‘A Bigger Suncor, The Same Focus On Sustainability’
A conversation with Steve Williams, Suncor’s chief operating officer
The 2009 merger between Suncor Energy and
Petro-Canada created a larger, stronger, and more financially flexible company. However, stakeholders have asked how the merger will affect Suncor’s longstanding commitment to sustainable development and ongoing efforts to improve reliability and performance across its operations. Suncor COO Steve Williams provides some answers.
The 2009 merger was struck for strategic economic reasons—to give Suncor an improved ability to invest and grow, while also providing a degree of protection from the volatility of commodity markets. But what does it have to do with advancing sustainable energy development?
WILLIAMS: Quite a bit, actually. Let’s start with one of the most tangible benefits—an enhanced ability to invest in environmental technologies and renewable energy. Suncor has a long history of doing both. Nevertheless, when you are hit with the kind of market turmoil we saw in 2008 and 2009, it becomes a much bigger challenge to maintain investment at the level that’s required to make real progress.
I’ll give you a case in point: Suncor has spent years researching and developing new technologies to speed up the reclamation of liquid mine tailings, which is the water, sand, clay, and residual hydrocarbons that remain after bitumen is extracted from the oil sands. We’ve come up with a drying process that will allow us to reduce our tailings backlog and the need for future tailings ponds. It should also allow us to reclaim entire mine sites in a third of the time it now takes. This is exciting and potentially industry-changing stuff.
However, it’s also costly. We’ve budgeted $450 million to begin commercial implementation of our tailings reductions plan in 2010. We expect to spend that much again in 2011. Frankly, given current oil prices, the old Suncor couldn’t have afforded that level of investment—at the very least, we would have needed to spread it over more years. That would mean delaying what we believe is a very significant advance in dealing with one of our industry’s biggest environmental challenges.
Or take the case of renewable energy. Two years ago, Suncor committed to spending an additional $500 million over five years developing wind energy and biofuels products. After the commodity price collapse and global credit crisis hit in late 2008, we were looking at having to stretch that out over a longer period. Post-merger, we’re back on the five-year track and have already invested $120 million in expanding our biofuels production facility near Sarnia, Ontario.
In last year’s Report on Sustainability, you talked a lot about the relationship between improving operational performance and sustainable development. Aren’t larger organizations less efficient than smaller ones?
WILLIAMS: Not in the energy sector. If you look internationally, some of the most efficient energy companies are also some of the largest. It’s about centralizing technical expertise and bringing it to bear across the enterprise. For example, you don’t have 10 rotating equipment experts resident in each of your refineries; you have three or four in charge of looking at the whole fleet of assets and giving the proper advice and guidance.
That’s the model we intend to follow. We’ve got to be saying, ‘Look, if we have poor reliability in any single part of our business, we’ll dive in, diagnose it, and fix it. Then, if we see the same things happening elsewhere, guess what? We’ll fix those too.’
Getting back to Suncor’s stated focus on operational excellence, in late 2009 and early 2010 there were fires at your oil sands facilities that delayed and depressed production. How does that square with the push for improved reliability?
WILLIAMS: There is no doubt these operational upsets meant we stumbled in achieving this goal. However, I can assure you that everyone, from the Board of Directors to our front-line operators, is determined to get to the bottom of these incidents and apply the lessons learned so they don’t happen again. At the same time, we did see progress through the balance of 2009 on improved reliability, better execution of planned maintenance, and other key performance measures—and we are doing everything we can do to get back on that track.
Post-merger, we also have a tremendous opportunity to look at our entire expanded asset base, identify where the best practices are happening, and standardize those across the business. We also need to look externally for other better practices we can incorporate. All of this is part of the enterprise-wide Operations Excellence Management System we’re currently implementing.
Operational excellence in a business like this isn’t about doing one thing right, it’s about doing a thousand things right; you can’t just wave a magic wand and make it happen overnight. Overall, we are making progress—and it remains our overarching priority.
Suncor has always prided itself on being one of the first major energy companies to make sustainable development a cornerstone of its business. How do you go about imprinting that philosophy on this new and larger company?
WILLIAMS: Well, let me start by pointing out that we don’t have to reinvent the wheel here. Petro-Canada’s operating principles were very compatible with Suncor’s. Petro-Canada was a recognized leader in several areas—including water use, community investment and corporate governance. Both companies have invested billions of dollars in technology upgrades to reduce their environmental footprint.
To answer your question more directly, environmental excellence and sustainability is embedded as one of the four defining pillars of our operational excellence strategy—the other three being reliability, people (including our employees and the communities where they live and work), and safety. So right there, you can see that sustainability is absolutely hard-wired into how this company operates in a way that I think is pretty rare in the corporate world.
I’d also point to the four environmental performance goals that Suncor publicly adopted in last year’s Report on Sustainability. We committed to specific and absolute reductions in water use, land disturbance, and air emissions by 2015, as well as a 10% improvement in our energy intensity. Those goals applied to Suncor’s assets at the time. We’ve since made it clear we will now apply the same goals to all of the assets we acquired through the merger.
This won’t be an easy task. Quite frankly, many of the conventional and offshore oil and gas assets we acquired already perform more efficiently than our oil sands business. So making the same magnitude of improvements in those new assets by 2015 will be that much tougher—although that’s what we intend to do. In sum, the new Suncor is bigger, but we have the same laser focus on sustainable energy development.
Suncor was traditionally focused on its oil sands assets based in northern Alberta. Now you operate across Canada, internationally, and with an expanded position in conventional and offshore oil, natural gas, and retail and marketing. So a lot has changed, right?
WILLIAMS: Yes and no. First off, our company remains strategically focused on oil sands development—so that hasn’t changed. Also, as I’ve just described, our commitment to a triple bottom line that values economic, social, and environmental performance remains the same.
However, you’re right to suggest we are now operating on a much bigger playing field, which is opening up some new opportunities to put our principles into practice. For example, we recently agreed to let one of our Petro-Canada retail stations in southern Ontario be used as a recharging station for a pilot project that’s studying North America’s first fully electric vehicle. It’s a small commitment to date, but it demonstrates how this company is increasingly being approached by governments and others as a partner of choice. Also, it’s another example of Suncor being proactive about building new energy sources. If change is going to happen, we think it’s better to be at the front lines figuring out where the long-term opportunities might exist.
Another set of new opportunities comes from harnessing the additional talent and brainpower that came to us through the merger. You know, when you operate in the offshore, sitting on stilts in the middle of nowhere, you get pretty innovative and self-sufficient when it comes to something like energy use. Similarly, when you’re drilling in the middle of the desert in Syria, you get pretty careful with water use. So I think we’ve got a lot of new expertise we can tap into that will help us better develop our core oil sands resource.
Finally, I think it’s fair to say the scale of expectations around our company have changed as a result of the merger. We are now Canada’s largest independent energy company, and the fifth largest energy company in North America overall. All of us feel a renewed responsibility to demonstrate leadership, whether it’s in technological innovation, environmental stewardship, policy development or investing in the communities where we live and work.