Madam Speaker: As previously agreed, the House will resume in Committee of Supply.
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The Acting Chairperson (Peter Dyck): Order, please. Will the Committee of Supply please come to order. This afternoon, this section of the Committee of Supply meeting in Room 254 will resume consideration of the Estimates of the Department of Energy and Mines.
When the committee last, it had been considering item 23.2 Energy and Mineral Resources (b) Petroleum and Energy (1) Salaries and Employee Benefits on page 47 of the Estimates book. Shall the item pass?
Ms. MaryAnn Mihychuk (St. James): I asked the indulgence of the committee as I indicated when I had to leave, and I thank the patience and the good will of the committee that we, in fact, return back to our order and that would be under 23.2.(a) Marketing. We had not completed that section, and I had to leave.
Mr. Gerry McAlpine, Chairperson, in the Chair
Mr. Chairperson: What is the will of the committee? Is there unanimous consent to revert to Section 23.2.(a)(1)? Okay. Agreed?
Hon. David Newman (Minister of Energy and Mines): There was one question left hanging, and if you want to have sort of a continuous record of the MLA for Dauphin's (Mr. Struthers) question in the previous section, I could answer that and maybe that will complete his segment. But there was a question he posed and then time was up. So I am prepared to answer that question if you want.
Mr. Chairperson: The honourable minister, to proceed.
Mr. Newman: The answer to the question about energy efficiency and alternate energy indicators is as follows. We have a number of indicators that we use to gauge the state of energy efficiency and use of alternative energy. These are contained in "Energy in Manitoba," and are based on information obtained from Stats Canada. The first is energy intensity which is measured in terms of energy use per unit of gross domestic product. This indicator has declined from approximately 15 megajoules/real dollars of GDP in 1980, to 11.27 mj/GDP dollars in 1996. That is the latest year for which we have statistics. It is anticipated this indicator will continue to decline to a forecast level of 10.29 megajoules/dollars GDP by 2001. This indicator reflects the overall energy efficiency of our economy.
The second indicator is the percentage of energy used in Manitoba that consists of imported refined petroleum products or RPPs. This is a measure of our dependence on fossil fuel production from our western neighbours. This indicator has declined from approximately 48.5 percent in 1980 and is stabilized at about 41.3 percent since 1991. It is estimated that the indicator will continue to decline slowly to about 70.7 percent by 2001. This indicator is adversely affected by the buoyant economy, primarily additional use of diesel for the trucking industry and the popularity of less efficient sport utility vehicles.
A third indicator is the percentage of energy used in Manitoba that is renewable, predominantly hydro. This indicator has increased from approximately 17 percent in 1979 to approximately 22.5 percent in 1996. It is forecast that this indicator will further increase to about 24.1 percent, largely due to the conversion of the TransCanada PipeLines compressor station at Iles des Chenes from a gas turbine driver to an electric motor driver.
A fourth indicator is the residential energy use per household. This is a measure of energy efficiency in the residential sector. The indicator has declined from approximately .133 terajoules per household in 1978 to approximately .111 in 1996. This factor is expected to be stable over the next few years.
With respect to alternate energy use, Statistics Canada does not report a nonhydro renewable energy use. This is primarily because the original capital cost to the facility, the energy costs of wind, solar energy, et cetera, are generally free, making monitoring of its use difficult or impossible. Examples of alternative energy installation in the province is a demonstration ground source heat pump at Fort Whyte Centre and installations in a number of rural residences and a couple of arenas.
In general, ground source heat pumps are expensive to install and difficult to maintain. A number of small horizontal wind turbines used by individual households to supplement electric energy consumption are in operation. There are two vertical wind turbines we are aware of in Churchill and Birds Hill, but we believe neither one is operational. There are a large number of small photo voltaic systems, that is solar energy, throughout the province that provide heat in off-grid situations, example, remote cottages, lodges, et cetera, and provide water heating for swimming pool operations.
Lipsett Hall on Kenaston Boulevard has a solar system. However, we do not know how much it is used. Ford New Holland and Canadian Bronze have solar walls used to heat make-up air for their facilities.
Ms. Mihychuk: Since I missed the whole preamble to all of that, I am sure it was very informative, but I do want to thank my colleague from Dauphin for asking those questions, and I would now like to suggest that we move back to the Marketing section, please.
Mr. Chairperson: The honourable member for St. James, to proceed.
Ms. Mihychuk: It seems to me where we had left off I had indicated to the minister that there were indeed two exploration companies exploring in resource management areas and that this was causing a certain amount of hard feeling by the local First Nations community.
Perhaps the minister could indicate whether either one of those two companies has received provincial monies in terms of an exploration grant, a MEAP grant.
Mr. Newman: We do not want to be guessing as to who these companies might be. We have identified that there is one possible company that might be in the area, but we are not sure, so I cannot answer the question.
Ms. Mihychuk: It is my understanding that one of these companies is indeed receiving a MEAP, received a MEAP last year, and its receiving has been approved for a MEAP for this year. Without giving the name, I guess as a policy question, given that we are providing provincial money for this exploration program and given the minister's stated objectives of working co-operatively with First Nations, does he feel that it is appropriate to give out a MEAP to a company which has not apparently or, let us say, theoretically, would it be within what he would perceive as a policy to give out an exploration grant to a company that would be exploring in a mineral resource area?
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Mr. Newman: I am inclined to ask, Mr. Chair, what is your point of view on this issue, but at the moment there is no policy that makes MEAP grants conditional on whether or not they are within or near or of any particular relationship to a resource area.
Ms. Mihychuk: In fact, it is true, is it not, that the resource management area has no jurisdiction in terms of limiting prospecting or the issuance of a disposition of any kind.
Mr. Newman: This, I guess, may illustrate a difference in philosophy between the party you represent and the government that I am part of. We do not interfere in the judgments that are made freely by these companies in terms of where their invested dollars, with a proportion of taxpayers' dollars attached to them, are going to result in exploration being done. The rules of the game, in terms of locations where they are prohibited, where investing puts at some risk the certainty of a positive relationship, is in the hands of the company to pursue in mutual self-interest kinds of ways.
I have every confidence that that kind of approach will be more constructive and will be more respectful of aboriginal people and of the companies' best efforts to make the best business judgments and the best socially responsible judgments in the interests of mining exploration and development in the province of Manitoba.
Ms. Mihychuk: What measures did the department take to instruct these companies that there was, in fact, a resource management area identified and that their activities may infringe on that area? What actions were taken? What recommendations did the department give those mining exploration companies?
Mr. Newman: First of all, I do not know again of what company you are speaking, but in terms of general policy it is up to the companies to ask the questions and get the answers and to determine those sorts of issues themselves. If they do not have the capacity to do that better than us feeding them something that may not be responsive to their needs and may not even be reliable--we might be going beyond our mandate. We leave that up to the companies to determine, but they know by virtue of the kind of speech I gave in Toronto, if they heard it, and through other communications, what sort of culture I believe is present in the North, which they are either going to respect and embrace or take the risk of not being as welcome as they would be with knowledge and sensitivity and understanding of the particular environment, culture and local economies.
Ms. Mihychuk: It seems truly incredible that this is the same minister who talks about respecting First Nations and aboriginal people and is talking about the need to do joint ventures and an aboriginal mining initiative, yet it is his own department, from what I understand, which has not sat on the committee for two years. It is his own department which his government has expanded to encourage, promote, lure, give out exploration grants to bring in more mining companies and actively pursue their interests in terms of bringing in exploration.
It seems to me that given his philosophical position when we first started Estimates, that there was a relationship between Northern Affairs and mining, and we had to work in harmony and that this was an advantage, that the minister would clearly see how the department appears to have provided the information, perhaps lured these companies here, attracted them, and has actually facilitated their ability to do exploration in an area that is sensitive to a First Nations community.
Now, is the minister suggesting that the department has a role by providing civil servants and the funding to go out there and market but does not also have a responsibility in terms of respecting First Nations, ensuring that there are joint partnership meetings and ensuring that there is respect for those First Nations?
Mr. Newman: It might help if we made sure what kinds of areas we are talking about. I am operating under the assumption that we are not talking about what are called community interest zones under the Northern Flood Agreement. I am operating under the assumption that we are not talking about hold areas under the Northern Flood Agreement.
To the extent we are talking about those, and I thought we went through the exercise this morning so that we are not talking about those, that with respect to those particular defined areas, the first being in relation to the treaty land entitlement, the second, the hold areas, being in relation to the Northern Flood Agreement, an information sheet was sent out to all mining companies in the province and exploration companies, and it was generally made available December 5, 1997, an information sheet explaining what the expectations were of the department in relation to those particular areas.
If you are simply talking, as I have assumed you were, about what the aboriginal people would call traditional lands but are not within those kinds of areas, then there is not either a co-management agreement in existence, nor is there a protocol pursuant to the treaty land entitlement agreement in relation to community interest zones.
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Ms. Mihychuk: Mr. Chairman, I am speaking about resource management areas. When the discussion came up, we, I thought, had established that this is a land use zone established by the community and the resource sectors and a great deal of time is spent on forestry management, but presumably it also includes the mineral sector in a resource management area.
This is something different than community interest zones, Northern Flood and treaty land entitlement. It is specifically called resource management areas, and that is the particular land designation or zone that I am speaking about. Is the minister familiar with this land designation?
Mr. Newman: There is, for example, a board called the Nelson House resource management board, but that is pursuant to the Northern Flood Agreement. I think the only way I can address this is to determine what specific resource area you are talking about, and then we can maybe address her intelligence to it in ways that ensure that we are both focusing on the same geographic area.
Ms. Mihychuk: I will provide the information to the minister because it is in a very sensitive area and is causing, I know, the government, in general, difficulties because of the relationships that have occurred in that area, so I do not want to go into specifics but, in general, I will continue my line of questioning.
Would the Marketing branch identify all of the various land management areas in legal or, I guess, in good will to exploration companies in terms of their buddying? It is my understanding that the Marketing branch does a one-to-one with exploration companies. They sort of help them through the process of getting permits and encouraging them to go ahead and do business here in Manitoba. Is it the policy of the government to also make them aware of the sensitivities of the areas in question, including land tenure issues and the need to consult with the people, the First Nations communities in those areas?
Mr. Newman: With respect to the fact sheet I referred to in advising about Northern Flood Agreement areas where there is a co-management area and agreement, the statement is made in response to the question as follows: what steps must be taken to acquire a mineral disposition in a co-management area? The acquisition of mineral dispositions is not affected by the co-management areas. However, we again encourage active dialogue with First Nation communities to inform them of exploration activities in the area and especially those activities that may affect hunting and trapping.
With respect to treaty land entitlement implications to land tenure, there is an admonition to mining and exploration companies as follows: mining and exploration companies should be aware that land selections must be consistent with the land selection criteria as outlined in the framework agreement and will be, for the most part, in the vicinity of existing reserves. All land selection must be approved by the federal and the provincial governments to be made within three to five years of the ratification of the agreement. It is expected that much of the lands selection will consist of unencumbered Crown land within community interest zones. A CIZ consists of an area of 30 kilometres from the exterior boundary of the main reserve of each entitlement First Nation. Notification of any changes to land disposition, excluding mineral claims and leases within the CIZs, must be made to the appropriate entitlement First Nation. CIZs are not hold areas and do not limit any rights of a mining or exploration company to stake or develop mineral claims or obtain mineral leases.
That is what was agreed to. It is in the agreement. However exploration permits must be reviewed by the affected EFN. The purpose of this overview is to preclude large amounts of land within the CIZs from becoming encumbered and not available for land selection. It should be noted that any land purchases made by an EFN under the TLE process must be made on a willing-buyer and willing-seller basis.
Ms. Mihychuk: I take that as, basically the answer is no. Besides providing the information in writing, the department is aware of the situation and does have inspectors that are quite aware of activities that are going on in the province, both that are with dispositions and not.
It is my understanding that, in fact, the minister has granted MEAPs to companies who have not registered any type of mineral disposition. Is that correct?
Mr. Newman: The simple answer is yes.
Ms. Mihychuk: How does the minister justify giving out money to exploration companies who do not register any type of land tenure in terms of exploration permits or anything else to the department?
Mr. Newman: I am not aware of any constructive persuasive reason why it should not be done the way it is done to maximize the value that their investment brings to the province. When they make their application, they give an indication of a budget as to how they are going to invest the money. It is scrutinized and, to the extent it has geological and other merits that make sense to the best intelligence that we have within our department on the review committee, it is approved or not approved in whole or in part.
Ms. Mihychuk: Can the minister explain why companies need to withdraw to get exploration permits? Then if we wish to encourage exploration, and some companies need it, and some companies do not, what is the difference?
Mr. Newman: The business practice is for exploration companies to take out an exploration permit where they are seeking a larger area within which to do exploration work. When they determine that a certain area is worthy of taking out this position to protect their interests, they would do that and then pay the necessary fees to allow that to happen. It just makes sound business sense.
The treatment of exploration permits and special exploration permits, in accordance with the notice we give to the explorationist community, is that they can be issued in the community interest zone area with the consent of the entitlement First Nation. The entitlement First Nation can object to the issuance of exploration permits or special exploration permits only if the land applied for, or part of it, is made as a land selection within the specified time lines in the agreement. Those time lines are 60 days to respond to notice of disposition and 180 days from date of notification to formally select the land. The reason these two kinds of permits are dealt with differently is for the simple reason that these permits would encumber large tracts of land in the area, wherein we are encouraging the time lease selection of the treaty land entitlement of the entitlement First Nation.
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Ms. Mihychuk: Does this policy about requiring exploration dispositions of some type actually allow companies to explore in areas that are within lands that may be considered by First Nations in coming up to certain decisions without that First Nation knowing about it? Does the minister not feel that those First Nation communities have the right to know that there are mineral interests in those lands and that, in fact, companies are exploring and doing work in those areas?
Mr. Newman: As I have said on several occasions, this you leave up to the good sense and good will, the individual and corporate ethics, the self-interested motivation of the peoples involved, and that is also why we have the ninth point in our strategy which we are going to be workshopping so that we do not come in and impose paternalistically in interfering ways what we think is the best way of doing this. We are going to the people themselves to tell us in a workshopping process which is imminent. This has been in the planning process for some months. We are in the final process of selecting a facilitator, and we are inviting a variety of organizations to nominate two members to send to a workshop to begin the process of learning each other's aspirations, cultures, communication needs and to begin to work on the initial draft of an accord.
The initial workshop is planned for the end of May of this year, and invitations will be sent to the Assembly of Manitoba Chiefs with the recent, reported in the aboriginal media, severance of the MKO, the MKO as well, the Manitoba Metis Federation, the Northern Association of Community Councils, the Mining Association of Manitoba, Manitoba Prospectors and Developers Association and the Manitoba-Saskatchewan Prospectors and Developers Association. That is the process to have the representatives of the communities come up with what they believe is the answer you are apparently searching for.
Ms. Mihychuk: Can the minister indicate how many companies have received MEAPs but have not registered exploration permits?
Mr. Newman: We do not have that information at hand but, if you wish, we can undertake to provide you with that information.
Ms. Mihychuk: How does the department know where these companies are working in terms of accountability, inspection, and ensuring the work is being done when exploration permits or some sort of tenure is not registered?
Mr. Newman: The process for inspections is a spot-checking process and, when there is a decision to go and do a spot-check of a particular explorationist, it is ascertained at that point in time where they are and then the inspection is done in that fashion. They have some indication normally in the broad area where they are, which is identified in the initial application, but the specifics are ascertained at the time of the spot audit.
Ms. Mihychuk: Well, surely these spot audits sound like the department sends out an inspector to go onsite to see that the activities are actually going on as presumably are being expressed in their application or their plan. Now, if an inspector is planning to do a random check on the company, surely that sort of surprise visit would be pre-empted by a phone call to the company saying, hey, we are coming up, where are you guys?
We are putting millions of dollars into exploration companies, and I believe that in the most part we have seen positive steps. I believe it should come from Consolidated Revenue. That is another argument, but there needs to be strong accountability. Putting $4 million into exploration, there have to be clear guidelines. The government must know where the companies are and be able to access that whenever they want to, not at the convenience of the company, it seems to me. What is the minister's view and how does he have his inspectors go and check on these companies if there is no mineral disposition of any kind?
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Mr. Newman: I do not get the impression that we have got unwelcome investors in Manitoba skulking around in a darkness and trying to hide from the scrutiny of the local populations and the world.
What we are talking about here is companies that have seen fit to invest significant amounts of dollars, a fraction of which is supported by a provincial tax dollars contribution. They have 18 months within which to complete the work for which they have received support from the province. The creative tension for those who are not absolutely honourable is to have the potential for a random inspection, audit, of their expenditures.
The practice is, without giving away the total picture which would then be a disservice to the integrity of the process that you are talking about, to go in after they have done enough work to be able to make them accountable and then measure whether the money has been spent, as they had indicated in the application form, in the way it was intended to be spent. So that is the way it has been done, and I welcome comments from you and continued questioning from you that may reveal to us some ways that we can practice our policy of continuous improvement. That is the answer to your last question.
Ms. Mihychuk: So it is my understanding that exploration companies are able to apply to the province, to the department, and receive provincial grants and do work without field observations or checks in areas without registering mineral dispositions. Clearly, this has to raise questions of accountability for the department. It very much concerns me that the minister was not aware that these companies were out there and actually in an area that may impact on other negotiations that are going on.
So I think that there needs to be better communication, but I think that there is a public accountability question here that the minister must address. The minister must be aware that there are exploration companies in Manitoba's environment that are doing work and do not wish to be recognized or have their work spotted by other companies. I mean, this is part of the exploration business. You go out and you do your business, and you do not leave tracks. I mean, it is not the type of thing that you want to advertise. But if you are going to do that, it would seem to me that you take your chances. You go without a provincial grant. You are out there to make a deal or find a find and that goes on all the time. So am I implying that there are companies out there in Manitoba that are lurking around and people do not know? Well, those are the minister's words. I would say, yes, absolutely. There is exploration going on in Manitoba. We want to encourage it. It is the way business is done, but the government has decided to give public money to companies. When they have decided to do that, then there is an onus on those companies, a responsibility for them to own up, indicate what areas that they are going to be doing business in because it is a matter of accountability. Inspectors must be able to come and check the field site.
Can I ask: have there been inspectors who have done random checks on the field programs of these companies that receive MEAPs? That may be a very broad question because I know that there are numerous companies out there, but in particular, those companies that have not registered mineral dispositions.
Mr. Newman: What specifically did you want to know about the audits? I missed the question.
Ms. Mihychuk: How many inspections have there been in lands identified, presumably to the Marketing branch or whoever runs the MEAP program, on those companies that have received MEAPs but have not registered mineral dispositions?
Mr. Newman: As I indicated, I cannot delineate between those that have registered with the branch, but I can talk about the gross number of audits.
In October of '95, there were 14 active MEAP projects. Nine inspections were scheduled and two were completed. In January '96, there were 34 active projects. The number of inspections scheduled is nine, and three were completed. In May of '96, there were seven projects active. One inspection was scheduled and it was not completed. In November of '96, there were 43 projects active; five inspections scheduled and four completed. In May of '97, there were 22 projects active, and seven projects were scheduled and two were completed. The last inspections, then, were in May of '97.
Ms. Mihychuk: For clarification, is the minister saying that these inspections were in the field, or are these financial inspections?
Mr. Newman: All of those that I have referred to are site inspections. In addition to that, there were office audits selected.
In January of '96, there were two selected for office audits. One was carried out and there was an internal review of project receipts and invoices in 10 cases. In May of '96, there was one office audit selected. One was carried out and in one there was an internal review of project receipts and invoices to the date. There were internal reviews in November of '96 and May of '97 in the amount of 19 in the former and six in the latter.
Ms. Mihychuk: Are the site inspections conducted by a claims inspector?
Mr. Newman: The audits are conducted in the offices by the MEAP co-ordinator and a staff auditor with the Department of Finance. The field audits or site inspections are done by departmental geologists.
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Ms. Mihychuk: How much experience and training do the geologists have in terms of inspecting claims and other types of exploration work?
Mr. Newman: The way you phrased your question causes some difficulty. My advice is that the people who conduct the inspection are people who are professional geologists who are doing inspections of the geology.
Ms. Mihychuk: Can the minister indicate what expertise is required to be a claims inspector?
Mr. Newman: The claims inspector has no relation to the function that we have been describing in doing site audits with respect to MEAP expenditures. The claims inspector is someone who determines whether or not the staking of claims has been done in accordance with regulations.
Ms. Mihychuk: Are the geologists that do these inspections familiar with the criteria required in the MEAP plan and the mineral disposition regulations?
Mr. Newman: The guide for the geologist doing the site inspections is developed by the MEAP co-ordinator and is given to the geologist doing the inspection to ascertain whether the geological work being done is in accordance with the criteria which were the basis for the advance of MEAP support.
Ms. Mihychuk: It seems to me that last year we talked a little bit about accountability and the inspection methods for MEAP projects by departmental geologists and others, and we talked about--I think this was also raised by the Auditor--that the department included visits by field geologists into areas where a company was exploring and had a MEAP. It seemed, at that time, fairly casual and not particularly planned out as necessarily an inspection of that program, although they went for a site visit, and they may see what was going on.
Are there specific geologists assigned by the department now to inspect and ensure that these MEAP projects are complying to their plans and ensuring the financial accountability of our grants to these companies? Who is doing it, and whose branch or department are they assigned to?
Mr. Newman: To geologists.
Ms. Mihychuk: And those two geologists are associated with the MEAP program specifically, Mr. Minister?
Mr. Newman: I meant t-o, not t-w-o geologists.
Ms. Mihychuk: Can the minister clarify that, please, in greater detail?
Mr. Newman: I was not responding in terms of the numbers of geologists. I was responding to the profession, the types of staff that were engaged in the process of site inspections, and they are geologists.
Ms. Mihychuk: Okay. I understand that the inspectors are geologists. My question is are they specifically identified to do this work on the MEAP companies and those projects?
Mr. Newman: Those considered to have the relevant background and experience are the ones who are designated to perform the particular inspections at a particular time.
Ms. Mihychuk: Can the minister identify how many geologists go out and do these inspections? Who are they? How often do they go? Are they identifiable people who go and say I am going to do the following 45 inspections, or are they at random? It just seems I am not getting clear answers as to who is the inspection team for MEAP.
Mr. Newman: We try to be as helpful as we can. If we understand what your earnest desire is, that is to get the names of the people who have done inspections, we are prepared to give you a list of the names of all people who have done site inspections. We just cannot do it right now, but we can undertake to provide that to you, and I so undertake, if that is what you want.
Ms. Mihychuk: I appreciate that. I would also like to understand the process. Is there a planning process identified early on in the year that says that you will be expected to visit the following five companies, or how is it assessed as to who is going to go out and at what time, and how is the link between the Marketing department and the person who handles MEAP and the geologists that go out?
Mr. Newman: The written policy dealing with inspections and audits is as follows. Inspection and audit criteria have been established with advice from an internal auditor with the Department of Finance. An inspection checklist was developed along with guidelines. All inspections will be co-ordinated through the director of Geological Services, Energy and Mines. Site inspections will be based on 30 percent of approved assistance dollars under the November 1996, May 1997, and future offerings. Company office audits will be conducted on 30 percent of paid assistance dollars paid to the November 1996 offering. Company office audits will be conducted on 20 percent of the paid assistance dollars under the November 1996 and November 1997 offerings. Companies approved prior to the November 1996 offering were not required to submit receipts or invoices for their exploration activities. Site inspections and company office audits are selected randomly unless there is cause for concern, therefore selection of a project or company may be made by the MEAP co-ordinator.
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Ms. Mihychuk: My understanding, and if the minister can correct me, is that it is the geologists in the Geological branch that go out and do whatever inspections that the co-ordinator for MEAP assigns. Is that correct?
Mr. Newman: The staff advised that the definition of random means sort of just pick any one of them, and it may very well be that to demonstrate absolute integrity in the system every project should be given a number and thrown into a hat and then you pick one, but if that is the concern of the honourable member for St. James, then maybe you can share that. If you think that is a more objective way of doing it, I am inclined to think it is too, if that is of any concern.
Ms. Mihychuk: Well, I think we have ended up coming into an area where perhaps I am going to request the minister take some time to investigate and ensure that we have steps of clearly defined inspection and accountability established for the people of Manitoba in terms of handing out these grants. It concerns me when I heard numbers like, there were 34 projects; we are going to do nine audits; only three got completed. That is a very small number, and I know that that was in the past. Now I think there are 45 projects, five were identified, and five completed.
Well, we are talking about a very significant amount of money, and we do take considerable effort to promote Manitoba and the program, and so there must be also an onus on the department to do the inspections, do them at random, have somebody identified who is not the same person that also gives out the money. It needs to be somebody different, in my opinion. So, there have been several questions. I am not very satisfied in understanding the process or how we ensure that accountability, so I look for the minister to perhaps review the situation and ensure clear criteria on accountability for MEAP.
Mr. Newman: You can be assured that the committee that does the selection, any one of those members is not the person that does the audit. That is a matter of policy. But looking at the same numbers that you brought to our attention and being exposed to the detail that I have, you have made me accountable on the record to make sure that I am satisfied that this process does meet the standards expected of taxpayers of Manitoba who contributed part of the investment.
I will, of course, make sure that I am satisfied that that trust is exercised in those checks to ensure that the monies are appropriately spent, is a process that has adequate checks and balances to it. That is why another department auditor was brought in to establish--the internal auditor was brought in from the Department of Finance to give guidance as to how the program should be conducted.
One thing that I will look at in particular is what random means, and the other thing I will look at in particular is why there have not been audits done, according to my record, since--site inspections--May of 1997, and I will provide you with answers not only to both of those but will respond and indicate what the deputy minister has chosen to do to address those two points.
Ms. Mihychuk: I thought that maybe we could move off of it, but the minister's comments raised just one more area that I want clarification on, and that is the MEAP co-ordinator. That individual is a member of the Marketing branch. Is that correct?
Mr. Newman: Yes.
Ms. Mihychuk: This individual is responsible for overall administration. Did I understand the minister to indicate that they also are the ones who do the selection of the site inspection?
Mr. Newman: The MEAP co-ordinator may make and normally would make a recommendation, but the choice of geologist is not made by the MEAP co-ordinator.
Ms. Mihychuk: How does the MEAP co-ordinator provide all the detailed information to the geologist who would do the site inspection?
Mr. Newman: There is a checklist and criteria.
Ms. Mihychuk: So, if I understand, the MEAP co-ordinator may select the companies for the site selection. What I am trying to get at is that it seems to me that the Marketing branch probably has plans or a certain intent identified by the company, and I am wondering about the link.
Is there a clear link between that person who is fairly administrative in their role, I understand, with the people who may be in the field already who are going to be going out to a local project? What types of lines of communication is there between that MEAP co-ordinator and the field inspectors?
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Mr. Newman: There is communication between Marketing and geology, and the means of communication is discussion and then, normally, memo.
Ms. Mihychuk: I am going to move off of this line. I think that the minister's exploration into the MEAP accountability sector may establish the fact that there needs to be clearer lines of communication between the Marketing individual and the people who may go out into the field. I think that would be an improvement. The MEAP co-ordinator I do not believe is a geologist with geological experience, and there may need to be some partnering in those two services because we are dealing with the mining industry, and as we talked about, there needs to be a strong sense of accountability.
So I will leave that area and ask what other activities the Marketing branch has been up to and ask them what activities, and that is the first one identified, promotes economic development opportunities for base and precious metals and industrial minerals. What initiatives has the Marketing branch done to promote industrial minerals?
Mr. Newman: Growing out of a meeting held at the Mining and Minerals Convention in November, a collaborative effort between members of industry and the branch have been working to develop an industrial mineral advisory committee. It will be an advisory body to help the department set priorities and to identify key sectors that should be focused on and promoted. The direction then or recommendations growing out of that will be implemented by the Marketing area to the extent that our resources and capacities permit.
Ms. Mihychuk: Can the minister provide for us a list of conferences and promotional trips that the Marketing branch has undertaken to promote mining in Manitoba?
Mr. Newman: Maybe I could just add to that last response. In addition to the industrial mineral advisory group, a business-developed officer has been dedicated to industrial minerals as a part of the responsibilities of that position.
I am sorry, could you repeat the question which you put just moments ago?
Ms. Mihychuk: My question is if the minister could provide us with an itinerary, I guess, of the Marketing branch, where they went, to what conventions and conferences and other promotional activities they undertook to sell our resources and attract companies here to Manitoba.
Mr. Newman: Excluding potash, the conferences were the Titanium Oxide Conference in Vancouver; the North East Mining Conference in New York, New York; the North West Mining Conference in Spokane, Washington; Western Investment in Mining Conference in San Francisco; the Cordilleran Roundup Pathways '98 in Vancouver; The Prospectors and Developers Association in Toronto; a Mid-Canada Mining Corridor Conference in Thompson; company call-backs; visitations in Vancouver and Toronto; new company visits in Calgary and Vancouver and the Nunavut mining conference in Cambridge Bay.
Ms. Mihychuk: When was the last time the department attended the construction industry's convention or had an association with the construction industry?
Mr. Newman: I know the deputy minister and myself and at least one of our department members and one of my staff attended the Heavy Construction Association meeting where I gave a speech on the quarry rehabilitation program and sustainable development. That was in Winnipeg a couple of weeks ago.
There is a continuous working relationship with the Heavy Construction Association and its members. One of the staff who I had the good fortune to meet and have a lengthy conversation with, and also members of the industry, a chap named Brian Bailey, who is a manager of inspection of the rehabilitation work pursuant to that policy has a regular working relationship with that segment of the industry. I might say I received many positive comments about the quality of the relationship the department has and how generally happy they are with that particular program.
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Ms. Mihychuk: Can the minister indicate the value of base precious minerals in industrial minerals as a follow-up? We were just talking about the construction industry and their needs. Is that included under industrial minerals, or is that separated?
Mr. Newman: The Mines Branch has the most significant involvement and relationship with the aggregate portion of industrial minerals.
Ms. Mihychuk: Does the Marketing department have information as to the value of Manitoba's minerals--base, precious minerals, and industrial minerals?
Mr. Newman: Are we talking values of production?
Mr. Chairperson: The honourable member for St. James. The honourable member for St. James.
Ms. Mihychuk: Oh, yes, I am, sorry. I snoozed there--I sort of lost it.
Mr. Newman: We do not have that information handy, but to make sure we have accurate information, we will undertake to provide that to you.
Ms. Mihychuk: I see here that this is the branch that also plans and co-ordinates the mining convention and runs the MEAP, as well as provides business liaison individuals. Can the minister identify how many staff are accordingly responsible to those sectors?
Mr. Newman: The convention allotment of staff is one co-ordinator with a planning committee made up of several staff from throughout the department; MEAP, two staff plus a panel; and business development, three staff plus the director, and the time devoted to that aspect by the deputy minister or the assistant deputy minister and myself, the minister.
Ms. Mihychuk: That does not, as far as I can figure, account for the whole staff allocation in the Marketing branch. Perhaps a better question would be--there are 17.5 positions identified in that branch. Can the minister explain for us or outline what those positions are related to?
Mr. Newman: The 17.5 FTAs are the director; the information/business development officer support--do you want the names?--the business development officer; library technician; publications and graphics officer; graphics technician; manager information resources--vacant position--publishing assistant; convention assistant, which position is now part of business development; library website technician; library technician; program co-ordinator, MEAP; administrative secretary; convention co-ordinator; information clerk; business development officer; administrative secretary; and MEAP assistant.
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Mr. Peter Dyck, Acting Chairperson, in the Chair
Ms. Mihychuk: This is a branch that deals with the library and publications, and I have a question on that as well. It probably would have been easier for us to just go through that in the beginning because I had forgotten that they also handled library services and the information desk in the front, but I look to the minister for policy guidance here in terms of a vision of reports and information generation. Geologists go out in the field, collect information and then produce several different types of information sources. Some of it comes out in the mines convention, and then there is a preliminary. That is usually the time of the release of preliminary information, and then later on at some time, if I remember correctly, eventually a report comes out with greater detail.
Now, I know that some reports have taken several years to complete, and there has always been a question of relevance of that information because of its timeliness and how quickly things are changing in the mineral industry. I am wondering if the minister has a thought of the future in terms of providing information to the industry and those interested in that type of information, and what is the vision for the future? Are we going to continue to put out final reports that maybe take years to produce? Are we going to enhance preliminary information? Are we going to go online? What is the vision for disseminating information from the department?
Mr. Newman: As you know, the vision is towards the use of the Internet as the major communications highway or tool, and the digitization process has progressed to a point where the largely paper focus is being replaced by an electronic on-time, ready-access kind of program. There is a data delivery plan which is targeted towards launching operationally at the next Mines and Minerals Convention in November of '98 for testing, as I understand it, at that particular convention, so that there will be some feedback by people that participate in that convention.
Ms. Mihychuk: If I remember correctly, the minister's introductory statements indicated that there were, I believe, eight reports being published or were published this year. Is that correct?
Mr. Newman: The number was nine reports.
Ms. Mihychuk: Can the minister indicate what type of reports these are? Are these all geological reports? Are there petroleum? Are there energy reports included?
Mr. Newman: While I am waiting for the specific answer to that question, it might be timely to respond more fully to the previous question that another focus or changed focus in the publication approach is to move towards more open-file reports with more raw data and less interpretation, with more detailed reports to follow later so we would avoid, discourage delay for the sake of adding that dimension to the report.
The category of those nine reports, classification of the nine reports is mineral deposit series, open-file reports, report of activities, and one aggregate report.
Ms. Mihychuk: Let me first start with the open-file reports. These are reports that are done on an annual basis from field crews. Is that correct?
Mr. Newman: Generally speaking that is correct, but sometimes it goes back two years with mapping activity.
Ms. Mihychuk: And how many of those reports were open-file reports?
Mr. Newman: Four.
Ms. Mihychuk: What is the average length of time to produce a geological minerals report?
Mr. Newman: I am advised a range of two months to two years.
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Ms. Mihychuk: Well, I think then things have really sort of sped up in the department, and that is a very positive component I hear the minister raised since I left the department. I would be glad for him to investigate my publication record and the speed of report writing of myself and, perhaps, compare it to other geologists.
In fact, the report that was just released in my name--I believe that is one of the reports this year--so under this minister a report as a geologist by me has just been published. That was turned over to the department way back I think before I had grey hair, and fully completed in, I believe, 1989, so from the response it sounds like things have definitely improved in terms of production, and that one must have got lost in all of the other reports in production. But I can assure you the author had the information turned in as she was anxious for the payment.
My questions are because I think that there is need for review of the timeliness and the length of time that we spend producing geological reports. The information is collected in a field season. We can produce them for the meeting with industry, and I know there is follow-up. There has to be analysis of the samples, et cetera, but I would urge the minister to move towards that direction, move towards open file reports. I know this is going to be somewhat controversial. There are many of my former colleagues who view themselves as academics, and they have a role in providing a foundation of information. But I would say that this is kind of a tough world now and we need to crank out the information. That is the primary focus.
We want to get mining companies and industry interested in what we can provide to them and so rapid production of these reports, I would say, should be a priority. Interpretation and geological investigations are very important, but I would argue probably belong in other sectors like the academic sector and perhaps the Geological Survey, and urge the minister to perhaps review the timeliness of some of these reports. For example, you have nine reports. One of them is 10 years old. The others, you have open file reports and I think those are quite speedy, but you have got, then, four geological reports, I believe you have about perhaps--I do not want to guess, but are there 30 geologists in the department? So the number of reports coming out from those professionals is quite low. That is only about 10 percent.
This is another area, I think, that really requires some focus. I am a strong proponent of getting all those professionals out into the bush and into Manitoba doing that good work that I know they can do for the full field season, coming back to produce meaningful, timely reports that are going to be relevant to the users in Manitoba, and I urge the minister to move ahead in this area as quickly as possible.
Mr. Newman: I think your sentiments echo those that my staff have expressed through me here today, and that is their commitment. The number is 32 geologists. The other point is they produce not only reports, but also maps, and 11 maps were published in addition to the nine reports.
Ms. Mihychuk: I am aware that we produce maps as well, and those are extremely important to the users. How many field personnel, or how many crews, went out last year?
The Acting Chairperson (Mr. Dyck): Okay, just for clarification, we are moving to another section. If we could deal with the one that we have been working at under Marketing, it would certainly be advantageous.
Ms. Mihychuk: I was just trying to establish how many crews went out so that we could get an impression of how many maps were published, and therefore highlight that we have a problem in this area as well. Eleven maps are not a lot of maps, given that we have a significantly larger number of crews going out, and there is, I believe, a fairly large backlog. So I urge the Marketing department to maybe look at a publication strategy so that the information gets out quickly in the sector of databases, maps, and whatever additional information is available.
This is an area I recognize has got again desktop publishing component, and the costs that are associated with that, is that for contracting servicing in the past year?
Mr. Newman: Yes.
Ms. Mihychuk: One of the purposes of this branch is to monitor market trends and interpret their impacts on Manitoba. Has there been a strategic analysis done of the low mineral prices and the trend toward going into a downturn here in Manitoba and the impacts on our mining economy?
Mr. Newman: Yes, the market prices are tracked, and that certainly guides the valuation programs like MEAP and helps in the focus of the Marketing group and their relations to customers and relations to the world at large in terms of how they focus their efforts at marketing opportunities at different conferences and that kind of thing, so certainly it is a guide. It is part of the marketing function, the customer service function.
Ms. Mihychuk: I thank the minister, and I am ready to move on to another section.
The Acting Chairperson (Mr. Dyck): Item 23.2.(a) Marketing (1) Salaries and Employee Benefits $817,400--pass; (2) Other Expenditures $434,800--pass.
Moving on to 23.2.(b) Petroleum and Energy (1) Salaries and Employee Benefits.
Ms. Mihychuk: One of the new initiatives I see in this section is something that is quite surprising, quite frankly, to me, the increase of two full-time positions worth $109,000 related to climate change initiative. Can the minister explain what this climate change initiative is?
Mr. Newman: I really explained that at some length to your colleague the MLA for Dauphin (Mr. Struthers) just after you left. Do you want me to repeat it, or do you want to consult him or Hansard?
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Ms. Mihychuk: I have numerous questions about climatic change initiative, whether that is actually this title or not and these people are going to go about trying to change our climate--which I think would be publicly very supportable--but I think that there is still large speculation whether there is significant climate change or not, so it leads me to a whole series of questions. It may be better to move on and try and--either you have to repeat it for me, or I would be glad to move on to another section and come back to this.
Mr. Newman: I can give you the essence of the strategy and that might be sufficient for you. The key part of the strategy relates to addressing the challenge of an excessive amount of carbon emissions in accordance with the recent agreement on climate change by focusing on the Manitoba significant advantage in relation to renewable hydroelectric power.
The very imminent effort to get a strategy to be more than just a Manitoba strategy is my attendance tomorrow at an energy and environment ministers' conference in Toronto which is addressing this kind of issue, and our goal is to maximize the amount of support we can get for a national initiative promoting hydroelectric power and attracting a maximum amount of federal support for that. That is unquestionably the most significant initiative that can make the most significant contribution to the challenge of climate change while, at the same time, promoting economic benefits for Manitobans.
The other thrusts are in relation to ethanol and looking at that as an encouraged means, as a way to address the climate change challenge. The other is the energy efficiency or conservation approach. We discussed everything from the R-2000 program to other innovative kinds of initiatives that can make a contribution towards the very, very demanding goals that have been set for this country.
The two policy program analysts are going to have their efforts focused on doing an inventory of greenhouse gases and forecasting of energy use in Manitoba and will also contribute to the development of that transportation options paper. I mentioned to your colleague that, for example, there would be a review of the pros and cons of substituting alternative fuels in our special operating agency operating our fleet of motor vehicles, looking at natural gas and propane as possible alternatives. All of this would be consistent with an overall approach focusing on energy efficiency and energy sources and transmissions that are economic in their own right and that provide for a reduction in greenhouse gas emissions.
Ms. Mihychuk: Is the climate change initiative articulated in a booklet or some sort of public statement as to its goals and its objectives?
We do use the term "climate change," and I am assuming that there is a specific reason for that. I believe that it was this government that actually released numerous energy policy people from the department. I understand that was a real shortfall to the Energy Branch, and I am just trying to understand the purpose here. The policy analysis is important and we look to those goals, but is the climate change definition related specifically to the federal initiative, so that is the purpose of calling this climate change, when it looks like they have a broader mandate? These are policy people. I look to the minister.
Mr. Newman: I think the short answer is that we are just taking it as a given that the federal government has entered into commitments. Without going our own path and attempting to second-guess all of the world-class science that has been applied to this and intelligence, we regard this as a Canadian obligation. We intend to, through our department in co-operation with other departments of our government, contribute to the international obligations that the federal government has committed us to as a country, and we believe that we can make a contribution that can significantly impact not only Canada but North America and maybe beyond.
Ms. Mihychuk: Is this an initiative that other provinces are undertaking under the Energy and Mines departments or is this related to Environment?
Mr. Newman: It is a joint effort, and I will learn a lot more about that tomorrow. I participated at meetings with colleagues who are Energy ministers, and there has been a recent joint meeting of Energy and Environment ministers pre-Kyoto. This is the first post-Kyoto joint meeting of ministers. We do not at this moment have a formal climate-change action plan for the province, but it is in the process of being developed in co-ordination with the Department of Environment and the Sustainable Development Co-ordination Unit and our departments through this particular branch.
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Ms. Mihychuk: Has consideration been given to moving the Energy unit to another department?
Mr. Newman: Who by? Certainly not by me. I think it is well positioned where it is now and allows us to relate in very appropriate and effective ways multijurisdictionally.
Ms. Mihychuk: I raise that because there is a--organizationally, the Energy sector is sometimes placed with Mines and other times placed with the Environment. In fact, the minister himself said he was going to a conference on energy and environment.
The unit or the branch has sometimes seemed to have a completely different focus than the rest of the department, and that being Mines which is mineral sector and natural resources, while the Energy component seemed to be somewhat divergent, doing a lot of energy conservation programs. It actually worked quite closely with Hydro, and that is very understandable, so it is another sort of component of where do we belong. That is always a question that comes up when you are in these different departments. Sometimes they are grouped because of convenience or many sections are related to other departments.
I just raised that because this group has now become so much significantly decreased over the last number of years that their focus has obviously diminished. Some of the stuff that they were doing in terms of energy conservation projects and other initiatives have now moved to other departments. A good example is Manitoba Hydro which is doing a lot of initiatives in businesses and other things in terms of retrofitting and energy conservation. So the question was a matter of administrative policy and whether the minister or the government had looked at perhaps an evaluation whether they are placed in the best places.
Is that the link that is working the best now in today's world? It may be different than 20 years ago when they were merged. I am not even quite sure when it was. I do recall back in the '80s, they were physically separated from the department. It has always kind of been a strange marriage where the two components of the department seem to have quite divergent sorts of perspectives.
Mr. Newman: I am of the opinion that it is important to have a departmental component which has the capacity to vigilantly monitor independently for the people of Manitoba the kinds of issues that arise in Manitoba Hydro. I think it is important to maintain a capacity to formulate energy policy under the guiding leadership of this particular branch. It is very useful, I think, to have a dedicated energy focus, as distinguished from an environmental focus, so that they interact but each advocating positions that are representative of their reason for being, with a sustainable development kind of balanced resolve emerging out of it.
I must say, when I came in, I wondered how that would work. I am actually very pleased the way it is working, so the extent I have the ultimate decision on this or a significant influence over the decision, I am very pleased with the status quo, and I am particularly pleased about the enhancement in terms of staffing to this area. There were all the departments, and all Manitobans participated in an effort to try and get into repeated budgetary surpluses and meet the challenge of the discipline of the balanced budget legislation.
Because that is working and because all the other policies of this government are working, we can now focus on the very important challenges that are faced by our energy policies to emerge and by our Department of Environment in ensuring the environment is appropriately protected over the long haul.
Ms. Mihychuk: Are these two positions going to be permanent to the department after this climatic change initiative is completed? Are they hired specifically for this initiative, or are they intended to be permanent positions?
Mr. Newman: Again, within my influence and control and advocacy, the intention would be these would be a permanent component.
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Ms. Mihychuk: Can the minister indicate what Manitoba's oil and gas reserves are? I believe last year we looked at Estimates that indicated about 10 years, but I also know from other announcements and the ministry that there have been some new discoveries. Have reserves been extended in Manitoba?
Mr. Newman: We do not have the 1997 figures yet, but the estimate is that the proved reserved additions are likely to show an increase of 10 percent over the 128,800 cubic metres showing for 1996, and the remaining proved reserves in 1996 were 5,077,700 cubic metres, so it is projected that that will increase so that will be over 5,200,000 cubic metres.
Mr. Chairperson in the Chair
Ms. Mihychuk: I guess my question is: the reserves have increased slightly, but we have been extracting reserves at unprecedented rates. What is the lifetime expectancy of the Manitoba oil and gas deposits?
Mr. Newman: The life index for 1996 was 8.3 years, and it is estimated that that will increase this year.
Ms. Mihychuk: Is the minister concerned about the relatively short number of years that looks like is available for the production of oil and gas in Manitoba?
Mr. Newman: It is something that one should know. I mean, there is not an unlimited identified reserve of crude oil in the province. This is the identified reserve, with a great deal of exploration opportunities that have been made available to companies, which is what is largely an exploration area now has been available since ever--the correct way of expressing that would be the amount of Crown land under disposition is the highest it has ever been in the province's history, so the reason for investing PEAP money, for example, is to have inducements to have Greenfield wells is to expand the proven reserves. So, sure, we have enough understanding of what the future is that we are taking steps to expand investment and exploration in the province.
Ms. Mihychuk: Did the minister suggest that there is a high potential to double our oil reserves? You were mentioning that there is, the future looks quite good. I took from the last statement that we are promoting the exploration and development of our oil fields, so I am wondering if we are anticipating that there is going to be significantly more reserves identified by these exploration projects. Geologically, are we anticipating another find in Manitoba?
Mr. Newman: The realistic and maybe optimistic goal would be to achieve a 20 percent increase in proven reserves which translates, as I am advised, into a 20 percent, roughly, increase in production.
Ms. Mihychuk: If we were successful and found an additional 20 percent of reserves, that would extend the life of our fields for how long, could we say?
Mr. Newman: This helps--there has got to be a clarification. When you talk about the life index of 8.30, my understanding is that involves the division of the amount of production into the remaining proven reserves, so 613,000 into 5,077,000 is the 8.3, but I am advised that we have some existing producing wells in the province that have a future lifespan of 50 years or that kind of future to it, so this is a very rough way of getting some useful information about the limitations in the resource. But it does not mean that oil production or proven reserves disappear.
I further would add that the typical productive life of an oil pool can range from two to three years to over 100 years, so it is a pretty wide range.
Ms. Mihychuk: The primary objective of this section I would gather is to foster the sustainable development of Manitoba's oil and gas resources. Basically it concerns me a great deal that our reserves, given the present extraction levels, are estimated approximately to amount to eight years, and that this government continues to encourage and promote the rapid extraction of oil and gas in Manitoba. I would ask the minister: what initiatives is he taking in terms of conservation of our resource to extend the lifetime of our oil reserves? We know that the government has taken initiatives in terms of promoting exploration and extraction, but I look also for conservation which he argues is extremely important, and we are bringing on two policy people to look at exactly those types of things. How does the statements about concern about conservation and cutting down, using less, coincide with the government's policy over and over again of rapidly extracting limited finite resources in the oil and gas sector?
Mr. Newman: Are you suggesting that we should, in effect, restrict production or preserve a certain amount of reserves for future generations, perhaps as an energy security kind of approach? That simply is not an approach that at this point is part of our policy. I would be very interested in your thoughts on that. Certainly efficient production and good environmental practices in production and good environmentally friendly rehabilitations and closures of wells are all part of the plan. I know through the industry and discussions that there is potential currently under review in the largest oil field to implement an enhanced oil recovery project that has the potential to add 15 to 20 years on the life of the field.
Mr. Chairperson: Order, please. The hour being 5 p.m., time for private members' hour. Committee rise.