Wednesday, November 20, 2013

The Benefits of Doing it Right

Canadian Natural’s Joy Romero on sustainability 
and supply chain capacity building
This article appears in the September issue of Oilsands Review

By Peter McKenzie-Brown
A metallurgical engineer by training, Joy Romero joined Canadian Natural Resources in 2001 to participate in the development, construction, commissioning and operation of CNRL’s Horizon project. When complete, that project will deliver 110,000 barrels per day of upgraded oil (CSO).

Now headquartered in Calgary, she is Vice President of Technology Development for the company’s oil sands operations. She says she believes strongly in environmental protection, but is well aware of the widespread cynicism toward corporate executives who claim to really believe in the environment. So she takes a different tack: good environmental practice is good economics.

“At least believe that [business is] driven by economics,” she says. “It’s our responsibility to use that resource to the best of our ability. How do we get the most from that barrel [of bitumen] both during production and by the people who use” petroleum products?

In Romero’s view, environmental practices improve with technological innovation. Asked about the “tragedy of the commons” – the idea that unregulated self-interest on common resources can end up in destruction of the resource – she is adamant that this issue is “not even a probability,” given both public and industry attitudes. “We want our industry to be sustainable over many generations. There is a place for fossil fuel in the world, but it needs to be used responsibly. Can you imagine if everybody recycled and re-used waste heat, how much further a barrel of oil would go? We’re pretty darn good at recycling and reusing. If we could get the whole world to do that, there’d be a much smaller footprint out there and lower demand for energy of any kind.”
“If you don’t believe that we want to improve the environment because it’s the right thing to do,” she says, “just look at the economic benefit good environmental practice brings. Our tailings pond is half the size of a conventional tailings pond because reducing the amount of water we take in reduces the amount of water we have to treat and recycle. You don’t have to be a rocket scientist to figure out that it is good business to have a smaller tailings pond. [Developing] heat integration between our upgrader and our extraction plant means that facility won’t use gas. It’ll use waste heat from the upgrader.”
 “When you look for flares on-site you basically can’t see them,” she says. “We use fuel gas to fire our furnaces. We recycle all of that.” These environmental innovations are possible, of course, because of recent technological innovations that simply weren’t available to earlier oil sands plants. But a key benefit for CNRL is that they lower the company’s operating costs. Then, Romero adds a new element to the discussion: “You can’t create a strong oil sands project that isn’t focused on the environment and building human capacity.”
Collaboration
Worried that future production is at risk because of “the social interpretation of our product” is putting the industry’s social licence to operate in jeopardy, she says public education that stresses the rapid improvements in the industry’s environmental trajectory since the beginning of this century is critical. “Up until now, one of the things that I’ve always been involved in and really enjoyed since I actually started is collaborative technology development within the industry.” She has been active in CONRAD – the Canadian Oil Sands Network for Research and Development, which recently shut its doors – and with OSLI, the Oil Sand Leadership Initiative, both of which focused on the environment.
These industry organizations looked for ways to work together to reduce the sector’s environmental footprint. “When it comes to producing oil and the various technologies that we use, we compete. But, when it comes to safety and the environment, we don’t. It is very important for us to work together. Producing companies CEOs have met together, especially since the advent of the social licence to operate.”
CAPP has created a series of environmental ads, one of which features Romero. To some extent they have been controversial, with anti-oilsands groups spoofing and mocking them, but the industry supports them as accurate and necessary antidotes to misinformation.
“We have done other things to promote education and try to help people understand,” she says. But, the proof is in the pudding. People need to see something more concrete. So, even though we are not exceeding any of the regulations, we understand that we can do it better. And, under the guidance of CEOs representing 95% of production, we formed Canada’s Oil Sands Innovation Alliance, COSIA. If we thought we were collaborating before, this is collaboration on steroids. We’re focusing on tailings, greenhouse gases, land and water. Inside COSIA, best practices with respect to land, water, greenhouse gases or tailings are shared,” because “we are judged not by the environmental performance of our best operator out there. We’re judged by the environmental performance of those who are not as strong as others. So, it’s really, really important to bring the industry as a whole to the best level that we can be.”
Shared Values
One of the most important academics to catch Romero’s eye is Professor Michael Porter of Harvard Business School; his work on the “social progress imperative” is taught around the world. “Social progress,” according to Porter, “is the capacity of a society to meet the basic needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”

Porter has parsed that key idea into numerous sub-indexes and concepts, one of which, according to Romero, is “a continuum of philanthropy.” She elaborates that “at the beginning, companies just give stuff away. Then, you develop corporate social responsibility.”
Porter’s ideas on shared value refer to the ways in which companies and communities live, interact and operate. “When he found out what we were doing in the oil sands, he actually came and visited us, and toured and took a look. He said we were probably the most advanced form of shared value that there is the world. [Prior to his visit,] Porter’s impression of what is out there was completely different than what he found when he toured our operations and met our people, and our communities.”
Porter’s ideas on community relations are an important part of his notions of good corporate strategy, and in this area too CNRL fit the bill. “We don’t count minorities and we don’t hire women or men,” according to Romero. “We hire the best people for the job. They are treated the same whether they are Aboriginal People, local small businesses from Fort McMurray or smaller-sized companies from around the world. We generate the project and we generate scopes of work that allow people to learn and to participate. Fort McMurray, Fort McKay, Fort Chipewyan: those are our nearest neighbors, and we make sure the best performers participate in this through a strategy of shared value.” The company’s business systems allow people to be part of a multi-billion dollar project at their right level, and we ensure that they to learn the safety standards and all of the other components needed to be successful.
Romero stresses that companies owned by the Fort McKay community, for example, bid for work to earn it. “If they are qualified, they earn that work. I often hear people speak about these things as handouts,” she says. “Not on our site, they’re not. That is not the way that we work. People are there because they add value. And, they are an integral part of what we need to be successful on our site.”
Building Capacity
Whether the company is dealing with “Aboriginal or small business owners within the Fort McMurray region, smaller engineering companies, construction companies within Alberta or companies from the US or Poland or Spain, we package work so that it can create that capacity in the region, in the province, in Canada and in the world. Literally everybody can have shared value from our project.”
Stressing that CNRL is the only Canada-based company with a mega-mining project in the oil sands, Romero adds that the company has done capacity building across the country. “We’ve done that with respect to companies from the Maritimes, companies from Quebec, companies from Ontario.” CNRL has flown its people to locations in Newfoundland, Nova Scotia, New Brunswick, Quebec Ontario, Saskatchewan and BC to find construction workers. “We’re picking up construction again now and we are again going to look for people to fly in from across the country. So, when we say that we [at CNRL] are Canada’s Oil Sands, we literally are Canada’s Oil Sands.”
These efforts are part of the company’s need to build capacity. “There will be a pipefitting company that we let a contract to in Newfoundland or in Nova Scotia or in Quebec, and we literally go and fly their workforce from that community to our site. You will have a plane that picks people up in communities in Newfoundland and Nova Scotia and New Brunswick and then it flies west. [By doing this], we basically build the capacity of those companies to be able to work. And, so, wherever there’s a level of underemployment we will look for opportunities to bring people to work. Now, when they come and work in the oil sands, often their safety standards are less than what we need them to be. So, there is that capacity building at that time for those companies. That is when their safety standards come up to snuff. They may not be used to building inside our kind of structure, so we help them understand just how to interface with our building practices. That’s what we do to build capacity within the country.”
In a few summary comments, Romero stresses that the industry needs to do two things. First, she says, “we have not communicated nearly as well as we need to and part of our problem is people simply don’t understand what we are doing in those areas. It’s a critical failing on our part…. Whenever we [communicate well], we recognize right away that people go away from the discussion with a different impression than they might have come in with.”

A second and more important part is to continuously improve performance. According to Romero there is an “absolute need to continuously improve, hopefully at an accelerated pace. So, we don’t say we’re good enough, we’re regulated enough, our performance is good enough; we know that’s not the case. We’re under the microscope and for good reason. [The oilsands sector] is a very high-footprint industry which is going to get the scrutiny it deserves. Our performance has to match or exceed people’s expectations.”
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