Kerry Margetts steps into position as the inaugural COO of the Sturgeon Refinery

With 6,000 workers on site, a bussing program of 100 coaches transporting more than 4,000 people through Alberta’s Capital Region every day, a labyrinthine skyline of more than 100 cranes manoeuvring vessels, stacks, coolers and various modules into place, the Sturgeon Refinery is the kind of megaproject that Alberta could use a few more of right now.

The project’s owner, North West Redwater Partnership (NWR), broke ground on Sturgeon in 2013 and is currently at peak construction activity. There is still a year and a half to go until its estimated completion at the end of 2017, but it has already hired Kerry Margetts as chief operating officer. The 29-year operations veteran already has his hands full with pre-commissioning and startup testing as completed refinery packages are handed over to his operations and maintenance team.

The challenge for Margetts will be to commission as many as possible of the 1,200 packages making up the Sturgeon refinery during the course of construction in order to expedite the final startup.

“It’s standard procedure, but [the question is] how efficiently you can do this,” Margetts says. “The projects team would prefer to hand over everything when it’s done and get out of the way, but if you do that, you extend your schedule way out. [With effective pre-commissioning,] it only takes a couple or several months to have the entire thing up and running after construction is completed.”

When pre-commissioning work is folded into the fray of construction, the challenge of safety on a busy worksite is compounded. Coming from Shell Canada, a company noted for its safety culture, one of the first things Margetts wanted to know was whether his potential new employer shared the same high safety standards. It does.

Margetts recalls what shaped his own commitment to safety. “In one of my early roles as a health safety environment manager [at Shell],” he says, “we had a couple incidents where people got seriously injured. Those experiences give me a real foundation in understanding that there’s nothing more important than keeping our people safe.”

In the fishbowl

The chemical engineer’s career with Shell—he joined the company after a four-year stint with Syncrude after finishing his chemical engineering degree—was also shaped by the understanding that an industrial complex doesn’t operate in isolation. It’s part of a larger community.

Working as Shell’s Sarnia plant manager for five years and operating manager for six years prior to that, Margetts was keenly aware that across the street from the refinery was a First Nation reserve. The city of Port Huron, Mich., was directly across the river. The town of Corunna was just south of it. And Detroit was further downstream on the same waterway connecting Lake Huron and Lake Erie.

He says the refinery “was also relatively old and very complicated. So that experience gave me two things. How to run these plants very reliably, but also the incredible sensitivity around personal safety, process safety and the environment. When your tank farm is literally in somebody’s backyard and there’s a whole community that lives around your plant, you are really in a fishbowl.”

As the refinery’s manager, the facility’s visibility in the community meant that about a third of Margetts’ role was on the other side of the fence, building strong relationships with the government officials, First Nations chiefs, local mayors and councils, representatives of local trade unions and colleges, and directly with the people in the community. The work combined his strengths as an engineer in mechanical operations with his passion for dealing with people.

“I’m passionate about that interface between people and machinery, for working with people, coaching and mentoring and seeing that things come together into a safe and reliable operation,” Margetts says.

His final role with Shell before coming to NWR was general manager of contracts and procurement. Part of his task there was to transfer the hard-won lessons on downstream costing to the upstream industry, which, in Alberta at least, at the time was still mostly focused on growth and capital investment. His efforts centred on better materials management across three fronts.

He pushed for improved inventory accuracy at Shell’s oilsands mining operations. He brought radio-frequency identification (RFID) technology to the task of tracking of equipment at Albian Sands. And at Scotford Upgrader, he introducing “kitting,” which is the packaging of all the necessary materials needed to perform maintenance, repair and operations work in big plastic bins on skids before starting work.

Smaller scale

This last role at Shell was also the most business-oriented position Margetts had taken on his career. It provided a natural segue into his current position as NWR’s chief operating officer, but this similarity is overshadowed by differences in the size of these two organizations.

Shell is massive. It has 60,000 employees worldwide. Some of the world’s top experts in their fields were always looking over Margetts’ shoulder. That was mostly a good thing because, for a young engineer in the middle of his career, being a gear in a much larger machine provided ample opportunity to learn. But with those lessons learned, Margetts felt the desire to take on greater responsibility.

“At NWR, the buck stops here,” he says. “It’s a small company. It’s very entrepreneurial and I really believe in what we’re doing here. So the values and the project altogether made sense to me.”

Being part of the first major greenfield refinery in Canada in 30 years was certainly part of the attraction. Margetts is proud of the fact that Sturgeon is providing good jobs for people from across the country, that it will add value to Alberta’s bitumen by converting it to ultra low-sulphur diesel and that the facility includes the latest technology.

“This project has CO2 capture system designed right into it rather than a bolt-on CO2 solution,” he says. “So instead of just capturing and putting the CO2 in the ground, we’re able to use the CO2 we capture for enhanced oil recovery.”

Another progressive dimension of the project is its green approach to construction. Ninety-eight per cent of the facility’s construction waste is being recycled. Much like in a sprawling municipal recycling center, there are bins for concrete, metal, plastics, cardboard/paper, organics, etc. The monetary proceeds from this recycling is being pooled into a community fund that supports local causes.

“Just last week, we gave a $25,000 cheque to the public school in Gibbons to build a playground,” Margetts says.

High-profile project

As exciting as it is for Margetts to be on the executive leadership team at NWR, he’s also aware that a lot is riding on the success of this somewhat controversial project. The proposed refinery has attracted its share of political wrangling over the years because of the provincial government’s involvement in the deal.

The provincial government allows oilsands producers to pay their royalties with either cash or bitumen, which sets the stage for the province supplying, under contract with NWR, 75 per cent of Sturgeon’s Phase 1 feedstock for the next 30 years. The other 25 per cent is to come from Canadian Natural Resources, which owns 50 per cent of the project (along with privately held North West Refining holding the other 50 per cent). The refinery will process that bitumen for a fee.

Because of the project’s visibility and because its estimated price tag has already taken a big jump to $8.5 billion in 2013 from the original $5.7 billion in 2011, bringing Sturgeon in on budget and on schedule is a priority. Margetts says that with $7.6 billion of the capital cost already committed and 60 per cent of the project already standing, the risks of meeting timelines and budgets “is reduced.”

“We’ve made a cost commitment to the owners and our toll payers, so it’s a fundamental target for all of us—not just NWR, but also the construction trades, the Construction Owners Association of Alberta and the [Alberta Construction Association]—to be able to say that we can actually build a megaproject in Alberta with that focus on budget,” Margetts says.

As for schedule, there might be some wiggle room, he notes. But the sooner Sturgeon is up and running, the sooner it will be generating revenues and paying for the money invested. This is good motivation for working closely with partner contractors towards timely completion. The project’s effective incorporation of technology and processes also bodes well for meeting timelines and cost objectives.

RFID materials management, which Margetts was instrumental in bringing to Shell’s oilsands operations, is well established at Sturgeon’s construction site. Inventory control is also being managed efficiently at Sturgeon. If anything could be added, it’s the introduction of kitting. Margetts is already talking about that concept with his maintenance teams.

So with oilsands megaproject construction in the doldrums, Sturgeon is a welcome hub of activity as it chugs towards completion, picking up at least part of the slack in Alberta’s trades thanks to NWR’s vision and determination to see bitumen refined in Alberta.

“As a small enterprise built during the boom time in Alberta, NWR attracted a lot of entrepreneurial talent,” Margetts says. “The quality of the people here and the commitment to make this small partnership with a very large project successful is impressive. And it’s backed by the owners, Canadian Natural and North West Refining, who are highly committed to this project and the broader aspects of community.”

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