Selling the Brand

Dene National Chief Bill Erasmus addresses Keystone XL pipeline protesters 

Earning the public trust has become an industry responsibility, not a corporate exercise in public relations

This article appears in the February issue of Oilweek

By Peter McKenzie-Brown

Operating an oil and gas company in western Canada has become a much more complicated endeavour in recent years – in large part traceable back to the rise of the Internet and the age of instant communication. Those living on the periphery of the industry are becoming increasingly vocal about the impact of drilling and pipelines and fracking and trucking are having on the quality of their lives.

In such a fishbowl existence, then, gaining a social license to operate becomes not just a one-off exercise for an operator dealing with a landowner, but an industry-wide commitment requiring coordinated and cooperative efforts by producers, industry associations and regulators to develop cohesive consultation plans with a broad range of stakeholders.

“We are all out there operating in the land base, but we are also in people’s neighbourhoods. Regardless of your company’s size, people see us as the industry,” according to Patsy Vik, who is EnCana’s Group Lead, Community Relations. Collectively, “we are painting a picture that all of us are going to be branded with. If we (in the industry) all work responsibly and respectfully, we will reflect positively on other companies. We should all behave in such a way that we garner respect from our neighbors.”

When the industry fails in matters of common courtesy, terrible things can happen. Consider the Keystone Pipeline, which was constantly in the headlines last fall. In an interview, the University of Alberta’s Andrew Leach suggests that “it’s important not to take this decision (to postpone a ruling on Keystone until after America’s presidential election) as an anti-oilsands measure. At least in part, it’s a reaction to high-profile oil spills in the United States by Canadian pipeline companies.” Also, he suggested, project proponent TransCanada Corporation may have been “a bit high-handed” when it planned the line.

TransCanada spokesman Shawn Howard disagrees. “Across the entire TCPL system, we deal with some 60,000 landowners,” he said. “We understand that we need good stakeholder relations to earn our social license to operate….We have held more than 300 community consultation meetings” as part of stakeholder relations for Keystone, for example.

Howard believes “a well-financed, well-organized group of anti-hydrocarbon environmental groups have taken on the project. The original Keystone pipeline was approved without any problem. For them this is a very important symbolic victory.” Clearly frustrated, he blusters that “A lot of the information (these groups) submitted to the hearings was simply not true and certainly not scientific. They would submit each other’s news releases instead of scientific studies….”

Worst Case Scenario

While Keystone is the most celebrated recent example of a project at risk because of public engagement issues, it has many predecessors. For example, a decade ago Shell was seeking a permit to develop a sour gas field at its Farrier location near Rocky Mountain House.

A consultant specializing in community engagement, Gay Robinson picks up the story. “Shell put in an application to drill this well but in the hearings they began with their emergency plan rather than starting in a positive manner,” she says.

The result was a classic: the locals became frightened and upset and TV personality David Suzuki got wind of the controversy. “He came in and did a documentary called Worst Case Scenario, which aired on CBC-TV. The license was denied and the hearing alone cost Shell many millions.” The mega-corporation also had to forgo the Farrier property’s profit potential, and its reputation suffered.

Robinson continues, “A number of years later, Shell had another significant (sour gas) discovery fairly close to Rocky Mountain House, at Tay River. That time, they realized they had to work in a different way to develop it. They had a different attitude about how to engage the community. They talked to people, asking ‘What do you think we need to do?’” The outcome was a license to operate.

Having focused the last 15 years of her career in public consultation, Robinson is passionate about both the process and the reasons behind it. “There is a need for it. I think there are opportunities for this, and I enjoy sitting down at the kitchen table with people in the community and talking about how we can do things better.”

She adds, “Good stakeholder relations are based on the belief that stakeholders have a right to be involved in decisions that will affect their lives. If companies don’t believe that, we have a basic disconnect from the beginning. People remember the mistakes the industry made in the past, and they don’t want them to see them repeated.”

What they see is a truck

Whether companies are large or small, “they face exactly the same problems,” according to Terry Bachynski, a vice president of emerging oilsands producer Athabasca Oil Sands Corp. (AOSC). “When local people see a truck driving by, they don’t know or care who the truck belongs to. What they see as a truck. If any company is unresponsive to the needs of the people, then we as the industry can all be affected.”

While in one sense stakeholder relations is fundamentally the same for every company, local factors to make a difference. “We have a wide network of stakeholders we have to deal with,” according to EnCana’s Patsy Vik.” These include the media, community leaders, organizations we provide community investment support to, synergy groups, different industry groups and interested environmental groups. Our contractors are another really important stakeholder. They are out there representing us on a daily basis.” EnCana’s interests stretch across the continent.

By contrast, Bachynski works primarily with aboriginal groups. “Because we are up in northeastern Alberta, most of the stakeholders we have to deal with are aboriginal communities. They have deep concerns: how will oilsands development affect their land treaty rights? Will it interfere with their use and enjoyment of their traditional lands? When we talk to them, one of the areas we talk about is how they can benefit from our efforts – for example, through employment and business development. “There are some cases where it’s really important for all the operators to work together – road building, for example. People in those areas really don’t want a lot of roads going through their traditional territory. What’s important is for the industry to work as one on these projects, making sure they meet the needs of local communities.

“New operators do have particular challenges in some ways,” he concedes. “The companies that are already established have a reputation among the local people. If it’s a good reputation, they do have an advantage. New operators have to go in and prove themselves.”

Unlike Bachynski’s AOSC, gas giant EnCana mostly produces from more populated parts of the Western Canada Basin – thus, different constituents with different issues. According to Patsy Vik, “A lot of the issues are related to dust, noise and traffic. We try to identify the impacts of our developments on our neighbours so we can be proactive and manage them. We need to talk to people and listen to people and create some kind of awareness and understanding around what we’re doing. It depends on the scope and scale of the project. We have different groups in our company that address different parts of the issues. A lot of people work with landowners on issues like gathering lines, for example, that might affect them.”

Vik stresses that public engagement is mostly about communities and neighbourhoods. “People are protective about their homes – that’s the one domain that they want to have influence and control over. That’s why we developed our signature Courtesy Matters program, which specifically addresses those things that affect people when they’re driving to their homes and through their neighbourhoods. Some of the things we do can make it less appealing for them to enjoy their homes and enjoy their space. We know that. We try to mitigate those impacts” through Courtesy Matters, which she describes as a policy focused on “working with the community to understand our impacts and working to resolve, mitigate and minimize them.”

She adds, “One of the things we really stress is how people utilize natural gas in their daily lives. We want it to be personally relevant to people. We also communicate with people around the different stages of our activities, and what it will mean to them.”

Moving On

Returning to Gay Robinson’s Tay River case study, “the community recommended that the partners form a synergy group. I helped them do that.” She adds that global best practices “show that public acceptance of the decision-making process is the key to implementing a public engagement program.” A strong advocate of synergy groups, she describes this relatively new approach to public consultation as a public consultation best practice.

The purpose of these groups “is to bring people together to resolve issues, lessen impacts and encourage the use of best practices in the areas of health, safety and the environment,” according to Synergy Alberta, a not-for-profit organization which promotes this form of conflict resolution. “They connect people and organizations to a particular project, facility or neighbourhood. With relevant people at the same table, true information sharing happens and projects or facilities can be tailored to meet the needs of all stakeholders including industry, residents and landowners and regulators.”

According to the organization’s website, synergy groups “form for a variety of reasons. Sometimes it’s community-driven to seek more information, provide information or rally against something the community opposes. Other times, groups are created by industry looking to proactively share information on proposed projects and gather input from the community and others with a stake in the project or area.”

Those working in the area are adamant that good stakeholder engagement is critical if you want a controversial project to move on – be it sour or shale gas, bitumen or an environmentally contentious pipeline.

According to Robinson, “There is actually a solid business case for meaningful stakeholder relations. It’s not something you do just to avoid grief. You do it to get a social license to operate.” Quoting a colleague, she says “‘the government grants the permits but the community grants the permission.’ The idea is that if the community is not in support, and you don’t have the social license to operate, you will have a lot of trouble getting the project off the ground.”

To a very large extent, those decisions reflect changes in the law. In 2004, for example, a Supreme Court decision articulated the notion that governments and industry have a “duty-to-consult.” Alberta’s recent Aboriginal Policy, Water for Life, Land Use Framework, Biodiversity Monitoring Institute and other policy-related pronouncements incorporate this notion. The same now applies in one way or another across the country.

The duty of government, public agencies and industry has simply become good practice.

The Granddaddy of them All

The granddaddy of Canada’s public consultation regulations probably comes from Alberta’s Energy Resources Conservation Board (ERCB). The Board has required public consultation for decades, thus making Alberta a leader in public engagement. According to ERCB historian Gordon Jaremko, the board’s first major public hearing involved Imperial’s proposed Cold Lake project in 1978-79, although it had done hearings on sour gas development earlier in that decade.

The ERCB and its much younger sibling, the Natural Resources Conservation Board (NRCB), have broad discretion and little legislative guidance on what “the public interest” actually means.  In practice, these organizations consider social, environmental and economic effects of development when they determine whether a project is in the public interest.

Since regulatory agencies have so much latitude, they can be very responsive to well-organized campaigns opposing a particular project. For the proponent, therefore, it is better to over-consult than to do too little.

“Companies should recognize that the regulations are just the starting point. They are the minimum requirement,” Gay Robinson stresses. “The ERCB has a document called Directive 56 which outlines the application process. It specifies that in some cases the public may require greater consultation (than the directive specifies). Unfortunately, some companies only perform to those minimums. They need to develop a principled approach to stakeholder engagement rather than just use the one that is prescribed – the regulatory minimum, as it were.”

Patsy Vik puts the matter into a continental context. In her view, EnCana’s stakeholder relations emerge out of “a reputation we have that we’re proud of, and (that reputation) is based on standard values we hold across the company. They are values that are dear and near to us, and they don’t stop at the border.”

Higher, Wider, Deeper and Sooner

A decade ago, Ontario and Quebec and eight states were negotiating what became the Great Lakes-St. Lawrence River Basin Sustainable Water Resources Agreement. The negotiations involved many participants with special interests, a vast geographical area and greatly different legal systems. Ontario’s position was that Aboriginal people should be consulted on the issues. The Americans would have none of it, so Ontario struck out on its own.

In 2004 the province issued a report on its negotiations. Penned by Billy Garton and Sandra Carter, the document is titled “First Nations Consultation: Higher, Wider, Deeper and Sooner.” Later that year, Ontario became a signatory to the final agreement.

The story signifies the growing significance of public consultation in Canada. Also of importance, the report outlines a list of rules for consultation which, though written for government-to-Aboriginal consultation, are applicable much more widely. For the benefit of the private sector rather than government, following is a highly edited adaptation of the ten Higher, Wider, Deeper and Sooner rules for public engagement.

·         Involve the public early, carefully considering what adequate engagement would look like. Ensure that sectors with a stake in the issue are fairly represented – especially those who are most critical.

·         Don’t go into consultation with pre-conceived ideas. Reach consensus through shared decision-making and balancing interests.

·         Demonstrate that your company’s leadership supports public consultation. Keep senior managers involved. Provide staff with the resources they need to do the job.

·         Develop clear ground rules. Provide good information and regular updates. Create an atmosphere of respect for those involved in the discussions. Ensure that consultations are open and transparent. Follow through on the advice you are given or provide reasons why you didn’t. Report back on progress.

Saving Money with Monster Trucks

HOURGLASS: Lessons from the Oil Sands Oral History Project

Three stories tall, these trucks now seem like an obvious approach to 

ore delivery. That wasn't the case in  the beginning.

Retired Syncrude COO Jim Carter describes an oilsands mining technology revolution.

This article appears in the December Oilsands Review

By Adriana Davies

The haul trucks used in today’s oilsands mining industry are some of the biggest in the world—1.4-million-pound, 20-foot-tall, multi-million dollar behemoths ferrying 400-tonne loads of bitumen ore from the hydraulic shovel to the crusher at top speeds of 40 miles per hour. And this is the more agile and economic option.

In the 1980s, trucks and shovels began to replace burdensome and even more costly bucket-wheel and dragline equipment. The new system was first incorporated into overburden removal, and then for the ore itself—enabling oilsands mining producers to operate and expand in a more cost-effective and selective manner. One of the key people recognized for driving this revolutionary technology change is Jim Carter, former president and chief operating officer of Syncrude Canada Ltd.

Jim Carter was a graduate of mining engineering from Nova Scotia Technical College when he heeded the call to “go west, young man.” He had gotten a taste for mining work through summer jobs in Ontario while in high school, and his first job after graduation was with the Iron Ore Company of Canada in Labrador City, N.L. In 1974, Carter was enticed to move to Alberta by a former colleague. He went to work for Smoky River Coal Limited in Grande Cache, rising from mine foreman to mine manager and finally, mine superintendent.

It was when he headed up a provincial study examining mine lighting that he met Dennis Love, general manager of mining at Syncrude. Carter recalls Love’s comment to him about the operation: “Jim, we’ve got a bit of a challenge here with our mine plan. It’s not quite working the way we’d thought. We’re going to have to move to truck and shovel stripping of the overburden, and move our draglines and buckets onto oilsands.” It was an opportunity that the 29-year-old couldn’t pass up. In 1979, Carter went to work for Syncrude as manager of overburden operations.

He says, “The original plan had the dragline sitting on top of the overburden and then digging it and putting it into the pit all at the same time as casting up the oilsands. What happened was that the overburden would not stay at a steep angle. It wanted to go flat, and it contaminated the oilsands, therefore rendering that mine plan inoperative.”

These were the very early days of Syncrude, when various theories not only to do with the mining operations but also the chemistry of extracting the oil from the sand were being tested on an industrial scale rather than in the lab. Carter notes: “The whole industry was really viewed as a bit of a curiosity in those days. Nobody really believed that we were going to be successful with this very complex business of mining the oilsands and extracting the bitumen, then taking this very, very heavy oil and upgrading it to a light, sweet crude that was then usable in refineries to turn into gasoline and diesel fuel, propane and whatever. The world didn’t know much about the oilsands. Certainly, even in Edmonton it wasn’t really that well-known. Calgary, it wasn’t well-known. Toronto, they didn’t know about it at all. So, if you were going to get involved in something that was really a pioneering endeavour of the highest order, this was it.”

The other issue was the link between the oil business and mining; this was not a natural match. To merge the two operations, as was happening north of Fort McMurray, Alta., was viewed with great skepticism. But they were doing it, and in driving the shift to trucks and shovels, Carter was set to play a pivotal role.

His first big challenge was sizing up the geotechnical issues associated with the soft landscape.

“Because the oilsands are soft to traffic on, there wasn’t a lot of aggregate material around for building the roads, and yet we had to move these high volumes. I wanted to use the 170-tonne trucks because those were the largest in the industry at the time, and I knew that the unit cost per tonne-mile of moving a tonne with those was going to be lower than, say, an 85-tonne truck or a 50-tonne truck, even though the conditions were very soft,” Carter explains.

“The biggest challenge I had initially was convincing people there that we could do this successfully. Great Canadian Oil Sands at the time had tried the big 150-tonne trucks, and they didn’t have much success with them. They were switching their fleet back down to 85-tonne, mechanical-drive trucks. There was a lot of skepticism to overcome, shall we say. But we persevered on that and ended up being very successful.”

If existing trucks couldn’t do the work required, then, they would need to be redesigned. In Labrador City in the iron ore business, Carter had used a particular brand of 170-tonne truck called the Terex, which was made by GM in London, Ont. It worked well in severe conditions and had a robust drive system. Carter had actually spent time with the manufacturer in their engineering offices and noted that they used the same drive motors in this truck as they did in their railway locomotives—a technology that could help move across the soft oilsands mine floor.

“The locomotive, when it goes to get started, starts off with the electricity going to the motors in series, and then it switches to series parallel, and then to parallel once it gets rolling and gets its speed up. I had thought this would be a great advantage to use in the oilsands because the trucks normally have power going to the wheel motors in parallel.” He and other Syncrude representatives asked GM whether they could do the series parallel arrangement on the trucks, and GM agreed.

The result was a design that enabled the operator to switch from parallel into series when he got on the waste dump, when the rolling resistance was really high in the soft conditions. Carter says, “It increased the torque to the rear wheels by about 45 per cent, so it made a tremendous advantage for getting across these soft waste dumps. Now, of course, whenever you do that, you’re putting more horsepower into the components, so we needed to build a bigger axle, a larger-diameter axle, which became known as the tar sands axle on those trucks. It gave them the capacity to haul a 200-tonne payload across the soft conditions. It was really then that we realized we could make these trucks work, and we used radial tires. Radial tires tend to have a greater footprint, so they got the ground-bearing pressure lower, and that enabled them to traffic over the softer conditions.”

Carter says that once the Syncrude team started using trucks and shovels for overburden removal, other opportunities for the system presented themselves.

“The first year that we had the fleet running, it was designated as a six-million-cubic-metre-a-year fleet, and we actually moved 10 million cubic metres within the first year, so it was a great success. It was the initial success of that particular fleet that enabled us then to really look at trucks and shovels on a go-forward basis. It meant that we weren’t going to be limited to bucket-wheel excavators and conveyors and draglines. So that opened up opportunities for other technologies to be introduced into the mining system.”

By the late 1990s, the truck and shovel system was well underway in replacing draglines and bucket-wheels in the oilsands industry, a technology change that has enabled the cost-effective expansion of mining operations. Syncrude retired its last bucket-wheel and dragline in 2006.

Carter steadily rose through the ranks at Syncrude, eventually taking on the role of president and chief operating officer in 1997, which he held until retiring in 2007.

This article is one in a series reflecting information from the Petroleum History Society’s Oil Sands Oral History Project, which is recording the stories of oilsands pioneers in their own words. As with the society’s previous oral history projects, transcripts and recordings will reside in Calgary’s Glenbow Archives. Adriana Davies is part of the team of researchers/writers behind the project.