Deputy Chair: Yes.
Mr. Wiefelspuett: In those less supervised organizations the maintenance cycles are stretched out. You do not drop your ship. You do not fix it when you need to. The chance of accidents happening or loss-of-control events happening more frequently in the near future is increasing.
That is not just my opinion. That is being stated by the European Maritime Safety Agency and by the Alliance Insurance Company. They are seeing that risk becoming actually quite strong. We do not have much control in terms of legislation or in terms of regulations over those ships. As in the case of the Simushir that I mentioned earlier we might have a problem one day. How we respond to it is where the work needs to be done. We need to strengthen our ability to enforce regulations to prevent things from happening.
Senator Mercer: To follow up on the job I have done on this trip all along, Mr. Campbell, you have 54,000 members. You are in favour of the pipelines, particularly Energy East et cetera, because it involves work for your members. For those of us who are supportive of that you can be a big help if you would engage your 54,000 members and educate them. This needs to happen quickly. They need to contact their members of Parliament, whoever they may be, to indicate their support and that there are jobs available for members of their union. Obviously the people contacting them could be potential recipients of those jobs. That is very important.
If you have to fine-tune that because of time then eliminate the people in the opposition and only talk to Liberals, because I am the only Liberal on the committee here today, not because of my partisanship. That is where the decisions will ultimately be made and that is where the pressure needs to be brought to bear.
I would not normally have to do this publicly, except that a couple of years ago Mr. Trudeau removed me and my colleagues from caucus. This would have been something I would be raving on about in Wednesday morning caucuses, but since I do not get to go there I need to solicit your support.
Those people who want Energy East in particular and the other pipelines and projects need your help. Your members need your help. One of the ways they can help themselves and help all of us is by contacting their members of Parliament to tell them that this should be going ahead. It means jobs in every province involved. In all seven provinces there are jobs to be had and the jobs are not short term. There are some short-term jobs obviously in construction but in the long term it is good for the economy. If you could do that, my work here is done.
Mr. Campbell: With respect to our organization we have seen the challenges for this industry. Probably the greatest frustration on the part of many of our members is that they know how well these projects are built because they are the ones building them. In many cases they are the ones living along the rights-of-way where these projects are built. Not only do they build them to the highest standards simply out of a point of pride in doing a proper job, they build them to the highest standard because the safety that goes into these projects affects their families and friends in these communities.
We have taken on an initiative to put forward a campaign to ensure these voices are heard not only by members of Parliament but by Canadians everywhere so that they are aware of the level of expertise that goes into this construction.
Senator Mercer: That is perfect but a phone call, a letter or a visit to their members of Parliament in the next short while would go a long way to help.
Mr. Campbell: We feel that campaign should be fully operational by the end of October.
Senator Mercer: The end of October is pushing it but we will take it.
The Deputy Chair: Our time is up but I want to ask one more question of Dr. Wiefelspuett regarding the ability to navigate. I don't know if this is true or not. Maybe you could give us some advice on this.
I have been left with the impression that if there was a spill off the shore of Nova Scotia, on the ocean side of Nova Scotia, the prevailing winds and the prevailing tides make it likely that any spill would go out in the ocean or is more likely to. On the other hand I am told that depending on where the spill is the chances of the prevailing winds and the prevailing tides bringing it on to the shore of British Columbia are greater. Is there a particular vulnerability on the northern B.C. coastline for navigation that does not exist on the East Coast of Canada?
Mr. Wiefelspuett: There was a risk assessment study done by the Council of Canadian Academies from which we learned that the factors that contribute to marine occurrences are quite different on each coastline in Canada. It was a consensus study among experts. The B.C. risk is seen to be related more to traffic density related while on the East Coast it is more weather related. In the Arctic it is lack of charts and navigational aids. It is very diverse.
When it comes to the ability to effectively clean up oil spills you need to be there quickly and you have to have the right assets. Once the oil hits the shore it becomes very difficult to imagine how you could clean up a very rocky northern B.C. coastline. It is almost like the Arctic. You have very little infrastructure in place. You have a very sensitive environment and you cannot get to the place. That might make it very complicated.
The Deputy Chair: Is the biggest challenge is responding to it?
Mr. Wiefelspuett: Responding to it and actually in terms of recovery to clean it up and rehabilitate the environment. That is going to be very complicated. The Exxon Valdez showed how complicated that is. The Alaskan geomorphology is not very different from northern B.C. and where it happened was just a few kilometres farther north. That is why I am saying let's prevent it. It is possible to do more on preventing it, but by talking about it as if we could achieve 100 per cent safety we are achieving a very different communication with the general public.
The Deputy Chair: Yes. There is no solution for bad navigation sometimes.
Mr. Wiefelspuett: No, that is right. That is a safety culture. I talked about safety layers. Safety culture is onboard the ship. That is the driver in the car. In a car that is perfectly designed and perfectly regulated the driver then becomes important.
The Deputy Chair: Yes.
Mr. Wiefelspuett: There is a large diversity in the community of shipping organizations. We see leaders in the field who develop their staff, own their staff and allow them to stop work if they are insecure. Those are the people we see in organizations like Green Marine. We see a lot of that in the oil and gas industry actually. The deep safety culture that exists there unfortunately does not always exist in the other shipping sectors. That is again where the risk comes in.
The Deputy Chair: Thank you both very much. These have been great presentations.
I wish to welcome our final witness in Vancouver from the District of Kitimat, His Worship Phil Germuth, the Mayor of Kitimat.
Your Worship, please begin your presentation and afterward the senators will have questions.
Phil Germuth, Mayor, District of Kitimat: Thank you for the opportunity to be here and speak to you today. It is an honour to be here.
Kitimat is a town that was built by industry. We support industry. We support development but we are also very protective of our environment. We believe that Kitimat has the opportunity to be the value-added industrial centre for Canada's natural resources.
Right now there are two proposed oil refineries, one proposed oil pipeline, two proposed LNG facilities, and many other potential value-added opportunities. Value-added clearly is the best option for our natural resources. At this current time we actually have other countries that are getting more economic benefits and jobs from our natural resources than we are, especially our oil.
Value-added captures a greater percentage of our inherent economic value within our resources and it is much better for the environment. Transporting a refined product has a much less potential impact on the environment than exporting our raw resources. It also ensures that a greater percentage of our natural resources are utilized and that less product is wasted.
Of course value adding and refining our natural resources under Canadian regulations are generally more environmentally viable than sending our raw products to Asia for refinement.
There are two safe options for the overland transport of oil: safe pipeline transport and safe rail transport. In 2010 at Kalamazoo, Michigan, 3.3 million litres leaked out of a pipeline. In 2016 at Maidstone and North Battleford, Saskatchewan, between 200,000 to 250,000 litres leaked out. Two communities had to lose part of their water supply. In 2016 at Swift Current, Saskatchewan, over 100,000 litres of product leaked out of a pipeline.
The common denominator between all of these disasters is that every one of them was easily preventable. Our current leak detection standards are not up to par. The problem is not the technology. The problem is our current standards and regulations. I think every one of us has seen the amount of opposition to all oil pipeline projects, be it Keystone XL, be it Energy East, be it Northern Gateway, or be it TransMountain.
The problem we have now is our current standards. Right now we use SCADA, supervisory control and data acquisition, and MBS, a material balance over a mass balance system. In the most basic terms these systems are pressure gauges and flow gauges along with a computer algorithm that actually tries to figure out the difference between the amount that went into the pipeline and what came out the other end. However the theoretical leak detectability of these systems is between 1.5 to 3 per cent of the flow. One might think that 1.5 to 3 per cent is not so bad, but if I use the Northern Gateway project as an example 1.5 to 3 per cent of the actual flow in the pipeline equates to having between 50,000 and 100,000 litres of product leak out of that pipeline every single hour after hour without ever setting off an alarm.
The technology is there. There is a solution. It is actually called external hydrocarbon sensing cable. It is 100 per cent accurate. It has 100 per cent detection and there is no such thing as false alarms. If an alarm goes off where it is triggered you absolutely can guarantee that what was in the pipeline is now outside of the pipeline. You have a problem and you have a chance to fix it before it becomes the next headline in the papers.
Instead of having between 50,000 and 100,000 litres leaking out every hour the external hydrocarbon sensing cable can find what is in these pitchers of water. It detects it ultimately accurately.
Current rail methods are not safe. It is transporting in a volatile state. We all know what happened in Lac-Mégantic several years ago but there is a solution to rail. The two refinery projects in our area currently want to use rail as their way of transport clearly because there is absolutely no social licence for pipelines, because of what happened with other pipeline leak disasters, and because we do not have the proper standards.
What they are proposing to do with rail now in a different way is to transport it in a solid state. It is about the consistency of peanut butter. What they do is take it out of the ground. They use steam to extract it and it is hot. It then sits for about two weeks while it cools and gets into a state almost like peanut butter. They are then proposing to put that on rail and send it out.
Another advantage is that you do not need any diluent with it. The only possible problem is that you use more energy that way because now that it has cooled for two weeks you have to get it out to a refinery and heat it up again to start the refining process. Without a pipeline that is really the only other way to do it safely.
Everybody knows about the Exxon Valdez spill of 41 million litres. Tidewater transport of unrefined diluted bitumen is extremely risky. Honestly I do not believe we will ever have social licence, any support be it from First Nations or non-First Nations, to be shipping undiluted bitumen off the West Coast of Canada, the West Coast of B.C.
We should be refining our products before they go out. We are very supportive of tankers that are shipping out refined product such as gasoline, aviation gas, diesel or whatever it may be.
Risks have created public opposition. We must push for that refining. The appropriate prevention, preparedness and response strategies must also then be mandated for shipping a refined product from the North Coast of B.C. There has to be mandatory pilotage. There have to be clearly expressed boundaries of who will pay for prevention and response resources. There also need to be clear definitions of levels of interdepartmental emergency responsibilities. There need to be clearly defined lines of communications between these response agencies.
A North Coast B.C. moratorium should include only an unrefined product and it should not include any refined products. It should be defined according to groups 1 to 5 product classifications and it should not be based on persistent or non-persistent product classifications.
Senator Neufeld: Thank you for your good presentation. If in fact it is refined in Kitimat is rail the only way you can get it there? Do you think there is a possibility that you would be able to get it in pipe at all or is a pipeline totally out of the picture and it just has to be rail to refineries?
Mr. Germuth: In my opinion a pipeline is still the safest way to transport it when you put the proper leak detection on. For the past four or five years while looking at the Northern Gateway project when I was on council I started hearing about theoretical leak detectability and what could really leak out. With current standards I thought there is no way this could happen. I am an automotive technician by trade so I am used to sensors and technology. I did a little research and found that there was something out there. No, I do not believe rail is the only option.
Just over a year ago we had a meeting with one of the refinery proponents that still wanted to go by pipeline. I mentioned that there are pipeline accidents and there was another way to go. His response was, "Only the old pipelines leak. It is not the new ones that leak. That never happens." It was that exact night that I went home, turned on the news, and there was the Nexen pipeline in Fort McMurray, a pipeline less than one year old that leaked. It was typical that our normal leak detection never found it. It happened to be a worker walking by who all of a sudden noticed and said, "Holy smokes, look at all this. There's a problem."
All of a sudden the next proposal was that we are going to be doing it by rail." Rail is an option but if the public were educated enough on what technology is out there and if that were mandated I still believe you could get it done by pipeline.
There was a roundtable discussion between northern mayors, CAOs and regional district chairs in Prince George a couple of weeks ago. I was there and presented basically on pipeline leak detection. I explained that refineries were going by rail because there was absolutely no public confidence in the way pipelines were currently being done. Comments were coming back from other mayors that no matter what form it was in they did not like it going by rail. They would prefer a pipeline with proper leak detection.
Senator Neufeld: Can you just expand on the leak detection issue? If you did a presentation on leak protection could we get a copy of that by any chance?
Mr. Germuth: Yes, I will make sure that we get a copy to you.
Senator Neufeld: You can send it to the clerk, but for our benefit or maybe for my benefit could you talk a bit more about this leak protection that you say is out there and where it is being used.
Mr. Germuth: It is nothing brand new. It has been around for year. In fact almost all pipeline companies in Canada currently use it. They just do not use it along the complete stretch of a pipeline. They use it at manifold stations. They use it underneath tanks, et cetera. The approximate cost of it for one of the companies is around $70,000 to $90,000 per kilometre. If you use the scope of the Enbridge Northern Gateway project and if you take 10 cents from a barrel of oil and put that toward leak detection, the whole system would be paid for in less than six years.
It is used in Canada. In Ontario there was a housing development that could not receive zoning unless this type of leak detection was put on. It was a fuel pipeline that was underneath a residential development. The only way they would allow that development to go ahead was if this type of leak detection was on there.
The technology is used extensively for fuel lines, for pipelines that are running underneath rice fields in Japan. Approximately two months ago there was a major pipeline conference in Berlin, Germany. This is the technology they were looking at. It has even been further refined to basically achieve zero tolerance on leaks on pipelines. They need to find the small leaks.
Senator Mercer: Thank you, Your Worship, for an interesting presentation. You mentioned the shipping of refined products. Something that always puzzled me since we started this study was why we were not shipping more refined products. I got an answer a couple of days ago on.
The problem is that the regulations are different in every country. We ship to country X to meet their regulations. The ship starts at country Y and the product is not meeting the standards or the regulations there, so re-refining has to happen at the recipient country. It makes more sense to me that we refine the products ourselves and create jobs here instead of exporting not just product but exporting jobs. That is the background.
With regard to the issue of leak detection technology it seems to me that your suggestion is a good one. Are you suggesting that there needs to be a leak detector every kilometre or are there other natural breaks every 5, 10 or 20 kilometres? That would that make sense. At the site of a detector is there also a shutoff valve?
Mr. Germuth: I have talked with the pipeline companies about the way I would like to see it. Of course they have never said they would actually do it but they proposed maybe what they would do.
They look at areas of what they call high consequence. An area of high consequence is where a leak could get into your watershed. It could be an environmentally sensitive area or something like that. They said we could put it there. We could have it in as short or as long a space as you want. It is a radio receiver actually that sends out a signal as soon as there is a leak and away it goes.
For me being a mayor in B.C. I believe all of our environment should be an area of high consequence. If you support putting it in an area of what they call high consequence then you are basically saying you do not want a leak here because it might impact your watershed but you are okay if a leak happens over there. You are willing to sacrifice that area.
Personally I am not willing to do that. There is enough money in oil still and there is enough leak detection technology that we should be demanding the best protection for all of our environment. We cannot get any of it back once it is gone. I believe all of B.C. should be an area of high consequence. Did I answer the question?
Senator Mercer: You did and it should make your re-election brochure.
Senator Black: Sir, you are going to have to help me. I am fishing a bit here. I toured the facilities of a new start-up company in Calgary that is manufacturing a product that detects leaks on pipelines by I am going to say radio waves but I am sure I am dating myself. Are you aware of this?
Mr. Germuth: Is the company called Leek?
Senator Black: No.
Mr. Germuth: I am not exactly aware of that one. Is it external or internal? Do you know?
Senator Black: It is internal.
Mr. Germuth: With internal the problem they have is that they can get false alarms with a system like that. It is what is called column separation. That is why I support the external because there is no such thing as a false alarm. Once it goes off you know something from inside is outside.
The problem with the radio wave one is that it is acoustic and they get column separation. The product in the pipeline is going so fast that you actually get an air gap in it and that can give off false alarms.
Senator Black: They did note that there is some technology to pick up false alarms. I do not want to dwell on that. I just wanted to see whether you were aware of it.
Mr. Germuth: Yes, I am aware of it.
Senator Black: There is thought, money and energy going into this but it is expensive.
Mr. Germuth: It is, but look at what a leak costs after it is out there.
Senator Black: I hear you.
Mr. Germuth: We need to get that social licence to be able to have something. That is the only way you are actually going to get some First Nations to start looking at this and some non-First Nations people to start having some confidence in it.
Senator Black: Tell me if you would about Kitimat. Give me a summary again, please, as to the projects that are currently pending in your community.
Mr. Germuth: We just finished the $5 billion Rio Tinto modernization of the aluminum smelter. That has been there since the early 1950s, pretty much going 24 hours a day, seven days a week.
A current proposed project is the massive LNG Canada project. Its partners are Mitsubishi, KOGAS, PetroChina and Shell. There is also the very big Kitimat LNG project within a partnership between Chevron and Woodside. Then there are two refineries right now. There is David Black's Kitimat Clean refinery just north of the Kitimat Service Centre and there is the Pacific Futures Energy refinery about 25 kilometres outside Kitimat up by Onion Lake. David Black's Kitimat Clean refinery was originally proposed to be where the Pacific Futures Energy one is but he has moved his closer to Kitimat.
Senator Black: And of course there is the proposed Gateway pipeline terminus.
Mr. Germuth: Of course, yes.
Senator Black: None of those are happening as we speak.
Mr. Germuth: Yes.
Senator Black: What is your educated judgment as to which ones are going to happen and in what period of time?
Mr. Germuth: I would say that within two years you would have the LNG Canada project proceeding. Right now there is more of a supply than demand on the market, but globally as Asia, India and other countries are starting to modernize we believe that by around 2022-2023 demand will start outstripping supply. If they start building around 2018 it takes about five years to build so by 2022-2023, they are ready to be online. The Kitimat LNG project is also one we are very much in favour of. They are probably a bit behind LNG Canada.
Senator Black: We heard about that one today, yes.
Mr. Germuth: As for the refineries they are both in an early stage. Part of the problem in my opinion is that I do not think there is enough co-operation between B.C. and Alberta to try and force, to try and propose, or to try and move forward the value-adding and make it our strategy.
I do not even know if we have a national energy strategy that really makes sense. Why are we not refining these products before they go out? You will hear from oil companies that they cannot do that because they do not make any money doing that, which is false. They still make money; they just do not make as much money doing that.
A lot of times I hear our premier criticizing Alberta by saying, "Oh, look at how good we are doing here; they are doing so badly," when really we should be working together. In Kitimat I ran on basically building relationships with all the mayors, with industry and with government. I do not know why our provincial government does not want to do it. If we are ever going to see a refinery project come through, of course the oil is coming from Alberta to here and we need to work together. I am not seeing that happen.
We need to work with the federal government too. Since I got elected Chief Ellis Ross of the Haisla Nation and I wrote a letter to the Right Honourable Prime Minister Trudeau trying to get that meeting, trying to talk to them. We have also written letters to the Alberta government. We are trying to get a foot in the door to say this is the way to go, we support this, we want to work with you, but we just have not been successful doing that yet.
Senator Black: Sir, just to confirm the obvious, even if half of these projects went ahead we are talking about $50 billion, $60 billion or $70 billion worth of investment in your community and that would all be private money.
Mr. Germuth: Yes. The LNG Canada project is anywhere from $25 billion to $40 billion. The Kitimat LNG project is in the range of $20 billion. The Kitimat Clean refinery is in the range of $20 billion to $30 billion. It is massive. It is well over $100 billion dollars of potential investment for our region.
We are doing everything we can. Yes, we are realistic. We understand that the chance of all of them going ahead is almost zero, but if we can help push through one or two it would be great.
Senator Black: You bet.
Mr. Germuth: The oil is critical. LNG will do its own. It seems to be going fairly well. We really need to find a way to promote the refining of our resources all through the country. Of course it is in our best interests. I am sure you all know that too.
The Deputy Chair: Your Worship, I have a few questions for you. You mentioned something I have heard a number of times, and I know I say it, regarding the lack of a national energy strategy in the country. Everything seems to be fragmented and everybody works in a silo of their own particular area of interest. I think we share that sentiment.
Another thing we hear a lot about is the need for a fixed energy corridor particularly for the West Coast. Why is Kitimat a better choice than Prince Rupert?
Mr. Germuth: I am from Kitimat and I fully support the projects in Prince Rupert too. I would love to see the communities of Mayor Lee Brain and Mayor Dave MacDonald from Port Edward do well too.
In Kitimat we have a bit of an advantage. It is much easier to build in Kitimat, especially if you look at where the LNG Canada site is. It is where we used to have Methanex, a methanol facility. It is a massive flat area. It is already there. They already have a terminal.
Another great advantage that we have over Prince Rupert is that we only have one First Nation, and that is the Haisla First Nation. They are as pro-development as we are when the environment is suitably protected.
The Deputy Chair: Taken care of.
Mr. Germuth: Yes. They are pro-business. They are really showing the way. There are other First Nations that are pro-business too. The Haisla are a great example of First Nations not just saying give us this or give us that but let's support business and have them give us jobs and opportunities for the future instead of just giving us cheques.
The Deputy Chair: Would you say that theoretically we could have a fixed corridor that incorporated both Prince Rupert and Kitimat?
Mr. Germuth: We have talked to some of the pipeline companies before. I am talking more about natural gas right now for Kitimat LNG and LNG Canada. The problem is that they are not coming to the exact same place. They are not all coming from Fort St. John or, if it is oil, from Fort McMurray. They do take different paths but they do converge hundreds of kilometres away from Kitimat to where they are kind of following the same line.
The Deputy Chair: Yes.
Mr. Germuth: Yes, we think that would be a great idea. If there is a way to do that we would very much support that.
It is tough for them because they are competing projects, but Pacific Trails Pipeline and Coastal GasLink have a relationship too. If there was a way to get it through they would. The one problem both of them actually have at this time is that there is a blockade in Moricetown which is near Smithers. It is not a First Nations band that is against it but one house out of a band. The way the hierarchy works is that there is a band made up of a whole bunch of different houses. One of these houses has separated away and that is where the blockade is. They will not let people in to survey the land.
Coast GasLink, the pipeline for the LNG Canada project, has actually already proposed another route to go around that area that would cost them tens of millions of dollars to do it.
I am baffled as to why there is so much negativity to a natural gas pipeline. If it happens to spring a leak you are not going to destroy the environment. It is going to dissipate into the air. If it is under a river it is not going to freeze.
The Deputy Chair: It is not rational.
Mr. Germuth: Yes. It does not make sense to me. I don't know if it is education. I know groups have tried to go and talk to those people but sometimes they say, "No, we don't even want to talk to you." How you get around that I don't know. It is only one. Other than that all 16 nations have signed on to support of the natural gas pipelines.
The Deputy Chair: I could never understand the idea of exporting unrefined bitumen through Kitimat. I take it from our discussions today that we agree on that as well. When it comes to refined product the people of Kitimat and yourself are more than comfortable with that.
Mr. Germuth: Absolutely. I am sure many of you saw in the headlines a few years ago that we had a plebiscite on the Enbridge Northern Gateway project that was 58 per cent against and 42 per cent for. We stick by that. No, we do not support that.
Obviously the very first thing is environmental reasons. We care about the environment. The second one, and just as important, is that it only makes sense that we should be keeping those jobs in Canada. By the way, both the Kitimat Clean and the Pacific Future Energy refineries would be using a technology that would have them pretty much the cleanest refineries anywhere on earth emissions-wise, et cetera. They are using brand new technology that would have emissions way down from other refineries that you would see over in Asia, et cetera.
The Deputy Chair: I have one more question. If there was not a fixed or established corridor one of the advantages that could be provided to Alberta and British Columbia would be the provision of hydropower from British Columbia to the oil patch to help them reduce their greenhouse gas emissions. Would Kitimat be a suitable place to drive hydropower through? Maybe Senator Neufeld could answer that better than you can.
Mr. Germuth: Is it suitable to drive hydropower through? We are right on the coast so of course there is the Alcan. (1) The reason they located in Kitimat is because we are on the water. (2) They were given the rights to basically dam up a water resource, a water area. They have their own hydroelectric facility that puts out well over 800 megawatts.
When you are transporting power on hydro lines you have a line loss. To get it from Kitimat all the way out to the oil sands would be tough. Or, are you talking about doing it locally?
The Deputy Chair: No, I am talking about bringing hydro in from British Columbia to Alberta.
Mr. Germuth: That is more where they are looking at site C. Is that in the Fort St. John area?
The Deputy Chair: Yes.
Mr. Germuth: We have no problem with that at all. Alberta is still using over 60 per cent coal to produce power, whereas in B.C. we are very fortunate with our water resources that we are over 90 per cent hydro. If we can take some of ours to help them out and then get off of burning coal we would support that 100 per cent.
The Deputy Chair: Whether it is going east or west from Edmonton or from Kitimat or from Prince Rupert, it is pretty hard not to go through Fort St. John. It is going to come close to it. It is pretty well in the path.
Senator Mercer: I appreciate the frankness. It was a very informative presentation.
The Deputy Chair: Your Worship, it was great to have you here today. We are very pleased that you took the time to come visit us. We look forward to putting our report together and getting a copy of it to you.
Mr. Germuth: Excellent. Thank you very much for having me today. It was an honour to be here and present in front of you.
(The committee adjourned.)