Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 49 - Evidence - April 3, 2019
OTTAWA, Wednesday, April 3, 2019
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-48, An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast, met this day at 6:49 p.m. to give consideration to the bill.
Senator David Tkachuk (Chair) in the chair.
[English]
The Chair: Honourable senators, I call this meeting of the Standing Senate Committee on Transport and Communications to order. Today, we are continuing our study of Bill C-48, An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast, also known as the oil tanker moratorium act.
We’ve got two great witnesses, but before we get to them, there are a few items I’d like to deal with. First, the steering committee would like to make a recommendation that the committee travel to Alberta and Saskatchewan. I’m kind of hoping that we have a unanimous vote on this. We don’t need a vote if everybody is in agreement; we’ll call it unanimous. If you’re not in agreement, then we’ll have a vote. That’s the way it’s going to work.
If nobody’s in disagreement with this, then it’s unanimous that we travel to Alberta and to Saskatchewan.
Senator Black, did you want to say something?
Senator D. Black: When you’re ready. I won’t speak against it. I simply wanted to say to the committee thank you very much. On behalf of Albertans, we appreciate this. I think it’s the right thing to do, and thank you to the committee.
Senator Busson: I spoke to Senator Simons, whom I’m replacing, and she asked that I thank the committee.
The Chair: Good. There’s one little item that I’d like to have dealt with.
Senator Plett: Could I please make one quick statement. Since I was the mover of that motion originally, I also want to thank the committee.
The Chair: Okay. All right.
Before it gets out of hand, right now April 30 was passed by the committee to deal with this clause by clause. If we’re going to be travelling, it’s going to be almost impossible for us to travel within that time period, deal with the bill and report it. I’d like your agreement that we set the new date on May 9 because that’s a date set on the motion moved by Senator Harder. We could deal with that. If we run into another problem, we can deal with it again. Right now, if everybody’s in agreement, that will be the new date. That will give us time to travel and to report the bill. Everybody in agreement with that?
Hon. Senators: Agreed.
The Chair: Excellent. We will do that.
For our meeting this evening, we are pleased to welcome, from ARC Energy Research Institute, Mr. Peter Tertzakian, Executive Director, by video conference; and from Wim M. Veldman Consulting Inc., Mr. Wim Veldman, President. Thank you for attending our meeting.
We’ll start with Mr. Tertzakian followed by Mr. Veldman. Please proceed, Mr. Tertzakian.
Peter Tertzakian, Executive Director, ARC Energy Research Institute: Thank you for having me. I’m honoured to be offering my thoughts on Bill C-48, an act regulating vessels transporting greater than 12,500 metric tonnes of crude oil, or persistent oil as it’s referred to in the document, to or from coastal facilities located along British Columbia’s north coast.
The bill has reached third reading, and I have reviewed all the readings. As I read them, however, the reasons for enacting this legislation were not included. So I relied on what I know about the information in the public discourse. That information suggests that the reasons for Bill C-48 are dominantly driven by environmental and social reasons. The latter, the social reasons, are mostly related to localized Indigenous issues. The concerns of the former, the environment, relate to the threat of potential oil spillage in sensitive coastal areas. Also implicit in environmental concerns is the expansion of export capacity for Canadian oils that, upon combustion in foreign jurisdictions, contribute to greenhouse gases that induce climate change.
Personally, I acknowledge these reasons and believe that the elevated standards for environmental and social scrutiny are not likely to go away, nor do I believe should they be compromised. However, in my opinion, the acknowledgment and attention to these social and environmental issues do not justify a total and indefinite ban, or moratorium, on transport of oil from the geographic locations described in the proposed bill. Again, to repeat: I do not believe they justify a total and indefinite moratorium, as is described in the third reading of the bill.
I believe Bill C-48 is unreasonable in its current form because of four issues. The first issue is one that is well talked about in the public discourse, namely, that it is harmful to Canada’s economy and its employment; second, Bill C-48 represents what I see as an absolute sanction or an outright ban with no flexibility in its implementation; third, Bill C-48 is inconsistent in its implementation across Canada’s vast coastline; and, fourth, based on those three reasons, Bill C-48 in its current form is deeply antagonistic and divisive within Canada, especially in oil-exporting jurisdictions like Alberta and Saskatchewan.
I’d like to take a moment to summarize and elaborate on these four issues. First, I believe that Bill C-48 is unreasonable in its current form because it is harmful to Canada’s economy. This year, 2019, the sales of upstream oil and gas are expected to exceed over $100 billion Canadian in corporate revenue. Based on this measure of revenue — and I can give you other measures if you like — the Canadian oil and gas industry is Canada’s largest resource industry, representing approximately 5 per cent of the country’s GDP. The inability to export oils to foreign jurisdictions around the world, other than the United States, has already negatively impacted our economy with steeply discounted prices. This was most evident in the fourth quarter of 2018. I can elaborate on that more through questioning if you like. The result was compromised investment, employment and compromised royalties and taxes as well. The absolute restriction, or moratorium on tanker exports from ports like Kitimat, or Prince Rupert in British Columbia, in my opinion, will ensure excessive reliance on U.S. markets and inhibit the ability to export oils to higher-value Asian markets and probably induce further steep discounts in our oil and gas prices.
Second, absolute sanction. This legislation that is absolute imposes a blanket sanction ad infinitum and leaves no room for compromise. I believe it arrogantly assumes that neither high standards of marine safety nor carbon intensity can ever be met. This is false assumptions. In fact, the goals of superior, world-class marine safety and meaningful reduction in greenhouse gas emissions from the upstream that is in the supply chain can be reduced materially. In fact, it has been reduced materially over the last couple of years. We cannot assume that technology and other practices, including innovations in social and environmental things, are not achievable. They are achievable.
The third issue is inconsistent implementation. I, as a Canadian, am really unsettled by this bill. I have lived in Canada all my life. I’ve been up and down the British Columbia coast. I’ve been to the Arctic Ocean. I’ve been to the Strait of Bell Isle, the Atlantic Ocean, the Bay of Fundy, the Gulf of St. Lawrence and pretty much every waterway in this country. I don’t understand why the north coast of British Columbia is any more environmentally sensitive than the rest of Canada’s coastline.
Any marine safety and product requirements in Bill C-48 should be universally applied across all of Canada’s territorial waters or not applied at all. Territorial or geographic elitism, in my opinion, as a Canadian, is unfair. If we’re going to legislate bills like Bill C-48, we need consistency. Consistency is paramount.
Without such consistency, including reasons number one and two, leads us to number four.
Bill C-48, I sense, living in Alberta particularly, is antagonistic and divisive in extreme ways that I haven’t seen before.
The combined effects of these points are demonstrably contributing toward civil instability between provinces, threatening the fabric of Canada’s Confederation. And those are big words. But the rise of regional nationalism, indeed outright separatism in places like Alberta, is not just words. The election is rife with separatist narratives. I really believe that this is a very sensitive time and that bills like Bill C-48 are wholly unnecessary and is stoking the absolute legislation that is embedded in Bill C-48.
Personally, I can tell you that I am in no way naive to the environmental, social, political, geopolitical and economic factors that brought us to where we are today with Bill C-48. In other words, I understand the conditions that have brought to this legislation. I have analyzed and followed the Canadian energy industry — all forms of energy from renewables, to nuclear, to oil and gas — for over 35 years and I am very well versed in pipeline and oil issues, as well as the history of those issues in this great country of ours. Yet in all those years that I’ve been in this country and studied it, I have never seen a bill as intransigent as Bill C-48 and I have actually never seen a bill that in many ways is so consequential to the future of our country going forward.
So recognizing the complexities here and now, instead of just pointing out the issues, I would like to conclude by offering the government one of the following three options: Number one, if Bill C-48 is going to be implemented, then I would suggest eliminating the divisive hypocrisy and implement it to include all Canada’s coastline, west, north and east, and acknowledge that all coastal segments are biologically sensitive to marine tanker traffic and not just one small segment of perceived privileged space within our country.
Or I can recommend option number two, which is to amend Bill C-48 to be more flexible. Eliminate the absolute sanction, incorporate stringent yet reasonable and attainable thresholds for safety, social and environmental targets for tankers of all sizes for each of the persistent oils described in the appendix. This will allow companies to innovate, to work toward meeting such targets.
I recall the NEB’s 209 recommendations for Enbridge’s Northern Gateway pipeline, which was to export out of Kitimat. In my opinion, that’s a good starting point. The goals were strict yet acknowledged to be achievable.
Or my final potential option for you is number three, implement the Bill C-48 legislation but identify narrow marine corridors leading to already industrial ports like Kitimat and Prince Rupert and exempt them from the Bill C-48 sanctions but preserve the rest of the coastline.
Whichever option you might choose either from my list or from the suggestions you solicit from others, I suggest that time is of the essence. There is massive uncertainty and uncertainty hinders investment, affects the economy and worst of all, foments regional discontent such as we are witnessing in this country right now.
Thank you for your time and attention and listening to my arguments and recommendations.
The Chair: Thank you Mr. Tertzakian. I will call on Mr. Veldman now.
Wim M. Veldman, President, Wim M. Veldman Consulting Inc.: Thank you very much, Mr. Chair and honourable senators.
In the brief time that I have, I hope that I can bring my knowledge of Alaska’s spill response system to your attention. I started with Trans-Alaska Pipeline full-time in 1973 on the design and construction, lived in Houston and then moved to Alaska. I still consult to them. In fact, as of last week, I just signed another two-year contract extension with them.
As early as 1974, I was helping them to respond to questions with respect to the shipping out of Valdez, so I know the system that they have, and one of the focuses of my comments is to talk about their system and to see if we can use that as go by for shipping out of the ports that we’re talking about.
The four things I would like to talk about are that Prince Rupert and Kitimat are very safe ports; the Exxon Valdez 1989 spill is not relevant in this discussion; with modern design and operating protocols for the operation of oil tankers in the world is very safe, oil spills over time are reducing dramatically; and the last is if you lift the ban and allow oil tankers, I contend that the risk to the environment could be reduced.
Let me repeat that: If you lift the ban and allow oil tankers, the risks to the overall environment with all of the different shipping could be reduced.
First, with respect to Prince Rupert and Kitimat, Prince Rupert is a very wide open and deep port. It is not a safety issue. In Kitimat, the Douglas Channel leading out of Kitimat, the narrowest part of the Douglas Channel is 10 times as wide as the narrowest part of the Panama Canal that I have gone through more than a dozen times over the years. I have seen it widened. It is almost at the point now where they can have two-way traffic. The Kitimat Douglas Channel is a minimum of 10 times as wide as that.
The shipping risk from these ports should not be a consideration and determine whether or not a ban is appropriate. I note in 2012, Transport Canada expressed no significant concerns with shipping from Kitimat for the Northern Gateway pipeline project.
The second point is Exxon Valdez is not relevant. Maybe the simplest way to talk about Exxon Valdez 1989 versus now is comparing the old cellphone in the 1980s compared to the smartphone of today. There is no comparison. And I have included that in my presentation or in my submission. Just in summary, Exxon Valdez was a single hull tanker; all tankers now have to be double-hulled. The present system for Trans-Alaska pipeline has 10 escort and response tugs. Their position and place are not only in Valdez but also along the way until the tankers get out to the open water. They have eight oil recovery barges, 140 skimming units, which are the largest in the world, and 80 kilometres of booms ready to go.
The second level of their response program is what they call Vessels of Opportunity Program. This is where they have trained 1,500 crew operating more than 450 local fishing boats to respond if necessary. They do annual training with all these local people.
The third level of response I think is a very important one and that’s public oversight. It is an organization that is “absolutely independent” from Alyeska Pipeline but wholly funded by Alyeska. In 2017, their budget was $3.6 million. It consists of 18 staff and a 19-member board all from the local area. This is called the Prince William Sound Regional Citizens’ Advisory Council. That would be an extremely good independent, unbiased, on-the-ground group of people who could really tell you what is going on.
An interesting thing that’s worth noting is the president of Alyeska Pipeline for about the last eight years is a former retired vice-admiral of the U.S. Coast Guard and he oversaw training for the Coast Guard. His influence in the operation of the Trans-Alaska Pipeline certainly has seen a major shift from the pipeline to the tanker operations, and a brand new contract that they initiated with the new company last year is also reflective of his real concern and key interest in this area.
Thus the Exxon Valdez should not be part of the discussion. Modern tankers and operational protocol have a low risk. I have included some graphs of oil spill trends in the world versus time, and there is a dramatic decrease.
If we have the ban, what is the remaining risk with the tanker ban? We know that exempt vessels such as cruise and container ships can carry 20 per cent to 40 per cent of the total spill that occurred as a result of Exxon Valdez. Refuelling ships that are permitted up to 12,500 tons are at about 30 per cent of the volume of the Exxon Valdez spill. Most of these ships would be single-hulled; and they would have no tugs, no skimmers, no booms, et cetera.
One thing about tugs, Trans-Alaska has a tethered tug until they get into the open water and a second tug within a quarter of a mile of a tanker to be able to respond if necessary. A couple of weeks ago, I believe we all saw a cruise ship, the Viking Star, off Norway almost get into trouble — almost grounded. They were just able to get one engine started in time.
Spills have occurred in the past with exempt vessels. We know about the Nathan E Stewart tug in 2016, and there was almost another spill with a tug named Jake Shearer pulling a large barge. They were just able to get it anchored in time before it ran aground.
So I ask myself: Is a win-win possible? Minister Garneau in 2017 stated that a reason for the ban and the Great Bear Rainforest was “fewer spill response systems are in place in this area compared to Vancouver and compared to other parts of Canada.” So I ask myself: If we had an excellent response system in place, would that eliminate the reason for the ban and be a win-win all around?
Here is a scenario: The Eagle Spirit pipeline to Kitimat is approved. That’s certainly a win for the Native-backed $16-billion project. A spill response system like Valdez would be in place, enforced and be used as a go-by. The Trans-Alaska Pipeline and the terminal being in the same environment as this area here is an excellent go by in this part of North America. A spill-response system like Valdez could hire a lot of local people.
Third, a cooperative agreement with all shippers in the case of a what-if. So the spill-response system would not only be used for tankers, but like Alberta and Saskatchewan, you could set up a cooperative agreement that if there is a spill, all the shipping companies cooperate and work together to respond to a spill. That’s what they do in Alberta and Saskatchewan if there is an oil spill with respect to pipelines, et cetera.
There could be a vessels-of-opportunity program like Alaska has set up for all situations. I see that the Oceans Protection Plan from Transport Canada does talk about some training, but certainly there would be formalized training for all vessels of opportunity, if you set it up that way.
Fifth, I would also recommend that an oversight committee, completely independent of the company and staffed by the people in that area, would oversee this all.
I won’t conclude at this point in time that it would be an absolute overall risk reduction, but it’s not hard to imagine that with the Valdez response system, which has had no issues or spills since the Exxon Valdez in 1989, and with that same consistent vessel response system, as well as a cooperative agreement for the rest of the vessels that are presently exempt and which don’t have the degree of reaction if something happens — the overall risk would be reduced.
To conclude, I respect that the tanker ban was in the election platform. I respect that it was in Minister Garneau’s mandate, but if the prime reason for the ban only being here is, as per Minister Garneau’s statement, “fewer spill response systems are in place in this area,” then if we, in fact, have those spill-response systems in place, that reason is eliminated. Then we can achieve the other two conflicting mandates that presently affect our natural resources. Those are, to Minister Carr, one of our core responsibilities is to get our natural resources to market. Also, the Prime Minister has stated many times that getting our natural resources to international markets results in a strong economy and jobs.
Thus, I ask you to consider that if we follow the scenario that I have laid out for a pipeline such as Eagle Spirit or a similar type of pipeline, is the ban necessary? The ban might have unintended negative consequences that would be eliminated if you had a cooperative spill-response system like I suggested.
Thank you very much for your time and consideration.
The Chair: Thank you, Mr. Veldman. We’ll go to questions.
Senator Miville-Dechêne: I have a couple of observations and questions for Mr. Veldman.
First, I was a little surprised when you said that the Exxon Valdez should not be taken into consideration, considering the long-term impacts of this giant spill. We will later have a biologist named Stanley Rice who talks about the long-term effects of this spill on sea otters, pink salmon, herring embryos, killer whales and human communities depending on fishing. So I just want to say that.
I also want to hear you on the fact that you mentioned security and safety, but we know that there have been quite a few spills with double-hulled tankers around the world for about the last decade. I would mention a handful of examples around the world. I could mention the Bunga Kalena, Singapore and the Sanchi, recently in the East China Sea. It’s not a zero risk, obviously, regarding a spill.
Mr. Veldman: I’m losing my sound.
Senator Miville-Dechêne: I was referring to a few quite large oil spills around the world.
There are also communities — I’m thinking of the Haida Gwaii most notably as well as other coastal communities — that would like their waters to be exempt from the risk of an oil spill.
How do you answer those who want to be able to live without the threat of an oil spill?
Mr. Veldman: I’ll respond to the first part of your question with respect to the Exxon Valdez. I know, recognize and accept that the spill still has long-term impacts. That does not take away from my presentation that the Exxon Valdez, in terms of its operating protocol at that time and the reasons for the spill — are no longer there.
At the time of the Exxon Valdez, they did not have tugs tethered to the Exxon Valdez, there was not a second tug, and the booms and skimmers were some distance away. It took them a couple of days to get the booms to the site, and by that time, some of the oil had reached the shore. Absolutely, there are still long-term impacts, and I know there are many papers and studies on that.
Double-hulled tankers still have a risk. In my presentation under conclusions, I wrote, “does tanker traffic have zero risk?” I say “no.” I was proposing and recommending that we look at the risk with oil tankers with the modern state of the operating protocol versus the risks with spills from exempt vessels that don’t have the same operating protocol or the design with double hulls, and weigh that. I’m not saying at this time that one is stronger than the other one, but I think it would be really worthwhile to look at that and make sure we don’t go down the road of a tanker ban and then say, “We have had another Nathan E Stewart. If we would have had tankers and the spill-response system, we would have of the able to respond more quickly to those incidents.”
Senator Plett: Thank you. I have a few questions, Mr. Veldman — and I should know this. What is the size of vessels that are not allowed to go through with the moratorium? 12,500?
Mr. Veldman: Yes, it is.
Senator Plett: With that, are there also regulations as to what kind of a ship it has to be? For example, if you would reduce the 12,500 to 12,000, we could carry it with a single-hull ship maybe? I know there may not be many of those but would that be legal to go through that channel with that kind of a ship, single hull?
Mr. Veldman: I certainly don’t know all the details of vessels that would be exempt under this act, but I suspect that a lot of these refuelling vessels that have been used in that area for a long period of time would be single hull. But I will not swear on that.
Senator Plett: Do you have any stats on how many oil spills of significance there have been in the last, I’ll use five years, with the state-of-the-art double-hull ships that we have?
Mr. Veldman: Certainly, two of the last pages that I appended to what I submitted late last week showed the global oil spill trend versus time, and one of the charts also shows the number of spills of different sizes. So the numbers are there for the different decades as well as they are categorized according to the size of spill. I believe that was in the charts. I don’t know if you have those in front of you.
Senator Plett: I don’t have it in front of me but that’s fine. It’s okay. I’m not going to bother looking it up now. That’s fine.
Mr. Tertzakian, can you tell me, or either one of you for that matter, what the economic impact is to Alberta if this tanker ban goes through?
Mr. Tertzakian: Sure. The economic impact is already being felt due to the uncertainty of a number of bills, including Bill C-48, Bill C-69. The biggest impact is upon investment. Typically, if you look over the last 15 to 20 years, the industry will see investment in the form of both outside debt and equity of anywhere from $10 to $15 billion a year. Since last year, 2018, that investment has dropped to $1 billion. This year will probably be less. So the investment has contracted from $10 to $15 billion to $1 billion or less.
That amount of spending is spending that directly goes into employment and oil field activity in the ground. As a consequence of the uncertainties of these bills — and the induced differentials in oil price that we saw in September, October and November — the rig count in the first quarter in Alberta, Saskatchewan and British Columbia dropped to its lowest level in more than 20 years. This causes widespread seasonal unemployment across three provinces, not just one, and the ripple effects of these sorts of things manifest themselves in lagged form over time.
Now, I will be the first to acknowledge that Bill C-48 is not the only cause of these issues, but restrictive and, as I called it, absolutist measures such as this instill in investors’ minds that there is no way out. Therefore investment is unlikely to come back until such time as these issues are resolved.
So the impact is real, and this does not include the impact of price differentials, which are very complex but definitely impact royalties that the three provinces realize as well as provincial and federal corporate income taxes and, of course, personal income taxes that shrink as a consequence of unemployment.
Senator Plett: Those numbers you gave me of $15 billion to $1 billion, that is just Alberta and would not even include Saskatchewan and British Columbia; is that correct?
Mr. Tertzakian: No. That would include what we term the upstream oil and gas business, which would not include in this instance Newfoundland and Labrador and their offshore business but it would include Western Canada. And in Western Canada I would say that the — if I get my number right — ballpark of 80 per cent of the industry is in Alberta
Senator Plett: Thank you very much.
[Translation]
Senator Boisvenu: I understand that the Exxon Valdez spill is still very fresh in the minds of people living on the West Coast and that this bill represents a continuation of the trauma.
To that end, Canada should be prohibited from transporting any oil by rail. This cost 47 people their lives in Lac-Mégantic. However, despite the tragedy, four times as much oil is being transported on the rail lines compared to when the incident took place. I’m wondering about the logic of continuing to live in the past and focus on Exxon Valdez tragedy, which would likely never happen again, when we have the pervasive issue of an accident as serious as the Lac-Mégantic incident. Four times as much oil is being transported on the roads, so the risk involved is much greater.
You said at the outset that the pipeline is a way to limit risks, especially in terms of loss of life. I want you to explain this to me. I also want you to provide a figure. If both the Northern Gateway and Eagle Spirit pipelines were built, how many tankers would the residents see passing by each day between the sea and the coast?
[English]
Mr. Veldman: I don’t think I need to make any more comments about the safety of pipelines versus rail. I think that is well-known. If two pipelines were built, Northern Gateway and Eagle Spirit, how many tankers, it depends a little bit on the size of the tankers. But those two lines together would still be less than the maximum production out of the Trans-Alaska Pipeline, which was 2.1 million barrels a day in about 1984-85. At that time, there was a little bit more than one tanker a day coming out of Valdez. So it’s a function of the size of tankers. They have some different sized tankers, but that is roughly what it would be for two pipelines at the same time. Does that answer your question?
The Chair: Is it one tanker or one tanker per pipeline per day?
Mr. Veldman: It might be, say, one tanker every couple of days out of one line and the same thing, another tanker every couple of days out of the other line because obviously the two terminals would likely not be at the same location.
I do know at the peak, Trans-Alaska was pumping out 2.1 million barrels a day; Northern Gateway about 800,000; and Eagle Spirit around the same thing, if I recall. Those two are less than maximum throughput through Trans-Alaska in the mid-eighties, and they were a bit more than one tanker per day out of Trans-Alaska.
[Translation]
Senator Boisvenu: Marine transportation causes very little disturbance to the natural environment. I understand that biologists are concerned about wildlife protection. I worked for about ten years at Quebec’s wildlife department. I therefore have a keen interest in this issue. When we talk about increasing marine traffic by allowing the passage of large tankers, we’re looking at a minimal increase in the number of vessels, especially in northern British Columbia. It’s really a very small increase.
[English]
Mr. Veldman: Yes, and I think you have to put it into context. What we’re talking about is not a great significant number of tankers out of either one or two pipelines. Somebody would certainly make the argument that compared to the tankers in that area now it would be a significant increase relative to what is there now. It would not be a significant tanker shipment compared to Vancouver or, obviously, some of the much busier ports around the world. Each port is unique and different as I indicated at the beginning. I certainly believe both Rupert and Kitimat are safe ports to ship out of.
The Chair: How many tankers would be on the world’s oceans in any one day?
Mr. Veldman: I’ve seen that and I don’t recall it.
The Chair: I’ve seen it too and I don’t recall either. That’s why I was hoping you’d have that.
Mr. Veldman: My birth country is Holland. At one time Rotterdam was the busiest harbour in the world. At one time I knew all the number of tankers in and out of Rotterdam. I believe Singapore is now the busiest harbour in the world. I have it somewhere. I don’t want to quote a number.
Senator MacDonald: I want to thank both of you, gentlemen, for your testimony this evening. There seems to be a terrible lack of — and I can’t think of a better word — common sense when it comes to this bill. On the East Coast of Canada, we’re very used to handling oil. We handle 283 million metric tonnes a year. About half of that is oil produced in the offshore of Newfoundland and exported. The other half is imported from places like Norway, Saudi Arabia, Colombia, Algeria, Nigeria, the Ivory Coast and the U.K. to refineries in Quebec and New Brunswick. We pay over $14 billion a year for this oil. This is money that leaves the country and moves out.
Looking at this type of decision-making — I know the term “national energy policy” is a dirty term in this country, and with good reason — we seem to lack a national energy strategy when it comes to managing resources. We take a lot of risk on the East Coast, but it’s managed risk. As you rightly point out, there’s a lot of double-hulled ships out there that didn’t exist 20 or 30 years ago. We hear a lot about the Valdez. Nobody in Ottawa ever speaks about the Arrow, or the Kurdistan that went down off of Cape Breton in 1979. If we were just exporting oil, not importing oil, it seems that we would be so much further ahead as a country.
Are you concerned about the lack of a national energy strategy when it comes to the management of petroleum? You’re both very familiar with these activities and this industry. Can you reflect on that and give us your opinion on how we’re handling our resources, in particular oil and gas?
Mr. Tertzakian: Thank you very much for those comments. I wholeheartedly agree. I believe we need a consistent national strategy on all resources. That consistency, as I said, is important because, as I pointed out, with this proposed legislation, you can’t just apply it to one small segment. If you’re going to do it to that segment, you have to do it everywhere.
Similarly, we have to have consistency in how we think about energy as a whole; how we think about combating climate change; how we think about consistency in dealing with Indigenous issues; and how we think about other social issues. We’re completely lacking in that. In fact, I’m very disturbed that we are going the other way. We’re creating unnecessary polarization that is driving us further away from any sense of collaborative spirit in this country and leading to consistency.
This point about importing is really important. I actually came to Ottawa in 2007. I was invited by the Department of Foreign Affairs to come and testify about energy security at a time when the price of oil was going up. We’re one of the very few oil-producing countries in the world that produces more than we use. In other words, we’re net exporters. Yet, we’re not self-sufficient in this country. We have all the oil and gas resources in the West and we’re importing greater and greater quantities in the East from unsavoury countries, which I don’t need to name because you listed some of them.
If you want me to reflect, I’ll give you a true story. During the oil price shocks of the 1970s, when we had the Arab oil embargo in 1973, we actually had to ship oil from Alberta through the Trans Mountain pipeline — the one that we debate today as well — to a Greek tanker in Vancouver, Burnaby. That tanker had to be dispatched and go all the way down south, through the Panama Canal, and around into the Gulf of St. Lawrence. There’s much more to the story, but I think it highlights the fact that we are not energy secure in this country. We are now running a massive trade deficit because of exactly the point you made. We are importing so much oil and restricted on exporting. That affects our trade balance, which affects our Canadian dollar and all sorts of other issues. We need to get it together. Anybody looking at our country from the outside is laughing. I don’t understand. You guys are resource-rich in oil, gas, uranium, sun, wind — you name it — and there’s no holistic strategy here.
I hope the work that you’re doing can lead us to some common sense, as you said, to try and make us realize that few countries in the world are as privileged as we are when it comes to energy resources and we do need to think about how to better manage it fiscally, physically and environmentally and teach the rest of the world how to do it properly. Thanks very much.
Mr. Veldman: I fully agree. In fact, I’m testifying tomorrow morning on Bill C-69. The two policies that I recommend the government needs to set up front, which is almost overlying policies for a NEB, is that, one, we should be energy independent; and two, we should commit and walk the talk when we say that we export our natural resources.
Senator MacDonald: This question is to both of you again. I’m not minimizing the importance of managing risk. Of course, it’s important to manage risk. You rightly point out that so much of the oil that is carried today is now carried in double-hulled carriers.
I guess a couple of questions.
My first question is this: Am I right to assume that when it comes to risk in the handling of oil in ships or just marine risk in general, there’s always more risk today from any single-hulled vessel going aground or having some sort of a catastrophic event than there is the risk that’s involved in an oil carrier that’s a double-hulled vessel? Would that be statistically accurate?
Mr. Veldman: Look at risk as probability times consequence. I would certainly say that with the single-hulled tanker, or any other ship like a cruise ship or a container ship that can still carry a lot of fuel, the probability of an incident is higher. You don’t have the tethered tugs, you don’t have the support tugs and certainly you don’t have the double-hulled protection.
The consequence with oil tankers — there’s much more oil, so there’s more oil. There may be oil of a different product. So it’s the combination of those two factors that result in the risk.
I’m saying that I have not done that calculation. It would be interesting and really worthwhile to make that calculation, considering all the exempt vessels and the oil tankers, and see if there is a net benefit. I believe there very well could be, if we have a spill-response system, as I’ve talked about, and therefore cover the exempt vessels that don’t have the kinds of protection and response that we have for oil tankers.
The Chair: We’ve got two really interesting guests here, and —
Senator MacDonald: We really do.
The Chair: — we also have an interesting guest coming up. What I’d like to do is go right until 8 o’clock. We started a few minutes late. We’ll go to 8:00 with these two witnesses, because we’ve got more senators. I’d like to have them all in.
Then we’ll do the full hour with the single witness, which should be lots. It may not be that long, but we’ll give it that if we need it.
Let’s move it along here and, hopefully, we get everybody in.
Senator Galvez: I have two quick questions, one for Mr. Tertzakian and Mr. Veldman.
They’re very interesting arguments you are presenting, Mr. Tertzakian, but I think you are forgetting to talk about the elephant in the room, which is that this moratorium — the history is that it’s been there for decades. So when you talk about losing jobs and losing economies, it’s all potential; it’s something that could be in the future — future projects. But this restriction has been going on for decades. So I think you are avoiding talking about that.
Another thing I think you talked very fast in avoiding is that the price of the oil is a very complex thing; it’s not only because of the lack of a pipeline or capacity. You have the LOOP in New Orleans, and this changed the whole logistics in the navigation of petroleum. Different paths for the transport of petroleum is there. Also, I think you are not up-to-date with the fact that Quebec doesn’t import any more petroleum from Saudi Arabia. It buys the petroleum from Alberta. So I have to really correct you on that.
When my colleague asked you how much money they are losing, it would be good that you put real numbers there and that you say why, presently —
The Chair: Are you asking a question, Senator Galvez?
Senator Galvez: I’m asking.
The Chair: Because you’re not testifying here.
Sir, could you go ahead and answer that and then —
Senator Galvez: No, I have a little second question for Mr. Veldman.
The Chair: Why don’t we have him just answer this, and you can ask that question.
Senator Galvez: Chair, why do you always cut me off? When my colleagues —
The Chair: Because you always go on for too long.
Senator Galvez: On and on and on, and you cut me.
The Chair: Oh, no.
Senator Galvez: It’s a pattern you have with me.
The Chair: Senator Galvez, ask your question.
Senator Galvez: Let me ask my question.
For Mr. Veldman, you put the equation that risk equals probability multiplied by consequence. So you are increasing the frequency of tankers, and the consequence — we have here population living around. So these two factors are increasing.
How can you expect that risk is zero when the two factors are increasing?
Your last graph has been criticized, because in 2010, you don’t have the Deepwater Horizon that should be a big arrow there, with almost 5 million barrels of oil with a cost of cleanup of $62 billion. So can you comment on that?
The Chair: Mr. Tertzakian, why don’t you start with the first question, and then we’ll go to Mr. Veldman with the second question.
Mr. Tertzakian: Okay, great. Thank you. There are many elephants in the room. Let me quickly address the three that you mentioned.
The first is very quick. You are right that Quebec does not buy oil as much as it did from places like Saudi Arabia, but it does not buy it from Alberta. It buys it now dominantly from the United States. It comes from the Gulf of Mexico. I can give you the numbers from Statistics Canada. The point is that it is imported, we are not self-sufficient and we are running big fiscal deficits as a consequence.
Second, let’s talk about the future potential of the impact. I disagree. The impacts are actually happening today. Why? In part, for example, the oil and gas industry, and pipeline companies like Enbridge, went through the regulatory process over the course of many, many years. The Northern Gateway pipeline was approved with 209 conditions. The expectation among industry was that said pipeline would be built with stringent regulations in place. However, as a consequence of these pipelines, including Trans Mountain as well not being built, has led to a situation where there is the bottling-up, so to speak, of the oil in Western Canada, leading to these very steep discounts.
More important, as I mentioned earlier, there is now very little confidence that Canada can resolve its regulatory issues. As a consequence, the numbers speak for themselves. The investments have dried up. The field activity and the employment in the field are way down. As I mentioned, this is yet to be felt, and it will be felt, because there is always a lag between the impact of declining investment within the economy.
Finally, you are right: Oil price is a complicated thing that is dependent upon many factors, including international geopolitics, supply, demand and all sorts of things. But I can tell you that the price that Western Canadian oil producers realize, including British Columbia, Alberta and Saskatchewan — the prices that companies in those three provinces realized since, say, 2012 — so the last seven years — are generally the lowest prices in the world. We are living with the lowest prices. In other words, other producers in the world are realizing world market prices, and we are living either with very wide discounts or very volatile discounts. This is a detriment to investment.
If we don’t resolve these regulatory issues conclusively and consistently, then I assure you we are going to feel more pressure on the largest industry in this country, and it will ripple all the way across the country.
Mr. Veldman: First, with respect to the graph I included and it not including all of the information, certainly some of the graphs — and I believe all of the graphs, in fact — specifically say that these are spills from tankers. I don’t think the platforms were included.
What I was talking about with respect to risk equalling probability times consequence — probability: Let’s take an exempt vessel that loses power. That’s very similar to the Viking Star that lost power a couple of weeks ago — the cruise ship.
If the spill response system that I’m proposing could be implemented, there could be tugs in the area that respond to those exempt vessels, whether it be a container, a big cruise ship or any other smaller ship so they could respond to one of those vessels losing power.
The consequence, as a result of an exempt vessel having a spill, would certainly be decreased because, again, with a comprehensive cooperative system, you would have booms and skimmers in the area to reduce the consequences.
[Translation]
Senator Cormier: Yesterday, Peter Ellis reconfirmed that Bill C-48 doesn’t address the current situation. Instead, the bill is intended for future projects, such as the development of markets with a focus on Asia. I understand that the oil industry wants this, and it’s perfectly legitimate.
We know that there are many environmental issues. These issues have been repeatedly identified. We know that the West Coast ecosystem — I’m from the East Coast — seems more fragile for all kinds of reasons that have been established by environmental experts. We also know about the many human challenges for everyone living on the East Coast.
When I look at the list of 14 persistent oils that seem to cause problems in this area of transportation, my question is simple. How is the oil industry moving toward greener energy sources? Why aren’t these oils processed in Canada and then transported in another form?
Since the beginning of this study, I haven’t heard about how the oil industry in Canada is processing these products so that the products are less dangerous to transport.
[English]
Mr. Veldman: No, I don’t have any comment that would be worthy, as compared to what Peter could say.
[Translation]
Mr. Tertzakian: Thank you for the question.
[English]
It does relate to my first point. I’ll work backwards talking about the greener oil and gas business. So what does “greener” mean? We know that the world is undergoing a transition. We want to go more and more into renewal energy sources, and certainly in this country we are. However, we have to acknowledge, as many agencies now do, that we will be using fossil fuels, including oil and gas, for several decades to come. And I am a strong proponent that given we cannot transition off of fossil fuels quickly, the pursuit of solutions to climate change necessarily means that the oil and gas industry must become greener.
Is the Canadian oil and gas industry becoming greener? There is data out there that I don’t have with me but that I also feel is incumbent on those who are in the business to give you the data that, indeed, over the past four years there has been substantial improvements in the carbon intensity, in other words, the amount of CO2 that is liberated by producing one barrel of oil from the ground, that this carbon intensity has come down substantially over the course of the last few years.
Now, I think you bring about a good point, why don’t we take these products which we have in such great abundance and refine them ourselves with world-class environmental standards and practices and create secondary and tertiary products? Indeed, this is starting to happen now as well, and the current Alberta government will tell you there are an increasing number of petrochemical facilities that are looking to establish themselves in Alberta, add value and refine these products in a green way so we can be leaders.
Now, we have to acknowledge that this takes time and we are the fifth-largest producer of oil and gas in the world. So being able to transition to value add to these products overnight is not reasonable.
I can tell you that the importance of exporting should not be lost on us as Canadians because we, in Canada, are among only a handful of countries that have such strict environmental record, have rule of law, have very low levels of corruption as measured by agencies like Transparency International. And on many other dimensions, not just environmental dimensions, our exports of resources, including oil and gas, are among the best in the world.
I ask those who want to restrict exports: Why is it that we want to take out of the global supply chains the best producers in the world and leave the ones that do not have rule of law are highly corrupt — and by the way corruption is directly proportional, it is shown in academic studies, to environmental degradation.
So the case that Canada should be exporting its oil and gas and in this transitionary period, in my mind, is solid. And we should be facilitating this in a responsible way with high degrees of safety, as has been talked about by my colleague, and all the other environmental stringencies that we have in place. I am fully supportive of those.
Senator Manning: Thank you to our witnesses. Very quickly, I live in a small fishing community of St. Bride’s in Placentia Bay in Newfoundland, largest bay in our province, 365 islands in the bay, one for every day of the year. In 1990, the Brander-Smith report said the most likely place in Canada for a major oil spill was in Placentia Bay, based on the islands and 200 days of fog.
Every night I’m home, I see oil tankers going back and forth. We have an oil refinery in the bottom of the bay. We have corridors that the tankers have to flow through. We have 1,100 fishing vessels in Placentia Bay who operate at the same time.
I want to get back to Mr. Tertzakian. You mentioned identifying narrow geographical marine corridors leading to already industrial ports. On the West Coast, because I’m not familiar with it 100 per cent, do we have geographical marine corridors there now for the ports that exist?
Also, to make sure we’re clear, Kitimat and Prince Rupert you’re saying are exempt under Bill C-48 sanctions; am I reading that correctly or is that the fact that you’re asking to have marine corridors leading to these industrial ports? I want to make sure that we are clear.
Mr. Tertzakian: Yes, thank you for the question. And I have been to Placentia Bay as a proud Canadian, so I know what it looks like. I have also been to the West Coast, which is equally beautiful.
What I was proposing under my third option was that if you want to implement Bill C-48, implement it, but allow for marine corridors in the restricted areas as one alternative, one potential amendment to the proposed bill. Right now, I don’t know what the marine specifics are in terms of how the ships go in and out. Mr. Veldman may be able to help you with that.
I’m saying that instead of blanket imposing Bill C-48, which would be akin to, say, a blanket tanker ban all across southern Newfoundland as an equivalent type of bill, apply it but allow for the corridor in Placentia Bay in and out. That’s what I was proposing as one of three potential options for you to consider.
Now, Prince Rupert and Kitimat are the two largest northern B.C. ports that are ideal because, as was mentioned, they’re deep water and with their proximity to Asia, they are natural. They already transport a significant amount of other hazardous materials and it would be logical those should be the exempted corridors.
Senator Manning: Mr. Veldman, I get back to the Brander-Smith report of 1990 and the concerns with single hull. I don’t think we can come up with anything that brings it down to a zero possibility of something happening.
My understanding, from your papers, is 60 miles out we have a tug attached to the oil tanker, and we have another tug that rides along with the tanker when it’s coming into port or going out of a port, whenever the oil is aboard, is that the case?
In relation to the response times, can you just elaborate a bit in regard to the protections in place now for the tankers that travel in those waters?
Mr. Veldman: A couple of answers, one with respect to exclusion zones. If you look at the Prince Rupert Port Authority information, they set up exclusion zones for environmental reasons. Even as part of their existing shipping, they have excluded certain areas out of their shipping lanes.
With respect to the tugs 60 miles out, Trans-Alaska and Valdez, they have two tugs. One is tethered and another one is a quarter of a mile away. They are 12,000-horsepower tugs, so very massive new tugs. They go out beyond Bligh Reef, which was the area of the Exxon Valdez, and they are certainly tethered, and they go with the loaded tankers, not with the incoming tankers.
Trans-Alaska has five of these super tugs — so two at any time if there is a tanker movement loaded — and three on standby.
Senator Busson: Being from British Columbia and listening to the environmental concerns around pipelines and tanker traffic, my colleague mentioned about Lac-Mégantic and the unspeakable tragedy of what happened there. I also watched the rail traffic go down the lake I live on, Shuswap Lake, down the Thompson River and the Fraser River, and I wonder why the environmentalists think that might be a better solution than pipelines. I scratch my head about that.
I would like to ask Mr. Veldman, as a consultant on containing oil issues, is there a possible scientific plan when a tanker or a tanker rail car might go into a swift river? Is there any way to mitigate that kind of damage?
Mr. Veldman: If it’s a very swift river, it would be very difficult. It wasn’t oil tankers, but in one of my previous projects, where it was shipping an environmentally unfriendly product to a specific place, one of scenarios that we did in our environmental impact assessment was to look at a spill of a truck right into the river at one of the crossings, almost like what happened last week with a fuel truck that went into the Salmo River, the driver was unfortunately killed, and certainly some of the fuel, but whether you could boom it is very much a function of velocity. If the velocity is too high, a) it gets away on you too quickly; and b) booms do not work in high-velocity rivers.
Senator Busson: That’s my frustration. The environmental folks seem to be pushing more oil to rail when pipelines are a better answer.
I just wanted to, in my own mind, get it straight. When I was looking at your graph around spills over the last while, that while you talked about a large spill in 2017 of 700 tonnes in the Indian Ocean; yet this bill proposes to allow single-hull ships that carry twice that much oil to travel the coast exempt.
Have I gotten that wrong? If I’m not wrong, does that focus need to be realigned?
Mr. Veldman: You’re certainly right. And reading the bill and reading the background, the 12,500 number was selected based on the existing vessels and the precedents and what they’re presently using in the area. Looking at the background to the bill, that was a difficult number to come to, and that was the one that was settled on.
Senator Gagné: Mr. Tertzakian, I wanted to mention that I read your article, and I think that the article that was published in the Financial Post entitled “There’s more than lack of pipelines and Bill C-69 that ails the oilpatch. Let me count the ways,” so I’m going to ask the clerk to circulate the article. It was quite interesting.
In that article you say:
For the moment, new investment into oil and gas companies is dry pretty much everywhere, not just Canada. Between 2016 and 2018, American oil and gas financings were also down over 75 per cent. Yet nothing is static. Investor sentiment will change toward companies that overcome the challenges.
It is quite interesting for an article.
One of the questions asked by my colleague, Senator Cormier, where you mentioned that you didn’t have the statistics pertaining to the fact that the oil and gas industry is getting greener. If you do have any information on that, I would appreciate that you send that to the clerk so it can be circulated.
Has the economic impact of a major oil spill in the coastal area of B.C. ever been evaluated? Has that ever been calculated? Would you know?
Mr. Tertzakian: Thanks for your comments and question. With respect to the question, I don’t know. I imagine someone has potentially done that.
Just to relate that to my testimony here, neither me nor Mr. Veldman is saying the risk of any of this is zero. There has to be some risk tolerance. It just depends on how much. I’m pretty passionate when I say that, okay, if we assume a very high level of risk tolerance on the coast of B.C., then we should be applying the same standard everywhere in this country.
You cannot convince me, as a Canadian who has travelled every single province and territory, that any one part of this country is more pristine than another. That is an arrogance that is adding to polarization.
I want to make one more comment on the article, which thank you for bringing up, because, as I mentioned to one of the other senators, I don’t want you to have the impression that I’m saying that Bill C-69 is the only factor. When I said that, I had that article in mind.
However, you can think of this as pancaking of issues that are affecting the oil and gas industry — not only here but in other free market jurisdictions like the North Sea, the United States, et cetera — but we have this layer of uncertainty at the very top which has to do with things like Bill C-48, Bill C-69 and other uncertainties that we need to address.
Further to the senator from Newfoundland and Labrador earlier, it is time for a holistic Canadian approach to this thing to understand what our risk tolerances are with respect to this, understand where we want to go fiscally, environmentally, how we can make a positive contribution to the world, not just to our own little region in this country, so we can be more than helpful, to be part of the solution to pressing issues like climate change. If you go back — I can’t remember — 12 months, not more than two years, I wrote an article about how we need to be thinking globally, not locally.
Senator McCoy: Thank you for including me. Many of my points were made, but I would invite Mr. Tertzakian to lay this evidence on the floor because we do like to have evidence before us.
I’ve heard you speak before about the changing fundamentals of the global oil markets. They’ve changed radically in the last 10 or 15 years. If you have a brief answer to that, so we have that on the record, I think it would be helpful for the committee.
Mr. Tertzakian: Certainly.
The Chair: Thank you very much, Mr. Tertzakian and Mr. Veldman. This was a very interesting discussion. Thank you, colleagues, for all your great questions.
For our second panel this evening, we are pleased to welcome, by video conference, Stanley Rice, Retired Biologist. Are you a retired biologist who works there?
Stanley Rice, Retired Biologist, National Oceanic and Atmospheric Administration, as an individual: No; I’m retired.
The Chair: Welcome to the committee. We look forward to your presentation and then there will be questions, I’m sure.
Mr. Rice: I’m a retired biologist from NOAA, having worked there for 41 years. I was based here in Juneau. I was initially hired to establish an oil effects program here at the Auke Bay fishery lab. I hired biologists and chemists and made a team up to study oil effects. We did that for a number of years prior to the Exxon Valdez oil spill. When the spill occurred, we were ready — pretrained, so to speak — and advanced into the spill and started studying it. We also partnered with a lot of other researchers who did not have oil chemistry expertise.
In addition to responding to the Exxon Valdez oil spill, we have responded to a number of other spills, a couple of small ones in Alaska up in the Aleutians but we also responded to the Ixtoc spill in the Gulf of Mexico in 1979 and later, in 2010, with the Deepwater Horizon spill. We have a lot of experience and a lot of publishing experience.
Collectively, our studies, combined with many other agency studies, have produced the science that supports $1 billion and $18 billion settlements from those two largest spills.
The Exxon Valdez oil spill was a paradigm-changing event. Prior to the Exxon Valdez oil spill — and there are hundreds of spills prior to that, some much large than the Exxon Valdez — few spills were studied very well. There is always a strong response to stop the spill event and clean it up, but studying the effects was usually relatively visual. With surveys, everything looks all right so people move on so to speak. There were few long-term studies, virtually none in that case.
These spills were pretty much over, and they were always treated as a short-term event. They might last months, but they didn’t go on for years and years. With the Exxon Valdez, though, that changed. A lot of things changed, for example, national laws. The oil spill pollution act of 1990 changed things, operations changed and certainly spill science changed. That’s because we found lots of short-term effects and also long-term effects. That changed how oil spills were studied from then on forever.
Human culture was also impacted with the spill. This is not my area of expertise so I will only mention it briefly, but it is certainly well documented. The native village of Chenega, which has a high reliance on subsistence resources, had a lot of fear for their food quality. They would no longer harvest from their traditional beaches which they used to supplement their food supply. The fishing town of Cordova was impacted. Fishing seasons were cut off. Their herring, salmon and other fisheries were stopped for that entire year in 1989.
Ultimately, there was financial compensation through the legal court system, but that took more than two decades to occur. There was a lot of stress and a lot of disruptions to the native Americans and to the fishing community.
Of the short-term impacts from the Exxon Valdez many were expected. They had been observed in some of these other spills. Birds were certainly affected, as were all the air-breathing mammals that have to either land on the surface or come up through the oil to breathe. They were heavily impacted. Large numbers were impacted. About 2,000 sea otters were killed; 200 to 300 harbour seals; and 150,000 to 250,000 sea birds. In addition, 40 per cent of two pods of killer whales were never seen again after the first year of the spill and a couple of their juveniles died in the second year. Intertidal habitats were severely coated and contaminated, especially in bays that face to the north, where the winds brought the oil.
Regarding cleaning aspects, the Prince William Sound was heavily cleaned in the summer of 1989 and again in 1990 and 1991. Cleaning added to immediate damages from the spill. About 1,500 kilometres of coastline were contaminated with oil. The oil inside Prince William Sound was continuous in the path of the oil spill. Some of that came outside Prince William Sound and further down, around the 1,500 mark, tar balls were affecting the beaches.
In addition to those animals that are directly killed by coating, or whatever, of the oil, early life stages of pink salmon and herring were also damaged. The year class of 1989 for herring is just non-existent. It never recruited into the population at all. There are elevated embryo mortalities in pink salmon streams and in the fresh water portions in the intertidal areas of fresh water streams that cross the oil coating. Those animals are affected.
Large-scale impacts to fishery resources had never been documented in oil spills before. That part was relatively new and unique to the Exxon Valdez.
In terms of long-term damage — and this is where we began to get surprised — this started becoming more visible to us probably by year four, five and six, and on to 10 and 20 years, actually.
I’ll give you several examples of some of the best studies that documented these long-term damages. I’ll start with the killer whales. The AB pod killer whales, which is a fish-eating pod — 40 per cent were lost in the first year. They have been recovering, but at a relatively slow rate instead of bouncing right back up. This is a long-lived specie, and it takes time for the animals to recover.
The AT1 pod is a marine-mammal-eating pod and also lost 40 per cent of its animals after the first year of the spill. However, 100 per cent of the reproductive females were killed in this event. Later, some of their juveniles then failed to survive, also, in the second year. So 40 per cent of those animals were lost, and because of the loss of all the reproductive females, this pod is on its way to extinction. It will never recover.
Both pods of these animals are photographed in the slicks, so there is evidence that they were exposed.
The sea otter is an interesting story. Sea otter recovery has been slow for significant parts of Prince William Sound in the heavily oiled areas. Scale here is very important in understanding sea otter impacts. If you look at Prince William Sound as a whole, the recovery has been pretty good. Within less than a decade, for those 2000-plus sea otters that died, the population numbers recovered. But when you bring the scale down to the hardest-hit area, northern Knight Island, the recovery did not begin until after two decades. Then, if you look at an even smaller scale, one bay inside of Knight Island, in this case, another 36 to 38 sea otter carcasses — all sea otters were killed in Herring Bay. Because recovery for them was dependent upon expansion of neighbouring populations, which was not occurring, their recovery has not existed after 25-plus years. Scale matters here.
The lack of recovery by those sea otters is very much linked to the persistence of oil in the intertidal zone. By the 10-year anniversary, there had been several encounters of subsurface oil in the sediments of the intertidal zone. This is not a prime area where sea otters actually forage, but nevertheless, that happened.
The encounters with oil were anecdotal, and this stimulated a real bona fide scientific study — a survey — that took place. A person from our lab visited over 100 different formerly oily beaches in Prince William Sound. It took all summer — some 80 days of field observations — to get those beaches surveyed.
Oil was found in over half of those beaches; it was found about 10 centimetres down below the surface. You have waves that will move and oxygenate that top 10 centimetres or so, but below that, it’s anoxic. Oil remained fresh and liquid. As soon as you dug into it with a pick, you could smell the vapours coming out. If you put some paper towels in there and lit them, the vapours would burn. It was still very toxic and available if you penetrated down below the 10-centimetre mark and got exposed.
This potentially explained why the sea otters had not recovered in the worst oiled area.
The sea otter study that was going on parallel to the oil persistent study — these were then overlapped. We were getting poor recovery where the oil is at its worst. That was a good linkage.
Later, they conducted diving survey-type studies with the sea otters. They put a microchip in them that would detect what depth they were diving to. They found that the females with small babies would make the shallowest dives, because they didn’t want to leave the baby on the surface while they were diving down for very long. So they made the shallowest dives. That means they were sometimes diving into the intertidal zone but at high tide.
When we looked at the distribution of oil in the intertidal zone, we found that distributed peaking in the middle of the intertidal zone and then going down as you either went upslope or downslope. It means that a third of the oil that was on a beach was in the lower third of the intertidal zone. That’s where you find clams and good forage for some of those species, like sea otters.
In any event, the correspondence of these — two plus there is other evidence on the sea otters. They had metabolic — you could detect they were metabolizing oil through enzyme assays and that sort of thing. There was a lot of good evidence they were being impacted by that oil that was there.
Ultimately, the sea otters dug literally millions and millions of pits. This basically works up that oil and gets it exposed to the oxygen. They are basically doing a pretty good restoration effort, but it was at a cost. These animals are living on the biological edge. They have to eat about 25 per cent of their body weight per day. It’s a huge work demand they have to go through in order to acquire all those calories.
To put it in perspective, if a 200-pound man ate 25 per cent of his body weight per day, that’s 50 pounds he would have to acquire and not only consume but metabolize. The sea otters do not have a fat insulation layer, so they need that elevated metabolic rate to generate the heat they need to survive.
The point here, though, that because they are living on this metabolic edge, any disruption to that will impact their potential for survival. Basically, for this group of sea otters that was in the worst-hit areas, their birth rates were equalling their death rates, so they were not returning to normal population levels. Consequently, they could not reinvade down into that area —
The Chair: I’m sorry, Mr. Rice, but could you wrap it up? I don’t mean to rush you, but we want to have time for questions.
Mr. Rice: I’ll skip the rest of the sea otter.
Let me talk briefly about the embryo sensitivity issue. There is elevated embryo mortality in the salmon streams that crossed the intertidal zone. This happened for four years. The Alaska Department of Fish and Game would do egg pumps in order to find out how many animals would potentially go out to sea and come back. They found the elevated embryo mortality in those streams.
Laboratory toxicity tests found they were sensitive down to the parts per billion level. Previous bioassays had shown that most fish were vulnerable down to parts per million but not parts per billion. Parts per billion is three orders of magnitude more sensitive than a parts-per-million types of exposure.
The most sophisticated studies eventually exposed these embryos to low parts per billion — five parts per billion, for example — then, as the animals emerged out the gravel, they wire-tagged them. This was done in a 75,000-per-dose lot. Then they are returned to the sea as little fry. They go to the sea for a year and a half and come back. At five parts per billion, 20 per cent fewer would come back. At 18 parts per billion, 40 per cent would come back. The point is that these animals are really sensitive to oil. These studies — the sensitivity and the parts per billion — were later confirmed by extensive studies done by Deepwater Horizon researchers in the Gulf of Mexico spill after that 2010 spill. It’s a real number. Embryos are supersensitive.
I’ll skip that risk factors play a role. They certainly are there; you can read them in my notes.
I will conclude with a statement that oil spills no longer are short-term events; they have long legs, so to speak. Sometimes the short-term effects can last long, as in the killer whales. If there is persistent oil and you have an animal that’s dependent upon where the persistent oil is, there will probably be long-term effects on that animal population. As for the humans, there are also long-term sociological effects. Two decades to settle the court issues, for example. A lot of stress and disruption in those people’s lives.
Basically, things do recover, and Prince William Sound is a productive very viable habitat now, but it is not the same as it was prior to the spill, and I’ll leave it there.
The Chair: What caused the Valdez accident?
Mr. Rice: That was a human error. Basically the captain said, “Deviate the course,” and that was okay to get around some iceberg traffic, but then he never gave the command to return the vessel back on track. The crewmen were basically, I think, afraid to change the course back even though they knew they were heading for Bligh Reef. Apparently he had been drinking on the job and that led to some of the convictions. He was convicted for that.
The Chair: Would a double-hull ship survive that accident?
Mr. Rice: It probably wouldn’t have. There certainly would have been leakage of oil but wouldn’t have been as much. I would assume it would have been lessened. If you see pictures of the hull of the Exxon Valdez, with that much mass — this thing carried 55 million gallons of oil. Only a fifth of that was spilled in the spill. It has this huge mass. It takes 11 miles for the vessel to be in reverse for it to come to a stop. So you just have that much mass.
When you look at the hull from underneath when it was in dry dock it comes up like this, but it goes for the length of two thirds or three fourths of the vessel. That’s 600 or 700 feet of this 15 feet of pushing up into the hulls, into the tanks basically rupturing. I’m sure double hulls would have made it less, but on this particular accident it wouldn’t have prevented it.
The Chair: He was going in the wrong direction. They were going at the reef. They went right into it.
Mr. Rice: Right to it, yes.
Senator Miville-Dechêne: Thank you for your presentation, Mr. Rice. It was quite interesting. As you know, we are studying a bill, an oil tanker bill in northern B.C., and I’d like to know what lessons we can take or you would give us considering the oil spill of the Exxon Valdez. What lessons can be transferred to northern B.C., northern coastal B.C.? Do we have some of the same environment in terms of oceans, in terms of animals?
I would like you to also talk about the risk of having tankers. There’s no tankers now in the zone that’s an exclusion zone. There’s no oil tankers now around Haida Gwaii and the coast. So I’m wondering, yes, are there lessons and what are the risks if you have, for example, one tanker a day going through this region of the northern B.C. coast?
Mr. Rice: Let me answer that last question about risk first. Certainly there are risks, and I always make the analogy to a lottery. Lotteries are terrible odds that it will happen, that you will win a lottery, and yet somebody wins a lottery every month or every year or whatever, so it does happen. That’s in part because if you’re running — in our case we were running close to seven to ten tankers a week out of Port Valdez. We were doing it for 365 days a year, and we did it for, in this case, over 15 years before the accident. Now we’ve done it for another 25 or 30 years since the accident. When you do that over time, that ultimately increases your odds, so to speak, but the risk is always there.
Technology has certainly helped with the risk with GPS and double hulls. In the case of Valdez the tankers are now escorted, which tries to prevent the human error aspect. Also, one tug is tethered to the tanker until it exits Prince William Sound, gets to the entrance. That would aid if there was a mechanical engine failure, which is what happened with those other spills in Alaska that I mentioned. But the risk is there. If you’re going to mess around with oil, there’s risk.
Now, as to whether the lessons learned are applicable to your environment down there in Haida Gwaii or whatnot, I think they certainly are. You have a rocky intertidal environment. You have salmon, herring, halibut, those sorts of species. We have species that are similar if not identical. The habitats are very similar. The culture, meaning fishing community cultures are there. The subsistence native cultures are there. So we have a lot of similarities in those habitats.
Senator Miville-Dechêne: Thank you.
Senator Galvez: Thank you very much for your presentation. As my colleague said, we are interested in the case of northern B.C. I wanted to ask you if you can work a scenario with me. Let’s say an oil spill happened and the oil is not the one in Valdez. It’s a heavy oil. And that there is salmon and fish and a population is feeding on these fish. You talked about the short term and the long term. I wanted to ask you how many generations the salmon will be unsafe to consume and what could be the impact on the health of the people eating these salmon as their main diet?
Mr. Rice: In a way I think the impact on human health eating the salmon will probably be minimal, and the reason for that is, one, they won’t eat it.
Senator Galvez: By how many years, do you know? Because you said when the oil disappeared people tend to forget, but that doesn’t mean that —
Mr. Rice: Not for those who live there.
Senator Galvez: Okay.
Mr. Rice: And that makes a very big difference. The people of Chenega are still in part living the history of the Exxon Valdez spill. I doubt that they went back to those beaches, which were heavily impacted for more than a decade, maybe two. I don’t have direct data on that, but it’s a long, long time. Their memories are long. So for them it became more of a sociological issue: How are you changing your fishing habits? Where are you going? Are you going to switch to deer? Are you going to switch to food imported in from the grocery stores, that sort of thing? In that way it’s more of an impact than a direct health issue. They avoid the direct health issue.
As far as the heavy oil aspect, I have had some experiences with bunker oil, which is probably thicker than the crude oil you would be shipping, but certainly the crude oil you’re talking about would be fairly thick. The trouble with that is that it’s very hard to clean up. It’s very physical, very sticky. It doesn’t flow very well. So once it contaminates a beach, it’s just really hard to clean it up. It doesn’t flow.
Senator Galvez: One short question. Yesterday and before yesterday there were a couple of reports here in Canada saying that climate change is impacting three times worse and higher and stronger in the North than in the South. I am thinking about the erosion and the waves and the weather in those coasts. You are living in Juneau, Alaska. Can you tell us something about how climate change will play in the evaluation of the risk of oil spill?
Mr. Rice: Climate change is really difficult to assess in that regard I think, but I can give you a couple of examples. Certainly in the far North where we have a lot of ice, we have a major erosion problem up in the northern Bering Sea in several village sites there. That is because without ice being there, they now have much more open water, much longer reaches of open water when the water is open, and so they’ve actually had a significant amount of erosion damage. That’s from a weather-related point of view.
Another point of view is that we’ve had a major change. We’ve had this big slug called the blob that went into the northern Gulf of Alaska. It was warm water that wasn’t related to El Niño. It wasn’t an El Niño event, just a huge mass of warm water. By warm water, I don’t mean bathtub water but warmer water than natural. That affects the ecosystem. Consequently we’ve had species that went out there as fry or juvenile fish, for example, and didn’t have the prey resources, so the runs were affected.
Whenever you have a changed event like that, there are winners and losers, but if the prey base is damaged, then seabirds, sea lions, humpback whales and the salmon feeding on herring are affected. You have this major domino effect.
We’ve had a couple of tough return years in response to that blob that came. That’s just an example of the possibilities that are out there.
The Chair: Is that the first blob that ever happened?
Mr. Rice: I suppose we don’t really know, but we do know this one occurred and that is because one of the outcomes of the settlement with Exxon Valdez was to form a trustee council, and one of the studies they’ve been supporting is some oceanographic work — baselines, if you will — periodically taken with both buoys and that sort of thing. When you couple that data with the lack of returns from those recruitment years, that’s where the correlation comes.
Prior to the Exxon Valdez, we didn’t have very much science going. We had some population studies with killer whales for about five years and seabirds and pink salmon and herring. Once you get out of that, then the science base really drops down, so I can’t answer that question.
Senator Plett: Thank you, Mr. Rice, for being here. It’s a few hours later here than where you are so I will move through my question quickly.
Mr. Rice: I will try to answer quickly.
Senator Plett: I really didn’t hear in your testimony whether you are an advocate of oil tanker traffic or in opposition to it, but you did spend a lot of time on the long-term effects of the Exxon Valdez disaster.
Here in Canada, certainly I find it very curious that supporters of the particular bill that we’re discussing, Bill C-48, the oil tanker ban, people constantly reference the Exxon Valdez oil spill. They use this to reinforce their arguments that the risks are much too great to allow oil tanker traffic off the northwest coast of British Columbia, even though they do allow it everywhere else in the country.
Yet Alaska has not stopped the export of oil via an oil tanker, despite the fact that the Exxon Valdez happened in their waters and washed up on their shores. The Trans-Alaska pipeline system continues to send crude oil to the West Coast of Alaska, which is then loaded into oil tankers and exported.
Would you be able to explain to me why Alaska can continue to do this and northern British Columbia cannot?
Mr. Rice: Well, I can answer one half of that question, the Alaska part but not the B.C. part.
First of all, I don’t have a position on your bill. It’s not appropriate for me to have a position, and I won’t speak to that at all. But as far as why Alaska has not banned oil traffic or anything like that, oil is our lifeblood up here. Fisheries is an important employer for sure, but our population would be cut in half, I would guess, if we didn’t have oil flowing. It’s our tax base. We don’t have an income tax. Our cost of living is very high up here, as you can guess. Our infrastructure needs — meaning roads, hospitals, schools, et cetera — are all very demanding with our very widespread population base geographically in small villages and all that. Without the oil money, our culture would really be hammered, I think. It would be tough.
Speaking to the other half of that, one thing that we have done is tried to make things better. We have to live with the oil spill, so to speak. We have the tethered tankers and the double hulls to reduce the risk a little more. It may not stop it all; no single thing does.
We’ve taken care of human error, hopefully, by having two tugs escort. So now you have to have three sets of captains to make the same human error sort of thing. We’ve tried to make things better in that respect, by being smarter. We have deployed spill response equipment now out in the middle of bays, which could more quickly respond to a spill event, things like that.
The oil companies have taken care of doing Breathalyzer tests and that sort of thing to double-check themselves. When you have a cost of a billion dollars in both the settlement and roughly I think it’s a billion or two to the fishermen and Native Americans and $2.5 billion to clean it up, that’s a pretty expensive event. That forces the oil companies to be a little bit more proactive, so to speak, in preventing things, such as more training, more regulation and more safeguards.
We also have this RCAC, the Regional Citizens’ Advisory Council. It’s funded by a tax to the oil. The amount of oil that flows through the pipeline supports the Prince William Sound RCAC. They are an independent watchdog group. They participate in spill response drills. They monitor the various activities. They even do some support of research. They try to support research to detect oil spills and to fight oil spills. We’ve kind of taken that approach, I think. You can never prevent everything. We have fishing vessels that go on a rock too.
Senator Plett: Thank you very much for that answer. I thought it was excellent, and I believe that many parts of our country that are being impacted by this, especially Alberta and Saskatchewan and parts of British Columbia, would feel exactly the way Alaska feels about it being their livelihood. So I would invite you to come and visit our government in office and see if they could get their head out of the sand, agree with what you’re saying and let the oil flow. Thank you very much for your testimony.
Mr. Rice: Could I make just one more comment before the next question?
Senator McCoy: Yes.
The Chair: Yes. Please.
Mr. Rice: All right. I will say that I ran into this issue with Columbia River tribal organizations down there where oil was going to be railed down the Columbia River. It put the Native American fisheries at risk.
One issue they complained about and I think is appropriate to mention here is that the people in Alberta, for example, are the ones who have the jobs and make the money, yet the risk is downstream, so to speak. And that was the argument from the Columbia River tribes. Wyoming and Montana were making money pumping oil or transporting it and selling it, but the fisheries were at risk and they weren’t getting any of the benefits.
Senator Plett: Here all of the country would benefit from it.
Senator McCoy: Thank you very much for your testimony because it’s very important. I don’t think there is anyone at this table that is not impressed with the very legitimate concerns of the coastal communities in British Columbia’s northern coast. By the same token, what worries me, with the testimony we’ve heard so far and the research I’ve done, they do not have a marine response system that is adequate to the risks that they are facing now. And that is because all of the cruise traffic, all of the cargo tankers, all of the refuelling and tanker barges that are going through and, of course, all the fishing activity.
You mentioned that you are still experiencing oil spills in Alaska from fishing vessels and you’re dealing with the cleanup from those on a continuous basis, I presume.
Mr. Rice: Yes, true, but they’re on a much smaller scale than a huge tanker accident.
Senator McCoy: Much smaller scale, but the same effect. Much smaller scale, I agree, but still it’s having an impact on the ecosystem.
Mr. Rice: Right. And because it’s a smaller scale, I think the environment has a much better chance of recovering relatively quickly from those sorts of events. There’s still a damage, but it would be very difficult probably to measure on those scales. With the Exxon Valdez, the scale is so huge, the number of carcasses and all that were so large that it’s pretty easy to quantify a lot of damage.
The Chair: Thank you very much. Mr. Rice, that was terrific. Thank you for your testimony. I appreciated it very much. I think the senators had a great time discussing these issues with you.
With that, thank you on behalf of all of us.
(The committee adjourned.)