Suncor CEO’s parting shot: Let the oil markets work again

When Steve Williams took over the helm of Suncor Energy seven years ago, he described working in the oilsands as “the ultimate marathon.”

The endurance race of heading up Canada’s largest oilsands producer is now winding down for Williams.

A dedicated long-distance runner, the 63-year-old chief executive will step down as Suncor’s leader next week, replaced by president Mark Little.

On the 45th floor of the company’s Calgary headquarters, Williams sat down Thursday to talk about his time at Suncor, the biggest decisions and deals during his tenure, and the future of Canada’s oil and gas industry.

He also weighed in on ongoing oilpatch topics, including curtailment, carbon taxes, investment sentiment and energy issues facing the incoming United Conservative Party government in Alberta.

Here are the highlights of the conversation, abbreviated and edited for clarity.

Q: When you took over the CEO’s job in 2012, you compared being in the oilsands business to running the ultimate marathon. Seven years later, how do you feel the race has gone?

A: It is a bit of a marathon. One of the things I want to get across here is for companies like Suncor, it’s a long-term game…

Most of marathon running is about training and preparing yourself. And if I look at the resilience of Suncor … it’s in phenomenal strength. Great team. I feel no reservations about going.

Q: At the time of that news conference, you said your challenge was to take the company to a market capitalization of $100 billion and double production to one million barrels per day (bpd). Today, the market cap is around $71 billion and daily production was 831,000 bpd as of the fourth quarter. How do you feel you’ve fared?

A: I’m never satisfied. That, in a sense, is the point of having those targets. We did actually go through $100 billion (market cap) for a few days, and the markets and prices have moved. But the purpose of those targets was to stretch the company and say what we could do…

Q: Looking at Suncor’s corporate deals — from buying Canadian Oil Sands and acquiring Murphy Oil’s stake in Syncrude, to cancelling the Voyageur upgrader project, and building the Fort Hill oilsands plant – what was the most pivotal for the company?

A: One was stopping the Voyageur project, because that was the realization of two things. The first one was growth at all costs, which had often been the mantra of the industry, was no longer appropriate.

So that was a really important one. And then I would say the other one was the absolute strategic pursuit of Canadian Oil Sands….

Fort Hills was big because, what it said was these vast reservoirs we’ve got in the ground, they can be monetized, they can be turned into healthy businesses.

Q: The oil price downturn hit the sector hard and in 2015, you cut 1,000 jobs. You’ve also significantly reduced costs and moved forward on technology like autonomous oilsands trucks. Given the forces at play, do you think we will see additional job growth in Canada’s oil and gas sector, or is this the new normal?

A: I think there could be great days ahead for the Canadian oilsands, in particular …. And the reason I say it depends is because it’s a fabulous resource, there are wonderful opportunities there. The world wants the product.

But we are not attracting investment at the moment. And we are unattractive from a competitive point of view in Canada. We are unattractive from a regulatory point of view. I think if we work on those things, then there are some really optimistic signs out there.

We have queues of projects we would like to spend money on, but we haven’t got the confidence to spend it in Alberta and in Canada at the moment.

Q: In 2015, you went to the Paris climate talks, and were also vocal about the need for broad-based carbon pricing. Have your views changed at all on the need for a carbon tax, given we have a new government that’s pledged to end it here in Alberta?

A: I often get quoted for things that were not attributable really to me. So let me start with what I believe in. Climate change is happening … we always want to be a part of the solution.

What we actually said was carbon pricing could be part of the solution. It depends on how it’s designed, it depends on how it’s charged, how it ramps, how it’s recycled, there shouldn’t be any addition to tax, and (consider) the extent to which it targets technology and taking the industry forward.

I have not seen a tax in Canada which meets any of those criteria. So whilst we were recognizing that carbon pricing can be part of the solution, we weren’t advocating for any particular tax that has gone on in Canada.

You used the word broad based in there. Before the broad-based (taxes), there were company, large emitter-specific ones. So these carbon prices can take many forms, and we’re very happy to work with all sorts of government around what that best solution may be.

Q: Is he (Jason Kenney) making a mistake getting rid of the carbon tax in your estimation?

A: What we need to hear — and it’s little bit hypothetical at the moment — is, OK, if climate change is happening, what is the plan? That’s the piece I am looking forward to, and say how is the best way to address it? Is it a levy on large emitters, which is similar to what we used to have, which worked.

Is it a broader-based tax, which can work … I haven’t seen a design which has met the criteria of revenue neutrality and being recycled fully. So I think it’s a bit early to say, because we haven’t got a clear plan in front of us.

Q: You were one of the CEOs who sat on stage with Premier Rachel Notley back in 2015 (at her climate plan announcement) and took a lot of heat for that from some quarters afterwards. Do you have any regrets?

A: No, I don’t have regrets. I mean, what I tried to do is, we tried to get into the solution space. We want to be a leader in sustainability. What we were looking for then was a solution that could start to give confidence in the Alberta and Canadian oil and gas sector. And to an extent, that happened.

If you look at the vigour of the off-oilsands campaign, it hasn’t been there. You’ve seen projects approved, you’ve seen Fort Hills built and started up.

And we currently have three pipelines approved. Now, we have to see them get constructed and that’s where I hope all of the policies going forward and all the public policy helps those projects develop.

The federal government, for lots of reason, bought TMX (Trans Mountain) so they could build it. So we should try and aid that process. Keystone XL is approved, the president has just approved the permit again … and if you look at Line 3, the project is approved and parts of that are in construction now.

So we still have lots to do, I’m looking for the results from those three projects.

Q: In your mind, does the province’s 100 megatonne GHG cap on the oilsands make sense? What do you make about Kenney’s pledge to remove it?

A: I understand his pledge to remove it, but again, it is a bit hypothetical. I need to see it. I never had great concerns about (the cap), because I saw a couple of reasons why it was there.

One, it was a reassurance to people that oilsands just wouldn’t grow in emissions. It’s not a production cap, it’s an emission cap. And part of my reason for being comfortable was the technology we are developing, comfortably enable us to stay below 100 megatonnes. So it’s not quite as important as people think.

Q: Last year, you said you don’t see Suncor making major investments in this country until we get clarity on market access. Are you getting closer to making a decision on big projects?

A: We have a queue of projects that we are working on, multiple phases of in-situ (oilsands) growth here in Alberta. We have other projects in other jurisdictions as well. Our position in Canada hasn’t changed much.

We need to see clarity, we need clarity on market access, before we would start to develop projects, particularly here in Alberta.

Q: Should the new Alberta government cancel its crude-by-rail deal and get out of curtailment?

A: We expressed a view that we didn’t support curtailment because we believe that markets are the right answer. We think the prices would have come back and there were two unintended consequences going to happen.

One was that crude by rail isn’t going to become uneconomic … and we also thought it would turn investment off, and both of those have happened.

Q: What about crude by rail, should the province be in it, or should the new government cancel the contract?

A: Again, it’s hypothetical. We should have public policy which enables us to move product by rail. The simplest answer is to let the market work and then the differential will be there.

Q: What is next for you?

A: I’m trying not to over-plan … Not full retirement, and I want to stay in and around the oil and gas industry, particularly here in Canada and Alberta.

Chris Varcoe is a Calgary Herald columnist.