Business of Energy - October 2019

OF ENERGY

OCTOBER 2019

THE WOMAN FOR THE JOB

ALBERTA’S ENERGY MINISTER SONYA SAVAGE ON HER NEW ROLE AND THE CHALLENGES AHEAD

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OF ENERGY VOL 1, ISSUE 5 | OCTOBER 2019

PUBLISHERS

Another Group Loses the Plot

by Cody Battershill

Federal Elections, Climate Change and Single-Issue Politics by David Yager

04 06 10 15

The Woman for the Job 2019 FEBRUARY

by Melanie Darbyshire

Let’s Talk Sales

by Chuck bean

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Cody Battershill | Another Group loses the Plot

ANOTHER GROUP LOSES THE PLOT by Cody Battershill

T

here are few NGOs more famous than Amnesty International. The group has earned the world’s respect predominately for decades of advocacy for unjustly-held political prisoners around the planet. That’s why an open letter from Amnesty’s Canadian head recently sent to the Alberta premier raised more than a few eyebrows around Edmonton and across the country. It seemed to show Amnesty isn’t above politicizing a difficult, pressing economic issue that Albertans grapple with daily – the landlocking (the activists’ words) within the province of Alberta oil exports, and the loss of thousands of potential jobs for indigenous and nonindigenous Canadians. With genuine respect for the good works Amnesty has carried out for prisoners of conscience over nearly six decades, it’s weird that Amnesty’s Canadian head, Alex Neve, would claim in the letter that Albertans are threatening the human rights of various Canadians simply because we want to set the record straight. U.S. energy interests have watched their production double to the point they’re the world’s largest oil producer. But we’re forced to sell our product to the U.S. at a huge discount as a result of the non-Canadian funded

“landlocking” of Alberta oil, in which Canada’s pipeline proposals are stalled through the coordinated efforts of well-funded activists. A majority of Canadians know Canada’s innovative energy industry is among the most scrutinized and regulated of any on the globe. It’s nonsensical that a reputable brand like Amnesty would claim Albertans’ commitment to truth in campaigning somehow threatens the freedoms of association and expression. And while I admire the fact Amnesty’s track record for bringing to light injustices around the world continues to be valuable, it’s surprising to me Neve would claim that Albertans’ enthusiasm for pushing back on misinformation fails to commit “to urgently address the human rights impacts of the mounting global climate crisis.” Neve might consider that the recent push of environmental groups for a prohibition on oilsands activities – and their fight againt all pipelines too – force Canadians to use 700,000 barrels per day of imported product from countries with generally inferior records of environmental and human rights standards, and curtailments of freedoms of the press, of religion, of women’s rights and of fair labour practices.

4 • Business of Energy • October 2019

“

| Cody Battershill

If the planet adopted world-leading Canadian standards for oil and gas production, emissions per barrel of global production would drop by 23 per cent. But for Neve and Amnesty to claim Alberta’s pushback strategy “fails to recognize (this) province’s vital obligation to advance reconciliation and safeguard the rights of indigenous peoples” is truly bizarre. Indigenous organizations like the National Coalition of Chiefs, the Indian Resource Council, Project Reconciliation, the Western Indigenous Pipeline Group and others are actively supporting Trans Mountain’s sale to indigenous interests and energy development overall. Many see this as a constructive way forward. Alberta is one of the only top-10 oil-exporting jurisdictions with carbon-pricing initiatives that have been in place since 2007. If the planet adopted world-leading Canadian standards for oil and gas production, emissions per barrel of global production would drop by 23 per cent. Even Amnesty International could support that, B couldn’t they? OE

Cody Battershill is a Calgary realtor and founder/spokesperson for CanadaAction.ca, a volunteer-built organization that supports Canadian energy development and the environmental, social and economic benefits that come with it.

5 • Business of Energy • October 2019

ALBERTA OWNED AND OPERATED

David Yager | Federal Elections, Climate Change and Single-Issue Politics

FEDERAL ELECTIONS, CLIMATE CHANGE AND SINGLE-ISSUE POLITICS

N

by David Yager

obody involved in oil and gas or reading this magazine is not closely watching October’s federal election.

The choices have never been clearer. The stakes are high. Because every time oil becomes a federal election issue, regional single-issue politics ensure the West gets clobbered when the wrong people win. Single-issue politics dominates 21st century elections. Using modern polling techniques and social media tools to identify supporters, political parties deliver highly-targeted messages, promise what people will vote for and, when elected, deliver the goods. Nowadays the economy is not always a key election issue unless voters are directly affected. Like Albertans. Today’s politics is highly polarized, pure us versus them. The technical terms are “cleavage” or “partisan sorting” by which voters deliver their support based on their peer group, region, gender or social values. They then reject or even attack those who don’t agree. For oil, the first and worst example was 1980 when Pierre Trudeau’s Liberals won a majority government then delivered the national energy program, the most economically disastrous and

divisive policy in modern history. The issue was a shortage of oil and it cost too much. This election will be about climate change and the future of fossil fuels. Today, there is too much oil that doesn’t cost enough. The Green party and NDP are in a contest to see which can sacrifice the most Canadian oil jobs. This is the first time two of the options on the ballot promise to reduce employment, not increase it. They claim Canada’s energy future is in renewables and replacement jobs will come from massive government investment in mass transit and insulating homes and buildings. This will be financed by increased taxes on high-income earners, corporations and ending investment tax deductions for oil and gas developers. This was renamed fossil fuel subsidies by the anti-carbon movement. The Conservative Party of Canada is the exact opposite. The CPC will tackle climate change through technology, not taxes, and encourage low-carbon energy advancements for worldwide markets where 98.4 per cent of emissions are created. Conservatives are concerned about the exodus of foreign investment from the oilpatch, will undo bills C-48 and C-69, and ensure the Trans Mountain pipeline is completed.

6 • Business of Energy • October 2019

Federal Elections, Climate Change and Single-Issue Politics | David Yager

Somewhere in the middle is Justin Trudeau’s Liberal Party which must run on its record. This includes pipeline cancellations, C-48 and C-69, climate change, carbon taxes, social issues, big spending, big deficits and no admission they have ever committed an egregious blunder. However awful Trudeau’s SNC-Lavalin fiasco looks to the rest of the country, the native son of Quebec has proven he will do whatever it takes to protect that province’s interests. Unless the Liberals do something really stupid, Quebec will deliver almost one-third of the seats required for another Trudeau majority. Climate change will be a major campaign platform outside of the Prairies. Neither the Green party, NDP or Liberals are likely to win a single seat in Alberta. September polls indicated all three might elect only four MPs from 62 seats in Alberta, Saskatchewan and Manitoba. This means the Liberals, Greens and NDP can campaign aggressively against the oil and gas industry without jeopardizing success. Their battlegrounds for supporters will be the Lower Mainland of B.C. and urban residents of Ontario and Quebec. These voters can support aggressive climate policies at the expense of oil without losing their own jobs or risking shortterm financial cost. The Green party platform is a collection of classic socialist doctrine including social justice, diversity and world peace, cemented together by the menace of climate change. The Greens reinforce the recent Liberal national climate emergency declaration stating, “Accept, at every level of government, that climate is not an environmental issue. It is the gravest security threat the world has ever seen.” If this makes oil workers uncomfortable, it should. The Greens admit they won’t form government, but if they hold the balance of power, they will push their anti-fossil fuel agenda. This would end unrefined oil exports (effectively shutting in 2.5 million barrels per day), ban fracking, Trans Mountain and LNG Canada, make every new car on the road electric by 2030 and prohibit internal combustion engines 10 years later. The only use for oilsands will be plastics and petrochemicals. This would eliminate over half of Canada’s oil jobs. The NDP isn’t far behind. This party pledges to exceed Canada’s 2030 Paris commitments by slashing fossil fuel emissions. Leader Jagmeet Singh puts social justice and climate change in the same sentence stating, “It becomes more clear each day that the time for talk on climate change and economic inequality is over … it’s time to act like our future depends on it, because it does.” This will be accomplished by billions in government spending on green transportation infrastructure and assistance for provinces and cities to make public transport free. There would be $5,000 subsidies for electric vehicles, free charging stations at federal buildings and $600 for households to install EV chargers. The NDP formerly supported LNG exports but backed off after losing a byelection on Vancouver Island to the Green party. Led by the relentless high profile of federal Minister of Environment and Climate Change Catherine McKenna, since 2015 the Liberals have been assuring Canadians their policies will deliver climate salvation. McKenna regularly uses every bad weather event as proof that immediate action is essential while claiming Liberal programs will solve the problem. 7 • Business of Energy • October 2019

Federal Elections, Climate Change and Single-issue Politics

It is well understood by CPC supporters that a new government would send a clear and powerful message to domestic and international investors that Canada is again open for business.

David Yager | Federal Elections, Climate Change and Single-Issue Politics

Pursuing regional, single-issue policies to chase votes may be bad for the West and the country, but it works. In politics, nothing else matters. Regionally, many Canadians are relatively comfortable financially. From 2014 to July of 2019, the national unemployment rate fell from 6.9 per cent to 5.7 per cent. Quebec is on a roll. Its unemployment rate dropped from 7.7 per cent in 2014 to 4.9 per cent in July. Ontario is enjoying similar results, from 7.3 per cent down to 5.7 per cent. Since 2014, the B.C. unemployment rate declined from 6.1 per cent to 4.4 per cent this summer. Alberta and Saskatchewan have gone in the opposite direction. Unemployment in Alberta in 2014 was at 4.7 per cent. In July, it was 7.0 per cent, down from a peak of 8.1 per cent in 2016. In 2014, Saskatchewan’s unemployment rate was 3.8 per cent, the lowest in the country. With its potash, oil and agriculture facing headwinds, that figure this July was 5.4 per cent. Saskatchewan peaked at 6.3 per cent in 2018. Last May, Calgary, once the booming envy of the nation, had the highest unemployment rate of any major city in the country at 7.6 per cent. Based on where the economy is strongest, unemployment figures in the summer of 2019 were going in the right direction for all three political parties prepared to trade oil’s future for votes. Political isolation of Alberta and the rest of the Prairies. Again. Canada’s agricultural and carbon resources warehouse versus the rest of the nation. A significant contributor to single-issue climate politics is urbanization. In 2016, 65 per cent of the nation’s 35 million people lived in 100 urban centres with a population of 50,000 or more. Thirty-five per cent of the population lived in Montreal, Toronto and Vancouver alone, hardly hotbeds of support for oil and gas. When Canada was created, 84 per cent of the population lived in rural areas. By 2011, that was down to 18.9 per cent. Canada’s economy

remains heavily driven by resources with oil and gas the largest by any measure. But with over 80 per cent of voters not living where resources are produced, it is easy to understand why people increasingly don’t grasp or care where their food, energy and other products come from. And why political parties target urban voters. But by area, the 100 cities that house nearly two-thirds of Canadians occupy only one per cent of the nation’s land mass. Offsetting all this bad news are several positive realities. As this column is written, the CPC is polling slightly ahead of the Liberals in committed public support and more than all the other parties combined. A CPC minority government is possible and majority not impossible. Justin Trudeau is no longer well liked. During the campaign, voters will be reminded of his many mistakes. Carbon taxes are proven vote killers. Even the Liberals know this which is why they advertise rebates for most households every time they mention it. The Liberals tell us we must pay for pollution yet claim to be putting more money in our pockets. Disingenuous? Absolutely! Climate change is a global challenge requiring global solutions. Many more people understand this than will say so publicly because they are terrified of being branded climate change deniers. And no matter what campaigning politicians may claim, the world still runs on oil and gas and will for the foreseeable future. Canada is a large cold country. Interruptible renewables will not work for most energy needs. Mass transit and even electric vehicles are impractical for 99 per cent of the country by area. But now you know why everyone is paying close B attention to this election. OE

Living in Calgary, David Yager is an oil and gas writer, energy policy analyst and author of From Miracle to Menace – Alberta, A Carbon Story.

8 • Business of Energy • October 2019

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Melanie Darbyshire | The Woman for the Job

THE WOMAN FOR THE JOB

ALBERTA’S ENERGY MINISTER SONYA SAVAGE ON HER NEW ROLE AND THE CHALLENGES AHEAD by Melanie Darbyshire

I

f one is fortunate in life he or she will, at some point, have a job perfectly suited to them. Work that requires a blend of the person’s skills, talents and interests while also providing meaningful opportunity for growth and challenges along the way. A job seemingly made for the person, or vice versa.

As minister of energy for Alberta, Sonya Savage has landed that job. Officially sworn into the new role on April 30 of this year, Savage brings with her a background steeped in the business and politics of Alberta and Canadian energy. A lawyer by profession, she worked in the oil and gas industry for the 13 years prior to being

10 • Business of Energy • October 2019

The Woman for the Job | Melanie Darbyshire

elected. Her experience and knowledge are oneof-a-kind, a perfect match for the job of minister. The timing for Alberta couldn’t be any better. With an economy trudging through its fifth year of struggle – the result of damagingly low prices for Canadian energy – and a federal government overtly anti-Alberta energy, the province’s industry desperately needs strong, intelligent political leadership. Savage is it. “I was thrilled to be appointed minister of energy,” says Savage, who also represents the riding of Calgary-North West, with a humble smile. “But also certainly cognizant of the challenges ahead. I was not naive at all to what needed to be fixed.” Born and raised on a farm near Standard, Alberta, Savage got into politics while attending the University of Calgary. After earning a master of laws in environment and energy, she practiced law for 13 years before taking a job at Enbridge Inc. in 2006. “I worked on some of the biggest projects the country’s ever had,” she reminisces. “Northern

Gateway, Alberta Clipper, Line 9. I did policy and government relations and worked collaboratively with the teams that were doing indigenous affairs and regulatory, getting those applications through.” Much of this work was with the National Energy Board, now the Canadian Energy Regulator. “I saw the challenges, knew the landscape, knew the industry,” she says. She moved to the Canadian Energy Pipeline Association (CEPA) in 2015, taking on the role of senior director of policy and regulatory affairs. “I had the regulatory affairs file plus indigenous affairs and government relations,” she says. “A much larger gambit which included responsibility over the climate change file, regulatory reform and bills C-69 and C-48. I had a front-seat view to what the federal government was doing. “And I can tell you that when Justin Trudeau said he wanted to phase out the oilsands, he meant it,” she says, referring to comments made by Trudeau in January 2017.

11 • Business of Energy • October 2019

Melanie Darbyshire | The Woman for the Job

Given her experience, Savage assumed office with many priorities, most of which lead back to one thing: “Market access,” she says. “Almost all of the challenging issues in one way or another lead back to the fundamental problem that we don’t have enough pipeline capacity, rail capacity, ways to get our product to market.” The Trans Mountain pipeline expansion, in various stages of pre-construction and still subject to litigation (the most recent development being the grant of leave to appeal by the Federal Court of Appeal to six First Nations groups in September) must be built, Savage says. “It’s in the national interest; it’s needed. I can’t conceive of any circumstance that it won’t be built because it has to be built. It’s an abrogation of the rule of law if the federal government doesn’t see it through.” She’s less unequivocal on Keystone XL, which is slowly making its way through court challenges. “They face political risk in the United States; there’s no risk here in Canada.” Energy East, she explains, was abandoned by TransCanada because of the federal government’s Bill C-69, which adds climate change as a factor to be weighed in any pipeline assessment. “TransCanada very clearly said don’t make us responsible for upstream and downstream GHG impacts; we can’t possibly get through a regulatory process with that much uncertainty and with having to meet tests that are out of our control,” she laments. “But the government put it in and TransCanada walked.” Proclaimed into law in August, Bill C-69 has been a contentious piece of legislation for Alberta. “We’re challenging it,” Savage says bluntly. “No question. Definitely constitutionally challenging it. The project list, the factors to consider, the scope of the assessment. They’ve really clearly intruded into provincial jurisdiction.” She expects most other provinces, including Ontario and Quebec, to do the same, though some for different purposes. “I would think we’ll have a pretty strong coalition. Nine out of 10 provinces opposed it. I’m not sure how many will step in to litigate, but I would expect a good chunk.” A similar strategy will be employed for Bill C-48, the so-called tanker ban bill. “It’s not a tanker

ban, it’s an Alberta oil ban,” Savage clarifies. “It only applies to one product coming from one province. We’re exploring the options and the process for a constitutional challenge.” Litigation is already underway regarding the federal carbon tax, another policy the Alberta government vehemently opposes. Saskatchewan and Ontario are also challenging it. “It’s winding its way to the Supreme Court,” Savage says. “But hopefully it all becomes moot on October 21 [the date of the federal election].” Indeed, Savage holds no bars when it comes to what she thinks about Justin Trudeau, his government and her desire to see them replaced with this month’s federal election. “He’s filled the prime minister’s office, all the key ministers’ offices, with environmental activists,” she says. “Some of them came from Tides, one was the head of Pembina. Gerry Butts was from World Wildlife Fund. And a number of these groups were there in New York City in 2008 when they launched the Tar Sands Campaign. And we’ve seen that strategy play out of the last 10 years. I think there’s a deep story there on what they’re intending.” Part of Premier Jason Kenney’s “fight back” strategy to deal with environmental activists and the Tar Sands Campaign is the highly-publicized war room, which, Savage says, has attracted thousands of emails from Albertans offering to help. “We’ve hired [oil and gas reporter] Claudia Cattaneo to give us some vision on what it should be doing,” she explains. “It’s going to be a nimble, rapid response way of dealing with things. Like a media room that operates quickly. It will be responding to, and creating content on the narrative of how Alberta really is a leader.” The war room is partially funded by industry through the tier levy for heavy emitters. Similarly, a $10-million litigation fund has been set up for use by pro-resource indigenous groups. In addition, the Alberta Indigenous Opportunities Corporation has been created to help indigenous groups, whether through acquiring equity or their own business projects, become involved in major resource projects. In August, Savage made the decision to extend oil curtailment (a policy originally implemented by the previous NDP government to correct an oversupply of oil in the province) for another

12 • Business of Energy • October 2019

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The Woman for the Job | Melanie Darbyshire

“We expect it to create 55,000 jobs and really stimulate the economy. The response from the business community has been overwhelming. Some of them, only a year ago, were ready to pull out of Alberta, out of Canada. But now they’re staying.” year. She increased the limit from 10,000 to 20,000 barrels per producer per day. “We want a gradual, orderly exit off curtailment,” Savage confirms. “It’s not ideal, but it was necessary to keep the differential from blowing up again to $43 per barrel. By lifting the base exemption to 20,000 barrels, we got 13 companies off.” Sixteen companies, out of over 300, remain on curtailment. Savage is also exploring the options to get out of the $3.7-billion crude-by-rail deal entered into by then-Premier Rachel Notley on the eve of the April election. “That was a terrible deal,” Savage says incensed. “It was going to cost $3.7 billion to run the program and all they expected to make out of it was $2.2 billion. That’s a $1.5 billion loss. By anybody’s standards it was a terrible deal.” The deal is now with CIBC Capital Markets in divestment, and various options are being sorted out. Beyond issues related to access to market for Alberta’s oil and gas resources, Savage has been busy with other files. The corporate tax rate was lowered to 11 per cent from 12 per cent on July 1, with the plan to get to eight per cent. “It will make us the most competitive jurisdiction in Canada,” Savage says proudly.

“We expect it to create 55,000 jobs and really stimulate the economy. The response from the business community has been overwhelming. Some of them, only a year ago, were ready to pull out of Alberta, out of Canada. But now they’re staying.” In September, she announced the review of the Alberta Energy Regulator (AER), which is

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Melanie Darbyshire | The Woman for the Job

responsible for overseeing Alberta’s energy sector and for ensuring the industry operates in an environmentally-responsible way. “It takes too long to get anything done and in place,” she laments. “There’s too much red tape. We’re doing a thorough comprehensive review of the AER to see if there’s some structural pieces that need to be fixed in order to achieve speedier time frames.” Her decision to scrap the NDP’s plan to overhaul the electricity system to a capacity market was one of the easiest she’s made. “We did a 90-day review right at the outset because we knew we needed to give some certainty on which direction we were going,” she explains. “We held broad consultations with all the affected groups. And it was just overwhelming, from everyone, to stick with the energy-only market. Everyone from the renewable folks to the generators to the distributors to the consumer groups wanted to stick with the energy-only market.” Though it’s been a mere five months, Savage,

with husband of 23 years Eric by her side, has taken on her new role with gusto, inspired by an energy industry she describes as resilient. “They’re down, and they’re being kicked when they’re down,” she says frankly. “Prices are down, they don’t have market access, they don’t have a federal government supportive of their industry. They’re down, but they’re resilient and innovative.” Full of praise for Premier Kenney, whom she says moves at the speed of lightning, she’s confident in the UCP caucus of which she is a part. “We hit the ground running,” she says proudly. “We have an enormous mandate of things that need to be fixed, and we’re just getting started. A lot of the issues we’re working on are very much frontend loaded because they’re critical to getting Albertans back to work.” Evidently made for the job, Savage is the energy minister Alberta needs right now. All Albertans should be grateful for her leadership B and service. OE

14 • Business of Energy • October 2019

Let’s Talk Sales | Chuck Bean

LET’S TALK SALES by Chuck Bean

T

he best marketing any company can do walks around on two legs. It is, of course, your salespeople. Nowhere is this more apparent than in the oilpatch. Whether you are an E&P, service company, trader, investor or financer, what attracts and keeps your clients, vendors and investors with your firm is how your people communicate, relate and represent your corporation.

salespeople take the focus off their offering to how they can help clients with anything. This is how relationship are built.

Ask anyone in the executive suite and they will tell you the same thing, “We have seen the rear end of that 10-year run.” Times have changed – and they’ve really changed when it comes to customer relations.

Pat Shouldice – the industry icon who built Nowsco into an industry giant – once told me the secret to success was being the first and the fastest to solve a client problem (expletives removed). He added you will be judged not by the work you do, but by how well you stayed ahead of the client. Keeping them in the loop was the trust builder. Going the extra mile was the trust sustainer. Reciprocity is the king of relationship building and doing things for others, above and beyond, is transcendent.

Companies like Amazon and Netflix have conditioned buyers to expect real-time, ondemand services. Immediacy is no longer an exception, it’s a given. If you are building (or rebuilding) a business, you’d better get used to this. You’re not being compared to your energy competitor; you’re being compared to the “FAANG” of high-performance technology companies (Facebook, Apple, Amazon, Netflix and Google). They’re your new competition. Can you imagine a hardened oilfield salesperson who learned the ropes turning pipes on the rigs being compared to a chatbot? Believe me, it’s happening right now! A common problem I hear from executives is they worry their salespeople aren’t engaging enough with clients. It is a genuine issue and it stems from being so focused on our current challenges that we are losing the art of communicating and relating with our clients. If you want to future-proof your business, it starts with face-to-face conversations that keep sales professionals connected to their clients. Operating 24-7, salespeople who work quickly to solve problems gain customer trust. Great

If you are in sales or direct your corporate sales, ask yourself these questions. What have you done for your client lately? What have you done to help them? Are you telling them or teaching them?

Every single interaction a client has with a sales representative, or anyone in your organization, is a reflection of your brand. Every contact, be it tiny or bold, will determine the longterm relationship and resulting loyalty. Your salespeople are representative slices of your company. If they are shining, smart, empathic and pragmatic people, your clients will believe that your entire organization is the same. If they communicate and build relationships, your clients will do the same with you. In this age of email we are losing our connection. With the insurgence of AI, professional salespeople are going to have to work faster, harder and smarter. Those salespeople who make the decision that face to face is where it is at – communicating and building relationships with clients – will be B the winners. OE

15 • Business of Energy • October 2019

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