Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 47 - Evidence - February 27, 2019
OTTAWA, Wednesday, February 27, 2019
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-48, An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast, met this day at 6:47 p.m. to give consideration to the bill.
Senator David Tkachuk (Chair) in the chair.
[English]
The Chair: Honourable senators, in this evening’s meeting of the Standing Senate Committee on Transport and Communications, we are continuing our study of Bill C-48, An Act respecting the regulation of vessels that transport crude oil or persistent oil to or from ports or marine installations located along British Columbia’s north coast, otherwise known as the oil tanker moratorium act.
My name is David Tkachuk. I am a senator from Saskatchewan, and I am going to ask senators introduce themselves.
Senator Jaffer: Mobina Jaffer, British Columbia.
Senator Dasko: Donna Dasko, Ontario.
Senator Simons: Paula Simons, from Alberta.
Senator Gagné: Raymonde Gagné, Manitoba.
Senator Miville-Dechêne: Julie Miville-Dechêne, Quebec.
Senator Dawson: Dennis Dawson, Quebec.
Senator McCoy: Elaine McCoy, Alberta.
Senator Griffin: Diane Griffin, Prince Edward Island.
Senator Oh: Victor Oh, Ontario.
Senator Smith: Larry Smith, Quebec.
Senator D. Black: Doug Black, Alberta.
The Chair: Thank you.
We will now proceed with our first panel of witnesses, who we are pleased to have with us this evening.
From the Western Canada Marine Response Corporation, we welcome Mr. Michael Lowry, Manager, Communications, by video conference; and from Whitecap Resources Inc., Mr. Grant Fagerheim, President and Chief Executive Officer, also by video conference.
Is that the proper pronunciation?
Grant Fagerheim, President and Chief Executive Officer, Whitecap Resources Inc.: Yes, it is.
The Chair: And, from the Independent Contractors and Businesses Association of British Columbia, we have Mr. Tim McEwan, Senior Vice President.
Thank you for attending our meeting. We’ll start with our witnesses by video conference. The floor is yours, Mr. Lowry, followed by Mr. Fagerheim and Mr. McEwan.
Michael Lowry, Manager, Communications, Western Canada Marine Response Corporation: Thank you, chair, and committee members for the invitation to speak to you this evening.
As an introduction, WCMRC’s mandate under the Canada Shipping Act is to be prepared to respond to oil spills on Canada’s West Coast, regardless of where that spill may happen. If required, we can and do prepare for and respond to spills anywhere from the coast of B.C.
While we neither support nor oppose Bill C-48, spill response and our ability to handle spills has played an essential role in the conversation around energy exports, market access and shipping volumes.
I’d like to provide the committee with an overview, first, of our organization, a little bit about spill response in Canada for those who might not familiar with how it works, and then I’d like to provide the committee with recent examples that WCMRC has been involved in that relate to increases in shipping traffic on the West Coast.
Western Canada Marine Response Corporation is the only Transport Canada-certified marine response organization on Canada’s West Coast. On average, we respond to 20 typically small spills each year. WCMRC has successfully responded to oil spills for more than 40 years. Starting in 1976 as Burrard Clean Operations, we became Canada’s first certified response organization under the amended Canada Shipping Act in 1995. We currently have bases in Vancouver, Nanaimo, Victoria and Prince Rupert. We have equipment caches along the entire coast, including in Kitimat and Haida Gwaii.
Our mandate under the Canada Shipping Act is to ensure there is a state of preparedness in place when a marine spill occurs and to mitigate those impacts on B.C.’s coast. This includes the protection of wildlife, economic and environmental sensitivities, and the safety of both responders and the public. Our mandate covers 27,000 kilometres of B.C. coastline out to 200 nautical miles from shore, which means our work is often extremely remote.
As I mentioned, we are certified by Transport Canada as a response organization under Canada’s Marine Oil Spill Response and Preparedness Regime. Transport Canada sets the spill response standards, and WCMRC must demonstrate that we meet those standards to meet our certification. WCMRC consistently exceeds Transport Canada recommended response standards, and, currently, Transport Canada is looking into updating response organization planning standards for all of Canada.
Canada has a polluter-pay model for spill response, and WCMRC, as a result, is industry-funded. We’re an organization with more than 2,300 members. Membership is mandatory for vessels over a certain size calling on Canadian ports, as well as for oil-handling facilities receiving or shipping oil across their docks. Members are required to pay an annual preparedness fee to ensure they will receive our response services, including equipment and supplies in the event that they may pollute.
Our fees cover our annual operating costs. They do not cover the costs that we incur when responding to a spill, which, as per Canada’s Marine Liability Act, must be paid by the polluter. Profits earned by WCMRC from a spill are either reinvested into the organization or used to offset future operating costs and lower fees for the members.
I will move to the risk-based model that is currently in place and we are developing for the coast.
Transport Canada and the Canadian Coast Guard are leading the development of area response plans based on area risk assessments. In B.C., the first focus for this initiative is the north coast. The projects include the participation of Environment and Climate Change Canada, the Department of Fisheries and Oceans, the B.C. Ministry of Environment and coastal First Nations.
To help plan and prepare for spills on our West Coast, WCMRC has developed a coastal mapping program that gathers existing data to identify coastal sensitivities, including ecological, cultural and economic resources. Field teams from WCMRC then ground-truth the data and develops protection strategies for these at-risk resources. These strategies, called geographic response strategies, allow for the most efficient deployment of response resources, maximizing coast protection, reducing response times and minimizing risk. WCMRC has developed more than 500 geographic response strategies for the West Coast, including some for Kitimat Channel and Prince Rupert. We strongly feel that response planning and preparedness should take a science-based approach that starts with a risk assessment of the area.
I’d like to give you some examples of projects we’ve worked on previously, starting with the Trans Mountain expansion project. This is a recent example of a project that will increase shipping traffic on the West Coast. As a result of this increased risk, WCMRC and Trans Mountain worked together to develop enhanced planning standards in the shipping lanes around Vancouver Island. These enhanced planning standards for marine spill response in the Salish Sea will result in reduced times for initiating response from a maximum of six hours to two hours for Vancouver Harbour, and from 18 hours to six hours for the remainder of the southern shipping lane. This regime will be able to deliver 20,000 tonnes of capacity within 36 hours from dedicated resources along the Salish Sea. This represents a response capacity that is double and a delivery time that is half the existing planning standards.
The estimated capital cost of these enhancements is approximately $150 million, and these enhancements will add more than 120 new employees, 44 new vessels and six new spill response bases along the shipping route. We have proposed bases that will be 24 hours, including ones in Vancouver Harbour, Victoria and Sydney.
When Northern Gateway was still a project, we were approached to develop its spill response enhancements for the north coast. I’d like to outline what those enhancements would have looked like.
During the planning phase of Northern Gateway, WCMRC developed equipment, personnel and response based plans to support a response to a 32,000-tonne spill. This project would have been over $130 million of equipment and was planned with 120 dedicated responders who would support four response bases in the north. These plans were based on credible worst-case spills, with robust response plans in place that would support the Northern Gateway project, along with other marine users of the north coast.
A similar approach could be developed for any potential projects along the north coast.
In conclusion, I’d like to say that WCMRC does believe in science-based decision making. The Government of Canada, through Transport Canada and the Canadian Coast Guard, has the ability to improve its response planning standards to better align with risks. Finally, I’d like to say that it is possible to plan for spills anywhere along the West Coast, and WCMRC is prepared to work with government and/or industry proponents to ensure the appropriate level of response is in place to address any increases in risk.
Thank you for your time.
The Chair: Thank you.
Mr. Fagerheim, please go ahead.
Mr. Fagerheim: Good evening and thank you, honourable chair and committee members, for allowing me to speak today.
Whitecap was founded as a private company in 2009, with eight employees and today is a publicly traded Canadian oil and gas company with 433 employees, producing approximately 75,000 barrels of oil equivalent per day of primarily light oil from British Columbia, Alberta and Saskatchewan.
Whitecap is not an oil sands company. We produce oil from conventional fields through technologically advanced secondary and tertiary recovery, including the CO2 enhanced oil recovery project at Weyburn, Saskatchewan, which is the largest CO2 recovery project in the world. Our operations at Weyburn sequester approximately 2 million tonnes of CO2 per year, providing storage for emissions capture.
Whitecap is different from integrated oil companies that have their own refining operations that consume crude oil to make gasoline and other refined products. We are a pure producer that sells our crude products at market prices, and we have experienced extreme price differentials of late as a result of lack of market access due to there being no incremental pipeline capacity.
Like other pure producers that don’t own refining infrastructure, we rely entirely on Canada’s export capability, which is primarily pipelines, to monetize our crude oil products. The proceeds of our sales are then reinvested into our Canadian economy to employ people directly and indirectly through the purchase of goods and services across Canada.
As with almost all producing integrated companies in Canada, Whitecap has a strong track record of safety, operational excellence and environmental stewardship. We are very proud of our records in these programs to date.
Today, I want to speak to you about the concerns we have with regard Bill C-48, the proposed tanker ban.
We are a country that is known to be rich in natural resources, including our oil and gas assets, with these being some of the largest resources in the world. We are also very proud and protective of all of Canada’s diverse natural landscapes, wildlife and coasts, including the beautiful west coast of British Columbia.
Sadly, although we have one of the strongest regulatory standards and environmental practices in the world, Canada is not believed to have consistent government regulations that allow Canadians to get fair prices for their produced oil and natural gas, and therefore has lost significant amounts of investment from American, Asian, European and even Canadian investors. Global investors invest their capital in companies that are able to provide the best returns for their shareholders. To do that, we require access to foreign markets other than the United States of America to monetize our products. This requires access to coastal waters. The West Coast of Canada is the closest, most practical and therefore most logical.
Should the tanker ban proceed, we, as Canadian producers, will experience even further reputational damage as a nation along with further loss of investment.
Canada has a technically advanced workforce and has demonstrated itself as a world leader in extraction of hydrocarbons. We should celebrate the contributions that energy business brings to the Canadian economy, to the citizens of Canada and to the nation as a whole. These will benefit all Canadians, including our middle class and our First Nations communities, in order for them to achieve a better way of life and to narrate their own destiny.
Targeting advancement of prosperity for all Canadians should be a defined objective for every one of us, including each of you here today.
I believe that each of you is aware that the global demand for oil continues to rise, with 86 per cent of energy today being comprised of fossil fuels, now slightly over 100 million barrels per day, and that demand is being filled from countries with much lower environmental and social standards that we, as Canadian producers, provide.
We also know that energy transition to affordable renewables that we all strive for will take an extended period of time and significant capital investment to achieve. We should consider accelerating our crude oil to world markets, obtain the highest price possible for our products, and reinvest in technology, health care, education and social programs for our less fortunate.
To do this we need a stable and consistent regulatory environment that encourages investment from around the world and demonstrates that Canadians are open for business, are leaders in innovation, environmental stewardship and care for our fellow Canadians. The world needs more Canadian energy, not less.
The effect of not getting our crude oil to world markets impacts all Canadians as they do not obtain the benefit of strong pricing for their resources in either royalty or tax revenues. We believe strongly that an oil tanker moratorium act on the West Coast of Canada is harmful to Canada, its citizens and the Canadian economy.
We understand the need for finding a balance between environmental protection and advancing job creation and our economy for the benefit of our children and future generations. We also never suggest that tankers be allowed in our waters without adequate environmental, rescue and safety measures in place. However, that does not mean that Canada should never be permitted to use its coastal waters to achieve fair market value for its resources.
In conclusion, I’m hopeful that you, along with other Canadians, understand that this bill is detrimental to Canadian energy and to the reputation of Canada as a jurisdiction with strong, supportive regulations for energy industry and to our Canadian economy.
Thank you for your time.
The Chair: Thank you very much, Mr. Fagerheim.
Mr. McEwan, please.
Tim McEwan, Senior Vice President, Independent Contractors and Businesses Association of British Columbia: Thank you very much, Mr. Chair and committee members, for having me here today. We appreciate the opportunity to provide you with our views on the tanker moratorium, which the federal government proposes to put in place on the north coast of British Columbia.
By way of background, the Independent Contractors and Businesses Association, or ICBA for short, has been the leading voice of British Columbia’s construction industry for 43 years, representing more than 2,100 members and clients who collectively employ over 50,000 British Columbians.
ICBA advocates for its members in support of a vibrant construction industry, responsible resource development, and a growing economy for the benefit of all British Columbians.
Important for our members who provide services to the energy industry are the nascent opportunities from the potential export of hydrocarbons to the vast markets of the Asia Pacific. For far too long, Canadians, especially in Alberta but also in British Columbia and Saskatchewan, have been captive to the United States as the sole export market for energy products. This has resulted in our world-class oil resources continuing to trade at a significant discount versus prices prevalent in the international marketplace. Some estimates suggest these differentials have cost the Canadian economy more than $20 billion between 2013 and 2017.
While investment, regulatory and market discount challenges are significant and mounting, there are enormous opportunities ahead if we seize them. Through to 2040, for example, global demand for oil is expected to grow by 10 per cent over a 2017 baseline. At 28 per cent in 2040, oil will still rank as the world’s leading source of energy versus natural gas at 25 per cent and coal at 22 per cent.
This means there is a considerable opportunity to grow the Western Canada service and supply chains which already exist in the oil industry beyond Alberta. For example, fully 738 companies representing 22 per cent of the goods and services provided to the oil sands from outside of Alberta originated in British Columbia, while 462, or 14 per cent, were Saskatchewan-based in 2014-15, the last year for which data is available. At the same time, Indigenous participation in the Alberta supply chain stood at 399 firms in 65 communities in 2015-16.
Opening up market access to Asia for Canada’s oil resources from B.C.’s north coast would enhance these opportunities for Western Canadian communities and Indigenous nations.
Over the past year, we’ve also witnessed the challenges in getting the Trans Mountain pipeline successfully through permitting and approval processes. The reality is that Canada will require Trans Mountain to be built, and if we are to realize the full market value for our oil resource moving forward, further capacity will definitely be needed on B.C.’s north coast.
Bill C-48 gives rise to a number of pressing questions which we raised in our brief, and I’ve summarized a few of them for you.
Today and over the past year, 1,400 oil tankers from Alaska have plied the waters on the west coast of British Columbia, shipping to refineries in Anacortes and Cherry Point, 50 kilometres south of where I live in Tsawwassen, British Columbia. What, then, does the tanker moratorium effectively accomplish on the west coast of British Columbia? Why preclude B.C.’s strategically located ports at Kitimat and Prince Rupert and other nearby tidewater locations and private sector proponents from assisting energy producers to build new markets and supply chain routes for oil exports?
There’s no corresponding tanker moratorium proposed for any coastal area of Canada, including the Arctic, Atlantic or the St. Lawrence River Valley. Why is it limited only to the west coast of British Columbia? In our view, this is an inherently unfair application of federal law.
A number of Indigenous nations also oppose Bill C-48, believing the legislation limits their quest for economic self-determination. How is it appropriate to eliminate economic opportunities for Indigenous groups and other project proponents? And why is the federal government not allowing proponents to avail themselves of independent regulatory processes to determine whether an oil port project has environmental, scientific and technical merit? This is a key question.
The federal government’s professed commitment to expand trade to the Asia Pacific is laudable, but the proposed tanker moratorium runs directly counter to this critically important national policy objective.
As the committee considers Bill C-48, ICBA encourages you to examine the tanker moratorium with a view to the long-term national interest. We believe this includes a commitment to responsibly get to “yes” on major energy projects through rigorous, independent regulatory review processes.
Bill C-48 needlessly limits these possibilities at a time when our country and our energy industry is most in need of assistance to get our country’s landlocked oil resources to Asian markets.
As a leading B.C. industry association, we understand our province’s important national role in this effort. B.C.’s coastline is Canada’s coastline. It belongs to Alberta, Saskatchewan and other provinces as much as it does to the residents of British Columbia.
As I conclude, the Alberta Minister of Energy aptly summed up the core problem with Bill C-48 for the federal Minister of Transport this way:
The proposed moratorium, as drafted, now prohibits any facility exporting crude oil and condensate in the region (northern B.C.), which will affect several future projects with the potential to reach new, high-value markets in Asia. Prohibiting shipments from the strategic deep-water ports on the North Coast of B.C., which can deliver products with a full day advantage over other Pacific ports, will have profound and long-lasting economic consequences for the entire country.
As I conclude, I would suggest that the Standing Senate Committee on Transport and Communications should recommend that Bill C-48 be withdrawn or set aside. In the alternative, the committee could recommend that the legislation be amended to allow for a tidewater energy corridor through the Dixon Entrance to facilitate access to existing and potential ports located in northern British Columbia.
We appreciate the opportunity to appear before you today, and I’m open to any questions you may have.
The Chair: Thank you very much.
We’ve got committee members here and visiting senators who have taken a very strong interest in this bill. I’m going to follow the same procedure. I’ll go through the membership of the committee first, then I’ll go to other senators, and then we’ll repeat the process.
Senator Miville-Dechêne: This is a question for Michael Lowry. I would like you to expand a little bit about the possibility of an oil spill in northern British Columbia.
I have read, and we have been told, that because the water is very agitated, because of the strong currents, because of the sea itself, cleaning up an oil spill is much more difficult in northern B.C. Can you give me your views on that? You probably studied that when you were trying to prepare for the Northern Gateway pipeline.
Mr. Lowry: Thank you for your question. The important thing to understand with spill response is it’s very similar to when you look at a wildfire response. There are factors within the responders’ control, and there are factors outside of our control.
The weather, as you mentioned, is going to definitely impact a response. Spill response equipment, including booms and skimmers, starts to lose efficiency in weather conditions over what we call Beaufort four. That applies anywhere on the coast.
B.C.’s coast does have strong weather conditions. That includes the north, but it also includes the south, on the west side of Vancouver Island. Weather is definitely going to play a role in the response.
As you may know, we did respond to a spill in the mid-coast a couple years ago. We were responding there for 40 days. Out of those 40 days, there were 11 days where we were stood down due to weather.
So the weather will have an impact, but that applies to the entire coast of B.C.
Senator Miville-Dechêne: Does it apply to the Port of Vancouver, too? I want to know if there is an added risk in northern B.C. as opposed to southern B.C.
Mr. Lowry: I wouldn’t say there is an added risk. There are different weather conditions in certain areas. The Port of Vancouver was chosen as a port because it’s very sheltered. There will be less wave action in the Port of Vancouver, certainly.
The Chair: Wouldn’t that be true on almost any coast in the world?
Mr. Lowry: That is true, yes. Weather plays a role on all coasts.
Senator Miville-Dechêne: I have read that because of the particular nature of the sea in northern British Columbia, cleaning up an oil spill is almost impossible. Are you telling me that is not true?
Mr. Lowry: What I’m telling you is that weather does have an impact on spill response. There are areas all across B.C. that are impacted by weather.
Up north, the Hecate Strait is very susceptible to heavy weather. Also, in the south, in the Juan de Fuca Strait and off the west coast of Vancouver Island, that is also true.
What I’m saying is weather plays an equal factor along the entire coast of B.C.
Senator Miville-Dechêne: Thank you.
Senator Griffin: I’m not sure who my question is for. It may relate to a couple of the witnesses.
If Bill C-48 were to pass as proposed, and if you didn’t have the tidewater energy corridor at Dixon Entrance, what would be the nearest coastal area that would provide a suitable terminus if there were to be a northern pipeline?
Mr. McEwan: I’ll take a stab at that. You have two or three theatres in the north with where you can do this. They are all linked to the Dixon Entrance. You have Kitimat and Prince Rupert, and then there are other locations as you proceed towards the Nass Valley or up the Portland Inlet.
The next viable port is the port of Metro Vancouver, and it’s increasingly constrained. They have plans to continue to build it out, but for incremental oil pipelines, it would be in northern British Columbia where you have to put it.
Senator Griffin: What about in Alaska?
Mr. McEwan: You could certainly put it in Alaska. In the national interest, I don’t know why we would send our oil through an Alaskan port.
Senator Griffin: Which is why I’m asking the question.
Senator Oh: My question is for all three of you.
We are selling crude oil to America for $38 or less a barrel. The world price is closer to $70 a barrel. Looking at Bill C-48, it is more designed for American interests than for Canadian economic interests.
Can you tell us about the impact on the economic side for Canada if this bill passes? How severe is the impact on economic growth for Canada?
Mr. Fagerheim: It is a travesty that we are having such a major difference in the price that was being received. First of all, if you take it back from the Brent crude international price today, it is around $70 or $75. The WTI price is now in the neighbourhood of $58, and we drop back to the Canadian dollar price, which is about $30 less. We are talking in the neighbourhood of between $80 million to $90 million a day of lost revenue to our U.S. counterparts.
What is even more concerning for all of us, and it should be for all Canadians, is that historically, up until three years ago, the Americans required our crude oil; and the American producers, with the growth that they have seen over the years, have now become an exporter of their crude products to world markets. They are actually exporting to us now into Ontario.
Will there be a time where we see the Americans say, “We don’t need your oil at all anymore”? They are our only customer today. We have one customer in the world, and it is the United States of America. That is a very, very difficult situation for Canada to be in.
Mr. McEwan: I will add to that. Thirty years ago, the original free trade agreement was concluded. A big precept of that was that the United States would likely require our energy resources into the distant future. As the previous presenter said, that dynamic has changed fundamentally. The United States is now a net exporter of oil. It’s also a net exporter of natural gas.
If we do not get our resources to tidewater, if we don’t get Trans Mountain done, if we don’t get LNG Canada across the line — and it’s there; they have a final investment decision with a couple of recent hiccups — and if we don’t step up and realize that we’re going to need another outlet for our oil resource in the 10- to 20-year mark, perhaps, then we’re doing our nation a great disservice.
We have got a world-class resource. We have the third-largest reserves of oil in the world. Asia needs them. People are going to continue to fly in airplanes. In fact, airplanes are growing in use across the world.
It’s very disconcerting to our association that this kind of public policy would be put up to put a barrier to project development moving forward. As we say in our brief, every project has to meet the most rigorous scientific, environmental and technical standards, but they should be allowed to go down that path and not be blocked like this legislation does.
The Chair: Are the Americans buying our oil, using it for themselves and selling their oil at world price? Is that what is going on here?
Mr. Fagerheim: That is what’s going on. If I can come back to that, you buy Canadian oil at a discount and the U.S. can expose themselves to foreign markets. Remember, foreign markets attract a premium of about $10 a barrel to WTI at this particular time. So they can buy ours at a massive discount and market theirs at a higher world price market at Brent pricing.
The Chair: That’s why in Green Bay, Wisconsin, you can buy a gallon of gas for two bucks.
Please continue. I always find this interesting.
Senator Oh: For economic reasons, we shouldn’t compromise on environmental issues. I’m sure that today, with modern technology and all kinds of satellite guidance systems, a double-hulled oil tanker should be able to travel safely on our coastline. Even Transport Canada says that Canada has one of the safest marine tanker systems in the world. Can you comment on that, please?
Mr. Lowry: Certainly. Since the new regulations came out in 1995, Canada’s record is fantastic on the coast. In fact, our organizations have never had to respond to a single drop of oil from a tanker on the West Coast. So I think the safety record of Canada’s shipping industry on the West Coast certainly speaks for itself. It’s impeccable.
Senator Galvez: I have three small questions, one for Mr. Lowry and the other ones for Whitecap and Independent.
Mr. Lowry, how can you describe the behaviour of these three types of crude oil: Texan oil, Bakken oil like what burned at Lac-Mégantic, and dilbit? Can you please explain?
I follow the Chinese economy for many reasons. I had many Chinese students as graduate students and they go back and work in the field of environment. It’s very strange because when I talk to them in China, I ask, “Do you know about Canadian petroleum?” And they don’t know. They say that China buys their petroleum from Russia and Iran and that very important pipelines are under construction right now. I would like to know the exact amount we are talking about for the sale of our petroleum to China.
A Louisiana offshore port has been constructed. This is the LOOP, a huge port in Louisiana that is influencing the cheap logistics of crude. Isn’t it disturbing how petroleum is being transported in North America?
Mr. Lowry: I’ll go first on the question of the products that are shipped on the coast.
When WCMRC looks at potential risk, we have to look at the products that are in the vessels. Broadly speaking, those are the heavier products and the lighter products. On the heavier products, we have crude, diluted bitumen and bunker C. Bunker C is what deep-sea vessels use as an energy source. These are all heavier products. On the lighter end, we have marine diesel-type products.
Now, we have equipment to handle both types of products. On the heavier side, even though we call them heavy crude, the density is lighter than water. These products do float, including diluted bitumen. We know we can clean this product up because we have experience cleaning it up. We are the only response organization in the world that has actually responded to a diluted bitumen spill in the ocean. We found that our brush skimmers are very effective in recovering this product from the water.
If it’s a lighter fuel like a marine diesel, we use a different type of skimming system. We use disc skimmers. As an organization, in our equipment inventory we have products that will handle whatever product is on the coast. So we can clean up those products, both the heavier products and the lighter ones.
In fact, it’s actually easier for us to clean up the heavier products because it’s easier to corral them using our boom systems so they can be recovered using a skimmer.
Senator Galvez: Do you use the same dispersants that were used during the Deepwater Horizon spill? What type of dispersants do you use?
Mr. Lowry: There are three main approaches to handling an oil spill. The first is what we call mechanical recovery, using booms to collect the oil and skimmers to recover it. Then there are dispersants, using chemicals to disperse the oil into the ocean and then it’s biodegraded in the ocean. Then there’s also in situ burning, basically lighting it on fire.
In Canada, we plan for mechanical recovery. We don’t plan for dispersants or in situ burning, and that is primarily because we need prior approval from Environment Canada. That is not our first approach. Our first approach is using mechanical recovery.
The Chair: The two other questions you had asked, go ahead. Who is going to answer them, or have we forgotten them?
Mr. McEwan: If they could be repeated.
Senator Galvez: The second question concerns the fact that China is buying its petroleum from other sources like Iran and Russia. There are pipelines under construction as we speak.
My third point was about the LOOP, the Louisiana offshore port in the Gulf of Mexico that is receiving post-Panamax tankers that can load and unload petroleum at the speed of so many tonnes per hour. Everything is now shifting because of the existence of this new port that nobody seems to want to talk about.
Mr. Fagerheim: I will tackle the second question that you asked. When we talk about the importing of crude oil products from Russia and Iran, that now also includes other Middle Eastern countries into China as well as the United States of America.
Now, how much we could export there all depends upon — we are not even talked about in that category because we don’t have access to tidewater. When you look at production in Canada today, just over 4 to 4.4 million barrels per day, how much could go offshore? We use about 600,000 barrels a day in our own country, so we have a very large capacity to take offshore.
We can quickly do the math on that if we wanted to. If you took a million barrels per day at $65 to $70 a barrel, you are losing so much revenue. We can factor that in.
Other places in the world — this is what needs to be clearly understood. Canada is so reliable and has an environmental record that is almost impeccable, yet we’re not being allowed to get our products to foreign markets. It’s a travesty.
Senator Simons: Thank you. I think my questions are primarily for Mr. Lowry. You mentioned the Hecate Strait. We have been given information that says it’s one of the most deadly and dangerous water passages in the world, the fourth most dangerous body of water in the world, particularly because of the shallowness of the water and the way the winds blow there.
If you weren’t going to do a complete and total moratorium, are there areas along the coast that you think would qualify to be called particularly sensitive sea areas?
Mr. Lowry: I don’t think WCMRC is in a position to answer that question. What I would say is there are mechanisms in place through this new area of risk assessment that the federal government is doing, Transport Canada and the Canadian Coast Guard, that are better bodies to look at the risks along the coast and where shipping is safer. Particularly Pacific pilots are an entity that can look at that. Our job is to be prepared for a spill when and where it happens along B.C.’s coast.
Senator Simons: I had a question about dilbit because I’ve seen conflicting information about it. Is it easier or harder to do a dilbit spill recovery than a crude oil recovery?
Mr. Lowry: It would be very comparable. Both products have a similar density, so as I mentioned earlier, they do float. The primary difference — this is through studies that Environment Canada and Natural Resources Canada have done — is that dilbit does become viscous quicker, which means that if you were to use dispersants, the window would be a lot narrower. That is one of the primary differences when you are looking at a response between crude and diluted bitumen.
Senator Simons: Somebody told me they form little balls that float.
Mr. Lowry: All heavy products can form tar balls. That is common across that spectrum of oils.
Senator Simons: It was Mr. McEwan who suggested the idea of a corridor, and I wanted to know, from your perspective doing the rescue operations, are there particular places? I mean, he singled out a particular area. I realize this is outside your immediate area of expertise, but how would a corridor work for you in terms of your emergency response programming? Would it be easier to have a corridor?
Mr. Lowry: If I can rephrase that question a little bit, what we’d be looking for is prescribed routes for vessels along the north coast. If we look back at the Enbridge project that we prepared for, we knew what the route would be and we were proposing to place equipment at appropriate spots along that route. Now, that is key for response because the one factor that we can influence — obviously we can’t influence the size of the spill, where it happens, the weather, but we can influence how quickly we get there. If we know the route that a vessel is taking, we can position our equipment at key locations along that route and make sure that we are able to respond quickly.
Now, that’s exactly what’s in place for the southern shipping lanes that go around Vancouver Island. Our equipment for the Trans Mountain project will be placed in key locations in those areas so we can ensure a rapid response anywhere along that route.
Senator Simons: Thank you very much.
Senator Gagné: I think we’re all very aware of the concerns expressed by coastal First Nations in B.C. and other stakeholders. How does this legislation address their concerns?
Mr. McEwan: There are First Nations that are not supportive of Bill C-48 and there are those that are supportive of it.
I guess my point in all things here is that we shouldn’t be putting in place legislation that effectively precludes a project proponent from availing itself of independent rigorous regulatory review processes — full stop. That’s what this legislation effectively does. It effectively freezes out ports over the size of 12,500 metric tonnes. In so doing, we are limiting our ability — to Senator Galvez’s question — to get our resources responsibly to the Asian marketplace.
I was part of multiple marketing efforts to Asia on major projects when I was a senior public servant in British Columbia. We were talking up the pipelines we had going through regulatory processes. One is in the offing; another one was approved and then was cancelled. Bill C-48 sends a negative signal to those markets. I think we have to think about what we’re doing here in terms of that market signal.
To the point of one of the other witnesses, we have also put in place very rigorous regulatory policy in Canada that’s admired throughout the world, but it is a bit too cumbersome. That’s another bill before another committee, Bill C-69, which has other challenges.
Senator Simons: You don’t say?
Senator Gagné: In your presentation you mentioned that if there were to be an amendment we could consider a corridor. You mentioned the prescribed routes.
Senator Simons: Prescribed shipping routes. I think that’s what he said.
Senator Gagné: Having said that, how could we address the concerns of First Nations or other stakeholders in that particular situation where we would have an amendment such as that?
Mr. McEwan: With any linear project or port project, under the law there’s a duty to consult and accommodate First Nations. That consultation process should be allowed to run its course through a regulatory review process that looks at a project-by-project basis.
Senator Gagné: Would anyone else want to comment?
The Chair: Did you want to get into that?
Mr. Fagerheim: From a proposal perspective, should we seek compromise or an amendment rather than the rejection of Bill C-48, we would suggest that rather than outright prohibitions in section 4 of the bill, a conditional prohibition by the addition of the following words at the end of sections 4(1) and 4(3) that I provided to everybody in written format:
Unless at the applicable time there exists in a prescribed radius of the tanker, i) sufficient marine spill response capability; and ii) not less than [x] tugboats having prescribed combined horsepower and towing capability of [y].
So we would be providing opportunity as a compromise or as an amendment that would allow our products and the emergency response to be available and move forward in the modernized world of emergency response and recovery.
Senator Dasko: Thank you, everybody.
I think everyone is well aware of the price differential and what’s happening in the industry. This has come up many times at this committee, in the other committees and in the chamber. I think everybody understands how difficult it is for producers.
Mr. McEwan, you are the perfect person for me to ask this question. You say you employ 50,000 employees in B.C.
Mr. McEwan: Our members do.
Senator Dasko: I’m very interested how the B.C. government is responding to this. I’d like you to tell me everything you can on their position and whether they have been supportive of your organization and whether they do not support this bill and are turning it down. You said you’re a former employee of the government, so you may have extra insight into what’s going on in B.C. right now.
Mr. McEwan: As the committee likely knows, the former government had five conditions for oil pipelines that it put in place, and one can debate the merits of that.
The current Government of British Columbia has, in my view, been obstructionist when it comes to Trans Mountain. In fact, our organization is an intervener in a B.C. Supreme Court case around the regulation to restrict the movement of diluted bitumen through the province of B.C., and it’s a constitutional case. I would say the Government of British Columbia is not supportive of oil pipelines.
Senator Dasko: Are they supportive of this bill? Do you know what their position is on this bill specifically?
Mr. McEwan: I can’t speak to it specifically.
Senator Dasko: Do you know anything they’ve said about it at all?
Mr. McEwan: I don’t, to be honest, but I would suspect they’re supportive of the prohibition.
Senator Dasko: Okay.
Mr. Fagerheim, first of all, can I ask you where you are?
Mr. Fagerheim: Calgary, Alberta.
Senator Dasko: You said you’re a producer in three provinces. How do you get your resource to tidewater in B.C.? You don’t?
Mr. Fagerheim: We don’t get it to tidewater in B.C. That’s the challenge.
Senator Dasko: Right. So where is your product going at the moment? Just going south, is it?
Mr. Fagerheim: Yes. We sell into the Canadian market, which is in Fort Saskatchewan, a refining complex, and then into the U.S. Midwest.
Senator Dasko: So if this act does not go ahead, what do you see as prospects for your company? What would you be doing differently?
Mr. Fagerheim: If this did go ahead or did not go ahead?
Senator Dasko: If it did not go ahead. If this bill dies.
Mr. Fagerheim: If this bill dies? Sorry, I just want to make sure I —
Senator Dasko: Yes, if it dies, if it’s killed.
Mr. Fagerheim: If it dies, we would have an opportunity to take our products to foreign markets and get a much higher price. We could accelerate the development of our assets with higher amounts of funds flow, cash flow, and foreign investors would reinvest back in our country.
Senator Dasko: Without the bill, do you think the prospects for another pipeline that would go to tidewater are good?
Mr. Fagerheim: Yes, I do.
Senator Dasko: Are we looking at another pipeline?
Mr. Fagerheim: From our perspective on the crude oil side, we’re looking to get TMX approved. I don’t think that should be a limitation on any other pipelines. For natural gas producers, as you’ve heard earlier today, I think getting an LNG facility built so we can ship our natural gas products to foreign market is as equally important. So they’re not mutually exclusive to one another.
When we think about this, these are our resources. They are going to be produced and sold. When they are going to be sold, what price are we going to get for them for the benefit of all Canadians? This is not for the benefit of Whitecap Resources. This is for the benefit of every Canadian, to have the best health care, the best schooling system, the best technology and advancement centres and for our social programs across our country.
[Translation]
Senator Boisvenu: I’ll ask our guests my question in French. First, I want to thank all the guests who have joined us this evening. I appreciate their presentations.
Mr. Fagerheim, can you hear the interpretation properly?
[English]
Mr. Fagerheim: Yes, I can. Thank you.
[Translation]
Senator Boisvenu: Thank you. Obviously, Canada is very large and rich in natural resources, but it has a fairly limited domestic capacity to develop those resources on its own. It must rely on outside investment. This week, other guests spoke about how much foreign investment in Canada has declined in the past four years, especially in the natural resources sector.
I have only one question. Mr. Fagerheim, I know that you’ve been working a great deal on investments at home and abroad. When you talk to investors about Bill C-48 and Bill C-69, which will significantly affect or may limit natural resource development in Canada, at least development for export purposes, how do the investors view these two bills?
[English]
Mr. Fagerheim: Thank you for the question. I appreciate that. Whether it’s in our marketing efforts in Asia, which includes Australia, Singapore, Taipei, Tokyo, China, that we had done in the fall, or in Europe here in January/February, the questions we are continually asked are not specific to Bill C-48 or Bill C-69 because to international investors they are just numbers.
What they want to know is the regulatory processes. They ask this question: Why, when you’re so resource-rich in your country, are you not allowed to produce your product into foreign markets and therefore get the highest price possible? Your regulatory bodies, your regulatory affairs, and then your government bodies and the policies within the country have limited your ability to advance funding. Therefore, at this particular time, I can tell you that of the 24 meetings we had in Asia, 20 involved previous shareholders of Whitecap Resources, but because of our inability to advance products to markets — and they look at the wide differentials, prices — there is not one Asian shareholder in Whitecap Resources at this particular time. It is a far different situation than we had two and a half years ago. Those are challenging questions for which we don’t have an answer, other than to say we’re working on it.
[Translation]
Senator Boisvenu: Thank you.
[English]
Senator MacDonald: I thank the witnesses for being here.
On the East Coast of Canada, we’re very familiar with the movement of petroleum. My father and three of my brothers sailed, and I have Coast Guard captains in my family going back generations and am very familiar with this activity.
It’s interesting to look at the numbers. On the East Coast of Canada, the Atlantic coast, we move 192 million metric tonnes of oil a year. On the Great Lakes system, the St. Lawrence Seaway, 24 million metric tonnes, and the St. Lawrence Estuary in the gulf, 67 million metric tonnes, for a total of 283 million metric tonnes that we handle safely on the East Coast of Canada. That is six different sources. The Quebec City and Montreal refineries, the Come By Chance refinery — the Newfoundland offshore oil wells where they directly export it — Point Tupper and Port Hawkesbury, which is the largest oil handling facility in the country, and St. John, New Brunswick, at the Irving Oil Refinery.
The only place on the West Coast that we handle it is the Port of Vancouver, 6 million metric tonnes a year. That’s nothing in relative terms. In fact, 37 million metric tonnes of U.S. oil goes through our water on the West Coast. I can’t believe the Government of Canada is doing this. Yet, here we are making an arbitrary decision to block off this important part of coastline which would solve so many problems in this country in terms of getting our product to market.
Now, there are reports. In 1978, the Department of Environment and Fisheries made a report. They evaluated 27 West Coast ports for the export of petroleum. By far the top-rated were Port Simpson and the Prince Rupert area. At the very bottom of the list was the Vancouver area. What rational reason can you see for the Government of Canada encouraging more petroleum in the Vancouver area, where not just the tanker pressure is but all the activity is, and there’s so little pressure in the Prince Rupert/Port Simpson area where the finest immediate ocean access West Coast port exists? What is the rationale for this?
Mr. McEwan: I’ll jump in. There is none. It baffles me that this kind of legislation would be put in place again and not allow proponents to bring forward worthy or unworthy proposals, but in either case they’re judged by a thorough, independent regulatory process.
In terms of the Trans Mountain pipeline, one argument in favour of it, I suppose, is it’s a twinning of an existing pipeline. It’s in an existing route. Quite apart from the tanker traffic that safely goes in and out of the Vancouver Harbour, there is all kinds of traffic just to the south of Metro Vancouver that goes in and out, as I referenced in my remarks before, to Anacortes and Cherry Point. It’s literally 50 kilometres south of where I live.
Bill C-48 makes no public policy sense. It should, in my respectful view, be set aside.
Senator MacDonald: Mr. Fagerheim, do you want to respond?
Mr. Fagerheim: I would agree with the comments that Mr. McEwan has made. When we talk about this in Canadian terms, natural gas and crude oil are Canadian products, and we have to think about it in that context. The fact that the ban is needed, I think, is a fallacy. I don’t believe for a second that it is needed. We need these products for the benefit of all Canadians.
It harms me to sit here and watch the lack of respect that we have for the energy sector, its policies and the innovation and the education we could provide for these young bright minds, that we’re not allowing ourselves to participate in the financial benefit that comes with selling our products at world prices.
Senator MacDonald: I’ve been on this committee for 10 years. I had the opportunity to chair the committee when we did a pipeline study and spoke to all the experts in the movement of petroleum on both coasts.
Nobody’s minimizing the importance of safety. Everybody understands the importance of safety and managing risk. I don’t think there’s any concern about understanding the importance of that. On the East Coast, we have the Eastern Canadian Marine Response Corps, the Point Tupper Marine Services, the Atlantic Environmental Response Team. They’re very experienced in managing all these resources and the movement of this petroleum.
Everybody has heard of the Exxon Valdez. But we had two significant oil spills on the East Coast of Canada. Growing up around Cape Breton, I remember them. In 1970, the Arrow went aground just west of the Canso Causeway. In 1979, the Kurdistan split in two in the Cabot Strait between Cape Breton and Newfoundland. It was heading for the refineries in Quebec.
If anybody thinks for a second that had occurred in the St. Lawrence estuary in the middle of winter, on the ice, it would have been less problematic than an oil spill on the West Coast of Canada, it just doesn’t make any sense to me. Or if the Arrow, which was working for Irving, had ended up in the Bay of Fundy as opposed to Chebucto Bay, a major oil spill in the Bay of Fundy would be an international incident. It would be in the State of Maine in 24 hours, in Boston 48 hours and in New York in 72 hours because the tide is so strong there.
Yet the Government of Canada is selecting this small section because what this really is about, and I think you would agree, is about blocking pipelines. There’s no rational reason to stop this coast from delivering oil to the world. Would you not agree?
Mr. McEwan: I would agree with that, not to your surprise, I suppose.
I think we’re buckling to interests that are outside of our jurisdiction that are wanting to shut us down, and we shouldn’t allow that to happen. We have our own national interest. We have our own social programs to pay for.
One other metric I didn’t put in our brief — but I thought about putting it in there — is that between 2005 and 2015, there was $226.8 billion invested in the oil sands in Alberta on the precept that international investors would be able to get our oil to markets. Our problem is getting a $10-odd billion pipeline into port Metro Vancouver. Down the road, it’s going to be our need to do another pipeline on the north coast, but this bill stymies that.
The Chair: First of all, Mr. Fagerheim, thank you. I’m from Saskatchewan. Thank you for doing business in our province and contributing to our economy. I wish we could solve this problem of moving our natural resources to the West Coast.
We had heard quite a bit talk about the consultation process. This question goes to all three of you because a consultation process would have looked at how we can handle an oil spill. Were you consulted by the federal government on this bill?
Mr. McEwan: Our association to my knowledge wasn’t, albeit I have been with the association for 18 months. I haven’t heard that we were.
The Chair: You would have heard it from your predecessor —
Mr. McEwan: Correct.
The Chair: — if there had been a serious consultation process.
Mr. Fagerheim: Whitecap Resources definitely was not consulted or advised of the consultation process.
The Chair: Mr. Lowry, did they talk to the WCMRC about the possibility of an oil spill and how efficient you would be in cleaning it up?
Mr. Lowry: No, not to my knowledge.
Senator Jaffer: I want to clarify something with you, Mr. Fagerheim. You talked about natural gas from the north. That’s a mistake, right, because that’s not part of persistent oil or crude oil. You misspoke on that. Liquefied gas and natural gas, even after this legislation comes in place, will still be able to be transported; isn’t that correct?
Mr. Fagerheim: I believe that to be correct.
Senator Jaffer: Thank you.
Mr. Fagerheim: The discrimination is only against crude oil.
Senator Jaffer: Thank you. I think you misspoke on that.
I have a question for you, Mr. Lowry. Where are you located? Where are your offices or where is your business located?
Mr. Lowry: We have response bases in Vancouver, in Nanaimo on the Island, in Victoria, and also up in Prince Rupert. We do have a response base up in Prince Rupert, and we do have equipment caches or depots spread along the coast in B.C.
Senator Jaffer: I’m not trying to put words in your mouth, but it would be easier to get to a place where the weather conditions are not as drastic, like in a place where you said for 11 days you couldn’t get to an area because of weather conditions; is that correct?
Mr. Lowry: No, that’s not what I was saying. Wherever we are on the coast, wherever a spill might, they’re all equally opportune situations where weather could impact that spill response. So the north coast is certainly not the only place that has extreme weather. We have extreme weather anywhere on the coast of B.C.
Senator Jaffer: But not in Vancouver.
Mr. Lowry: We do have storms in Vancouver, but Vancouver Harbour was chosen as a harbour for a reason, yes.
Senator Jaffer: Mr. McEwan, it’s good to have you here. Your family and mine have known each other for a long time.
You said you represent business interests, but as you know — and you’ve been a senior policy person in the Government of British Columbia — there are business interests of Indigenous people in the north as well. And those Indigenous people do not want to have pipelines because they are very concerned that it will affect them if there’s a spill. The local coastal communities are concerned their fisheries will be affected. They do not want to take this risk. You probably don’t represent the business interests in the north; am I correct?
Mr. McEwan: Yes, we do have business interests in the north, in fact. We have a vice-president based in Prince George.
Senator Jaffer: Is it the coastal nations?
Mr. McEwan: We have members that provide service and supplies, many different industries, out towards the west coast of British Columbia and Prince Rupert.
Senator Jaffer: I’m happy that you do. You must have heard that there is a great concern by the coastal nations. There are two: Nisga’a and Lax Kw’alaams that do not want this bill, but all the other coastal nations do want this bill to protect their business interests. I am sure you have heard that.
Mr. McEwan: I have heard two things. It is important to acknowledge that there are those against, and there are those for. There’s the Eagle Spirit proposal, which is a $16 billion pipeline from Alberta to Grassy Point, which is in the Dixon Entrance, and 35 First Nations support it. The Nisga’a, as well, support industrial development and have tidewater access —
Senator Jaffer: I am sorry to interrupt, but the nations you are talking about, to the best of my recollection, are not the coastal nations. Where are those 35 nations?
Mr. McEwan: There is the Lax Kw’alaams, which is a coastal First Nation, as is the Nisga’a because they have tidewater.
The Chair: You have to let him finish answering the question and then you can ask him another one. Don’t interrupt him.
Go ahead.
Mr. McEwan: That’s fine; I’m done.
Senator Jaffer: What I meant was the Nisga’a and the Lax Kw’alaams are from the coastal nations. The others are not coastal nations, the 35.
Mr. McEwan: They’re not coastal nations, granted, but they are Canadians like the rest of us, and I think they deserve to have their kick at independent regulatory process to determine whether or not it’s viable to export oil off the coast of British Columbia.
As I said, the Nisga’a are on the coast, as are the Lax Kw’alaams.
Senator D. Black: Thank you to you all for being here.
I was checking my notes, Mr. Lowry, and I would like you to confirm that this would be accurate. It is your view that should there be no tanker ban on the northern coast of British Columbia, your organization, existing now and supplemented if necessary, would have the appropriate response capability in the event of a spillage of oil, and it is your belief that you could address that issue. Are my notes accurate?
Mr. Lowry: Yes, that is correct. We would work with the proponent to develop the appropriate level of response based on the increased risk of shipping of that project. That’s exactly the approach we took to prepare for the Trans Mountain project. It’s the exact approach we took to prepare for the Northern Gateway project before it was cancelled.
Senator D. Black: Thank you, Mr. Lowry.
Senator McCoy: I will address my questions to all of you. I’m looking at a publication by the Department of Transport Canada and it is statistics of marine transportation in the area that would be covered by this tanker ban. It says that for all ships, in 2003 and from 2005 to 2008, between 1,000 and 2,000 ships went into Prince Rupert.
We have also heard of three, maybe four incidents of spills in this area, all of which came from boats and ships smaller than would be affected by this so-called moratorium. They are the Alaskan ferry and a barge. The other one I’m familiar with is a U.S. military ship that sank in 1946 and started leaking, and it was actually a combined effort on the West Coast. I don’t know if you were involved Mr. Lowry. But the Coast Guard led with First Nation participation, an integrated approach to actually seal the leakage so it no longer was a problem.
Bill C-48, this ban, is not going to change any of that. In my view, it is not addressing the risks that the communities along the coast are facing. What would it take to protect the legitimate interests of communities in British Columbia from the variety of risks they face? What would it take?
Perhaps Mr. Lowry would be the one to answer, but any of you, please.
Mr. Lowry: The point you raise is a good one. The tanker moratorium does not eliminate the risk of an oil spill on the north coast. All shipping traffic presents a potential risk. As I mentioned earlier, the deep-sea vessels have bunker C, which is a toxic product. Obviously all other vessels contain fuel that can potentially source a spill.
As a response organization, when we look at risks we’re looking at all marine traffic on the entire coast of B.C., not just tankers. They all present risks. We often say it’s tankers that don’t keep us up at night because of the all the measures in place to ensure that they have safe passage, including escort tugs and pilots and whatnot.
When we look at what we’re going to put in place for Trans Mountain, those enhancements are not just for Trans Mountain; they are for the benefit of the entire marine community on the West Coast. Certainly any enhancements we might put in place for potential projects on the north coast would be the same. These are spill response enhancements available for any type of spill on the north coast or anywhere else in B.C.
Senator McCoy: We should aim higher.
Mr. Fagerheim, I saw a headline in Bloomberg a week or two weeks ago that stated that U.S. energy exports were now viewed as being the backbone of the U.S. economy. You have explained some of that, but is TMX, the expansion of Trans Mountain, sufficiently large, and is it going to Asia in order to aid you and other producers? Is that a sufficient market diversification to ensure the future of the energy industry?
Mr. Fagerheim: To answer that question directly, no, that isn’t. What we would like to get for what I’ll call the energy security for Canada, which is the way we should look at it, is adding about another 375,000 to 380,000 barrels a day of capacity to the Port of Burnaby. Some of that product may make it to Asia where the premium prices are, or to premium-priced markets. For the most part, we still have another 3.5 million barrels that will continue to have discounted pricing.
Senator Galvez: I am interested in this differential price because I know there are the standard brands. There is the Texas oil, the Western Canadian oil, and then there is dilbit and bitumen. To my understanding, it’s not just the pipeline capacity that determines the differential price, but there is the distance, the pipeline feeds, the condensate, the diluent used to make the dilbit and the difficulty of refining. There are many factors.
I consulted on the gap price, and today WTI is $56; Brent Crude U.K. is $66 and WCS, our oil, is $45. So there is only $11 difference. Sometimes we exaggerate some numbers in order to say we are losing so much money per day.
Can you please elaborate on what is the exact way in which these differential prices are calculated?
Mr. Fagerheim: What you have is Brent pricing that is a discount to Brent at this particular time. The reason we’ve narrowed this in is because Alberta has had to curtail its production into the marketplace. It is unheard of that Canadian regulatory bodies have to regulate the production, in essence, I wouldn’t say as strongly to manipulate the price, but that’s what has had to happen to reduce that differential.
With the wider discount, Albertans and Canadians are not getting full value for their products. These are their products in Alberta, British Columbia and Saskatchewan. These are their products being sold to the market. With the wider discount, they get fewer royalties and fewer taxes.
I talked about the calculations earlier. When we were $38 and now $45, that is a near-term phenomenon because we don’t have the capacity to get our products through to market, which is a challenge.
Senator Jaffer: I have one more question for you, Mr. McEwan. You were saying 35 nations and they are Canadians. We have had coastal communities come here, and they have said they do not want to risk their fisheries in the coastal regions. These are people who live on the coast. This is where they and their families have lived for hundreds of years. Do you think we should be overriding what they want?
Mr. McEwan: What I think we should be doing, senator, is if there is a project proposal, it should be submitted to a fair, independent and very rigorous regulatory review process.
As part of that, under the law, there is a duty to consult and accommodate Indigenous nations. As part of that consultation, we should purposefully look for accommodations that deal with their concerns. I think that’s the appropriate way to approach this, rather than put in place a bill which effectively precludes the creation of massive economic value for the benefit of all Canadians, including those coastal First Nations.
The Chair: Thank you, witnesses.
After we finish with the second witness, we’re going to spend a couple of minutes on our travel plans. The steering committee met and I think we’re getting organized.
We had two people on your witness list from the Friends of Wild Salmon, but we weren’t able to connect. Sorry about that. I don’t know what happened, but the video conference failed.
But we have with us Karen G. Wristen, Executive Director, Living Oceans Society, by video conference. Thank you for participating. The floor is yours, Ms. Wristen.
Karen G. Wristen, Executive Director, Living Oceans Society: Thank you, senator. I am Executive Director of Living Oceans Society, not Friends of Wild Salmon. I would like to begin by telling you about Living Oceans.
We were incorporated under the laws of British Columbia in the fishing village of Sointula on the central coast of B.C., up around the north end of Vancouver Island. We are 20 years old today and operate two offices, one in Sointula and one in West Vancouver.
Living Oceans’ mandate is marine conservation, but we have always taken the view that we conserve marine resources for the use and benefit of people, so we try to make sure that coastal communities are heard in decision making about the ocean, and we try to facilitate their participation in decision making.
Some of the work we have done over the years includes research, particularly interpreting that research for a public audience using maps and plain language reports . We tend to engage directly with governments and with industry and the coastal communities to try to craft solutions that will work for everyone.
Over the years, we have worked very hard to enable citizens to participate in the decision-making process. We have been working in particular on a legislated ban for oil tanker traffic on the north and central coast for over 15 years. Our reasons for supporting the ban are pretty straightforward. Those waters are far too dangerous to permit the carriage of dangerous cargo such as this. The weather and the sea states in that area simply preclude any meaningful spill response during most of the year.
The second reason, of course, is that the marine life in the region is far too precious to risk the known long-term adverse effects of an oil spill or, indeed, the immediate day-to-day effects of ordinary operations of oil tanker traffic.
Let me speak first to the question of the unique dangers presented by these waters. Hecate Strait is classified as the world’s fourth most dangerous body of water, and that’s primarily because of how quickly the wind and sea state can get up in that area. In Hecate Strait and Dixon Entrance and Queen Charlotte Sound in the winter months, it’s not uncommon to see sustained storm force winds of up to 100 km/h and sea states getting up to 8 and 10 metres tall. That’s just the sustained states that you can see in the winter. Gusts of up to 90 knots, or 167 km/h, have been known to occur in Queen Charlotte Sound.
Because Hecate Strait is quite shallow, it’s known for particularly difficult sea states. You can get steep waves occurring at short intervals, and they can be extremely high. The maximum significant wave heights that have been recorded in that area by the Department of Fisheries and Oceans vary from 9 to over 18 metres. The highest wave that has been recorded in Hecate Strait was about the height of a 10-storey building, if you can imagine that crashing down on your decks.
It’s not only a bad area for shipping at the moment, it’s expected to get worse. With the impact of a continually changing climate, the predictions are for increasing severity and higher waves in the region. We have already seen some evidence of this happening.
Since 1990, there have been four occasions on which the 100-year maximum wave height has been exceeded, so it would appear that the predictions regarding the increased wave height are already being seen.
Wind and wave conditions like these make navigation extremely difficult and can even damage large vessels like oil tankers. That’s because the integrity of those ships depends on — particularly the double-hulled oil tankers we have these days — the integrity of thousands of welded joints. When a ship is repeatedly subjected to the kind of short-interval steep waves that you can get in this region, it can be extremely taxing on those joints and result in structural failure.
When conditions like those are coupled with the reduced visibility that may occur at any time of year as a result of snow and fog, the north and central coast presents an exceptionally dangerous place for shipping.
I have just been speaking about the open water areas in the north and central coast. If we were seriously considering Kitimat as an oil port again, you would have to also take into account the conditions in the confined channels leading to the Port of Kitimat. That’s 150 nautical miles of largely confined-channel transit that tankers have to navigate. That’s important for a couple of reasons.
One, because that distance also includes a couple of very sharp turns that a tanker would be hard-pressed to make, particularly at the low speeds that they would be operating at, when they are not particularly manoeuvrable. In fact, on that point, the results that were filed in the Northern Gateway hearing for ships transiting the Douglas Channel were preliminary only, but they showed that even in the roughly modelled conditions that were being used by the simulator, there were instances in which 100 per cent of the power of the tethered tugs on it needed to be used to prevent the ship from grounding or striking rock. That means there was absolutely no margin for error. If the modelled conditions didn’t exactly mimic natural conditions, the ship would have gone aground.
The uniquely dangerous nature of these waters lends itself to a blanket moratorium on oil tanker traffic. There are certainly dangerous areas on all coasts of Canada, but there are none that really compare with the suddenness and severity of the weather that can come up here in this region or the challenges of that long confined-channel navigation. A tanker that leaves port in good weather may find itself beset by storms that develop with explosive intensity over these waters. There are few places of refuge and inhospitable rocky shorelines, so vessels that are caught in that weather are putting lives, cargo and ships at risk.
We say it’s simply unwise to permit the shipping of inherently dangerous cargo in waters like these. A mariner faced with contractual obligations to deliver oil on time to the destination refinery will take risks that ought not to be taken in these waters. You are probably familiar with the old saying that there are old pilots and bold pilots, but there are no old bold pilots, and I would submit the same would be true for mariners. We don’t want to encourage ships, lives and cargo to be put at risk in these waters.
I’ll turn next to the question of spill response effort in these waters. Living Oceans was an intervener in the Northern Gateway Joint Review Panel assessment. We filed evidence of a response gap analysis. That’s essentially a study of the percentage of each year that oil spill response would be impossible because the operating parameters of the response equipment had been exceeded. We found sharp seasonal variation, as you might expect in this, with the winter presenting conditions that would impair or prevent spill response between 60 and 98 per cent of the time. The reason there is such a range there is because we did the analysis at each buoy that records wave heights, and they vary, obviously. During the summer months, recovery efforts would be impaired or impossible 18 to 65 per cent of the time.
That gap analysis was only looking at the sea state. If you add in factors such as temperature, wind and visibility that would also impair response efforts, it’s likely that those numbers would rise and that spill response equipment could not be mobilized or operated effectively for most of the year throughout that region.
Because of that response gap, it’s reasonable to expect that oil spilt in this region is going to wind up stranding on beaches and fouling estuaries. It’s reasonable to expect there will be impacts on wildlife in the area. But more than that, cleanup of stranded oil requires a large workforce, volumes of hot water and absorbent materials, and a place to store those and remediate the waste water and deal with absorbents that are generated. None of that is available anywhere in the region. We are simply not prepared to be able to mount a response effort in this region.
I’ll turn next to the diversity of marine life that would be put at risk. The reason we say this area is exceptional is because there are cold nutrient-rich waters upwelling throughout this area, which makes it exceptionally productive for marine life. An oil spill could devastate populations of species that are resident anywhere from the ocean floor through the water column to the surface and even in the air. That’s because oil has a way of mixing with the water, particularly in high sea states like this, and can wind up sinking to the ocean bottom, influencing life throughout the water column, as well as the obvious and expected effects at the ocean surface.
Even the ordinary operations of oil tankers, however, present risks to certain species, such as the whales that return to these waters every year. Whales and particularly the juveniles are prone to be struck by large vessels, resulting in wounding or death. There is at present no known way to avoid ship strikes, though many methods have been tried. For those whales for which we have recovery plans — for those listed as endangered or threatened under the Species at Risk Act, which would include humpbacks, blue, fin, sei and killer whales, both resident and transient — ship strikes have been identified as important factors to be managed.
The problem hasn’t been quantified scientifically. The reason that hasn’t been done is because it’s impossible to collect the data. Ships are so large now that it’s often not even known that a ship has struck a whale, and there has been no central repository to collect the data. But we know they are a problem for the species because we have discovered carcasses and even living animals that bear the marks of ship strikes, and so we know we need to manage the problem. The only way we know that we can manage the problem is to avoid putting ships in the areas where we know whales feed and rear, like the north and central coast.
Underwater noise and physical disturbance from shipping are also factors that have been identified in whale recovery plans. Humpbacks in particular are extraordinarily prone to return to the same feeding areas year after year. If they are displaced from these waters by noise or by the physical intrusion of ships, the feeding and the education of young whales suffers and over time the health of the population may be impaired.
We have the benefit of a remarkable scientific record on the consequences of a heavy oil spill at sea in the work that has been done in the wake of the Exxon Valdez spill. Thirty years after that spill, the beaches of Prince William Sound, Alaska, continue to harbour viscous oil deposits that are as toxic today as they were at the time of the spill.
The Chair: I do not mean to interrupt, but how long will you be? How long is your statement?
Ms. Wristen: Two more pages, senator.
The Chair: Okay. Thank you.
Ms. Wristen: As I was saying, 30 years after the Exxon Valdez spill, the beaches of Prince William Sound, Alaska, continue to harbour viscous oil deposits that are as toxic today as they were at the time of the spill. They are showing little, if any, signs of degradation.
The record to date gives us some really important information about what we would be putting at risk and for how long in the event that oil shipments were to be allowed through this area.
On the social and economic front the losses were catastrophic. They included injuries to human health, which were numerous and long-lasting, and those resulted from both the spill and the cleanup effort. There was loss of property that was damaged by oil and loss of income for the First Nations, the fishermen, the tourism operators and the myriad businesses that depend on all of those. There was also a loss of subsistence resources for both First Nations and other local communities. Those losses persist to this day.
Compensation for those losses was not provided in a timely manner or in some cases at all. That exacerbated both the human suffering and the economic losses that were attendant on that spill.
The compensation regime in Canada makes provision for some payment of personal losses, but it remains unclear to this day how quickly and by what process compensation would be available for personal economic loss and injury.
From the viewpoint of risk to species other than humans and their habitats, the Exxon Valdez record is very informative. We had immediate consequences, medium and long term. Immediately, there was death by asphyxiation, hypothermia and poisoning of sea and shorebirds, sea and river otters, whales, eagles, shellfish, herring and salmon. There was also destruction of large populations of near-shore microbial organisms such as plankton, which are essential to the food web. That was consequent on the cleanup efforts rather than the spill itself.
In the medium term, which I would place at one to 20 years, we saw decreased population levels of whales, otters, herring, salmon and shellfish, with a risk of extirpation of some of those species. Other populations became increasingly vulnerable, and the food web was disrupted. Toxic oil continues to affect the near-shore environment throughout this period, and this was the time in which we began to identify long-term genetic impacts on fish populations which were reducing their ability to reproduce.
In the long term, and we’re now at 30 years and counting, we’ve seen extirpation of small populations — the loss of one whale pod and perhaps the second to go — the failure of herring or seabird populations to recover and that having consequences on the salmon population. Toxic oil continues to affect the near-shore environment and the long-term recovery of fish populations that are important for commercial exploitation remains in question.
Turning to Bill C-48 and its protections for the north coast, we welcome the provisions of the bill because it removes uncertainties that existed concerning the status of the moratorium that has been in place since 1972. American oil tankers have, since that time, voluntarily observed routing agreements, later to be formalized as the tanker exclusion zone off our westernmost shores.
There are two respects in which we would like to see the bill strengthened. One is the ministerial discretion to exempt certain vessels from the provisions of the act. Clause 6 allows the minister to do this without public notice or consultation. The reasons to be given: if it’s essential for “community or industry resupply or is otherwise in the public interest.” We say this discretion is too broad, it lacks transparency and accountability, and we see no reason why resupply operations should be permitted to put at risk everything the bill itself is designed to protect.
We would recommend that the exemption be removed from the bill altogether. Failing that, a process for public notice and consultation should be inserted to ensure that there is transparency, and a more tightly defined set of criteria for the exercise of the minister’s discretion should be developed. To say that an exemption could be granted if it is “otherwise in the public interest” is difficult to interpret in the context of this bill because we presume the context of it is that the public interest lies in protecting this region from the impacts of tanker traffic.
Limiting ministerial discretion to clear cases of emergency relief and providing an expiry date for any exemption order are two of the possible approaches to amending this clause. They were proposed by West Coast Environmental Law in a brief that was given to the House standing committee, and we would support those amendments.
The second concern I’d like to raise with the bill is that it covers only crude and persistent oils. From a purely scientific viewpoint, there’s no justification for restricting the operation of the bill to tankers carrying only these oils. Refined oils are also toxic to marine life, and the same conditions that pertain to spill response for crude and persistent oils apply to the response for refined oils. The best-case scenario for a response to an ocean spill of refined oil is still only a recovery of about 15 per cent of the product, meaning these oils will strand on beaches, will mix with the water column, and will put at risk the marine life and the coastal communities that depend on a clean and healthy ocean.
From a practical perspective, the bill already provides an exemption for community and industry resupply by allowing vessels to carry up to 12,500 tonnes of any kind of oil to offload at port facilities within the defined moratorium area. We submit that this exemption represents an attempt to strike a balance between the provision of essential fuel and the protection of the environment. While we don’t believe that the volume that has been chosen here is supported by the evidence, as current resupply volumes don’t exceed 3,200 tonnes, it’s clear that the exemption is more than adequate to supply the needs of communities for refined product now and well into the future.
To allow tankers carrying refined product in excess of 12,500 tonnes into the moratorium area is to invite a spill that we can’t clean up and that has the potential to do similar damage to marine life as a spill of crude or persistent oil.
I’d like to conclude by addressing a remark or two to something we saw in the media that was suggested to this committee the day before yesterday, which was that the moratorium act might somehow be in conflict with our duties in international law under the law of the sea convention, and that a preferable approach to legislating a ban in this area might be to ask the International Maritime Organization to create a “Particularly Sensitive Sea Area.” I would submit that this is not an appropriate approach for this area. A “Particularly Sensitive Sea Area” can be established to control marine traffic, but the tools that are available are only those available to the IMO under the international treaties. Regulation of shipping lanes, restriction of dumping and creation of areas to be avoided are the main tools that are available. That is a tool for regulating oil tanker traffic through these waters. What we want here is a tool that eliminates that risk altogether, not manages it. The domestic moratorium enacted by creating restrictions on the use of domestic oil ports and marine facilities is an appropriate one that does not contravene our obligations under the law of the sea convention.
The approach that has been taken by the moratorium act preserves the right of innocent free passage to all vessels using the area. I would submit that it is completely in keeping with our responsibilities under the law of the sea charter. If any international designation might be appropriate for these waters, it would be an “Area Avoided.” That could certainly be applied for. That would require domestic legislation to assist in the implementation. We might as well go ahead and exercise our sovereign jurisdiction over internal waters to pass a moratorium that will protect those waters while we wait the five to seven years that it will take to create an “Area Avoided” through the International Maritime Organization.
Those are my comments. Thank you for your indulgence.
The Chair: Thank you.
Senator MacDonald: Thank you, Ms. Wristen, for your testimony. I guess the first thing I want to ask you is, what’s your background? Are you a marine biologist or an engineer? What brings you to this topic?
Ms. Wristen: Law, actually.
Senator MacDonald: You’re a lawyer?
Ms. Wristen: Yes, was a lawyer. Not a practising lawyer.
Senator MacDonald: All right.
Of course we have three major coastlines in this country, but most of the oil is handled on the East Coast and everything you bring up is replicated on the East Coast of Canada. You talk about shallow waters. The Grand Banks are shallow waters and also the greatest fishing grounds in the entire world. Not only do we ship half a million barrels of oil out of there every day but extract half a million barrels every day. If we were to take your advice on this, we would shut down either the fishing or oil industry on the Grand Banks, and I don’t think any Newfoundlanders or people from the East Coast would agree with that.
You talked about weather — snow, fog, freezing rain, heavy surf, huge waves. I can assure you, there’s no shortage of that in the North Atlantic. It’s some of the roughest water in the world.
You talked about whales feeding. The rarest whale in the world, the right whale, is in the Bay of Fundy; they give birth there. The northern humpback feeds there four months of the year. Yet, the Irving refinery is there and handles 200,000 or 300,000 barrels a day of both unprocessed and refined fuel.
Regarding diversity of marine life, I’m not suggesting it’s not diverse out there. The most diverse marine micro-ecosystem is in the Bay of Fundy. Any scientist will tell you about that.
I understand the concern about ship strikes, but there doesn’t have to be an oil tanker to hit a marine mammal in the water. The overwhelming majority of ships on the West Coast are not oil tankers. They are container ships and ships of other natures. They make noise. The chances of an oil tanker, on a percentage basis, striking a marine animal on the West Coast are much less than a container ship or any other ship.
You talked about response capability. We have three organizations on the East Coast that will tell you how to respond. We spoke to the Western Canadian Marine Response Corporation, and they don’t agree with your assessment in terms of response. They say they have the capability to respond.
I appreciate that you have an agenda on this, but when I take what you’re saying and apply it to the East Coast of Canada, all the things you’re concerned about we handle on the East Coast with great aplomb, quite frankly.
The most endangered salmon population in this country is the Atlantic salmon. It’s the Atlantic salmon that’s under great pressure. Yet, I think most people would tell you that the problems with the Atlantic salmon are not related to shipping.
So there’s nothing here that doesn’t apply to the East Coast of Canada and there’s nothing here that people who make decisions on the East Coast of Canada would convince them to do otherwise. I’m wondering why I should disagree with everybody on the East Coast and agree with you.
Ms. Wristen: Senator, I offer no advice whatsoever to the East Coast of Canada, and I do not think it makes any sense at all that we degrade the north and central coast of the Pacific because other areas of Canada are already degraded. The East Coast of Canada has been suffering from human intervention for well over a thousand years. It has a social and economic structure around its marine industries that is different from that of the West Coast. Part of the decision making around deciding what resources you want to protect and what resources you want to compromise for the benefit of an economy is the social and economic structure of the area.
The people of Canada’s north and central coast have spoken very clearly in favour of their existing fishing and tourism operations which provide them with a nice economy. They have voted overwhelmingly against oil tanker traffic on their coast repeatedly in their communities and in response to the various surveys that have been done on this coast on the development of oil and gas resources. It’s just not wanted here.
I don’t offer any advice at all to the East Coast, but I will point out that your whales are in danger and your whales are being struck by ships.
Senator MacDonald: I’m quite familiar with them because I’m from the East Coast of Canada.
The Chair: Sorry, Senator MacDonald. I’ve got to try and finish this off. Make it real short.
Senator MacDonald: I’ll pass. You can take the next question.
Senator Miville-Dechêne: Thank you for being here. We just had a witness right before you who was from the Western Canada Marine Response Corporation, and he was adamant about the fact that the weather was exactly the same on the whole West Coast of Canada, that it was not more difficult to clean up an oil spill in the north than in the south. So obviously we have here contradictory testimony. As senators, we want to be enlightened.
Can you be more specific about the scientific studies or the evidence that permits you to say that the weather is worse up north, that the spills are more difficult to clean up?
Ms. Wristen: I can, but probably not in the time allotted to us here. Why don’t I follow up by providing you with links to the evidence that we filed in the Northern Gateway hearing? I’m most distressed to hear that Western Canada Marine Response Corporation doesn’t know that the sea state in Hecate Strait is worse than they would find in the Strait of Georgia.
Senator Miville-Dechêne: How would you explain that?
Ms. Wristen: I wouldn’t attempt to explain that. I don’t know who your witness was and I didn’t hear the evidence.
Senator Miville-Dechêne: Thank you very much.
The Chair: Just for your information, it was Mr. Michael Lowry, who’s the manager of the Western Canada Marine Response Corporation. That was who the witness was. So when you’re sending in your paper, he was the person who testified before you.
Senator Simons: I want to thank you very much for your testimony. I have to say, of all the witnesses we’ve had so far, you’re the first one who’s done a robust job of defending the moratorium legislation. Even the people from Transport Canada did not make nearly as solid a case as you did.
I do have some questions. Is there not a concern that if all of the oil gets shipped out through Burnaby and the Port of Vancouver that we create more of an environmental risk there because we concentrate all the exports from that one spot?
Ms. Wristen: I don’t think there’s a question of concentrating all the exports. It’s not as if both oil ports could conceivably be built and operated with the volume of oil that’s coming out of the tar sands in the foreseeable future. Investment there has been declining, if anything, development of new fields stopping. You’ve heard evidence — I’ve read the transcripts, and I know you’ve heard evidence — that companies are pulling out of the tar sands.
Senator Simons: I’m from Alberta. When you say “tar sands,” it’s a term that has a particular meaning in Alberta.
I understand that right now there is no permanent infrastructure in place to clean up spills because there’s already a voluntary exclusion zone. So we haven’t had a motivation or a reason or a necessity to staff up, as it were. But presumably, if we were to establish, say, a corridor in between exclusion zones, we would be able to prepare and provide the kind of infrastructure that you referenced, if we knew that we were going to have a dedicated shipping lane there.
Is there no way that you see possible to have a compromise where you could have a particular shipping lane that would be safeguarded and prepared for a potential spill? Is it really necessary to sterilize development of this nature up and down that whole coast?
Ms. Wristen: The first point I’d like to make is that this is not sterilizing development. There is no development on this coast being affected by the moratorium —
Senator Simons: Let us put it this way: It’s not just an oil tanker moratorium; it’s an oil pipeline moratorium for that whole area.
Ms. Wristen: It may well operate that way in the future. I concede that point.
The question of establishing an area through which the ships could pass and trying to put response mechanisms in place is the reason I was referring to the response gap analysis. No, in a word, it is not possible. Regardless what the gentleman from Western Canada Marine Response Corporation may have indicated, the fact is that all of the response equipment that he owns at the moment, and all of it that is on order, has certain operating parameters. Those parameters are exceeded by the weather and sea states for up to 98 per cent of the time in the wintertime and as much as 60 per cent of the time in summertime.
That’s why I say, no, you can’t respond effectively to a spill. Even if you could, where could you mobilize hundreds of workers per day to clean beaches? Where could you effectively deal with the wastewater and waste product that would be created by that? None of this is in place. For most regions of the north and central coast, it would be extremely difficult to create it. You only have a couple of major centres you could work from to set up these resources.
Senator Simons: Thank you very much.
Senator Galvez: Thank you very much for your testimony. You said Hecate Strait is classified as the world’s fourth most dangerous body of water. It’s classified by whom? What are the criteria used? Which is the body that does this classification? If it’s so, why are some people trying to propose to have a port there and have cargo traffic there if it’s so dangerous?
Ms. Wristen: The quotation that I’ve given you in my notes is from Environment Canada. I believe that they were citing an IMO publication. I tried to find that for you so that I could give you the precise original citation for it, but I could not. We’ll have to go with Environment Canada so classified it.
As to why people want to set up shipping through that, I think some people believe that you can do anything with technology. I believe that Mother Nature bats last.
The Chair: Do you think oil is a resource and that the people of Canada have a right to exploit that resource?
Ms. Wristen: Yes, I do.
The Chair: How do you think are we going to get the oil to market from Alberta and Saskatchewan?
Ms. Wristen: Probably through the Trans Mountain pipeline.
The Chair: Which isn’t built yet, but you mean to say that will be the only pipeline?
Ms. Wristen: I would rather be a historian than a prophet in that regard, Mr. Chair. I think the oil industry will take care of its needs for getting oil to market by a combination of rail and pipeline for the foreseeable future.
The Chair: How many people work at your organizations, and how many of them are scientists?
Ms. Wristen: Six people work at my organization, and two of them have science degrees.
The Chair: Two scientists, six people. Where do you get your money?
Ms. Wristen: From people just like you.
The Chair: Do you get any funds from outside the country?
Ms. Wristen: Not this year, but we have in the past.
The Chair: In the past you have?
Ms. Wristen: Yes. It’s a matter of public record that we have funding from American and Canadian foundations, as well as from members of the public.
The Chair: What kind of American foundations?
Ms. Wristen: I’m not aware there are different kinds.
The Chair: What are the names of the American foundations?
Ms. Wristen: Those are all a matter of public record, senator. They include the —
The Chair: I don’t remember them?
Ms. Wristen: Oh, yes, I do.
The Chair: Why don’t you tell us?
Ms. Wristen: I will, if you like.
The Chair: Yes, I would.
Ms. Wristen: Tides U.S., the Gordon and Betty Moore Foundation and the Oak Foundation are the ones that occur to me that have funded work to do with risks from oil transport in the marine environment.
The Chair: You say you didn’t get any money this year. Did you get any money last year, 2018?
Ms. Wristen: Yes, I did.
The Chair: So you did get money last year. Do you expect to get any this year?
Ms. Wristen: Not from an American source, no.
Senator Jaffer: Yesterday, we heard from the Canadian Association of Petroleum Producers about the safety of double-hulled tankers. They said the safety of double-hulled tankers is light years ahead of where we were a few years ago.
I understand you released a report on double-hulled tankers and the safety concerns that make them unsuitable for oil-spill prevention. What is your opinion of the safety of double-hulled tankers?
Ms. Wristen: Double-hulled tankers are effective at reducing the volume of an oil spill, but they are no protection at all against the occurrence of an oil spill. In fact, there are some structural and inspection issues with them that may even increase the risk of a spill. In particular, they’re built with thinner steel than was the case with the single-hulled tanker, so that a lower-speed impact can breach both hulls.
I referred earlier to the thousands of welded joints. Many of those joints are in areas that can’t easily be inspected. When the ship is repeatedly subjected to passages in rough seas, particularly with steep waves at short intervals, the ship is subject to a number of stresses in various directions and it can break those welds.
There is also an issue with respect to the corrosion coating on them that’s particularly germane if we are thinking about the transport of bituminous fuels that tend to be quite acidic and promote corrosion. If the inspections aren’t done regularly, the corrosive fuel in the tanks can result in the metal being eaten away, leading to a greater propensity for stress failures.
Senator Jaffer: What was the response time when the Nathan E. Stewart grounding happened in your region?
Ms. Wristen: To be honest, I don’t recall the exact time. I remember it was considered by the local Heiltsuk people to be far too long. But, you’ve got me there; I can’t tell you how many hours it was.
Senator Jaffer: It was a long time; is that correct?
Ms. Wristen: It was more than one day and possibly more than two days.
Senator Jaffer: Could you please provide us the time, if you have it, and send it to the clerk so we can have a look at that?
Ms. Wristen: I will.
The Chair: Thank you very much, Ms. Wristen.
With that, we’re going to consider a couple of motions regarding travel. I don’t think we need to suspend. We’ll just go ahead and do it.
We had quite a discussion on travel at the last meeting, as you may remember. We had a steering meeting today and had unanimous agreement on travel.
I’m asking you adopt the motion. Option 1 is Prince Rupert and Terrace, British Columbia, which all members of steering agreed should be places we travel to. Option 2 is Prince Rupert and Fort St. John, British Columbia, which we did not agree with.
We would like the committee to agree with the decision of steering and the proposed travel budget. You have a copy of the first option. I think the subtotal was $109,000. The total was $136,640.
If you approve the motion, we’re going to prepare the budget. We won’t be able to actually go to the Internal Economy Committee until the one week we’re back in March. What we’re going to try to do is go to the subcommittee, get the budget approved, and then we’ll go to Internal. I’ll have to ask leave to proceed that afternoon so that we can actually begin the travel plans, because the clerk can’t begin travel plans until we pass the budget.
The weeks that we chose were the last two weeks in April, which are non-sitting weeks. The problem is that two committees will be travelling, this one and the Energy Committee. We’re going to let the clerks sort that out. They know that there are doubles on each one of those committees, Senator Galvez, to make sure we’re not running into each other.
Which weeks are you looking at?
Senator Galvez: The second sitting week of April.
The Chair: Yes.
Senator Galvez: And before the last week break in April.
The Chair: So the last week in April, right?
Joëlle Nadeau, Clerk of the Committee: The last break week in April, so April 22.
Senator Galvez: April 18, and then there is a break and then another break. That’s the second break we’re going.
The Chair: You’re going on April 22? There are two weeks in a row there.
Senator Galvez: There are two weeks that we sit and two weeks that we don’t.
The Chair: Yes.
Senator Galvez: The second week that we sit.
The Chair: That doesn’t matter to us.
Senator Galvez: And the second week we don’t sit.
The Chair: April 15.
Senator Simons: I wish to remind the chair that he has yet to get permission from the Senate for us to travel.
You moved the motion today.
The Chair: I moved the motion. This will all come together. I do know what I’m doing.
Senator Simons: I’ll let you drive the F-150.
The Chair: Just don’t do what you did today.
Senator Simons: Speak in support?
The Chair: Because I won’t speak against the motion. I’m going to be fully behind this motion.
Senator Galvez: I didn’t speak against the motion. I want to say, I never said —
The Chair: Try to have a sense of humour, Senator Galvez
Senator Gagné: Do you need someone to move the motion?
The Chair: I do, Senator Gagné.
Senator Gagné: I move the motion.
The Chair: Is it agreed that the committee adopt Option 1 of the proposed travel budget, subject to review by Senate administration?
Is that the motion you wish to make?
Senator Gagné: Absolutely. Thank you.
The Chair: Senator Gagné, thank you very much. Do we need anything else?
All in favour?
Senator Dasko: Can I just ask a question, please?
The Chair: Sure.
Senator Dasko: Just to clarify the dates, you’re saying that your committee is travelling the week of April 8 and 22; is that right?
The Chair: Yes.
Senator Dasko: So that leaves the week of April 15 as our potential week?
The Chair: We could go either April 15 or we could go into May, but we have a problem with May because we have settled on an April 30 end date. So really, we’ll almost be confined to that. Hopefully at least the majority of committee members will be able to go and we have equal representation from each side. That’s what we’re hoping for.
Senator Dasko: Thank you.
The Chair: Senator Miville-Dechêne, did you have a comment?
Senator Miville-Dechêne: No, that was exactly what I wanted to clarify. We’re talking about the third week?
The Chair: I’m just going to go around the room. Senator Oh and Senator Smith are both representing other senators who are not here, so I am going to have to canvas my own group. Let’s go to the independent senators.
Senator Miville-Dechêne, that’s good for you?
Senator Miville-Dechêne: Yes.
The Chair: Senator Gagné?
Senator Gagné: I think so.
The Chair: Senator Simons?
Senator Simons: As long as we’re coordinating the overlap.
The Chair: I’ll consult with you, Senator Miville-Dechêne, and with Dennis because Senator Mercer is also, I believe, on this committee.
Ms. Nadeau: Not anymore.
The Chair: So that has changed. Okay.
People who aren’t members — we will invite all the senators from B.C. who wish to come, and Alberta, and they can fly up, but they are on their own nickel.
Senator Simons: Senator Busson might wish to come.
The Chair: We’ll invite them all and whoever wants to come is good.
Senator Gagné: I would suggest that the clerk send an email to all the members and see if they are interested or available when the dates are confirmed so that we have that trail.
Senator Simons: Should we vote first on the motion to travel?
The Chair: Please. All in favour of the motion? Unanimous.
Senator Simons: I’m trying to learn.
Senator Smith: How many people will be travelling?
Senator Oh: Put my name down.
Senator Smith: When you make your budgets up, are you putting all —
The Chair: We are putting all members of the committee. It’s rare that you ever get the full load.
Senator Smith: Right.
Does everybody understand that? Does everybody understand how the review goes?
The Chair: The budget is for everyone because everyone who is on the committee has a right to go. The budget will be what I stated, but it may be less because it’s rare that we ever get a full contingent.
Senator Smith: Many of us have been in charge of the Subcommittee on Budgets. The historical average, so you understand, is about 50 to 55 per cent of the members at cost. So if you budget $130,000, you can assume that somewhere between 55 and 60 per cent will actually be spent.
As you hear all these numbers about spending money, it’s really tightly monitored. Once it goes through the subcommittee, then it goes back for reaffirmation by the whole committee.
Senator Miville-Dechêne: I see there are quite a number of non-senators on the trip. I suppose that’s for translation purposes?
The Chair: Yes. If we’re going, we’ve got to carry translation. We have the whole thing.
Senator Miville-Dechêne: Thirteen people are for translation?
The Chair: No, it’s broken down. We have the clerk, the analysts, one communications officer, interpreters.
Senator Simons: We don’t bring our staff?
The Chair: We do have — I don’t know — a staff member for a chair and a deputy chair.
Senator Simons: I’m not asking this to be mischievous. This is my first trip, so I just didn’t know how this worked. That’s what I assumed. That makes perfect sense.
The Chair: We never used to allow staff, but since the Liberals got in, everybody gets to go. So that’s it.
Senator Smith: When I was on the Finance Committee we never brought staff. We had a limited number of people because it was the members of the group that did the work. We were successful because we created a homogenous group and people worked closely together.
Senator Simons: I want to say thank you, Senator Smith, because as a very new member, when I saw those budget numbers, I felt kind of sick to my stomach. I thought, “How on earth do I justify that to people?” But you’re telling me that is the upper end of the envelope.
Senator Smith: Historically, over time, we used to spend $1.7 to $2 million a year on travel, but we always had it set up in such a way that we kept a buffer in our budget. I’m not sure how it’s working today, but it’s a historical precedent that has been continued by senators. One of the things that is so important is to make sure you can learn and ask as many questions as possible so you accelerate your entry into it and your comfort level.
Any of us who have been around would be more than pleased to answer any questions you have because we would like you to be successful.
Senator Simons: I enjoyed answering Senator Plett’s questions today.
The Chair: Senator Smith used to be the chair of the subcommittee.
This is not a high number. There have been a lot higher numbers. We have a yearly budget for travel, and we almost always stay within that.
Senator Simons: Thank you. I appreciate that.
The Chair: And usually spend less, absolutely.
Are we all done? Adjourned.
(The committee adjourned.)