Budget Estimates 2020: Energy, Mines & Petroleum Resources

Jul 12, 2020 | Blog, Estimates, Governance

The BC Green Caucus was up in Budget Estimates with Hon. Bruce Ralston (Minister of Energy, Mines and Petroleum Resources) this week.

My colleague Sonia Furstenau and I asked Minister Ralston questions in a number of areas including BC Hydro, Site C, mining and LNG. The transcript below begins with Sonia’s final question to Minister Ralston about Site C because I respond directly to his answer as I begin my line of questioning.

The emerging theme is the lack of time we have in Estimates to really dig into the issues and ensure there is accountability and transparency. As you will see in my exchange with Minister Ralston, I express my significant frustration with these estimates sessions.

Thankfully Minister Ralston was more direct with his answers to me as our Caucus provided him with all our questions well in advance. However, our colleagues in the official opposition were asking important questions that provide context and inform decisions we are going to have to make on energy policy in the near future. Unfortunately, there were very few direct answers from the Minister.

There are a handful of questions that we were not able to get on the record and so I look forward to combining the Ministry’s written responses with the transcripts from these sessions for a more complete picture.


Thursday July 9, 2020 [5:45pm]

S. Furstenau:

Just to clarify with the member for Kootenay East, we had been both in discussion with staff from his offices as well as with the other critics that the member for Kamloops–North Thompson was ceding the floor and had sent me a note indicating so. So I’m not sure about the confusion, but we have been working very hard. There are two of us and a very limited staff, and we work very hard to set out times for this and to be available and ask our questions. So I appreciate that opportunity now to continue.

I’m just going to ask one more question on site C, and then I’ll hand it over to my colleague to ask some questions about our energy imports and exports. The list of reasons why there are delays and overruns in costs seem pretty significant. And as the minister indicates, COVID-19 is also going to exacerbate the growing costs of this project.
When we look to the other side of the country in Muskrat Falls and the state of the project out there of a very similar major dam project that had some pretty serious controversies, as has site C here…. And many of the things that the minister has outlined were issues that had been raised by those who had had serious concerns about site C, including our caucus.

[5:50 p.m.]

I guess this is more of a question just for the minister. Is there a point at which there’s a level of cost that is reached that makes this project unsustainable economically, as it is unsustainably environmentally that we know for that to be. At what point do the overruns of costs become something that makes this project unsustainable?

Hon. B. Ralston:

I appreciate the member’s question. Thank you for the question. I too am concerned about the cost of the project, but I’m convinced that every reasonable effort to mitigate the cost of the project is being taken. I think the concern is legitimate, but also the efforts to contain the costs and….

Certainly, there have been some unexpected costs due to COVID in terms of its impact on the schedule, which has obviously had some financial impact. Those will be assessed in the fall, but certainly, every reasonable effort to contain the cost is being taken.

A. Olsen:

Sounds like, from that answer, it’s actually a bottomless pit. There isn’t a number. There isn’t a threshold. As long as we’re continuing the efforts to contain, then that’s enough effort. That’s problematic.

I have to share the sentiment of my colleague from Kootenay East, my colleague from Shuswap and my colleague from Kamloops–North Thompson. We’ve specifically shared our questions with the minister earlier today in a hope that these long delays…. I recognize that last question that was asked by my colleague was not on the list, but we’ve provided these questions, and I’m hoping that we can, in an effort to try to make the best use of the time….

The former Minister of Energy, Mines and Petroleum Resources said on the record in 2019 that the province was a net importer of energy. From 2019-2020, was B.C. a net importer or exporter of energy?

[5:55 p.m.]

Hon. B. Ralston:

In fiscal 2020, B.C. Hydro was a net importer of electricity, with net imports of approximately 2,000 gigawatt hours.

A. Olsen:

What is the total surplus of energy that is produced in British Columbia each year, on average, and who is the largest purchaser of this power?

Hon. B. Ralston:

The total surplus energy is about 4,000 gigawatt hours, on average, each year. The surplus of clean energy that can be sold by Powerex to its trading partners within the western interconnection…. Powerex will export energy when the B.C. Hydro system has more power than we need to meet demand in B.C. and when fair market prices are high. This provides additional revenue and helps keep B.C. Hydro rates low.

A. Olsen:

Thank you for the response, Minister. How much power did we import from Alberta and from the United States? If the minister could briefly characterize the sources of this power, whether it be hydro, coal, natural gas, etc.

Hon. B. Ralston:

In fiscal ’19-20, B.C. Hydro was a net exporter to Alberta of 1.2 million megawatt hours and a net importer from the U.S. of 3.4 million megawatt hours. Approximately 98 percent of the electricity B.C. Hydro generates is from clean, renewable resources.

Since 2011, imports from Alberta have made up less than 0.5 percent of total gross supply in B.C. Hydro’s system and 3 percent of total imports. It’s also important to note that Powerex typically exports five to six times more electricity to Alberta than it imports, which helps substantially reduce greenhouse gas emissions in Alberta.

Powerex imports power during periods of low prices, which is increasingly periods of high renewable output in the United States. There is an increasing amount of renewables available on the market during midday periods when solar generation is high, which leads to low prices.

[6:00 p.m.]

A. Olsen:

Not quite what we were trying to get there, but….

Can the minister confirm that the majority of power that B.C. Hydro, via Powerex, imports to B.C. is from natural gas, coal-fired power plants? I guess it’s just digging in a little bit further on that previous question.

Hon. B. Ralston:

I’m not able confirm the mix of the electricity that’s imported for the following reason: when Powerex purchases unspecified market electricity, it’s a blend of all the resources in the market. Although I think it’s fair to comment that an increasing amount of renewables — wind and solar — has been added to the grid, and this trend is widely expected to continue.

A. Olsen:

Thank you to the minister for the response.

Can the minister please provide the number for the carbon intensity of energy imports as determined by Powerex and the Ministry of Environment and Climate Change Strategy for the past year? And can the minister comment on what the historical trend has been for the carbon intensity of our energy imports? Is it going up or going down?
And to the last point that the minister made, what are the future projections of the carbon intensity of the power that we are importing?

[6:05 p.m.]

Hon. B. Ralston:

If you were to benchmark comparables of emissions intensity of imports to B.C. Typical comparables would be natural gas, which is 0.50 tonnes of CO2 equivalent coal, 1 tonne of CO2 equivalent; “market energy” from the U.S., 0.43 tonnes of CO2 equivalent; and Alberta, 0.52 tonnes of CO2 equivalent.

In British Columbia, the latest figure that’s available is…. The emissions intensity of imports for British Columbia is 0.141. So dramatically lower than all those comparables that I just listed.

A. Olsen:

Thank you to the minister for those responses. I’m going to cede the floor to the member for Cowichan Valley for one question about mining. As with the members for Shuswap and Kamloops–North Thompson, we’ve submitted you some other questions which I didn’t have time to ask today. I’m hoping that our caucus can get a response to those from your ministry. There are some important questions there around the topics we’ve been asking.

As you can imagine, we’d love more time, but it’s not there. Thank you for your responses today.

Friday July 10, 2020 [10:05am]

A. Olsen:

Thank you to the previous members for the questions that they’re asking. We’ve all got very short on time, and so I’ve been instilled with confidence at the line of questioning that’s been asked here. We’re not all able to ask all the same questions over and over again, so I thank the members for their depth in getting to the bottom of this.

I think a really important part of the budget estimates is the transparency and accountability in government, and I remain concerned with the lack of direct answers to the questions, even direct responses to the questions that are being asked. They’re important questions. They’re important questions about the direction of our province. They’re important questions about the future of our province. While we may have differences of opinion on how that is to be, the people of British Columbia deserve direct responses to the questions that are being asked.

To my question. Minister, the oil and gas industry in B.C. is being pushed as an opportunity to create good-paying jobs for rural and northern communities. However, we must be critical about how many jobs are stable, long-term opportunities and how many of them are actually available to British Columbians. As we move into our economic recovery, we must prioritize not just shovel-ready jobs but shovel-worthy ones.

How many direct jobs are in the oil and gas industry in B.C., and how many indirect jobs, such as construction services and accommodations? How many of these jobs are filled by British Columbians, and how many are filled by other Canadians and international workers?

Just to note that these questions have been provided in advance to the ministry.

[10:10 a.m.]

Hon. B. Ralston:

Thank you to the member for the question. The Statistics Canada data that’s been provided to me says that 5,100 people were employed — these are direct employment — in the oil and gas sector in B.C., and 7,500 persons were employed in support activities for mining and for oil and gas extraction.

In terms of major projects — there may be some interest to know about major projects — for LNG Canada, the total expected workforce at the end of June 2020, just last month, was 1,500 people. It’s estimated that about 50 percent of those are British Columbians. As the member will be aware, under the Canadian Charter, there are mobility rights to every Canadian to travel throughout the province — although, perhaps, with COVID, that’s a little somewhat inhibited. That’s the number that’s provided to me.

On Coastal GasLink, the total expected workforce at the end of June 2020 was 800, of which an estimated 75 percent are from British Columbia. In terms of any foreign workers, there don’t appear to be any at all. There are very few, if any. The only thing I would note about project labour force numbers is they obviously fluctuate as the project advances. They’re currently in an expansion phase as they’re beginning to recover from COVID and to advance those projects. I hope that satisfies the member.

A. Olsen:

Thank you to the minister for the response. The terms “person-year” and “job-year” have been used frequently in estimates for the number of jobs emerging from development of B.C. oil and gas. Can the minister define these two terms on the record? Why is this term used, over a direct estimate of part-time and full-time positions? What are the actual units of employment per person? How many people work in the sector, as an example?

[10:15 a.m.]

Hon. B. Ralston:

A “person-year” is defined as “the amount of work done by a full-time individual or the equivalent number of part-time individuals over the course of a year.” It doesn’t represent the total number of people employed, which can be difficult to estimate due to job-sharing, shift work and turnover.

These questions on the composition of that workforce and the subsectors in which they work, as well as the typical duration of employment, are better directed to the minister responsible for Advanced Education, Skills and Training, who is responsible for the labour market information office, from whence these definitions come.

A. Olsen:

As of May 2019, the deep-well royalty credit program had in excess of $3.4 billion in unused credits available to qualified wells. What are the total accumulated natural gas deep-well credits available to companies in British Columbia for the past year? How many credits have been accessed by qualified companies? What are the total royalties that government has received since 2019?

Hon. B. Ralston:

The Ministry of Finance acts as the royalty collector and tabulates these figures as a part of the government’s audited public accounts each year. For this year, the public accounts have not yet been released. There is an obligation to release the public accounts before August 31, 2020 for last year’s fiscal.

To give you some context, the total outstanding deep-well credits available for reducing future natural gas royalties payable by March 31, 2018 was — and it’s a long number here — $2,589,799,654.26. That appears as…. It’s rounded up in the public accounts as $2,590 million on the ’17-18 Public Accounts.

For further context, the following year, the total outstanding deep-well credits available for reducing future natural gas royalties payable by March 31, 2019 — $2,621,872,311.41. It’s rounded up to $2,622 million on the 2018-19 Public Accounts.

I acknowledge the member asked about the access — how much of those credits have been used. The staff is in the process of compiling and getting the number to me, which I’ll give to the member shortly.

[10:20 a.m.]

A. Olsen:

Thank you. I’m not going to be able to get to all my questions, so, as per what I stated yesterday, the full list of questions –– well, the truncated full list of questions –– that we have for the Minister of Energy, Mines and Petroleum Resources has been submitted, so it would be great if we could get those responses as well.

As per the Intergovernmental Panel on Climate Change, the use of natural gas must decline by 15 percent by 2030 and 40 percent by 2050 –– this is relative to 2020 –– in order to limit warming to 1.5 degrees Celsius above pre-industrial levels. Market analysis backs up this need to slow our use of natural gas, as the falling cost of renewable energy –– and this was largely the context of the conversation that was happening yesterday –– makes sustainable options more available and the falling price of LNG puts the natural gas industry at a heightened risk for stranded assets. At this point in time, we are faced with an unprecedented opportunity to invest in a greener economy that will support British Columbians long into the future as per targeted spending not only in shovel-ready but shovel-worthy jobs.

A couple of questions here with respect to the LNG industry before I cede the floor to my colleagues in the official opposition. Is the minister still considering, and is the ministry still considering, the expansion of the LNG industry through the Kitimat LNG project? And can the minister please provide an updated status of construction for the LNG Canada project? What percentage of the project has been completed? What’s the anticipated timeline? And how has COVID-19 affected construction of the project?

[10:25 a.m.]

Hon. B. Ralston:

I thank the member for his question. As the member may know, but it probably bears the repetition here, the province is supportive of the development of LNG and will ensure that British Columbians benefit from LNG projects by requiring proposals to meet four stated conditions. Proposals must include express guarantees of jobs and training opportunities for British Columbians, must provide a fair return for resource, must respect and make partners of First Nations, and must protect our air, land and water, living up to our climate commitments.

The government considered all of those four conditions prior to determining whether to support the LNG Canada project. The owners of LNG Canada and their partners decided the project was feasible and proceeded with the largest private sector investment in Canadian history. Obviously, the project has been buffeted by the impact of COVID-19, but we are advised that they are on track to deliver LNG in 2025.

A. Olsen:

I didn’t get a response with respect to the other…. I believe it’s a Chevron-owned project up there. But anyway, I’m just moving on, because I’ve only got time for one more series of questions, again, which have been provided to the ministry.

What is the total budgeted subsidy for LNG Canada? In other words, how much is the taxpayer on the hook for the LNG Canada project? What’s the market price for LNG that was used in determination of the feasibility of the project? What’s the current market price for LNG ? Maybe the minister could provide some of the industry projections for the next year, five years, decade, going out into the future. Then, once I get that response, I can cede the floor to friends in the official opposition.

Thank you for the time — to the member of Kootenay East.

[10:30 a.m.]

Hon. B. Ralston:

British Columbia put together a fiscal framework that was critical to the competitiveness of the LNG Canada project and supported the decision by its owners to proceed. The framework created opportunity for the province to enjoy significant employment and revenue opportunities that would not have been available had the project not gone forward. When the LNG fiscal framework was announced, the government estimated the province would see $23 billion in direct revenues over the life of the project.

The member has asked some questions about the pricing of LNG. Generally, the decision to proceed and the expectation of the future price into the future is something that private proponents are…. It’s something that they take into calculation, making their decision about whether or not to invest. That’s totally a matter for them. They have negotiated offtake agreements based on future production with partners, and that, again, is something that is within their purview. Those are negotiations that they engage in. The government doesn’t engage in those negotiations.

Image by Michael Schwarzenberger from Pixabay

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