May 3, 1982 ALBERTA HANSARD 893 LEGISLATIVE ASSEMBLY OF ALBERTA Title: Monday, May 3, 1982 2:30 p.m. [The House met at 2:30 p.m.] PRAYERS [Mr. Speaker in the Chair] head: INTRODUCTION OF BILLS Bill 43 Trust Companies Amendment Act, 1982 MR. KOZIAK: Mr. Speaker, I request leave to introduce a Bill, being the Trust Companies Amendment Act, 1982.

Among other amendments, the Bill provides codifica­ tion of policy on pool trust funds which deal with such areas as registered retirement savings plans and registered home ownership savings plans. [Leave granted; Bill 43 read a first time] Bill 42 Metis Betterment Act Restoration Act MR. MOORE: Mr. Speaker, I beg leave to introduce Bill No. 42, the Metis Betterment Act Restoration Act. The purpose of this Bill is to put the Metis Betterment Act back into exactly the same position it was prior to the 1980 revision of the statutes.

That's consistent with the request by the Metis federation of Alberta. [Leave granted; Bill 42 read a first time] head: INTRODUCTION OF SPECIAL GUESTS MR. MANDEVILLE: Mr. Speaker, I'd like to introduce to you, and through you to members of the Legislature, 12 grade 8 students from Ralston in my constituency, who are up here on one of their curriculum courses. For anyone who doesn't know where Ralston is located, it's down in the natural gas field of Alberta, Suffield. They said they got a videotape from the Department of Education, indicating how the Legislature operated. They said: you know, Mr. Mandeville, Mr.

Lougheed looks so young and, on top of that, he's on the other side of the House. I suggest to the hon. Minister of Education that he update that videotape before he sends it out to the schools, because gray hair won't show up in the video­ tape. [laughter] Mr. Speaker, they're accompanied by their teachers Raymond Reid and Susan Masterman. They're in the members gallery, and I'd like them to rise and be recog­ nized by the House. MRS. EMBURY: Mr.

Speaker, on behalf of the Member for Barrhead, today it's a privilege for me to introduce to you, and through you to members of the Assembly, 52 grade 6 students from Swan Hills school. While it's diffi­ cult for me to compete with the member's enthusiasm over his constituency — and I certainly can't claim that Swan Hills is a suburb of Calgary North West — it is a privilege for me to introduce them today, since at one time in my life I was a resident of the town of Swan Hills. Accompanying the students are two of their teachers, Mrs. Joyce Venables and Ms. Enid Johnston, their bus driver Mr.

Maxwell, plus eight parents: Mrs. Hornsby, Mrs. Paradoski, Mrs. Dawson, Mrs. Croswell, Mr. Clar- kson, Mrs. Sperling, Mrs. Carleton, and Mrs. Carlson. They are seated in the members gallery, and I would like them to rise and receive the welcome of the Assembly. MR. WOO: Mr. Speaker, I'm pleased to introduce to you, and through you to members of the Legislature, 47 grades 5 and 6 students from Mills Haven school in Sherwood Park. They are accompanied by teachers, Mrs. Caroline Barr and Mrs. Margaret Melmock, and parent Mrs. Doreen Peters.

They are seated in the public gallery, and I now ask that they rise and receive the traditional welcome of the House. MR. MAGEE: Mr. Speaker, today it's my pleasure to introduce to you, and through you to members of the Assembly, 26 students from the Piper Creek elementary school in Red Deer. They have a perennial date with this Assembly each year, as part of their annual educational experiences. They are seated in the public gallery, accom­ panied by their principal Blair Nestransky, their teacher Jean Tatlow, and their bus driver Blaine Pullyham.

I ask that they rise and receive the traditional welcome of the House. head: ORAL QUESTION PERIOD Oil Development MR. MANDEVILLE: Mr. Speaker, I lost again. [laugh­ ter] In baseball, if you miss three times you're out. My first question is to the hon. Minister of Energy and Natural Resources. Could the minister indicate if there are going to be further negotiations as far as Alsands is concerned, or can we consider Alsands shelved at this point in time? MR. LEITCH: Mr. Speaker, I do not anticipate any further negotiations with the Alsands consortium. MR. MANDEVILLE: One supplementary question, Mr. Speaker.

Could the minister indicate whether he has had contact with Gulf and Shell, the two companies still in the consortium, since the decision last Friday in Calgary? Have they directly indicated that they are definitely not going to be interested in going into the Alsands development? MR. LEITCH: Mr. Speaker, I've had no contact with either company since the announcement at approximately 1 o'clock last Friday.

I've taken the public statements of both the spokesman for the consortium in Calgary and the president of Shell and Gulf Canada at face value, which is to the effect that they are not prepared to proceed with the project. MR. MANDEVILLE: A further supplementary question, Mr. Speaker. Now that Alsands isn't going ahead, could the minister indicate what contingency plans the govern­

894 ALBERTA HANSARD May 3, 1982 ment has in place to keep our Alberta oil industry and construction moving in the province of Alberta? MR. LEITCH: Mr. Speaker, certainly we will be explor­ ing alternatives, but I think it would be premature for me to comment today on what those might be. MR. NOTLEY: Mr. Speaker, a supplementary question to the hon. minister. What priority is the government now putting on Syncrude expansion, as a result of the Alsands decision last Friday? MR. LEITCH: Mr. Speaker, I'm not sure what the hon. member means by the priority the government is putting on Syncrude expansion.

Certainly the government has encouraged all oil development proposals within the province, whether they be a Syncrude expansion, major projects such as Alsands or Cold Lake, pilot projects in the heavy oils, enhanced recovery, and in the convention­ al oil industry. The government has been supportive and encouraging in respect of all those projects. MR. NOTLEY: Mr. Speaker, a supplementary question.

In light of the shareholder position through the Alberta Energy Company, is the minister, or perhaps the hon. member on the Syncrude board, able to give the Assem­ bly any indication as to where the Syncrude expansion now stands? MR. LEITCH: Mr. Speaker, I can't be more definitive than to say that I know it is under consideration. I expect that when the owners of the Syncrude project have collec­ tively reached a conclusion with respect to expansion, there will be discussions with us about the terms of the expansion. MR. MANDEVILLE: A supplementary question, Mr. Speaker.

Now that we're not going ahead with the Al­ sands megaproject, has any consideration been given to starting our synthetic crudes on a smaller scale? I'm saying: have smaller projects, and develop synthetic crudes in the province. MR. LEITCH: Mr. Speaker, certainly there has been consideration of that; it has been ongoing for a number of years. Members of the Assembly would be familiar with the work carried on by the Alberta Oil Sands Technology and Research Authority, which essentially is involved in experimental and pilot work with respect to development of the oil sands.

We have been very suppor­ tive of all the companies proposing developments in those areas. For example, I'm sure members of the Assembly are familiar with the fact that we have a nominal royalty with respect to pilot projects, to encourage them to proceed. We are supportive of any of these projects brought to us, both in the sense of having the Alberta Oil Sands Technology and Research Authority involved and in having a nominal royalty in order for them to proceed. MR. KESLER: Mr. Speaker, a supplementary question. Could the hon.

Premier indicate whether he's considering any major changes in the economic resurgence plan, in view of the failure of the Alsands deal? MR. LOUGHEED: Mr. Speaker, I'd like to refresh the member, also members of the Assembly, that the Alsands project was not in any way part of the economic planning of the province, in the sense of relying upon it. Neither in the Speech from the Throne nor in the Budget Address was there any reliance upon the Alsands project's pro­ ceeding, in terms of the economy here in this province.

As I mentioned in the Assembly on Thursday, our view is that that project, important as it was in terms of providing leadership in synthetic oil activity in the world, and hence had our support, was not an integral part of an economic resurgence plan. For our part, we felt that our stimulative budget, our Alberta oil and gas activity plan to stimulate the conventional oil and gas industry, is our prime thrust at the moment. Of course, there will be others in due course. MR. KESLER: A supplementary question, Mr. Speaker. Could the hon.

Premier indicate whether other plans are being reviewed at this time, to redirect the effort put on the Alsands project? As the government had indicated many dollars, at low interest rates, to go into the Alsands project, could the hon. Premier indicate whether a pro­ gram is being reviewed to take up the slack for those who have commitments in the project? MR. LOUGHEED: Mr. Speaker, I'm not sure I quite understand that question. Certainly last Thursday — or at least it was given a week ago today — we made an offer that we thought was constructive.

It involved a risk investment of major magnitude by the government of Alberta. In previous questions, I think the Minister of Energy and Natural Resources referred to other projects of oil sands development. But I may not have understood the import of the hon. member's question. MR. MANDEVILLE: A supplementary question, Mr. Speaker. Is the hon. Minister of Energy and Natural Resources planning any immediate meetings with Esso, with regard to the heavy oil project in Cold Lake? MR. LEITCH: I have no meetings scheduled with Esso Resources, with respect to that project, Mr. Speaker. DR.

BUCK: A question to the hon. minister, Mr. Speak­ er. In light of the fact that I believe a statement was made in Ottawa by the minister's counterpart, the hon. Mr. Lalonde, that the federal government would now be pressing for the Esso/Cold Lake project to go ahead, have there been any discussions within the last two days between the provincial and federal ministers of energy, as to the possibility of getting off the ground the new type of process Esso is proposing in Cold Lake? MR. LEITCH: Mr. Speaker, I'm not sure what the hon. member means by the "new type of process". Perhaps he could expand on that.

But to answer the main portion of his question, I haven't been involved in any such discus­ sions over the past weekend. DR. BUCK: Mr. Speaker, to the hon. minister: the Alsands and other plants have been open-pit mining, and of course the Cold Lake project would be an in situ recovery situation. MR. SINDLINGER: A supplementary please, Mr. Speaker. May I ask the minister what plans there are for long-term development in the tar sands? Now that Al­ sands is not going ahead, what are the prospects for tar sands development over the next 20 years?

May 3, 1982 ALBERTA HANSARD 895 MR. LEITCH: Mr. Speaker, in large measure, I think I answered the substance of that question in earlier answers today. If the hon. member is asking about our projections for oil sands development, I have no doubt that there will be significant additional oil sands development. But as to the form or time, those matters will have to be deter­ mined by the future. DR. BUCK: Mr. Speaker, a supplementary question on the development of the oil sands in the Fort McMurray area.

In light of the fact that as of this weekend, the Colorado shales are being put on hold by the federal government in the United States, can the minister indi­ cate if this will reflect upon our open-pit mining in the Fort McMurray area? Has there been any discussion between the United States government and this govern­ ment as to the feasibility of possibly never having another oil sands plant go ahead? MR. LEITCH: Mr. Speaker, I believe the hon. member is referring to an announcement by Exxon, as opposed to the United States government, to withdraw from a mega- project in the Colorado oil shale.

There have not been discussions that I'm aware of between our government and representatives of the United States government, re­ garding connecting oil shale development or oil sands development. There have been some exchanges of techno­ logical information on both developments. Mr. Speaker, I'd merely observe that as I follow the numbers, the capital costs were significantly higher with respect to oil shale development than with respect to oil sands development. MR. SINDLINGER: Mr.

Speaker, could the minister indicate whether any preliminary or exploratory talks have been held with potential applicants to develop tar sands plants over the next 10 or 20 years, or have we now seen a stop in tar sands development for the near future? MR. LEITCH: Mr. Speaker, we've been involved in a number of potential projects. First of all, there's the Syncrude expansion, which was raised earlier during this question period. Also, some preliminary work is being done on what we refer to as the other six leases in the Syncrude area.

The ownership of those leases is some­ what different from the ownership in Syncrude. Discus­ sions have also been going on with respect to a megapro- ject that would have followed Alsands and Cold Lake. So certainly, on a preliminary basis, a variety of projects have been under discussion for oil sands development. MR. KESLER: A supplementary question, Mr. Speaker. Could the hon. Premier indicate if he'd be prepared to set up a special committee of this Legislature, with a mand­ ate to review and make recommendations with regard to the economic policies of this government?

In the past, Albertans have put their complete trust in this Premier and his cabinet, but now I feel that much of their trust has . . . MR. SPEAKER: Order please. The hon. member could put that on the Order Paper for debate. MR. NOTLEY: Mr. Speaker, a question to the hon. Minister of Energy and Natural Resources. The minister indicated that the Syncrude people were reviewing the option of expansion, and that at some point there would be discussions with the government. Presumably, howev­ er, there have already been discussions with the govern­ ment.

Can the minister give us some indication as to timetable for Syncrude expansion, in view of the oppor­ tunities this expansion would give to pick up some of the slack in the associated industries that have geared up for Alsands? MR. LEITCH: Mr. Speaker, I wouldn't be able to give any estimate of the time frame. As I've indicated, that's being considered by the participants in Syncrude. There would need to be a decision to proceed with it. When and if that decision is made, we would then be able to forecast a time frame. MR. NOTLEY: Mr.

Speaker, could I put a supplementa­ ry question to the hon. member of the Legislature who sits on the Syncrude board? As a member of the board, is the hon. member able to supply the Assembly with a more definitive answer, in terms of the objectives of the board with respect to Syncrude expansion, given the need to provide some opportunities for businesses that have geared up for Alsands and might be assisted, were Syn­ crude to expand? MR. BRADLEY: Mr. Speaker, the board hasn't had an opportunity to discuss this matter since the Alsands deci­ sion.

I might say that at this point in time, the emphasis at Syncrude is to maximize efficiencies. We are looking at de-bottlenecking. At a certain point in time, a decision on expansion will come forward. MR. NOTLEY: A supplementary question. MR. SPEAKER: Followed by a supplementary by the hon. Member for Olds-Didsbury. MR. NOTLEY: As a representative on the Syncrude board on behalf of the Alberta government, can the hon. member advise the Assembly whether he has in fact recommended expansion of the Syncrude project? MR. BRADLEY: Mr. Speaker, our position has been one of being in favor of an expansion of Syncrude.

MR. KESLER: A supplementary question to the hon. Premier, Mr. Speaker. MR. SPEAKER: Might this be the final supplementary on this topic. MR. KESLER: Will the hon. Premier be prepared to set up a special committee of this Legislature, with a mand­ ate to review and make recommendations with regard to the economic policies of this government? MR. LOUGHEED: Mr. Speaker, the only way I could answer that question is to suggest to the hon. Member for Olds-Didsbury that that's the very purpose and nature of legislative debate. The estimates of the Department of Energy and Natural Resources are coming forward.

The estimates of the Treasury Department are coming for­ ward. The hon. member has ample opportunity to ex­ press his views, and no doubt they'll be fully considered. MR. KESLER: A supplementary question, Mr. Speaker. Because of the turmoil many Albertans are feeling . . .

896 ALBERTA HANSARD May 3, 1982 MR. SPEAKER: I had expressed the hope that that might be the last supplementary, but perhaps we could shift that to this one. Then I believe the acting Leader of the Opposition has another question. MR. KESLER: My question is: would the hon. Premier be prepared to set up a special committee at this time, to deal with the confusion [interjections] created in the prov­ ince by the situation of Alsands not going ahead? MR. LOUGHEED: Mr. Speaker, I could no doubt launch into a debate with regard to the question of confusion.

I think it's been clear for some time that this government, as I mentioned earlier, has not been relying on the Alsands project as part of its economic strategy for this or next year. As we have shown, we hoped that the project would go ahead, and were prepared to make very significant commitments to it. But I can only repeat: rather than a separate committee of the Legislature, the whole function of this Legislative Assembly is for debate. No doubt the hon. member will have plenty of opportuni­ ty, both today and in the days ahead, to make his points. Vehicle Registrations MR. MANDEVILLE: Mr.

Speaker, my second question is to the hon. Solicitor General, with regard to the mail-in license applications that haven't been sent back, and automobile owners who don't have the licence. Has the minister put in place any contingency plans for people whose licences, sent in by mail, have been held up in the head office? MR. HARLE: Mr. Speaker, I'd have to make some inquiries in that regard. There was a cut-off date and, as I understood it, the cut-off date was in sufficient time to be able to get the license tabs out. However, I'll check. MR. MANDEVILLE: A supplementary question, Mr. Speaker.

If someone had proof that they did apply for their licence, a cheque, would the minister consider that enough that the person wouldn't be charged for not having a licence? MR. HARLE: I would have to check the legislation in that regard. MR. MANDEVILLE: A supplementary question, Mr. Speaker. The question is more or less a conflict with myself, because I sent in my own licence on March 4. I haven't got it back yet, and it's pretty tough backing around. [laughter] It reminds me of the '30s, when I was wearing those denim pants. I'd like the minister to con­ sider that, so one wouldn't have to back around.

I had to get to Edmonton today. I had to get into the airport and back into my stall, so I wouldn't be noticed. I'd like the minister to take that into consideration, and see if we can get these licences speeded up. MR. HARLE: Mr. Speaker, I certainly think I should consider the representations of the hon. member. Howev­ er, I would like him to give me some details of his regis­ tration plate, and I will follow up on it. Aircraft Purchases — Job Opportunities MR. NOTLEY: Mr. Speaker, I'd like to direct this ques­ tion to the hon. Minister of Economic Development. A word of background is necessary.

Recently BAC pur­ chased Boeing aircraft. As a result, it obtained 50,000 offset jobs in Great Britain. In view of PWA's purchase of a quarter of a billion dollars' worth of Boeing aircraft, has the government of Alberta discussed with PWA the conditions that might lead to offset jobs? MR. PLANCHE: Mr. Speaker, I'm going to refer that question to the Minister of Transportation. Before I do, I'd like to point out that we have been to Boeing in Seattle, and we have extensively researched what oppor­ tunities there may be here for appropriate manufacturers.

Since the visit we have contacted, and continue to con­ tact, those manufacturers to see if they're interested in being competitive in carve-outs and parts that would appropriately fit Boeing's program. Among them are things like galley trays, complete galley assemblies, and a variety of other things that may be compatible with those who manufacture for camp projects and such in Alberta. So we're at that. MR. NOTLEY: Mr. Speaker, a supplementary question. I would ask the hon. Minister of Transportation to respond. But to the hon.

Minister of Economic Develop­ ment: is the minister in a position to confirm that Northwest Industries is now in the position of laying off large numbers of employees? In view of Northwest Indus­ tries' good reputation in this area, I ask the minister whether any consideration was given by PWA to offset­ ting agreements before the commitment to purchase Boe­ ing aircraft was given, considering the fact that BAC got 50,000 jobs for England out of Boeing? MR. PLANCHE: In terms of impact, Mr. Speaker, there's some difference between buying airplanes from Boeing and buying Boeing.

So it's hard to grade the two the same. In terms of Northwest Industries, it is a fact that Northwest Industries did enjoy some business with Boe­ ing, and they've had what you might call a commercial disagreement. Since that time, Northwest Industries hasn't enjoyed the participation with Boeing that they did before that disagreement. MR. NOTLEY: Mr. Speaker, a supplementary question. Can the hon.

Minister of Transportation indicate whether the minister, on behalf of the government of Alberta, held any discussion with the board of PWA, concerning offset opportunities that might be developed pursuant to the purchase of Boeing aircraft? In particular, is the minister in a position to confirm that the multimillion dollar galley contract on those planes is in fact given to a Japanese firm? MR. KROEGER: Mr. Speaker, I had discussion specifi­ cally with Boeing when I was in Seattle last year.

You have to understand that when these contracts are nego­ tiated between a firm like PWA and the Boeing Com­ pany, they're in a very competitive position. Negotiations start on the value of aircraft and design, performance, and this sort of thing. Secondly, Boeing informed me that they look at inter­ governmental sorts of arrangements, but between coun­ tries rather than states or provinces necessarily. The answer I got was that major components for 737s and 767s are being manufactured in Canada, but they can't move those around between provinces whenever the pos­

May 3, 1982 ALBERTA HANSARD 897 sibility of a purchase occurs. In other words, 737s are being purchased by users in Canada other than just Pacif­ ic Western Airlines. The other thing that complicates it, for example, is that you make a deal for six 767s, as we did through PWA. You could tie some riders to that. Then the difference in the demand for aircraft travel occurs, and you go back and cancel four of those. What does that do to your agreement?

So you really haven't the leverage you might like to have, for those kinds of reasons: the competitive thing with other companies and countries, and the fact that the manufacturers do allocate out of country. But you can't just shift with economic conditions. So while we're aware of this kind of thing and we have had discus­ sion, nevertheless there is a limit to how much leverage you can exert. MR. NOTLEY: Mr. Speaker, a supplementary question.

Given the success of the British in obtaining offset con­ cessions by Boeing, has the minister made any representa­ tion to the federal government with respect to securing at least some of those jobs which might not otherwise be generated in Alberta, when we have a layoff in our major aircraft firm in the city of Edmonton? MR. KROEGER: Mr. Speaker, since we as a government are not involved in the negotiation when these contracts are being worked out, I would have no reason to go to the federal government, making these kinds of suggestions. MR. NOTLEY: Mr. Speaker, a supplementary question to the hon.

Minister of Economic Development. Has any general guidance or policy been issued by the government of Alberta to PWA, in view of the quarter of a billion dollar contract, that the companies should deliberately attempt to seek offset concessions when negotiating with different aircraft manufacturers? MR. PLANCHE: Again, Mr. Speaker, I'll refer that spe­ cific to the Minister of Transportation, but I'd like to make a comment. We are active in the offset program.

For instance, in terms of supply to de Havilland, the other day this government was instrumental in seeing to it that a foreign supplier, bidding at a preferred subsidized inter­ est rate, was made to be competitive with someone from Alberta who could supply a competitive part. In fact, the Alberta producer won the contract. We do a variety of things, understanding that this is not a manufacturing centre in the clear sense, in terms of volumes of product for aircraft; it's a specialty manufac­ turing area. Where appropriate, and where we can be actively useful, we are. MR.

NOTLEY: A supplementary question to either the hon. Minister of Economic Development or the hon. Minister of Transportation. It's with respect to clarifica­ tion on a question I asked before respecting the galley contract on the 767s. It's my understanding that those galleys could be produced in Alberta. In his discussions with the board of PWA, is the minister in a position to advise the Assembly why there were no offsetting com­ mitments to obtain that kind of work in Alberta for Alberta manufacturers, as opposed to having Boeing con­ tract it out to a Japanese firm? MR. KROEGER: Mr.

Speaker, I didn't have that kind of conversation with the board. Nevertheless, I think what I said to begin with . . . PWA, negotiating the best terms they could, was dealing with at least two world class manufacturers. They go down to the bottom line on what the price is going to be, and make the comparison on what the performance qualities are. When that's all over, at the level of one company, you can't really start pressur­ ing them for offsets. I think that would have to a policy, a thing that would start ahead of PWA going and negotiat­ ing for aircraft. MR. NOTLEY: Mr.

Speaker, a supplementary question to the hon. Minister of Economic Development or per­ haps the Premier. Given the very large contract — in the case of PWA, a quarter of a billion dollars with Boeing — has any consideration been given to both the Premier discussing with the federal trade and commerce people as well as developing a policy in Alberta with respect to maximizing offset concessions in this part of the country? MR. PLANCHE: I'm sorry, Mr. Speaker, I didn't hear the first part of the question. MR.

NOTLEY: Has any consideration been given to carrying on discussions with our federal trade and com­ merce people, on this issue of offset concessions? If you're going to spend a quarter of a billion dollars on aircraft, let's make sure that as much as possible, we get as many jobs in Canada and as many in western Canada as is feasible. MR. PLANCHE: The offset program has frequently been discussed by my colleague with his counterpart in Otta­ wa. I'd like to say two things, though, before I take my seat. Mr. Speaker, on the issue of the galleys, three or four companies around the world make those galleys.

Usually the purchasing airline company specifies which galley they prefer. At the time of our order for PWA, there was a shortage of galley components. That market quickly turned as the fortunes of the world-wide airline industry turned; cancellations rained in, and in fact the price cut­ ting became severe. Our information was that we could not turn up anybody who could competitively supply those galleys in Alberta. If the Member for Spirit River- Fairview has a name, I'd very much appreciate having it. As to the question of how we pursue offsets, perhaps my colleague would like to comment. MR. SCHMID: Yes, Mr.

Speaker. In fact, for two years now we have tried our best to interest Alberta companies in the offset program for Canada, which was instituted to offset the purchases of fighter aircraft and other material specifically from the United States. We have had compa­ nies here from California, and they have contacted Alber­ ta manufacturers. But because of our low manufacturing output, as mentioned before, and its competitiveness, we have not been as successful as Quebec and Ontario, for instance. In addition, Mr. Speaker, you may be aware that the Leopard tank was purchased for Canada by the Canadian government.

A mission is coming from Krauss-Maffei in Germany to Alberta this month, to discuss again any type of offset program we could provide for the purchase of the Leopard tanks, which could be anything from edible oils to any kind of manufactured goods to be provided from Alberta for that program.

898 ALBERTA HANSARD May 3, 1982 MR. NOTLEY: Mr. Speaker, one final supplementary question to any of the hon. gentlemen. Can the govern­ ment advise the people of Alberta whether, as a conse­ quence of this quarter of a billion dollar contract by PWA, there will be any offset jobs in Alberta? MR. PLANCHE: I'll lead off. Mr. Speaker, I don't know of a quarter of a billion dollar contract. That was part of what I missed when I asked for it before. Perhaps the member could outline what the quarter of a billion dol­ lars will be spent on. MR. NOTLEY: Yes, as a matter of fact.

As I understand it, the planes are the purchase of some additional 737s, as well as the 767s, which comes to about a quarter of a billion dollars. MR. KROEGER: Mr. Speaker, initially an order was issued for six 767s, over a specified period of time. A 767 is listed at $60 million. That order has now been reduced to two, which changes the numbers considerably. I don't happen to have the number of 737s that are on order. They carry a price tag of about $15 million. So that's really what I was making reference to earlier.

Had the order been predicated on somebody building something in Alberta by the size of the order, and we reduce it by two-thirds — as we did with the 767s — then what would happen to the kind of offset program which you might develop? It's a little tough to tie it to a dollar figure. Oil Sands Technology DR. BUCK: Mr. Speaker, my question is to the hon. Minister of Energy and Natural Resources.

Can the min­ ister indicate if his department has had any consultation with the nuclear energy people, Nova Corporation, and TransAlta, as to the feasibility of using nuclear energy to recover oil from the oil sands, especially using the in situ method of oil recovery? MR. LEITCH: Mr. Speaker, I'd have to check on that. I'll do that, and respond later to the hon. member. DR. BUCK: Mr. Speaker, in light of the fact that the minister's estimates will be coming up fairly soon, I'll hold the remainder of the questions until that time. Canola Production MR. BATIUK: Mr.

Speaker, I'd like to direct my ques­ tion to the Minister of Agriculture. It's with reference to Senator Argue's telephone survey of 1,200 prairie farms, to determine whether they would be in favor of a sole marketing system for canola by the Canadian Wheat Board. Could the minister advise whether he has been notified of this survey, and what stand he has taken? MR. SCHMIDT: Mr. Speaker, I have no official notifi­ cation of the survey, although I have been notified of a survey being taken by some of the canola breeders themselves. MR. BATIUK: Mr. Speaker, a supplementary question.

Could the minister advise whether it's his intention to request that the survey, particularly that area that covers Alberta, be given to him? MR. SCHMIDT: Mr. Speaker, in light of the outcome of the survey showing a difference in points of view, I'm aware that the canola growers themselves have expressed that they will be trying to get a better handle on the percentage of the survey and the numbers presented. MR. BATIUK: Mr. Speaker, a supplementary question. Last year, the three pools made a similar survey, and it cost in excess of $47,000.

Could the minister advise whether the cost of this survey is going to be covered by the wheat producers, through the Canadian Wheat Board, or is it going to come from the federal treasury? MR. SCHMIDT: Mr. Speaker, I have no information as to who would receive the bill in regard to the survey. DR. BUCK: Mr. Speaker, a supplementary question. Can the minister indicate if the Department of Agricul­ ture is doing any studies as to the amount of acreage that would be sown to canola, in order for us to fulfil our foreign contracts? MR. SCHMIDT: Mr.

Speaker, the drop in acreage of canola production that took place last year was a serious threat to the rapeseed crushers within the province. Co­ upled with some reduction in yield, that gave the province of Alberta and western Canada a much lower yield in canola than we had been used to or that the crushing industry could live with. The program established mainly by the canola growers, and the information the Department of Agriculture has made available to the various regions throughout the province, have been designed for a singular purpose: hopefully to increase the canola acreage this year.

It appears that Mother Nature will perhaps be aiding that program by providing a much later spring and cutting down some of the growing period that would be availa­ ble. Perhaps some wheat acreages will now be sown to canola. That number of acres will be much easier to assess once spring planting starts, and we will be monitor­ ing that almost daily. MR. KESLER: Mr. Speaker, a supplementary question. Has the hon. minister contacted his federal counterpart and expressed the concern Alberta canola-crushing peo­ ple have with subsidized canola-crushing facilities in Ontario? MR. SCHMIDT: Mr.

Speaker, on behalf of the rapeseed crushers in the province of Alberta, we've had ongoing consultations with the federal government. In the presen­ tation to Dr. Gilson, as part of the Crow support program, we have also supported them in their approach and recognize that problems exist in the crushing industry. Summer Temporary Employment Program DR. PAPROSKI: Mr. Speaker, I wonder if the Minister of Advanced Education and Manpower would indicate to the House whether the number of jobs available under STEP will increase or decrease this summer. MR. HORSMAN: Mr.

Speaker, the summer temporary employment program, also known as STEP, has been finalized as of today. I think hon. members will receive information on that with respect to the supplementary estimates that I expect to be tabled today by my colleague

May 3, 1982 ALBERTA HANSARD 899 the Provincial Treasurer. I think a news release is availa­ ble, with respect to the numbers. As a result of the circumstances facing students and their summer job prospects, I can confirm that the numbers with respect to the summer temporary employ­ ment program will increase significantly over last year, from about 3,500 served last year to 5,000 this year. In addition, some additional programs will bring the total to be served this summer to in excess of 5,400 students. DR. PAPROSKI: Mr. Speaker, a supplementary ques­ tion.

I wonder if the minister would further indicate whether the policy of funding the student temporary employment program is the same or changed from last year? Meaning where they could work or in a general way, is the policy the same or changed? MR. HORSMAN: Mr. Speaker, there are a number of changes in the program this year. Some new elements have been added, and one program which formerly was funded through that program, the junior forest ranger program, has now been transferred to the Department of Energy and Natural Resources as a permanent job pro­ gram for people in that area.

So that won't appear any longer as part of the summer temporary employment program. More emphasis is going to be placed on municipal government participation this year. That is where the greater number of jobs will be created; in fact almost, if not completely, doubling the number of jobs available through the municipal government feature. MRS. EMBURY: Mr. Speaker, a supplementary ques­ tion. Would the minister please advise the Assembly if this program is comparable to what is offered in other provinces throughout Canada? MR. HORSMAN: Mr. Speaker, I couldn't give an an­ swer on that.

I'm not certain whether other provinces provide such a program. The government of Canada is making some effort to assist students to participate in this program. I should point out that we are making these additional jobs available for Alberta students, and other provinces of course should consider doing the same. But I could not answer that question as to whether other provinces have the same type of program in place, al­ though I do not know of others that have that type of participation by students. MR. SPEAKER: I regret interrupting the hon. member for a moment, but that last question got past me.

I wouldn't want it to be taken as a precedent, because it has been observed many times in the House that one doesn't do one's research with regard to what other provinces are doing, by asking questions about it in question period. DR. PAPROSKI: Mr. Speaker, a supplementary. I wonder if the minister would indicate to the House whether the student temporary employment program for the summer is targeted for university students or high school students. If high school students are involved, is it any grade in high school or a specific grade? MR. HORSMAN: Mr.

Speaker, the students who partic­ ipate in this program will be from the both systems. That postsecondary element commences immediately. The high school student element will commence July 1, or at least at the end of June, when the high school students will be available for the job market. If I may comment briefly, I quite appreciate the point made by the Speaker, because it's even more difficult to answer a question when the minister doesn't know the answer. MR. MANDEVILLE: Mr. Speaker, a supplementary question.

I think the minister sent out a letter on March 20, or some time in March, and he wanted a response from the municipalities on April 20. Could the minister indicate if there's a deadline as to when they can make application through STEP? MR. HORSMAN: Mr. Speaker, thank you to the hon. member for asking that question. I want to make it clear that any deadlines which may have been associated with the earlier request for positions have certainly been ex­ tended. Under the original proposal for municipal gov­ ernments this year, the element that was previously going to be made available has in fact been doubled.

Municipal­ ities won't know that until now, because the information is just being finally decided and made available to the public. So municipalities will certainly have additional time in which to request more positions for students in their areas to participate in this program. DR. PAPROSKI: Mr. Speaker, a final supplementary for the students in the province, so it's abundantly clear. When a student applies under this program, does he have to state that he wants a job under the student temporary employment program, or does he just apply? MR. HORSMAN: Mr.

Speaker, most of these jobs — in fact, all of them that are not presently filled — are listed with the hire-a-student services which are in almost every community throughout the province. Therefore the job applications a student would make would be through the hire-a-student offices. Some of them will have to take their chances on the types of jobs available. But certainly what we anticipate will happen is that they will make their applications to the hire-a-student offices, and what­ ever jobs are available will be through that purpose.

They may not necessarily be able to choose the jobs they want, but at least it will give them some considerable assistance over the summer months. ORDERS OF THE DAY MR. HYNDMAN: Mr. Speaker, I have received certain messages from His Honour the Honourable the Lieutenant-Governor, which I now transmit to you. SERGEANT-AT-ARMS: Order! [Members of the House stood] MR. SPEAKER: His Honour the Honourable the Lieutenant-Governor transmits supplementary estimates of certain sums required for the service of the province for the 12 months ending March 31, 1983, and recom­ mends the same to the Legislative Assembly.

It is dated at Edmonton, May 3, 1982. Please be seated.

900 ALBERTA HANSARD May 3, 1982 head: GOVERNMENT MOTIONS 12. Moved by Mr. Hyndman:

Be it resolved that the messages of His Honour the Honour­ able the Lieutenant-Governor, the supplementary estimates of expenditure (A) 1982-83, and all matters connected therewith, be referred to the Committee of Supply. [Motion carried] head: COMMITTEE OF SUPPLY [Mr. Purdy in the Chair] MR. DEPUTY CHAIRMAN: The Committee of Supply will please come to order. Department of Energy and Natural Resources MR. DEPUTY CHAIRMAN: Has the minister any opening comments? MR. LEITCH: Mr.

Chairman, I would like to express my thanks and appreciation to the staff of the depart­ ment, and intend to limit my opening comments to that expression of thanks and appreciation. I expect that there will be a number of matters members would like me to respond to. But rather than anticipate them in my open­ ing comments, I'd prefer to wait until they are raised. Mr. Chairman, I think the past year has probably been one of the most difficult for the staff of the department. That is true for both the staff on the renewable side as well as those on the non-renewable side.

With respect to the renewable side, two things occurred during the past year which placed a tremendous amount of pressure upon the staff of the department. Of course, the most signifi­ cant was the unprecedented fire situation. Not only did the department staff have to cope with that situation, but also develop plans and procedures to endeavor to cope in a better way if we were to have a similar situation again this year.

In addition, the significant downturn in the lumber markets, on an international basis, imposed fur­ ther obligations on the staff on the renewable side of the department to develop recommendations and programs as to what action the government might take to relieve that situation. On the non-renewable side, Mr. Chairman, I'm sure everyone in the Assembly is aware of the problems the staff of the department had to cope with during the past year. They were undoubtedly unprecedented.

I simply want to say how tremendously impressed I was with the quality and amount of work the staff had to turn out during the past 12 months. They worked willingly on weekends and nights, and put in a tremendous number of extra hours. In fact I can recall an occasion, when we were in discussions in Montreal, a number of the staff literally had to work through the night. I wanted to open by expressing my very sincere thanks and appreciation for the support and efforts of the de­ partmental personnel. In my judgment, Mr. Chairman, the people of Alberta have been served exceptionally well during the past year. MR.

MILLER: Mr. Chairman, as the associate minister, I would also like to express my thanks to the staff of the department I'm responsible for. They're dedicated to the work they do for the people of Alberta. As you are probably aware, I'm in charge of the department of resource evaluation and planning. We are looking for­ ward to an exciting year, when we're going to implement an automated land-status system — something the Mem­ ber for Edmonton Mill Woods has always been interested in — in order to serve the public better and to co­ ordinate the activities of the various departments.

You are all aware of the tremendous job the people in the department of lands are doing, not only in opening up new areas for settlement but also doing a terrific job administering our Crown land improvement program. The fish and wildlife department is looking forward to an exciting year. We are going to put great emphasis on our fish enhancement program, following the recommenda­ tions of the select committee of the Legislature which brought in the report a year ago. I would also like to thank the people who worked so hard on surveying and mapping. Our foreign ownership of land is operating extremely well.

Generally speaking, Mr. Chairman, I would like to congratulate the staff on their dedication and service to the public of Alberta. MR. NOTLEY: Mr. Chairman, I would certainly like to second the compliments for the staff, not necessarily for the government but for the staff of both the non­ renewable and renewable sectors of the Department of Energy and Natural Resources. I want to take a few minutes to talk about the non­ renewable sector. Before I do that, I have one particular issue I want to raise during estimates, with respect to the Worsley ranger station.

Perhaps one of the hon. gentle­ men would be prepared to respond directly to this, when the time for response comes. Some concern has been expressed to me by people in the Worsley area, that the government is going to close down the Worsley station and move it to Hines Creek. I would just say to the minister that, first of all, that move would be very adverse, in terms of the community of Worsley, where the ranger station has been in opera­ tion for many years. Secondly, it doesn't make a great deal of sense in view of the proximity of the Clear Hills and the Canfor operations in the Clear Hills.

I would just like to support, in the strongest possible way, the repre­ sentation that I know the minister has received from Improvement District 21 — if he hasn't received it, he will be receiving it shortly; I'm sure he already has — that there be no change in the location of the Worsley ranger station and that we get a firm statement on that by either hon. gentleman during committee study. Mr. Chairman, I'd like to reflect for a few moments on the non-renewable energy field.

I think it's important not only to draw observations about the collapse of Alsands but to look at what options I as a member of this committee would recommend to the minister. Of course I'm not going to be holding my breath that the minister is going to take my recommendations, but he's going to hear them anyway. I think it would be wrong for members of the committee not to discuss what happened with Alsands. It's fine to say that a generous offer was made — there's no question about the offer on Thursday being generous — and the companies decided to reject it. Frankly, Mr.

Chairman, I think the companies used a good deal of horse sense. At the juncture of $14 billion, as I read it, the cost of producing oil from the Alsands operation would have been so high that the most recent estimates I've seen of international oil pricing would cer­

May 3, 1982 ALBERTA HANSARD 901 tainly put the thing in a very, very dubious column. The information I have is that we'd be looking at a price between $83 and $90 a barrel, in order to make any money out of the Alsands project. Mr. Chairman, what I think members of the committee have to reflect upon is that while this was a prudent decision by the companies in April 1982, when the project was estimated at $14 billion, I don't think the same proposition would have been turned down in October and November 1980, when the estimates were in the neighborhood of $8 billion. The provincial government can blame Mr.

Lalonde, and Mr. Lalonde can blame the provincial government. The fact of the matter is that as a result of the decisions made by this Legislature — one of the provisions of the policy passed in the fall of 1980 was the suspension of any further development, or at least not allowing the go-ahead of the Alsands project. It seems to me that there can really be little doubt that that year and a half delay — or at least a delay until the fall of 1981, when the accord was finally signed — was probably fatal in terms of the economics of the Alsands project.

So one of the casualties, if you like, of the bickering between the two levels of government has been this major megaproject in the oil sands region. As I said at the time — and members can look back in Hansard if they wish — Alsands probably made some sense in 1980 at $8 billion. In the spring of 1982, at $14 billion — and I don't mind saying this inside or outside the House — the companies looked at the offer and decided it just didn't make any sense for them to invest their money. Frankly I think they rescued the taxpayers of both Alberta and Canada from what would have been a very expensive miscalculation.

But now that Alsands — may it rest in peace — is not in the picture anymore, I think we have to ask ourselves what other options exist for development of the oil sands area. It would seem to me, Mr. Chairman — and the reason I asked questions today on the Syncrude expansion is that that is the obvious immediate move the government has to examine, in consultation with the federal govern­ ment. It's my understanding that the Syncrude expansion was designed to increase production by that plant. I think the estimated increase would be somewhere in the neigh­ borhood of 70,000 barrels a day.

At the estimates I've seen, it would be approximately half the production of the Alsands project, at a much, much lower estimated capital investment cost. Mr. Chairman, during the course of these estimates — when we go from the general statements, which no doubt will take most of the afternoon, until getting into specific questions this evening — I think it would be useful if both the minister and the member sitting on the Syncrude board would supply the committee with as much infor­ mation as possible, and certainly more than we got this afternoon in question period, on just where that matter stands.

The Member for Olds-Didsbury is quite right. A lot of firms — especially in this city but also in northeast­ ern Alberta, Fort McMurray in particular — have geared up for the Alsands project. Perhaps they shouldn't have, but they did. We're going to see a number of bankrupt­ cies unless we can move forward with some alternative. It seems to me that one of the most practical alternatives that surely should be well into the planning stage at this juncture is the Syncrude expansion. I invite both mem­ bers to respond: where to from here? One of the other matters I think we should also discuss was raised by the hon.

Member for Bow Valley in his second question today; that is, the possibility of smaller projects, not only in the oil sands region but more partic­ ularly in the heavy oil area of Alberta. We have the ERCB study, February 1982, by Mr. N. Strom: Projec­ tions of Alberta Bitumen, Synthetic, and Extra-heavy Oil Developments.

This study, released under the auspices of the ERCB, suggests that an alternative to the megapro- jects is the smaller mini-projects, you might call them — I believe that's what the ERCB report describes them as — and that the capital costs for these projects — again, I'm taking this from the ERCB report — would be much less. The average would be somewhere in the neighborhood of $35,000 per barrel of daily production — that includes upgrading — compared with $100,000 per barrel for the Alsands megaproject. I say to the members of the committee, Mr.

Chairman, that one of the alternatives we should look at when we examine capital expansion would be this ERCB study of February 1982. I ask the minister in this case, because it's not clearly in the purview of the Syncrude board, to respond specifically to that ERCB study. Mr.

Chairman, as we move from the oil sands and the Cold Lake heavy oil, it seems to me that one of the obvious areas we now have to turn our attention to is the heavy-oil fields — Cold Lake is the northern extreme, but largely in the Lloydminster-Wainwright area — where, I'm given to understand, there are something in the neighborhood of 2.5 billion barrels of recoverable crude oil, which is significantly more oil than could be reco­ vered by the Alsands project over its economic lifetime, if not its actual operation existence. Two and a half billion barrels is a lot of oil.

But of course heavy oil needs an upgrader. Members in this House are all aware of the fact that we don't have a market for the potential production from the heavy-oil fields. Co-operation with our neighboring province might even be easier for the government now, as a result of an event a week ago. Co-operation on the construction of a heavy-oil upgrader would be a capital project which might well begin to take up some of the slack of people who are feeling the pinch of Alsands.

It would make a good deal of sense for the two provinces to work together on a program that would substantially increase the Lloydminster-Wainwright oil production from those fields, as a result of close interprovincial co-operation.

The one caveat I would stress at this point, because right now no doubt a lot of attention will be given to the heavy-oil fields in the province — I think that goes without saying, as a consequence of Alsands biting the dust — is that I think it is very important that the surface rights of farmers in the area are very well protected and that we not allow the pressures building up in the petro­ leum industry to sweep away our commitment, or what must be our commitment, not only to the protection of the land on top but especially the water supply of people in that area of the province.

I know there's a good deal of concern in the Vermilion-Lloydminster-Wainwright area about the impact on drinking water, where potable water is being used in some of these experimental projects. There's no question that heavy oils offer a major alterna­ tive for this government and for the people of Alberta. But I think the point we have to make is that in exploring that alternative, let's not overlook the very definite sur­ face rights of people in the area. Mr. Chairman, I want to deal with several other areas. Of course we all know we have a surplus of natural gas at the moment.

We have a government which says that finding new markets, especially south of the border, is the answer. In view of the softness of that market, I really

902 ALBERTA HANSARD May 3, 1982 wonder whether export of more natural gas is the long- term solution. Frankly I don't think it is. It seems to me there are options we have to explore right here in this province. The government is investigating the feasibility of a natural gas bank, which has been proposed a number of times. The first time I heard the matter being discussed was by Cass-Beggs, who was the former chairman of the Saskatchewan Power Corporation and the person who, more than a decade ago, recommended that one consid­ eration would be the creation of a natural gas bank.

It seems to me that we already have the legislation in place. In 1973, when we passed major legislative changes for oil and gas in this province, we made provision to take our royalty in kind as opposed to taking it in cash. That would make it possible to develop the concept of a natural gas bank. I think the government might well look at taking about one-fifth of our natural gas royalties and putting that in the form of a natural gas bank.

A second area I'd like to suggest that the administra­ tion consider at this time is perhaps slightly unique, but not unfeasible; that is, conversion of natural gas to gaso­ line. Mobil Oil has recently developed a process where high-quality gasoline can be produced directly from na­ tural gas. We have plants using this process operating in both West Germany and New Zealand — just recently, a good deal of discussion over the plant in New Zealand. Mr. Chairman, it may be that the government would want to start by looking at an experiment in this field.

But when we have a surplus of natural gas and a demand for fuel, I believe we should examine the New Zealand and West German experience very carefully. Mr. Chairman, I've already mentioned the question of the heavy-oil fields. The other issue I'd like to leave with members of the committee, when we are discussing poli­ cies of a general nature, is market sharing — proration- ing. For many years, we had prorationing in this prov­ ince. When oil was discovered in Leduc, for a while there was no system.

But we suddenly found we had a surplus of oil, that our local requirements were not nearly suffi­ cient to meet the production of oil. We didn't have a pipeline to Montreal at the time. So in the mid-50s, we had the creation of a system of prorationing, which was basically the application of the Canadian Wheat Board system to the oil industry, where each well would have an allowable. In my judgment, that worked quite well in terms of our conventional oil industry. I think it kept an industry in place here, which probably would have gone under if it hadn't been for this system of prorationing. Mr.

Chairman, in view of the fact that we now have a surplus of natural gas, it would seem to me that one of the things the government should be looking at is apply­ ing to the production of natural gas the principle which was sound enough to operate for many years in our conventional oil fields, bringing in a system of proration­ ing for natural gas. When I asked the minister about this in the House a few days ago, he suggested it's much more difficult to develop prorationing for natural gas. That may be true.

But I don't think the obstacles are insur­ mountable, at least not from the feedback I have ob­ tained in discussing this with some people in the industry. We also have the proposal for a differential flowback of export revenue. At the moment, the flowback goes right across the board. While that may seem fair enough, that means that the larger producers tend to benefit most from the flowback on natural gas sales.

It seems to me that one of the advantages of the differential flowback — that is, assigning the total amount of the flowback to a certain level of production, again taking almost the same sort of principle you have in prorationing and applying that on your flowback of revenues — is that your smaller companies would benefit greater. They would have a more enriched flowback. At this stage of the game, they're the ones who are most likely to get under way with substantial drilling activity.

It seems to me that rather than an across-the-board flowback, a differential flowback would be a boost to the smaller firms in the industry. Mr. Chairman, I want to make one further comment before concluding my remarks. We have a number of smaller firms that are facing very difficult circumstances at the present time.

While it's fine to say that if they've been turned down by three other financial institutions, they can go to the Alberta Opportunity Company, and if they wait for God knows how long to go through the process, they can borrow some money, I say to the minister that if he has in mind a turnaround as a result of some of these announcements that have been made, par­ ticularly the $5.5 billion incentive scheme, if the minister is genuinely convinced that that is going to lead to a major turnaround in the industry, then it seems to me that we have to look at some kind of gap financing for many of these smaller service companies, which aren't going to be around much longer unless we can somehow bridge that gap.

I know that's not directly the responsibil­ ity of the Minister of Energy and Natural Resources, but perhaps more the responsibility of the Minister of Eco­ nomic Development or of Tourism and Small Business. At this stage of the game, one of the components of any economic recovery package or economic resurgence pro­ gram — call it what you will — should be some form of low-interest loans for service companies. To summarize the observations I'd like to make with respect to the non-renewable field, let's take a look at what is practical and feasible.

It seems to me that at this stage, the only likely area of major development in the next few years will be Syncrude expansion. Where do things stand on that? Our heavy-oil fields offer us consid­ erable opportunity to increase oil production. But it seems to me that that is contingent upon working out an arrangement with our neighboring province so we have a heavy-oil upgrader. We have a surplus of natural gas. What innovative methods is the government examining, including following the example of the New Zealanders and West Germans, with some capital investment in a plant to convert natural gas to gasoline?

And finally, Mr. Chairman, with respect to natural gas production in the province, it seems to me that we ought to borrow a leaf from the '50s and apply a system of prorationing and differential flowback for existing export contracts, rather than hoping that with a softer market in the United States, somehow we're going to be able to increase export. Mr.

Chairman, I might just say by way of observation that five or six years ago I remember the firmness — this government can be extremely firm when it wants to be — with which the Premier, the Provincial Treasurer, and the Minister of Energy and Natural Resources were saying there was going to be no truck or trade with the export of natural gas unless we got all these concessions in the areas of petrochemicals and agriculture. Most objective analysts would have to agree that those concessions are a long way down the road. Yet we've changed the tune and are now saying we have to increase exports.

But with a soft market, I really wonder how feasible that is going to be. Would it not make more sense to look at facing the reality that the government did in the 1950s and carving

May 3, 1982 ALBERTA HANSARD 903 up the market or generating a greater domestic market? Before closing, I want to say one other thing, and that is not with respect to non-renewable resources but on the question of our ailing lumber industry. I realize there were some very sensitive negotiations, and I don't think this committee would want to prejudice those. However, I believe they have reached the point where we might have a full report in terms of entry into the American market place. That being the case, I would welcome either one minister or the other to do that.

I may have some supplementary questions that would follow. MR. LEITCH: Mr. Chairman, perhaps it would be ap­ propriate for me to respond to the hon. member's ques­ tions and comments before moving on to the questions of other hon. members. I'll have to begin by asking the Member for Spirit River-Fairview to give me a little more detail regarding his closing comments, because I didn't follow what he had in mind. MR. NOTLEY: Mr. Chairman, it's my understanding that there were some fairly sensitive negotiations between Canada and the United States with respect to the export of lumber to the American market.

Hearings were to be conducted by the Senate in April, I believe. I think there are some things we should be doing, but I did not want to say anything in this House that might in any way preju­ dice what is a fairly sensitive situation. If we've got to the point where we can discuss it, I think it would be useful. If not, fair enough. MR. LEITCH: Mr. Chairman, perhaps I could begin my remarks by responding to that. I'm not aware of negotia­ tions.

There were proceedings in the United States, re­ garding the question of whether there should be an invocation of some unfair trade practices on the part of the Canadian lumber industry as opposed to just the Alberta lumber industry. The issue was whether it was being subsidized in competition to the United States' lumber industry. My memory of those proceedings is that they have been concluded. I'm not sure that the reports are public yet. Therefore I wouldn't want to comment on them until I am sure they are public. Moving on to the other comments raised by the hon.

Member for Spirit River-Fairview, I might begin with his plea that we not close down the Worsley ranger station. Mr. Chairman, I believe the concern of the people in the Worsley-Hines Creek area arose from the fact that we were conducting a review of the operations. But I want to assure members of the Assembly that we do that type of review on a continuing basis to ascertain the efficiency of the existing system, to determine whether we ought to make changes.

In response to a number of representations I received with respect to the Worsley ranger station, on March 25 of this year I wrote to those people who had made representations, saying that we had conducted the prelim­ inary review but assuring everyone that both the Worsley and Hines Creek stations would remain open, with the only changes being reporting procedures. We contemplate putting in place a system where both stations will report to a chief ranger, who would be located at one or the other station. I think that fully responds to the concern the hon. member expressed.

As I said, on March 25, I responded to representations by saying it won't be closed. The concern or questions had arisen because people became aware that we were doing a review, but it was the kind of review we do on a regular, ongoing basis. The second issue raised by the hon. member related to the Alberta government causing a delay in the Alsands project and that's why it didn't proceed. I must say it doesn't come as any great surprise to me that the hon. member would make that argument in this committee.

I want to say to him and to the members of the committee that any objective examination of the facts simply doesn't support that submission. I think it appropriate to review a bit of history. I should begin with the time I assumed the responsibility for this portfolio. At that time, we made a decision, which was really a continuation of a practice that had gone on before, that we were going to ensure we would do everything to maintain the construction

schedule of the Alsands consortium. Shortly after I assumed the port­ folio, our government took a number of actions to carry out that intention. One of them was to retain Mr. Getty, the former Minister of Energy and Natural Resources. One of his responsibilities was to have discussions with the Alsands consortium and Esso Resources Limited re­ garding the agreements under which those two projects would proceed. There I'm referring to agreements be­ tween the project owners and the government of Alberta. We did that to ensure there would be no delay because of a change in ministers. In addition to that, Mr.

Chairman, Alsands had filed its application to the Energy Resources Conservation Board. Before we could really deal with the commercial terms, we had to know the nature and scope of the project that was going to be approved by the board, assuming it was in fact approved. Members of the committee will recall that the Energy Resources Conser­ vation Board took what was an unusual step in endeavor­ ing to speed up the approval process and, as I recall, came forward in mid-1979 with preliminary approval of that project.

That was followed, in the last days of 1979, by a final report, which indicated that the Energy Re­ sources Conservation Board would approve the project. Mr. Chairman, we then come to the period after the election and change of federal government. Members of the committee will recall that we were then engaged in discussions and negotiations with that government, all of which were designed to lead to an acceptable fiscal regime as to both pricing and taxation, that would enable the Alsands project to proceed. As members of the committee will be aware, those discussions were unsuccessful.

We come to the date to which the hon. member refers. That occurred immediately after October 28, 1980, when the federal government introduced its national energy program. As I follow the hon. member's arguments, he's saying: you should then have endeavored to negotiate with the federal government a separate agreement with respect to Alsands and the Cold Lake project. I simply want to ask members of the committee: how reasonable a supposition is that; how reasonable an argument is that?

The hon. member will recall that during the discussions I've referred to, that took place during 1980, we began with a price of $25 per barrel for oil sands production. Gradually that was moved upward until the price pro­ posed on October 28, 1980, was $38 a barrel, as I recall, plus consumer price index increases. It was absolutely clear, and I don't think any member of this committee would argue, that on that proposal, plus the taxation proposals contained in the budget of October 28, 1980, oil sands projects could not proceed. So there had to be changes.

The hon. member argued that you could have nego­ tiated those changes and negotiated a movement upward

904 ALBERTA HANSARD May 3, 1982 to the international price, which was essential for those projects to be considered viable. I simply pose the ques­ tion to members of the committee: how realistic an argument is that? How realistic is the expectation that one could then have entered into a separate negotiation with respect to the Alsands projects and moved them from the price and taxation regime set out in the budget, to a price and taxation regime that would have enabled the projects to proceed?

In my view, there is no reasona­ ble expectation that such an agreement — that is, one on those terms — could have been negotiated, subsequent to October 28, any earlier than we were able to negotiate those terms in the agreement of September 1, 1981. When hon. members consider the likelihood of our being able to negotiate such a separate agreement, they have to bear in mind that in the budget of October 28 and in the national energy policy, the Syncrude agreement, which called for international prices with respect to pro­ duction from Syncrude, was set aside.

In considering the likelihood of being able to negotiate a separate agree­ ment, one has to keep in mind the atmosphere, which included setting aside the agreement that provided inter­ national prices for Syncrude, setting aside the budget which provided a price of $38 plus consumer price in­ creases, and reducing the taxes proposed in the budget. Mr. Chairman, in my judgment the chances of negotiat­ ing such an agreement in a time frame shorter than September 1, 1981, were extremely minimal.

Even if hon. members argue that one could have done it, the question remains: assuming you could have done it, would the participants have proceeded? That is a question members of the committee ought to reflect upon. Remember what the national energy program and budget did. They very, very significantly reduced the cash flow of the participants in that project. Any suggestion that those companies would have been prepared to pro­ ceed in the face of that reduction, even if we had been able to negotiate a separate agreement, is unreasonable in my view.

Summing up the points I wish to make in respect of that contention by the hon. Member for Spirit River- Fairview, I'd say that even if one were to say that we should not have taken the action the government of Alberta did in an effort to bring the federal government back to the negotiating table, in my view the chances of negotiating an agreement that the participants would have been prepared to proceed upon in ordinary circum­ stances and then having them proceed, in light of their restricted cash flow as imposed by the October 28 budget, are extremely remote. Mr.

Chairman, I've entirely left aside the question of whether it was appropriate to take that action. I have no reservations whatsoever in saying to members of the committee that it was appropriate to take the action we did, which was to announce that we were withholding approval of further oil sands projects until we could negotiate an agreement. Remember, Mr. Chairman, a mechanism had to be put in place by this government to bring the federal government back to the negotiating table. What does the hon. Member for Spirit River- Fairview argue that that mechanism should have been?

Two things were done by this government which brought the federal government back to the negotiating table. One was the decision with respect to further oil sands projects; the other was with respect to reduction of conventional production. My memory is that the hon. Member for Spirit River-Fairview was opposed to that action as well. I simply say to him, Mr. Chairman, how did he propose to get the federal government back to the negotiating table? Those two actions were key in bringing them back to the negotiating table.

There's no question that by bringing them back, we were able to negotiate a successful energy agreement on September 1. How the hon. Member for Spirit River-Fairview proposed to bring them back is beyond my comprehension. Mr. Chairman, in respect of the hon. member's argu­ ment about delay, remember this government and the Alsands consortium did a good deal of work during the period between October 28, 1980, and September 1, 1981, and in subsequent months, to ensure that there wasn't a delay in that project. For example, we continued our discussions with them on commercial terms.

We made all the decisions with respect to having in place some components of the necessary infrastructure, including such things as building a road. The consortium didn't stop; they didn't go into hiber­ nation. The consortium kept doing the work they would have done even if approval and agreement had been reached in late 1980. They continued to work in respect of that project. The government facilitated their doing that work. They wanted to do certain work on the site, and we issued the approvals required to carry out that work.

So to leave the impression that nothing was done to move the project along in its anticipated normal time frame during that period, is quite in error and quite contrary to the facts. Finally, Mr. Chairman, and I think the members of the committee need to keep this very much in mind: even if the project had been approved a number of months ago or in 1980, today you would still have the question of whether the project was going to proceed. All members of the committee are familiar with the circumstances en­ countered in Syncrude. The decision was made to pro­ ceed. They proceeded apace for a period of time.

I've forgotten the precise time frame — a year and a half or two years or so. Then came that critical point in time when you have to make the final decision as to whether you're going to continue with the project. In the Syncrude case, that occurred when ARCO decided to withdraw. We were in very similar circumstances as we are today with Alsands. Only in Syncrude's case, the project was much farther along. I'd simply call the attention of members of the commit­ tee to the comments made in this respect yesterday, I believe, by Mr. Daniel, president of Shell Canada Li­ mited. I think it's worth quoting.

In answer to questions, Mr. Daniel said: if the project had been approved two years ago, there would have been an improved probabili­ ty that the project could go ahead today, but I cannot say it would have gone ahead. So, Mr. Chairman, while I anticipated the hon. Member for Spirit River-Fairivew making that argument, and it's an argument one would expect to hear from members of the opposition, I think that any objective examination of the facts simply doesn't support it. The hon. member made a number of other observations during his comments, and I'll endeavor to respond to them.

One of them dealt with Syncrude expansion. I don't know that I can add anything to what I said during question period in the House today. As a government, we encourage it. But the decision to proceed with expansion would be made by the participants. Certainly when and if the participants approach the government of Alberta with respect to expansion, we will be supportive of it and prepared to enter into negotiations and discussions that from our part would lead to a reasonable basis on the

May 3, 1982 ALBERTA HANSARD 905 expansion proceeding. The hon. member referred to small projects and left the impression that we should now turn our attention to those. I simply want to say that it's not a question of turning our attention to them. We have always been and will continue to be supportive of them. It has not been a case of not having our attention on the smaller projects or being supportive of them during the past years because we had the Cold Lake and Alsands projects on the drawing board. We have always been supportive of the smaller projects.

There has been a good deal of work by a number of companies, by the government through the Alberta Oil Sands Technology and Research Authority, and by the Energy Resources Conservation Board, as the hon. member pointed out in his comments with respect to these projects. But the factual position is that as of this date, none of the sponsors of those projects has come forward and said, we are ready to build. I certainly hope that will occur, and we will do anything we can do to accelerate that decision on the part of project developers. The hon. member referred to an upgrader project.

Again I simply want to bring to the attention of commit­ tee members the fact that in a very significant way we have been encouraging the development of the feedstock for an upgrader. We've done that by a royalty system and by the pricing mechanism for heavy oils. I'd simply refer members of the committee to a number of comments by companies indicating that a very favorable regime is in place in Alberta for the development of the heavy oil feedstock for the upgrader. Certainly we would encourage the building of an upgrader, but to this date no one has come forward.

A number of companies are looking at it seriously, but none has come forward prepared to build it. Over the past years, we've endeavored in a very signifi­ cant way to encourage it by providing a very favorable taxation and pricing regime under the energy agreement with respect to the heavy oil feedstock. The hon. member also referred to not relying on ex­ ports of natural gas, and described the markets in the United States as being soft. Mr.

Chairman, I want to stress to members of the committee that it's a mistake to look at the whole United States as one market in respect of natural gas, because the marketing situation in dif­ ferent parts of the United States varies very substantially between one part of the United States and another. Because of its price, the natural gas currently going into the western United States, particularly into California, is meeting great resistance from competing fuels: electricity in the northwest and an excess supply of heavy fuel oils.

So the price competition from alternate energy sources in that area is very, very severe. But you can turn to other areas in the United States where an entirely different situation exists. As I recall, there is now before the National Energy Board something like 13.5 trillion cubic feet of applications by United States customers. A num­ ber of those are on firm take or pay commitments and would begin taking volumes of natural gas very quickly. So it's a mistake to refer to the soft United States market as if the whole United States were one market. It isn't.

The opportunities to market natural gas in the United States will vary very significantly from one part of the United States to another. In addition to that, we have a number of applications that have either already been made or will be made to market natural gas, in a liquified form, outside North America. So I think the hon. member's comments about a natural gas bank ought to be considered in light of what I just said about potential natural gas markets. In partnership with industry, we have under way a study into not a natural gas bank but rather a natural gas storage facility. But as the hon.

Premier indicated at the time of our announcement on April 13, we would only contemplate proceeding with that if it is a sound economic decision for the people of Alberta. There may be ways in which it would be a sound economic decision. The existence of such a storage facili­ ty might well increase the volumes of natural gas that the National Energy Board found surplus to long-term Canadian requirements and therefore available for ex­ port. Alternatively, natural gas from such a facility might be used to provide peaking requirements for United States customers.

That's a matter we're continuing to study and hopefully will have some preliminary studies completed in the near future. But I do think we should bear in mind the caveat that we're supportive of it only if it makes economic sense for the people of Alberta. The hon. member argues that we should adopt a prora­ tioning system for natural gas. That has been raised on occasion during my term in this portfolio. I've never categorically rejected it, although I have great reserva­ tions about it.

It's quite wrong to equate the prorationing of oil, which we had for a number of years in Alberta, with the prorationing of natural gas and argue that the two are the same. They're very, very different. For one thing, historically and certainly during the period of the prorationing system in Alberta, oil was purchased on short-term contracts. We introduced the prorationing sys­ tem without having to break any contracts. In contrast, natural gas is marketed on long-term contracts. We could only introduce a prorationing system if we set aside all those long-term contracts.

I'm sure that is not a decision any member of this committee would want to take lightly. In addition, Mr. Chairman — and I referred to this when the hon. member asked me questions about it a few days ago — this would involve a massive addition of adminis­ trative people in the Energy Resources Conservation Board. It would be an extremely difficult administrative task. I heard his comments with respect to the differential flowback.

It seems to me that you're involved in very serious questions of equity if you — and this is the result of the hon. member's comments as I follow them — say we will pay a different price for your natural gas, depend­ ing on how much you as a company produce. Mr. Chairman, with respect to the comments about converting natural gas to gasoline, that is not something I've been approached to support. I'd certainly be pre­ pared to consider it. I suspect serious questions of economics are involved in that at this stage.

But it may be something that has promise down the road, and I would certainly be prepared to examine it closely. Finally, Mr. Chairman, the hon. member referred to some gap financing for service firms. I think he quite properly suggested in his comments that that might be more appropriately referred to another minister. I simply stress to members of the committee that in our judgment, the program announced on April 13, 1982, will provide a very significant and major boost to the service firms.

I'm happy to advise members of the committee that we have received very favorable and supportive response to that program from the industry. We've done a lot of work with them in developing the guidelines for the program. It has been very enthusiastically received and, in our judg­ ment, will go a very long way to solving or at least alleviating the very serious difficulties that components of the service sector found themselves in.

906 ALBERTA HANSARD May 3, 1982 Mr. Chairman, I believe that responds to all the points raised by the hon. member. MR. TOPOLNISKY: Mr. Chairman, I have two ques­ tions for the Associate Minister of Public Lands and Wildlife. First, are there any plans to upgrade and expand the various grazing lands in northeastern Alberta, and to what extent, so the farmers of the area can increase their cattle herds. Secondly, about a year ago I filed the Report of the Select Committee on Recreational and Commercial Fishing Industries in Alberta. To date, there has been no opportunity to debate the report in the Assembly.

We certainly have some important recommen­ dations in this report. Were any of these recommenda­ tions that are of a non-capital nature implemented — for example, the commercial fishing licences — or perhaps the capital nature one of freight assistance at Fort Chipewyan? Mr. Chairman, I now make reference to the 1982 Budget Address, page 20: "Planning will begin for a fish hatchery in [northeast] Alberta." Could the associate min­ ister enlarge on this statement? What are the plans, and is the minister in a position today to explain whatever plans they have in mind? Thank you. MR. MILLER: Mr.

Chairman, the questions of the hon. Member for Redwater-Andrew are very important. With regard to grazing lands, as you're probably aware we have the Crown land improvement program, which is being financed under the Heritage Savings Trust Fund, whereby we do an appraisal of Crown lands which we and the lessee feel should be upgraded, not only to provide greater carrying capacity for the person who wants to graze his cattle but also to increase the capabili­ ty for wildlife to have grazing.

In these plans, which are developed on a regional basis, we have the lessee submit a request that he be allowed to partake of the range improvement program. He makes a request, and this request is referred to a committee composed of persons involved with the lands department as well as the wildlife department. Along with the input from the farmer, they do an appraisal as to the amount of upgrading that should be done on the lands. Because of the vast increase in the encroachment of brush on much of the parklands, this program has proven very, very successful.

We are able not only to accomplish greater carrying capacity, but also to increase the amount of wildlife that is able to be part of the overall picture, as it were. Generally speaking, consideration is given to leav­ ing select areas of a parcel to accommodate not only the wildlife that want to have places to live, but also to provide escape routes. So they're able to utilize the area and also have greater grazing than they had when it was left in its natural state. [Mr. Hiebert in the Chair] These programs are ongoing. Our consideration is based on those who need them the most. We are satisfy­ ing that need.

We're now looking at the overall aspect, whereby we look at the land and base it on the need of the land to be upgraded as well as the need for the individual who wants to increase his carrying capacity. As well, I might point out that we have the grazing reserve program. As you know, grazing reserves have been estab­ lished throughout most of northern Alberta to accommo­ date farmers who want to get started in the cattle business or increase their herds.

These are very important for those people, particularly those who have a small group of cattle and want someplace to pasture them for the summer so that their own deeded land can be used to provide feed for the winter. In regard to the select committee's report on fisheries, of which the hon. Member for Redwater-Andrew was chairman, it is very extensive and well prepared. We have been following this report in some of the recommenda­ tions we're bringing forward, and some enhancement programs we have, to be able to increase fishing opportu­ nities throughout Alberta.

As you're probably aware, the brood stock station has been in operation on the Raven River at Caroline for the last few years. We hope to be able to have the Allison Creek brood stock station in operation this year. We're making some improvements to the Sam Livingston Fish Hatchery in Calgary, to be able to accommodate the increased number of eggs being produced. As well, we are looking at the potential for putting rearing stations not only on Lake Wabamun, but also on the Clearwater River. The Lake Wabamun facili­ ty has been in operation.

We are doing a feasibility study on the one on the Clearwater River, to see if we have the right quality and amount of water. We'll be able to utilize it to rear fish, not only for Kananaskis Country, where we have a put-and-take system, but for the rest of Alberta as well. A study was conducted last year, and we are looking into the potential for a fish hatchery to be established in northern Alberta. Some sites and recommendations have been brought forward, and we will be announcing the location sometime early this summer.

With regard to freight allowance, I would just point out that a week ago today, I had the opportunity to be at the Freshwater Fish Marketing Corporation plant at Transcona, just outside Winnipeg. At that time, I put forward the request that consideration be given to equal­ izing the freight rate for all fish delivered to the plant. This would be a distinct benefit to the people of Alberta and the Northwest Territories, in that they would pay less freight. In fact, freight would be equalized for all fish delivered to the plant.

As you are probably also aware, this past year we have had a problem with cysts in whitefish in Slave Lake. We've had to bring in a program to compensate people who fish whitefish that are of cutter grade, rather than the continental. We have had a subsidy in place for them. Mr. Chairman, I hope I've answered the member's concerns. If not, I am prepared to answer further questions. [Mr. Purdy in the Chair] DR. BUCK: Mr. Chairman, one or two points to the Minister of Energy and Natural Resources.

With regard to the sale of Crown leases — I'm sorry; if this has been asked before, the minister can tell me and I'll read it in Hansard. Lease sales declined by 28.3 per cent in 1980-81, relative to '79-80. Can the minister indicate what he foresees in lease sales, and will lease sales going down be an ongoing thing? Secondly, I asked a question on the use of atomic energy as a heat source to develop the tar sands by using the in situ method. Those are the two questions I'd like to ask. The minister can answer them now, or when we come to the appropriate

section of the estimates. MR. LEITCH: Mr. Chairman, perhaps I could deal with the first one now. As I indicated in question period, I'd

May 3, 1982 ALBERTA HANSARD 907 like to do some more checking on the question relating to atomic energy. I have had some correspondence with respect to that, but I'm not sure it dealt with the issue the hon. member has raised, which is a heat source. In any event, I'll check it and respond to that later on. Mr. Chairman, I have some optimism that lease sales will increase. I think the decision we made and an­ nounced on April 13 is going to have a very significant impact on industry activity, which I think will be reflected in the amount, in the sense of both acreage and dollars, in relation to lease sales.

I simply underline — and I don't think anyone disagrees with this — that the pricing and royalty regime that Alberta has put in place with respect to new oil, makes it extremely attractive to explore for new oil within the province of Alberta. I'm referring to oil which receives the new oil reference price. That, coupled with the geological prospects of this province, which are superior to other areas in which exploration is going on, is a very attractive incentive for the industry within Alberta. MR. BORSTAD: Mr. Chairman, I have a couple of questions.

I think they probably end up in both depart­ ments, and maybe either one could answer the question when he's closing. It seems that the snowpack in forested areas this winter was not conducive to preventing forest fires. It's my understanding that this coming season we're in as bad shape as last year. I wonder if the minister might comment on that. That same snowfall drove wildlife out of the mountains and down to some of the more settled areas. Because of that, has the damage fund of the minister's department increased? What impact has that had on the department?

Also, because of that same winter snowfall's effect on the calving season for moose, is any consideration being given to shortening the season this fall? I have had representation from the county of Grande Prairie; they're concerned about some areas within the county, because of the deep snow and the loss of calves.

Because of economic conditions in the province and the loss of jobs, and the need to restore much of our timber resource which has been lost over the years to forest fires, especially in the last couple of years, has any considera­ tion been given to a major reforestation program which would satisfy the two needs: reforestation and also creat­ ing jobs for students and maybe other people in the province who could be looking for jobs when our unem­ ployment rate is increasing? Also, what is the time line on the Shell pilot plant at Peace River, and Gulf, north of Wabasca? Will they continue to be pilot projects?

When do they come into a position where they start to produce, or whatever they're going to do? MR. LEITCH: Mr. Chairman, perhaps I could respond to those questions that relate to my areas of responsibili­ ty. With respect to the two projects the hon. member has referred to, I can't give him a definitive time line. I will do some checking to see whether there is any up-to-date information in the department, but I doubt there is. I certainly haven't been informed of any definitive time line when those projects might change from their present character to a different character.

On the question of the outlook for the forest fire season, I wouldn't want to make any predictions. It's safe to say that the department is preparing itself in anticipa­ tion of a serious forest fire season again this year. In short, we are assuming the worst, preparing for the worst, and hoping it will be much less severe than has been the case in the past two years. I should add that we have materially improved, and there are funds in the budget for forest fire prevention capability. For example, we have added some attack crews and some aircraft.

We've also added what I am hopeful will be a very significant improvement in lightning detectors, which will now indi­ cate the direction and approximate location of lightning strikes. That enables us to have the aircraft fly in that direction the morning after an evening storm and along the indicated distance, which is going to give a much greater focus to our surveillance by aircraft. Funds were provided by special warrant for that in the late fall, as I recall, and additional funds are provided in the budget.

With respect to reforestation, under the program funded by the Alberta Heritage Savings Trust Fund we are of course carrying on very significant reforestation in a number of areas, including areas that have been burned over. The hon. member suggests we might increase what we're doing in that area. I'm not sure we have the capabil­ ity to do that, in the sense that one limiting factor would be the stock for reforestation from our nursery. Members of the committee will recall that we very significantly expanded the capacity of that nursery just recently.

As far as I'm aware, we are using all we are able to produce in reforestation but, again, I'll check into that. MR. MILLER: Mr. Chairman, with regard to the moose season, I would answer that we are contemplating shor­ tening that season by one week. Instead of September 15, it will be September 22 in big game unit 3 and wildlife management unit No. 510. Death from starvation generally is not as bad this year as in other years. Southern Alberta is considerably better than normal. In the St.

Paul area, northeast of Edmon­ ton, it's probably increased 5 per cent over what it might normally be, and the rest of the province is considered normal. As you're probably aware, one problem is the number of ticks on wildlife, particularly moose. They've counted as many 20,000 on one animal. How to control ticks on these animals is a concern. Usually they weaken the animal to the extent that it starves to death. It's a very large contributing factor to the death of many of our ungulates. In regard to our damage fund, we're most concerned with the prevention aspect.

We supply fencing, so that farmers can fence their stacks to keep them from depre­ dation by animals. We have a damage fund and, to the best of my knowledge, it's still in pretty good shape. MR. KESLER: Mr. Chairman, as of the events of last week, I think many members are, or at least should be, concerned at the direction of the Energy and Natural Resources Department of this government.

As I review the events of the last two years — Alsands, Cold Lake, and the conventional industry — I find myself wondering if members of the Energy and Natural Resources De­ partment aren't perhaps trying for early retirement, in fact early retirement of the total department. It seems to me that the responsibility of the Minister of Energy and Natural Resources is to guarantee that the oil industry, one of the most vital industries in Alberta, continues to function at an adequate level.

As well, the minister's function is to guarantee that those involved in that indus­ try, who are dedicated to improvement in this province, have a place to go with their company. As we review the events, and recognize that the federal

908 ALBERTA HANSARD May 3, 1982 government will take the brunt of criticism for the failure in the energy agreements, I wonder if there isn't a lesson there for many cabinet ministers. As negotiations have broken down, and the spirit of the agreements has broken down, it appears that the federal government did its homework. The Prime Minister travelled throughout the world and perhaps knew more about the future of the oil industry on a worldwide scale than did those representing the industry from Alberta.

Perhaps, as they negotiate, they should learn to read the small print, so that the people of this province don't always come out with the short end of the stick. Over and over again, on and off again, we hear policy decisions from the minister and his department. First it's Ottawa's fault that negotiations break down. One day the program is going ahead; the next day the program is backing off. Many times in this Legislature, we've heard what a great deal the September energy agreement was. I'd like to read a statement concerning the September agreement by a very reputable individual in the industry.

His first statement: High expectation followed by disappointment and frustration. That's the kind of reaction we, in industry, ex­ perienced as we studied the September 1 Ottawa Alberta Memorandum of Agreement . . . The individual goes on to say that he wishes to review some of the principles of the agreement so there might be an improvement in the conditions facing the industry.

He goes on to explain that greater specific emphasis has to be put on by the provincial government to protect the Alber­ ta junior oil companies that make up, or have been responsible for, 75 per cent of all the exploration in this province over the last few years; junior oil companies, made up of Albertans, that are disappearing every day. Mr. Chairman, we hear there's going to be an upturn. We once heard statistics that lease acquisitions are down 28 per cent. A review of percentages of seismic activity has always been a good indicator of increased activity.

I know those percentages are readily available to the public and, as I've said, they're positive or negative indicators of where the oil industry is going. We keep hearing about an upturn; however, the seismic activity clearly shows a 25 per cent reduction in the last year. When are these agreements, which are so positive for Alberta, going to start to have an effect, so that these companies can survive? We have small Alberta junior oil companies disappear­ ing, yet we have an Alberta company called Alberta Energy. I certainly recognize that public shares are avail­ able in Alberta Energy.

However, the government of this province certainly initiated and basically controls the operations of that company. It seems to me that when Alberta Energy was first implemented, it was to go where the private sector couldn't — words from this government — for example, the Suffield Block. By their manual, we see Alberta Energy today competing in gas and oil, pipe­ lines, coal, petrochemicals, forestry, and other activities. Another statement in the manual reads: Additional plans for increased oil and gas explora­ tion activity are being developed at this time.

Alberta junior oil companies going under, and Alberta Energy planning more expansion: rather a sad state of affairs when tax dollars are being taken from the private sector, and destroying that private sector, to support government corporations. Mr. Chairman, we've heard about a $5.4 billion resur­ gence program for the oil industry; we heard about $250 million going into the service sector. But the $250 million to the service sector will only help those who are current­ ly working. What about those who aren't working?

As you drive through Alberta today, you see the signs — I'm not talking about road signs — all the way from the southern border to northern Alberta: hundreds of rigs racked throughout this province, along the highways. It's spring break-up, so you expect to see a few rigs racked. But you've never seen rigs racked like that in this prov­ ince, for five years. And there's no future for that iron. There's no place for them to go. Some of them have already stated they don't have contracts in sight for as long as two years; millions of dollars tied up, high interest rates, and no work. Mr.

Chairman, I don't think the government of the province can have all the answers. But I hope they're open to some suggestions from industry. I'd like to review with the hon. minister a program that was presented as a news release the other day, and ask that he consider that program, as it's been widely circulated and accepted by many in the industry as an opportunity to put the service industry and the Alberta junior oil companies back to work immediately. As we were going to use billions of dollars of heritage trust funds over a long period of unpredictable term, this program has a safety factor built into it.

I hope the hon. minister would at least consider parts of it, or make modifications where need be, to get the industry working. The objective is as stated, to get people back to work tomorrow so they don't lose their equipment, and so we don't fall farther behind in reserves — that security we've heard this government talk about many times, the future of Albertans. The method is easy. The government would loan $750 million to Alberta junior oil companies with less than $50 million in assets and reserves. It's not a subsidy or a grant. It's a loan guaranteed by the reserves of those companies who accept the loans.

With gas being discounted at 30 per cent and oil at 20 per cent, and as the interest rate announced for the Alsands deal was sounded at 11 per cent, I'm sure the industry would be tickled to death with that, and maybe even 2 or 3 per cent higher would be acceptable. I'm sure they'd be open to negotiation. A number of companies would be involved in the drill­ ing program. There are over 200 junior oil companies currently in existence in this province; however, not for much longer. The hon. members of the government con­ tinue to say, bring something positive forward. I think that's fairly positive, Mr. Chairman.

I think it's very positive at this time, where they don't have to wait. The long-term program was announced: $5.4 billion. Let's look after the short term, or there won't be any need for a long-term program. [Mr. Appleby in the Chair] Mr. Chairman, I'd like to speak on another area before I sit. Many times this government has gone to Ottawa and dealt in energy negotiations. Many times they've come back to Alberta saying they've struck a good deal, and then later we hear that the spirit of the agreement was broken. I'd like to ask the hon.

Minister of Energy and Natural Resources if at this time they would consider taking action as severe as the federal government has taken against the lifeblood of Alberta. Will they consider limiting the amount of involvement in this province by Petro-Canada and other federal Crown corporations to the extent that they're limited in the percentage of control

May 3, 1982 ALBERTA HANSARD 909 in land sales and in drilling operations, so they know that Alberta is tired of having its resources confiscated through taxation? Surely, Mr. Chairman, there must be an end to the rape and pillage of the oil industry in this province by the federal government. Surely it's the responsibility of the Minister of Energy and Natural Resources in Alberta to defend the people and their industry, and get the thing back on the road. Thank you. DR. BUCK: Mr. Chairman, I have to be away this evening, so I'd like to direct some questions to the associ­ ate minister.

I would welcome it if the minister would indicate if he has heard from people concerned about the use of the Blackfoot grazing reserve for snowmobiles. I believe the minister has a letter from a gentleman, a Mr. Twerdoff, who has made it public. There are pages and pages of concerns. I'd like to know from the minister what the timetable is, when something's going to happen, if there's going to be further involvement by the people in the area who are going to be affected by the changes, and the entire philosophy of what the department is trying to do in the Blackfoot grazing reserve.

Many concerns have been expressed to me, and I'm taking the opportunity to express them to the members of the committee. I think this is one situation where, as far as I can tell from the concerns expressed to me, not proceeding with too much haste would be very, very advisable. If those questions can be answered this after­ noon, that's fine; if not, I'll read them in Hansard. But I felt it was very important that the people of Alberta who, through their taxes, are funding the Blackfoot grazing reserve project, and the people going to be affected by it, know the plans for that reserve. MR. MILLER: Mr.

Chairman, I appreciate the concerns expressed by the hon. Member for Clover Bar, not only today but in previous questions he's asked in the Legisla­ ture, and which on other occasions he's directed to me personally. I think it's fair to say that because of the potential for a multi-use concept, the planning that has gone into and is going into the Blackfoot grazing reserve has to be the most extensive that has ever taken place in the province of Alberta.

The primary reason we are looking at establishing a grazing reserve is because of requests we had from the Blackfoot Grazing Association, which felt that, with the encroachment of brush, their potential for grazing cattle was diminishing every year. So they came to the province and asked if consideration could be given to establishing a grazing reserve. We welcomed this approach and, thereby, set out to plan a multi-use concept, at which time various user groups were contacted and a conceptual plan of what might be developed on the grazing reserve was establish­ ed.

In this regard, we had cross-country skiers, snowmo- bilers, naturalists, and those people who felt they had a direct interest in what could be developed for their multi- use concept. I might say that we have had representations from these various groups, and from them we have attempted to develop a more detailed plan in which we outline the various areas and what could be done for each and every group. One of the concerns the Member for Clover Bar brought to my attention was that of the snowmobile group. Initially we had designed certain specific areas where they would be able to operate.

They came back with a request for the establishment of trails. We hope we will be able to sit down and accommodate some of their needs, but not totally so, because of the wildlife aspect and the need to afford some protection to wildlife at certain times of the year, particularly during the calving period. Another concern expressed by the Member for Clover Bar was on behalf of the Islet Lake acreage owners, who had a concern that one access point for recreational people to the grazing reserve would be right next door and close to their subdivisions.

We have taken this into consideration, and our planning team is working on the aspect where we will be able to more or less design the facility so it will have minimum impact on the people who live in that area. Generally speaking, right now we are in a position where the planning team is meeting with various user groups and getting their concerns together. We hope to have these plans more or less finalized later this year.

I appreciate the member's concern, and it is our concern as well, that we not be too hasty in developing the plan in order that all the user groups and their specific interests can be dealt with. DR. BUCK: A supplementary question to the hon. minis­ ter. When the final plan is in place, would the minister agree to an opportunity for people in the area and other concerned groups to have a look at the entire master plan, and give it a further go?

If there's anything the citizen and taxpayer just doesn't go along with, it's when he feels he still doesn't get the final opportunity to get his two cents' worth in before it's go. I think it's only good politics. It's responsible listening on behalf of the depart­ ment and the government; it's not a matter of life or death. I'm sure the project can be modified. Nothing is going to be carved in stone. It's just plain, good, grass roots politics, Mr. Minister, plain and simple. The minis­ ter comes from a rural area. He knows what grass roots are all about; that's what keeps you in, or gets you out.

It's that simple. Listening and giving people the opportu­ nity to respond is what gets governments in, or gets them out. I would like to say to the minister that I feel it's only fair, only right, that when the master plan is just about ready to go, the people in the area be given a final opportunity to express their wishes. I certainly make that representation. I'm sure the minister, being a reasonable man, will provide the leadership: not let the department lead the minister, but the minister lead the department, and give those people the opportunity to have a look at the final plan before it is ready to go.

MR. MILLER: Mr. Chairman, we'll certainly do that. There's no question that there are many points of view with regard to this specific plan. As the hon. member says, it's only fair and fitting that the citizens who are going to be utilizing the area be given a final opportunity before we start developing it. DR. BUCK: One final supplementary. There's been quite a criticism that the people have not really been able to get information. I've had the matter brought to my attention several times that brochures and information did not get out.

I was at several meetings where a list of citizens' names was taken, and they said that only about seven or eight copies of some of the interim reports were sent out. Again, Mr. Chairman, we get back to basic grass roots politics. I think it's only fair that citizens know what is going on. I would like to see the minister's department make sure there is adequate information, adequately dis­

910 ALBERTA HANSARD May 3, 1982 seminated, so people know and do not have the excuse that the department did not let them know what the proposals were. MR. MILLER: Mr. Chairman, we'll certainly look into that and see that the information is forthcoming. MR. LEITCH: Mr. Chairman, I simply wanted to say to the hon. Member for Olds-Didsbury that I'd be happy to trade insults with him, if that's the way he wishes the debate to proceed in this Assembly. But it's always been my observation that the people who send us here expect a somewhat different level of debate than that, and so I will avoid that.

What I thought was remarkable about his speech was the total absence of facts or evidence on which he based his allegations. DR. BUCK: He doesn't need facts. MR. LEITCH: That's apparent. I'm simply going to make two observations, Mr. Chairman. The first is that I'd ask the hon. member it he can refer to a time in the history of this province when the oil and natural gas industry was as buoyant as it was during our term of office. I don't know of one. I don't think he can find one.

We recognize the value of that industry to this province, and I think that recognition was amply demonstrated in the announcement by the hon. Premier on April 13 last. I should simply point out to him, too, in connection with his reference to Alsands, that he quite misunderstood the factual position. There was nothing in the Alsands offer that referred to money being loaned to Alsands at 11 per cent. In fact no loan at all was involved in that offer. It was a loan guarantee.

I thought I made it very clear during the discussions in question period in the Assembly that (a), it was a loan guarantee, and (b), it would be at the prevailing rates. In response to a question from the Member for Calgary Buffalo, I believe, as to how we arrived at the maximum liability we thought the province of Alberta would be under, pursuant to the loan guarantee, I gave the figure $3.7 billion, and said that was assuming an 11 per cent interest rate over the lifetime of the loan.

That had nothing to do with any loan by the province of Alberta, and I made it very clear that the loan would be by the Alsands consortium, guaranteed by the province of Al­ berta, and we were using an assumed interest rate of 11 per cent over the lifetime of the loan to calculate the maximum exposure under the loan guarantee. Again, I clearly indicated in response to those questions that that wasn't the expected interest rate today if the project had proceeded, but rather was the interest rate that on average we thought would apply over the lifetime of the loan.

I do want to make two comments in response to the hon. member's suggestion of loans to junior oil compa­ nies. Certainly my preliminary reaction — but I'll give some more thought to it — is that one of the things the smaller companies do not need at the moment is addi­ tional debt burden. I gather that the hon. member is proposing a loan at the going interest rates, because I've heard his comments about being in opposition to hand­ outs.

Of course, if one made a loan at less than a going interest rate, that is a handout. [interjection] As I say, I'll give some further thought to it, but certainly my impres­ sion is that additional debt burden isn't the solution for companies now having difficulty. We are working very hard and will continue to work at perhaps getting some changes in federal policies that will assist those compa­ nies. We are working very hard and will continue to work very hard on enhancing their opportunities to market natural gas. Certainly the absence of a natural gas market contributes to their problems in a major way.

I must say, too, that I was struck by the absence in the hon. member's comments of any reference to general economic conditions, world and North American eco­ nomic conditions, that are having an impact on the indus­ try, such as interest rates and the general lack of confi­ dence preventing these companies from raising equity funds which, to a substantial degree, are what they relied on to carry out their very important exploratory and development work within the province. Finally, Mr.

Chairman, with respect to Petro-Canada, I merely draw to the member's attention that so far as we the government of Alberta are concerned, Petro-Canada competes in the province on the same terms and condi­ tions as any other company. Again, it may be useful to draw to the hon. member's attention that under the proposal given to the Alsands group, the federal govern­ ment would have paid provincial royalties and provincial taxes in the same way as other members of that consortium.

Agreed to: 1.1.1 — Minister's Office $244,141 1.1.2 — Associate Minister's Office $148,837 1.1.3 — Deputy Ministers' Offices $742,657 1.1.4 — Government Relations — 1.1.5 — Internal Audit $298,224 Total Vote 1.1 — Central Support Services $1,433,859 1.2.1 — Financial Accounting $3,405,722 1.2.3 — General Services $4,721,368 1.2.6 — Financial Management $101,146 1.2.7 — Financial Planning and Control $720,612 Total Vote 1.2 — Financial Services $8,948,848 1.3.2 — Personnel Services $2,150,445 1.3.4 — Information Services $1,355,330 1.3.8 — Computer Services $933,732 Total Vote 1.3 — Administrative Support Services $4,439,507 1.4.1 — Legal Services $140,494 1.4.2 — Scientific/Engineering Services $2,046,577 1.4.3 — Energy Resources Research Fund $77,362 1.4.4 — Economic/Financial Services $941,027 1.4.5 — Energy Conservation $1,428,477 1.4.6 — Administrative Support $146,031 Total Vote 1.4 — Policy and Advisory Services $4,779,968 Total Vote 1 — Departmental Support Services $19,602,182 2.1 — Program Support $604,909 2.2 — Resource Evaluation $11,553,361 2.3 — Resource Planning $880,535 Total Vote 2 — Resource Evaluation and Planning $13,038,805 3.1 — Mineral Dispositions $8,037,752 3.2 — Mineral Revenue $5,098,847 Total Vote 3 — Minerals Management $13,136,599

May 3, 1982 ALBERTA HANSARD 911 4.1 — Program Support $28,681,016 4.2 — Forest Land Use $6,246,092 4.3 — Reforestation and Reclamation $9,104,552 4.4 — Timber Management $8,333,591 4.5 — Forest Protection $21,189,490 4.6 — Forest Research $1,800,268 Total Vote 4 — Forest Resources Management $75,355,009 5.1 — Program Support $5,304,688 5.2 — Land Disposition $2,075,120 5.3 — Land Management $11,126,568 Total Vote 5 — Public Lands Management $18,506,376 6 — Fish and Wildlife Conservation MR.

MILLER: If I could just correct a mistake I made in response to the Member for Grande Prairie when I mentioned the shortening of the moose season. I men­ tioned big game zone 5. That should read big game zone 3.

Agreed to: 6.1 — Program Support $5,304,635 6.2 — Wildlife Services $4,773,986 6.3 — Fisheries Services $4,547,974 6.4 — Public Service and Enforcement of Resource Regulations $6,356,695 6.5 — Conservation Education $1,283,700 6.6 — Habitat Protection and Management $3,770,034 Total Vote 6 — Fish and Wildlife Conservation $26,037,024 Total Vote 7 — Oil Sands Equity Management $1,652,391 Total Vote 8 — Foreign Ownership of Land Administration $466,033 Total Vote 9 — Surveying and Mapping Services $8,006,096 Total Vote 10 — Petroleum Incentives $10,908,745 Total Vote 11 — Oil Sands Research Fund Management $2,908,000 Total Vote 12 — Petroleum Marketing and Market Research $5,738,100 Department Total $195,355,360 MR.

LEITCH: Mr. Chairman, I move that the vote be reported. [Motion carried] MR. CRAWFORD: Mr. Chairman, maybe I could deal briefly with House business for hon. members. In order to deal with the supplementaries, it would be necessary to pass, while we're sitting in the Assembly, Motion No. 13, which declares the number of sitting days to consider the supplementary estimates. Because of that, I suggest we now report out of committee and return in the Assembly at 8 o'clock in order to pass that, if members a