THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
CALGARY, Wednesday, September 21, 2016
The Standing Senate Committee on Transport and
Communications met this day at 1:30 p.m. to study the development of a
strategy to facilitate the transport of crude oil to eastern Canadian
refineries and to ports on the East and West coasts of Canada.
Senator Michael L. MacDonald (Deputy
Chair) in the chair.
The Deputy Chair: Honourable senators, this
afternoon the committee is continuing its study on the development of a
strategy to facilitate the transport of crude oil to eastern Canadian
refineries and ports on the east and west coasts of Canada.
I'd like to introduce our first panel: Michael
Priaro, Professional Engineer, Association of Professional Engineers and
Geoscientists of Alberta; and from the Canadian Energy Research Institute,
Allan Fogwill, President and Chief Executive Officer. I invite both of them
to begin their presentations, and then the senators will have some
Mr. Priaro, we'll start with you.
Michael Priaro, Professional Engineer,
Association of Professional Engineers and Geoscientists of Alberta, as an
individual: Thank you, Senator MacDonald. My presentation is in two
parts. The first part regards the west coast and the second part regards the
An energy corridor from Fort McMurray to
northern B.C. to the west coast port of Prince Rupert could contain a
proposed 2 million barrels per day Eagle Spirit oil pipeline, TransCanada's
proposed Prince Rupert Gas Transmission pipeline, and a potential liquefied
petroleum gas/natural gas liquids pipeline. This would create a highly
efficient energy corridor that would dramatically reduce the costs and the
environmental footprint of energy development in northwest Canada and
provide vastly improved access to new markets in the Pacific Rim.
The Prince Rupert area is sheltered and
ice-free year-round with many deep, natural harbours. It is widely regarded
as the safest location for marine terminals on Canada's west coast. There
are no significant hazards such as narrow channels to navigate, resulting in
unobstructed entry to the high seas and to the northern Pacific great circle
shipping route, which provides the shortest trade route between North
America and southeast Asia.
Along with the Port of Vancouver, Prince Rupert
is part of the Canadian government's Asia-Pacific Gateway and Corridor
Initiative to connect ports, road and rail connections across Western Canada
to the economic heartland of North America.
An energy corridor offers many business,
economic and environmental incentives and benefits, as well as benefits to
affected First Nations.
A northwest energy corridor would include
electric power transmission lines to supply low-carbon hydroelectric power
from B.C.'s Peace River region and from new Alberta hydroelectric projects,
while facilitating greater penetration and use of renewable energy sources,
as follows: westward to provide low-carbon hydroelectricity to power LNG
liquefaction plants near Prince Rupert; regionally to field operations and
facilities developing and producing the immense shale gas, natural gas
liquids and oil resources of northeast B.C. and northwest Alberta;
regionally to provide hydroelectric power to meet expanding residential,
commercial and industrial demand; eastward back to the oil sands to provide
low-carbon hydroelectric power to reduce greenhouse gas emissions by
displacing some of the large volumes of natural gas used in the oil sands;
and, regionally, to provide access points to store renewable, but
intermittent, energy via hydroelectric projects. Additionally, large
reservoirs behind hydropower dams could provide reliable quantities of water
necessary for shale gas fracking operations with minimal effects on river
flows during natural seasonal variations.
Running power lines and other services together
with oil, natural gas and LPG/NGL pipelines requires a wide right-of-way,
but dramatically reduces construction costs and minimizes the environmental
footprint and wildlife habitat fragmentation when compared to clearing
multiple rights-of-way through B.C.
There is also potential to capture added value
for Alberta's bitumen resources using low-carbon hydroelectric power to
partially upgrade bitumen, thereby eliminating the need for diluent, adding
value and reducing significant handling and transport costs of dilbit, which
I estimate to be $10 per barrel of bitumen; to fully upgrade more bitumen to
syncrude; and refine bitumen and batch the products down pipelines to
markets. Several recent applications to Canada's National Energy Board have
been made to export LPG totalling 233,000 barrels per day. This easily
achieves economic threshold for a pipeline, especially if volumes of natural
gas liquids are added.
Calvin Helin, Chairman and President of Eagle
Spirit Energy Holdings Ltd., and a member of the Lax Kw'alaams Band in Port
Simpson, has obtained 95 per cent of all inland First Nations approvals for
an oil pipeline from Fort McMurray to Prince Rupert.
An energy corridor from Fort McMurray to Prince
Rupert offers large efficiencies, economies of scale and cost reductions in
manpower, operations, management, infrastructure and emergency spill
response, as well as a reduced environmental footprint if oil, natural gas
and LPG/NGL pipelines all terminate together in the Prince Rupert area.
A northwest Canada energy corridor provides
multiple tie-in points to TransCanada's extensive NOVA Gas Transmission gas
gathering system infrastructure in northwest Alberta and to Spectra Energy's
growing gas gathering system in northeast B.C.
A northwest energy corridor to Prince Rupert
could also tie into future Mackenzie Valley pipelines transporting Arctic,
Beaufort Sea, Mackenzie Delta and Northwest Territories resources to
Canadian, U.S. and Pacific Rim markets.
Along with the existing Keystone pipeline to
the U.S. gulf coast, Enbridge’s mainline system to the U.S. Midwest, and the
proposed Energy East pipeline to Canada's east coast, the result would be a
major interconnected oil, natural gas and LPG/NGL pipeline network, and a
major pipeline hub in northern Alberta that would efficiently tie together
the immense hydrocarbon resources of northwest Canada and provide
flexibility of access to the best prices available on world markets.
Canada exports about 80 per cent of its oil
production. Ninety-nine per cent of those exports go to just one customer,
the U.S., which is striving to become energy self-sufficient in oil. What
business worthy of the name allows itself to be so reliant on just one
A northwest Canada energy corridor respects the
concerns, needs, legal responsibilities to and desires of First Nations, as
well as environmental concerns far better than any other oil pipeline
proposal to Canada's West Coast. It ties in well with current Canadian
federal government priorities to improve the economic and social well-being
of First Nations.
There must be direct, long-term economic
benefit to First Nations from pipelines and facilities on First Nations
lands. This could be achieved through federal loans providing a measure of
capital participation by affected First Nations. There would also be
significant benefit to First Nations, as well as project proponents,
designing, constructing, operating and managing the energy corridor and
associated pipelines and facilities with training and oversight provided by
Coordinated leadership for a northwest Canada
energy corridor will challenge Canadians. It is a complex mega-project that
requires the leadership and support of the Canadian federal government, the
provincial governments of British Columbia and Alberta, First Nations,
affected municipalities, provincial power companies and, of course,
companies in the oil and gas industry.
I'd like to direct the imagination of the
committee to the east coast, 6,000 kilometres away from Prince Rupert.
One of the most important conditions for
approving the Energy East pipeline must be either a 540-kilometer extension
from its currently proposed terminus at the Canaport marine terminal near
Saint John, New Brunswick, to the Strait of Canso, Nova Scotia Superport, or
an agreement by Irving Oil to expand its Saint John refinery up to total
capacity of 600,000 barrels a day, to eliminate the export of dilbit and
heavy oils from the Canaport.
The proposed 1.1 million barrels a day will
transport a variety of crude oils: dilbit, which is raw bitumen diluted with
a solvent; syncrude, which is upgraded bitumen; and conventional medium and
light oils, including very light shale oils.
The Saint John Canaport is located in the
middle of the ecologically sensitive and pristine Bay of Fundy, which has
even more cetacean issues than the Cacouna, Quebec marine terminal, which
was cancelled because of possible effects on beluga whales in the St.
Lawrence River. Each summer endangered North Atlantic right whales, and up
to 14 other species of cetaceans, come to mate, play and feast in the Bay of
Fundy, necessitating the current voluntary tanker exclusion zone in the
middle of the bay.
Each day, 160 billion tonnes of seawater flow
in and out of the bay during each of two tide cycles, more than the combined
flow of the world's freshwater rivers, according to Tourism New Brunswick. A
major oil spill near an expanded Canaport marine terminal would result in
conventional crude or, much worse, dilbit, being washed up and down the
entire Bay of Fundy coastline twice daily by tides of up to 16 metres. How
does one even begin, let alone contain and clean up a major oil spill under
such conditions, even under ideal weather conditions?
Extending Energy East to the Canso Superport
shares and reduces the risk and effects of any oil spills, as well as
reducing the effects of crude oil tankers on marine life in the Bay of
So, yes, upgrade, refine and produce
petrochemicals in Saint John, and then export the high value-added refined
products and petrochemicals from the Canaport.
However, export crude oils from the Canso
Superport, the safest location for a marine terminal on Canada's East Coast,
and the closest to markets in Europe and Western India, using the North
Atlantic great circle shipping route. By tanker, at 12 knots, the Canso
Superport is 1 1/4 days on the water closer to those markets than the Saint
That concludes my presentation.
The Deputy Chair: Thank you, Mr. Priaro.
Allan Fogwill, President and Chief Executive
Officer, Canadian Energy Research Institute: Thank you, senator, and
thank you, committee, for inviting me to make a presentation to the
Transport and Communications Committee on the study of the transport of
crude oil in Canada.
The Canadian Energy Research Institute is a
40-year-old organization that provides objective research dealing with the
economic and environmental impacts of energy issues. Due to our neutral
status, we do not make recommendations or suggest policy options. We do our
best to give government and industry factual evidence from which to base
There's a lot of debate in Canada right now
about the transport of crude oil on pipelines and rail. As I see it, the
argument breaks down into four questions: What is the physical risk to
people living along the route in the case of an incident? What are the
environmental impacts of such an incident? How does the addition of new
transport capacity affect upstream emissions? And, are these costs offset by
the benefits of increasing the transport of crude oil to tidewater?
CERI has not done any research into the risk of
an incident along the route, nor the extent of the environmental impacts. We
do see a couple of recent examples of pipeline leaks and train accidents,
such as the Kalamazoo River in Michigan. This was the largest spill in the
U.S., and clean-up costs approached $800 million. Another example of an
incident is the fatal Lac-Mégantic crude oil spill on a rail line. The loss
of 47 people was tragic. No cost benefit assessment of that accident could
convince family and friends that the loss of their loved one was worth it.
We know there is a risk for pipeline and rail
transport of crude. The question is, should this mean not allowing such
transport or putting in better safeguards to further minimize the risk? If
we take our cue from other industries such as airline service or
prescription drugs, the clear direction is, increase safety measures to
reduce harm, while still allowing the activity to continue.
Taking the third question of upstream
emissions, the debate is focused on the higher emissions from oil sands
production. Due to the higher energy use in producing oil from oil sands,
there is a correlation between increased production and increased emissions.
However, a study produced by CERI last year
showed that, with the best-in-class technology that exists today, emissions
from oil sands can be reduced by 29 per cent. Interestingly, that is
equivalent to the differential between emissions from oil sands crude and
crude from the Middle East or the U.S. This latter observation comes from
work done by the Carnegie Endowment for International Peace , which
developed an Oil-Climate Index. This means with investment and innovation in
oil sands production, oil sourced from Alberta would be similar in emission
impacts with oil from the U.S. or the Middle East.
That being the case, emissions are still
occurring and people are rightly concerned about climate change and its
long-term impact globally. The federal and provincial and territorial
governments are hard at work drafting a comprehensive climate strategy that
will deal with the emissions concern. If we have faith in that process and
those potential policies, should those same concerns be considered in the
crude transport question? Surely, the policies, when completed, will take
into account public interest and greenhouse gas emissions and determine an
optimum approach. Addressing them during the review of crude transport seems
duplicative and of little value. It might even result in a tribunal issuing
decisions that are not consistent with government policy.
So we know there is some risk to the transport
of crude in Canada, even tragic circumstances. We know with appropriate
technology innovation and government policy, the emissions issue can be
dealt with. What remains is whether the benefits of transporting crude in
Canada, and in particular to tidewater, outweigh the risk.
By way of example, in 2014 CERI produced a
cost-benefit analysis of the Energy East Pipeline project. Our analysis
showed that over the 28-year period of the research, the pipeline alone
added almost $34 billion to the Canadian economy. This works out to
approximately $1.2 billion per year. It would create about 48,000 jobs
during construction and 7,900 during operations. Interestingly, the largest
economic benefit for this project is to Central Canada. GDP impacts in
Ontario and Quebec come to almost $20 billion.
One calculation we did not do at the time is
the higher price the Western Canadian producers would receive for their
crude oil. As a captive supplier to the U.S., Western producers face a
discounted price averaging $15 compared to the West Texas Intermediate price
point. It's difficult to say what the actual impact would be bringing
Canadian oil to tidewater, but in another study CERI completed this year on
price impacts, we calculated a $1.7 billion benefit to the Canadian economy
each year for a $1 increase in the average price of crude. Let's assume,
then, that the discount could be reduced by $5. That would mean an increase
of $8.5 billion to the Canadian economy each year, and this number does not
include the balance of trade benefits by purchasing oil domestically instead
To summarize, the risk of transport is real and
can have tragic consequences. Emissions can be managed through technology
innovation and government policy, and the clear decision in this example is
for policy-makers to determine whether the benefit to the economy of
approximately $9.7 billion a year is worth taking on that risk.
Another question is this: Should some of those
risks be mitigated by allocating some of the economic benefit to those most
at risk? This is an approach that should be considered when assessing the
costs and benefit of crude oil transport in Canada.
The Deputy Chair: I thank both the
We'll move to questions.
Senator Black: Mr. Fogwill, that was a
tremendous presentation. Thank you for that.
I had never heard of the concept of possibly
sharing economic advantage to those who have assumed greater risk. I think
that's a very interesting concept. Has your organization done any further
work on that, that we could have a look at?
Mr. Fogwill: We're right in the middle of
doing a review of the situation in British Columbia with respect to natural
gas development, and part of that is looking at some of the agreements that
the proponents of these projects have entered into with various First
Nations. A lot of them have an economic element to them. That economic
benefit is, in part, of course, due to the increased risk that that First
Nation is taking on because of their close location to the route. Once
that's available, we can of course share that with the committee.
Senator Black: That would be wonderful, if
you would. Thanks very much. It’s a very interesting thought.
Mr. Priaro, in terms of accord, myself and my
colleague Senator Tannas are very much encouraging our colleagues at the
Senate on another committee we sit on to study this very concept, but our
concept, or the concept that we're talking about, would be a corridor that
runs from Labrador, ultimately picks up at Fort McMurray through to Prince
Rupert, the so-called the northern corridor. Have you ever heard any
conversation around that?
Mr. Priaro: Not conversation, but I've read
a little bit about the idea, yes.
Senator Black: I just flag it for you
because, if we move forward to study this, and this would be at the Banking,
Trade and Commerce Committee — and I say "if" because I don't control that,
obviously — you might want to flag that, because you're certainly an
individual we would want to hear from in greater detail.
Mr. Priaro: Okay.
Senator Black: I'm going to move on quickly
from the corridor to the east coast. My question is simple. If the Energy
East were to terminate at Canso as opposed to Saint John, could a spur line
be built from the main line to Saint John in sufficient volume to provide
for the needs that are being met?
Mr. Priaro: I think the main target should
be Saint John, and the extension for any significant crude oil exports
probably should go to Canso. But the line, I think, should have at its start
at Saint John as the main target.
Senator Black: I had it backwards. So the
spur would be from Saint John to Canso.
Mr. Priaro: That's how I would view it.
Senator Black: I have some colleagues on
this committee who have some interest in this aspect of the file, and I'm
just trying to come up to speed as to the most efficient way —
Mr. Priaro: There could be an additional
spur down to revitalize the Dartmouth refinery depending on efficiencies.
Senator Black: That's interesting.
Mr. Priaro: Obviously, Irving is looking
for more refining capacity because it just bought a small refinery in
Ireland. If there was a pipeline out to New Brunswick and Nova Scotia,
perhaps they might look at what they could do with the Dartmouth equipment,
which is not in good shape, I understand, but there might be possibilities
Senator Black: Presuming Irving's needs are
met, is there going to be excess product that could be sent on to Canso or
is Irving's concept that they're going to use it all?
Mr. Priaro: No, I think there would be
excess product. Energy East is designed to transport 1.1 million barrels a
day. Right now, the Irving refinery can refine up to about 320,000 barrels a
Senator Black: Oh, I see.
Mr. Priaro: They have plans that they
shelved a while back to double the capacity of the refinery to 600,000
barrels a day, so that leaves half a million barrels a day.
Right now, the Montreal refinery is being
supplied by the reversed Line 9 from the U.S., so depending on who can
provide the best price, lowest tariffs, there might be some volumes that can
go to the Montreal refinery, some volumes might end up at the Lévis
refinery, and the rest of it could supply Saint John, and whatever was left
over would go to Canso as crude oil —
Senator Black: For overseas shipment.
Mr. Priaro: Yes.
Senator Black: Your concept is that there
would be no overseas shipment from Saint John. Saint John would use the
product for Irving's purposes.
Mr. Priaro: Right.
Senator Black: Anything to go to India goes
from Canso to India.
Mr. Priaro: Right.
Senator Black: Thank you.
Senator Mercer: I want to fix a little
terminology issue for those people here who aren't from the east coast. When
we use the word "Canso," we mean the Strait of Canso. There's a community
called Canso, which doesn't play or factor into this at all.
The Deputy Chair: It's on the mainland.
Senator Mercer: It's on the mainland, not
on the Cape Breton side at all.
One of the issues you talked about is the line
from Saint John to the Strait of Canso, that being the spur line as opposed
to the main line. Would it not make sense that that would be the main line,
since we only have the one customer in New Brunswick and potentially we have
all kinds of customers around the world that we would be able to reach from
the Strait of Canso? Would it not make more sense to have the main line go
into the Strait of Canso, with the necessary spur line going off to the
refinery in Saint John? Of course, I would encourage the Irving operation to
double the size of the refinery as well. If there's a business case for it,
get it done; let's get the construction of that done, too, because that's
obviously an economic generator as well.
Mr. Priaro: Yes, I'm not sure that it's
terribly important which one is the spur line and which is the main line. I
guess I was thinking in terms of the bulk — the majority of the volumes
would be used up as far as Saint John, and then there'd be a smaller volume
that would end up in Canso. I would just call it the "spur" in that respect.
But you could just say branches somewhere in New Brunswick, and part of it
goes to Saint John and part of it goes to Canso.
Senator Mercer: Senator MacDonald will talk
about the natural gas pipeline that already exists from Nova Scotia coming
west and south and that in the not-too-distant future they'll run out of
product from Sable Island. Senator MacDonald — and I'm giving him credit for
bringing this idea up — has talked about reversing the use of the natural
gas pipeline to facilitate that so that we may be able to jump-start the
Nova Scotia portion of this by using that line. Have you made any study of
Mr. Priaro: No, I haven't looked into that
in much detail. I believe I'm aware that Pieridae Energy has a proposal for
an LNG plant at Goldboro, and I thought that they had perhaps started
construction already on that.
Senator Mercer: I just double-checked here,
and they're still in the licensing stage.
Mr. Priaro: Oh, are they?
Senator Mercer: But unlike other LNG plants
in the east coast, there's not a lot of opposition to the one in Goldboro,
because Nova Scotians are wise people and they know that there are jobs
Mr. Priaro: That's very near the Strait of
Senator Mercer: You can't see it from
there, but it's close.
The Deputy Chair: Before I go to Senator
Tannas, I just wanted to put some context on what Senator Mercer was saying
about the Canada northeast pipeline, which all the Sable feedstock goes
into. They're expecting that line to be empty in 18 months. That's a
relatively new line, and it runs right up to Canaport refinery; it's right
So they're reversing a lot of pipeline; the
TransCanada proposal reverses a lot of pipeline. The only thing they would
have to do to be able to send all the feedstock they want to Canso is,
there's a spur line now that runs from Goldboro to Port Hawkesbury to Point
Tupper, which is a narrow gauge. They'd have to put a standard size line in
there, but that's the only modification they have to make.
The right-of-way is there, and if more gas
comes in sometime — let's say they're successful at Goldboro — they can
always build another gas pipeline beside the existing one to carry gas.
I just wanted to bring that to your attention,
Senator Tannas: Would either of you be able
to give us a little economics lesson on why it is that we can't find our way
to refining crude oil on the west coast for our own use and also for export
as refined products?
I've never found what I consider to be a clear
explanation as to why it is that the rest of the world can refine products,
and somehow we're not allowed to or the economics don't work. Can either of
you shed some light on that?
Mr. Fogwill: I can. There are a couple of
First, we do refine products here, but we
refine it for our needs, which is almost exactly the same situation you have
in other jurisdictions. They will have sufficient refining capacity for
their own needs.
One of the reasons why they do that is because,
in many jurisdictions, they have very unique requirements for the refined
products. So if you shipped refined products from Canada to somewhere else,
there's the possibility you would have to re-refine it to get it to the
specifications that they're looking for. There's always the issue, as the
transporter of the refined products, could also require, even if the specs
were right at the beginning, because of the transport time, it may have to
be re-refined at the other end.
Crude is much more stable, and it just seems to
have worked out that most people are looking at refined products in a very
regional area as opposed to refining the products and shipping them away.
Senator Tannas: So none of our oil that
goes to Texas and Oklahoma would find itself refined and on a boat going
somewhere else; is that right?
Mr. Fogwill: Depending on what the
customers were looking for, they could refine it up to a higher grade, so
there could be partial refining.
Senator Tannas: Partial refining.
Mr. Fogwill: But for the most part, the
bulk of the shipments is crude.
Mr. Priaro: I have a couple of things to
On the last question, the U.S. is actually
exporting refined products to the Caribbean and South America. They've got a
good business refining and exporting products, and I'm sure some of that
would include some of our crude that's being refined and exported to some of
those countries that don't have that kind of refining capacity that's
available on the gulf coast.
As far as what's happening on the west coast,
one of the reasons refineries right now aren't that attractive is because we
are able to batch refined products down the existing Trans Mountain pipeline
to the Lower Mainland where there is a 50,000 barrel refinery, Chevron's
Burnaby Refinery, but that only provides about a third of the demand of the
Lower Mainland and the islands. The rest is batched down the pipeline from
Alberta, and I believe that Trans Mountain pipeline is the only in North
America that carries a whole range of products from refined products to
crudes to dilbit. They carry just about everything down that line.
But as far as a new refinery on the coast,
there are two proposals to build refineries on the West Coast. I believe
they both want to use rail, or even truck, to get the raw bitumen there. My
problem with that is that you're building a high technology refinery in an
isolated area. Your costs are going to be high. It's going to be a tough
haul that way. In effect, you're refining for export, but I see that a great
deal of the ownership of such a refinery would be foreign. As far as
building such a refinery, most of the products would be built in Korea or
somewhere else and shipped across the Pacific.
So I don't see a great deal of benefit for
Canadians sending a raw product to the coast and having all the added value
obtained by other countries. I don't see there's a great deal of domestic
benefit to a situation like that.
Senator Tannas: But the environmental risks
are significantly different, are they not?
Mr. Priaro: I suppose in a way you could
say, because you're not exporting dilbit or heavy oils, you're exporting
refined products, the risk is somewhat lessened in the case of a spill. The
lighter a product is, the more likely it is to evaporate and there would be
less damage to the water and the coast.
Senator Tannas: Thank you.
The Deputy Chair: I just want to throw some
questions out there before I forget them, and you can both answer them.
Getting back to the refinery situation, it's
always about getting oil to the refineries in the east; the small capacity
out here on the West Coast. Am I naive to assume that, if you had the
corridor going to Prince Rupert and you had the bitumen going to Point
Tupper, and you knew you had a steady source of this product at a really
good price for the next century, is it too much to assume that somebody in
business in the oil industry wouldn't build a state-of-the-art refinery in
Prince Rupert and Point Tupper and export this product for the next century?
Mr. Fogwill: I know there is one proposal
that actually is in the works. I'm not sure of the name of the company, but
they're talking about building a refinery on the west coast. The economics
are quite challenging.
Even the one that is being built here in
Alberta had a break-even price of oil at $82 a barrel. It's supposed to be
coming online and being commissioned this year, so it's going to be under
water for the first few years, until the price of oil goes up. So it's a
challenging set of economics.
The Deputy Chair: I want to make the point
and make you aware that at Point Tupper there's a brownfield site, the
former Gulf refinery, and one of the challenges is to get environmental
approval for a new site. It wouldn't be hard to get one for that site. I
just wanted to put that out there.
Senator Mercer: Senator MacDonald brought
up a point, and then you brought up another point about a couple of dormant
refineries: the one at the Strait of Canso and the one in Halifax. Someone
suggested perhaps the Irvings might want to look at purchasing the Halifax
one at least and using it to service that market.
Has anyone done an analysis of what it would
cost to retool a dormant refinery to get it back into operation? Imperial
Oil obviously didn't get out of the refinery business in Nova Scotia because
it was just so profitable. I'm 69 years old. I don't remember when that
refinery wasn't there. That's how old the refinery is.
Senator Black: That old?
Senator Mercer: It's probably older than
Mr. Priaro: I think Irving Oil has a leg up
on some of its competition because it has a great market penetration in the
U.S. northeast, supplying refined products for distribution in the U.S., and
that's the market that they would look at serving.
They might be able to make the Dartmouth
refinery just take a certain type of feedstock that would be very economical
to get the refinery going again, and just produce a specific narrow range of
products for the market.
To refine large quantities of raw bitumen and
heavy oils, there's going to have to be some expensive upgrades done to the
Irving refinery, but they're going to have economies of scale to justify it
and hopefully the price that will give them the margin to carry such a
Senator Mercer: I don't think we've ever
thought a lot about exporting refined products as opposed to exporting the
bitumen. As you say, the requirements at the other end vary from place to
place. I'm thinking out loud here — the Irving refinery in Saint John is
close to the U.S. market and they do have a large penetration in the U.S.
northeast for the retail sale of gas and oil.
When does it cross over that it becomes more
economical to service the local market, I guess?
Mr. Priaro: The local market would be small
in comparison. In principle, it's always a good idea to buy local. Local
jobs refining, local jobs distributing and the money that the local spends
stays in the local economy, so there's that type of economic benefit to
doing things locally.
Senator Mercer: I found your west coast
proposal interesting. We're going to Vancouver tonight so we may hear more
about this tomorrow. It seems to me that the difficulty getting social
licence is an issue in British Columbia. You say there's a refinery; I think
you said it was Chevron refinery?
Mr. Priaro: Yes.
Senator Mercer: Is there an opportunity to
increase the size of that without having to get new social licence?
Mr. Priaro: I don't think there's any
opportunity to increase the size of that refinery. I think the real
opportunity there, if the Trans Mountain expansion goes ahead, would be to
actually run the pipeline down the Roberts Bank rail corridor to Tsawwassen,
B.C., where there's already a coal terminal and a container terminal.
Senator Mercer: Right at Roberts Bank.
Mr. Priaro: Yes.
Senator Mercer: Yes. I've been there.
Mr. Priaro: Have a mooring buoy out in the
water, in deep enough water, and export the crude from there. I don't see
that there would be social licence from the City of Vancouver or the City of
Burnaby, the third largest municipality on the Lower Mainland, to increase
the number of tankers through Vancouver's harbours from 34 to well over 400
per year. I don't think the social licence will ever be there for that.
The project might get approved, but it won't
have the backing of the citizens of Vancouver and Burnaby.
Senator Mercer: The other complication is,
of course, that the Port of Vancouver is famously slow and famously tied up
because of labour disputes. They have multiple labour contracts that need to
By the way, there has not been a labour
stoppage on the Port of Halifax since 1972. If you want to ship in a secure
port, Halifax is the place.
Mr. Priaro: There would be many benefits to
re-route the end leg of the Trans Mountain pipeline down to Roberts Bank.
The pipeline farm on Burnaby Mountain, which is acknowledged by the local
authorities to be a public hazard, could be eliminated. You could remove two
terminals from Vancouver's harbours, one for their refinery and there's an
export terminal as well for the pipeline. You can eliminate all that
infrastructure and not send any more tankers at all, eliminate all the
tankers through Vancouver's harbours, if you re-routed the end leg of the
Trans Mountain pipeline down to Roberts Bank. I think the people who live
there would be very happy for that kind of outcome.
Senator Mercer: So social licence would be
easier to obtain.
Mr. Priaro: For that. Now, there would be
objections. The Roberts Bank area is considered to be an environmentally
sensitive area, so it's not without issues that way either.
Senator Mercer: We talked about the Bay of
Fundy, and in your presentation you talked about the right whales, et
cetera. That area of the Pacific Northwest is a favourite breeding ground
for whales. I've been there and seen them.
Mr. Priaro: Yes, hence the recommendation
to go to Prince Rupert. It's as far north as you can go on Canada's west
coast and still be in Canada. You're right up against Alaska.
Aside from the safety of the area for marine
terminals and marine shipping, the other point is, what's out of sight is
out of mind.
Senator Mercer: You've already got a
Mr. Priaro: There's a railroad there.
Senator Mercer: You could probably parallel
the pipeline next to the railroad. I don't know the layout of the land.
Mr. Priaro: I don't think they follow the
railroad. That would be one option. I don't know how close Eagle Spirit
Energy looked at that option, but the route they picked now doesn't really
follow the railroad.
Senator Mercer: But there's a separate
route that probably doesn't require as much; it would require a fair amount
of licence from the Aboriginal groups, though.
Mr. Priaro: As far as the Prince Rupert
area goes, I think there's a great deal of social licence supporting a
pipeline there, gas and oil, but it's got to be done right.
Senator Mercer: From all the people
affected, including Aboriginal groups.
Mr. Priaro: Calvin Helin's brother, John
Helin is mayor of Lax Kw'alaams Band, and they recently had a vote that went
two thirds in favour of an LNG plant in the Prince Rupert area.
Senator Mercer: That speaks volumes.
Mr. Priaro: Yes.
Senator Black: I want to understand a
little bit more, because you're on to a very important issue, that being the
potential reconsideration of the terminus of the Trans Mountain pipeline
from Burnaby to Roberts Bank. I want to physically picture that. Rather than
going into Burnaby, before you get to the edge of Burnaby, it would in
theory go down through White Rock to Roberts Bank.
Mr. Priaro: Before you even get to the
Fraser River, so you eliminate crossing the Fraser River. You eliminate the
tank farm. You use the railway right-of-way. You basically parallel it right
beside it and run it right down to where you've got the existing coal and
container terminal and the ferry terminal.
I even thought B.C. Ferries could sell the
Tsawwassen terminal, build a new terminal out by the airport, which would
make access much easier for people who live in Vancouver, and then perhaps
convert the ferry terminal to a marine terminal.
Senator Black: Very interesting thinking.
We're in the complete realm of hearsay. Why
hasn't Kinder Morgan proposed that?
Mr. Priaro: They have looked at that. They
said it was too expensive.
Senator Black: I've got it. Thank you very
Mr. Priaro: But if you're not going to get
approval to go to Burnaby, then you've got to pay the piper if you want a
Senator Black: But they have NEB authority
to go to Burnaby?
Mr. Priaro: They do, with 157 conditions, I
Senator Black: So there could be 158
conditions. You're proposing or suggesting that one of them being you would
change the terminus.
Mr. Priaro: The NEB has ruled, so I think
we're past the conditions. I don't know if they can go back and add
conditions, but certainly the government, the cabinet, can impose their own
conditions and say yes, but only if you do this.
Senator Black: Thank you.
The Deputy Chair: I want you both to
respond to this. I referred to what you mentioned about upgrading to
syncrude to move some of the petroleum.
Would the economics be the same going westward
as going eastward; and would an upgraded petroleum in the line address a lot
of the environmental concerns that people push back on when it comes to the
movement of this product?
Mr. Priaro: I can address that last
question quite well.
The National Academy of Sciences of the U.S.
just issued a major report early this year. They looked at the effect of
dilbit in pipelines and the effects on the environment if there was a spill.
They concluded that there was a substantive difference between a dilbit
spill as far as its effect on the environment compared to the normal types
of crude oil that were being transported through the United States.
Yes, if we were able to come up with a
low-cost, partial upgrading process that would eliminate the need for
dilbit, that we could upgrade bitumen to the point where you could pump it
without needing the diluent, not only would we save about $10 a barrel for
bitumen — because you've got to import that diluent from the U.S. gulf
coast. If you don't have your own domestic supply in Alberta, you've got to
import it from the U.S. You've got to pay pipeline fees to the oil sands,
then you've got to pump that 30 per cent diluent with the bitumen all the
way to your markets in the Midwest U.S. or the gulf coast. So there are
those savings, which is about $10 a barrel.
In addition to that, you're adding value to the
product, which stays domestically, in Canada. Most environmentalists would
agree that dilbit is the least preferable product to have spilled into
water. They would all enjoy a situation where we could eliminate pipeline in
Mr. Fogwill: I'd be speculating if I was
going to say whether or not environmental groups or others would be
concerned about if it's dilbit or diluent or light crude in a line.
The debate that I'm aware of is about oil sands
in general being encouraged to increase production and, therefore, increase
greenhouse gas emissions. I don't think it would have any impact on people's
concern for a project if what we were doing was upgrading the bitumen to
some synthetic crude level that it could flow in the pipeline.
The real issue is that there is a concern about
emissions, and pipelines are a way to encourage increased production in oil,
and those increased emissions are what people are concerned about.
Mr. Priaro: Yes, I agree that the
opposition really is to the emissions from the oil sands, and in a way,
they're using pipelines to try to choke off the production in the oil sands.
But if we could upgrade, not only would we add
value in Canada, but we would remove one argument that they can't use the
pipeline issue and they've got to focus more on the greenhouse gas emission
issue, which Albertans are trying to address from the oil sands.
I think by removing one issue we would benefit
and it would allow more focus on the greenhouse gas emissions issues in the
The Deputy Chair: If we've got these lines,
both the west and east coasts, do we need or do we want the XL pipeline?
Mr. Priaro: In my opinion, when we're
already exporting 99 per cent of our exports to the U.S., why do we want
another pipeline to the U.S.? We should be looking for new markets, period.
The Deputy Chair: Plus, once it goes to the
east and west coast, we'll get Brent price for that petroleum.
Mr. Priaro: Hopefully.
The Deputy Chair: Close to it. It certainly
won't be West Texas or Western Canada Select.
Mr. Priaro: I've never seen the
justification for XL.
The Deputy Chair: Particularly, it would
pretty well dry up if we had our own separate access.
Mr. Priaro: I think XL is dead unless a
Republican president is elected. I don't think XL would ever get built under
a Democratic president.
Senator Mercer: But the border will be
closed with Donald Trump.
Mr. Fogwill: I would look at it from the
point of view that it doesn't matter if there's a concern about whether the
government thinks there's too much capacity or not. I would say the market
will determine if there's going to be a third pipeline, because it will be
those people who are putting their money at risk to make that investment.
If we get an expansion of the Trans Mountain
pipeline and we get the conversion for the Energy East project, we're
talking about a equivalent of 1.7 million barrels a day capacity that is
available that's not available right now, and then if some other investors
can come along and say "I can make a better deal by bringing your oil down
to the U.S.," and we've covered off all the concerns related to the
environment and public safety, have at 'er, go for it. Who cares.
Senator Mercer: My last question is a touch
off the topic, but it does relate to if there is a need for a pipeline going
How secure do you think the American supply is?
They've been moving to the point where they can self-supply. How secure do
you think that is? Is that realistic? How long is it going to last?
Mr. Priaro: They're importing a significant
amount of oil. They have tremendous shale gas resources there, and I've seen
forecasts that, even under some fairly low price scenarios, that production
will continue to increase. They have sufficient reserves that they're not
going to peak down there until 2025 or 2030. They've got 10 or 15 years
before they even reach the peak of their shale oil.
I don't think they will ever get to the point
where they will be entirely self-sufficient in oil, but I think they will
get to the point where they need less and less of our crude. That's another
reason why we have to look for new markets.
Senator Mercer: It's another great reason
why we need new customers.
Mr. Fogwill: It's imperative, actually.
It's an imperative. Both in oil and gas, we are losing our major market.
Senator Mercer: It's the reality that we
see, and accepting your argument, that should make the approval, with all
the usual restrictions, of pipelines a lot easier. It makes sense. Do we
want to go out of business here?
Mr. Priaro: For example, Senator Mercer,
Obama has initiated a program to increase the fuel economy of the heavy
transportation sector — heavy engines, heavy trucks — by 25 per cent. The
transportation sector is the largest user of liquid fuels in the U.S. If
they can get a 25 per cent reduction there, that's going to reduce their
demand for crude oil right there, just from their transportation sector,
just from that one measure.
Senator Mercer: Thank you.
Senator Black: I want to pick up on the
word "imperative" that you just used. It is a good word that I would
recommend to our analyst as we move through this and think about title and
whatnot. "Imperative" is a very good word. Thanks for that, because it is
Mr. Fogwill: It is imperative.
The Deputy Chair: Northern Gateway, unless
the government appeals this and tries to do something, would appear to be
dead. Does that increase the opportunity to build the northern route to
Mr. Priaro: Certainly, as would a federal
cabinet turning down the Trans Mountain pipeline. I can't see the federal
cabinet turning down both the Trans Mountain expansion and Energy East. I
think there's a possibility that they could approve both, but really what is
most likely is that one gets approved and one gets turned down. Politically,
how can Prime Minister Trudeau turn both down or approve both? I think some
political capital is going to be lost either way.
I don't know what he's going to do, but I'm
just trying to analyze the situation, approve one and turn one down.
If he approves the Trans Mountain pipeline,
maybe that means he can't approve Energy East, or if he approves Energy
East, that means he won't approve Trans Mountain, but, in that case, can we
get the northern energy corridor approved?
It's going to take more time. The Trans
Mountain expansion is the most politically expedient solution. It can be
done the quickest, but in the long run, I don't think it's the best solution
for Canada. I think the energy corridor to Prince Rupert, in the long run,
is the best answer, and that's what we should be working toward.
As a matter of fact, after this meeting, I'm
going to speak with TransCanada. I have a meeting with the vice president,
liquids pipelines, and I've actually talked to Alex Pourbaix, the chief
operating officer of TransCanada. I've met with him. I've met with Steve
Laut, president of CNRL, on this northern energy corridor, and I'm getting
positive feedback from both of them.
I think they're interested. It's something that
has not received its due of media coverage. I’m trying to get people
thinking about this proposal as the best alternative that we have after
The Deputy Chair: If I could just finish up
on this, then, in regard to Energy East, with the exception of exporting
directly to the Far East, eastern Asia, from the west coast, the truth is
almost every other export market, certainly in Asia, India, west of it, it's
quicker and cheaper and more accessible to go from the east coast than the
Mr. Fogwill: That's correct.
Mr. Priaro: Yes. The distance from Edmonton
to the west coast of India is shorter than the distance from Edmonton to the
west coast of India going through Vancouver.
The Deputy Chair: Through Nova Scotia.
Mr. Priaro: Yes.
The Deputy Chair: Substantially.
Senator Mercer: It's an ongoing argument
that those of us from the east have, to get people to understand the concept
that going all the way across this country is closer to India than it is
going just to the Pacific.
The Deputy Chair: It’s one thing that is
maybe not appreciated out West. I think there's a very broad consensus in
the Maritime provinces — I believe I'm safe in saying this — that we're very
accepting of bringing that petroleum east and exporting it through our
ports. I don't think there are the same challenges there that there would be
on the west coast.
If we can just finish up with this one
statement, it’s something for you to reflect on. We're talking about oil.
I’ve spent five years on the Energy committee as well. I think there's a big
gas situation coming down the pipe for Canada as well that nobody is
discussing, and maybe the Energy Committee will have a go at that, but
there's going to be a real energy shortfall, a gas shortfall in many parts
of this country, the ability to get it to market. We're going to have to
look at that in the future. Maybe we'll get you back in the future to say a
few words about that.
Thank you both for being here.
Honourable senators, I wish to welcome our next
group of witnesses: from the Young Pipeliners Association of Canada, Tran
Mah-Paulson, President and Chief Executive Officer, Central Executive
Committee; Kevin Tsang, Board Member and Vice President, Central Executive
Committee; and Peter Tanchak, Board Member and Vice President, Central
Gentlemen, please begin your presentations, and
afterwards the senators will have questions.
Tran Mah-Paulson, President and Chief Executive
Officer, Young Pipeliners Association of Canada: Thank you for the
honour and privilege of being able to come before the Senate today and share
We are a panel representing the Young
Pipeliners Association of Canada, YPAC. I'm Tran Mah-Paulson, as introduced,
the President and CEO, and this is Peter Tanchak to my right and Kevin Tsang
to my left. They're board members, vice presidents.
For our day jobs, we are engineers. I work with
T.D. Williamson, a pipeline services company, and Peter and Kevin both work
I want to start this off with a little bit
about my experience and getting more into YPAC. It all started with my
father. He's a respectable senior pipeliner. He told me, "You should get
involved with the Young Pipeliners Association. It's for young people. If
you're working in a pipeline company, I'll get you connected." Me being a
young pipeliner, I said, "Sure, let's go for it."
Sooner or later he sent an email. I was cc'd
and included in other people's responses, including senior pipeliners; but I
didn't know they were senior pipeliners. I was a young pipeliner. Then it
ended up at our former president's email inbox, and she called me and said,
"Hey, you should get involved with this organization; we're trying to make a
difference." I said, "Okay."
For some reason I didn't ask too many
questions. I just went to this meeting in Calgary. I'm from Edmonton and I
travelled down to Calgary, grabbed a bus the next day and went into this
meeting and figured out what was going on at the meeting. I guess usual
things like that happen all the time.
I was in the meeting and we started talking
about what young pipeliners are about and what a young pipeliner is and why
this is such an important cause. I learned about the generational
differences and the silver tsunami. I learned about birth rates declining. I
learned about a shift where baby boomers are taking off and wanting to
retire while the young people are going to have to somehow figure out how to
fill their shoes.
Out of that meeting, which was a strategy
meeting, we hired a company to develop a strategy and they came up with this
vision, and this vision was "To ensure the sustainable future of the
pipeline industry by enabling and enhancing the career development of young
YPAC's drive is to build a pipeline
professional community through the development of technical and networking
events, working together with other organizations such as the American
Society of Mechanical Engineers, the Canadian Standards Association, the
Canadian Energy Pipeline Association Foundation and the Canadian Gas
Association, as well as providing YPAC volunteers with opportunities to
influence the direction of industry.
The organization was founded on the principle
that there is a knowledge and experience gap due to the generational
experiences that has presented itself. The gap exists between the baby
boomer generation from about the 1940s to the 1960s and the current
generation. This is happening now.
YPAC represents a millennial generation,
children of the baby boomers, who share a concern with ensuring the
succession of the pipeline industry. The millennial generation represents 28
per cent of Canadians, with the baby boomers representing 26 per cent. I
just did the math about a week ago on that.
It is clear that there is a need to bridge this
gap to assure safety, quality and environmental responsibility during the
transport of crude oil. It is also clear that the millennial generation is
eventually going to be the succeeding generation where we depend on economic
prosperity as well as a healthy environment.
Peter Tanchak, Board Member (Vice President),
Central Executive Committee, Young Pipeliners Association of Canada:
Thank you, Tran.
I would also like to thank you, senators, for
the honour and privilege of being able to come before the Senate today and
share our views. To elaborate a little bit more on the mission of YPAC, I
will go into the four points here.
Our mission is to be a Canada-wide network
focused on attraction, engagement and retention of young professionals to
the pipeline industry; provide opportunities to the full spectrum of young
professionals employed in the pipeline industry to learn the breadth and
depth of the business; facilitate knowledge transfer between the young
professionals and from more experienced to younger professionals and, as a
result, retain the industry memory and facilitate succession; and, last, and
most important, look for opportunities to influence the direction of the
industry by providing a young professional perspective to the issues of
The long-term success of any industry depends
upon fostering the interests and skills of all employees and ensuring that
experiences and knowledge can be passed on from one generation of leaders to
The pipeline industry is an industry that needs
such attention, especially to maintain and enhance Canada's existing quality
of life and to enable other nations via knowledge-sharing and expertise to
offer their citizens enhanced quality of life as well.
Furthermore, the pipeline industry offers much
to young pipeliners, including technical challenges, financial benefits and
a strong link to what helps Canadians enjoy our quality of life, as well as
our economy, including jobs, warmth and mobility. Thus, we focus on the
attraction and engagement of young pipeliners through our core values of
knowledge transfer, opportunities, networking and influence.
We attract and engage young pipeliners through
the development of technical speaker events on topics ranging from landowner
consultation in the pipeline industry, carbon capture, Aboriginal
engagement, pipeline regulation, integrity, project management, leak
detection, and many more wide-ranging related subjects.
We further find ways to encourage collaboration
through the development of a mentorship program where mentors and mentees
connect and have regular conversations regarding pipelines. Other ways
include networking events where we have established a sense of community
amongst young professionals within the pipeline industry. This is one of
several methods we attempt to obtain social licence for pipelines at a high
I'll pass it to Kevin.
Kevin Tsang, Board Member (Vice President),
Central Executive Committee, Young Pipeliners Association of Canada:
Thank you to my colleagues, Tran and Peter, and thank you very much for the
opportunity and privilege to speak before the Senate and for you to hear our
I want to reiterate that I'm here to speak on
behalf of the Young Pipeliners Association of Canada and, more important, as
a young Canadian who will be directly impacted by the development of the
We support the need to develop a strategy to
facilitate the transportation of crude oil to Canadian refineries and to
ports on the east and west coast. We believe a strategy must include young
pipeliners as we are going to be the generation that has to build, operate
and maintain this infrastructure. In addition, it's imperative that we have
the support and skills to ensure the safe and reliable operations of these
assets throughout their entire lifetime.
Pipelines are the safest form of transportation
for the hydrocarbon products that are required nationwide from coast to
coast in our everyday lives. They're also the least carbon-intensive and
least environmentally intrusive method of transporting hydrocarbons as most
of the infrastructure is buried underground.
Canada has won the resource lottery. We have
the third largest proven hydrocarbon reserves in the world, with access to
ports in the Atlantic, Pacific and Arctic oceans.
We currently live in a world with increasing
demand for oil and gas products globally. This is demand driven by the need
to fuel the quality of life for others. Canadian oil produced by companies
is held to the highest social and environmental standards, and this Canadian
oil should play a part in the global energy mix.
As we transition to a low-carbon future, Canada
needs to realize the maximum value for its resources to help bridge us into
this low-carbon future. Canadian pipelines are the safest and most socially
and environmentally responsible way to get our products to the markets that
will generate the greatest return.
These returns from private investment fund
Canada's social programs, in addition to the research and development that
will enable industry to lower emissions, as well as diversify our energy
makeup that helps, again, Canada's transition to the low-carbon future.
To achieve this, we need to ensure that young
pipeliners as our next generation of workers have access to the best
information and technology to continue Canada's existing role as leaders in
building, operating and maintaining pipelines. These aspects are
instrumental in building public confidence in the safety and integrity of
our energy infrastructure.
We look forward to a great discussion. Thank
you again for the invitation.
The Deputy Chair: Thank you, gentlemen, for
your presentations. Now we'll go to the senators for questions.
Senator Mercer: Thank you, gentlemen, for
I have a couple of practical questions about
the Young Pipeliners Association of Canada. How many members are in the
Mr. Mah-Paulson: We have 1,200 members to
date. We're an organization that started in 2012, and we're currently
growing rapidly. We have members coming in and joining our membership every
single day, and we also have volunteers that are coming in to help grow our
Senator Mercer: Which trades make up your
Mr. Mah-Paulson: We are predominantly an
engineering association. The pipeline industry is actually quite
engineering-intense as well. I know that from my experience being around the
executives at the CEPA Foundation meetings as well as the American Society
of Mechanical Engineers, or the ASME. I'm also an engineer, so I could hold
a little bit of bias in that respect.
We do have a bit of outreach to the trades like
inspectors. We're looking at landowners; we're looking at lawyers. We
recently had an event with the Federation of Asian Canadian Lawyers. One of
our strategies as the YPAC is to reach out to more than just the engineering
technical crowd, although engineering was a really good start and foundation
to grow upon.
Senator Mercer: You haven't mentioned
whether you have any welders as members of the association. The last time I
checked, welding does play a role in pipeline construction.
Mr. Mah-Paulson: Yes. You asked the right
guy, because I'm actually a welding engineer. That's my day job at work. I
interact every single day with welders. I think it's really important to get
the trades involved with the pipeline industry.
NAIT has the largest welding training program
in the world, I believe. They can get a lot of welders out right away. I
honestly think we could use more trades. Especially if our pipeline projects
do happen to go through, the demand for trades is going to go up
substantially and we're going to need all the help we can get.
Senator Mercer: I'm from Halifax, Nova
Scotia, and welders are a highly-sought-after commodity. We're about to
embark on the largest ship-building contract in the history of this country.
Our community college, Nova Scotia Community College, the day after the
contract was awarded to Irving Shipbuilding, immediately retooled their
entire program. They had slowed down the welding program significantly over
the years. They've retooled it and are producing more welders because the
program of building Canada's new navy is going to require quite a few
welders. That was one of the reasons for the question.
As you know, we're talking about pipelines and
about the approval process of pipelines. You've got 1,200 members; that's
not a small number. Have you engaged those 1,200 members in doing what I
have been talking about, some of the necessary work to provide the social
licence but also to provide the political will to members of Parliament and
particularly members of cabinet to go ahead with approval? Have you talked
to your members about that?
Mr. Tsang: When we're talking with YPAC,
our mission is primarily focused more on the development and education for
the technical basis. We want people in the industry, first and foremost, to
be able to develop those skills and the education required to be a competent
pipeliner. We want a solid foundation for people in our industry to continue
to maintain that high performance of Canadian standards.
The other half of it is attracting people into
the pipeline industry and into the business. Attracting and engaging people,
getting them interested in the pipeline industry, is a key part of our
outreach program. If these people want and should choose to, they can get
engaged in the approval process. Our focus as an organization has always
been about the development and education of these people.
You may have noticed across universities in
Canada that a lot of them don't have a pipeline engineering program or
pipeline certification. We're starting to see some of this. From our
experience going to the universities to speak, the question is, "How do I
get into your industry?" That's where we come in. We say there's no defined
path on how to get to where you are. I'm sure when you guys went to school,
you weren't thinking, "I'm going to be a senator" or "I'm going to be a
library analyst." This is what’s happening. We all have different paths and
career paths. I think this message needs to be communicated out more to our
So we go to the university and tell them,
"Look, this is my path; it's an interesting path, and this is how I got
Senator Mercer: However, you all have an
interest in pipelines and in building pipelines. That would suggest that you
would have an interest in ensuring that one or more of the proposed
pipelines is approved so that you can actually do the work of building a
I would encourage you to think about using your
1,200 members, which is not a small number, putting that together as an
opportunity to speak to members of Parliament, particularly members of the
government, and encourage them to proceed and to get approval for one or
more pipelines, because it's in your own best interests. It's also another
exercise in developing the industry. You want to be part of the industry;
part of the process is making sure that approvals are given.
Senator Black: I just want to add a
recommendation. You're young pipeliners; I'm a young senator; so I think the
suggestion of Senator Mercer is a very good one.
You're doing great work in working with your
colleagues, but you should be considering an advocacy role. I just leave it
to you. Any of us around this table would be happy to help you figure out
what that looks like, but you're a very important constituency, more
important I would think than you actually appreciate, and I believe that you
should be at this particular moment assuming an advocacy role.
I'll leave that with you. I think Senator
Mercer is on to some very good free advice.
Mr. Tsang: I do want to add more on that.
We're one of many young professionals energy groups. There's the Young
Professionals in Energy,the Calgary and Edmonton chapters. There's also the
Young Women in Energy, which represents an often under-represented group
that has been doing amazing workshops here in Calgary and Edmonton promoting
how to get women involved in engineering and particularly the energy
And I completely agree. We would love to —
Senator Black: Maybe you should work with
all of those groups and form an umbrella advocacy group. But we’ll move on,
because I have a couple of questions for you, if I may.
We talk all the time, us senators and others,
about ensuring for your generation the prosperity that our generation has
enjoyed, and we talk about that kind of in the ether because we don't often
have the opportunity to meet with the generation that is either going to
benefit or not from getting pipelines built.
I'm wondering whether any of you have given any
consideration to what your world looks like if Canada does not build any
Mr. Tanchak: I'll take that one.
If Canada decides not to build any incremental
pipeline capacity, whether that's to any coast or even to the United States,
although we would prefer to diversify our market, having only one customer
as your business model isn't the best. You're held captive in that
situation. That is the situation that we find ourselves in today, as we're
all here. I do not see a bright future in that sense. I almost see
displacement in most settlement patterns or internal migration within the
country, including labour mobility, A future without the oil and gas
industry or incremental pipeline capacity would not be to the benefit of
Canadians because the world demand for oil and gas is still increasing to
2030 and beyond.
We are still going to need the products here
within our own country, and it is still going to be needed around the world.
Senator Black: How would it impact you?
Mr. Tanchak: Personally, if no new
pipelines were built, we would still have a lot of work. Don't get me wrong.
There's a lot of existing infrastructure that needs work, whether that's
replacing pipelines and doing replacement projects because that’s the best
path forward, but the work would definitely decrease in the fact that you
would have a shrinking industry.
You would lose a certain specific skill set
that is of huge value to this country and to our industry. You would have a
shrinking industry, essentially. How that would impact me directly is that I
would have no opportunities to fall back on. It's almost like a one-shot
opportunity in my current role and in my job. If that job disappeared, I
wouldn't be able to support a family or anything along those lines.
Senator Black: We're working hard to ensure
that doesn't happen. Thanks very much.
The Deputy Chair: I have a few questions
I'd like to put to you.
How is your membership distributed around the
country in terms of the numbers by province or by region?
Mr. Mah-Paulson: We are heavily focused in
the Edmonton and Calgary regions, Alberta region, because that is where we
started. We started in 2012 in Calgary and then we expanded into Edmonton
around 2013, 2014, and since then we've expanded into Vancouver and then
we're expanding into Toronto.
The stage we're at is we have four different
chapters. Membership is still more centralized in Alberta, but I would say
that now 10 per cent of the membership is outside of Alberta. We're working
really hard to build these chapters and we have experienced some challenges
when expanding to, say, the Vancouver area. Sometimes the name of the
association does pick up on some things in those regional areas. We found
through our experience that it is a very regionally dependent area. For
myself, I can be proud that I work in the pipeline industry in Edmonton, but
being proud to work in the pipeline industry in, say, Vancouver, it's very
difficult to be proud there.
The Deputy Chair: You have 1,200 members.
Mr. Mah-Paulson: Yes.
The Deputy Chair: How many of them are
presently fully employed?
Mr. Mah-Paulson: We have a mixture of
members from the university level all the way up to the employment level.
It's not a specific statistic that we have looked at, but I would say we
have about 45 per cent from the student population, so U of A, U of C, UBC,
because UBC has a pipeline integrity program over there as well, and then a
few from U of T and McGill. The rest is more industry-related, as well as
people looking for jobs. I would say maybe 10 to 15 per cent are looking for
jobs and the remaining people are in the industry.
The Deputy Chair: Again, remind me, you
said you had four chapters.
Mr. Mah-Paulson: Yes.
The Deputy Chair: One in Toronto; one in
Mr. Mah-Paulson: Yes.
The Deputy Chair: There are two in Alberta?
Mr. Mah-Paulson: Yes.
The Deputy Chair: You have none in
Mr. Mah-Paulson: None.
The Deputy Chair: Would Saskatchewan be a
place you would have a chapter in naturally?
Mr. Tsang: Yes, it is a natural fit to have
another volunteer chapter in Saskatchewan, but I don't know how much
experience a lot of you guys have in cultivating and motivating a volunteer
to start an independent business unit somewhere.
The Deputy Chair: I want to commend you for
what you've done. I think to accomplish this in such a short period of time
is a great effort on your part.
Senator Mercer: Hear, hear.
Senator Tannas: Yes.
Senator Black: Yes.
The Deputy Chair: I think it's a great
effort, and what we need to help to drive this issue is initiatives like
this. If I can encourage you, you say most of the people are obviously
concentrated in the heavy pipeline area in Alberta, but I'm sure a lot of
the people who work in Alberta weren't born in Alberta. There must be a
number of them who have come from other parts of the country.
I would encourage you to use them as your
intellectual property, use them as your conduit to help plant the seed for
these different offshoots of the organization in the Maritimes, in Quebec,
in Saskatchewan and Manitoba, because if you can pull together four chapters
in less than three years, it looks like, and 1,200 members, I think you're
going great guns. So certainly there are no apologies to be made. I think
it's a great effort.
In fact, you can see this is something that
should be duplicated in many of the other aspects of the energy industry,
because we need a big push in this country, a big collective push. There are
a lot of people who could push along with you that wouldn't necessarily be
part of the Young Pipeliners Association but may be part of another
association that could be established.
Senator Mercer: I want to follow on what
Senator MacDonald said. I think 1,200 members is a good-sized membership,
but, as Senator MacDonald mentioned, you need to think about some plans to
move east because, number one, from the point of view that, if Energy East
were approved, then you're going to have an awful lot of people east of here
working on pipelines. We need to engage them and we want to get some young
professionals involved to make sure that the benefits flow to them, and also
that in the long term, as you age, you'll be around to help maintain the
pipelines, too. I would encourage you to think about that.
I go back to one of my original questions,
which was about lobbying and talking to your local members of Parliament. If
you were to expand east, then you can engage those new members to do the
same, because this does require a fair amount of lobbying, and don't be shy
Your member of Parliament hears from you, he or
she notes it, no question about it. Many people sell that short. I have had
the privilege of working with a lot of members of Parliament over the years
and they do listen to their constituents, and they do listen particularly to
young professional people who are trying to move the puck down the ice here,
and they want to hear that. So expansion would be a good idea.
Senator Tannas: Who funds the operations of
the association? Is it the members themselves? Is there a membership to
belong, a cost, or is it funded by industry or by employers or by CEPA? Any
Mr. Tanchak: Yes, I can take that one.
The funding comes from a wide variety of
sources. When we founded the organization in 2012, we pondered the idea of
having a membership fee, but then again, we wanted to draw in new members
and, really, we're in the business of educating the young professionals on
the pipeline industry so we wanted to make it accessible. We decided to
waive a membership fee.
At some of the events, we try to run on a net
neutral basis, so charge an entry fee to offset some of the costs for the
rentals and the rooms, but all the speakers, et cetera, are free and doing
it on their own professional time. A lot of funding sources for the
initiatives the YPAC does are key to maintaining our independence.
There are similar organizations around the
world. We give credit to the Australians for having a Young Pipeliners Forum
before us. The idea came from one of our seniors in the industry who wanted
us to develop it here in Canada. Why does Australia have one and not Canada,
We took that on, developed the organization,
except the big notable difference between the Australian and the Canadian
setup is that in Canada we maintain our independence by not being attached
to the hip to one sole provider of funding.
We our own sponsorship campaign through just
YPAC by hosting golf tournaments or a biannual conference and having
sponsors and then, obviously, the proceeds left over go towards YPAC
initiatives. CEPA Foundation, CEPA itself, and then ASME PSD — the American
Society of Mechanical Engineers - Pipelines Systems Division— all provide
funds. Surprisingly, it's been consistent, even throughout the commodity
downturn. We've noticed a small drop in funding, but we've been able to
maintain our program every year, so it's been good.
Mr. Tsang: I do want to add, on the note of
sponsorship, that we are voluntarily doing our own business development. No
one is handing us cheques saying, "Great work." We have to put together our
value proposition. We have to go and sell ourselves. To do all that, to
raise 1,200 members, is hard work, and now we have momentum and now our name
is heard, but it took a while to get it there, because to go to a
corporation and ask them, "Can you give us money?" they'll ask, "For what?"
So this is all independently driven, and not the other way where industry is
saying, "Take this money and do great work."
Senator Tannas: I would echo what my
colleagues have said. It's a worthwhile organization, heart-warming to see,
and wish you all the best.
I have one other question. What can we do? What
can the federal government do to help you get your message out with your
Mr. Tsang: What the federal government can
do, and we often see this portrayed in media, is my generation, the
millennial generation, largely opposed to infrastructure projects, which we
frankly believe is not true.
Again, I reference the other young professional
organizations, Young Professionals in Energy, Young Women in Energy. There's
the National Association of Corrosion Engineers, or NACE, young
professionals groups, the American Society of Civil Engineers, early career
engineering groups. We exist. We would like that acknowledgement that there
is a working side of young professionals that are for a balanced and fair
discussion on development.
If we're talking about national strategy, it is
a surprising thing when we get invited to some of the major conferences or
the CEPA Foundation or the CEPA conferences, that we're often the youngest
people there by a long shot. Being involved in discussions like this, it
makes us very proud of our organization because we've come up a long way,
but it's something we would very much like to be involved in the process.
Senator Tannas: Thank you.
The Deputy Chair: You say you're a welding
engineer. Of course, when we think of pipelines, we do think of welders, but
the 1,200 people who are members of your association, it's not 1,200
welders. What are the other major trades that would be members of your
Mr. Mah-Paulson: We are predominantly more
engineering professionals, the current make-up of the organization. The
trades are more lacking in our membership profile.
We are looking towards an outreach strategy
that does include NAIT and SAIT. We did a career fair, as awareness. We were
doing it more for an awareness perspective because we don't offer jobs; we
offer volunteer positions and people get to work for free.
At the same time, people come to us, and it's
actually a perfect setting for us to say that we don't quite offer jobs; we
offer volunteer positions, but there's also all these other companies that
have jobs, and this is the type of work that you can do at these pipeline
A lot of people, you'd be surprised, who come
to you didn't know that their own profession can do it. For instance, even a
biologist comes to you and says, "Well, I can't do this." We reply, "Well,
you can work in wetlands management; you can potentially work in
environmental reclamation, right?"
Being a welder is pretty obvious. Being from
Alberta, we see with welders that it's a very easy path for them to see.
Once you get into trade school, you become a welder; then you can be a
structural welder or a pipe welder and off you go. At the university level
it's not as easy to see where you end up going. At least, that's from my
I graduated with a civil engineering degree and
didn't realize I'd be doing welding. I didn't realize I'd be in the pipeline
industry. I could have been designing buildings. I could have been doing
The Deputy Chair: Have you established any
interaction with the community college network across the country, and do
you think that might be something that would be in your future?
Mr. Mah-Paulson: It would definitely be
more of a future aspiration because, today, we are more focused on the
universities at the moment and trying to focus on leveraging our current
network on how to get to different areas. Our network tends to be more in
the engineering / professional setting. We have put that in the plan, but we
haven't figured out ways to connect ourselves into those areas.
The Deputy Chair: We obviously want
pipelines built and you want pipelines built. You want to bring everybody to
the table that would help you strengthen your hand and strengthen your
arguments. What efforts have you made to interact with the Aboriginal
communities along the routes of the present pipelines or proposed ones, and
are there any members of your association who are Aboriginal?
Mr. Tsang: One of our founders is part of
the Aboriginal community, Deanna Burgart. She runs her own consultancy on
Pipeline 101. She's an instructor. She teaches the whole design process.
We've had excellent engagement in that regard. Being able to attend the CEPA
Foundation conferences has put us in touch with that community as well.
The whole outreach process and going to a
reserve is something else that we have not pursued. I think we just don't
know how to. We don't have that experience in how to engage and
appropriately bring up that discussion.
The Deputy Chair: Maybe the person you just
mentioned would be a perfect person to help you do that, because I think it
Mr. Tanchak: I can add a little bit more
there. YPAC absolutely agrees that indigenous consultation and involvement
in resource projects is a must. We've had working sessions with Aboriginal
representatives. First off, we've raised money for Indspire, for example,
through a golf tournament and charity, and had them participate and provide
a guest speaker at the golf tournament to talk about resource development.
We have also had Mark Podlasly from the B.C. First Nations Energy and Mining
Council to speak to YPAC members.
We try to address all these different broad
topics, and Aboriginal engagement is definitely one of them.
The Deputy Chair: Gentlemen, it's a
pleasure to have the three of you here. We wish you nothing but the best. We
think you're going in the right direction.
Again, as Senator Tannas alluded to, if you
come up with anything that you think the federal government can do to help
you pursue your goals and expand your footprint, please let us know and
we'll be sure to carry the message.
Thank you for coming.
Before I introduce our guests, I want to put it
on the record that we invited both the premier of the province and the
leader of the opposition to make a presentation. The premier's office
declined to make a verbal presentation, but they did send a written
submission. The leader of the opposition is away on his honeymoon, so he
couldn't be here, but he sent some people in his stead.
I'd like to introduce Mr. Prasad Panda, Member
of the Legislative Assembly for Calgary—Foothills; and Dr. Bill Bewick,
Director of Policy of the Wildrose Caucus.
I'd ask you both to begin your presentation and
then afterwards the senators will have questions.
Prasad Panda, Member of the Legislative
Assembly (Calgary—Foothills), Legislative Assembly of Alberta: Good
afternoon, honourable senators. My name is Prasad Panda and I'm the Member
for Calgary—Foothills in the Alberta Legislative Assembly. I'm an economic
immigrant, a first generation Canadian, and a registered professional
engineer by training.
My family chose to move to Canada after
evaluating the natural resources it possesses and the economic opportunities
presented, and the standard of living and Canada's respect for diversity.
For 28 years, I worked in the hydrocarbon
industry myself and managed the supply chain management at Suncor Energy for
11 years. During my time in the oil patch, many of my suppliers and
contractors were actually from Ontario and Quebec. Also I was proud to say,
several of the purchase orders were issued to the First Nations contractors
on a preferential basis. That is still the practice in the industry.
Before Suncor, I worked for Reliance Group of
India for 16 years. One of the many major projects I worked on was the
construction of the world's largest refinery at Jamnagar in Gujarat in
India. Later on, that refinery was twinned to process 1.24 million barrels
per day at a single location.
When I worked there, we built that refinery,
including marine facilities and aromatics complex, in just three years — 26
months. Today, five years after being mentioned the first time, we are still
haggling over building a pipeline from Alberta to New Brunswick.
I was a key member of the project management
teams that built pipelines for Suncor, for Reliance and for SNC-Lavalin's
client, Saudi Aramco, and my personal experience is that Canadian industry
takes accountability for safety and sustainability very seriously.
Here, in Canada, energy employee compensation
is tied to the performance, to the safety and sustainability metrics. That
was not the case when I worked overseas.
Over the years, technology has advanced so
much. Today engineers design pipelines with high alloy corrosion-resistant
pipes, valves and pumps. Now, with high tech electronics in the control
rooms, they can monitor, track, control and isolate the leakages to the
greatest extent. Containment of the spills has improved so much, and the
operators of the pipelines are very cognizant of the health hazards and the
social and economic impacts of the leakages.
In spite of having the most environmentally
responsible oil and gas sector in the world, Canada's industry cannot seem
to get pipelines approved in a timely manner. Meanwhile, other less socially
and less environmentally responsible countries grow their market share with
unimpeded access. Canada's growth is being strangled.
Pipelines are critical national transportation
infrastructure that binds the country together. These pipelines carry
prosperity from Alberta and distribute to all Canadians across the country.
According to CIBC, lack of pipelines is costing Canada $15 billion every
year in lost opportunity revenue, and according to the Canadian Chamber of
Commerce, that is $50 million per day, every day.
Honourable senators, Albertans are very anxious
to get back to work. The 22 per cent office vacancy rate in downtown Calgary
right here is very troubling. Calgary's unemployment rate is expected to be
double digits by December, by Christmas time. We can continue to attract
economic immigrants to Canada only when the federation of provinces and
territories works in letter and spirit.
We need those pipelines to add capacity, to get
our products to market at world prices. Thus, we can expand our output.
Canada's access to the markets is insufficient. Perhaps more
problematically, this marketing infrastructure is largely designed to
service only one customer that is no longer reliant on significant volumes
of Canadian crude. The shale oil and gas revolution has resulted in an
oversaturated American market, so our single customer has become our largest
Alberta producers are so desperate to move
their product that they're selling their product at a price of discount.
This discount means billions less in profits, which in turn means billions
less in royalties and taxes for the Government of Alberta and Canada. That
means less money for hospitals, schools, seniors care and critical
According to the International Energy Agency,
global demand for energy will increase by 37 per cent by 2040, and fossil
fuels will make up 75 per cent of the energy mix. If Canada does not build
new pipeline projects, it means forfeiting this market to the other
countries with less than desirable environmental or human rights records. No
other country in the world is wasting time and opportunity to realize the
full value of their resources in a timely fashion.
Our oil and gas industry needs access to new
markets. Pipelines with access to tidewater built in every direction are
essential for the long-term prosperity of our energy sector.
While the booming Asian markets are a priority
with projects like Trans Mountain expansion, Energy East cannot be dismissed
in its significance.
Energy East will displace 600,000 barrels per
day of crude imported from foreign countries. Energy East is expected to
create 23,498 jobs during construction period and another 4,252 jobs during
the operations phase. This is all private investment, no public dollars, no
public funds required.
Pipelines are the safest and least carbon
intensive way to move oil, plain and simple. The U.S. State Department has
comprehensively demonstrated in their analysis of Keystone XL that pipelines
have no net impact on carbon emissions, especially in comparison to
But if we cannot have pipelines, we will have
railways move our product, and the risk of derailments, fires, explosions,
deaths and destruction will significantly increase.
It's our belief that if new pipeline projects
continue to face the kind of regulatory hurdles they face now, the federal
government will need to begin exploring the possibility of developing a
single national energy and utility transportation corridor in order to
streamline the approval process for all future projects.
New railways are talked about from Fort
McMurray to Alaska and rebuilding the line to Churchill, Manitoba. But,
again, will federal regulators impede these developments? Would the
Government of Canada park an ice breaker in Churchill year round?
On May 16 of this year the Legislative Assembly
of Alberta unanimously called on the federal government to scrap the planned
crude oil tanker ban on the northwest coast of British Columbia.
There is nothing more crucial for Alberta's
economy than getting access to the tidewater for our energy products. Market
access delayed is access denied. Lack of market access is diversely
impacting the livelihood of Albertans and Canadians. Time is of the essence.
Wildrose has consistently and proudly supported
our energy sector and the jobs and prosperity it brings to Alberta and
I thank you for the opportunity to appear
before your committee.
The Deputy Chair: Thank you very much, Mr.
Panda, for that presentation. It was knowledgeable and comprehensive. We
really appreciate it.
Senator Tannas: Welcome, Mr. Panda. I'm
glad to have you here. You mentioned in your notes a discussion around a
national energy corridor.
Mr. Panda: Right.
Senator Tannas: This is something that I
recall your former leader Danielle Smith speaking about, and it captured the
attention of a number of us. I note that it captured the attention of Dr.
Mintz and The School of Public Policy.
Have you had a chance to review his
organization's paper on the idea of a corridor, and what are your thoughts?
We were considering in the Senate studying that
very issue, through a process similar to what we're doing here. Can you give
us your thoughts on that idea and specifically what your formal policy is on
it and what encouragement you might give us on the subject?
Mr. Panda: Thank you. I'm happy to hear
your Senate committee is actually looking at that study.
Personally, I haven't reviewed what Mr. Mintz
has done so far, but recently there was a news article about the study,
University of Calgary, The School of Public Policy, and Montreal Center for
Interuniversity Research and Analysis of Organizations. Is that the one you
are looking at, sir?
Senator Tannas: Yes.
Mr. Panda: I thought it's a great idea. In
Canada, in reality, it takes decades to build anything. When Canadian
citizens are demanding us to build national infrastructure projects, those
are not only good economic projects for Canadians but they also unite the
We should all rally behind that idea and do the
feasibility study, commission engineering feasibility reports and look at
all opportunities to build that corridor for pipelines, for power lines, for
rail and road transportation. Once we have that infrastructure in place, or
at least if we say we are keen to have that infrastructure in place, then
that will trigger private investors to invest some money. They may also
contribute to the studies and unlock the values of all those resources up in
the north, and connect all the way from B.C. to Eastern Canada. I support
that and most of our caucus is in favour of that.
Senator Tannas: Thank you, sir.
Senator Black: Thank you very much for your
presentation and also thank you for your service to Albertans.
You have talked very eloquently about the
situation as we see it today. I'm very interested in you sharing with the
committee your view as to what the situation looks like if pipelines do not
Mr. Panda: Thank you for the question. It's
a good question. Everyone is asking, not only in Alberta; it's everywhere.
In most of the Atlantic provinces, they're also saying the same thing. If
the pipeline doesn't come, they lose the opportunity of jobs and all the
social infrastructure investments and social benefits that come with that.
It's really acute now. Most of the friends I
used to work with, not only from Alberta but from all over Canada, are
looking for jobs now. Without pipelines, there is no way we can ship the
product when we expand oil sands facilities here. If we are not building new
projects, there are no job opportunities for people.
The established companies like Suncor, instead
of developing oil sands projects, are just improving their cost performance
from their existing operations. Whatever profits they are getting from that,
instead of building new projects, they're looking for mergers and
acquisitions. That means they're going to consolidate the jobs. When they
acquire other companies, they look at duplicate functions and then they
eliminate the duplication and consolidate the jobs. That means there are no
new jobs. We’re in fact going to lose more jobs.
Without the pipelines, for all the SAGD
proponents, they are not getting finance from the banks and institutions
because there is no market access. That's why the pipelines are actually
As we all know, these are cyclical markets, so
they'll come back. In my short stay here, I have faced the boom and bust
cycle three or four times already. When the next opportunity comes, we
should be ready to export our products to the market where we can get full
value for our product.
But if we don't start that process now, it may
take forever and we might lose the next boom cycle. That's why all these
people who lost jobs recently in Alberta and all over Canada are very eager
to get back to work soon.
With these pipeline projects there are no
public dollars; it's all private investment. They are shovel-ready and
shovel-worthy projects. Both the federal and provincial governments should
actively look at starting some of those projects.
Senator Black: Thanks, Mr. Panda.
Senator Mercer: Mr. Panda, thank you for
your participation. It is one of the most impressive presentations we've had
before the committee.
I want to draw your attention to a comment you
did make. You said Energy East is expected to create 23,498 jobs during the
construction period and 4,252 jobs during the operations phase. Those are
very impressive numbers.
However, one of the problems that we are
addressing is the fact that if Energy East is not approved and then it's
appealed, say, to the cabinet — you know, as a politician, all politics are
local. We need to take that 23,498 number and that other number of 4,252 and
break them down so that it becomes local, so that the member of Parliament
from wherever, in Eastern Canada, and particularly in Ontario, Quebec and
Atlantic Canada, knows that the failure to approve Energy East will cost X
number of jobs in his or her constituency, and X number of jobs in the long
term in his or her region.
One of the problems we have is that people are
looking for the social licence to build the pipeline, but nobody talks about
the social licence to create jobs.
Mr. Panda: Right.
Senator Mercer: Really what we're
interested in is creating jobs, and creating jobs will create wealth, and we
know it's self-perpetuating.
Is there a way that you or someone can take
those numbers and break them down and say that, of those 23,498 jobs, our
projection is that X number will be in New Brunswick, Quebec or Ontario or
wherever, because that becomes real to the local politician. That becomes
real when it goes to cabinet, and if cabinet doesn't approve it.
Let's use New Brunswick, for example. If
cabinet failed to approve it, then Dominic LeBlanc, the cabinet minister for
New Brunswick, has to explain to New Brunswickers why this didn't get
approved, the same way that my member of Parliament, Scott Brison, would
have to explain to Nova Scotians why it didn't get approved. This is
politics at its rawest. If I come to your constituency in Calgary and say
that if we don't do this project, 3,000 people in Calgary—Foothills are
going to lose their jobs, I've got your attention.
Mr. Panda: Yes.
Senator Mercer: You're going to want to
know what you can do to prevent that, how you can turn that around.
Is there a way of taking those numbers and
producing them in a way that's useable for people, and putting them out
there publicly so that the media and other members of Parliament — and I
think you need to start communicating with all members of Parliament — but,
in particular, to the government members of Parliament, because they're the
ones closest to the decisions, and saying, "Here, this is what it means in
jobs in your neighbourhood."
Mr. Panda: That's a really good point. It's
not only the jobs; it's also the tax revenue for each province and as a
nation how much we get, billions of dollars. By not building the pipelines,
we are losing the tax revenue, too.
To your point, I'm not here to politicize this.
I'm just quoting authentic sources here. The Conference Board of Canada has
projected the number of jobs province-wide. They don't have constituency
level, but they have each province. For example, New Brunswick will have
47,366 jobs during the project development and 6,410 jobs. This is for the
project duration. These numbers are not from Wildrose but from the
Conference Board of Canada.
Senator Mercer: It’s very important that
they are not from Wildrose, not that I want to take anything away from
Mr. Panda: Right. So they're out there
province-wide. I can table this report if you’d like.
Senator Mercer: You can table it through
Mr. Panda: That gives the number of jobs
for Quebec, for example: 49,195. This is the summary report from the
Conference Board of Canada.
It says that between 2013 and 2040, the project
is expected to generate in total, across Canada, 260,695 person-years of
employment, full-time equivalent. As well, the project will produce $81
billion worth of fiscal revenues over the same period. They broke it down by
province and territory.
Senator Mercer: That's very useful because
it seems to me that, with those numbers, you being not just Wildrose, but
everybody who's supportive of Energy East needs to communicate that to
people and to members of Parliament so that they understand it.
I would suggest that the mayor of Montreal,
once he sees those numbers, will take pause when someone walks in his office
and says, "Your opposition to Energy East is costing Quebec," and, in his
case, Montreal, "X number of jobs."
Mr. Panda: Yes.
Senator Mercer: That hits home. If I come
into your office and tell you the project is costing 2,000 jobs in your
constituency, I've got your attention and you're going to do something about
Mr. Panda: There are few things that
actually surprised me here. Those things are happening in a Western
democracy like Canada. This interprovincial transportation is the
jurisdiction of federal government, and there is a reason why it is like
that, because any one individual jurisdiction like the mayors of Montreal or
Burnaby or Vancouver can hold the entire country’s economy to hostage. We
don't want that; it's not good.
That's why we had to keep the politics out of
it and we had to allow independent bodies like National Energy Board to do
their review process based on facts and science.
Senator Mercer: I think your other comment,
that on May 16 the Legislative Assembly of Alberta unanimously called on the
federal government to scrap the plan, that the northwest coast of British
Columbia issue, that goes to the point that we need to make sure that it's
as least political as possible, although if the National Energy Board were
to say no to Energy East, then our target does narrow politically to one
group, because there's only one group. The reality is that my political
party is the one in power and we're the target. I'm happy to help in aiming
at my colleagues.
Mr. Panda: I really appreciate that. So if
the Energy East project doesn't go ahead, then the other options we have is
Northern Gateway, which was already in trouble.
Senator Mercer: Yes.
Mr. Panda: The other one is Trans Mountain,
but if we don't build Energy East, that means we'll continue to import about
600,000 barrels of oil from countries like Venezuela, Algeria and Nigeria
that don’t have good human rights records.
Senator Mercer: Senator MacDonald and I
have been talking. We had a witness just before you who encouraged us to
talk, and I encourage you, it will help you with the 11 members of
Parliament in Nova Scotia, I can tell you, if you talk not just about going
to Saint John, New Brunswick. The real problem with Saint John, New
Brunswick, the only reason people are talking about Saint John, New
Brunswick, is because the big Irving refinery is there, but if you want to
go to tidewater, if you go to Saint John, New Brunswick, it means you're
going into the environmentally sensitive Bay of Fundy where there are a
large number of species at risk that use the Bay of Fundy, particularly in
the summertime, large right whales frequent the bay, whereas if you went to
the Strait of Canso in Nova Scotia, where the large terminal for importing
oil into Canada is already there, it makes logical sense that we should turn
that around for exports. We've got tanks to store there, ready and waiting
for tankers to come in, if that's where we go as opposed to going to Saint
We avoid the environmental aspect. I think you
will find more agreement in Nova Scotia with respect to the environment. You
still have the problem of getting it across the land, although Senator
MacDonald rightly points out that we have a gas pipeline that comes ashore
from our Sable oil and gas fields that will be out of gas in, Senator
MacDonald says 18 months. I don't know what the actual number is. It will be
out of gas shortly. It would seem that reversing that, obviously increasing
the size, because gas is smaller than what we need for this project, there's
some sense there.
Let's start talking about going to Nova Scotia.
Now, as we go through New Brunswick with the pipeline, there's a need for
feeding the large Irving refinery in Saint John, because it's a market that
should be utilized, and it reduces the price for them in purchasing imported
oil from Saudi, or wherever else they're getting it; and reminding people
that I think it's a day closer from the Strait of Canso in Nova Scotia — no,
it's a day and a half closer — than it would be from Saint John, New
Brunswick to India, for example.
Mr. Panda: Yes. Once we take it to the
Atlantic coast, then India is willing to actually import a lot of that oil.
Senator Mercer: Well, let's do it.
Mr. Panda: The previous company I used to
work for, that refinery alone is 1.24 million barrels, and they are very
hungry. That refinery can actually handle our bitumen. It is the most modern
refinery. They can take the hardest crude and refine it.
Senator Mercer: I'd like to thank you and
your comment about the non-partisan aspect of this. We have to make this as
non-partisan as possible, because we need to engage all of our communities,
and we all have different communities — Wildrose; I'm a Liberal; Senator
MacDonald is a Conservative and he has different communities —that we can
mobilize. Regarding social licence, other than the one bump that we've
crossed in the Saint Lawrence River there with the mayor of Montreal, I
don't see a lot of really major opposition in Eastern Canada. There will be
groups, I know there will be, and they will be noisy and disruptive.
However, if we explain jobs to them, and if we
also explain the tax benefits to Alberta and to Canada, we can also remind
Canadians that if Alberta's taxation rate is successful enough then there's
more money that Alberta pays into equalization, which benefits all of us
across the country, particularly those of us in provinces who do receive
equalization payments, such as Senator MacDonald's and mine.
Mr. Panda: When I look back, Alberta didn't
receive any transfer payments, equalization payments. All of Canada is
benefiting out of it.
The issue I have when you talk about social
licence, I'm not clear. Who issues that social licence? Who is the competent
authority to issue that social licence? What are the requirements to gain
that social licence? I don't get it.
Senator Mercer: It's not like the DMV. You
don't go in and apply for a social licence. Social licence is earned, and as
I told some industry people earlier, and I was very critical of them, social
licence is earned every day.
Mr. Panda: Exactly.
Senator Mercer: They have done some good
things, but nobody knows about them. They forget they're in the sales
business. They think they're in the petroleum business. That's part of what
they do, but they're only in the petroleum business if the sales go right.
Mr. Panda: Exactly. We all know that we
have to consult everyone. We have to hear the independent bodies like the
NEB. They should hear all the concerns from every stakeholder, including
First Nations, and address them. All the reasonable concerns should be
addressed, and the NEB should put those conditions as a conditional approval
for the project and we should get the proponents to address those reasonable
concerns and needs of all the stakeholders. But if we allow every
jurisdiction and every person to come and take over, that’s where not only
senators and legislators and parliamentarians, every one of us, we have to
show leadership and educate people on the benefits, like you said, senator,
the economic benefits for everybody. Otherwise, protesters are going to take
control and they're going to set the terms, which are not acceptable. There
are always protesters who will protest any growth project. Some provinces
might say, "Well, not in my back yard." If everyone says that, how can we
function as a country?
These trade deals that we are signing with
other countries in order to make them work and to benefit all Canadians, we
actually should take politics out of this and build these pipelines in a
timely manner so we can leverage those trade deals with other countries.
Senator Mercer: We also have to make sure
that if the National Energy Board does reject it or put too many
restrictions on it, that the people who are at the appeal process, the
cabinet, have been exposed to so much of this data that it's going to be
difficult for them to say no. We need to do that. It’s not a small job. It's
a big job, and we all have a role to play in it, those of us who might be in
favour of energy.
I wouldn't want to pre-judge what this
committee might say, but I’ve got a funny feeling.
The Deputy Chair: Mr. Panda, I have a few
things I'd like to discuss.
I have to agree with you: I do find the
arguments about social licence pretty nebulous stuff. This country has been
crisscrossed with pipelines for 75 years. This is not new technology or a
new thing. The only thing new about it is that it is better technology,
better pipelines, better safety systems, better backup systems, better
everything than existed. We have pipelines in the ground that have been
there for 75 years and they're still operating. Anything that's going to be
built today will be so much more efficient and so much safer.
Mr. Panda: Yes.
The Deputy Chair: The Northern Gateway
pipeline proposal, the courts have ruled against it, and I suspect that the
federal government won't have the stomach to do otherwise. They may. I can't
pre-judge them. We'll have to see what happens, but sometimes when a door
closes, another one opens.
Mr. Panda: Yes.
The Deputy Chair: Are you familiar with
discussions regarding the proposed Eagle Spirit energy corridor to Prince
Rupert? Have you discussed that with that group?
Mr. Panda: Instead of Kitimat, you're
talking Prince Rupert?
The Deputy Chair: Prince Rupert. Are you
familiar with that proposal? We've had some discussion about it here today
by a couple of our presenters.
Mr. Panda: No, I'm not.
The Deputy Chair: I think the Government of
Alberta or the people of Alberta would be very interested in the particulars
of it. We'll make sure that our clerk and our committee gets this
information to you. We've been in touch with them. We were hoping that the
group itself would have been able to make a presentation, but they haven't
been able to pull it together yet.
Mr. Panda: Yes, either way, whether it is
Kitimat or Prince Rupert, as long as we have access to the tidewaters, I
don't think we have an issue with that.
The Deputy Chair: This will be a
comprehensive corridor. It would move LNG, move power lines, move
Mr. Panda: Yes, that would be great. I
think we can support that.
The Deputy Chair: The other thing I want to
mention to you is, again, with the creation of wealth, as Senator Mercer
mentioned, we create jobs, but if we create wealth, the jobs will take care
of themselves in many ways. But $200 billion has been transferred from
Alberta to the federal authority in the past 15 years.
Mr. Panda: Right.
The Deputy Chair: That's a lot of money. In
turn, that money has been allocated to the provinces for health, education,
to First Nations; they've been allocated to all the different levels of
social infrastructure that we support in the country.
I said earlier, this is not my grandparents'
Canada. When my grandparents were around, the government did nothing for
them. Until they got the pension cheque, I think, in the late 1930s, there
was no social security or any social backup at all in this country. We have
to be able to pay for this stuff.
Do you have any idea, do you have any numbers
in regards to the drop in the amount of transfer that would have gone to the
federal government from Alberta, let's say, in the next three to five years?
Mr. Panda: I don't know exactly how much it
is from Alberta, but I have these graphics here about total lifetime
equalization payments among the provinces, and Quebec received $198 billion.
The Deputy Chair: This is from what year?
Mr. Panda: From the beginning.
The Deputy Chair: Beginning of
Mr. Panda: This is the total lifetime
equalization. So Quebec received $198 billion, which it says is 50.5 per
cent. That means in total that $400 billion was transferred from the federal
government to the provinces as equalization payouts. Out of that Quebec got
$198 billion; Ontario got $17 billion; Newfoundland and Labrador, $25
billion; New Brunswick, $43 billion; Nova Scotia, $44 billion; and P.E.I.,
When you talk about Western Canada, Manitoba
got $46 billion; Saskatchewan got $8 billion; and you'll be surprised to see
that Alberta got only $92 million in the last 30, 40 years, whenever it
started; and British Columbia, $3 billion.
The Deputy Chair: Yes, and that's a
Mr. Panda: Yes. During this economic
downturn, even now, Alberta, British Columbia and Saskatchewan are getting
zero dollars, including Newfoundland and Labrador, they're getting zero
dollars, whereas Quebec is getting $10 billion even now.
The Deputy Chair: But the biggest province,
Ontario, which for years was the industrial heartland of the country, is now
a have-not province.
Mr. Panda: Yes.
The Deputy Chair: In those cumulative
years, Ontario would probably only be part of that equation for the last
three or four years or whatever.
Mr. Panda: Yes.
The Deputy Chair: From now into the future,
in the short term anyway, it looks like Ontario is going to continue to be a
have-not province. The potential of Ontario to suck a lot of money out of
the equalization program is substantial, and there's just not going to be
the money there to replace it.
Mr. Panda: Yes. That's unfortunate. That's
why Wildrose commissioned an independent equalization panel. Those are not
politicians or pro-Wildroses; these are independent experts in economy, in
calculating royalties and all other subjects. These are the experts, and
they're giving us the report after reviewing whether the formula used to
calculate these equalization payouts is still fair, even now after so many
years, because it's not working for us in Alberta.
We asked them to review and give their
comments, so we're getting that in the fall. Once we get that, we can share
it with you. It's not any partisan report; it's independent, not done by us,
expert report, just to check the fairness of that formula, whether it meets
the current needs or not.
The Deputy Chair: I want to reassure you
that I think most Canadians appreciate the substantial contribution Alberta
has made to this country in the last 40 years.
Senator Mercer: Hear, hear.
The Deputy Chair: I think most Canadians
want to help Alberta and their own country in getting this product to
market. I want to reassure you that this committee will do everything it can
in a reasonable and professional way to get that point across to the federal
I want to thank you both for being here.
Mr. Panda: Thank you for having us and for
visiting Alberta, the heart of our energy sector. You took time to come and
hear from Albertans, and we want to thank you.
If you could take back our concerns for us,
time is of the essence. We have to get approvals for these projects in a
timely fashion, particularly when our Prime Minister is telling the world
that he is there to help everyone, but here in Canada, we should help