THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Thursday, October 30, 2025
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:01 a.m. [ET] to examine and report on Newfoundland and Labrador’s offshore petroleum industry; and, in camera, for the consideration of a draft agenda.
Senator Josée Verner (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: Honourable senators, before we begin, I would like to ask all senators to consult the cards on the table for guidelines to prevent audio feedback incidents.
Please make sure that your earpiece is away from all microphones at all times. Do not touch the microphone. Activation and deactivation will be managed by the console operator. Please avoid handling your earpiece while your microphone is on. Earpieces should either remain on the ear or be placed on the designated sticker at each seat.
Thank you for your cooperation.
My name is Josée Verner. I am a senator from Quebec, and I am the deputy chair of the Standing Senate Committee on Energy, the Environment and Natural Resources.
I would now like to ask my colleagues to introduce themselves.
[English]
Senator Arnot: Good morning, everyone. My name is David Arnot. I’m a senator from Saskatchewan.
Senator Fridhandler: Daryl Fridhandler, senator from Alberta.
Senator D. M. Wells: David Wells, from Newfoundland and Labrador.
Senator McCallum: Mary Jane McCallum, Treaty 10, Manitoba region.
[Translation]
Senator Youance: Suze Youance from Quebec.
[English]
Senator Lewis: Todd Lewis, Saskatchewan.
[Translation]
Senator Aucoin: Réjean Aucoin from Nova Scotia.
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
The Deputy Chair: I would like to welcome everyone who is with us today, as well as those listening to us online on sencanada.ca.
Today, pursuant to the order of reference received from the Senate on October 8, 2025, we are pursuing our study of Newfoundland and Labrador’s offshore petroleum industry. We welcome via video conference representatives from the Canada Energy Regulator: Darren Christie, Chief Economist, Transparency and Strategic Engagement; Keith Landra, Chief Safety Officer, Technical Excellence; and Mike Johnson, Technical Leader, Energy Supply and Data.
We also welcome via video conference Wesley Foote, retired professional engineer.
I welcome you and thank you for accepting our invitation. You will have five minutes to make opening remarks, after which we will move on to a question and answer session.
[English]
Darren Christie, Chief Economist, Transparency and Strategic Engagement, Canada Energy Regulator: Good morning, members of the Senate committee. Thank you for inviting the Canada Energy Regulator, or CER, to appear as part of your study on Newfoundland and Labrador’s offshore petroleum industry.
I am accompanied by Keith Landra, our Chief Safety Officer, and Mike Johnson, Technical Leader for Energy Supply and Data.
I want to begin by acknowledging that I am appearing before you today from Calgary, located within Treaty 7 territory, the traditional territories of the Blackfoot Confederacy, which includes the Siksika, Piikani and Kainai First Nations. Treaty 7 is also home to the Tsuut’ina First Nation, and the Stoney Nakoda, including the Chiniki, Bearspaw and Goodstoney Nations. We would also like to recognize the Métis who have settled in southern Alberta and call this place home.
[Translation]
In my remarks today, I will speak about three topics and how these relate to your study of Newfoundland and Labrador’s offshore petroleum industry: first, the CER’s mandate and jurisdiction; second, the CER’s cooperation with offshore regulators in Atlantic Canada; and third, the CER’s mandate to produce energy information.
[English]
The CER’s mandate is to regulate energy infrastructure, specifically international and interprovincial pipelines, international power lines, and offshore energy projects and power lines in a way that prevents harm and ensures the safe, reliable, competitive and environmentally sustainable delivery of energy to Canada and the world.
[Translation]
With respect to the offshore activities, the CER has regulatory responsibilities for oil and gas exploration in those parts of Canada’s north and offshore that are not governed by a joint federal-provincial management regime.
[English]
This means that we regulate, among other things, drilling, testing, producing from, and abandonment of, oil and gas wells in the Canadian Arctic offshore, the Hudson, James and Ungava Bays, the Gulf of St. Lawrence and the British Columbia offshore. We regulate these activities under the Canada Oil and Gas Operations Act.
[Translation]
Currently there are no active drilling and exploration programs or producing facilities in offshore areas under the CER’s jurisdiction.
[English]
Under the applicable Atlantic Accord Implementation and Offshore Renewable Energy Management Act, the Canada‑Newfoundland and Labrador Offshore Energy Regulator, or C‑NLOER, have regulatory jurisdiction over the exploration and development of offshore petroleum resources in the Newfoundland and Labrador offshore area.
Our colleagues at the C-NLOER are best suited to answer questions about regulation of Newfoundland and Labrador’s offshore petroleum industry, while we can answer questions on how the CER regulates facilities within our jurisdiction.
[Translation]
We can also speak to our expertise with regard to our energy information function, including information and analysis relating to Newfoundland and Labrador’s offshore petroleum industry.
[English]
Though we do not have regulatory responsibility for the offshore petroleum industry in Newfoundland and Labrador, the CER does collaborate with the Atlantic offshore regulators through initiatives such as the Frontier and Offshore Regulatory Renewal Initiative, which is a federal-provincial partnership working to modernize the regulatory framework for frontier and offshore oil and gas activities in Canada.
We also have memorandums of understanding with the Atlantic offshore regulators, which are currently being updated. The MOUs, the memorandums of understanding, focus on regulatory cooperation and sharing best practices and relevant data.
[Translation]
Taken together, this helps establish a robust, clear and consistent regulatory framework for the oversight of offshore oil and gas activities across all of Canada’s offshore areas.
The CER also has a mandate to produce energy information. We supply data and analysis that clarifies energy-related decision-making and dialogue in Canada.
This includes publishing information and analysis on the petroleum industry in all of Canada’s regions, including the offshore areas of Newfoundland and Labrador.
[English]
For example, we develop provincial-territorial profiles where we summarize energy in every province and territory. We write market snapshots to highlight key trends in Canada’s energy sector. We issue Canadian oil and gas production statistics aggregated from the provinces. We publish our flagship reports called Energy Futures to examine what energy consumption and production might look like in Canada over the coming decades. In addition, we continually monitor oil and gas markets so we can publish up-to-date information and advise our federal partners.
[Translation]
I will conclude by thanking you for the opportunity to speak to you today about the Canada Energy Regulator’s work.
[English]
We look forward to your questions.
Wesley Foote, Professional Engineer (Retired), As an Individual: Good morning. Thank you for this opportunity to appear before your committee this morning. I really appreciate you accommodating my virtual participation. I am at the office of the Canada-Newfoundland and Labrador Offshore Energy Regulator, or C-NLOER, in St. John’s, Newfoundland and Labrador, in the traditional territories of diverse Indigenous peoples. I acknowledge with respect the histories and cultures of the Beothuk, Mi’kmaq, Innu and Inuit.
I was invited here in my former capacity as co-chair of the Regional Assessment of Offshore Oil and Gas Exploratory Drilling East of Newfoundland and Labrador, which was completed in February 2020.
I should also note that I currently serve as a board member of the C-NLOER, whose chief executive officer and chief safety officer appeared before you on Tuesday evening.
Members may be interested to know that I have 45 years of private and public sector oil and gas experience, including in industry, education and as the former assistant deputy minister of petroleum development with the Government of Newfoundland and Labrador. Much of my professional life was spent working in the public interest in matters involving the Canada‑Newfoundland and Labrador Offshore Area. So, I have a broad understanding of the technologies and practices of the oil and gas sector in this part of the world, along with its economic importance, challenges and opportunities.
The regional assessment that I was appointed to co-chair was the first conducted under the Impact Assessment Act, 2019, or its predecessor, the Canadian Environmental Assessment Act, 2012. I can say with certainty that our regional assessment successfully improved the efficiency of the environmental assessment process as it applies to oil and gas exploratory drilling, while all the time maintaining the highest standards of environmental protection.
It did so by building upon the experience and knowledge gained from previous projects and using technology to build a tool for efficient presentation of data in time and space. It continues to reduce duplication in processes and information with more efficient project reviews now enabled through a ministerial regulation that excludes exploratory drilling from the requirements to undergo a project-specific federal impact assessment.
The exemption is limited to a specific offshore area and is conditional on compliance with a series of conditions focused on protecting the environment and ensuring meaningful Indigenous engagement.
The federal Crown consultation approach for the regional assessment was described in publicly available documentation that sets out the approach that was undertaken with Indigenous Peoples.
While our five-member committee disbanded following the submission of our final report, a regional assessment follow-up program was established by the Government of Canada and the Government of Newfoundland and Labrador. It continues to monitor and report on the implementation and effectiveness of the various outcomes of the regional assessment, including commitments made in the associated ministerial response.
The regional assessment follow-up program ensures that the information and analysis remain valid and up to date, and that it continues to fulfill its intended function of informing decision making as it pertains to exploratory drilling and associated activities in the study area.
Its reports are publicly available, and the C-NLOER also hosts the geographic information system, or GIS, decision-support tool that was developed as part of the regional assessment referenced earlier.
I should note that I was not a part of the Regional Assessment of Offshore Wind Development in Newfoundland and Labrador, although I followed that work with interest in my capacity as a C-NLOER board member in light of our expanded mandate.
I would be remiss if I did not take this opportunity to once again thank the then Regional Assessment Committee co-chair, Garth Bangay, as well as our committee colleagues, the task team and technical advisory groups who worked so diligently with us and everyone who contributed to our regional assessment.
I would also like to thank members of your committee for your interest in the Canada-Newfoundland and Labrador Offshore Area, and for inviting me to meet with you.
I would be pleased to take your questions. Thank you.
[Translation]
The Deputy Chair: Thank you for your presentations. We will now move on to the question period. I propose that five minutes be given to each member in this first round, including the question and the answer. We will have a second round if time permits.
Senator Miville-Dechêne: My question is for Mr. Foote.
[English]
Thank you for being here. Since you were there during the regional evaluation, you have gained expertise.
[Translation]
My question is this: What lessons did you learn from your experience in 2020 when you did the regional assessment? What lessons have you learned, positive or negative? What should be done better? It’s clear from our notes that, at the time, you felt that you did not have enough time to do the work or to take things further.
Second, what did you find out about the assessment? What aspects of environmental assessment needed to be fixed?
[English]
Mr. Foote: Thank you. In terms of lessons learned, as you correctly pointed out, the project area was some 750,000 square kilometres, which is a very large space. Within that, we had historic wells. We had some data, but much of the area was data poor. Trying to match that up was definitely an issue.
The time given was problematic. The committee was a little bit late getting started. It didn’t start until April. There was a request for an extension of time, which was granted. That helped bring us to the finish line.
In terms of what we discovered, some of which I touched on, the massive expansive area that exists there, of course, is not the whole Newfoundland and Labrador offshore area. It’s a portion of that. Being able to put all of that together, the biggest discovery that comes to mind for me was that what we saw in terms of the environmental assessments that were occurring before the regional assessment seemed to be cookie-cutter type assessments that were lengthy. There was a lot of cut-and-paste. Our approach was to try to change that and get the information out in a different format. Part of that was the GIS decision support tool that we created.
Senator Miville-Dechêne: Your last two sentences were somewhat technical. Tell me how should it be changed? I ask because it is still happening. There was another evaluation in March 2023. What should be improved in order to have a better evaluation? What do you think? You are retired now. You can tell us what you think. Please be open about what should be improved. That’s part of why we are asking you questions.
Mr. Foote: Yes, most certainly. I’ll go back to the GIS, which is a geographical information system. In previous reports, there were literally thousands of pages of documents. As an example, I will just use one species. Let’s just say shrimp fishing. There would be maps over time showing where and when that fishing occurred and in that particular area what the impact was in terms of time and space.
Once we were able to develop this GIS decision-support tool, all that information, all that data over time — catches, frequencies, water temperatures, et cetera — was presented on a GIS platform that you could query and ask: What is the fishing of shrimp during these particular months, these years? Is it more? Is it less? It’s a very smart tool that enables us to look at a host of data. That was a game changer.
Senator Miville-Dechêne: Thank you.
Senator Arnot: Mr. Foote, in your professional view, do you believe Canada is underestimating stranded asset risk for offshore projects, particularly if global oil demand peaks sooner than assumed?
If you were advising Parliament, would you warn that existing CER and Natural Resources Canada models are overly optimistic about offshore competitiveness beyond 2035?
Are current environmental emergency and response systems designed for worst case — “black swan events” — or best-case probability models from the past decade?
If you don’t have time to answer those today, I would ask that you put your answers in writing and submit them to the clerk, but I’m happy to hear your answers to those questions.
Mr. Foote: Thank you, Senator Arnot. Is Canada underestimating our stranded reserves?
Senator Arnot: Stranded asset risk.
Mr. Foote: As we move through the transition, which is the period we are going through, and we see our earlier targets of 2030 are now being pushed ahead a little by various operators and countries and our deepwater assets are being targeted mainly because the elephants are located in our offshore. The notion of underestimating this, we know what we have, and it is important to continue to try to develop this.
Is the CER and Natural Resources overly optimistic? Could you repeat your question, please?
Senator Arnot: If you were advising Parliament, would you warn that existing CER and Natural Resources Canada models are overly optimistic about offshore competitiveness beyond 2035?
Mr. Foote: I don’t think we are overly optimistic in terms of our competitiveness. There has been quite a lot of work that has been done with respect to our regulatory environment. An example is the regional assessment that has brought Canada in line with other international jurisdictions. I’m reasonably accepting that this is not overly optimistic.
In terms of our current emergency response, a lot of work has been done, particularly in this area, on emergency response and oil spills. We are, in my mind, in terms of what technologies are available, continuing to do desktop exercises, continuing to try to improve the equipment and our systems so people are talking to one another in terms of the Coast Guard, the regulators, Transport Canada. I’m confident a lot of work has been done in recent years to keep us on top.
Senator Arnot: Mr. Johnson, will the CER publish a clear public comparison of emissions intensities, netbacks, and market risks between offshore Newfoundland and Western Canadian production?
Mike Johnson, Technical Leader, Energy Supply and Data, Canada Energy Regulator: I can say right now that I don’t expect to, but I’ll pass this to Darren. He has a high-level view of what we will be publishing and what we won’t.
Mr. Christie: Could you repeat the question? It was about emissions intensity.
Senator Arnot: Will the CER publish a clear public comparison of emission intensities, netbacks and market risk between offshore Newfoundland and Western Canadian production?
Mr. Christie: As part of our energy information program, we aim to provide a range of relevant information. If you look at, for example, our last Energy Future report, we did speak to the emissions intensity of the offshore Newfoundland through time in the different scenarios. Then as part of our analysis, we certainly factor in the assumed global prices as well as benchmarks.
I would say that as part of that Energy Future series, we do aim to provide that kind of transparent analysis. The last report was June 2023, and we are also working on our next version of that report.
Senator D. M. Wells: Thank you, witnesses.
Mr. Foote, before I ask my question, I want to thank you for your years of service in the offshore industry in Newfoundland and Labrador. You and I have worked together over the years, and I appreciate what you have done.
Could you talk a little bit about the new technologies that we have seen over the years in offshore drilling and production, things such as venturing into deeper water, directional drilling, those extensions we have on a number of the fields and how that might affect the longevity of our offshore?
Mr. Foote: Thank you, Senator Wells. It was always a pleasure working with you.
Yes, new technology. In brief terms of older technology, pretty much drill vertical wells. If the reservoir was 20 metres thick, then the pay zone that you intersected on a vertical well was 20 metres. As technology progressed, we started doing more slanted drilling, then got down to horizontal drilling where the same reservoir that is 20 metres thick could be intersected by a horizontal lateral that is hundreds or thousands of metres long.
In terms of extended-reach drilling from the Hibernia platform, we are well over 8 to 10 kilometres away from our target from the drilling rig. That’s certainly a technological improvement.
The typical scenario with drilling technologies, Senator Wells, was that you would use drilling mud. Basically, that mud was a combination to balance the pressures and get rock cuttings back to surface.
Nowadays, at Hibernia and at Hebron, they are using managed pressure drilling techniques where we are cognizant that these fluids can do damage to the reservoirs. If we can maintain a close pressure balance at the reservoir level, less damage could occur. Technologies such as that are continuously improving our recoveries.
Senator D. M. Wells: Thank you. I have a question as well for Mr. Johnson on energy supply and data.
With the amount of reserves and production that Canada has — it is among the top in the world — why do we still import petroleum resources from other countries?
Mr. Johnson: That has more to do with how oil has been transported around and on markets in general. Most of our production is in western Canada. We do actually supply quite a bit of western Canadian production to refineries in southern Ontario, and Line 9 can reach all the way into Quebec.
A lot of oil does flow to those places, but we still need to import in places, say, like the Irving refinery. It is connected to tidewater, and it has options. It can use oil from offshore Newfoundland and Labrador, or Valero’s Jean Gaulin Refinery in Quebec City. The Montreal refinery is, as well, connected to tidewater. These two refineries can use the offshore oil, but they have so many options. They can pick whatever grades suit them best in the international markets.
Really, that’s why we still import; it’s the options that those refineries have. Yes, they can get that Newfoundland and Labrador oil when they want it, but sometimes they might be getting oil from somewhere else. Just to put it into perspective, I think, in 2024, they used about 30,000 barrels per day, coming from Newfoundland and Labrador. I can’t remember the total capacity, but I would hazard a guess at maybe 500,000 barrels per day. They don’t use a heck of a lot.
We can get that total number to you. We can do some work offline and get that total capacity of the three refineries.
Senator D. M. Wells: That would be helpful.
My final question is to Mr. Christie. Do you measure the consumption and production for energy of more than just oil? Do you do hydro and solar and other energy sources, or is it just petroleum?
Mr. Christie: Absolutely. As part of that energy future series where we’re looking out to the decades ahead, we’re looking at all energy sources across each province and territory, all types of electricity, hydrogen, natural gas, oil. We effectively do it all.
Senator D. M. Wells: Thank you. With the rapid expansion of the electricity needs in the data centres and AI world, have you factored that in? Because that’s a fairly recent draw on the electricity capacity in North America.
Mr. Christie: Yes, absolutely. I mentioned June 2023. A lot has changed in that regard since then. It wasn’t really a significant point on the radar when we released our last set of projections. It is one of the significant points that we’re looking at as we recalibrate our focus for this next report. The data centres are a significant piece, and there is a lot of uncertainty there, but it is something that we intend to explore in the next Energy Futures report.
Senator D. M. Wells: Is that an annual report?
Mr. Christie: The frequency has varied. It has often been biannual, depending on the cycle that we’re in, so, yes, it varies depending on what’s going on in the market and the uncertainty that’s out there.
Senator D. M. Wells: Okay. Thank you.
Senator Fridhandler: Mr. Foote, thank you for appearing today. It’s good to speak with someone who has a long association with what has gone on offshore in Newfoundland. My colleague, Senator Wells, has stolen my question on technology and what you have seen over the years. I’ll put a different twist on the different drilling technology and ask you to comment on the reservoir recovery technology that might currently exist in the market or might be thought of relative to going beyond primary recovery and ways to repressurize the reservoirs to have greater recovery.
Mr. Foote: Thank you very much. Most certainly. If we look at traditional reservoirs under primary recovery, recovery rates of 10% or 15% would be expected. In our offshore system, from the onset, a development plan must be submitted. In that development plan, we look at how the operators plan to maximize recovery.
Right from the get-go, we look at methods, depending on the scheme. Water injection could start immediately as wells come on stream, basically to fill the voidage left by the oil that has been removed and therefore to maintain pressure. Gas injection is also utilized, and, again, that technology helps sweep oil.
Our recoveries are much higher. In fact, in some of the best blocks at Hibernia, we are approaching 80%. A lot of work has occurred recently at Memorial University with respect to enhanced oil recovery, and it’s all about injecting certain chemicals, surfactants, et cetera, to try to extract those last bubbles of oil that are trapped in the reservoir. Yes, that’s what’s occurred over time.
Senator Fridhandler: Thanks. I have a follow-up question, again for Mr. Foote, although I welcome the CER people to pipe in.
Generally, I’m interested in understanding what impediments you see to further exploration, whether they be regulatory, economic or royalty regimes. What do we do to see greater activity and more economic benefit to Newfoundland and Canada from the Newfoundland offshore?
Mr. Foote: Some of the impediments we have seen are in our regulatory system. In fact, if we look back over time to the original Canadian Environmental Assessment Act, or CEEA, the offshore boards were designated as responsible authorities under that act. That meant the regulator could undertake the environmental assessment matters on behalf of the government. The Canadian Environmental Assessment Act of 2012 removed from the offshore regulators the ability to conduct that within their own offices. Then environmental assessments were actually formed by the Canadian Environmental Assessment Agency. Then that was followed by the Impact Assessment Act of 2019, which again drove the timelines.
I recall the then Newfoundland and Labrador Oil and Gas Industries Association conducting some work leading up to the regional assessment, showing the differences in times in other jurisdictions to get an environmental assessment done. The times ranged from about 20 to about 150 days in other jurisdictions. At that time, two wells were in process in Newfoundland for over 900 days. So, it took 900 days of environmental assessment to drill a 30-to-60-day well.
The good news out of that, though, was that the regional assessment, as an example, without taking away any of the requirements for the protection of the environment, reduced that time to be competitive with other jurisdictions.
Senator Fridhandler: Thank you.
Senator McCallum: Thank you for being here to answer our questions.
In the International Energy Agency’s latest report, Oil 2025 the organization projects that global oil demand growth will peak by 2030. Do all of you believe that? When I look at that it will peak, I think we’re going to need oil for a long time. I look at electricity. The country is not ready to go electric. I have spoken to people in Manitoba about what the needs are if electric comes in. We’re looking at extreme weather events, where there is drought, and it is First Nations that are suffering. So will it peak by 2030? Because it seems that everything is being driven by that, and if we are truly looking at what is best for Canada and you look at the different between light oil and heavy oil, then we really need the information so the committee can decide instead of working with what is. And you look at wind turbines, and when we did Bill C-49, they told us it would take 10 years to do that project.
What are the medium- and long-term opportunities for new oil supply and export projects offshore Newfoundland and Labrador? There is no refinery in Newfoundland and Labrador capable of turning the oil produced offshore into refined petroleum products. What are the economics of having a refinery in Newfoundland and Labrador, or are there more benefits to exporting oil internationally, and what are some of the pitfalls?
The Deputy Chair: And you are asking the question to?
Senator McCallum: I think a lot to Mr. Christie, but if I could have all of them answer the question of do they believe oil will peak by 2030?
Mr. Christie: Sure. Happy to speak to that. Thanks for the question.
I’ll start by saying that as we look ahead, the question that you are getting at is an uncertainty. There is not one view. The Canada Energy Regulator does not have a particular view. When we look ahead, our approach is to use a set of scenarios that provides a range of possible futures, and the way that we reflect that, specifically when it comes to international oil demand, is the price assumptions, because ultimately Canada is a significant exporter of crude, and, therefore, it is really the international prices that are driving the economics of production both in the Newfoundland offshore and in the Western Canada Sedimentary Basin. The approach that we took in our last Energy Futures report was we had quite a range in prices. As we look out ahead, we used the International Energy Agency’s own scenarios that they had developed based on different outlooks of global oil demand and the prices that they associated with that. What we saw was it does have quite an impact on the level of production, more so in some respects than even the policy within Canada. It is really a critical factor in the level of supply that we project.
I know that doesn’t provide a clear answer. If I could, I absolutely would. The reality is that there is uncertainty there, and we see it as important to provide kind of a range of what the future might look like depending on what might happen with respect to things like global oil demand.
Senator McCallum: Did anybody else want to make comments on that?
Mr. Johnson: I will add to that. When we do our work, Mr. Christie correctly identifies the IEA as a source of some of the things that we do, but we have other information providers as well. There are others who say that oil demand peak might be coming in the early 2030s, so it seems like maybe then — we know China is decarbonizing. Fifty percent their vehicle sales are now electric. But we have to think about the Canadian situation versus the global situation. These can be two very different things. Mr. Christie is absolutely right.
In our modelling, we can potentially hit our net-zero targets by 2050 and we can produce a lot of oil while doing it for those export markets. But, on the other hand, that is only if the demand is there for it. If there is not demand for it, we don’t have a market. It makes it much harder. Oil prices fall, and new projects probably wouldn’t break even and they would never get started.
Now, finally, as to your question about the refinery in Newfoundland, the refining market is incredibly competitive, and sometimes it may just be economically more efficient to use products produced in the Maritimes Basin, probably from the Irving refinery, than to start up another refinery in Newfoundland and Labrador. Of course, these are all market decisions. Different market players will come in, and if they think they have a business case, they will try it. So there may be more economic efficiency to exporting rather than refining, and maybe this is what the market has shown us by the Come By Chance oil refinery closing and reopening as a biofuels facility and then unfortunately closing again.
Mr. Christie: I was just going to add — and I think this was consistent with your question, senator. The demand for oil even in the scenarios and the expectations that some groups have for it peaking, the expectation is, generally, that demand sticks around, and often we hear quite a focus on when the peak will be. But, importantly, it is what happens thereafter as well, and to the extent that it is quite a resilient demand — notwithstanding that it is no longer growing — there is still significant need for barrels in the world. Our analysis has shown that Canada can be quite competitive going forward even in some lower-price environments.
The Deputy Chair: Thank you.
Senator Lewis: My question is more toward the peak oil piece as well. We met a representative from the Canadian Energy Regulator talking about AI and how that has changed the picture on demand of electricity. In many ways, with oil, there are so many different geopolitical things going on — the Russian situation right now and how much oil was exported out of Russia, and it seems like it is not going to be available with some of the recent changes there as far as putting pressure on Russia not to be able to export their product. Would you have a comment on that?
Mr. Christie: Specifically on the Russian piece, I don’t have a particular comment to offer. Overall, I think it is certainly the case that there seems to be a consensus view right now that there is a lot of supply in the near term, and we’re seeing that in the significant pricing pressures on crude oil. Longer term, that’s where more uncertainty comes in. As I mentioned earlier, that’s the sort of thing where our approach is to look at scenarios because it is just quite difficult to have a clear picture of where prices, demand and global supply balances will go.
Senator Lewis: I think it speaks to jurisdictions like Canada that have good rules in place, a stable government and everything else. Canada can be a supplier of petroleum products to export position and be seen as a good, reliable supplier.
The other thing I would like to just touch on: We have the regulatory partnership between the federal and provincial government. Is that fairly seamless? If there are problems, how do you deal with them? You have obviously had some success. Going forward, do you see that there will be much difference between where you are now and into the future?
Mr. Christie: Is that a question perhaps for Mr. Foote, if you are asking about the C-NLOER?
Senator Lewis: Sure, whoever has a comment on the partnership between federal and provincial.
Mr. Foote: Certainly. The basis of that partnership is the Atlantic Accord, and I know in my position with the provincial government as assistant deputy minister, relationships were cordial, but every visit to Ottawa I had to remind them that this was a joint management regime and that there are differences between offshore Newfoundland and Labrador, offshore Nova Scotia, for example, and certainly with respect to the Canada Energy Regulator and their jurisdiction in the North, quite a lot of differences.
In terms of that relationship, when you start looking at some of the work that we did — occupational health and safety comes to mind as an example — there were a lot of bodies around that table, when you look at the provincial, the federal, the regulators and then bringing in occupational health and safety, those other departments. It requires a lot of diligence and it can be a slow process. It is not for the faint of heart to take that on. But in the end, we had a lot of victories.
Senator Lewis: Thank you.
[Translation]
Senator Aucoin: Thank you to the witnesses. I would like to continue in the same vein as Senator Lewis. Given that oil demand is likely to decrease with the advent of electric products, such as electric cars, will the exploration program in Newfoundland and Labrador continue to be competitive in the future? That’s my first question for whoever wants to take a stab at elaborating on that.
[English]
Mr. Christie: Thanks for your question. Maybe I can start. I would say that when it comes to the long-term production from Newfoundland and Labrador — it is always a difficult thing to look out decades, no matter what type of energy we’re talking about, but that’s particularly the case given the nature of the big projects and the discoveries and the delay that can go between the discovery and production coming on. The last time we looked at this in Canada’s Energy Future 2023, across the different scenarios we did have Bay du Nord coming on stream, so that had supply growing in the late 2020s. Then after about 2030, we did see a decline, and that was based on the natural decline rates, and then a projection that we wouldn’t see significant new production coming on after that.
I could perhaps invite Mr. Johnson to elaborate a bit on that.
Mr. Johnson: Mr. Christie is correct. We had production rising in Newfoundland and Labrador out to 2030 and then declining after that because of those natural declines and no new production added after that. If you want to think about what Newfoundland and Labrador production would look like in a world with significantly lower demand, that’s probably what it would look like.
In terms of energy transition, it can be faster in that instance or it might be slower as well. Or, maybe the world hits the 2050 targets but it becomes a prolonged decline in emissions and a prolonged decline in oil demand. In those instances, prices get higher. It is possible that we do not have an additional field come online in our Energy Future report, but maybe after 2030 a discovery will be made and one comes online. We know there is still going to be some exploration in the Orphan Basin. We know that Equinor is still looking in the area around Bay du Nord. It is possible that we could see additional demand if it turns out to be that way.
I would say there is super-high uncertainty when it comes to that, and there are a wide range of possibilities, all of which are plausible. When we make these forecasts, I want to point out that each scenario is one possible pathway. These are not meant to be: This is exactly what is going to happen. There are wide error bars in this particular instance.
[Translation]
Senator Youance: I have a question for Mr. Christie, and you can answer the first part of my question in writing. How much oil do eastern refineries import? Also, what is it worth? Second, how much would an upgrade cost to process 100% of our Canadian oil locally? You could answer my question in writing if you have some data. Also, is it an economically viable option to process Newfoundland and Labrador’s oil?
The second part of my question is this: Is it viable for all sources of oil in Canada? I would also like to know whether it is viable given the uncertainties in demand and in the international market. We were saying a little earlier that demand would vary over a number of years.
[English]
Mr. Christie: Thanks for that question. In terms of the refineries in the East and the value and number of imports, we can speak generally but happy to follow up with precise numbers. I will say that in terms of the cost to have all consumption be Canadian, that’s not an analysis that we have done. Depending on the refinery, it might involve estimating infrastructure needs, and that’s, unfortunately, not something that we have done. So we wouldn’t be able to provide that.
More broadly, I would say that in the eastern refineries, there is generally optionality in terms of the light crudes that are processed, which means that some of the volumes that are imported could be sourced from Newfoundland and Labrador’s offshore production or some Western Canadian lighter barrels. But to the extent that what you were looking at is bringing some of the heavy oil from Newfoundland and Labrador or from Western Canada, that optionality isn’t there at present. It would involve some significant retooling of refineries, again, the cost estimates for which we don’t have. As I say, happy to follow up with those numbers on the value and number of the imports. That is certainly something we have.
[Translation]
The Deputy Chair: Thank you.
[English]
Senator Arnot: Mr. Landra, I’ll ask two questions in 60 seconds and you can put your answer in writing, as you probably won’t have time to answer them now.
Mr. Landra, what have been the top two systemic safety risks that the Canada Energy Regulator has identified in offshore operations? How are those being quantified and audited?
Secondly, is the CER satisfied today that spill response infrastructure is sized for worst-case scenarios and not average‑case probabilities?
Keith Landra, Chief Safety Officer, Technical Excellence, Canada Energy Regulator: Thank you for your question, senator. We can certainly return to you with a fulsome answer.
The big risk in offshore exploration is certainly the risk of a blowout. There is a variety of mitigation to prevent such an occurrence and a variety of responses to minimize the duration of the occurrence.
With respect to spill response, certainly, as part of the contingency planning of any activity, spill response plans are required. We look at the worst-case scenarios and how many thousands of barrels per day, and we expect a company to plan for various scenarios, including that. We can provide more of a response in writing later.
[Translation]
The Deputy Chair: Thank you. On behalf of my fellow committee members, I would like to thank you for taking the time to meet with us today.
Colleagues, this concludes the public portion of this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. We will now suspend the meeting for a few minutes while we go in camera to continue our work.
(The committee continued in camera.)