Legislative Assembly of Alberta The 30th Legislature Second Session Standing Committee on Resource Stewardship Ministry of Energy Consideration of Main Estimates Wednesday, March 4, 2020 3:30 p.m. Transcript No. 30-2-4 Legislative Assembly of Alberta The 30th Legislature Second Session Standing Committee on Resource Stewardship Hanson, David B., Bonnyville-Cold Lake-St. Paul (UCP), Chair Ceci, Joe, Calgary-Buffalo (NDP), Deputy Chair Dach, Lorne, Edmonton-McClung (NDP) Feehan, Richard, Edmonton-Rutherford (NDP) Getson, Shane C., Lac Ste. Anne-Parkland (UCP) Loewen, Todd, Central Peace-Notley (UCP) Rehn, Pat, Lesser Slave Lake (UCP) Rosin, Miranda D., Banff-Kananaskis (UCP) Sabir, Irfan, Calgary-McCall (NDP) Singh, Peter, Calgary-East (UCP) Smith, Mark W., Drayton Valley-Devon (UCP) Stephan, Jason, Red Deer-South (UCP)* Yaseen, Muhammad, Calgary-North (UCP) * substitution for Mark Smith Also in Attendance Gray, Christina, Edmonton-Mill Woods (NDP) Rowswell, Garth, Vermilion-Lloydminster-Wainwright (UCP) Schmidt, Marlin, Edmonton-Gold Bar (NDP) Support Staff Shannon Dean Clerk Stephanie LeBlanc Clerk Assistant and Senior Parliamentary Counsel Teri Cherkewich Law Clerk Trafton Koenig Parliamentary Counsel Philip Massolin Clerk of Committees and Research Services Sarah Amato Research Officer Nancy Robert Research Officer Michael Kulicki Committee Clerk Jody Rempel Committee Clerk Aaron Roth Committee Clerk Rhonda Sorensen Manager of Corporate Communications Jeanette Dotimas Communications Consultant Tracey Sales Communications Consultant Janet Schwegel Director of Parliamentary Programs Amanda LeBlanc Deputy Editor of Alberta Hansard Transcript produced by Alberta Hansard Standing Committee on Resource Stewardship Participants Ministry of Energy Hon. Sonya Savage, Minister Douglas Borland, Assistant Deputy Minister, Ministry Services March 4, 2020 Resource Stewardship RS-307 3:30 p.m. Wednesday, March 4, 2020 minister’s time, make a 10-minute block. Discussion should flow Title: Wednesday, March 4, 2020 rs through the chair at all times regardless of whether or not the [Mr. Hanson in the chair] speaking time is combined. Members are asked to advise the chair at the beginning of their rotation if they wish to combine their time Ministry of Energy with the minister’s time. If members have any questions regarding Consideration of Main Estimates speaking times or rotations, please feel free to send a note or e-mail to either the chair or committee clerk. The Chair: I’d like to call the meeting to order and welcome A total of three hours has been scheduled to consider the everyone. The committee has under consideration the estimates of estimates of the Ministry of Energy. The scheduled end time of this the Ministry of Energy for the fiscal year ending March 31, 2020. meeting is 6:30 p.m. With the concurrence of the committee I will I’d ask that we go around the table and have all MLAs introduce call a five-minute break near the midpoint of the meeting; however, themselves for the record. Minister, please introduce the officials the three-hour clock will continue to run. Are there any committee that are joining you at the table. I’m David Hanson, the MLA for members opposed to taking a break? Seeing none, we will schedule Bonnyville-Cold Lake-St. Paul and chair of the committee. We will that break in. continue, starting on my right. Ministry officials may be present and at the direction of the minister may address the committee. Ministry officials seated in the Mr. Rowswell: Garth Rowswell, Vermilion-Lloydminster- gallery, if called upon, have access to a microphone in the gallery Wainwright. area. Pages are available to deliver notes or other materials between Mr. Yaseen: Muhammad Yaseen, MLA, Calgary-North. the gallery and the table. Attendees in the gallery may not approach the table. Space permitting, opposition caucus staff may sit at the Mr. Getson: Shane Getson, MLA for Lac Ste. Anne-Parkland. table to assist their members; however, members have priority to sit at the table at all times. Ms Rosin: Miranda Rosin, MLA for Banff-Kananaskis. If debate is exhausted prior to three hours, the ministry’s estimates are deemed to have been considered for the time allotted Mr. Singh: Peter Singh, MLA for Calgary-East. in the schedule, and the committee will adjourn. Points of order will be dealt with as they arise, and the meeting clock will continue to Mr. Loewen: Todd Loewen, MLA, Central Peace-Notley. run; however, the timer for the speaking block will be paused. Mr. Rehn: Pat Rehn, MLA, Lesser Slave Lake. Any written material provided in response to questions raised during the main estimates should be tabled by the minister in the Mr. Stephan: Jason Stephan, MLA, Red Deer-South, substituting Assembly for the benefit of all members. for Mark Smith. The vote on the estimates and any amendments will occur in Committee of Supply on March 19, 2020. Amendments must be in Mrs. Savage: Sonya Savage, MLA for Calgary-North West, writing and approved by Parliamentary Counsel prior to the Minister of Energy. With me today I have Grant Sprague, our deputy meeting at which they are to be moved. The original amendment is minister; David James, our associate deputy minister of natural gas; to be deposited with the committee clerk, and 20 copies of the and Douglas Borland, assistant deputy minister, ministry services; amendment must be provided at the meeting for committee plus a number of officials behind in the room. members and staff. I now invite the Minister of Energy to begin with her opening Member Ceci: Hello. I’m Joe Ceci, the MLA for Calgary-Buffalo remarks. You have 10 minutes. and the deputy chair of the committee. Mrs. Savage: Thank you, and good afternoon. I’m here today to Mr. Sabir: Irfan Sabir, MLA for Calgary-McCall. present highlights from the Ministry of Energy’s 2020-21 budget, Mr. Schmidt: Marlin Schmidt, Edmonton-Gold Bar. and with any remaining time I’ll outline some of the ministry’s key initiatives and priorities as included in our current business plan. Mr. Feehan: Richard Feehan, Edmonton-Rutherford. As mentioned earlier, joining me at the table today from the Department of Energy are Grant Sprague, deputy minister; David The Chair: Thank you. James, associate deputy minister, natural gas; Douglas Borland, I’d like to note the following substitution for the record: Jason assistant deputy minister, ministry services. Today is like Christmas Stephan for Mark Smith. for Douglas Borland. He is our financial guru and knows the budget Please note that the microphones are operated by Hansard, and inside and out. This is the highlight of the year for Douglas, and I’d the committee proceedings are being live streamed on the Internet like to thank him for all his hard work in getting our budget in order. and broadcast on Alberta Assembly TV. Please set your cellphones The Ministry of Energy’s mandate is to represent the best and other devices to silent for the duration of the meeting. interests of Albertans as the owners of oil and gas resources in the Hon. members, the standing orders set out the process for the province. Our ministry contributes to sustained prosperity in Alberta consideration of the main estimates. Standing Order 59.01(6) through the stewardship and responsible development of energy establishes the speaking rotation while the speaking time limits are and mineral resource systems. set out in Standing Order 59.02(1). In brief, the minister or member Our ’20-21 operating expense budget is $506 million, which is a of Executive Council acting on the minister’s behalf will have 10 savings of $88 million from the 2019-2020 forecast. This reduction minutes to address the committee. At the conclusion of her comments reflects efficiencies made in the department and the Alberta Energy we begin a 60-minute speaking block for the Official Opposition, Regulator. It reflects the elimination of the electricity consumer rate followed by a 20-minute speaking block for the government caucus. cap program for the RRO. Of this funding $206 million is allocated The rotation of speaking time will then alternate between the to the Department of Energy. This includes the cost of selling crude Official Opposition and the government caucus, with individual oil related to royalty collection, staffing, industry advocacy, and speaking times set to five minutes, which if combined with the coal phase-out agreements. The department’s budget represents 41 RS-308 Resource Stewardship March 4, 2020 per cent of the ministry’s total operating budget. In addition, $300 financial risk associated with the inconsistent nature of the market- million is distributed to regulatory agencies, including the Alberta place. Divesting the crude-by-rail program will add 120,000 barrels Energy Regulator, the Orphan Well Association, and the Alberta per day of takeaway capacity, and every increase in capacity counts. Utilities Commission. But, to be clear, funding for these agencies Our government continues to work tirelessly to enhance our market comes entirely from industry levies. The government does not access on every front available without making Albertans shoulder provide the funding to these associations. It comes to us and back the risk. out to these organizations. 3:40 The total operating budget for the Alberta Energy Regulator and the Orphan Well Association, the OWA, is $269 million, and that’s Speaking of market access, now that I’ve walked you through 53 per cent of the ministry’s budget. The AER regulates energy some of the highlights of Budget 2020, I’ll outline some of our key development in the province and is responsible for regulating the priorities as included in our business plan. The first outcome is that life cycle of oil, oil sands, natural gas, and coal projects in Alberta. Albertans benefit economically from investment in responsible While the OWA is a delegated administrative organization with its energy and mineral development and access to global markets.