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Murray Edwards: Opinion that matters Oil patch billionaire leads oil sands execs, accompanies environmental organizations, aligning with Alberta’s climate action plan GARY PARK For Petroleum News Bakken
Murray Edwards seldom emerges into the spotlight.
He has no need to seek approval beyond the board room, given his estimated personal net worth of US$2.2 billion, largely accumulated from his holdings in the Canadian oil patch.
As a co-owner of the Calgary Flames of the National Hockey League, he has both imparted and absorbed stick-handling skills when it comes to finances, playing an instrumental role in turning Canadian Natural Resources from a penny stock into one of the world’s largest independent oil producers through its holdings in Western Canada, the British North Sea and West Africa.
Thus, when he does go public, Edwards commands attention as one of the industry’s most influential leaders. And that has been the case over the past few weeks.
Endorsement of carbon policy He startled many Albertans in mid-November when he shared a platform with three other leading oil sands executives to endorse a sweeping new carbon policy announced by Premier Rachel Notley that includes an economy-wide carbon tax and a cap on greenhouse gas emissions from the oil sands.
However, what has apparently angered many within the industry is evidence of collaboration among Edwards, chairman of Canadian Natural Resources, and the top executives of Suncor Energy, Shell Canada and Cenovus Energy, and four environmental organizations in striking a deal with the Notley government. Edwards said his three oil sands peers opted to lead by example, taking a “bold step” and hoping that other large producers, including those in the United States, would also accept a price on the carbon that is linked to their output.
“We understand this is an important issue to Canadians and to the globe, as we are going to start pricing carbon into the oil sands and we are going to start to incentivize to reduce our emissions,” Edwards said.
“I hope that the leadership position helps change the conversation in Canada, that we are what I would call ‘clean oil,’ and provide leadership on a global basis,” he said.
Informal discussions Edwards disclosed that the oil sands strategy evolution stemmed from informal discussions over the past year with environmental non-government organizations to better appreciate their concerns.
Despite the industry’s own attempts to explain the benefits of oil sands development and its creation of the Canadian Oil Sands Innovation Alliance to share environmental improvements, Edwards said the industry still lacked the game-changing technologies needed to lower GHGs.
However, he hopes the shift towards more positive discussions with NGOs will gain momentum, even though he is not counting on support for more pipelines.
“My view is that the industry is doing the right thing as a responsible developer,” he said. “And we think it’s important to communicate, to reflect Canadians’ aspirations and value set.”
Edwards said Alberta’s proposal to set a cap on oil sands emissions of 100 million metric tons a year (up 30 million metric tons from current output) provides an incentive to innovate, which could include a variety of measures, such as using trucks powered by electricity to move raw bitumen, or nuclear-powered operations.
What he hasn’t explained is why other leading producers such as Imperial Oil and MEG Energy were apparently not consulted or involved in the deal-making. Imperial has said only that it needs more time to assess the potential impact of the government’s policy announcement. Others have talked about “secretive” deal making.
‘In a different world’ Following the introduction of Alberta’s climate change plan, Edwards delivered a speech at a business forum in the Canadian Rockies when he talked about a world of sub-US$100 oil that faces a sharp rise in carbon taxes and possibly royalties.
“I’m now starting to, with our staff, communicate that we’re in a different world,” he said, by way of explaining his changed profile.
“Around town in Calgary, I get a lot of questions about when we’re going to return to the way it was.
“I don’t believe it’s going to go back,” Edwards declared, having already established his credentials as a forecaster a year ago when he suggested oil would sink under US$40.
“We’re in a period of change; we’re in a period of, if you want to use the words, ‘new normal.’ All of us are going to have to find ways to do things more efficiently, find ways to get our costs into line, and do it in a time of higher regulatory and environmental standards.”
With OPEC showing no willingness to reduce export quotas, many of its member countries and outside oil jurisdictions are having to deal with shrinking revenues.
Pressure to raise royalties Edwards conceded that has put the pressure on Alberta not to raise royalties on a sector which is slashing capital spending and releasing thousands of employees - so far costing about 40,000 direct and 100,000 indirect industry jobs across Canada, as capital budgets have nosedived to C$45 billion this year from C$81 billion in 2014.
He said Alberta’s dependence on oil sands production gives it the “lowest oil price in the world, (along with) some of the highest, if not the highest, regulatory standards in the world. And we’re captive to one market, the Americans. We have a lot of wind blowing in our face right now, a lot of challenge before us. So it’s really going to cause all of us to rethink how we do business.”
Peter Tertzakian, chief energy economist at ARC Financial Corp., told the same forum he is “confident that segments of the industry will remain competitive. This is a very major period of disruption in the world of energy and companies and institutions that are able to adapt will definitely be competitive.”
“But whenever you have change of this magnitude, there are always elements of the industry that cannot be competitive and we just have to move forward.”
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