Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 52 - Evidence - May 1, 2019 (afternoon meeting)
REGINA, Wednesday, May 1, 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 1:15 p.m. to give consideration to the bill.
Senator David Tkachuk (Chair) in the chair.
The Chair: Today, we are continuing our meetings on 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, the proposed “Oil Tanker Moratorium Act.”
I’m glad to be here in Regina and I’m going to ask all senators again for the record to introduce themselves, starting on my left.
[Translation]
Senator Miville-Dechêne: Good afternoon. Julie Miville-Dechêne, from Quebec.
[English]
Senator Busson: Good afternoon. My name is Bev Busson from British Columbia.
Senator Gagné: Raymonde Gagné from Manitoba.
Senator Neufeld: Richard Neufeld, British Columbia.
The Chair: I’m Dave Tkachuk from Saskatoon, Saskatchewan
For our first panel, we are pleased to welcome, from Skeena Fisheries Commission, Davide Latremouille, Fisheries Habitat Biologist; and from Des Nedhe Developments, Sean Willy, President and CEO. Thank you for being with us today.
Mr. Latremouille?
Davide Latremouille, Fisheries Habitat Biologist, Skeena Fisheries: Good afternoon, everyone. My name is Davide Latremouille and I’m a fisheries biologist with the Skeena Fisheries Commission in northern British Columbia.
Before I begin outlining why the First Nations that comprise Skeena Fisheries Commission strongly urge the Standing Senate Committee on Transport and Communication to make Bill C-48 law, I believe that a brief overview of my professional and personal background will help put things into context.
For the past 13 years I’ve worked with First Nations fisheries programs, both in Ontario and British Columbia, the past nine of which have been for Skeena Fisheries Commission. Skeena Fisheries Commission is an Indigenous fisheries organization that serves to protect Indigenous fisheries interests and fisheries resources, particularly for conservation in the Skeena Watershed.
The current Skeena Fisheries Commission member nations include the Gitxsan First Nation, the Gitanyow First Nation and the Wet’suwet’en First Nation, all of which have their traditional territories and fisheries within the Skeena watershed.
Even though the Gitxsan, the Gitanyow and Wet’suwet’en First Nations are all up river nations, the salmon populations upon which they depend for physical and social sustenance are anadromous species, which means that they spend part of their life cycle in the marine environment off of the north coast of British Columbia, and would be catastrophically impacted by an oil spill from a tanker in this area.
An oil spill would also result in a catastrophic impact to the salmon, which would harm Gitxsan, Gitanyow, Wet’suwet’en cultures, economies and their way of life.
I’m originally from Dartmouth, Nova Scotia, and like many Maritimers, I’ve been obligated to leave the region to find meaningful well-paid employment elsewhere, due to a lack of substantial economic development in my home province. I acknowledge that oil and gas industries are currently economic mainstays for both provincial economies and the Canadian economy at large, however, I think that all levels of Canadian government would be wise to learn from other countries, such as Norway, which has managed their oil and gas industries much more productively for the benefit of all their citizens.
One of my key job responsibilities with Skeena Fisheries Commission is to provide technical advice and oversight on fisheries and environmental matters that can potentially affect member nations’ fisheries and aquatic resources interests, particularly on environmental assessments for large scale industrial projects, such as oil pipelines.
Many of the industrial environmental assessments I have been involved with in northern British Columbia, particularly on the coast, have been ill-conceived with regard to their purported economic benefits and potential environmental impacts.
Making Bill C-48 into law is a golden opportunity to protect both coastal and riverine ecosystems from the irreparable ecological harms that would be caused by an oil spill from a large oil tanker. For all of Skeena Fisheries Commission’s member nations, fisheries and aquatic resources, particularly salmon, are absolutely crucial to their way of life. I cannot over emphasize this point enough, namely that salmon are absolutely crucial to First Nations, from providing winter sustenance and relatively cheap protein to the importance of salmon in community building.
For instance, every summer within many First Nations communities in British Columbia during food fish openings, whole extended families harvest salmon and get together to process it by canning, smoking and freezing. Everyone participates, from elders to children.
Even without the risk of an oil spill many of the salmon populations upon which Skeena Fisheries Commission Member Nations depend for sustenance are in dire straits. Climate change, amongst many other factors, has decimated the numbers of adult pacific salmonids surviving the marine lifecycle stage to successfully return to their natal rivers and streams to spawn, thereby reducing or eliminating future generations of salmonids.
By passing Bill C-48 into law, one potentially catastrophic factor, oil spills, to the salmonid population viability and survival can be virtually eliminated for northern British Columbia.
All of Skeena Fisheries Commissions member nations utilize hereditary systems of Indigenous governance, a key tenet of which is to take responsibility for making natural resource management related decisions that will not deprive future generations of their rights to healthy lands, environments and sustainable economies.
Thus, in conclusion, the First Nations that comprise Skeena Fisheries Commission strongly urge the Standing Senate Committee on Transport and Communications to make Bill C-48 law.
Thank you for affording me, on behalf of Skeena Fisheries Commission, the opportunity to speak to you today on Bill C-48.
The Chair: You’re welcome.
Mr. Willy?
Sean Willy, President and Chief Executive Officer, Des Nedhe Developments: Good afternoon. I’m happy to be on Treaty 4 land, the home of the Metis in Regina today. It’s my pleasure to be here with you today to give the committee my input on Bill C-48. I want to highlight what is possible around Indigenous economic development and why these bills, and bills like it, are quickly taking away opportunities which support self-determination of Indigenous peoples.
As mentioned, my name is Sean Willy, President and CEO of Des Nedhe, English River First Nation’s Economic Development Corporation.
By way of background, I met some of you before, but I want the rest of you know who I am. I was born and raised in Canada’s North. I was born in Inuvik, lived in Ft. MacPherson, Rankin Inlet, Nunavut and Yellowknife, Northwest Territories, and I am a member of the North Slave Métis Alliance. I still have strong connection to my Metis and Denesuline ancestry. I grew up in a family with a Dene mother and a mining executive father.
English River First Nation had a long history of working with the resource industry. Like any relationship, it has an ongoing partnership, but what English River saw was opportunity. Community leaders saw that the world wanted and needed the world class uranium deposits found on their traditional territory, and they knew they could support this development if they were involved in all aspects of the environmental monitoring process, and to better their community through the creation of businesses geared toward resource development.
Community leaders have always felt that you cannot drive toward self-determination on government funding alone. You must create your own wealth, but not at the expense of the environment.
Over the past 27 years this has evolved into Des Nedhe Developments, one of the most progressive tier one Indigenous owned and driven entities in Canada. Our mandate on Des Nedhe is based on three key pillars: operate a business that is separate from political influence; provide community dividends that support community infrastructure and operations; and maximize employment of our band members and other Indigenous people.
Des Nedhe is comprised of a diverse group of companies, the heart of which is an industrial division which includes TRON Construction, the country’s only 100 per cent First Nation entity which focuses on mechanical piping and electrical instrumentation construction. TRON has been built through progressive partnerships with the resource industry, but has diversified to attract additional clients, including Saskatchewan Crown corporations, national construction allies, oil and gas partners and nuclear companies. On average TRON employs 60 per cent Indigenous people.
Des Nedhe has diversified away from the resource sector and in addition and has invested in renewable power projects, underground mining opportunities, large steel fabrication, communications marketing, government relations firms, retail cannabis outlets, catering and housekeeping, and we are currently in a plan to develop our 140-acre urban reserve just outside Saskatoon, where we operate large gas stations and 63,000 square feet of commercial rental space.
We feel that this is the path to economic reconciliation. This has been achieved through progressive resource development partnerships with multiple entities. English River has always used resources of the land wisely, like every First Nation and Metis and Inuit group in this country. Still to this day members of the band hunt, trap and fish to support themselves. In fact, we still have commercial fishing operations which support the Fresh Water Fish Marketing Corporation.
English River always manages and protects their lands with the highest level of sustainability in mind. It’s not a one-or-the-other attitude. It’s an inclusive holistic strategy that’s born out of First Nations grassroots thinking.
Mine and other Indigenous business leaders’ main frustration is the lack of true dialogue and engagement with Indigenous communities before these bills are introduced, many of which appeal to a few colonialist environmental groups. These bills eliminate the opportunities that can support Indigenous peoples’ right to economic reconciliation and self-determination. To support Indigenous rights we need an Indigenous economy which provides training, employment and own source revenues through business. This bill, we feel, adds another hurdle for northern projects to jump over and takes away from those mid-level projects that could add value to all Indigenous Canadians.
I can imagine if the uranium deposits found in northern Saskatchewan were being opened in today’s political environment. I’m positive that due to the misunderstood nature of that commodity and the power of lies in the environmental movement, that English River First Nation and Des Nedhe would not be where we are today.
Des Nedhe strongly feels that the path to reconciliation is best achieved through economic development with strong involvement and participation in the environmental process. For the past 30 years English River First Nation and Des Nedhe have shown how this has been achieved through progressive relationships and resource development.
I’ll leave you with this: No culture of people has moved up the socio-economic and self-determination on government or philanthropic funding alone. At some point you need to use your own resources and take those next steps on your own.
We feel Bill C-48 and other bills like it in its current state will take away opportunities from all Indigenous peoples.
Thank you.
The Chair: Thank you very much, Mr. Willy.
Senator Miville-Dechêne: Thank you very much, gentlemen. We have from both of you very different views of development. For that reason, it’s really good to have you on the same panel.
Mr. Latremouille, since you are working with Aboriginal tribes on the salmon issue, what do you make of the positions of other Native tribes who want jobs and want the oil industry and who say the risk is minimal for an oil spill?
Second, you mentioned Norway as a good example. In what way is it a good example for Bill C-48?
Mr. Latremouille: To be clear, the First Nations that comprise Skeena Fisheries Commission are not anti-development everything, but allowing oil transport off of the north coast is ill‑advised in all our perspectives.
The Skeena Fisheries Commission, our member nations, don’t want to see other nations suffer on their paths to economic development and prosperity, but oil isn’t the only way to get there.
With Norway, they’ve established a fund from the royalties of the oil industry to the tune of $1 million per citizen. I don’t understand why we couldn’t do something similar in Canada.
Senator Miville-Dechêne: How have they been able to balance protecting the fisheries, as you are trying to do on the north coast, and the development of oil?
Mr. Latremouille: It depends on how you look at it. I know that Norway is a much more avid user of aquaculture on average than we are in Canada in terms of creating what you would call a production fishery. That’s a whole other can of worms, aquaculture.
I’ve worked in the U.S. as well and got a lot of my fisheries education there, and the U.S. uses, for instance, aquaculture much more to create fisheries opportunities than we do. From a conservation perspective, I don’t think that’s a great idea. To me it’s akin to somebody tying a set of antlers on a jersey cow and calling themselves a hunter. You’re basically adding a step.
I’m not saying that Norway is necessarily the poster child for everything, but Canada could make more of an effort to learn from examples around the world on what has worked in other locals.
Senator Neufeld: Thank you both for being here today. I appreciate it.
Mr. Latremouille, I’ll just read something. You said: “Many of the industrial project EAs I have reviewed for Northern British Columbia particularly on the coast have been ill-conceived with regard to their purported economic benefits and potential environmental impacts.” Would you tell me a few of those?
Mr. Latremouille: Do you want me to be fairly extensive?
Senator Neufeld: Just name what they are so I know.
Mr. Latremouille: Pacific Northwest LNG, also known as PETRONAS, is one. I was involved with that project environmental assessment from its inception to when they basically decided not to pursue the project anymore because they deemed that it wasn’t economically viable.
On the economic side, they started off saying there would be lots of jobs. Prince Rupert, for instance, a community very close to where that project would have been based, has been in economic hardship for quite a few decades now. There was a promise that thousands of Canadian jobs would be created as a result of this project, and at the time the Christy Clark government was in office.
At one point it was for Site C, but the provincial government in B.C. was looking at the regulations for temporary foreign workers and PETRONAS got all upset that, “Oh, well, if you change these regulations then we can’t build our project.” My first thought was how are these Canadian jobs if we’re bringing in a bunch of temporary foreign workers, and how is that really helping Canada and its economy as a whole?
On the environmental side, where PETRONAS wanted to physically locate that project is an area called Lelu Island, and immediately adjacent to is it an area called Flora Bank, which has been established as the most valuable juvenile salmonid habitat for the entire Skeena. The project went through several different design iterations, but the first one quite literally was to dredge up the centre of Flora Bank while saying that they could mitigate it, that there would be no habitat loss and that there would be no fish production loss, without any kind of statistical defensibility behind it.
It went through numerous iterations before they decided not to go with it, and my viewpoint on part of why they decided it wasn’t economically viable was a lot of the environmental mitigation they promised to perform — one, were highly unlikely to work effectively and, two, were going to be incredibly financially onerous to execute. That would be one example.
There are multiple mines I’ve dealt with farther up the watershed that basically their proposal, if it was executed, would destroy entire fish populations. With pacific salmonids, it’s not a case of building a hatchery and then out-planting a bunch of sockeye. Those things don’t tend to work.
Senator Neufeld: Thank you. I get where you’re coming from. I was involved in both of those, so I’m aware of what took place.
When you say a tanker spill, let’s remember that those tankers are double hulled, compartmentalized, so the full tanker, if you did have an accident, isn’t going to release all of its oil. It’s not anything like the Exxon Valdez. The ships that come from Valdez now to the lower 48, travel about 50 to 80 miles, somewhere in that neighbourhood, offshore. If one of those had a catastrophic accident out in the open water would that affect the fish, the salmon that you’re talking about?
Mr. Latremouille: There’s definitely a strong possibility that it would.
Senator Neufeld: Those tankers have been going up and down the coast now for a long time, and there has not been, to my knowledge, unless you can help me here, a catastrophic accident off the northern coast of British Columbia that had a big effect on the salmon.
Mr. Latremouille: Well, it was a smaller one in Heiltsuk territory, the Nathan E. Stewart.
Senator Neufeld: Yes.
Mr. Latremouille: The spill response was entirely inadequate and they’re still dealing with the aftermath and the damages. I’m not saying that the U.S. is perfect with their oil industry by any means, but on the Canadian side, especially for the north coast, we’ve got a ways to go, and the Nathan E. Stewart carries a much smaller amount of oil than a large tanker.
Senator Neufeld: It was a barge that was close to shore.
Mr. Latremouille: However, it’s not a reassuring sign to see that we didn’t handle it well, so how are we going to do in the larger scenario?
Senator Neufeld: I appreciate that. That is, in fact, true. We don’t have all the updated clean-up facilities that we need on the north coast.
Mr. Willy, your last sentence says, “We feel Bill C-48 in its current state will take opportunities away from all,” and I’m stressing the “all,” Indigenous peoples.” Can you explain that a little bit more?
Mr. Willy: Indigenous business over the last 30 years is the fastest growing segment of business in this country. We need access to ports, wherever they are, to provide inland opportunities for all Indigenous peoples.
There’s this fallacy out there that Indigenous people weren’t involved in commerce before Europeans came, but we traded with each other, had natural links with each other, all across the country, a supply chain. For instance, we do a lot of construction work and services work for oil and gas industries. It just slows that whole industry down and takes away a portion of the revenue. That revenue, those profits, don’t go to multinational stakeholders or shareholders, they go back to the poorest Canadians. The poorest Canadians then go out and spend that money to move up the socioeconomic run, right? They buy other foods, get involved, promote education for their youth.
If you stop access to shipping out oil, it affects everyone along the line in oil-producing provinces. It is not only the oil-producing provinces, First Nations are now getting involved in technology, so we’re all getting involved and we’re all connected across the country.
Senator Busson: My question is primarily for Mr. Latremouille,
We’ve heard testimony from witnesses from northern British Columbia. One that sticks in my mind vividly, because of his impassioned presentation to us, is the Mayor of Lax Kw’alaams. He felt that closing the door to an opportunity for a port in his area would stifle and affect any possibility for economic progress for his community and for his children for generations to come. Could you explain to me where the Gitxsan, Wet’suwet’en and Gitanyow groups are vis-a-vis the Metlakatla and those First Nations that are clearly for a gateway through either Prince Rupert or Port Simpson or one of those areas so that they could participate in whatever prosperity might be afforded?
Mr. Latremouille: It’s easiest to give you a little background.
Lax Kw’alaams had some affiliation with the organization I work for, Skeena Fisheries Commission, but Lax Kw’alaams has both systems of Indigenous governments, the heredity system and then the band-based system, which is what John Helin — the Lax Kw’alaams mayor — and the band council work under. The band system is not entirely representative of the point of view of the entirety of the Tsimshian community there.
To give you an idea of the geography, Metlakatla, Lax Kw’alaams are in the coastal areas by Prince Rupert, Port Edward. The Wet’suwet’en, the Gitanyow, the Gitxsan, are farther upriver. My office is based in Kispiox, British Columbia, which is in the heart of traditional Gitxsan territory. The Gitanyow are farther to the west of us near Kitwanga on the Kitwanga River, and part of their territory actually spills over into the Nass watershed.
The Wet’suwet’en overlap the Skeena, the Bulkley River and the Morice River and Lake, and their home base is actually Smithers, where I live. So they’re farther upriver, but all the salmon populations that are accessed in that part of the world spend part of their lifecycle out in the ocean.
Senator Busson: For clarification, because it can be confusing to some of us, the group that you represent isn’t necessarily the entire group in the Skeena watershed?
Mr. Latremouille: Meaning all the First Nations in the Skeena watershed?
Senator Busson: Right.
Mr. Latremouille: No, not currently, but I’m sure you’re aware that with First Nations there can be lots of internal strife and politics. I guess it’s sort of an aside, but working at Skeena Fisheries Commission, it saddens me to see people fight one another, undermining the greater good because they can’t see past their dislike of a certain individual or situation.
That said, the Skeena Fisheries Commission does look at all the fisheries issues in the Skeena watershed.
Senator Busson: Are you affiliated with the hereditary chiefs?
Mr. Latremouille: Yes.
Senator Smith: I met you, but you might not remember, at the War Memorial dinner, and you gave a fantastic presentation, as you’ve done today.
Having spent a few weeks going through B.C. and then through Alberta and to Regina, the Indigenous leadership, who are pro-development say the same thing, that we have to get our people out of poverty. The people who are for Bill C-48 say we have to save the fish. When you ask those individuals what is the economic development program, there’s sort of a look, I’m not sure if it’s a conscious look or not, and I’m not sure what the answer is to that one.
In talking to the Indigenous folks in Alberta and here, it would appear that one of the objectives, and I’m sure you’re already doing this, is how can we get the people for and the people against together so we can plan, if it’s meant to be. It seems that there is an opening, but the opening is only going to evolve if you can get the people together. I recognize, as per your point, the challenges when Indigenous people compete against each other, and that’s the same in any society.
Mr. Willy, what comments would you have on promoting a balanced, reasonable economic approach, because “not in my backyard” doesn’t work. That, to me, is just kind of goofy.
Mr. Willy: It’s nice to see you again, Senator Smith.
The model is a made-in-Canada approach; it’s not new. What they’re proposing in northern B.C. is not new. You can take the region of northern Saskatchewan where we have multiple people who make a good wage economy, who generate tax for the economy, and they still live sustainably on the land.
You have people in the Northwest Territories who have dealt with diamond developments in their traditional territory who are involved, who make good money and still live off the land. All these questions have been raised for the last 40 years, whether it be caribou, salmon, bison, muskox or polar bears. We had a made-in-Canada approach, and that’s involving Indigenous people early and often in the design of these projects, which happened in northern Saskatchewan. We’re a little humble in northern Saskatchewan. We don’t toot our horn loud enough about what was achieved there. They’re involved in the design, the ongoing monitoring, the fish palpability tests they do in northern Saskatchewan and Northwest Territories, that are tied to the mines to show the Indigenous people that the fish are not changing.
You are incorporating traditional knowledge throughout these processes and making sure that Indigenous communities are involved in the reclamation and decommissioning of all these activities.
The model is there. There is always nation-to-nation dialogue going on with these communities.
I travel around the country. Last week I was in Kitigan Zibi in northern Ottawa talking about how to create economic development. We do this because we see it as the path forward, because we respect the land, the environment we all grew up in, but we want to move forward and give our kids options in this world.
Senator Smith: There seems to be an issue in that proponents seem to be able to have consultation with the Indigenous leadership. Is the weakness in the consultation concept where government doesn’t do its job to sort of make the triangle whole?
How can you build the proper management model so this thing is going to work and you’re going to have true consultation? All I’ve heard over the past weeks is consultation, consultation, consultation, and I want to get a sense of whether it is between the Indigenous leadership, the proponent and the Indigenous leadership or is it between governments? I’m sure you remember that young lady with the natural gas project, who gave a great presentation.
Mr. Willy: Yes.
Senator Smith: She said that until the proponent understood exactly what we needed and wanted, we did nothing.
Mr. Willy: You need that relationship, an honest relationship where both sides are honest with each other, and a lot of progressive resource companies out there right now are at that stage. It’s a journey that both communities and the proponents take.
The proponents look at it as a legal check box they have to do, but over time and discussion with the Indigenous communities, it becomes the right thing to do. Once you get moving, the relationship moves forward and it actually becomes a valued thing to do. It generates value for the proponents’ bottom line, and it is seen by the community as a valued proposition all along the life of the project.
Senator Smith: How do you keep the government in the triangle?
Mr. Willy: I haven’t figured that one out because government changes. You have these government changes and the value proposition with the government is somewhat different. You have to look at the models that were created in other jurisdictions. I think those models are out there. The development in even Labrador on the Voisey’s Bay project, developments in Nunavut. The examples are all around Canada. I don’t think we do enough sort of debriefs after the fact to see what made that successful, that specific case.
Senator Gagné: My question was similar to Senator Smith’s, so I’m just going to ask Mr. Latremouille to comment on the question that was posed, and comment on the development model for the B.C. coast.
Mr. Latremouille: So you’re asking about consultation in terms of a specific project. I empathize with your frustration. I can tell you that from my environmental assessment experience in British Columbia, I saw quite a few cases where governments — especially the provincial government, and to a lesser extent the federal government — were involved in environmental assessments, and would try to download a lot of their consultation obligations to the proponent. To me, that’s an exceptionally flawed way to approach things.
I don’t blame anyone who works for a pipeline company or works for a natural gas company wanting to promote their project and want it to go ahead. You would have a tough time working for an organization if you don’t believe in what they’re doing at some level. You have to look at it from another lens. The project proponent is supposed to consult with you, and they want their project to go ahead, and there can be almost a disincentive at times to be objective about certain aspects.
I experienced that with the PETRONAS environmental assessment, where I had numerous arguments with their environmental consultants about some pretty basic scientific concepts. It really staggered me. I was thinking that this is basic science, this is something that really shouldn’t be up for debate. The regulators, both the federal government and the provincial government, in that case weren’t stepping up to the plate and pointing out that something was amiss here and being the adjudicators that they should have been.
From my perspective, both federal and provincial regulatory bodies have to get back into the business of regulating. PETRONAS came in with wild promises of economic prosperity. I think those glasses kind of have to be left off to take a look at potential benefits, impacts good and bad.
Senator MacDonald: Thank you both. Good to see you again, Mr. Willy. We seem to be running into each other quite a bit.
Mr. Latremouille, we’re both Nova Scotians. You’re a fisheries biologist. I have a few friends who are, and I respect their work. You talk about a disincentive to examine certain aspects. Of course, that would apply to you as well since you’re an employee of the Skeena Fisheries Commission. You have an obligation to promote their best interests, as you will do and should do.
In terms of this outright ban that you seem to support, and you’ve already mentioned the Nathan E. Stewart, the ban doesn’t really stop the potential for an oil spill, it just stops oil from getting to the West Coast so it can be put in tankers.
Mr. Latremouille: The political shenanigans of TransCanada aside, I’ve noticed that the attitude has been that if Bill C-48 comes to pass, there won’t be any oil shipments off the West Coast, and that’s not true.
Senator MacDonald: No, but there are 283 million metric tonnes on the East Coast, and there’s 6 million on the West Coast. It’s not as if you’re carrying the heavy load here, not even close. A single-hulled vessel will always be more of a danger for an oil spill than any double-hulled vessel. That’s just mathematics really, statistics.
The outright ban still doesn’t solve the problem of the potential of a spill which could still occur. There’s ferries, fishing vessels, all types of vessels going up and down that coastline. I just think that’s where the argument falls apart a bit.
Mr. Latremouille: Then you get into the magnitude of the spill. It’s definitely going to be more catastrophic, double-hulled tanker or not.
Senator MacDonald: Well, again—
Mr. Latremouille: — with a large oil tanker than with a ferry.
The Chair: Senator MacDonald, let him finish.
Mr. Latremouille: Sorry.
The Chair: Go ahead and finish. Don’t interrupt each other. It will be better that way.
Senator MacDonald: The one thing I do agree with you on, and I’m just wondering if you’re open to it, we have really good spill response units on the East Coast, on the Bay of Fundy, Point Tupper, up in the Gulf of St. Lawrence. The Government of Canada, I suppose because of the moratorium, has not seen the need or necessity of putting a good spill response unit up there. I think the Nathan E. Stewart shows that’s not true.
Would you be more open to some sort of a passageway to the West Coast if they had proper spill response facilities in the northern part of the B.C. coastline?
Mr. Latremouille: There are definitely a lot of specifics to work out. That said, I worked in the Coast Guard on the East Coast. What struck me was that within the country of Canada — at the time I worked for the Coast Guard, the inshore rescue boat program was a dramatically different process on the West Coast than on the East Coast. There certainly could be better national communication on things like safety response and oil spill preparedness.
I think if you could get it to a level where you could have, say, a 95 per cent probability of an incident not happening, I’d be willing to entertain it. There are so many information gaps right now. It would be one thing if that was the only option to get oil off the West Coast, but it’s not. To me, taking needless chances in an area that’s pretty pristine isn’t worth it.
Senator MacDonald: I see some hope there, and that’s good. Like yourself, I grew up in a maritime economy. Wouldn’t it make more sense to manage heavy oil or petroleum from the ports on the West Coast that are best suited to handle heavy oil, like Prince Rupert, Port Simpson, as opposed to Burnaby, which, according to the government’s own studies, is one of the worst ports on the West Coast for handling oil?
Mr. Latremouille: Oil in general or just heavy oil you mean?
Senator MacDonald: All oil. Prince Rupert and the Port Simpson area have long been identified by the Departments of Environment and Fisheries as being the best ports for handling the export of oil. So we have to get it there in order for them to handle it, how do you propose we get it there?
Mr. Latremouille: You mean getting it to the port itself?
Senator MacDonald: Yes, you have to get it to those ports, those are the best ports.
Mr. Latremouille: I’m just wondering what studies they’ve used, because there was a comprehensive fisheries study in the late 1970s and early 1990s—
Senator MacDonald: That’s the study.
Mr. Latremouille: That study advocated strongly for not having any large scale industrial developments in the Prince Rupert, Port Edward harbours. Those were studies that PETRONAS did its utmost to disregard. It took quite a bit of hand waving and shoving it in their face, so to speak, to get them to acknowledge that this area has high salmon values.
The Chair: Mr. Willy, could you tell me how many employees you have?
Mr. Willy: Right now we have about 250, 60 per cent Indigenous, and in the summer season it grows. We will probably grow to 600 or 700 people this summer.
The Chair: How do you think Bill C-48, coupled with Bill C-69, will affect your business? How many people might lose their jobs?
Mr. Willy: We won’t hire as many people on certain projects. For me, it’s worrying about the 634 First Nations, Inuit and Metis communities. As I mentioned to Senator Smith, we see a path to self-determination through economic reconciliation for all Indigenous people, and that’s why I mentioned that if we were just starting the resource development today in northern Saskatchewan we would get held up by misconceptions like our culture cannot survive if we get involved in resource development. We’ve shown it, and we have known hundreds of other communities that have moved forward and balanced both the environment and the economy and have been better off for it.
The Chair: Mr. Latremouille, you mentioned that there are other ways on the West Coast to move oil from Western Canada. What would that be?
Mr. Latremouille: Well, TransCanada, if the politics behind it can get sorted out.
The Chair: You mean the Kinder Morgan pipeline?
Mr. Latremouille: Yes.
The Chair: It isn’t built yet.
Mr. Latremouille: There are some proposals. I understand it’s an existing pipeline but with double the capacity.
The Chair: I understand that, but would your organization and the First Nation bands lobby the NDP government to quit obstructing that pipeline being built so that oil could get through the Vancouver coast?
Mr. Latremouille: We haven’t been lobbying either way on that particular pipeline.
The Chair: That’s interesting because you don’t want it on your coast. You’re not working hard to get it on the southern coast, so how would we get the oil out of the country?
You say that there is a way to get the oil out of the country outside of going to northern British Columbia, that would be through Vancouver.
Mr. Latremouille: Right, but what about going east as well?
The Chair: We have a problem there with the government that’s trying to prevent that pipeline from being built. I’m asking you, do you think Indigenous bands would be helpful in convincing the Government of British Columbia to build that pipeline?
Mr. Latremouille: To be clear, the First Nations I work with aren’t bands, they’re hereditary based, and it’s not really my position to stipulate how they feel about that. I don’t know if they would be able to put in an effort or if it would make a difference lobbying the B.C. government.
We’ve been at arm’s length on that whole thing, but that’s not the only spot to ship from. What about going east? Another thing, maybe it’s not central to this discussion, but what about more refining in Canada?
The Chair: So we move all the oil east, and none of the oil west? Is that what you’re saying?
You’re the scientist here. I’m trying to get an answer to the question. Where would the oil go?
Senator Miville-Dechêne: He’s a scientist, not a lobbyist. Maybe we should leave him and —
The Chair: So what — don’t argue with me.
Mr. Latremouille: What’s the question?
The Chair: The question is how are we going to get the oil from Western Canada through to the West Coast if we can’t get it through northern B.C. and we can’t get it through southern B.C.? Right now the NDP Government is fighting that Kinder Morgan pipeline, so how would we get it out?
Mr. Latremouille: Well, what about collaborating with the U.S.?
The Chair: There we go. Okay, thank you.
Any further questions? If not, thank you, witnesses, for appearing here today.
For our second panel this afternoon, I’m pleased to welcome, from Suncor Energy, Mark Prystupa, Director, Government, Indigenous and Community Relations; as an individual, Blair Stewart, Former CEO and Founder of Stewart Southern Railway; from Jerry Mainil Limited, Dale Mainil, Vice President of Acquisitions; and from Wil-Tech Industries Ltd., Jim Wilson, President.
Mr. Prystupa, please.
Mark Prystupa, Director, Government, Indigenous and Community Relations, Suncor Energy: Good afternoon. I’d like to begin by acknowledging that the City of Regina is located on Treaty 4 territory, the original lands of the Cree, Ojibwe, Saulteaux, Dakota, Nakota, Lakota, and on the homeland of the Metis Nation.
Thank you for the opportunity to participate in this important forum.
My name is Dr. Mark Prystupa. I have 25 years’ experience working in academia, government and now industry. Just about all of it has been in relation to Indigenous peoples and resource development.
At Suncor we value financial, social and environmental performance. It’s not a choice for us if we want to be a successful company in the long term. We provide significant contributions to Canada’s social and economic prosperity through our work with Indigenous peoples and others, as well as through the taxes and royalties we pay to governments and the over 12,000 workers we employ. Our investments of $350 million annually in technology and innovation are allowing us to produce oil with declining GHG emissions.
You’ve almost completed your hearings. I’ve been paying attention. Congratulations and thank you for coming out to B.C., Alberta and Saskatchewan.
Concerns have been expressed about spills and their potential devastating consequences to the pristine north coast of British Columbia, including traditional food places of Coastal First Nations, and also a risk to aquaculture and tourism. From others you have heard that this bill sends a chill to investment in Canada, it detracts from Canadians receiving fair market value for their oil resources and it is taking away opportunities from impoverished Indigenous communities. Suncor believes that all these views are legitimate and must be taken into consideration.
Suncor does not believe, though, that the Oil Tanker Moratorium Act properly addresses any of these interests, and that is why it’s so controversial.
In our view the tanker moratorium is deficient for two reasons. One, it followed a fait accompli process. The tanker moratorium was presented as a fait accompli based on the Transport Minister’s mandate letter. It was never the intention to engage with communities and stakeholders, but rather to convince them. Minister Garneau even said it to this committee on March 20, Bill C-48 is “binary in nature.” This is how the engagement sessions on the bill went, too. We’re smarter than this.
The federal government committed to more in their 10 principles respecting relationships with Indigenous peoples, and it spoke about developing processes that brought people together for real engagement and collaboration and understanding of their interests.
The question should not have been whether one supports the moratorium or not, but how best to protect the marine environment and support local and national economies.
Lack of evidence. The Government of Canada is committed to evidence-based decision-making, but that seems absent here. You’ve heard about the Nathan E. Stewart resupply barge, the Simushir bulk carrier incidents, both of which wouldn’t be related to this moratorium. You’ve also heard about the substantial improvements in tanker safety. Understanding the risk of existing, and tanker traffic should inform the legislation, and yet we’re not aware of any risk assessment that’s been done.
The legislation focuses on prohibiting crude and persistent oils, seemed like a vast oversimplification and doesn’t fit the science. Dr. Dettman from NRCAN, who I know appeared before the committee, found that the behaviour of diluted bitumen is not unexpected or totally different from other petroleum products. We’re not really sure why some are on the list and some aren’t. Other variables affecting prevention and the fate and behaviour of oil in water were not considered.
The divisive and blunt banker moratorium should not be passed. Rather, the federal government should lead an initiative that uses the best available scientific evidence and Indigenous knowledge. People should be brought together with the goal of protecting British Columbia’s north coast and advancing local and national economic interests, rather than passing legislation that splits Canadians apart.
Suncor firmly believes that there can be a better outcome for everyone through such a process. You have heard about how a citizen involvement has led to the world-class system in Valdez, why can’t we make that happen in Canada?
If the bill is to be passed, Suncor would suggest an amendment where some land would not be included in the described geographic area. A marine corridor could be created that would include considerable investments in oil spill prevention and emergency response while avoiding the most sensitive and dangerous waters, and probably making all shipping throughout the region safer.
Any potential oil project would be subject to a comprehensive, multi-year impact assessment process requiring government approval, and would include considerable investments in spill prevention and emergency response. Indigenous partnerships would be absolutely essential.
I am sure that in the long term the economy, communities, and indeed the safety and protection of B.C.’s north coast would be better off if we worked together rather than passing this legislation. Let’s start the conversation.
Thank you, and I’m happy to answer any questions.
The Chair: Mr. Stewart.
Blair Stewart, Former Chief Executive Officer and Founder of Stewart Southern Railway, as an individual: Thank you. Just as a sidebar, this is not my job or occupation. I’m not a public speaker, so you have to forgive me.
The Chair: We will have a conversation then, Mr. Stewart.
Mr. Stewart: Thank you.
Good afternoon, ladies and gentlemen, thanks for your time. When I first heard of Bill C-48 from the media and the federal government the description I heard was a tanker ban for oil and dangerous goods. The question for the panel is whether this is true or false. I think the correct answer is false, as only certain products listed in Bill C-48 are banned.
The ones that are banned are marine diesel, synthetic crude, lubricating oil, dilbit and bitumen. Why do you not see LNG? Maybe the answer is that the coastal gas link pipeline approved in October 2018 runs from Dawson Creek and Kitimat, B.C. — I think we know what was going to go in it at Kitimat. The bill will allow LNG to travel on tankers over the same waters that are restricted for certain types of oil on the Northern Gateway Project.
This kind of politics, which I might add goes with no scientific facts, restricts three Prairie provinces in developing their own natural resources, which are effectively landlocked, and leaves them with heavily discounted oil reserves. This very divisive bill goes against the best interests of many First Nation communities, as well as many other communities along the road.
This bill also sows great division between Western provinces and Eastern provinces. How do you think the people of Manitoba, Saskatchewan, Alberta and B.C. think about this bill when they watch the flow of oil in tankers come up the St. Lawrence River, unload at the Irving refinery on the Atlantic Ocean? This is oil coming in from Saudi Arabia, $10 million a day, Iraq, North Africa, and Norway, which are not regulated by any such divisive bill as Bill C-48 and Bill C-69. Are these tankers all double-hulled like they were mandated to be on the West Coast? Where is the outcry for the coastal protection and the waterways on the East Coast, like there is on the West Coast?
I believe a reason is that the environmentalists and the government hide behind the protection of the coastal water on the West Coast, but seem to ignore the East Coast.
Really, the federal government in my eyes picks winners and losers. It chooses where tankers can travel, what oceans they can travel, what seaways they can travel. 1,500 U.S. ships travel from Alaska, drop off oil at Washington, Oregon, California weekly, with tankers full of oil that is restricted in Bill C-48, plus cruise ships and cargo ships, which I would argue have probably caused more coastal damage than tankers, especially the cargo ships.
I ask you, is this bill fair to all Canadians? Does the federal government really believe Western Canadians are unschooled on the world? Do they really believe we don’t understand what Bill C-48 and Bill C-69 have done to Western Canada? If they do, I’m here to tell them they’re incorrect.
Western Canadian people are highly educated, hard workers, very, very generous and highly entrepreneurial, and please never underestimate our resolve. As a Saskatchewan boy and a Canadian that has been in business for over 45 years, I’ve never seen in my life a government with this intended ill will against one half of the country.
Do we live in a nation that has one standard for the East and one for the West? Senators, I hope you will think about this.
In closing, when you return, I want you to ask the federal government three questions for me. One, why have we heard over the last four months about the loss of a possible 7,000 jobs in Quebec and Ontario? Nobody wants to lose their job, I agree, but I have never heard anybody come to the podium and talk about the 100,000 jobs that were lost in the West. Not once have I heard the prime minister address that.
Two, why has the Prime Minister not addressed the $100 billion — yes, 100 billion — investment lost in the energy sector in the West in the last two years? One hundred billion is a lot of money.
Third, why would the PM and the government try to pass Bill C-48 and Bill C-69 and then go out and buy a pipeline?
Thank you for your time.
The Chair: Mr. Mainil, please.
Dale Mainil, Vice President, Acquisitions, Jerry Mainil Limited: Good afternoon. My name is Dale Mainil. I’m from Weyburn, Saskatchewan, and along with my brother and brother-in-law, we own and operate an oil construction company, Jerry Mainil Limited. My father started it 58 years ago.
Over my 35 years in the industry I’ve seen a lot of ups and downs, but none have been worse than the last four years. Oil prices have been a major factor, and also the politics of regulation by this federal government have scared investment away in Western Canada. All you have to do is drive 100 miles south, across the U.S. border, and the oil activity is night and day compared to southeast Saskatchewan. I believe that’s the difference between regulating us to death and deregulating our good ethical oil responsibly.
We are good stewards of the land in Western Canada and produce good ethical oil. We are world leaders in extracting, producing and shipping. We already have some of the most restrictive environmental policies in the world, and Bill C-48 will do nothing but put another nail in our coffin.
With current government policies we are driving investment out of our country because we let the minority interest groups push a false dirty oil story. Western Canada is a clean oil rich region. There is nowhere in the world that the technology is safer, whether it be in transportation of oil by land or sea, and yet this government wants to continue choking us off with legislation like Bill C-48 and Bill C-69.
Bill C-48 targets the Western Canadian oil industry. It restricts tanker traffic, to my understanding, on the West Coast, but yet allows Eastern Canada to have unlimited tanker traffic up and down the St. Lawrence River and Atlantic Coast. This government has no problem with bringing in oil from Middle Eastern countries such as Saudi Arabia while putting a cap on West Coast tanker traffic which will kill markets for Western Canada crude oil. On top of that, the current government killed the Energy East pipeline. How are we supposed to develop new markets when we are landlocked in Western Canada?
In my view it sounds like a two-tiered country, one set of laws for Eastern Canada and one for Western Canada.
In Canada, over half a million jobs are directly involved in the oil industry. This does not include the thousands of spinoff jobs that it supports. When oil companies move their capital south of the border and don’t invest in drilling in Western Canada our employees and my fellow industry peers do not go to work.
In closing, we need a government that will work with industry, not one that regulates industry out of the country. This message that this bill sends to the rest of the world is just that.
Thank you.
The Chair: Thank you.
Mr. Wilson.
Jim Wilson, President, Wil-Tech Industries Ltd.: Good afternoon. My name is Jim Wilson and I’m President of Wil-Tech Industries. Thank you for inviting me here today, and I hope I can provide insight and answer any questions you may have.
I’m here today representing my family, company, community, province and country. We all have a stake in the Western Canada oil and gas industry and the outcome of Bill C-48.
The family I represent here today I work with and live with in Estevan at our family business. My wife Crystal and I have three children and now six beautiful grandchildren. Our family is our life.
The company I represent is Wil-Tech Industries and the 35 employees working hard there. Our company was founded in 1992 by myself and my wife, Crystal. We have branches in Estevan, Regina and now Saskatoon. Our company specializes in hydraulics, offering a complete line of products and services. We help keep the equipment in the oil and gas, mining, agriculture industries working. Our customers are the drilling rigs, service rigs, fracking companies and general oil field service companies. We repair the hydraulic equipment of the oil field and mining industries.
The community I represent is Estevan, the Energy City. Estevan, let’s say, is experiencing difficult business conditions right now with oil and gas as a major industry in the community. Estevan also has two coal-fired power plants, one being the largest clean coal CCS project in the world. Uncertainty is at its highest. We were a vibrant growing community five years ago and we are struggling for our existence. This federal government has regulated us into extreme uncertainty.
The province I represent is Saskatchewan. Normally we are not called into ocean discussions, but in this case, as one of the largest and most diverse suppliers of commodities to the global supply chain we need to be consulted. Saskatchewan is positioned as long-term global leaders in potash and uranium mining and a diverse offering of agricultural products. We sell what the world needs and we need access to global markets via our rails and ports.
The Saskatchewan oil and gas industry also needs that same access to markets and we have seen that access denied. Presently, investor confidence has been lost due to the ability to get the oil to market outside of the USA. We need pipelines and global shipping lanes, not promises of pipelines and barriers to global shipping.
The country I represent today is one I am very proud of. As a Canadian I want a clean and safe country. I’m not here to argue the importance and regulation of our oceans and waterways, we all know the importance of proper regulation regarding our environment. Canada is an incredibly beautiful country and we all see the value in protecting it. We must protect all our oceans and waterways. We cannot have an easy way into our country for crude shipments in the East, and a more difficult western export solution.
We need a bill that protects our waterways in the same manner. Bill C-48 was not implemented to protect our environment. It was put in place as a barrier to business in the Western Canada oil and gas industry.
The greatest value in our Western Canada oil and gas industry is not the barrels of oil in the ground; it is the technology and innovation found in our oil field service sector. The Canadian oil field service companies are leaders in the industry and are known globally for our innovation. We are one of the most responsible explorers, developers and producers of oil and gas in one of the most difficult climates and environments in the world. We should be proud of this sector, not ashamed of it.
Let’s take hurdles like pipeline construction and master it; ship-building technology and master it. We hold the third-largest reserves of oil in the world, with only Saudi Arabia and Venezuela ahead of us. I see our ability to lead the world in safe, efficient oil and gas exploration, development, production and transportation capabilities as truly viable.
The way this can happen is by creating opportunity and confidence within the sector, and private enterprise will rise to that challenge. We will see the development of technologies when industry knows the Canadian Government wants development within the industry from reservoir to tanker and final use.
We will see innovative environmental solutions within our oil and gas industry become marketable globally. We will not become global leaders accidentally, but with strategic growth initiatives and a confident business environment, you will see this naturally happen.
Create challenges to opportunity, not barriers to opportunity, and you will see Canadians meet the challenge. Let the Canadian oil field services lead the world.
In closing, I feel we need some common sense and a sign of support from this committee today. I realize that you’re all expected to vote party lines, and these meetings are considered to be a waste of time. I hope, in fact, that is not true and that you will consider a common sense solution and send this bill back to where it came from.
We need support in the Western Canada oil and gas industry. If you create opportunity, the industry will rise to that expectation. If we continue to make it difficult to get product to market, our industry will continue to struggle. We need a common goal, and that is to be the safest and most efficient explorers, developers, producers and transporters of oil and gas in the world.
Canadians respond much better to opportunity and challenges than they do to barriers and uncertainty.
Thank you for your time.
The Chair: Thank you, Mr. Wilson.
Senator Miville-Dechêne: Thank you all for your testimonies.
Mr. Mark Prystupa. First of all, thank you for your presentation and recognizing that all those views are legitimate because we’ve been we’ve been travelling from B.C., to Alberta, to Saskatchewan hearing very different ways of thinking and they all have some truth to them, obviously.
When you say no risk assessment was completed, what kind of risk assessment are you thinking about? We know that double-hull tankers are much safer than single-hull vessels were, so we know that. We also know that there has been some accidents, some oil spills, about one a year in a 10-year period, so they do happen, however, not often. What is missing there?
Mr. Prystupa: There are two things. One is in relation to the shipping risk assessment, the other one is in relation to the type of oil and the fate and behaviour of oil in water.
In terms of the shipping risk, it would be good to understand what is the existing shipping risk right now? Whether that’s from the cruise ships, the barges and so on. In terms of looking at the tanker traffic, if you consider all the things that would be potentially involved, all the mitigation measures and prevention measures that would be put in place for the north coast, we haven’t seen what sort of analysis that is. I don’t think that it’s sufficient or adequate just to base it on what the situation is worldwide. Rather, what is the situation under a world class system like the one that we would hope to develop for the north coast of B.C.?
Senator Miville-Dechêne: There are no tankers now in that zone. The tankers are going around the exclusion zone.
Mr. Prystupa: Yes, there’s a voluntary exclusion zone.
Senator Miville-Dechêne: Therefore, it would be a risk assessment of something to come; it would be a theoretical risk assessment.
Mr. Prystupa: Right, you can do theoretical models on Northern Gateway, on Trans Mountain. They’ve done models around what the risks are and what sort of mitigation measures can be taken. We think that the risk is very low, especially if you adopt all of those mitigation measures.
I’ve included a background document just in terms of what’s happened in Valdez, so that’s an example of some of the things you’ve mentioned, and more.
Senator Miville-Dechêne: It seems to me there was a risk assessment in the Northern Gateway Project, and it is still good, isn’t it?
Mr. Prystupa: I’m not sure that it takes into account the existing shipping. One of the arguments that I would make is any new project would come with hundreds of millions of dollars of new assets to the region. You’ve heard about the Simushir and no tug. It happened that a tug from Washington State happened to be closer by.
Senator Miville-Dechêne: Yes.
Mr. Prystupa: You’ve heard about the Nathan E. Stewart.
Senator Miville-Dechêne: Yes.
Mr. Prystupa: If you take into account that there’s already this existing shipping, what would happen if you added all these additional assets? Having a tug based on Haida Gwaii, having skimmers available, having vessels of opportunity, where coastal First Nations who are fishers can also supplement some of that income by being the first responders and monitors. If you take into all those sorts of situations, you potentially have safer shipping generally for the north coast as a whole.
Senator Miville-Dechêne: Thank you for clarifying that for me.
Senator Neufeld: Thank you, gentlemen, for appearing here. I have to say that I agree with all the things that you’ve said, and I can feel some of your pain about what has taken place.
If a tanker outside the exclusion zone, some 60 miles or so out in the open ocean coming from Valdez — and there has only been one accident coming from Valdez and that had to do with, I believe, a drunk captain and a few other things — had a catastrophic accident, the oil would come to shore. Wouldn’t that devastate the salmon fishing and all the things that people are trying to protect on the north coast?
Mr. Prystupa: My understanding from the drift studies is that if there was a challenge with one of those ships coming down from Valdez, generally the oil tanker would move toward Haida Gwaii.
I understand that there was some science done in terms of identifying where that voluntary exclusion zone was and if it was supposed to be a sufficient distance off the coast that it wouldn’t pose as much of a risk. However, as I responded to Senator Miville-Dechêne, if you had other assets in the region they would be better able to protect you from the existing shipping coming down from Alaska as well.
Senator Neufeld: I go back a ways because we tried to open up offshore drilling off the northern coast and weren’t successful. David Anderson was the Federal Minister of Environment and lives in Victoria. I asked him what would happen on the East Coast. He said that if there were an accident on the East Coast it actually wouldn’t come to shore, it would go over to someone else’s shore someplace else. I thought that was a pretty nonchalant way of answering a question, so I appreciate what you said.
Mr. Wilson, one thing that you said was, “Create challenges to opportunity, not barriers to opportunity, and you will see Canadians meet the challenge.” I truly believe what you’re saying. Can you tell us the challenges that you’re thinking about?
Mr. Wilson: The biggest challenge is uncertainty. We try to run businesses — and I’ve had mine for 27 years — in four-year political cycles, knowing when to invest and how to invest. Right now the desire to invest in the Western Canada oil industry is not there because there’s not a way to market, so there’s nothing to invest into.
We’re not seeing private enterprise invest into Western Canada oil right now is because there’s no solution in place. Until that solution is in place, the uncertainty of oil remains. For example, if the policy changed four years from now and suddenly we couldn’t ship oil West again the problem would be there. I don’t think there’s a confidence level that the government supports oil and gas at this present time.
The Chair: Does anyone else wanted to chip in on that question, which is kind of universal.
Mr. Mainil?
Mr. Mainil: Regarding investment, it is exactly what Mr. Wilson said. Ours is a volatile, up-and-down industry. We understand that, being inland. We rely, in agriculture, on our ports out West. Our oil commodities need access.
We’re an export country, especially Saskatchewan, Alberta, Manitoba, and when we don’t see a partnership with our governments, the investment isn’t there — it comes down to families, as Jim says, our families, our local families — we don’t work.
Senator Neufeld: The present government has always talked about being transparent and consulting with people before they make decisions. They’ve told Canadians that over and over again. With this tanker ban, the First Nations along the coast were actually told what was going to happen, and there wasn’t extensive consultation with those First Nations.
Did the government consult with Suncor in any way, shape or form and ask whether this measure would affect your company’s ability to produce oil and gain new markets, before they decided to draft a bill as draconian as no tankers off the north coast of British Columbia? Did someone from government say, we’re going to come in and close this down, it might cost 100,000 jobs, but we’re still going to close it down? Did they at least talk to you?
Mr. Prystupa: Suncor is obviously involved in a lot of policy development, and this is one of the examples where the structure of it was set out in a mandate letter. We had an opportunity to provide a submission and we did. One of the main arguments I was trying to make in testimony is that we didn’t have a chance to bring some of the scientists together; some of the First Nations together, both coastal and interior; the energy industry; to address all these legitimate interests, and I believe that there would have been opportunities to do that.
You’ve heard about things like the particularly sensitive sea areas. Maybe you shouldn’t have barges like the Nathan E. Stewart going near clam beds that are the traditional food place of the Heiltsuk First Nation. Potentially that could have been discussed. You could have discussed a potential corridor that would have included a risk assessment. You would have the latest science on the fate and behaviour of diluted bitumen, which would be the most likely oil to be shipped. We didn’t feel that there was opportunity to have those discussions on this proposed legislation.
Senator Neufeld: That says to me that the government did a lousy job of consulting with people. Also, they talked about making their decisions with science-based research. Obviously from your answer they certainly didn’t make it science based. It was just a political decision to actually frustrate the West in what is our main industry, which is oil and gas. Would you agree with me?
Mr. Prystupa: I would say that we haven’t seen the science around the risk assessment. We also haven’t seen the science around the list of prohibited and permitted oils.
Our view of it is that oil is a bit of a continuum, that there are pluses and minuses of both. This bill seems to sort of say that persistent and crude oils are bad and that non-persistent are okay, and we think that there are a lot of other factors involved. It has to do with the waves, the location of a spill, how close to a beach, what sort of the response capacity is, and we didn’t see any evidence of that being considered in this bill.
As an example, diesel when spilled is highly toxic, more toxic than diluted bitumen. Where that spill happens could influence the actual environmental impacts. If diesel spills near a clam bed that might be worse than if it were another location. Some of the science on diluted bitumen suggests that it floats and will float for quite a while. If that spill were away from a beach area, which is something that you could take into consideration in terms of designing location and shipping patterns, potentially it’s more recoverable because it will float. If you have the response equipment that can get there really quick, that’s more important.
Senator Gagné: Coming back to the bill itself and trying to balance what is right now a yes or a no.
Mr. Prystupa, you mentioned that a corridor should be considered. You also mentioned that the list is problematic. Would you have any other suggestions pertaining to amendments that could be proposed to the bill?
Mr. Wilson: That it be applied to all of our coasts. Take, for example, Hudson Bay and the recent Richardson considerations of shipping on the East Coast. We shouldn’t have three sets of rules. We should have one set of rules that do not create easy ways in and out of the country. That would be my opinion.
Mr. Mainil: I echo that. As I touched on in my introduction, it fractures this country. I know the West Coast is different than the East Coast, but a spill is a spill, the potential cleanup is the same and there’s devastation no matter what, and we don’t want that. I believe in our industry, the technology, the double hull design. We, in our industry in Western Canada are leaders in the world. We have as safe a technology as there is out there, but we overlook that. There’s always potential, but that can’t stop such a vibrant engine to our overall economy, which pays for hospitals, pays for so many infrastructure items that we provide to both Eastern and Western Canada. That’s my answer.
Mr. Stewart: I think both gentlemen said the same thing, and I agree that there has got to be a standard. I was in the grain business for 28 years where I shipped grain all over the world, so it’s interesting when you talk about standards or double standards. I’m quite familiar with shipping grain from the St. Lawrence Seaway, off the West Coast, off the East Coast.
Everybody on this panel and everybody in Saskatchewan or Western Canada believes in safety and environment. That’s not what we’re here to fight about. It’s hard to imagine being in lovely Quebec and all through that region, a very nice area, but where are the standards for the St. Lawrence Seaway compared to what we’re dealing with on the West Coast? You have to have a fair playing field if you’re going to play. Like these gentlemen said, we ship all over the world, and it’s very difficult to plan your strategy when everywhere you want to go or everywhere you want to buy from is different. Thank you.
Mr. Prystupa: Number one, we don’t think the bill is needed. There’s no project right now. There’s no shipping of oil. Any potential large scale project would take 10 years and would be subject to a comprehensive impact assessment. We think there’s time to bring groups together to have a conversation about it.
I understand that you’re in the position where you’re looking at amendments. We think that a corridor would provide, if it was situated where it could access deep sea ports, was in more open water, where there’s more support from the Indigenous peoples.
Another potential amendment might be where you would have a shorter termination date by which you would be able to bring the groups together, and it ends up getting replaced by a more comprehensive plan for marine production.
The Chair: Wouldn’t corridors take a lot of study? I mean, when you set up a corridor you’re saying, well, that’s where you build pipelines.
Mr. Prystupa: Since the bill is around what happens on land, it has to do with moorings, loading and unloading. You potentially identify a broader area by which you would be allowed to look at a project that would ship from those ports. Any further detail would be sorted out after a lengthy engagement and through a comprehensive impact assessment.
Under Bill C-69, the proposed impact assessment legislation, the Minister or Governor in Council makes the decision about what’s in the public interest. They can decide about whether or not it meets the interests of marine protection and supporting the local and national economies.
The Chair: The Banking Committee did a study on a national corridor that took about two years. There were Indigenous issues to consider, national parks, all these things in the way. There are provincial lands. Of course, in the end you’re saying that these kinds of infrastructure projects can go through that particular corridor. However, none of it can go through unless they start all over again and go to the National Energy Board. They’ve got to start again and go through all that process doing the same thing that they would be doing if the corridor wasn’t there. I’m kind of on your side saying don’t pass the bill, just get rid of it and start all over again..
Mr. Prystupa: I think what we see with the bill is it’s for forever.
The Chair: Yes.
Mr. Prystupa: We would say that any project would require comprehensive review. It would take seven to ten years. It would involve consultation with the Indigenous communities. It would involve risk assessments. It would involve an evaluation about whether or not it’s safe , whether it meets the national interests about exporting oil, Canadian GHG commitments and so on.
Senator Gagné: Do you think five years to get everything settled is a possibility? I see a yes and a no?
Mr. Stewart: No.
Senator MacDonald: We’ve got four gentlemen here. One works for a well established large company, Suncor, and three gentlemen are self-made people who sign cheques and meet payrolls. I had a business for 30 years. I just want you to know how much I respect your work and I know how hard it is sometimes to make payroll. It’s February, you’re going to the bank and nobody is there to help. You are on your own. I know all about it.
I wish I could say the country wasn’t full of double standards. In my experience, I’ve worked in Ottawa for the last 10 years and worked there in the 1970s and 1980s, and the country is rotten with double standards. Unfortunately, this legislation sort of exacerbates the example of what a double standard is.
As a Nova Scotian, we deal with oil all the time, none of which goes to refineries. Our refineries have been closed and all the oil that goes through our water goes through to the Bay of Fundy to the Irving refinery or to the refineries in Quebec. One thing that a pipeline that went east would do, if it went to the right port, is enable us to take all the oil out of our water. It is frustrating to see the double standards that do exist, I agree.
Mr. Prystupa, Suncor is a great company, does a lot of drilling on the offshore in Newfoundland. You have a large refinery in Quebec. I was in Quebec last week with the Energy Committee of which I’m a member, and I had a discussion about the Line 9 pipeline. Of course, the environmental activists say we don’t want more oil in Quebec, we don’t want dirty oil, but they’re taking oil all the time. In fact, Line 9 used to provide about 15 per cent of the oil to Quebec, but now it’s up to 50 per cent.
I asked someone there, have you noticed a big change in your lifestyle? Has it had a big impact on the way people live? Of course, nobody even knows it’s there. The pipeline has been there for years.
Since you’re with Suncor, I’m curious as to whether you have any insight into how those negotiations went when they negotiated the reversal of the line to bring more oil. I know the Mayor of Montreal was for getting this oil to the refineries, and I’m curious as to why they seemed to go so smoothly. It didn’t seem to be a problem to take more Western oil, flip it around and drive it through Line 9 when Quebec needed the oil.
Mr. Prystupa: I don’t know much about Line 9, but I can explain what I do know.
Line 9 was a reversal of the oil flow. Suncor has the only refinery that’s left in Montreal. We refine about 137,000 barrels per day, which meets the local needs, so the Line 9 reversal meant that we could provide Canadian feedstock to a Canadian refinery in Quebec.
Senator MacDonald: It didn’t appear to be too controversial to bring that oil in at the time. There was open support from the mayor and local politicians, and I believe the provincial government.
Mr. Prystupa: It was an existing pipeline, and essentially all you were doing was changing the direction of it, and it was supplying fuel feedstock that could be used to meet local market needs.
Senator MacDonald: Was it bitumen?
Mr. Prystupa: Yes, most comes from Western Canada.
Senator MacDonald: They would be blending that oil.
The Chair: Before that reversal of the pipeline was there a problem getting the oil, getting feedstock?
Mr. Prystupa: Yes.
The Chair: So that would explain why they would be so malleable, let’s put it that way.
Mr. Prystupa: Yes.
Senator Busson: I’m not sure who I would like to answer this question, I guess whoever feels the most comfortable with it. It’s palpable, the frustration in your voices around this topic.
I certainly hope, Mr. Wilson, that your time is not wasted because we feel very strongly, as you do, about the issue.
Mr. Wilson: I already feel it isn’t.
Senator Busson: Great. That makes me feel better. We all want to find a win-win for this. I think at the end of the day we’re all anxious to find a solution.
One of the conversations around the moratorium at the north end of the West Coast involves the suggestion that if TMX goes through, or if we get solutions to the other pipeline challenges that have been in the forefront in the last five years or so, that we don’t need to talk about a pipeline out of northern British Columbia.
Would somebody like to comment on that, perhaps through a lens of diversification. Is that a perfect solution to say if we get TMX and the other proposed pipelines on line that our problems are solved?
Further to that, another witness of ours made a comment, as a representative of investors, that for the north it would be very symbolic if that opportunity was left open. I’d like your comments on that, too.
Mr. Prystupa: You’ve heard about the differential. Right now, none of the other pipelines have been completed, Line 3, Keystone, Trans Mountain, and we don’t know whether or not those will actually get into service. Even if they do, the Canadian Association of Petroleum Producers has done a forecast of oil production and needs, saying there would be, according to those forecasts, a need for additional market access.
Market access from northern B.C. is excellent. It’s a deep-sea port; it’s more easily able to access the growing markets in Asia, within a shorter time frame, which makes a difference in terms of the cost and the differential price you would get back.
In terms of why we think that Canada should be producing, Suncor has invested a lot in new technologies that are driving down GHG intensity. I included the climate report as part of the background. We believe that Suncor needs to compete on both a cost basis, as well as a carbon basis, so we would like to be a producer of choice, and we believe that if we can displace oils coming from other countries that are a higher GHG intensity, we can help the transition to a lower carbon future.
Senator Smith: You have a piece of legislation in front of you and you are four decision makers who are going to decide the future of the bill and the future of trying to restart the oil and gas business in Western Canada from the vantage point of the West Coast. You have a problem, besides all the other problems that exist, with the divisive nature of not only the bill but the division that’s been created with people; east/west, within B.C. and then the Indigenous population in the rest of Western Canada.
What would be your three or four steps to try to kick start this thing forward if the four of you had to make those decisions? What would be your top three points to start off? It’s the old magic wand question, and I always like to ask it at a certain point.
Mr. Stewart: Well, I’m just going to give one short one.
It’s my recollection that in 2014 the Trans Mountain was approved. If we look at the oil industry, the jobs and everything else, we were full steam ahead in 2014.
As has been said, we sit here with the third-largest oil reserves in the world and we’re landlocked. When you talk about how we change things, in fairness, the rules got changed. Now we have added on Bill C-69, which is probably more onerous or at least the same. At the end of the day, when you ask that question, I say we need a streamlined process to get things done.
I think everyone in the world could come in and write an essay on Bill C-69. They could come in from Saudi Arabia. We could be listening to those guys, whatever they wanted to tell us, for 15 years. At the end of the day, a big investment in oil underneath us, and for the good of all of Canada — it doesn’t matter who we are; we are all Canadians — we have to streamline this process.
In 2015 and 2016 they talked about Bill C-48. In 2017 they put it in. It’s 2019 and we’re still talking about it. The election is coming up. Is that going to make any difference? Are they going to extend it? Are they going to play with it? We need to act on this.
If we don’t act, how many more years can we hold the oil in the ground? How many more years can we lose 100,000 jobs in Western Canada and in Eastern Canada, wherever they come from, Newfoundland, Nova Scotia? I mean, aren’t we all Canadians?
I want to shut up now, but I want to say at the end of the day, streamline the process and let’s get at it. You know what? We all want to be safe.
The Chair: You’re a pretty good public speaker, Mr. Stewart.
Mr. Mainil: If I could just add to that, it reflects very badly on the world. Why would you want to invest in Canada because we are the third largest —
Senator Smith: You might want to change that because you’re one of the four decision makers to set us on a new direction. What’s your opinion?
Mr. Mainil: New direction? Well, I’d burn that bill, first off, and I’ve got a match.
Senator Smith: Moving forward, what would you do?
Mr. Mainil: We have to promote our industry. This is a great industry. I’ve been involved in it all my life. My father started it. From an ethical view, it’s a great industry to be in. We have nothing to be ashamed of. Unfortunately the perception out there, and we have done a poor job maybe as industry spokesmen, of not promoting it enough.
The Chair: Mr. Wilson?
Mr. Wilson: I was very involved in the seismic exploration side of it, and sold all the exploration explosives for the seismic industry. For the last five years, the oil and gas industry has been exploring at one tenth the rate at which it used to explore. When you see that type of divestiture out of upstream development, it will take a massive amount of investment to get it back.
So $100 and $150 oil is coming, and we can’t stop it. It’s going to take that much to reboot and get the oil industry going again. When you get massive divestiture, it takes massive reinvestment to get it back. If you explore at one tenth your rate for five years, then it’s going to take that much more exploration to get it back.
We can’t ignore an industry this great and this large for this long and expect it to self-mend. It’s going to take what we call full cycle money. Right now, it’s half cycle — it won’t pay to re-drill, re-land, redo everything — and it’s going to take $100 oil to get the oil going again. This is not creating sustainable oil prices, this is creating high oil prices, and I don’t know if they can be stopped.
The Chair: Mr. Prystupa, do you have something to add there?
Mr. Prystupa: Establish good evidence-based policy and stick with it so that we know the rules going forward.
The Chair: With that, thank you very much, witnesses. That was an extent discussion and excellent presentations.
For our third panel this afternoon I’m pleased to welcome, from the Government of Saskatchewan, the Honourable Bronwyn Eyre, Minister of Energy and Resources.
Hon. Bronwyn Eyre, Minister of Energy and Resources, Government of Saskatchewan: Thank you very much, Mr. Chair, honourable senators.
First off, I would like to thank members of the committee for stopping in Saskatchewan, and I welcome you here. I know there was some question at one point and some talk of it being an unnecessary expense. Of course, we feel that that’s the last thing that it is, and that it’s necessary and important that you hear from Saskatchewan people directly about the impact on their jobs and their livelihoods that this Canadian energy crisis is having on people here in the province and in Western Canada.
This crisis continues to put Canadian jobs at risk, thousands across Western Canada and these are Canadian jobs. Just like GM, Chrysler or SNC-Lavalin jobs, we like to say that energy jobs are people too.
Why we’re here today and why we feel it’s important to address you on Bill C-48 is that the bill is part of a broader macroeconomic issue, which is that Canadian exporters are unable to get oil to tidewater. That has a trickle-down effect on the price that we get for Canadian energy products and ultimately on royalties, which of course fund hospitals and highways, social services and schools here and across Canada. This should be a national issue. After all, last year insufficient pipeline capacity cost Canada’s energy sector $20.6 billion, 1 per cent of GDP.
Here in Saskatchewan, we feel that within the federation when it comes to energy there is quite simply a double standard between east and west, even between west and west, and that is a painful realization and a painful truth to have to come to terms with.
If you told a person on the street that despite proposed Bill C-48, this oil tanker moratorium bill, that the $40-billion liquid natural gas terminal planned for Kitimat in B.C. will get federal relief from tariffs on steel modules and we will get a new pipeline to supply it with natural gas, and that it will be perfectly okay for LNG monster tankers to go through the Douglas Channel and upload LNG from Kitimat, but that this same bill would decree that oil tankers, which would load Western Canadian oil at the exact same port will not be allowed to go through the exact same channel, that person would say that’s a double standard, and that’s not a moratorium.
If you told that same reasonable person on the street that there are 20,000 so-called tanker movements per year in Canada, 85 per cent of which are on Canada’s East Coast, and that inbound tanker traffic carrying foreign oil products from Algeria, Saudi Arabia and Nigeria, among others, can enter Quebec ports without issue, and that of the 25 million tonnes of oil that Quebec imports per year on oil tankers, 89 per cent goes through the ports of Quebec City and Montreal, and this despite significant St. Lawrence beluga whale populations, that under Bill C-48 inbound foreign oil is okay, but outbound Canadian oil is banned, a reasonable person anywhere in the country would say that that is preposterous and that that’s not a moratorium.
The fundamental problem with this proposed bill is its selectiveness. Why the West Coast and not the East Coast? Why the northern B.C. coast and not the Port of Vancouver? Because northern B.C. is more beautiful than Vancouver or the St. Lawrence or the coast of Newfoundland? More environmentally fragile or valued? Of course not.
Let’s also not forget Newfoundland has significant offshore oil rigs, New Brunswick refined $1.6 billion worth of Saudi oil last year, why don’t they qualify for an oil tanker moratorium? You can see the dilemma for Western Canada and for reasonable people here.
Some of you questioned my colleague Minister Harrison a few weeks ago about why we can’t just focus on the Port of Vancouver or the U.S. coast, why we care about gaining access to northern B.C. The answer is: We already do focus on the lower mainland and U.S. coastal ports, and we need access from anywhere we can get it, access to global markets to ease our hyper dependency on the United States.
As some of you pointed out, the United States clearly benefits from Canada’s continued lack of market diversification. U.S. refiners do access discounted barrels of Canadian crude oil and sell refined products to continental and global markets at full market price, and we could begin to fix this situation if we built more Canadian pipelines.
That was the whole point of Energy East and Northern Gateway and Trans Mountain, and why we were so concerned about more and more delays on the Trans Mountain project. Producers already in Saskatchewan eke out what product they can to the lower mainland by rail, for one, but, of course, those same rail tracks are in demand and in competition with other sectors from potash and other mining to agriculture. That’s why it’s called a transportation bottleneck, everyone wants access. Western Canada’s regional system of pipeline and rail capacity is highly integrated, so Saskatchewan’s producers would naturally benefit enormously from any new export pipeline.
Saskatchewan companies have become ingenious, highly creative, when it comes to working around the system we have with trucking, rail and whatever ports they can get to. They are making the best of a very bad situation.
Why we are focused on northern B.C. today and its deepwater ports and the global access that they would afford is because they would help assuage the Canadian energy crisis. Those northern ports would give Canadian exporters a full day’s export advantage. In other words, better, faster, cheaper shipping arrangements over other Pacific ports, including ports in the lower mainland, to rapidly growing Asian markets.
The Prince Rupert area, for example, would lead to a full 36hours faster shipping time to the world’s largest port in Shanghai than the port of Vancouver would. It would also avoid costly delays that routinely occur as a result of congestion of rail and ports in the lower mainland.
While we’re at it, Northern Gateway, which along with Energy East was killed by this federal government, would have reached northern B.C. and would have been just that, a northern gateway to Asian markets for B.C., Alberta and Saskatchewan producers, but benefiting all of Canada.
Northern Gateway will never come back to life with Bill C-48. This bill would kill it forever.
Eagle Spirit will never come to life with Bill C-48, at least along its proposed route. I understand that you heard in December from the Eagle Spirit Chiefs’ Council, the National Chiefs Coalition, the Indian Resource Council, who together represent some 200 First Nations communities, and they spoke to you about how the Eagle Spirit Energy Corridor Project could help reconciliation through economic empowerment.
It is a $12-billion investment that would create a once-in-a-lifetime opportunity for the 35 First Nations along the proposed pipeline corridor, who have indicated in principle support for the project. But Eagle Spirit’s prospective port at Grassy Point is in this bill’s proposed moratorium zone, and as its proponents have said, without tankers there can be no pipelines. That is called a wasted opportunity.
Your colleague Dennis Patterson, Senator for Nunavut has said: “I am struck by the division and acrimony that this bill breeds. It unnecessarily pits neighbour versus neighbour.” That is a tragedy.
In terms of solutions that we are putting forward today as Saskatchewan, we would suggest that you canvas and learn from, as much as you can, shipping stakeholders in Western and Eastern Canada about the tradition of safe tanker transport of oil products that has been achieved over the years, and about what excellent managers of marine traffic Canadian ports have been, and how tankers can coexist in a clean, healthy environment, which we, of course, all want as Canadians.
Bill C-48 allows the federal government to arbitrarily exempt oil tankers, but doesn’t address other marine traffic, such as cargo ships, ferries and cruise ships, which bring with them their own well-known carbon footprint. Is that fair?
Meanwhile, let’s not forget that worldwide some 7,400 oil tankers are currently afloat, sailing around the Galápagos Islands, the Great Barrier Reef, jewels of the world, just like the northern coast of B.C.
The federal government could also create a tanker corridor complete with rescue tugs and spill recovery equipment that could safeguard all shipping, or create a particularly sensitive sea area or PSSA which would protect against oil spills and safeguard coastal waters while at the same time not explicitly discriminating against oil shipments, oil shipments from one area of the country.
Jim Carr, federal Minister for Trade Diversification, said back in November: “Our competitiveness depends in large part on making Canada the most globally connected economy. The investments we are making will connect our people, their ideas and their products and sell them to the world.” We couldn’t agree more. But those products, that competitiveness and that globally connected economy, surely include Western energy.
Our understanding is that there are no oil tanker moratoriums in the entire world. With this bill Canada would have the only one. There are other options, other alternatives at your disposal.
So again I would say, as I did on Bill C-69, the time for sober second thought is now. Let this bill, which amounts to a self-imposed export ban by Canada on its own Canadian oil products, die on the order paper and let’s go back to the drawing board.
Thank you.
The Chair: Thank you.
Senator Miville-Dechêne: Thank you very much, Madam Minister, for appearing. I want to talk to you about capacity. We heard an expert analyst, Andrew Leach, in Edmonton, who was saying that according to the level of production at this point, if Trans Mountain has an extension, and if the lines are built into the U.S., Canada wouldn’t need an extra pipeline in the north.
Considering the depth of the crisis now, and we’ve heard very moving testimony from small and big business in Saskatchewan, building a pipeline in northern B.C. would take about 10 years or so. What do you say to this issue of capacity and to the fact that it would take time, in any case, to resolve the crisis the industry is going through?
Ms. Eyre: Recent years have taught us that speculation is a dangerous game when it comes to counting on any energy project. Certainly hopes were high around Energy East and Northern Gateway, and only relatively recently, in the last few years, have those been struck down. So now, of course, then the optimistic hope turned to Trans Mountain, which we know faced a similar fate but for the intervention of the federal government. Saskatchewan, and Western Canada, including Alberta, live in hope that that project will be seen through. We have seen delays recently announced again. We are hopeful, but the speculation game is a difficult one. The most important thing to emphasize is how highly integrated are efforts to get market access and product to tidewater and right now they are bottlenecked.
As I said in my remarks, companies in Saskatchewan have been extremely creative when it comes to trucking, trucking they didn’t expect to last as long as it’s had to, trying to eke out product on whatever pipeline they can and getting to whatever ports they can, including California in some cases, and so on. They’re doing everything they can. They’re using rail much more than they expected to. I would only say that Northern Gateway, for all the reasons I emphasized in my remarks, provides a great advantage over other lower mainland ports, including Burnaby in the case of Trans Mountain. A 36-hour advantage is a significant advantage. Those are the markets that we want to access — Shanghai, for example, and others, which we simply cannot now.
In short, it would be a very dangerous game to say, well, let’s not bank on that one because we’re going to bank on this one. As I say, recent history has proven that it would probably be a very tricky and risky road to go down.
Senator Miville-Dechêne: Thank you.
[Translation]
Senator Gagné: I will ask my question in French, if I may. Thank you for being here with us today, and thank you for your very eloquent presentation. Earlier you mentioned the First Nations that are established along the Eagle Spirit corridor, who said that this was an obligatory step toward reconciliation. We heard the same message from all of the First Nations peoples along the British Columbia coast. One of our dilemmas is to try to reconcile the economic development needs of First Nations—through the oil industry — and our support for the First Nations people who live along the British Columbia coast and support their families through fishing. How can we reconcile these diverse needs in Canada? If you prefer to answer in English, please do so.
Ms. Eyre: Thank you for the question.
[English]
I will answer in English.
In terms of reconciliation, I believe you’re asking, how can we strike this fine balance as energy producers within the private sphere oil companies and other energy companies to achieve that reconciliation that is required. I would point to Eagle Spirit as a prime example of that, not because I’m saying it or governments are saying it, but because First Nations along the route are saying it. That’s actually quite exciting and revolutionary for the Canadian energy story. It is an opportunity for the 35 along the route that have indicated support in principle and made comments of disappointment over what this bill would represent to that project.
It is a fine balance indeed. I understand, of course, that many bands in B.C., some of whom you’ll have heard from, are in favour and some of whom are not in favour. It would be a terrible lost opportunity to not go down the road of what Eagle Spirit, for example, could signify in terms of those relations that could be built around jobs and around a strong energy sector of which they should be a part.
That’s one of the many tragedies with this bill in its current form. Calvin Helin of Eagle Spirit Energy Holdings has told you that if the moratorium goes through and they’re prevented from shipping oil from Prince Rupert they will “Put our port in Hyder, Alaska, and ship oil out of the same Dixon Entrance under the American flag.”
The effort here is for reconciliation in Canada, and this is a wonderful opportunity that would be missed if we don’t allow this to be looked at again.
The Chair: On the question of the need for a pipeline, a university professor did tell us in Edmonton that if we had the one through Vancouver, if we had the Kinder Morgan pipeline and we had the U.S. one — and none of the two is finished; one is started and one is not — we would not need a third one. However, all the resource companies that have appeared have that we do because we need a deepwater port because we need to get the supertankers. They can’t go to the Vancouver port because they have to have a deepwater port.
Even though he didn’t think they had the demand, the business community said there would be a demand and that we would need a third pipeline by 2030. As you said, it is wildly speculative. I just wanted to make that point.
You mentioned that 200-plus Indian bands were involved in the pipeline. Were you referring to the pipeline project or to Eagle Spirit or to the oil and natural gas industry?
Ms. Eyre: I was referring to Eagle Spirit specifically that in terms of the Chiefs Council, the National Chiefs Council, the Indian Resource Council, they represent some 200 First Nations communities. Certainly it’s been documented that the 35 First Nations along that corridor are in principal support of the Eagle Spirit project. Again, I don’t think those are voices that we can ignore.
The Chair: There are only 313 First Nation groups in B.C., Alberta and Saskatchewan, so two thirds is substantial.
Senator MacDonald: For clarification, I want to add to what you spoke to in terms of ULCC and the VLCC tankers. I haven’t heard these discussed much across country, I guess because it’s more of a Maritime issue. As somebody who is from the East Coast who sees a lot of oil move, you need a certain type of facility to handle these. You have to be able to build the facility onshore; you have to be able to dock. Professor Kumar from the University of Alberta gave us the explanation. When you take the heavy oil in the large ships, not only does it help the economies of scale when it comes to managing the stuff and better profit, but it also helps manage the carbon footprint. You have a much smaller carbon footprint as opposed to with smaller vessels.
For example, we unload petroleum in Quebec and in New Brunswick. In New Brunswick, the stuff is unloaded out in the bay. They have a mobile system. They can’t dock because the ships are too large. That would probably be a problem as well in certain parts of the southern mainland of British Columbia, but that would not be a problem in Prince Rupert or Port Simpson, and it would not be a problem at the Point Tupper Facility in Cape Breton. These are huge deepwater ports at low tide. They could handle ULCC ships that would go right out into the main shipping channel and go right across the world with 2 million tonnes of crude. There would be a huge advantage to building this type of port facility that could handle larger ships, it reduces our carbon footprint and makes us much more competitive economically.
I want to encourage politicians to start talking about this more. It’s an important point. I haven’t heard much feedback from the politicians in Alberta and Saskatchewan, and I think it’s an argument that works in your favour.
Ms. Eyre: I agree. Again, it was something of a revelation to me, even the 36-hour shipping advantage, aside from the deepwater port the tanker size and so on. Those are powerful arguments for this bill not going forward, as well as the significance that northern B.C. would represent to those efforts, aside from the export advantages that we would gain. That’s a very important question to be further plumbed, for sure.
Senator Gagné: For the Province of Saskatchewan, what would be your ideal energy business model? Where would the pipelines be located so they would actually benefit the industry here in Saskatchewan? Where would they go?
Ms. Eyre: Currently, we can access the United States, as I said. Saskatchewan crude has the ability to reach the southern Gulf Coast in the U.S. through North American rail and pipeline systems. Again, it should be noted that there are significant bottlenecking issues with those pipelines that exist in the American Midwest, for example. This can prevent timely and reliable access for Western Canadian producers to the Gulf Coast.
Let me give a bit of background about Saskatchewan. The vast majority of crude oil moves south to continental markets via the Enbridge mainline, which runs from Edmonton to Chicago. It stretches across the province from the Lloydminster area in northwest Saskatchewan to the Estevan area in southeast Saskatchewan. A large part of that crude production from Saskatchewan is processed within the province, at Husky in the Husky Upgrader in Lloydminster, the Federated Co-op Refinery in Regina and the Gibson Energy Asphalt Plant in Moose Jaw.
We’re very keen on Enbridge, the Line 3 replacement. For obvious reasons; we are looking at bottlenecking across the board.
As I also referenced in my remarks, part of the problem with the increased move to rail is that we are competing with what ag producers want, what potash needs, what mining needs. Because of the lack of pipelines — Northern Gateway, Energy East and now Trans Mountain — and the ceaseless delays, we are continuing to have to feed everything through these other means.
In Saskatchewan’s case, it would go along the same route, counting on Enbridge Line 3 replacement. As those other areas provide ease and pipeline is built through any of the hypothetical three projects, or Keystone XL, suddenly there would be access. The dollar figures that we have lost as a province are significant, and the royalties by extension. The inability to access export terminals at Canadian ports cost the province $3.7 billion in lost revenue last year. It cost the government $250 million in taxes, royalties and other revenue.
As to the broader picture, this is not a Saskatchewan or Alberta or B.C. issue, it is really a Canadian issue because it’s about Canadian product and getting it to market. We only have one export target at the moment. We have to expand that. It’s a much bigger issue.
Senator Gagné: I understand.
Will you be increasing oil production if the three lines that are being proposed are built? Would that satisfy Saskatchewan?
Ms. Eyre: Saskatchewan produces roughly 500,000 barrels per day — 40 per cent heavy, 20 per cent medium, 40 per cent light. Approximately 70 per cent of total crude oil production in Saskatchewan is exported to the United States. Would we expand that if suddenly we had more market access? I’m sure we would.
We just can’t get it to market at the moment. I’m often astounded by the ingenuity of Saskatchewan companies. How they have actually managed to get this product to market is quite astounding. As I say, they’re using trucking beyond the time they ever expected to, wearing out roads, which has created an issue with rural municipalities, and trying to access that rail.
Absolutely, it’s had an impact on what producers produce and export, and they would tell you the same thing.
Senator MacDonald: I have a question I’ve been meaning to ask government officials for the last two months. I keep forgetting to ask it and it’s finally come to mind.
We have in this country a system of royalties and tax when it comes to the development of petroleum? How does the system in Saskatchewan compare to the one in Alberta? Have governments ever considered changing the tax system entirely and getting rid of the royalty system?
Some countries do not have a royalty system. I’m not saying it’s a bad thing to have royalties, I’m just curious, is there another way to approach this that would generate more activity and generate more willingness to take risk?
Ms. Eyre: That’s an interesting question. Certainly the differential point has been much exhausted in recent months.
Going back for one second to the previous question about what the impact has been on producers, would we produce more, would we export more and so on, oil companies are in grave trouble. Local and small oil companies are in grave trouble, and junior companies are in grave trouble. They are curtailing, they are abandoning, walking away and going out of business when they shouldn’t be. The current situation is driving people out of work and driving businesses out of business. That is clear and very well documented. Of course, it has had an impact on jobs. In Alberta alone 160,000 people are unemployed. It’s a crisis, and it should be seen as a national crisis for what it really represents.
On the royalty issue, with Alberta, we have looked at the issue very carefully in terms of leaving no stone unturned about our competitiveness. We have a competitive royalty system compared to Alberta currently. With the new premier, for example, we expect that there might be a lowering of royalties in Alberta, more to a Saskatchewan rate. We provide incentives, and we are very proud of our enhanced oil recovery. We have grown the sector enormously.
Keep in mind that Saskatchewan comes relatively recently to the game in some cases, at least in the expansion we’ve seen over the last decade or so. I think we’ve been very responsive about royalty changes to make us competitive and also incentives that have actually led to exploration and drilling and results.
As to whether we are looking at changes in that regard, I think we always have to be very cautious on the royalty front given the Ed Stelmach scenario and talking about reviews or anything like that, at a time when the nature of the sector is so delicate and so fragile.
Certainly there are no plans in Saskatchewan to go down the broader royalty re-examination route because it has worked well to this point; it is competitive. Compared to Alberta our regulatory system, for example, is very well regarded. I’m always very proud to hear when I’m out and about from producers and people in the sector who thank me because we have not gone down the same road as Alberta. Our regulations are easier, more transparent, everything. You can reach a person when you call the ministry and get them on the phone. They’re involved and the field staff are out there. Whereas Alberta has come to be more of a maze.
I’m sure Premier Kenney will see to that with his red tape minister and the other things on the agenda. It has evolved that Saskatchewan is actually seen as very business-friendly on the royalty front, the incentive front, the regs front and the transparency front. We just simply need to keep working and building on that here in Saskatchewan. Certainly the commitment is there to do so.
We’re very proud of the system we have, but we face such an enormous crisis with the discontinuation of these energy projects, which are hurting us, absolutely.
Senator MacDonald: You realize that when we talk about the royalties, I’m not saying you throw money away. I’m just curious. Has there ever been any cost analysis done on which would provide the government with more money, getting rid of the royalty system, increasing taxation on the companies or vice versa? Have you ever done a cost analysis on that? Certain countries in the world don’t have a royalty system, they just depend on tax. Food for thought.
Ms. Eyre: Point taken.
The Chair: Thanks very much, minister.
For our final panel today I’m pleased to welcome, from BFH Corporation, Cal Broder, President and CEO; and from the North Saskatoon Business Association, Keith Moen, Executive Director.
Mr. Moen, would you like to start?
Keith Moen, Executive Director, North Saskatoon Business Association: Mr. Chair, it’s my pleasure to be here. As mentioned, my name is Keith Moen and I’m Executive Director of the NSBA, a dynamic business organization in Saskatoon that I’ll expand upon further in a moment. First, let me personalize this and thank you for coming to Regina, thank you for coming to Saskatchewan, and for the opportunity to address you here today.
Also let me acknowledge the appreciation, admiration and respect I have for anyone elected to or serving in public office. I thank each of you for your respective commitment to public service for the betterment of our great nation.
The NSBA is a Saskatchewan-based member driven business organization that serves, promotes and protects business throughout Saskatoon and beyond through our advocacy and lobbying efforts. Started some 50 years ago by a handful of businesses, today’s NSBA consists of a membership of 800 companies. Members range from single owner/operator proprietorships to large multinational corporations that employ thousands.
Although diverse, our membership mainly consists of a strong community of small- to medium-sized businesses that are largely owner managed by entrepreneurs. Many of them are a generation or two off of the farm, who embody a value system, work ethic and integrity that we all should aspire toward. These folks are as grassroots, genuine and authentic as you will find anywhere. As such, the NSBA is known for our pragmatic, common sense approach to getting things done.
We see Bill C-48 as nothing more than an anti-resource development and anti-pipeline bill that is being disguised as an environmental bill.
While it may seem strange that a Saskatoon-based business organization representing a region as landlocked as any other in Canada has strong opinions about tanker transportation on the West Coast of our great nation, but make no mistake about it, we have a significant representation amongst our membership who service these industries and their supply chains, and they stand to suffer greatly if this bill is passed.
When you consider that oil tanker traffic on Canada’s East Coast and down the St. Lawrence, where Canada receives the majority of oil imports, is not being looked at through a similar lens, it’s a natural conclusion that a blanket ban of oil tanker traffic on the West Coast seems unnecessary, and perhaps even vindictive, unless the intention is to stifle resource development completely for political reasons.
Atlantic Canada’s shoreline is every bit as spectacular and marvellous as British Columbia’s, yet oil tanker traffic there is allowed, which largely consists of foreign oil coming into our domestic ports and refineries unimpeded.
Please don’t misunderstand that we would like to also see the eastern coast have oil tanker traffic banned because just the opposite is true. We would like to see Atlantic Canada and Western Canada both be given equal opportunity for oil tanker traffic to transport their goods unencumbered in response to market demands.
Let’s suppose the worst case scenario, and that this bill is actually passed. Aside from the job losses and viability of some of our member companies being challenged, this bill also would have negative consequences on many other levels. By taking Canadian oil extracted and developed under the strictest of environmental regulations off of the market, it enables foreign oil that much more market access as the demand will be filled by foreign interests. It’s highly unlikely this foreign produced oil would have the same level of environmental standards and regulations in its production or processing as does our Canadian-produced oil. Additionally, a reduction in supply on the world stage would result in higher prices for which Canada would be forced to pay, from a shrinking economy, no less. It’s a recipe for an even further economic downturn if not crisis.
Therefore, in the eastern part of the country where foreign oil is imported to East Coast refineries to meet Canada’s needs for petrochemicals, their by-products, and the consumer goods that contain them, will be paying more. So will the Canadian consumers of such goods, but even more critical, so will our environment be paying more.
In fact, it would be both more economically and environmentally friendly for the reverse of this bill to happen, where Canadian oil, again extracted and developed under the strictest of environmental regulations, can be exported from the West Coast to achieve world market pricing. Additionally, Canadian oil should be made available to Canada’s eastern coast and refineries and used for our own domestic use by building the Energy East pipeline, thereby replacing the foreign oil of dubious social and environmental provenance.
The NSBA would prefer that free market conditions prevail, but it is cognitively dissonant to consider that we allow our own industry and product to languish while helping our competitors to flourish.
In closing, the NSBA views Bill C-48 as a massive bias against the development of an industry in certain parts of the country, particularly the West, and not only affects the local economy in Saskatoon and Saskatchewan, but will also negatively affect our great nation as a whole.
We ask you to provide your unbiased sober second thought to this bill and defeat it.
Thank you for your time and thank you for listening.
The Chair: Thank you, Mr. Moen.
Mr. Broder.
Cal Broder, President and Chief Executive Officer, BFH Corp.: Good afternoon, senators. Thank you for this opportunity to talk have this conversation, because it’s a very important conversation for our country.
I’m going to take a slightly different approach. I’m not going to follow a script; I want to talk about the product that everybody seems to be concerned about, and that’s the bitumen from Alberta.
I take a slightly different approach. I’m a businessman, I’m a risk taker and I’m an entrepreneur, and my business is slightly different than what you’ve heard. Although I support pipelines, I believe that the world needs energy. We’re not going get off oil. We’re going to need oil for eternity because it’s the oil that creates the other products in our life. I also believe that we need all forms of transportation, but we need to do it safely, economically, and in a way that we can all be proud of. Coming from Alberta, a fourth-generation Albertan, I think we do that.
Yes, there’s need for improvement, and they are making strides. I’m not an oil industry person; I’m a technology provider and a processor. I’m not here to talk to you about my process; I have provided some literature on what we do. I want to focus on the product because the product is what’s unique. The product out of Fort McMurray is predominantly the production in Western Canada, although the Western Canadian sedimentary basin does produce somewhere around a million, a million and a half barrels a day by some people’s standards.
What’s interesting though is the oil out of Fort McMurray. It’s in the ground as a solid. I brought a sample of it, and I’d like to pour it on my friend here. This is the world’s safest crude oil, bar none. I’ll pass it around. You can put your finger in it, touch it, poke it. It’s the world’s safest crude oil now because it’s non-regulated, non-hazardous. That stuff won’t even kill fish if it accidentally gets dropped into the aquatic environment. I flew with that from Edmonton this morning. It went through security. We fly with it around Western Canada all the time, some of my people.
The point is that Alberta has two types of oil — the heavy oil and the light conventional oil like the Western Canadian sedimentary basin. The heavy oil from Fort McMurray is different than the heavy oil from Cold Lake and it’s different than the heavy oil from or from Peace River. Fort McMurray is a solid in the ground, so it’s safe to transport.
What we do is we show that there’s a new way to transport the heavy oil from Fort McMurray. We transport it as a solid. It’s more economic to transport it than diluted bitumen. People have come before you and probably said pipelines are the safest way to move oil. Yes, if that oil is a natural liquid. Fort McMurray bitumen is not a natural liquid; it’s a natural semi-solid, just like what you’re looking at. So in its solid state we have a huge opportunity to be the country that only has that product. There’s no other country that is producing a product like that. Venezuela is not even like that.
So what we have in Alberta and Western Canada is a new export opportunity and a new export strategy. That’s what my handout is, and it is more for information purposes. We can transport our heavy oil as a solid to global markets, more cost effective than diluted bitumen. I can show that we can move undiluted bitumen anywhere in the world cheaper than industry can move diluted bitumen. We are in discussions with some of the producers and they’re beginning to see that. It’s a gradual process.
What’s interesting about that is there’s an opportunity now to change the dialogue. The Trans Mountain pipeline is a great opportunity for the small producers of conventional crude. Not necessarily small, all producers of Western Canada conventional crude because conventional crude is safe, cheap, economic to move in a pipeline, and the heavy is not.
If we focus on the product and understand the product as opposed to the controversies that we’re facing, my suggestion as an export strategy for the governments of Canada, is that we transition the Trans Mountain pipeline for conventional light crudes and use a different method to move the heavies, and we will get both products to new markets.
We are currently in discussions with 14 refineries in China. They want to buy undiluted bitumen at WTI price. That’s unheard of because everybody is saying it’s a discounted product, it’s not. It should be the world’s best-selling product because it creates value.
The Chinese want to buy it because it will produce 50 per cent of a barrel of diesel, ultra-low sulphur diesel. It will also produce 50 per cent of a barrel of asphalt, which they want. It has high sulphur, which is what people want in asphalt. So the Chinese market or the Asian market is perfect for our heavy oil. What’s more, it gives us an opportunity to refocus and become an exporter. As we heard, and you have probably heard it often, Canada supposedly has the third-largest reserves of oil in the world. I would argue that we’re the largest because 20 years ago, give or take, they put an extraction rate of about 10 per cent on the reserves of 1.7 trillion barrels. We know right now that oil sand producers using SAGD get about 50 per cent. The mining operations in Alberta are legislated at 98 per cent. So if we use those numbers as an extraction rate, based on our 1.7 trillion barrels we have more recoverable oil in Alberta than Venezuela, Saudi Arabia, Iraq and Iran combined.
We should be proud of our opportunity before us, and that’s really what my discussion, my conversation is about. Let’s work together as a nation to move our product and show that we can do it safely, more cost effective. What’s more, the high carbon content that everybody is concerned about will go down dramatically because it produces ultra-low sulphur and asphalt, which doesn’t produce the emissions.
In closing, I’d like to again thank this committee of the senate for inviting me, allowing me this opportunity, because that’s the conversation we need. We can work together. I believe that this can help that pipeline issue as well.
The Chair: Senator MacDonald?
Senator MacDonald: Both presentations were great, but I’m intrigued by this approach. Would this be shipped by container?
Mr. Broder: Yes, we’ve devised a special container out of China. They are the world’s largest maker of shipping containers. We’re having six of them delivered to Alberta in mid-June.
Senator MacDonald: Would it go by train?
Mr. Broder: We’ve heard that conversation, the impact on rail. Unfortunately, the impact on rail is misguided and it’s misunderstood. It started back in 2014 when we had some rail issues with grain, but the rail issues that we had with grain were different. It was because the Wheat Board was disbanded, and the Wheat Board had the cars, not CN or CP, and those cars were sitting out here in Saskatchewan on sidings by the thousands.
When we talked to CN, and I don’t know if CN has presented before your committee, they’ve said that they could move 10 trains easily a day without impacting anybody. Ten trains a day is 750,000 barrels of bitumen.
What’s interesting is a pipeline, in order to move 750,000 barrels of bitumen, needs to be a third larger than that because of the diluent. The opportunity to move large volumes is doable right now.
Senator MacDonald: This Athabasca bitumen, this semi-solid stuff, is that anywhere else in the country? Is it in Saskatchewan or is it just in Alberta?
Mr. Broder: In northwestern Saskatchewan, correct.
Senator MacDonald: Anywhere else in the country, do you know?
Mr. Broder: No.
Senator MacDonald: So it’s a unique product.
Mr. Broder: Yes.
Senator Smith: Where is that one from?
Mr. Broder: This is Fort McMurray. What’s interesting about the Fort McMurray region, it’s different than Cold Lake. Because Alberta has, as I said, three different reservoirs, Peace River as well. Saskatchewan has it in Lloydminster. Peace River, Cold Lake and Lloydminster are bitumen, but they’re liquid in the ground. We define the product as liquid in the ground or solid in the ground, really, or semi-solid because, in all honesty it’s not a solid, but it’s pretty close.
Senator MacDonald: It’s pretty close.
Mr. Broder: What’s really interesting about this product is that in shipping some to China in these containers, we get a lower shipping insurance rate than wheat does, than any of the food commodities.
Senator Gagné: Than wheat?
Mr. Broder: We get a lower shipping insurance rate than food commodities.
Senator Smith: Why.
Mr. Broder: Because it’s safer. That’s unheard of for an oil.
There’s a test that we have in here, and I’ve given you a copy of it. We did what’s called an LC50, and they did those tests for the Northern Gateway.
That LC50 is a toxicity test on fish. They subjected our, what we call bit crude, to this fish test. Normally it lasts for about 12 hours, they called us after 12 hours and said what’s up, no fish have died. We said, “Well, we didn’t expect any, but thanks.” They asked if they could do it longer. We said they could do it as long as they want. They called back after 72 hours and said that they were going to stop because they were just charging us money and no fish were dying. As a matter of fact, we have a fish tank of trout back home that’s been going on for six days with this in it and still none have died. It can float; it’s a solid that’s non-regulated. This came on the plane this morning. No other crude oil would be able to do that.
That’s the unique opportunity we’re dealing with. It would help with Trans Mountain because it’s the product that Premier Horgan has a problem with, not the pipeline, so let’s change up the product, put conventional crude.
Western Canada has a lot of product, as we’ve heard from the minister before, that needs space. That conventional crude China wants. They will take every drop of oil that we can supply them, and then some. They have an insatiable appetite, but they have an insatiable appetite for bitumen, for the diesel, but also for asphalt, which is different than the U.S.
The U.S. wants our bitumen for ultra-low sulfur diesel because this product in the refinery in Edmonton produces 94 per cent diesel. It’s a high-yielding diesel product. No other crude oil like it.
Senator Miville-Dechêne: Is that the same product that could be in bricks or is it something else? We’ve been hearing that if we could convert oil into bricks that could go on trains and that it would be more secure.
Mr. Broder: I think you’re referring to the pucks that CN has developed.
Senator Miville-Dechêne: Okay, it’s not the same.
Mr. Broder: Their product is slightly different. This is 100 per cent bitumen. CN puts polymer into it. Polymer is a plastic, and then they encase it in plastic. CN is moving that along. I have worked with CN on this project now for 10 years. I started this 10 years ago, and I’ve been persistent at it, but the opportunity has never presented itself in the magnitude it is now, and that’s because the TMX has become government controlled at this point in time.
I’m not political in any sense, and I don’t profess to be, but I believe this is an excellent opportunity for Canada to export its product. Its conventional crude oil can get to markets so that our producers, like Suncor, can access new markets because China will pay world price for this. We’re not getting world price for WCS, Western Canadian Select. Western Canadian Select has two thirds oil and one-third diluent.
Senator MacDonald: So the pucks are made from diluted bitumen?
Mr. Broder: Yes, pucks are made from diluted bitumen; they extract the diluent. They mix it with plastic and then encase it in plastic.
What we do is similar. We take the diluted bitumen and we extract the diluent. We work with the industry to return the diluent back to them. The product then becomes 100 per cent bitumen, there’s nothing added to it, and that’s what the Chinese want.
Senator MacDonald: No condensate, no anything.
Mr. Broder: None.
The Chair: Mr. Moen, you talked about your 800 members. How many of those would be affected, or would be in the business of the oil industry either directly or indirectly through service?
Mr. Moen: I don’t have an exact number, senator, but anecdotally I could say that it would be two thirds to three quarters of our members would be impacted negatively through this.
The Chair: Oh, my goodness.
Mr. Moen: If not higher.
The Chair: Yes.
Mr. Moen: It’s simply because the spin-offs are massive, as you can well imagine.
As a Saskatchewan boy yourself, you know full well that there’s a high degree of spin-off activity from all the commodity resource development that occurs here in the province, whether it be in agriculture, oil and gas or mining. There’s a high degree of crossover in terms of talent and ability within these various companies, many of which are boot strapped from the ground up in terms of their entrepreneurial roots.
So absolutely it would be at least that high of a number, I would suggest, that would be impacted from a negative response to Bill C-69 — or rather Bill C-48. Sorry, wrong bill.
The Chair: Well, they’re both —
Mr. Moen: They’re both on my mind.
The Chair: Mr. Broder, on the development of your pure bitumen product, you mentioned China. How long before this actually comes to fruition?
Mr. Broder: It’s a very good question as it has been 10 years.
The Chair: Yes, you mentioned 10 years. That’s what drew my attention.
Mr. Broder: We are now about two and a half months away from shipping our first containers to China.
The Chair: That’s very good.
Mr. Broder: It is. What’s more, because it’s non-regulated, non-hazardous, it can go through the Port of Prince Rupert right now.
The Chair: Let me ask you another question. Would China be taking all the bitumen produced by Fort McMurray?
Mr. Broder: China uses 16 million barrels a day. What they’re looking for are two things: ultra-low sulfur diesel to bring down their emissions, and asphalt. This product produces the world’s largest volume of asphalt and diesel. They love this product.
We’re in discussions with 14 refineries. One of them by itself wants 120,000 barrels a day. The others combined want over 800,000 barrels a day. That’s just to start. Those are small teapot refineries in Shandong Province.
Senator MacDonald: I have two questions.
How many barrels in a container, because I have no idea? Second, is there any domestic market for this?
Mr. Broder: If you flip to page 8, you will see the process. We can ship 175 barrels in a shipping container. A one unit train will hold between 100 and 120 cars, which will be between 52,000 and 84,000 barrels. A container ship can hold anywhere between 87,000 and 3.1 million barrels, larger than the ultra-large tankers. These can all go through Prince Rupert without a worry as to the tanker moratorium because it’s a non-regulated, non-hazardous product.
The Chair: Would this take up all of the bitumen produced in the country?
Mr. Broder: No, it won’t take it all because the oil sands companies are committed to other places.
The Chair: So they still have to move their product to port?
Mr. Broder: No, that’s what we do. We have a process in the Edmonton area, which is the centre of the hub, the Bruderheim area; you might have heard of it.
The Chair: Yes.
Mr. Broder: We’re setting up a processing centre there to extract the diluent, package the bitumen, ship the bitumen to Prince Rupert and on to China. This opportunity gives us is that vast resource in northern Alberta. We heard this morning or earlier that there’s $100 billion loss in investment because of market access. With market access, we sit on the world’s largest crude oil reserve in the world, as I pointed out. That gives us a huge opportunity in Western Canada to expand. I don’t believe we want just one customer, we want multiple customers.
At the same time, the oil sands companies are tied into long-term contracts on pipelines, so they’re not going to move that, but it gives us an opportunity to get extra barrels going to new markets.
The Chair: Any further questions?
Senator MacDonald: Did you answer my question about domestic markets?
Mr. Broder: My apologies. Yes, we are looking at the domestic market. We can move anywhere in North America a barrel of bitumen cheaper than a barrel of diluted bitumen, per volume a barrel of bitumen. My view and my company’s view is that we want to go to Asia, and that’s our focus. We are working with some oil sands companies to look at moving their product throughout North America, but our internal focus is on Asia because that will get us world price. In North America, we’re dictated by the U.S. price.
China is prepared to pay WTI and possibly Brent for this. I believe it should be worth more than Brent because it yields such a high component of diesel and asphalt for China. China pays in excess of Brent for their asphalt.
Senator MacDonald: The consistency and the properties of this must have been known for many years. Why hasn’t this been brought to market before now?
Mr. Broder: The challenge with this product is it’s so viscous and in order to get it out of anything it takes a lot of steam and energy. That’s why they use coil cars, heated cars and insulated cars, so they can attach a coil onto it for steam.
What we’ve designed is a process. We have a diluent recovery process or an extraction process. It uses the 130-year-old technology developed by the Rockefellers, but we brought it into the 21st century and instead of using natural gas to fire that process, we use electricity. So we do have some emissions, but we have zero emissions on our process, other than the electricity. In order for industry to pump this product, they need to heat it to about 120 degrees Celsius. I can get it out of this plastic container without damaging it, so we use a lot less energy. We’ve demonstrated that to some of the oil sands companies.
This process was just patented in March of last year. This is brand new, and that’s why nobody has heard of it. Some of the oil sands companies have.
Senator MacDonald: Would this exceed any emission caps that have been put on by the federal government?
Mr. Broder: Our process isn’t extraction from the ground. Ours is like a refining process. We wouldn’t add to the emissions if that answers your question.
Senator MacDonald: I just wanted to see what the impact was on emissions.
Mr. Broder: Ours is a closed system. It has no emissions, just the electricity that we consume.
Senator MacDonald: Interesting.
The Chair: With that, thank you very much, witnesses, very much appreciated.
Thank you for coming down from Saskatoon, Mr. Moen.
Where did you come from, Mr. Broder?
Mr. Broder: I came through Edmonton. I’m normally out of Calgary.
The Chair: It was lovely to be in Edmonton yesterday and hear the witnesses there. It has been a great two days in the Prairies.
(The committee adjourned.)