Dec '07/Jan '08

Shaping the oil sands

By D. Zlotnikov

As the crude oil prices continue their climb towards the US$100 mark, the oil sands of Alberta continue to grow in appeal. The number of companies has grown from two back in 1996 to 17 today, and more projects are in the planning and permitting stages.

Such rapid growth has, not surprisingly, put a strain on the province’s ability to keep up. The solution, according to the Alberta government, was to create a secretariat and task it with creating a plan for continued sustainable development of the region. The person in charge of this newborn group — at least for the first two years of its existence — is Heather Kennedy, a metallurgical engineer and most recently the vice president of operations excellence at Suncor.

Kennedy had only been in her new position for three weeks at the time of the interview, but had big plans for the future. The secretariat, she explained, is meant to coordinate the ongoing efforts of a multitude of groups, ranging from the oil companies to local residents to environmental groups and, of course, the various government departments.

“We have all of sorts of divisions working away,” she said, “and where we can help is to pull it all together. We needed someone to look for the interdependencies and say, ‘You know what, you’re doing this over here, and you over there are doing the same thing at the same time so how can we make our lives better and have a better outcome?’ A lot of people in the government are doing good work to lead towards a sustainable oil sands industry. It’s a question of coordinating, talking to people and enabling them and pulling it together.”

Kennedy’s professional experience is not limited to her work with Suncor. In her 27 years as a metallurgical engineer, she has worked at the Kidd Creek Mine in northern Ontario, the Fording Coal Trust in British Columbia, moving to Suncor in 1996 to be employed as a process engineer. From that position, Kennedy moved first to project management, and then operations. For the past four years, Kennedy has been working in human resources and stakeholder relations. She had only held her vice president of operations excellence position for six months before going on secondment to the secretariat.

Kennedy’s relevant experience is not limited to her work. In the mining world, she has served as director of the Athabasca Regional Issues Working Group and was the chair of the Alberta Resource Chamber’s Aboriginal Committee. Kennedy has also sat on a number of boards, most notably the board for the United Way, Boyle Street Community Centre, Science Alberta and that of the Future Forward initiative put together by the mayor of the Wood Buffalo municipality. The latter is an ongoing effort to create a common vision for the future of the municipality, of which Fort McMurray is the largest community.

Kennedy’s experience in bringing together diverse stakeholders’ agendas and concerns may well prove invaluable in the next two years. “What I think is the most interesting is how interconnected everything is,” she said. “You can’t build a road without thinking where the neighbourhood will be. And you can’t build a neighbourhood without thinking where the development is and thus where the workers will be.” Looking at the interrelations, the diverse perspectives, and developing future sustainable development frameworks accordingly is where, Kennedy said, the greatest rewards will come from.

But, “that’s also going to be the most challenging part.”

To get a good understanding of the interconnections, Kennedy is in the process of hiring a team with as much diverse experience as possible. “I hope to have a team that includes backgrounds in economics, energy, aboriginal issues, environment and project management.”

To fill any gaps in her team’s experience, Kennedy will first look to the other government groups she will be working with.

“We will already be on the phone daily with people from Municipal Affairs and Housing, or Health or Infrastructure,” she said, “so we will look for internal resources and hire consultants to supplement if necessary.”

But all the diverse backgrounds won’t replace the first-hand experience of going up to the sites, which Kennedy recognizes. “We intend to have staff in the regions, talking to the stakeholders on a regular basis,” she said. “Otherwise we can’t do our jobs.”

Kennedy’s new position comes with the title of assistant deputy minister, and the secretariat is considered a part of the Treasury Board, a ministry not directly involved with the oil sands operations. The Treasury Board has two ministers, the president of the Treasury Board and the Associate Minister for Capital Planning, who provide support at the cabinet level. What this means, Kennedy explained, is that the secretariat will focus on advising, rather than dictating, how things should be done. That said, “sometimes you have to bring people together in a room with a whiteboard, and see what you can get done.” Coordination and overall vision may be the main focus of the job, but Kennedy added that sometimes an issue grabs you, and you just have to roll up your sleeves and get involved.

The advisory role of the secretariat is reflected in its budget — $1 million to cover everything from salaries to consultants’ fees to travel. This is, Kennedy explained, because any major expenditures, like capital costs or new projects, are expected to come out of other departments’ budgets.

Of course, like many government decisions, choosing Kennedy for the position involved some controversy. The main concern raised by the critics was the fact that while working for the Alberta government, Kennedy’s salary will still be paid by Suncor, who will then be reimbursed by the province. But the reasons for the arrangement are rather mundane, not very suspect, and far from sinister.

“I’m 49,” Kennedy said, “and while I want to keep working, I have to think about my pension.” With the two-year posting to the secretariat being treated as a secondment from Suncor, Kennedy will retain her seniority at the company and have an uninterrupted pension and a position to come back to. The government, on the other hand, will most likely want someone else to head the secretariat at the end of the two-year period.

“The last part in the terms of reference is to evaluate the success of the secretariat at the end of the term,” said Kennedy. “If we do our job well, the next step will require a different skill set. We’ll have to wait and see what this process needs by the time 2009 rolls around.”

Kennedy said she is not feeling pressured and that “there are mechanisms in place to ensure there are no conflicts of interest.” These include, for example, a restriction on her trading in Suncor stock while she heads the secretariat. There is pressure but it comes from the desire to get it right for the oil sands regions and the province and to add value to what’s already taking place and to create the right climate for progress.

But Kennedy feels that a more significant point is that the direction of oil sands development has already been decided on, before she ever took the new post.

“The decisions about sustainable long-term growth have been established by the government. These decisions were based on recommendations from multi-stakeholder and aboriginal groups and the Radke report.” Kennedy’s group is working very closely with Alberta Environment’s Strategic Oil Sands Division, who is taking the lead on the environmental management framework of the future. Coincidentally, the Radke report also included a recommendation that the secretariat be created.

One of the first issues Kennedy is hoping to address is that of land release. Fort McMurray, the town most affected by the oil sands expansion, has been growing at a rate of nine per cent per year, she explained, which is putting a great deal of strain on the community’s resources. The growth is also not likely to slow, as more industry projects seek qualified labour.

Is the current rate of growth sustainable?

“With the right cooperation from the municipality, the government and the industry,” said Kennedy, “the answer is yes and that’s the challenge, as it hasn’t been that way to date.” One area that Kennedy is hoping to address is the use of aboriginal skills in the region.

“The oil sands industry has done a lot to hire aboriginal people and work with aboriginal businesses but still has a lot of places where they could be hired. Optimizing that is key for the labour shortage.” Coupled with the fact that, as Kennedy points out, aboriginal people comprise the fastest growing segment of the working-age Canadian population, the industry and the province would be wise to pay attention.

Her goal, Kennedy said, is not one specific challenge or issue, but rather the industry as a whole. “It’s about creating an industry that has a really special legacy to it, more than about specific issues. What do we want to say about the oil sands industry when it’s all said and done is really the question I’d like to answer in the right way.”

For her part towards achieving that goal, Kennedy is trying to get the message out. “The secretariat is there, it’s going to be taking the good work being done today, finding the gaps and working to fill them and create a sustainable industry. We have some serious deliverables and intend to deliver on them.”

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