Calgary Rising

The world's greatest concentration of energy knowledge resides here. 

A cow town no more, Canada’s oil and gas capital sets its sights on Houston as petroleum capital of the world

This article appears in the December issue of Oilweek

By Peter McKenzie-Brown
Could Calgary become the centre of the petroleum world, finally shedding the century-old moniker of “Cow Town”? Many people think it’s not only possible, but inevitable.

Consider the views of Heather Douglas. “When I was president of the (Calgary Chamber of Commerce), I used to challenge visitors to name another city that had the intellectual knowledge about energy that Calgary has,” she says. Now a VP at Athabasca Oil Sands Corp. she adds, “That knowledge can be applied to any form of energy – nuclear, solar – not just oil and gas. We are already one of the world’s premier energy centres, and in the 21st century energy issues will endlessly challenge global economic and environmental systems.” Already in the big leagues, the city needs to get ready for growth.

Gary Leach puts the possibilities into a broader context. The executive director of the Small Explorers and Producers Association of Canada (SEPAC), Leach argues that “Houston was the late 20th century’s global energy capital. It’s now in decline, and Calgary is in the ascendant. A few things could affect (Calgary’s growing dominance.). What if the Mackenzie Valley and Alaska Pipelines are constructed, making Alberta the distribution centre for Arctic gas across the continent? Even if that doesn’t happen, within the next 20 years hundreds of billions of dollars will be invested in this province to develop the oilsands, and Canada will become a net exporter of millions of barrels per day – maybe 5 million barrels per day, most of it from the oilsands. The numbers are eye-popping.” According to a recent CAPP forecast, this country’s oil production will rise from 2.8 million barrels per day last year to 4.7 million in 2025.

“Looking back 20 years from now,” Leach adds, “we will see Calgary as a city of global importance” in more than energy. “Part of that is because of Canada’s energy and other resource surpluses. The other is the fact that Canada is one of the few countries in the world with food surpluses,” and Calgary will continue to be an agribusiness centre.

Constant Mixing
For decades Calgary has been home to the largest number of major head offices in Canada outside of the Toronto area, which has five times the population. Calgary is a corporate city, which arranges finance and makes business decisions. It is a technical centre, with an amazing array of scientific and technical skills. It is a management city, with seasoned executives continually making high-stakes decisions.

A unique mix of characteristics have set Calgary up for growth and increasing strategic importance in the energy world. Within the city’s ten blocks – the business part of downtown – is an extraordinary concentration of expertise. This includes the largest concentration of geological talent in the world, for example. Alberta’s petroleum industry has traditionally produced from conventional oil and gas formations that on a world scale are relatively modest. The industry developed strong drilling, engineering and technical skills at least partly in response.

Other areas of expertise include management, legal and accounting skills; finance and economics; technological development and environmental innovation. These skills developed in an entrepreneurial climate which takes a competitive delight in financing, exploring, developing and overseeing production from the geologically complex Western Canada Basin.

Underpinning the entrepreneurial environment is a fair and transparent regulatory system. Alberta’s system of land auctions and western Canada’s efficient regulatory systems make hydrocarbon development an attractive proposition. There is an enormous wealth of oil and gas data that must be made available by law. In Alberta, that information is mostly available through the Calgary-based Energy Resources Conservation Board.

With its concentration of companies, executives and expertise, Calgary is now the Canadian city you have to be in if you want to be in energy. You can’t be in Regina or Winnipeg or Toronto and be in the oil business. “In the last 20 years we have had the National Energy Board move here from Ottawa,” says Leach. “We had Shell and Imperial and TransCanada move here from Toronto and Enbridge moved its headquarters here from Edmonton.” Gulf Canada came indirectly, when Petro-Canada bought it out; so did BP when it acquired Amoco. “Calgary now has the densest focus of oil industry talent in the world between the Bow River and the Canadian Pacific rail tracks,” he says. “Everybody here is within a five or 10 minute walk of everyone else. That dense connectivity has created a unique and creative mix. There’s a constant mixing of competitors and collaborators.”

An unusual characteristic of Canadian business is that companies tend to go public at a very early stage – a tradition that in Calgary seems to be on steroids. There are hundreds of start-ups and other small energy companies, many of which have gone public. Forty per cent of the world’s 995 publically traded energy companies are headquartered in Calgary. Those companies represent about 30% of Canadian stocks by market value.

One of the reasons they are here is the resource potential. According to Heather Douglas, “Alberta is well-positioned to be a leading energy producer for decades. Challenging unconventional resources – oil sands, shale, tight and sour gas – are all a vital part of our future.”

The World’s Energy Cities
There is an organization known as the World Energy Cities Partnership, with 16 members. Besides Houston and Calgary, these cities include, for example, Aberdeen, Scotland; Atyrau, Kazakhstan; Dammam, Saudi Arabia; Daqing, China; Stavanger, Norway; and Tomsk, Russia. Canada is the only country to have three “energy cities” – the other two being Halifax and St. John’s.

How do the world’s other energy cities compare to Calgary? “Many of these centres have the disadvantage that they are dominated by a few very large producers, many of them state-owned,” according to Leach. “For example, Rio de Janeiro is the centre for Brazil’s offshore oil production, but it’s dominated by Petrobras.”

Other cities have other problems. “To be a serious contender as an oil and gas centre, you have to have the rule of law, democracy, and a stable environment,” Leach says. “You have to have transparent laws and regulation. You have to be a place where people will invest for the long term.” In many energy cities, few or none of these factors exist: Think China, Iran, Kazakhstan, Russia, and Saudi Arabia. Sudan, anyone?

What about Europe’s energy cities? “Aberdeen is only a service centre for oil and gas. It’s not financial. It doesn’t rival Calgary in any way,” according to the flag-waving Leach. “The same is true of Stavanger: It’s an important regional support and service centre, but that’s all. And of course North Sea oil production is declining rapidly, and that’s going to affect the relative rankings of those two centres…. Only Calgary, Houston, Dallas and London can say ‘We have big companies, we have oil and gas assets, we have a lot of financial strength, and here is where decisions are made.’”

London is a special case. It’s a financial superpower, of course, and it is headquarters for BP, Shell and some producers based in the North Sea. However, because energy is a relatively small part of its economy, it really isn’t an energy city.

The Rise and Decline of Houston
Houston’s status as the world’s dominant energy centre is fairly new. Until 1986 there were five significant oil centres in the US: Houston, but also Dallas, Denver, Oklahoma City and Tulsa.

When the oil industry went into a 20-year slump with the 1986 oil price collapse, much of the industry moved from Tulsa, Oklahoma City and Denver to Houston, which also benefitted from explosive growth in Gulf of Mexico drilling. Dallas is still an important centre, but primarily because ExxonMobil calls it home.

With its port and pipeline connections, Houston has become the world’s largest refining hub. It is an extremely important centre for petroleum technology, especially for offshore drilling and production. Still the world’s premier energy city, Leach argues that “its best days are behind it. As Calgary’s potential waxes, Houston’s is going to wane. We have the potential to rival them, not only in the oilsands but because of the prospect of Pacific Rim exports, for example. Calgary can become a Pacific Rim energy capital. This isn’t fantasy: Chinese, Japanese, Korean and Malaysian (companies are already) here.”

Already snapping at Houston’s heels, Calgary one day may take over. According to Chris Lee, managing partner of a resource consultancy provided by accounting giant Deloitte Touche, this country “has the opportunity to be an energy superpower. To do that we have to ensure that issues around transportation infrastructure are resolved. We need a national energy strategy. We have to deal with potential labour shortages and cost overruns, and we need a more positive public image for the oilsands. The future of the oilsands is incredible. Just imagine what would happen if (bitumen) carbonates became economic! What would this city be like?!”

Heather Douglas thinks Alberta should seize the moment to establish a Canadian benchmark for international trade. Right now world oil prices are quoted in reference to foreign crudes – mostly West Texas Intermediate (WTI), Brent and Dubai. “We usually sell at a discount to WTI,” she says. “Brent production is rapidly declining, while Alberta production is growing. We need to create a Canadian benchmark that is internationally recognized – maybe a price based on upgraded bitumen.”

Awesome
The Economist recently ranked Calgary as number five on its list of the world’s 100 most liveable business cities, and a Houston-based publication named Rigzone named the city number 2 in its list of the top ten energy centres to be transferred to – citing the Rockies, the fishing and the Stampede. (Dubai was number one, because of its tall new buildings and its shopping.)

And some months ago, 17-year-old Megan Butlin, on her way to Sweden as an exchange student, delivered a presentation to my Rotary club. It was a trial run for a presentation she would give to her Stockholm sponsors. According to one of her slides, “Statistically speaking, Calgary is 100% more awesome than Edmonton.”

Is any of this stuff really true?

Because of its proximity to major oil deposits – in the early days, Leduc and Pembina; recently, the Athabasca and Cold Lake oilsands deposits – Edmonton has become one of the world’s premier operations and service centres for the petroleum industry. It has fabrication and manufacturing capacity that would be the envy of virtually any other oilfield service centre. The University of Alberta is a jewel in the city’s crown, and it has been a centre of oilsands research since the 1920s.

The area is Alberta’s refining and petrochemical centre – notably the “Industrial Heartland” northeast of Edmonton. That industrial region has grown organically since the late 1940s, when Imperial Oil brought a tin-pot World War II refinery down from Whitehorse to process crude from nearby Leduc and other new fields. Now the beneficiary of more than $25 billion in investment, this 582-square-kilometre region hosts 40 large companies and many small ones. Together they operate numerous refineries and petrochemical plants, an upgrader, pipelines, service companies and numerous other interdependent businesses.

As the oilsands enable Canada to become an energy superpower, Edmonton will continue to serve as the staging area for the world’s biggest petroleum projects – most of them encircling another dynamic Alberta city, Fort McMurray. That, too, is awesome.

Basic Buddhist Vegetables: A Dhamma Diet

Buddha as part of a Southeast Asian temple

The founder of the HartCenter for Human Actualization offers personal insights into the practice of Buddhism

By Alan Lopez
In my student days there was a dish I would prepare for my housemates. Caught short for time I would fall back on a preparation called Basic Buddhist Vegetables. At the time the title meant nothing to me. The choice was purely instrumental: quick, simple, healthy, and satisfactory to the vegetarian faction. Yet unwittingly I was serving up a dhamma dish. The distinguishing mark of the Buddha’s teaching is taking the basic ingredients of our life as the path.

Religions (and other philosophies) sacrifice the actual for the Truth. Religions claim to teach the Truth, the Ultimate Truth. This is what up lifts the believer, is the obsession of the scholar, and the message of the preacher. What is lost in our praise, devotion, and longing for this Final Truth is the actual. That is, what is actually going on in our body/mind and the circumstances of life as we immediately encounter it. This is what I’m calling Basic Buddhist Vegetables—no special sauce added.

The Buddha had attitude—a different attitude.
Without needing to deny, his teaching was not Shiva-centered, Yahweh-centered, or Allah-centered. It was human-centered. But even more so it was centered on what the Buddha called our proper range or field, what I’m calling the actual. He tells a story of a bird that flies out of his range and has an unfortunate encounter with a hawk. Stay within your appropriate field of investigation and action—the available sensory based experience in the here and now. If we begin to take speculative flights, we may, like the bird, meet an unkind fate.

In contrast to other approaches, the Buddha was putting aside the Truth for a journey into the actual. The meditation the Buddha hit upon, vipassana or insight meditation, is precisely this venture into the actual of moment by moment experience. The cardinal characteristics of the actual came to be called the Three Marks of Existence, unsatisfactoriness, impermanence, and no-self. This trinity constitutes the facts of life from which we can run but cannot hide. It is the basic Buddhist fare.

The actual implies engagement. The marks of existence as well as other basic teachings, such as The Four Noble Truths, are not simply street signs describing the neighborhood, but are more like directional arrows pointing the way. Each of the Four Noble Truths has a kiccanana, an accompanying responsibility. The unsatisfactoriness or dis-ease of life demands that we know it—nothing more or less—while the eightfold path, the road to freedom, asks us to walk it. The Buddhist facts of life are not to be taken as a doctrinal model separate from us but as part of our person, our consciousness, and our response-ability.

A practice of the actual grounds us in a simple sanity that imparts a quiet integrity. We are present and aligned because we are attending to the everyday content of experience while keeping grand theories, dogmas, and speculation as a mere side dish. What emerges as a primary interest is how we can relate to the actual and how it works. Our guiding interest is focused on what a contemporary psychotherapist called the “now/how”. What is occurring right now and how does it occur? The Buddha expressed this commitment in his simile of the forest leaves. Scooping up a handful of leaves, he asks his cousin Ananda, are there more leaves on the forest floor or in my hand? He explains the obvious answer by saying, “What I know is like the leaves on the forest floor, but what I teach is like the leaves in my hand.” He teaches what aids our liberation. He doesn’t feed our cognitive appetites.

The confidence that working with the actual is enough relieves us of the burden of spiritual ideals and big Truths. While openness to new possibilities is helpful, the pursuit of ideals leads to vexation. The actual is sacrificed to the ideal. Suzuki Roshi, the founder of San Francisco Zen Center, cautioned his students against being “too idealistic”. Frustration, discouragement, and despair are the shadow-symptoms cast by the ideal.

This contrasts with the solid optimism that grows from an aware acceptance of the actual. We become friendly with what and who we are by embracing ourselves (and the world), not as we fervently believe or wish ourselves to be, but as the very texture of this moment, the actual. Yet facing the facts of life with all their warts and freckles is not a one shot catharsis; it is a daily practice of getting used to “what is”. We eat our Buddhist vegetables one mouthful at a time.

A daily practice to stay connected to the facts of life is to recite the following chant:

The Five Remembrances

I am of the nature to grow old. There is no way to escape growing old.
I am of the nature to have ill health. There is no way to escape having ill health.
I am of the nature to die. There is no way to escape death.
All that is dear to me and everyone I love are of the nature of change; there is no way to escape being separated from them.
My deeds are my closest companions. I am the beneficiary of my deeds. My deeds are the ground on which I stand.

The practice brings us back to our existential condition. The speed of the recitation can be of our choosing. If there is a particular refrain that hits us we can pause to more deeply access its relevance. Resistance to the practice signals our avoidance of “what is”. The chant jolts us out of our frantic busyness or sobers us up from our latest infatuations. The Five Remembrances support an authentic awareness that reminds us, “This is it.”

Whether we consider ourselves Buddhist or not, we need a balanced diet that includes basic veggies, a life staple. While not as filling as meat and potatoes or as alluring glazed desserts, with each serving we are absorbing what is organic to our life, learning to appreciate its flavors by coming into an awesome alignment with the actual. We are finally able to set aside our ideals and beautiful truths and begin to work with what is actually on our plate.

Alan Lopez, Ph.D., maintained a private psychotherapy practice in the Hartford CT area for more than twenty years. He trained mental health professionals in Body Centered Gestalt Therapy in both the USA and Germany. Alan has a lifelong involvement with Eastern spiritual disciplines and presently resides in Asia where he teaches Buddhism. He also offers counseling via internet/video and workshops on his visits to the USA.
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Reaching $1,000,000,000

Shell Canada marks a major milestone with its aboriginal oilsands contractors

This article appears in the October issue of Oilsands Review 

By Peter McKenzie Brown

As the CEO of no fewer than 15 companies, Phil Peddie is a pretty busy guy.He is the chief executive officer of the Fort McKay First Nation, and it's a hefty job.

Seven of the companies he leads are wholly owned by the Fort McKay First Nation. The rest are joint ventures – 51% owned by the band and the balance owned by non-aboriginal business partners. His companies specialize in doing oilsands-related work, and they couldn’t possibly be closer to their customers. Oilsands mining companies encircle the aboriginal community.

Fort McKay is smack in the middle of the cluster of mining projects now producing or under development – those operated by CNRL, Imperial (Kearl), Shell, Suncor, Syncrude, and Total (Joslyn). The community’s location and business acumen are fascinating in themselves, but to put their success in perspective it is worth noting that over the last six years, the Athabasca Oil Sands Project (AOSP) contracted more than $1 billion in services and supplies with aboriginal companies– many of them at Fort McKay. In 2008 alone, more than C$210 million local spending went towards purchasing supplies and services from such aboriginal groups as the Athabasca Chipewyan First Nation.

To put that number in perspective, Syncrude – which began operations in 1978 – couldn’t boast $1 billion of total work with aboriginal contractors until a quarter-century after start-up.

As the crow flies, the closest plant is part of Shell-operated AOSP. Owned by Shell, Chevron and Marathon, the project includes the Muskeg River and Jackpine mines and the Scotford upgrader, near Edmonton. According to the Shell consortium, more than 70 aboriginal businesses participated in the $1 billion spend. Collectively, they provided a wide range of services and products. These include facilities management, general maintenance works, technical expertise, earthmoving, health and safety services, bussing, camp construction, catering and waste management, and many others.

In terms of social and economic renewal, the rise of aboriginal business in the oilsands areas has come at a critical time. One reason is that there are chronic shortages of labour in the oilsands areas, and they are unlikely to go away. Aboriginal communities can provide reliable local labour. The oilsands industry has become Canada’s largest employer of aboriginals by far.

The other reason is that these communities have traditionally been important sources of untapped entrepreneurial talent. To help develop this area, for a quarter of a century the industry has been helping develop aboriginal entrepreneurs to meet its business needs.

Local Labour

According to Shell vice president John Rhind, this is more than a win-win. “Labour shortages are likely to be with us for a long time, and aboriginals have traditionally been an under-represented demographic for the industry. They can bring a lot of value to the oilsands producers. This not only applies to the Fort McMurray area, but to all producers throughout northeastern Alberta. There’s no question SAGD operators can benefit as well.”

According to Rhind, the surge in First Nations businesses was partly driven by the region’s big producers. “Some years ago the oilsands companies around Fort McMurray made a strong commitment to engage with the communities in the area. These included aboriginal communities – Métis and First Nations. But it included other communities as well – for example, non-aboriginals who were not recent hires, but had lived in the area for many years."

These stakeholders in the Fort McMurray area – Rhind calls them "citizens of the environment” – have “a lot to gain from this, and we thought it was important to make this commitment….It isn’t about the dollars. It’s about members of the community participating in our business.”

Until he was appointed to his present position last March, Rhind was general manager of operations for Albian Sands, the joint venture company that operates an oilsands project for the Shell consortium. I asked him to tell me about the project’s aboriginal partnerships. “We’re about developing the ability of aboriginal people in Fort McKay so that when the oilsands is done, decades or centuries in the future, we will be leaving a sustainable culture and economy behind.”

Shell and the other operators in that area have done this in a number of ways, Rhind says. For one, “we look for aboriginals to become part of our workforce.”

He says Shell’s experience is that there is “no difference at all between a First Nations employee and one from any other background….The key is that first that you have to train your employees. Be clear about what expectations the company has of them and give constructive feedback. Second, if there is any systemic racism you have to be relentless in getting it out of the system. That enables people to contribute at the level at which they’re capable, but it also removes any barriers that might stand in the way of their becoming successful in working in an oilsands business. Once you have a cohort of aboriginal workers in the company which includes people in management, then you have a sustainable system that welcomes new aboriginal employees.”

Part of that welcome arrives through Shell’s aboriginal employee network, an internal human resources system developed to support First Nations, Métis and other aboriginal employees. According to a Shell statement, it “draws together aboriginal and non-aboriginal employees and provides a diverse range of learning and social opportunities for employees.”

Local Business

According to the Athabasca Tribal Council, which represents the interests of five Treaty Eight First Nations in northeastern Alberta, there are approximately 5,000 Cree and Dene people in the region. Besides employing aboriginal workers from these communities directly, Rhind notes that his company and others in the area have “appointed people to work with aboriginal individuals to help them develop successful businesses. We want to work with local aboriginal businesses successfully and in a mutually beneficial way.”

That’s the view through the corporate window. Multiple-CEO Phil Peddie picks up the story. He operates in the world of aboriginal entrepreneurialism.

Peddie oversees a large group of companies which collectively employ nearly 1000 men and women. A Shell news release quoted him as saying that “working with Shell and the Athabasca Oil Sands Project over a number of years has enabled the Fort McKay group of companies, joint ventures and entrepreneurs to grow, and has brought significant opportunity to develop skills, establish businesses and further our community.” This reporter phoned to find out more.

The Fort McKay First Nation has seven wholly-owned companies which, collectively, provide a large number of services mostly targeted at oilsands-sector project maintenance and development. These include, for example, light earthmoving, fuel distribution, fleet maintenance and a variety of environmental services: According to the band’s business website, “Our land reclamation services encompass the entire process from start to finish.”

The Fort McKay Group also has a number of joint venture companies in which the aboriginal community forms partnerships with established non-native companies to provide specialized services. For example, Fort McKay Landing Services, which specializes in camp construction, is a partnership with modular facilities giant ATCO Structures and Logistics.

From the First Nation’s point of view, there are many reasons to like these joint ventures. For one, the community has control of a business that is adequately financed. In addition, the venture transfers managerial and technical skills to the local community and contributes to local employment. Also, of course, for their businesses the status Indian shareholders receive their earnings tax-free.

According to Peddie, each of these companies is operated by a management committee with equal representation from both sides. “It brings together the technical and management expertise of our partners plus the labour we can supply. Our unwritten goal for each of these enterprises is 30% aboriginal content. In every business we own, our goal is 30%.” Achieving that percentage of aboriginal employees isn’t easy. “It’s difficult to achieve because the unemployment rate in Fort McKay is quite low. A lot of people are employed by Shell, Syncrude, Suncor, and so on, so for some of our companies we are below that mark and for others we are above it.”

Oilsands employment has transformed the local economy, he says. “Only 30 years ago, the people of this community were primarily trappers. A European boycott of Canadian furs destroyed the trade,” and very tough times followed.

Now a hamlet of some 700 souls, Fort McKay is mainly composed of status Indians from the Fort McKay First Nation. The social fabric also includes a Métis community of perhaps 200, non-treaty aboriginals, and small numbers of individuals of other origin. The Fort McKay Group of Companies can’t strictly draw from the local community to reach its “aboriginal content” goals because most working residents hold fulltime jobs with Syncrude, Shell, Suncor or another big local producer.

According to Peddie, 13% of local people work for the Treaty Eight band’s wholly-owned companies. A similar number work for its JV partnerships. “So to try to reach our content quotas, we employ aboriginal people from all over the region.”

Being Canadian

Like representatives of other companies in the Fort McMurray area, John Rhind says that “working with aboriginal contractors is one way Shell benefits the communities where we operate. We announced our billion-dollar milestone to thank the businesses and partners we worked with during those six years.”

Shell’s achievement is impressive, and certainly something to brag about. However, it is worth remembering that Syncrude began developing business partnerships with aboriginal communities in the 1970s: During the construction of the plant, chairman and CEO Frank Spragins visited aboriginal communities, and let contracts before the plant produced its first barrel of oil. This policy was spurred by Spragins’ successors, Brent Scott and Eric Newell. The company’s ground-breaking efforts were both visionary and transformational.

As the company’s initiatives were coming to fruition, Newell addressed the triumph of Syncrude’s pioneering efforts in a speech given15 years ago. “We’ve brought two decisively different belief systems…those being business and spiritual… together in understanding and cooperation,” he said. “We’ve drawn strength from each other to leap the hurdles and head down the road side by side – on a journey not only to secure Canada’s energy future, but also to explore what it really means to be Canadian.”

One outcome of Syncrude’s initiatives is that today, Phil Peddie is a pretty busy guy.