Thursday, January 31, 2008

Suncor Invests in Alberta While Some Other "Alpha Oil" Types Choose to Intimidate.

There is plenty of business and news coverage of the Suncor decision to spend $20.6B…that is right Billion with a “B” in oil sands operations and expansions. Full disclosure, I hold shares in the company and have done work for Suncor in the past but not presently.

This company continues to show quality leadership and management and a demonstrable commitment to improved corporate social responsibility. They are not perfect but they get it and they work hard on getting it right taking to heart an integrated triple bottom line approach. In addition to this increased investment announcement, I see Suncor has also renegotiated its royalty contract with Alberta. Some business writers and industry commentators said the Alberta government was “tearing up contracts” with Suncor and Syncrude as part of the royalty changes. Not so and never was. This negotiated agreemetn revision proves that such hype was misleading and perhaps even intentionally by some.

Last October and November in response to the “Our Fair Share” Hunter royalty review expert panel recommendations “Big Alpha Oil” used intimidation tactics on workers, suppliers, communities and the Premier. The were saying that recommended royalty increase that merely put Canada and Alberta as the second lowest takers on the planet would devastate the industry and they would be leaving the province.

Well for a few weeks some actually did cut capital and exploration budgets but not nearly as drastically as they threatened and those decisions were made in light of market realities and taken long before the “Our Fair Share” report came out anyway. They moved some activity to Saskatchewan, which a good thing. They seemed to think it was their oil and gas and not Albertan’s oil and gas. That is a big mistake.

Now we see the most aggressive of the ENGO's shifting focus away from forestry and on to big oil, Alberta's oil sands in particular. We knew this was coming as early as the spring of 2005 when we did some work for the Alberta forest industry. The ENGO's we worked with then said that was their new strategy...and it is now happening.

With these announcements, Suncor steps up and shows leadership and wisdom - once again. This is not the first time Rick George has shown competence and class as a major corporate CEO. When the energy and manufacturing industries got twisted out of shape over the potential dire impacts on the economy due to the Kyoto Protocol, Suncor stayed out of the silliness. After a few months however, Suncor’s CEO said that they had calculated the cost impact of Kyoto in its Canadians operations and it was pennies on the barrel. Suncor said it could absorb that level of additional cost. Within days the din of dire consequences from the other aggitators and fearmongers, who were playing politics more than economics, were silenced and they slide quietly into the background and off the radar screen.

There are lots of examples of why big business has trust, respect and credibility issues with the public. But when we see a good example of a corporation and leadership that shows it is worthy of trust and respect, we have to applaud it. Suncor is consistently such an entity and an exemplar for others to emulate. Good on them!