THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Tuesday, November 4, 2025
The Standing Senate Committee on Energy, the Environment and Natural Resources met with videoconference this day at 6:30 p.m. [ET] to examine and report on Newfoundland and Labrador’s offshore petroleum industry.
Senator Joan Kingston (Chair) in the chair.
[English]
The Chair: Before we begin, I’d like to ask all senators to consult the cards on the table for guidelines to prevent audio feedback incidents. Please make sure that your ear piece is away from all microphones at all times. Do not touch the microphone; the activation and deactivation will be managed by the console operator. Finally, please avoid handling your earpiece while your microphone is on. Earpieces should either remain on the ear or be placed on a designated sticker at each seat. Thank you all for your cooperation.
[Translation]
I would like to begin by acknowledging that the land on which we gather is the traditional, ancestral and unceded territory of the Anishinaabe Algonquin Nation.
[English]
I’m Joan Kingston, senator from New Brunswick and chair of the Standing Senate Committee on Energy, the Environment and Natural Resources. I’d now like to have my colleagues introduce themselves.
Senator Arnot: I’m David Arnot, a senator from Saskatchewan.
Senator Galvez: Rosa Galvez, Quebec.
Senator D. M. Wells: David Wells, Newfoundland and Labrador.
Senator Fridhandler: Daryl Fridhandler, Alberta.
Senator McCallum: Mary Jane McCallum, Treaty 10 territory, Manitoba.
[Translation]
Senator Youance: Suze Youance from Quebec.
[English]
Senator Lewis: Todd Lewis, Saskatchewan.
[Translation]
Senator Aucoin: Réjean Aucoin from Nova Scotia.
Senator Verner: Josée Verner, deputy chair, Quebec.
[English]
The Chair: Thank you for being here. I’d like to introduce our witnesses.
Today, pursuant to the order of reference received from the Senate on October 8, we’re pursuing our study of the Newfoundland and Labrador offshore petroleum industry. We have two individuals: Brian Veitch, Professor, Memorial University of Newfoundland; and Lori Lee Oates, Assistant Professor, Memorial University of Newfoundland, by video conference. Welcome, and thank you for being here this evening.
You’ll have five minutes each to make opening remarks, starting with Mr. Veitch, to be followed by Ms. Oates. Mr. Veitch, if you would like to begin.
Brian Veitch, Professor, Memorial University of Newfoundland, as an individual: I’m going to read some brief opening remarks that are really intended to introduce myself to you, which I hope will focus your questions to me on things about which I might have some insight.
I’m a professional engineer. I work for Memorial University in the Faculty of Engineering and Applied Science. I’ve been there for 28 years. I teach in the Department of Ocean and Naval Architectural Engineering. This is a unique program in Canada. Our graduates are well regarded in industry, particularly the offshore energy sector, the shipping industry and the maritime defence sector.
As a professor at Memorial, I have been a research chair for much of my career. I started in 1998 as the Terra Nova Project Junior Research Chair. I subsequently became the Cenovus Energy Research Chair, a position I still hold. Both chairs are funded by the offshore energy industry.
My research over the years — perhaps what I can speak to best — has been inspired by missions: one, to improve the safety of life at sea, particularly for the people who have to work at sea; two is to safeguard the ocean environment. My research group typically comprises 12 to 15 people, typically graduate students. The financing for my research comes from a variety of sources, notably NSERC, as well as contributions from various industry partners and other research organizations. The offshore energy sector has been well represented among my industry partners, typically in cooperation with smaller technology companies.
That’s really all I wanted to say about myself. I did write a brief about three of the four points that are in the scope of this study. I gave my briefing notes to the clerk of this committee. I think she’ll circulate it to you at some point. I’ve tried to summarize some of those points here in my opening remarks just to get those things on the table.
The first is that offshore petroleum projects are, from my perspective, marvels of engineering and of operations. Second, the industry regulatory regime in the Newfoundland offshore is mature and, in my opinion, among the best jurisdictions in the world.
In terms of the significance of the industry to the province, I would say it’s a profoundly important contributor to the development of the province’s workforce over the last 40 years. It is the single most important contributor to the economic well-being of the province, and it is a major contributor to the research, development and innovation landscape in the province and in Atlantic Canada and perhaps even extending across the country.
I hope I didn’t go over my five minutes.
The Chair: Thank you. Now, Ms. Oates, go ahead.
Lori Lee Oates, Assistant Professor, Memorial University of Newfoundland: Thank you for the opportunity to appear before you today on these important topics. I come before you not only as a professor at Memorial University but as a Newfoundlander and Labradorian.
In our province, oil extraction was estimated to represent 15.4% of the total gross domestic product in 2023. It also creates spinoffs in the construction sector, which represents another 8.3% of the provincial economy. Newfoundland and Labrador continues to have the highest debt-to-GDP ratio in the country, at 45%. Without a doubt, oil is an important industry to the provincial treasury and the citizens of the province.
It is also an industry with a history of being unpredictable. Three times since first oil at Hibernia in 1997, the decline of global oil prices have seriously impacted our economy. While the ups and downs of oil prices have long been viewed as cyclical, what is happening in the present moment is something different. It represents structural change in the global economy. Carbon Tracker, an independent financial think tank, has called it “spiralling disruption” or the feedback loops of the global energy transition. Instability in the global oil industry is also driven by conflicts, such as those in Russia, Iran and Venezuela.
As someone who entered early adulthood during the period of the Cod Moratorium of 1992, I know well the dangers of depending upon a single industry as I watched my province go through what has been called the largest layoff in Canadian history, when 33,000 people were put out of work overnight.
During the final decade of the twentieth century more than 57,000 people, or 10% of the population, left Newfoundland and Labrador, those being mostly young people from rural parts of the province. That loss has been called “unprecedented in a developed country in modern times.” Many of the problems caused by that youth outmigration are still with us today. As we struggle with a declining tax base and aging population, our biggest challenge is arguably our demographics. If Newfoundland and Labrador ignores the political economy of oil in this moment, we are in danger of going down the same path again.
The International Energy Agency has predicted peak fossil fuels by 2030. In their words, “Continued growth in global energy demand post-2030 can be met solely with clean energy.”
The International Energy Agency forecasts are taken quite seriously, particularly by those in the energy industry. Research published in Nature Energy in 2021 has demonstrated that, upon reaching peak fossil fuels, the cheapest producers, likely OPEC countries, will simply be able to flood the market and quickly wipe out more expensive products in Canada. They predicted peak oil demand by 2031.
ExxonMobil is one of the most important operators in Newfoundland and Labrador as a partner in the Hibernia project and as an operator of Hebron. In September 2025, the company announced that they would be cutting 2000 jobs globally amid restructuring efforts. It has been estimated that 20% of jobs will be cut in St. John’s by 2027. Imperial Oil will be cutting 900 jobs in Canada by 2027, and ConocoPhillips is currently in the process of cutting jobs in Canada. Total numbers are not yet available.
We must all understand that we are at a precarious point in the shifting of the global economy. It is true that no one knows exactly what will happen with fossil fuels. However, the general direction seems to be clear. We are quickly approaching a period of decline in fossil fuels sectors, likely within the next five to ten years. Renewables will eventually overtake them as the main supplier of energy. Renewable energy is increasingly cheaper than fossil fuels, and cost is declining quickly. As stated by President Obama at COP26, the Paris Agreement was designed, in part, to help drive private sector interest in addressing climate change.
It is easy to wonder, what if the International Energy Agency or Nature Energy is wrong? Why should we listen to them? However, what if they are right and more than 15% of our gross domestic product is wiped out overnight? What if that happens and we’ve done nothing to prepare? We will be facing another cod moratorium as we still suffer from the outmigration that occurred after 1992.
The people of Newfoundland and Labrador deserve better preparation this time, especially since the writing has been on the wall for decades.
I welcome the opportunity to take your questions on these and other matters that relate to the Newfoundland and Labrador oil industry. Thank you.
The Chair: Thank you. We will start with questions.
[Translation]
Senator Verner: Thank you to our two witnesses.
My question is for Mr. Veitch. The Bay du Nord project, which is about 500 kilometres offshore of Newfoundland, was paused in 2023 owing to the significant costs involved. The federal government had approved the project in 2022. The implementation and development costs for the project were pegged at $12 billion. When it was paused in 2023, the costs had risen to $16 billion, an increase of $4 billion in one year.
According to your biographical notes, you specialize in offshore operations, making sure that they are safe and do not affect the marine ecosystem. What are the specific issues, including those related to safety and environmental protection? Could they account in part for the increase in the project’s costs and its launch being delayed? Furthermore, do you really think this project will be up and running before the end of the decade?
[English]
Mr. Veitch: I don’t know if we’ll see the project proceed before the end of the decade. I would guess it will. The exact nature of the increases in costs is unknown to me, but I would be very surprised if they were attributable to issues around safety, whether it’s safety of personnel or of the environment. It is more likely to be associated with construction costs. It’s far offshore, and it is in very deep water. Each of these developments has to be engineered uniquely for the circumstances, such as the depth of water, the distance from shore, these sorts of things. The type of oil or the type of gas are things that help shape the solution.
The solution to the Bay du Nord field will be unique, just like the solutions at Hibernia, Hebron, Terra Nova and White Rose have been unique solutions. I don’t know what it will look like. I suspect it will be a floating production system, but I don’t know why it’s as expensive as it is. All of these projects are very expensive. They’re big projects; they’re expensive.
[Translation]
Senator Verner: Thank you very much.
[English]
Senator Arnot: Thank you. I have some questions for this witness, but I also want to ask Professor Oates some questions in the second round.
Professor Veitch, from my research in this area before you came here, I think it is fair to say that Memorial University is the key academic institution for offshore engineering, marine safety and sustainable research in the country of Canada. Do you agree?
Mr. Veitch: Well, you’re being very kind, so I should agree. I certainly think that we’re unique in the country in terms of the fact that offshore engineering naval architecture pays attention to the offshore industry. We certainly have a lot of focus on safety issues. It’s been something that I’ve spent a lot of time dealing with.
In terms of the issues of sustainability and environmental protection, there is a lot of strength in this country in the academic community on those topics. It’s quite pervasive, so I don’t want to make any claims.
Senator Arnot: That’s fine. In your 28 years of experience, to what degree has academic risk research translated into regulatory enforcement? In your view, what are the biggest implementation gaps? To be fair, I’ve got two other questions, and because they can’t be answered in five minutes, I’m hoping that you might augment what you’ve already produced with the answer to these further questions.
Mr. Veitch: I’ll try to, perhaps in all of my comments, make personal anecdotes. You asked a question about safety and the regulation of safety. I don’t work for the oil industry; I work for Memorial University. I’m a researcher. I train highly qualified people who go and work in places like the petroleum industry, offshore wind, shipping, many places.
I have been invited to participate in some types of activities. For example, I did some work with the petroleum board and the Canadian Association of Petroleum Producers to develop a standard or a guideline specifically for offshore safety dealing with escape, evacuation and rescue. I found that to be a very nice committee. It was a big group. There were a lot of technical experts there, and we developed a really good standard. It was a performance-based standard, and I really enjoyed that work.
The reason I bring it up is because it drew on research that some people, including myself, had done. We were able to transition things from the academic community into the world, which is very rewarding to have some kind of practical impact.
You asked about implementation gaps. At the moment, it’s quite good. I think the regulatory regime, as it handles all the issues, actually, works very well.
Senator Arnot: Thank you. You’ve worked on the Arctic and extreme weather design. Are operators and regulators sufficiently incorporating climate-driven ocean changes like harsher storms and ice events into their structural and response models?
From a systems engineering standpoint, what is the single-most underfunded safety investment in offshore operations today?
Mr. Veitch: I teach design as well. My observations of the industry aside, I’ll tell you how we teach design to students who are going to be designing these things.
It used to be that you could get historical weather data, metocean data and kind of assume that it would be similar forever. You can’t do that any more. You have to use more sophisticated, predictive powers, so there is more uncertainty for sure. Of course, these are things that have to be considered and are being considered right from school. We’re trying to teach students that the world is changing. The metocean conditions are changing quite rapidly and we have to design for conditions that will probably become more severe, but also more uncertain.
Senator Arnot: From a systems engineering point of view, what is the single most underfunded safety investment in offshore if you can identify one?
Mr. Veitch: I’m a slow thinker and I’m not used to having all the answers ready. That would take me some time. I will think of it on the flight home. I don’t know right now, and I don’t want to just say something.
Senator Arnot: That is fair. I would like you to augment your paper or answer some of my questions on the flight home or shortly thereafter. Thanks a lot.
[Translation]
Senator Aucoin: Senator Arnot asked a number of interesting questions, but I would like to ask you something else.
Regarding the Bay du Nord project, if the resources are extracted, have you considered the safety measures that would be needed for workers at high sea, 500 kilometres offshore? In other words, are additional safety precautions needed for those working on this oil platform?
[English]
Mr. Veitch: This is a really great question. It is a concern. The ocean is a nice thing to look at, to see in a painting. It is a horrible place to work. It is a dangerous environment and it is threatening.
The people who do work offshore, it’s a risky place to be. Everything we can do to ensure their safety we should do. And that’s the attitude of the industry.
One of the things that I did 30 years ago when I was thinking about offshore safety, I came to the conclusion that the best thing to do would be to keep as many people on the beach as possible so that fewer people are exposed. That would require the adoption of things like remote control operations and some autonomy type of operations. Thirty years ago, that was perhaps difficult to realize. It isn’t any more. The industry has made great strides in increasing the number of operations that can be done from shore by remote control, thereby reducing the number of people offshore. But there are still some people offshore, and their safety has to be safeguarded.
It’s probably the most important thing for an operation like that day-to-day. Everyone is thinking about safety every single day. Operating principles had to be very strict every single day. That seems to be the philosophy in the industry. I’m not really an insider in the industry, but what I see gives me some confidence.
Thirty years ago when I was thinking about how I’m going to spend my career, one of the things that I thought I couldn’t do was create remote control operations. But what I thought I could do was help people who do work offshore come home safely.
We researched technology that would allow people who work offshore to become more acquainted with some of the safety procedures that they would normally only see in extreme conditions, so safety-critical operations like launching lifeboats or that sort of thing, extreme measures. We created some simulators so that we could expose people to the types of skills that they need to do that type of operation if they had to and we brought that to them.
This technology is now being used on the platforms off the coast of Newfoundland. So the industry is very serious about safety. The people who work offshore are very serious about safety. I don’t want to say that I’m happy with it, but I think that the industry is very vigilant.
[Translation]
Senator Miville-Dechêne: My question is for Lori Lee Oates.
You wrote an article that had a strong impact on me.
[English]
Cursed: How the Resource Curse Manifests in Newfoundland and Labrador.
[Translation]
I would like you to tell us about what you refer to as the “resource curse”, namely, how resource-rich economies such as Newfoundland and Labrador suffer by focusing on resource extraction as opposed to services or ideas. You went so far as to say that, in that type of economy
[English]
It includes poor democratic outcomes, weak institution, poor economic performance, a propensity for bad economic decisions, decision-making, gender inequality, petromania. This is all things you have said in this article. How much of it applies to Newfoundland? This is a very direct question. But did you think the society in Newfoundland and the institution are suffering from this concentration on oil extraction? What can you tell us about that?
Ms. Oates: Thank you very much for the question. Cursed is actually the title of a social science humanity research council inside development grant project that I’m currently funded. I’m trying to answer exactly that question, and the project is still ongoing.
I believe that piece was published on the website of the Network in Canadian History and Environment.
I got interested in this topic when one of my high school teachers, in a course called Newfoundland Folklore, asked the question, “Why is Newfoundland always so bad off when we have all these resources? We have fish, we have forestry, we have pulp and paper, we have mining.” The more I looked into the political economy research, the more I discovered that it probably was the fact that we had all these natural resources that were leading to the poor economic outcomes for Newfoundland and Labrador.
Research on what we call the resource curse, or the curse of the plenty, or in some cases Dutch disease, dates back to the early 1970s. It’s fairly well established that jurisdictions with a lot of natural resources, particularly oil resources, do tend to have worse economic outcomes. They also tend to have poor democratic outcomes. A lot of money gets invested in policing, a lot of the oil revenue goes directly into policing, a lot of money goes into the military. The reason for this is that the money from royalties goes directly to governments, and then the governments can spend it however they want. And they tend to invest it in things like infrastructure projects that reward political donors, or policing and military. That ensures their future as an authoritarian leader.
It was long thought Canada was an outlier to this. Norway seems to be the one country that has avoided, effectively, the resource curse. The theory on why that is the case is they had a well-developed democracy before becoming on oil state.
Increasingly, the evidence is becoming obvious that Canada is suffering some of these worse outcomes associated with oil production I have been particularly focused on gender outcomes in Newfoundland and Labrador.
There is a propensity for economic misfortunes, like the Muskrat Falls project. That’s hardly the first economic misfortune Newfoundland and Labrador have suffered. We have a long history of poor democratic outcomes dating back to the period of the Commission of Government. There does seem to be ample evidence that we are suffering negative impacts as an oil state.
Senator Miville-Dechêne: Can you be more specific when you talk about poor democratic outcomes? How does that apply to Newfoundland?
Ms. Oates: In the midst of the financial crisis in the 1930s, Newfoundland and Labrador was effectively returned to become a protectorate of Great Britain. During that period, there were no elections in Newfoundland and Labrador. Most of the decisions were made out of London by the bureaucracy. That’s the first example.
Senator Miville-Dechêne: I’m looking for some recent examples.
Do you think it is still the case? Are we talking about historic tendencies, trends in Newfoundland, or is it actually now where there are problems linked to the fact oil is the main resource?
Ms. Oates: We know the 2021 provincial election was highly problematic. It was a COVID election. It had to be moved to a complete mail-in ballot election. Preparations hadn’t been made for that. There were a number of legal challenges as to who had won seats because of the problems with the mail-in ballots.
We had an election recently. We are in another situation where there are challenges to vote counting. That’s just a couple of recent examples.
Senator Miville-Dechêne: You spoke about gender. What about gender? Is it because it is a male-dominated industry? What is the gender link with this curse?
Ms. Oates: I can speak far more eloquently on this than I can on democratic outcomes.
Newfoundland and Labrador have some of the worst gender outcomes in the country. We have a large gender wage gap, one of the largest in the country consistently. Canada has a high gender wage gap in the OECD.
We have high rates of domestic violence, particularly in Labrador against Indigenous women.
We have a high living wage that is not met by a minimum wage that comes anywhere close. More than half of those who are not earning a living wage in Newfoundland and Labrador are women. The reason for this is because most of the jobs in natural resource-based economies, the jobs doing the extraction of resources, go to men. It is not that women can’t necessarily do these jobs, but they are not necessarily accepted into these spaces.
The jobs left over for women in resource-dependent economies tend to be in government, low-wage positions, in tourism, for example.
Senator Miville-Dechêne: I will stop you because I’m out of time. Thank you.
The Chair: Thank you.
Senator D. M. Wells: Thanks to the witnesses for appearing.
Mr. Veitch, you are with Memorial University. When I was listening to Ms. Oates, she talked about how bad it was for females in Newfoundland and Labrador.
I’m reading here in Newfoundland and Labrador, primarily driven by Memorial University, the province’s main engineering provider, female undergraduate enrollment is at almost 27%. I assume that’s a current number?
Mr. Veitch: I think it is about 30% at the moment, which is, I think, the best in the country.
Senator D. M. Wells: That is what the next line is. This marked the fourth consecutive year Newfoundland and Labrador led Canada in female engineering enrollment. Are you seeing that on a practical level? Are these graduates moving away? Are they working in tourism? Are they working for the providers of the services?
Mr. Veitch: I am teaching engineering. They are typically not working in tourism. They work everywhere. They work all over the world, including in the offshore industry.
I teach in a department of the engineering school. In our department, we have worked to balance the population. We were aiming for 50-50, and we have achieved that. It wasn’t all that hard. If you want to do this, certainly in the professional schools, we’re working on it. We have had some successes.
Again, vigilance is necessary. We are pleased with it. We see our male and female graduates succeeding in these professions.
Senator D. M. Wells: Thanks for that answer. I’m glad that was cleared up.
Can you talk to me about some of the projects that the school of engineering is doing at Memorial — in association with the School of Ocean Technology, the Marine Institute, C-Core, some of the other products of Memorial and associated agencies — on research and development for the operators and oil companies? I’m thinking enhanced oil recovery, directional and distance drilling, things like that.
Mr. Veitch: Yes. One of the provisions of the Atlantic Accord, for those of you who may not be as familiar with the arcane nature of this industry, requires the producers to spend a certain percentage of their production value on research, development, education and training in the province. It turns out to be a lot of money. The fraction is quite low, but the amount of money is quite high. Over the years, that has helped increase the capacity for research, development and innovation.
Now it is at a point where the investment or spending on research and development is less about capacity building and more about strategic interests. That includes things like enhanced oil recovery, getting the most out of reservoirs. A reservoir isn’t a big bucket you put a straw in and take the oil out of. It is difficult to get oil out of a reservoir. There has been a lot of work done at Memorial on that, not by me. I’m not a reservoir engineer. The types of investments that have been made through this R & D obligation, I don’t know exactly what the numbers are. It is a matter of record.
I know in my faculty, which is just one faculty — there are only 70 of us — in the last five years we have had R & D obligation spends in our faculty on the order of $30 million or so. That’s gone in a bunch of different things. It is not about enhanced oil recovery; it is about other things, including things like safety, decarbonization, the transition from the way people work now to a more digitalized type of workplace, with autonomy, remote control and so on, and how to keep people safe in those periods of work transitions.
The investments in research, education and training through this obligation have gone into many different places. It has had a profound effect. The outcomes have been great, but it has also had a big effect on the sophistication of the ecosystem in terms of R & D and innovation. Does that help?
Some of my answers might go off on a tangent. I forget the questions.
Senator D. M. Wells: You are doing fine.
On Monday, I was at a suppliers’ forum in St. John’s for the Bay du Nord project. There were about 500 people there, and the main suppliers to Equinor were doing presentations, and everyone in the room was excited. To have 500 people in a room excited about a project that will probably happen is positive for Newfoundland and Labrador, and it doesn’t suggest that we’re near the end of this. It suggests, I think, we’re still in a good place.
I note that Equinor, in 2013, said there were 300 million barrels of recoverable. That is now up to 400 million barrels of recoverable in that area. In the Flemish Cap, there is estimated to be a billion barrels, which is huge. It is not just huge for the industry, but it’s huge for Newfoundland and Labrador and for Canada.
We have been pumping from Hibernia for two generations, long past what we initially thought. Do you see this as something that is — especially going into deeper water — starting to die down, or is there still excitement in the industry?
Mr. Veitch: You would probably get a lot more insight into that from your meetings with Equinor. Equinor is a great operator. You couldn’t ask for a better candidate to lead a deepwater exploration. They have a lot of experience doing that, so that’s a very positive thing.
Yes, it is a very big project. I think that it will go ahead, and I think it will provide some continuation of activity for the industry. And as you say, these are very big projects with very long lifetimes, so strategically it is very important.
Right now, there has been a really good balance, actually, over the years, from the different projects that have been developed. As one starts to ramp down, others ramp up, so it hasn’t been boom-bust; it has been pretty even. Equinor’s Bay du Nord field would probably play into that story as well.
I don’t know if I answered the question that you posed.
One of the things in your study brief was about the role of petroleum resources in the future. Almost all the oil that is produced in Newfoundland is exported. It goes to international markets. It goes almost directly from the fields. The oil is loaded from the field — and this is well offshore — onto tankers and basically shipped. The international markets are readily accessible.
I think about half of it goes to the U.S. now, and half goes to Europe, but it can go anywhere. Oil is sold to whoever wants to buy it. It is that kind of market.
There is a big energy mix in Newfoundland. It is not just oil. There are hydro resources that are quite mature, and there are wind resources that I think, as they get developed, will be important strategically for the energy transition.
In the context of shipping, I have looked at decarbonization pathways, so I’m thinking about the future. I think it’s Question B in your brief.
We have been studying the pathways to net zero in the shipping industry, and it is concerning. It is very difficult at the moment to see how international shipping can get to net zero quickly, because, although there are options — and there are different alternative fuels that have been touted — there is not enough of it. It hasn’t really been produced in the quantity that is required, and there are no supply chains for it. In some cases, the technology is not mature enough. Engines aren’t available to burn certain types of fuel.
I have a concern, when we look at mapping pathways to net zero out to 2050 — which is only 25 years. This is not a long time away; this is one generation. Looking out to net zero in 25 years, we have a hard time connecting the dots between where we are now and where we need to get to without some breakthroughs in the green fuels, and I don’t mean biofuels or biodiesel. I’m talking about things that are created with renewable energy, so it has to come from the wind, and it has to come from the sun. That’s the only way, and those fuels are not available.
From a security point of view, of course, the idea of getting off fossil fuels from a climate change perspective is a very important global concern, but that transition is going to take some time. And in order to get there, we have to fill a gap, and it is daunting. I have to say it is daunting. I think not enough is being done about it, investing in a transition.
Senator D. M. Wells: Thank you.
Senator McCallum: Thank you to the presenters for all the work that you do. I wanted to ask Professor Veitch a question.
People keep saying that oil is going to go soon. I asked the other group, “Why do people keep saying that, and what is the alternative?”
When I look at wind and solar, lithium, all of those are being stacked in warehouses in Alberta, because they don’t know how to take them apart. If we don’t have hydro, which causes a lot of problems for First Nations People — at Site C and all over, Manitoba, Quebec — there are problems there as well.
My concern is that people are being channelled into thinking, well, we have alternative energy already, and I don’t think we do. There will not be enough infrastructure — in Manitoba, at least — to run electric vehicles. Not right now. And if it does, when I talk to the people, it is going to be limited. It is like four per street.
How do we move beyond this conversation of, “Let’s get out of oil and go into something else”? Do we even have that luxury to talk like that?
Mr. Veitch: I think that, perhaps, the idea of getting away from oil is strategic or aspirational. It is going to take a long time, because, as you say, there are alternatives, but most of them are almost at the idea stage. Very few of them have been proved up from a technology readiness point of view, so the technology probably isn’t mature to scale out. The supply chains are almost non-existent.
If you were going to start using ammonia, for example, as a fuel on ships, then you have to have ammonia available as a fuel for the ships, and it isn’t available, and it has to be available everywhere.
People in the shipping industry are very seriously considering nuclear, because it is really the only technology that is available to get to net zero in the time frame that people have agreed to under the UN agreements in the shipping industry.
People are looking at pretty profound changes. There is a huge amount of uncertainty with these pathways to get to net zero. The pathways are enormously uncertain, and whatever pathways are taken are going to require huge investments in infrastructure that are not going to be underwritten just by industry. These are going to have to be societal changes, and there needs to be a huge commitment to them, and it is going to take at least a generation to get there.
Senator McCallum: Okay. I forgot my second question. That’s fine for now.
Senator Fridhandler: Professor Veitch, you talked about safety and I would certainly agree that with industry players, safety is a number one priority, and you expressed some high degree of comfort. Every time something happens, we say, that’s the 100-year event or that was the black swan. When you say you have a high degree of comfort, does it extend to the black swans or the 100-year wave or the massive iceberg that can’t be moved or the storm that no one predicted?
Mr. Veitch: Well, you have to predict these things, okay. Saying we didn’t anticipate this is not an acceptable defence. If I said I have some comfort, it is the maturity of industry. The industry takes this stuff seriously and so does the regulator. We’re wise not to rely completely on the goodwill of the industry. There are drifts in perspectives and attention. The regulator holds everyone to account daily.
Again, I don’t work for the regulator, but I have had exposure to the regulator. I have had exposure to the industry. A lot of my students work in these types of industries, safety-critical industries. I’m impressed with the level of maturity, attention to detail and the strictness to which the industry operating principles are held. It is very strict. For me, it is uncomfortable. When I’m up close and personal to the way offshore operations are done, I feel uncomfortable because I like my freedom more. You have to do things in a very particular way.
Senator Fridhandler: You also mentioned in the same vein that safety is practised through simulators, which isn’t quite the same as jumping in a lifeboat or a suit 300 or 500 kilometres offshore. Are there actual safety drills from the platforms as well?
Mr. Veitch: There are all sorts of drills. You have to do all these things. I told a little anecdote about my own personal world, okay. With a graduate student and some other people, we developed some training simulators. It wasn’t to replace the training that is done offshore or training that is done even in training schools. What we were doing was we had recognized some challenges with being able to do drills in really bad conditions. If you had to launch a lifeboat in really rough weather or in ice fields or whatever, you can’t practise that offshore. It is unethical to put people in harm’s way. Even a drill is a safety concern if you are doing it in high waves. We developed training simulators that would allow people to practise these things in a simulator so they can be exposed to really bad conditions but in a safe training environment to give them a chance to be able to do it well in the event that they actually had to do it. It is a rare event, but we’re trying to give these people a better chance of getting home safely.
Senator Fridhandler: For Professor Oates, a short question. We have talked a bit about the plight of Newfoundland, the curse of a resource sector. There are a lot of examples. There has been some money put aside in a fund, even if it is still means carrying annual operating deficits at the provincial level — we have had oil at a $100 a barrel for a short period of time when it probably generated surpluses in the province. Now, it may have to make up for prior debt, but you have to manage it a little bit and save something for the future from this resource that is not infinite. Has there been thought and discussion about a savings fund in Newfoundland?
Ms. Oates: The Liberal government under Andrew Furey did start what is called a wealth fund. They actually borrow money to put into the wealth fund. I think last year it got about a 2% return over what we were spending to borrow the money. Newfoundland and Labrador borrow $1 billion a year. So can there ever really be a wealth fund? I mean, you could be getting a better return by just paying down your deficit than putting the money into an investment. It is kind of like your mortgage and your RRSPs. You need to be getting a better return on the RRSPs than your mortgage rate for it to make sense.
Senator Fridhandler: Thanks.
Senator Galvez: My question is for Professor Veitch. I know you have said and mentioned many times you don’t work for the federal regulator, you don’t work for the oil company, but your chair is called Cenovus Energy Research Chair. If it is industrial, probably half of your salary probably comes from this chair.
I follow very carefully the Deepwater Horizon oil spill. In a time where there were not hurricanes like Melissa or hurricanes that come up north around here. Actually, it was a quiet time but it was uncontrolled release of crude oil from a sub-sea well located 41 miles off of the coastal of Louisiana at a depth of 5,000 feet. It cost widespread environmental devastation. Severe damage to marine and coastal ecosystems affecting fish, birds, sea turtles, marine mammals.
You said it will take one generation, two generations, but you one of these events takes multiple generations to not even disappear. It will never disappear, there is always something. Now, Bay du Nord is considered to be a potential carbon bomb because of the amount of emissions that it will generate. You, as an expert in security of these platforms and operations, what will happen if something like the Deepwater Horizon oil spill happens in the area where we are talking about?
Mr. Veitch: That’s a really difficult question for me to try to —
Senator Galvez: — you are an expert.
Mr. Veitch: So I think the expert in me would say that we have to do everything we can to prevent it from happening.
Senator Galvez: Prevent it from happening. So we approve in this committee the extension of the regulator to cover renewable energy, and you said that there is big potential for wind. But we have this archaic — I don’t know what you said — nature of this sector, that the oil industry keeps putting money in research and innovation but for their benefit. Wouldn’t it be interesting to have this archaic regulation to change the flow of money from oil and gas to renewable energy, because you are saying that we must prevent, so we shouldn’t be putting ourselves in this type of risk?
Mr. Veitch: I refer to the Atlantic Accord and the provisions there requiring the oil industry to spend roughly 0.5% of their production value on R&D. They do invest in things that are to their benefit but, in fact, they do not control it and they do invest in a lot of other things too. I’m not here to be a spokesman for the oil industry. But just as a little example, my salary is paid from Memorial University. Where Memorial University gets the money, I’m not really sure. I want to be transparent; I have had a long association with the industry.
Just as an example, one of the vice-presidents at Cenovus encouraged me to look at decarbonation issues. He said that we all have to face this, that it’s not an oil industry issue alone. It’s all of us; we all have to face it. He said it would be nice if I were able to generate some activity in this area, and I did. It’s led me to decarbonization in the shipping sector. There is no direct benefit to the oil industry. The oil industry, like I said, is not allowed to have direct control over their R&D spend. It’s basically treated as a donation. The CRA is pretty interested in the distinction between what they spend and the benefit that accrues.
Anyway, I have drifted from your question of what happens if there is a Macondo type —
Senator Galvez: You’re a professional engineer, I’m a professional engineer, and we have a code of ethics. At the point when the regulations or the government or the politicians don’t do what they are supposed to do, you have to secure the safety and security of the citizens. That is our ethical code.
Mr. Veitch: Of course.
Senator Galvez: Sometimes, even when something is not there specifically in the regulations or in the rules, we must tell our students, “Your first priority is protecting the safety and security of the citizens.” Do you agree with that?
Mr. Veitch: Sure. Yes.
Senator Galvez: That’s all. Thank you so much.
Senator Lewis: To Professor Oates, you talked about the curse of development or resources and so on. It’s hard to get your head around that if you’re from Western Canada. We look at jurisdictions like Alberta; it’s recognized as the richest jurisdiction in the country. Places like Saskatchewan have mining and so on. Are those examples of being cursed by resources? Or does it come down to how one manages those resources? I’m a little confused. Why is Newfoundland an outlier compared to some of these other areas?
Ms. Oates: Thank you for the questions. Let’s be clear. I am funded to determine how Newfoundland and Labrador would be impacted by the resource curse or how the curse manifests here, if it does manifest.
Increasingly, we are learning that, with extractive industries, social and environmental outcomes are highly problematic. Nobody doubts that wealth can come from this, but there was a fair amount written about, say, misogyny in the oil sands after a cartoon surfaced of Greta Thunberg being raped. The image had an oil industry logo on it. I don’t think you could argue that Alberta has escaped the social and environmental impacts of the resource curse.
Senator Lewis: Thank you.
Senator Arnot: Professor Oates, I want to follow up on some of the questions that have already been asked, if you don’t mind. I’ve got four questions. You won’t be able to answer them in the next five minutes, I’m sure, so I’m hoping you might put some of these answers in writing and give them to the clerk.
Ms. Oates: Absolutely.
Senator Arnot: Memorial University research often receives industry partnership funding. Do you believe that creates perception or independence risks in environmental communication and social impact studies? Elements of that question have already been asked, but I want your perspective.
Second question, from your work in cultural framing, does Newfoundland’s economic narrative around offshore oil align with a 2050 net zero commitment, or does it remain anchored in an older growth paradigm?
Third, how do you see gender, community and social equity dimensions being integrated or ignored in offshore development discourse?
I agree with your observation that Newfoundland is not unique in some of these issues. This has applicability in oil and gas studies that we’ve done, but we haven’t heard your perspective. I want you to amplify that a little bit, if you would.
Do you believe Memorial’s research agenda adequately reflects the urgency of Just Energy Transition, or does it primarily reinforce petroleum expertise?
Those are my four questions. If you want to take a few minutes to answer just one of them, that would be fine.
The Chair: Ms. Oates, the clerk has said she will send these questions to you via email as well. If you want to pick one to talk about right now, that would be great.
Ms. Oates: In terms of Newfoundland’s economic narrative, I think that is changing in the sense that right now we’re moving toward a new agreement with Hydro-Québec on the development of hydroelectricity, particularly the Gull Island site in Labrador. There are expectations that this energy will be used to develop mining and rare earth minerals in Newfoundland and Labrador. Again, you still see the focus on mega dams or megaprojects.
Quebec is probably the one preparing for the new energy economy, selling batteries and electricity, while Newfoundland and Labrador is still staying in the same resource development place. But we are looking away from oil, I would argue.
Senator Arnot: Thank you very much.
Senator Aucoin: I read about an iceberg that broke off from the Arctic, and it is bigger than Prince Edward Island. Has the sector looked into that? How would they mitigate that and avoid a disaster in the coming years when it floats down to the oil fields in Newfoundland?
Mr. Veitch: A lot of strange experiences occur in the Newfoundland offshore sector. One of them is dealing with icebergs. They’ve become very good at it. It is a strange phenomenon, but the presence of icebergs on the Grand Banks is something that is managed. You have to deal with what comes, whether it’s big or small. A lot of attention is spent on these types of environments. Metocean issues are carefully addressed.
The Chair: This brings us to the end of our time together. I thank both of the witnesses on behalf of all of us.
(The committee adjourned.)