A Centennial Tale: Our First Quarter Century

By Peter McKenzie-Brown

Rotary arrived in Canada in 1910 with the formation of the Rotary Club of Winnipeg – the world’s 35th club. As the Winnipeg Club boasts, its inception turned Rotary into an international organization. In a sense, therefore, 2010 is Rotary International’s centennial year.

Only nine years after the first Rotary meeting in Chicago, the organization issued a Calgary charter. Formed in 1914, the Rotary Club of Calgary was the first in Alberta and the seventh in Canada. It preceded by two years the Rotary Club of Edmonton, which was co-sponsored by Winnipeg and Calgary. Today there are 13 clubs in Calgary alone, with the 12 relative newcomers all able to trace a line of descent from the Alberta original.

Centennial came along in 1985 – a year which started out well. The city was already one of the world’s great petroleum centres, and the newly elected federal government was on course to eliminate the last vestiges of the National Energy Program. The NEP and a severe economic recession had led to a horrendous three-year home-price crash, but real estate prices were bottoming and ready to recover. Super-high interest rates and inflation were on the decline. Oil prices were high – nominally $30 per barrel, but nearly $100 in inflation-adjusted terms (2009). Pipelines planned or under construction would soon open up more natural gas markets in the United States. The city was optimistic as it began celebrating its civic centennial.

The most popular song of the day was the charity single “We Are the World,” which several dozen mostly American pop stars had recorded to raise funds (ultimately $63 million) to help feed the hungry in famine-ravaged Ethiopia. A then-unknown Canadian paraplegic athlete and activist, Rick Hansen, had just set out on a 40,000-kilometre, 26-month Man in Motion circumnavigation of the world by wheelchair. With single-minded determination and great personal charm, he ultimately raised $26 million for spinal cord research. This was also the year Rotary International announced Polio Plus - a drive to stamp out polio around the world. Nearing success, this effort has cost something in the order of $1 billion so far.

In those days to be “high tech” meant you had a fax machine and an expensive PC with 40 megabytes of storage, a monochrome monitor and a clunky black-only dot-matrix printer. Virtually all the computer could do was run primitive spread sheets and handle your word-processing needs. Telephones had rotary dials.

Charter Members
In this heady environment the Rotary Club of Calgary West sponsored 27 men – only men were permitted in Rotary in those days – to form the first breakfast club in Calgary and the second in Alberta.

It would probably be impossible to figure out how many Rotary clubs were chartered around the world before we received our charter. We have always met in the downtown core, as has the original Rotary Club of Calgary.

Our charter president was architect Dennis Bathory, who presided over the club after we received our Rotary charter on April 5, 1985. At a dinner-dance event at the Croatian Cultural Centre, District Governor Gardie Shaw formally presented the new charter. As we celebrate our 25th anniversary, three charter members are still active: Arvid Leinan, Lorne Plantje and Jerry van der Linden.

Dues for those charter members were $120 per year. To commemorate the city’s first century, our charter members named the new club the Rotary Club of Calgary Centennial. Appropriately enough, one charter member was city alderman Al Duerr, who served as Mayor from 1989 to 2001.

The club’s first “year” was actually only three months long – April, May and June, after which the Rotary year turned over. Accordingly, the club’s initial humanitarian efforts were small: $660, most of which went to the Calgary Sexual Assault Centre. The club quickly began to establish itself, however. A number of developments from those early years still influence the work we do.

Early Achievements
In 1986, we participated in the formation of the Bingo Barn, which in our early days was our main source of revenue. We later augmented bingo with participation in government-regulated casinos.

On Arvid Leinan’s watch, in 1990 we were awarded the opportunity to take on a casino. As it happened, that casino generated what was then the biggest payout in city history – $72,000. Our revenues that year totalled $112,000 – a budget similar to the ones we enjoy today.

In those days, if you took on a casino you took the winnings or you took the losses. If a charity lost money from a casino and didn’t have loss insurance, the consequences could be dire. As a result, the system later changed. Today, gambling money is pooled and distributed to participating charities at the end of the quarter in which they operated a casino. This eliminates the risk of loss.

Gaming income has served our club well for many years, but now may be on the decline. Several factors are at play. For one, smoking in bingo halls and casinos was eliminated in 2008. This drove many people away from bingo in particular – indeed, during the two years following this move, several halls failed, and so did some casinos. Another development was growing competition between bingo and casinos – with bingo the bigger loser. The advent of new technology and an evolving Internet have also affected gaming income: many people now prefer to sit at their computers and gamble. The interminable debate about the ethics of gambling, even when the proceeds go to good causes, has been another issue. Also, of course, the financial collapse of 2008 helped bust what had been an extended boom.

These developments notwithstanding, the Bingo Barn is still in service and remains an important source of revenue. We usually benefit from a casino every 18 months or so, and that income is a critical part of our revenue stream. In recent years, our gaming revenue averaged more than $100,000 per year, about $25,000 of which came from bingo.

Exchanges
In 1988 we first participated in Rotary International’s Student Youth Exchange Program – and our first outgoing student was remarkable in every sense. Karen Connelly, at the time an aspiring writer, went to Thailand where Rotarian families hosted her in the small northern town of Denchai. She published To Touch a Dragon, which recounted her experiences as an exchange student, in 1992. The book won a Governor General’s award and launched her on a highly successful career as a writer. By 2010 she had published nine volumes of non-fiction, fiction and poetry, and had been internationally acclaimed – nominated for the Kiriyama Prize for books about the Pacific Rim and South Asia, and for Britain’s Orange Broadband Prize for New Writers.

Our club has provided opportunities for 22 young Canadians to spend a year in other countries. In addition, Centennial has had the honour of reciprocating by hosting a like number of young people from other countries. In 2010, our outbound student is Julia Gummo, who is being hosted by Rotary families in Istanbul. Our inbound student is Chang Chia-Ying (“Yin-yin”) from Taichang, Taiwan. Young people on this program learn new ways of living, a great deal about themselves and often a new language too. They are ambassadors for their own countries.

A number of the exchange students we sponsored have gone into Foreign Service – for Canada in the case of outbound students, and for their own countries in the case of students coming to Calgary. The reason this is so common is that there are often three requirements for those seeking placement in Foreign Service: a university degree, the ability to speak a foreign language, and the experience of living in a foreign country. The Student Exchange program contributes to the last two.

Rotary often benefits from these student exchanges as participants reach full adulthood. Two of our present members – Laura Patko and Carrie Aiken Bereti – enjoyed the exchange experience as young women.

In 1990 the club began to participate in the Rotary Foundation’s oldest program, the Ambassadorial Scholar Program. These scholarships brought graduate students to our learning institutions to pursue further studies. Many of Rotary’s ambassadorial scholars have become leaders in their nations. Founded in 1947, this program has enabled nearly 38,000 men and women from about a hundred nations to study abroad.

Our club has also contributed to World Peace Fellowships, which fund either master’s degree or professional development certificate study at the Rotary Centres for International Studies in peace and conflict resolution at seven universities worldwide.

Kathleen Radford
The story of women in Rotary is one which shows a great organization taking a long time to make necessary change. However, it also shows an organization in which grass-roots leaders fought for the unstoppable cause of gender equality, and ultimately won.

Today’s clubs are better because they have given up men-only membership rules, but the change did not come easily. Rotary charters excluded female members for most of the organization’s history. However, in the mid-1970s, the Rotary Club of Duarte (California) allowed three women to join, and Rotary International undertook to cancel the club’s charter. This led to a series of court challenges, and culminated in a 1987 ruling by the US Supreme Court mandating a change in the bylaws to allow for the induction of women. While the court decision took place in America, the new bylaws applied throughout the Rotary world.

In 1989 our club welcomed City employee Kathleen Radford, who was almost certainly Alberta’s first female Rotarian. A few women in Calgary had previously been nominated as honourary members at other clubs – a form of tokenism, the women’s movement of the time would likely have proclaimed. By contrast, Radford was a full Rotarian who took her club responsibilities seriously. She was a member for nine years, during which time she spent several years as bingo chair and two as secretary.

One year Radford was chosen our Rotarian of the Year. Three other women have also enjoyed that distinction: Lyla Szabo, Joyce Morrison and Ursula da Rugna. Of these, da Rugna was the first woman to serve as president.

Maturity
By the 1990s we were no longer a new club experiencing growing pains. We were established, effective and actively contributing to district leadership. Rotary has always been an important source of leadership training. Serving on a committee or taking another leadership role enables members to exercise their leadership skills and develop them. Those who take on the presidency or become District Governor make major commitments of their time and talent – not for one year, but also during the years leading up to that seminal honour.

Other frequent contributors to Rotary ideals are our spouses and partners. They make direct and indirect contributions to the club, and they often make sacrifices, too. Their support can take the form of participation in fund-raisers and socials, for example, and hosting exchange students and other participants in Rotary programs. Our partners – in particular the spouses of club presidents – are a vital network of assistance, love and friendship.

Are there rewards for these endeavours? To be of service is a reward in itself, and so is the opportunity to lead. There are other benefits too, and they can extend into the nuclear family.

“The pleasure and honour of being provided a trip to the Rotary International Convention in Melbourne Australia in 1993” is a reward John White particularly remembers. “I was just transitioning from the teaching profession into my present career and our club was able to send the incoming president and spouse to the convention in that year. Charlotte and I were very fortunate in being able to also include our children, who were 17 and 13 at the time. It was the first time either of them had travelled off the continent and they were given a major educational and life experience. I have never felt truly able to thank my Rotary friends for that opportunity.”

Watershed
If a single period represented a leadership watershed for our club, it was the latter 1990s. That exciting period began when a delegation to Rotary, which included Mayor Al Duerr, successfully pitched the idea of holding the Rotary International Convention in Calgary.

The 1996 convention was a huge success, with every club in the city contributing to the triumph of one of the largest Rotary conventions ever: nearly 25,000 delegates from 126 countries. Exactly 100 conventions have taken place thus far. Of that large number, few have had as many delegates as did the Calgary event.

In response, Rotary membership in Calgary boomed. As Lorne Plantje handed over the helm to incoming president Al Muller, club membership totalled 74 members – the largest in our history.

As Muller’s term ended, Dr. Chuck Masur became the Governor of District 5360, and several members of his executive came from our club. Centennial organized the 1999 district convention in Canmore with the help of the local Rotary club.

With Mike Smith serving as club president and Chuck Masur as District Governor, we sponsored the Rotary Club of Calgary Heritage Park, which received its charter in 1999. With the creation of this new club, the Rotary cycle of birth and growth began anew. Seven of our members transferred to the new organization. That and other factors caused our membership to diminish – a problem being experienced by most service organizations in our times. Now numbering in the 40s, our membership ranks have not recovered to the levels they reached after Rotary’s International Convention came to town.

As the organizing committee for the Canmore conference attest, conference planning and execution can be a major undertaking. When Mike Smith served as District Governor, the district conference was held in Lethbridge. Seven members from our club served on a committee chaired by Miriam Mitchell-Banks, and the Lethbridge clubs provided seven other members. Meetings usually took place halfway between the two cities at the Lancaster Air Museum in the town of Nanton.

Gopher Drops
We have already recounted the club’s reliance on gaming funds for revenue. In recent years, fund-raising events apart from bingo and casinos have represented less than 16% of direct revenue – some $20,000 per year.

What else have we done to raise money? Many donations come from meeting operations – “happy bucks,” fines from the sergeant-at-arms and so on. Others come from generous (and frequently anonymous) gifts from members. Then there are the serious fund-raising events. These have included a gala wild game dinner-auction, renting seats at the Stampede Parade and the seasonal Santa Calls event, wherein our most avuncular members call young children to discuss their Christmas prospects. Another annual classic, the Santa Ball, takes place each year at the Willow Park Golf and Country Club.

A few fund-raising ideas have been truly spectacular, not least of which were the Saskatchewan Gopher Drops. For those who want to emulate these events, they involved selling small gophers (sewn by a team of spouses) with the promise of a shot at a prize. On an appointed day, the gophers are dropped out of a hot-air balloon along with three bulls-eyes. Of course, zoologically speaking the gophers are actually avatars of Richardson’s Ground Squirrels rather than of true gophers. Details notwithstanding, the owner of the gopher landing closest to a bull’s eye takes home a cash prize. The club collected about $6,000 in total from its two gopher drop events.

Of course, many club projects do not rely entirely on club revenue. Especially in the area of international service, the club takes advantage of funding from Rotary International, from the district, and from partnerships with the government of Alberta – first through the Wild Rose Foundation; more recently through the Community Initiatives Program, the foundation’s successor.

The Way We Are
Our club invests in all four of Rotary’s avenues of service: Community Service, Vocational Service, International Service and Club Service. Our focus in these areas helps us combat hunger, improve health and sanitation, provide education and job training, eradicate disease and generally make our communities better places to live.

Club service helps keep our club strong, dynamic and engaged. The most important club service functions are the speakers program and publishing a weekly newsletter. Since Don Bell created our emailed bulletin five years ago, it has played a key role in keeping members informed and bringing us together.

The Centennial Eyeopener is a takeoff on a newspaper once published by Bob Edwards – a nomadic and irascible Scot with a wicked sense of humour. By coincidence, Edwards lived in Winnipeg as that city formed Canada’s first Rotary club in 1910. He returned permanently to Calgary the following year. His funny and irreverent newspaper, The Calgary Eye Opener, served as a civic gadfly. Ours serves as a record of club activities and of excellent presentations from a diverse group of speakers.

In the area of community service, we have partnered with other Rotary clubs and organizations to fund large projects. In 1986 we joined other clubs in the development of Fort Calgary Park. Beginning eight years later, our club was a leader in the development of the Inglewood Wildlands Park, which transformed the site of a dismantled refinery into a nature preserve of which to be proud. In 1998, all the Calgary clubs showed their support for Rotary Challenger Park. We were also among the Rotary clubs supporting Kerby Rotary House, a refuge for abused seniors.

In 2000, we made what was then our single largest contribution – $50,000 to the Community Kitchen Program of Calgary. The funds were used for the purchase of a mobile kitchen to support an important nutrition program. We have supported projects for the hungry since our first year, when we made a small donation to the Calgary Food Bank.

Dying to be Thin
An extraordinarily successful but unsung project involved working with a group of parents who wanted to do something about bulimia and anorexia – eating disorders that are especially common among teenage girls and young women.

As Mike Smith recalled, “In 1996, Don Bell proposed that Centennial take up the issue of anorexia. Don, my wife Kathy and I visited with some of the key people in this field, and soon recognized that we were trying to penetrate a veil of silence. The children affected did not want to talk to anyone, least of all their parents. Mostly the parents either did not know or were too scared to acknowledge what was happening. Worst of all, little was available for the victims until they reached a crisis verging on death and were admitted to hospital, only to be discharged from the emergency ward with no care until the sequence repeated itself.” Coincidentally, about this time there were many media revelations about the disease.

Smith continued his story. “We asked to meet the then-fledgling Anti-Anorexia/Anti-Bulimia League of Calgary, made up of six women somehow affected by this disease. They could not believe their good fortune – that a Rotary club was prepared to back them with seed money and place one of our members, Cathy Jones Cook, on their committee.”

Centennial supported the group in other ways – for example, by co-sponsoring Quest Theatre performances of a play titled “Dying to be Thin,” which confronts eating disorder issues. “The league was on its way,” said Bell. “A couple of years later the Calgary Health Region opened an anti-bulimia clinic with a first-year budget of $3 million. Not a bad outcome from $6,000 in seed money.”

Time and Talent
As the eating disorders case illustrates, our contributions always include volunteer time and labour. We organize events and do detailed paperwork as we undertake projects, but sometimes our efforts are more direct. For example, on one occasion we repaired and repainted the porches of a safe house for teenagers. On others, we planted trees and prairie shrubs at the 34-hectare Inglewood Wildlands Park to help restore it to its original state.

In 2009 we joined other clubs in Calgary as volunteers at the World Skills Competition, hosted in Calgary for the first time. Nearly 850 competitors and thousands of delegates from around the world descended on the city for one magical week in September.

We have sponsored scholarships and bursaries and made other contributions in the area of educational and vocational service. We have helped organize Interact and Rotaract clubs for high school and university students. We have also supported literacy programs at The Calgary Learning Centre, which provides services for people of all ages with learning problems which affect their social, emotional and intellectual development.

We have been unusually successful in international service. We are significant contributors to Polio Plus, Rotary International’s effort to eradicate polio from the planet. We have funded projects throughout Asia, in sub-Saharan Africa and in Latin America. We helped out Europe during the Balkan tragedies of the late 1990s through a contribution to the Bosnia-Croatia Relief Fund. In 2010, we will make a $44,000 contribution to an important educational project in Cambodia, and a $50,000 contribution to build a hospital for women and children in northern India. In both cases we are partnering with the Rotary Club of Calgary and Alberta’s Community Initiatives Program.

Sometimes smaller efforts tell the greater tale. In 2008 we made an effective response to the dreadful cyclone which devastated vast tracts of the Irrawaddy Delta, killing many thousands. While the wicked and dysfunctional government of Burma dithered over terms by which it would accept international aid, we collected $4,000 and arranged for a Buddhist monk to take our money from Thailand to a trusted charity in Rangoon.

The Fellowship of the Thing
Rotary is an organization that first and foremost values “Service above Self.” So doing, it fosters close ties, warm friendships and deep respect. Although membership involves deep commitment and long volunteer hours, the fellowship of the thing keeps bringing us back.

Over the years the Rotary Club of Calgary Centennial has held countless social events. Committee meetings frequently take place in the homes of members, and they always involve more than business. Rotary couples – members and their spouses or partners – often become close friends.

With Jon Fisher famously at the helm, social events have included mystery bus tours of Calgary and area, surprise dinners in members’ homes (the hosts didn’t know who was coming) and the annual Christmas Ball fund-raiser. There have also been pub nights, pot luck dinners at
Roger Hough’s Anglican Church, curling and golf. We have hosted Rotarians, exchange students, academics and technical experts from around the world.

We have even hosted friends from Saskatchewan. The aforementioned gopher drops were part of a “Saskatchewan Communities Reunion” for Calgary residents who originated in that easterly province and had the good sense to move west.

Social events have sometimes been over the top. For example, Ursula da Rugna reports an episode in which Don Bell decided to have a dress rehearsal of the musical entertainment for Jerry van der Linden’s president’s ball. By dress rehearsal, of course, he meant in drag. Along with Emlyn Jessop and John White, off they went to Value Village to purchase new garments.

“The men tried on dresses in the middle of the floor,” reported da Rugna. “They didn’t need a change room. Laughter shook the store, and customers as well as staff came over to look. Some just shook their heads but others joined in, helping us select all those wonderful dresses, accessories and wigs. Tears of laughter were flowing!” On this episode, the final word goes to Don Bell’s wife, Angela: “Don resembled the Queen Mother. John, however, was the pretty one.”

Back to the Future
When charter member Jerry van der Linden recounted the club’s history in 2009, he closed his commentary with words that bear remembering. “We are still a vibrant, dynamic group with many promising new Rotarians. We have a history to be proud of, but more importantly, we are positioned to make our future even better.” Having given his account of our story, he said “Don’t just tell me what we’ve done. Tell me what we’re going to do.” In an ideal world, that would be the stance of all our historians.

As if in response to van der Linden’s comments, nine months later the club embarked upon strategic planning in a big way. Not to be unveiled until after the 25th anniversary celebrations, the plan outlines where we’re going and how we’ll get there.

A motivational speaker once reminded me that you can’t build a doghouse without a plan. President Pierre Hoebers recently put the matter less vividly, but more thoughtfully. “This plan,” he said, “will help us write our next chapter.”

In the Centre of the Storm

This article on SEPAC chairman Stan Odut appears in the April 2009 issue of Oilweek magazine; graphic from here.

By Peter McKenzie-Brown

Toward the end of a long and thoughtful interview, a smile flickers across Stan Odut’s face. The topic of his grandchildren has come up, and he brings out a photo of the four who are aged seven and older. Wearing Ukrainian dress, they are dancing at a multi-cultural festival in Calgary. A Chinese dragon dance takes place in the margin of the picture, suggesting the great diversity of today’s Alberta. His pride is palpable and infectious, and he’s probably thinking back on a life well lived.

Odut’s story is exactly contemporaneous with that of Canada’s modern energy era. Born in Germany just as Imperial’s Leduc #1 well ushered in Alberta’s post-war conventional oil age, his family migrated to “a very poor farm” near Dauphin, Manitoba, where he grew up. The new chairman of the Small Explorer’s and Producers Association of Canada (SEPAC) moved to Calgary after earning an engineering degree from the University of Manitoba in 1969. Forty years on, no one is prouder of his city or his province than Stan Odut.

As SEPAC chair he is the voice of junior oil, and he urges small companies to join the trade association. “Membership isn’t expensive, and SEPAC can help you get your voice heard by provincial and federal politicians.” With more than 450 members, the organization describes itself as representing “Canada’s oil and gas entrepreneurs” – a tag line the association has actually trademarked.

According to Odut, the small companies need to “press for revised regulations, cutbacks in bureaucracy and a more efficient industry.” He has strong views on the changes needed to return health to the juniors.

Background: His early career included stints with Hudson’s Bay Oil and Gas, Texas Gulf and Canterra Energy – larger companies that were eventually absorbed by acquisitors. After finding himself at Husky after its 1991 takeover of Canterra, he left that corporation and began working with smaller companies.

He was one of the founders of Del Roca Energy, which eventually sold out to Tusk Energy. Five years ago he formed privately-held Sifton Energy, which he serves as president and chief executive officer. Sifton has 80 shareholders, ten employees and daily production of 950 barrels of oil equivalent. Odut’s original exit strategy was to sell out to a trust “but now with the downturn, we’re struggling a bit to keep on going. There would be no advantage in going public, though. Public companies are so badly discounted that there would be a real disadvantage to doing that.”

Now he begins to address his key messages. “The sources of capital for the junior sector are equity, debt and cash flow,” he begins. But in today’s environment, “many companies are already mired in debt and credit lines are being pulled. You can’t get additional debt coverage. You can’t raise any equity because there is no reason for investors to put money into the energy business right now. And governments (provincially in particular) have strangled cash flow. So help me with the equation: you’ve got to get one of those factors to change to get the business going again.”

Odut describes the economic situation as “dire”, and observes that it has built up over several years. The treatment of trusts has been a major contributor. Another has been the loss of the Alberta royalty tax credit. “Actions by provincial and federal government have debilitated our industry”, which is mostly headquartered in Alberta. The economic environment is becoming similar to that of the 1980s, when exploration and development collapsed, layoffs replaced hectic hiring, and Alberta’s rural areas found themselves with little work on the rigs or in oilfield construction. In both periods, the junior sector was hit particularly hard.

Just as westerners with long memories generally finger the National Energy Program as an important cause of decline in that earlier period, Odut places blame for the deteriorating situation on Alberta’s new royalty regime. “It has resulted in fewer jobs, less activity and less money in government coffers.” He acknowledges that it has been “more than the royalty regime that has killed activity…. It’s also been oil and gas prices – but those prices are the same in Saskatchewan and British Columbia” where activity is still relatively strong. In Odut’s view, Alberta’s new regime helped drive activity into the other western provinces.

“The Alberta advantage seems to have disappeared,” he laments. “You can see it in municipalities increasing taxes on infrastructure, the cost of obtaining surface leases or the new royalty system. Alberta’s bureaucracy now seems to be anti-development.” While he acknowledges that “there are land bargains out there,” he stresses that “you need cash to take advantage of them. And if I put on my Alberta resident’s hat, should I be happy that provincial (mineral rights) are being sold for a song?”

As this article goes to press, the Alberta government has promised measures that will provide relief for the juniors, and the government has agreed to consult with SEPAC and other trade associations. “My advice on help is the sooner the better,” says Odut. “We have already lost the winter drilling season. Now we have to concentrate on (getting activity going during) the summer drilling season.”

Incentives: Only two years ago, when oil prices dropped to $50 per barrel, there was no let-up in investment in Alberta. Yet last year, when average oil prices hit their all-time high, that changed. Why? Because investors no longer feel they can count on a stable regime in Alberta.

“Large companies are still going around the world and investing,” says Odut. “They know that one pass through (countries with immature petroleum basins) can give them a good short-term return. They are less concerned if the regime changes. (But Alberta) is not a one-pass-through basin. You need to know there will be a stable return over time.” After the recent changes in royalties, that certainty is no longer there.

Although Alberta is a mature basin, Odut is optimistic about its future. “Better than 35 per cent of the conventional oil resources are still there waiting to be recovered,” he says. Odut’s optimism about Alberta’s productive potential is qualified by deep skepticism about its exploratory potential. “Right now, only one (exploratory) well in seven is a decent well. I think there are still a lot of good opportunities in the conventional sector. The opportunities are in technology, because of improved recovery methods. We aren’t going to find a lot of great new fields, but we can get a lot of left-over barrels of oil using new technologies. We need incentives to do that.”

“The present regime,” he says, “penalizes you if you come up with a good well by increasing royalty rates from 35 percent max to 50 percent max”. While acknowledging that at present prices oil royalties are “at the bottom of the scale,” he stresses that the present system “penalizes horizontal wells, which reduce the industry’s environmental footprint. If you are successful, instead of having four 10-barrel-per-day wells, you could have a single horizontal well producing 100 barrels per day.” However, because the present regulations impose lower royalties on less-productive wells, “you shoot yourself in the foot by drilling (horizontally) under the existing regulations.”

At the end of last year, the Alberta government announced a 5-year window in which companies could apply the old royalty system to new wells. Stan Odut wasn’t impressed. “It doesn’t address the basic question of what you are going to drill with. You need debt, equity or cash flow to drill, and it really didn’t address any of those issues. Equity I can’t raise any, credit there isn’t any and governments are strangling cash flow.” The royalty regimes are better in BC and Saskatchewan, he says, “and BC is tweaking its system to make it even better. The biggest problem is here in Alberta.”

The outcome is that large companies have taken their cash flow and vacated the province, leaving it to the junior sector. Yet the junior companies have little to work with. To turn this around, he says, “You have to acknowledge that capital will flow to where it will get the best return. Our fiscal regime does not encourage the flow of capital into Alberta.”

What’s a government to do? Provincially, he suggests incentives for horizontal wells. Federally, he argues for changes in flow-through tax rules.

If Edmonton encouraged small companies to use horizontal wells, production would go up and the environmental footprint would go down. “You need to encourage investment in horizontal wells, as Saskatchewan does. They have a royalty holiday for horizontal wells – you pay a very small royalty on the first 100,000 barrels or so. That way the investor is able to recover his money before the government begins receiving its take.”

Ottawa, on the other hand, should take steps to expand flow-through investment. Under the present flow-through rules, companies can pass tax breaks associated with exploration directly to individual investors. The focus of that program, however, is exploration, the success of which is in decline. “Flow-through rules should (be changed to) enable companies to put flow-through money into development wells, where the risk is lower. (The federal government should) make larger sums available, so slightly larger companies could take advantage of it. This would encourage investment, and that investment would be used for drilling. Companies could choose whether they wanted to put money into exploratory drilling or development. It would give you much more cash flow.”

Peak Oil: Stan Odut is one of a growing contingent of oilmen now subscribing to the concept of peak oil – the notion that the planet’s maximum rate of oil extraction is at hand. After that point arrives, the rate of production will enter terminal decline. “I believe we probably aren’t going to see an increase on the supply side globally,” he says. “With the global economic situation there has been (crude oil) demand destruction, but I would add that there has also been supply destruction because drilling has been declining, producers are shutting in supply” and many large projects, world-wide, have gone on hold.

Prices are low because “right now oil is overbalanced on the supply side,” he says. “When things do recover, I think we are going to be in a really tight situation. The horizon might be shorter than many people predict. I think within the next five years – certainly within the next ten – we will meet a supply crunch probably like we have never seen before.”

“There’s a huge disconnect between developing world and developed world consumption,” he says. “Either we have to tap some alternative resources which we don’t really know about today, or many of us in the developed world are going to have to really cut down on our oil consumption. The developed world has to contract its consumption a lot.” This sounds ominous, and Stan Odut quickly adds that he doesn’t want to be a scare-monger.

“I’m getting a bit long in the tooth and I have an eye for what my grandchildren are going to face as we go down the road. I think they are going to be facing a different world from the one we are in today.”

Centre of a Storm

A reflection of the trauma of Canada’s energy wars; cover courtesy Maclean’s Magazine. Left to right: federal Energy Minister Marc Lalonde, Alberta Premier Peter Lougheed, Prime Minister Pierre Trudeau and Alberta Energy Minister Merv Leitch. From the book Barbecues, Booms and Blogs: Fifty Years of Public Relations in Calgary, this chapter is excerpted in the November, 2008 issue of Oilweek magazine.

By Peter McKenzie-Brown
The oil price shocks of 1973, 1979/80 and 1986 echoed and re-echoed around the world. Here at home, they aggravated the conflicts that historians now call Canada’s energy wars. As the drums of battle deafened public debate and affronted an industry whose allies were few, federal and provincial partisans clashed for petroleum wealth. Through the Canadian Petroleum Association (CPA), oil and gas producers gradually developed a coherent public voice and eventually played a role in policy reform. They also opened their eyes to the critical importance of good environmental practice. This chapter tells those stories.

Energy wars
The battles began with a shot from Prime Minister Pierre Trudeau. Inflation had become a national problem and oil prices were rising, and on September 4, 1973, he asked the western provinces to agree to a voluntary freeze on oil prices. Nine days later, his government imposed a 40-cent tax on every barrel of exported Canadian oil. The tax equalled the difference between domestic and international oil prices, and the revenues were used to subsidize imports for eastern refiners. At a stroke, Ottawa began subsidizing eastern consumers while reducing the revenues available to producing provinces and the petroleum industry. This outraged Alberta, which had fought long and hard for control of its natural resources.Britain’s Privy Council didn’t award resource ownership to the province until 1930, after a drawn-out legal battle between Edmonton and Ottawa.

Premier Peter Lougheed soon announced that his government would revise its royalty policy in favour of a system linked to international oil prices. His timing was impeccable. Two days later, on October 6, the Yom Kippur War broke out – a nail-biting affair between Israel and the Arab states. OPEC used the conflict to double the posted price for a barrel of Saudi Arabian light oil, to US$5.14. Saudi and the other Arab states then imposed embargoes on countries supporting Israel, and oil prices rose quickly to $12. These events aggravated tensions among provincial, federal and industry leaders.

The rest of the 1970s were marked by rapid-fire, escalating moves and counter-moves by Ottawa, western provinces and even Newfoundland. The atmosphere was one of urgency, alarm and crisis, with global conflicts adding gravity to the federal-provincial quarrelling. Alberta, British Columbia and Saskatchewan (the latter two headed by NDP governments) took steps to increase their revenues from oil and natural gas production and to protect provincial resource ownership from federal encroachment.

The federal government announced a series of national policies founded on the basic notions of federal/provincial revenue sharing, made-in-Canada pricing, increasing Canadian ownership of the industry and a quest for self-sufficiency in oil through development of such non-conventional resources as oilsands and the frontiers.

A single voice
The logical voice for the petroleum industry was the Canadian Petroleum Association, a trade association mainly reflecting the interests of large, foreign-owned companies that together produced around 90 per cent of Canada’s oil and gas. Formed in 1952, the association’s primary function was to compile technical data for the industry – drilling statistics and reserves estimates, for example. The CPA asserted itself as the industry’s voice and quickly found itself in the centre of a storm.

Its Executive Director was John Poyen, a capable manager with a technical background. According to Jack Gorman, who later became the association’s Director of Public Affairs, “When the feds announced the export tax on oil, from his chair in the CPA office Poyen made some fairly blunt comments, without any reference to the CPA’s Board of Governors.” Hans Maciej – at that time the association’s Technical Director and economist – didn’t think so. “John used to call a spade a spade and the feds may not have appreciated his plain talk, but the organisation continued to put the industry’s case forward.”

Harold Millican soon took the top job at the CPA, and Gorman joined him. “It was a happy arrangement,” said Gorman. “Our focus at that time was to be conciliatory, especially because of the way Poyen had shaken the beehive and got a lot of people upset. So we developed our messages, and talked about how oil was getting harder to find and told people about different approaches to the problem. Jim Rennie joined us and we developed an educational approach, producing booklets about the ABCs of the oilpatch.”

As an aside, the CPA library became an important centre of PR learning for CPRS members, beginning with Rennie’s brief tenure there. Monthly “Library Nights” featured bottles of port and thoughtful discussion about every imaginable aspect of public relations practice. Library Night thrived until 1983, when it reappeared as Shop Talk at another venue. It soon disappeared from the historical record. “With some difficulty,” Gorman continued, “I was able to sell the CPA on a program of journalism awards to get the media to take more interest in our industry. I thought it was also important to hold seminars for reporters and separate seminars for editorial writers. So we brought them into town and set up seminars hosted by experts from the oil industry. It was a warm and credible way of working with the media.”

Perhaps, but it was powerless in the face of the worsening political struggles. As Maciej put it, “When politics entered the picture, PR people alone could not play the major role.”

The National Energy Program
In 1979/80, further crises in the Middle East led to panic-driven pricing. The Iranian Revolution came first. War between that country and Iraq soon followed. Oil prices more than doubled, to US$36 per barrel. Such high prices multiplied the amount of money at stake. Pierre Trudeau led the Liberals to electoral victory in 1980, promising vaguely to create a federal energy policy in response to rising oil prices.

The result was the National Energy Program, Canada’s most controversial federal initiative in peacetime. It ended an era of great prosperity in Alberta. On October 28, 1980, I worked for Gulf Canada, and that evening I sat glued to the television as the budget speech described the federal government’s latest energy initiative.

In a beautifully produced book prepared for the occasion by the federal government, Energy Minister Marc Lalonde said, “This is a set of national decisions by the government of Canada. The decisions relate to energy. They will impinge, however, on almost every sphere of Canadian activity, on the fortunes of every Canadian and on the economic and social structure of the nation for years to come.” Right he was, although no one could have imagined the rancour that followed.

A fuming Peter Lougheed compared federal actions to those of a rude invader blundering into Albertans’ living rooms. The province made plans to cut oil production by 15 per cent over three months, threatened to withhold approval of new oilsands projects and launched court actions. British Columbia and Saskatchewan mounted furious protests of their own. The NEP pitted vital interests against each other. Supported by eastern consumers, the federal government took one corner of the ring. Supported by regional voters, the western provinces took the other.

The petroleum industry was a spectator wishing it could score points against either combatant – or better, both. In the beginning, compromise seemed impossible. After a year, however, the two levels of government did reach a revenue-sharing agreement – memorialized in the press by photos of Peter Lougheed and Marc Lalonde toasting the deal with Champagne. Left out in the cold, the petroleum industry didn’t share in the celebrations.

Under the terms of the new deal, the sector could only realize additional revenue if oil prices, which had already begun to erode, continued to rise. Operating under new rules in a declining oil price environment, corporate cash flows dropped precipitously. In response to federal efforts to “Canadianize” the sector, foreign interests sold their assets and headed home. The Canadian sector became mired in debt – a development that contributed to the bankruptcy of once-mighty Dome Petroleum. Drilling slid into a deep funk, and rigs began a highly publicized exodus across the border. Confidence in the industry plummeted.

As the decade wore on, bankruptcies in Alberta reached new highs and real estate prices crumbled. Although exacerbated in 1982/83 by what was then the worst global slowdown since the Great Depression, the severity of the decline was unique among the world’s petroleum-based economies. Norway, for example, boomed throughout the NEP years.

New leadership
At the beginning of this period, in 1979, the CPA’s leadership changed again. Ian Smyth became Executive Director. Perhaps reflecting his civil service background but with the active support of the CPA’s Board, Smyth quickly began to enlarge the association. He began by creating an office in Ottawa to supplement divisional offices in Regina and Victoria. ‘Before long, the organization also had offices in St. Johns, Halifax and Montréal. Smyth’s ambitions, and his plans, were vast. 

“CPA staff often provided access to ministers in Ottawa and the provinces, but we never lobbied in the sense that lobbying is a dirty word,” he said. “We’d do show-and-tells. There would be half a dozen ministers around the table, and we would say: ‘Here we are, the industry, and we want to tell you what we’re doing. If you have any questions, Minister, we will be glad to answer them.’”

Gorman tells a story about this period with a combination of humour and derision: “The next thing you know they hired Allan Gregg, who had just founded Decima Research, to conduct a nationwide survey to find out what Canadians think about the oilpatch. I said to Ian, ‘I can tell you what the people of Canada think about the oilpatch. They think it is run by a bunch of Yankee fat cats who are exploiting Canadians and making high profits and sending most of the money back to the U.S.’ So they launched their campaign and surveyed Canadians and that’s exactly what they found out. “Then they decided to let the research drive a campaign to convince the Canadian people that this really wasn’t true, that the oil industry was really working in the best interests of the country. So they began this big, expensive advertising campaign, but I don’t think it was very effective.”

Norm Elliott and I joined the CPA in 1981, just before the advertising campaign began. Norm was Director of Public Affairs; I was his number two. Our day-to-day work consisted of analysing news and planning communications; preparing news releases and backgrounders; organizing news conferences; arranging publicity and media events (including the National Journalism Awards); managing publications, including a monthly magazine and the annual report; speech writing; meeting and meeting some more.

Despite technological innovation and the evolution of new forms of media over the last three decades, these functions are still the PR professional’s stock-in-trade. They are less art than craft. My role gave me a unique vantage point from which to observe the industry’s response to the NEP. The balance of this chapter describes how the CPA led the charge.

The leader
Ian Smyth was a big, wall-eyed man with a large ego, a superb mind and, when he turned it on, a huge amount of charm. Few people were able to dominate a social occasion, a meeting or an organization as completely as he did. As Norm Elliott put it, “Ian was the leader. He set the rules, he set the thinking and he knew what was going on. I never saw a better mind than his. It was unbelievable to watch him, to see how people responded to him. He came into Calgary not knowing a soul, and within a year he was right on top of things.” Smyth was a quick study, and his commentary was continual grist for the media’s mill.

“He could completely take over an interview,” said Elliott. “The best media people in the country took him on, but he always controlled the interview. No one could acquire that talent. He was just born with it.” Technical Director Hans Maciej continued to answer questions about many economic and most technical matters. On matters of policy, though, Smyth became the industry’s spokesman. The CPA was the industry’s voice, and he was the CPA’s.

When I asked him to describe the advertising campaign, Smyth began thus: “We set out to use opinion polling to find out what concerned people. What we quickly found out was that Canadians were not worried about Canada running out of oil. It was a period of high unemployment and high inflation. People wanted to have a job a year from now. That was their number one concern. As we worked through the research, we realized that we had a theme. That theme was that when the petroleum industry is at work and has the funds it needs to do what it does, it provides jobs and employment right across the country. So we began to run a series of TV commercials and print ads telling that story, and it worked.” He added, “That was the most researched campaign in the history of advocacy advertising. It became a case study in some MBA programs. We researched carefully everything we did. If something didn’t work we junked it and if it did work we did more of it. And so we gradually progressed to a stage where our campaign had a significant impact on public opinion. Partly because of what we did, voters threw out the Liberal Party in the next election.”

Hans Maciej was skeptical about the research, but supported Smyth’s conclusion that the campaign helped people understand the damage caused by the NEP. “I always questioned the numbers we were getting back from our advertising and polling people,” he said. “We would hear that something in public opinion moved by 0.2 percentage points and that was a major improvement. But Allan (Gregg) was an effective snake oil salesman, and it was always interesting to listen to his interpretations.”

“Anyway, I believe we were effective in putting forward the other side while the NEP was collapsing under its own weight,” Maciej maintained. “To their credit, the political opposition (Mulroney’s Conservatives) saw what was happening. It took them a long time to rectify all the wrongs of the National Energy Program, but they eventually did it.”

 Emerging issues
Just before the NEP died, the CPA shifted its focus toward the natural environment. The emergence of environmentalism as a public issue illustrates an important rule for the petroleum industry: A crisis for one is often a crisis for many. Take the cornerstone years of 1977 and 1982.

On June 9, 1977, Justice Thomas Berger issued Northern Frontier, Northern Homeland – the report of the Mackenzie Valley Pipeline Inquiry, and a surprise bestseller. This document raised environmental and social rather than technical objections to an industrial project. In so doing, it killed a proposal to construct a natural gas pipeline from the Arctic. The industry didn’t see this as part of a sea change, but responded with a cacophony of complaints about the “left wingnuts” in Ottawa. Wingnuts or not, 30 years later 1.7 billion barrels of oil and about 25 trillion cubic feet of natural gas remain stranded in the far north.

Five years on, two calamities struck in a single year. The Ocean Ranger disaster off Newfoundland and the Lodgepole blowout in Alberta precipitated more than gripes and grumbles. The Ocean Ranger tragedy involved a semi-submersible drilling rig going down in a winter storm. She took 84 hands into the frigid sea, and none survived. 

The Lodgepole catastrophe involved an Amoco-operated, high-pressure sour gas well. Out of control for 68 days, it took the lives of two blowout specialists and sent another 16 people to hospital. On days with strong westerly winds, residents of Winnipeg (1,500 kilometres away) could smell the rotten-egg odour of the gas. Regulatory opprobrium and public anger were intense. Inquiries went on for years, and the resulting new regulations were as tough as nails. More importantly, in Canada’s national consciousness these headliners reinforced budding concern about public health, industrial safety and environmental integrity. The CPA was the first trade association to take action on these growing worries.

According to Smyth, this, too, arose from research. “We were continually out there taking the public’s pulse. We had noticed from the beginning that the first few top-of-mind issues were always economic – jobs, taxes, inflation and so on. But after a while, people started volunteering the environment as a top-of-mind concern – the only issue that wasn’t bread-and-butter. So I said to the CPA’s Board that we should be, and be seen to be, the most environmentally responsible industry in the country, and they said, ‘See what you can do.’ We began by developing the first industrial environmental code of practice in the country, and soon set up an environmental department.”

Third price shock
As the CPA began its environmental labours, the country’s energy wars were ending. Then oil prices collapsed – a 1986 market phenomenon known as the third oil price shock. The industry’s core issue became survival in a world of lower energy prices.

Environmental policy remained a focus, but big-budget ads were suddenly out of the question. The CPA responded with its first and only community relations initiative. With the CBC and The Calgary Herald as media sponsors, the association’s Share the Earth Triathlon helped brand the CPA green. It was a sporting event with an environmental theme – the first, perhaps, in Calgary.

Why triathlon? It was a new sport and the city (gearing up for the Olympics) was sports mad. The demographics were excellent: a mean age of 36 and surprisingly large cohorts of professionals. Costs were minimal, and volunteers (led by volunteer Race Director Pete Strychowskyj) took care of planning and race-day operations. This early-season event quickly became the most popular in Alberta. The CPA’s wisdom in championing the environment became apparent as the Mulroney government began passing tough new environmental legislation. This included million-dollar fines and five-year jail terms for offending executives.

Smyth twice earned honours with The Globe and Mail’s front-page “Quote of the Day.” On the first occasion he said, “I have never seen a CEO who was prepared to trade five years in the slam for a better bottom line.” On the other he said, “We have plenty of environmental sticks. We need more carrots.”

In large part because of the CPA’s efforts, Ottawa nominated the petroleum industry for a prestigious United Nations award. In 1992, the CPA merged with its former shadow – the much smaller Independent Petroleum Association of Canada – to become the Canadian Association of Petroleum Producers (CAPP). The new organization axed the triathlon which, though still popular, had outlived its usefulness.

Legacies
The oil shocks left enduring legacies. One was an increase in industry organizations focused on telling the industry story. For example, the respected Centre for Energy is the successor to the Petroleum Resources Communication Foundation, and the SEEDS (Society, Energy, Environment and Development Studies) Foundation has been producing energy information tools for Canadian schools for more than 30 years.

In addition, companies and trade associations are now far more fluent in government and stakeholder relations than when the CPA’s pioneering efforts began. The alphabet soup of industry associations and organizations – CAPP, PSAC, CEPA, CAODC, SEPAC and the rest – are better staffed with or have access to public affairs professionals. They share key messages and backgrounders with their members, so all can respond quickly with the same basic messages. As importantly, senior managers now receive training in how to deal with public issues, and they understand that good environmental performance is the only acceptable business practice.

These developments owe much to the reverberations of the oil price shocks and, later, to the greening of Canada.