The groundbreaking business deal that saw two northern Alberta First Nations take a $545-million equity position in a major oilsands project was built on “deep trust and collaboration,” says a leader with Suncor Energy.
The Fort McKay and Mikisew Cree First Nations closed their acquisition of 49 percent ownership of the East Tank Farm portion of the Fort Hills oilsands mine in November 2017.
Sheila Innes, Suncor’s general manager of stakeholder and Aboriginal relations, says the deal – one of the largest business investments to-date by a First Nations entity in Canada – came from the trusting relationship between Mark Little, who is now the company’s CEO, Jim Boucher, who at the time was chief of the Fort McKay First Nation, and Archie Waquan, chief of the Mikisew Cree First Nation.
“Traditionally we’d had long-term benefit agreements with these communities; we’d worked to hire Indigenous employees [and] we would procure from their businesses, but they were having a conversation and really trying to understand what it is that these communities really want, what it is that these communities really need.
“Through that conversation, and through that deep trust and collaboration from the relationship that was there, it emerged that the communities were really looking for a long-term, stable revenue source,” Innes told a JWN Speaker Series sponsored by Fluor on Nov. 7.
“Our industry goes up and down and that presents challenges for all of us, including these communities, and they really wanted to move away from dependence on government revenue and be self-sufficient. And with that seed planted, the idea of partnering in the East Tank Farm came to be.”
Innes was part of an industry panel discussing success factors for oil and gas partnerships, joined on stage at Calgary’s new Central Library by John Brogly, director of the water environmental priority area for Canada’s Oil Sands Innovation Alliance; Glen McCrimmon, Husky Energy’s innovation chief; and Mark Brown, general manager of Fluor Canada.
Addressing the technical challenges facing the oil and gas industry will take a collaboration model “where we actually take the smartest people in the industry and solve the problem,” Brown said. “If we don’t, then the industry is going to hurt as a whole.”
That model is still being developed, he said.
“Fluor doesn’t have all the smart people; our competitors don’t have all the smart people. It’s a combination of the EPCs, the vendors, the contractors, the owners and operators. People have to put away their competitive spirit for a moment and say ‘how do we get to the best solution’ and still be able to employ the people that we need to employ.”
McCrimmon, who ran Husky’s innovation group off the side of his desk in his previous role as chief geologist until the company’s “innovation gateway” was formally established last summer, said that in some cases finding the right partners can be about size.
“What we learned very quickly is that there are different scales of technology providers out there, and they all have something to bring to bear, but we found that some of the really big technology firms are good at some things but typically not super agile, and the smaller companies are pretty agile but they don’t necessarily have the governance or the maturity to know how to work with a large company,” he said.
“We found a sweet spot with what I would describe as mid- to late-stage startups with good ideas, and they can compete head on with the really large tech firms.”
Whether companies are looking for social innovation or technical innovation, Innes said it is important that there is a sense of equality around the table.
“Often when you’re working to collaborate, people come from different positions of power, and those power dynamics can really change how you advance collaboration,” she said.
“I think the challenge is to get everybody on equal footing so that nobody feels like we’re the big company and they’re the small community or the small corporation that’s trying to advance a new technology.”
Leadership at all levels is critical, especially from the top, added Brogly, offering an anecdote about the formation of COSIA, which initially in 2012 had 14 member companies.
A legal working group from each of the members had been established to form the joint venture agreements to enable the competing companies to share technology and grant each other usage rights to technology.
“Our former chief executive asked this group of lawyers how long it would take to write an agreement like that; they said anywhere from two years to never,” Brogly said.
“What happened was the CEOs said, ‘look, we want this to happen, make it happen.’ My water joint venture agreement, which runs about 110 pages, was done in about four months.”