OILPATCH LEADER
David Olive remembers businessman Rick George,
More than anyone, Rick George reinvented the Canadian oilsands, by far the country’s largest source of petroleum. At Suncor Energy Inc., George made the oilsands costefficient, consistently profitable and environmentally respectable, at least among those willing to acknowledge the tremendous efforts Suncor has made in trying to tame the oilsands’ environmental impact.
Among CEOs of major enterprises, and especially those so large that they define their industry, George has few equals in Canadian business history for his acumen in decisionmaking over a tenure of two decades.
George died Tuesday at age 67 after a long battle with leukemia.
In a world where leaders of multibillion-dollar enterprises so often are consumed with misplaced pride, George deflected praise to his colleagues and even rival companies for their bold initiatives. (“Our employees have been the real champions of our company,” he once told me in an interview.) In the manner of a CEO marked for success, George stepped into Suncor on “little cat feet.” That’s the headhunter term for bosses who wisely make a long, careful study of the culture before beginning to put their own imprint on it. When George took the CEO job in 1991, something of a youngster at 41, the Brush, Colo. native thought Suncor might be a stepping stone to running an even larger firm in his homeland. George also saw Suncor as a humble “niche” player, devoted only to its pioneering effort in trying to make money from tarsands.
At Suncor, George took on one of the toughest assignments in the annals of Canadian business.
Since its founding in 1967, the company that became Suncor had failed to consistently make money. It was, in fact, one of the unluckiest enterprises in North America, frequently ravaged by fires, strikes, massive electrical failures, and abrupt drops in the world oil price.
George ramped up the pursuit of efficiency gains begun by his predecessor, Tom Thomson. And he experimented with promising new efficiencies. George became a practitioner of the Japanese custom of kaizen, or continual improvement.
George ultimately transformed Suncor into Canada’s largest energy firm, and one of the world’s most consistently well-run major enterprises.
In time, George committed wholly to Canada. He and his family earned Canadian citizenship. And George was keenly interested in communi- ty. With Suncor’s community embracing many Native Canadians, George resolved that about 20 per cent of new hires be drawn from First Nations communities, a goal whose achievement gave him delight.
As for “niche” player, the Suncor from which George retired in 2012 had revenues of $40 billion, profit of $4 billion, and a stock price that had tripled in value in the previous decade.
George’s enormous firm was now a mandatory holding for money managers across North America. George had methodically built Suncor into the “Big Oil” firm he earlier thought Suncor would operate in the shadows of.
That wasn’t empire building. George was intent simply on proving that oilsands production could be sustainably safe and profitable. Only by constantly expanding Suncor’s production could George hope to keep lowering Suncor’s cost per barrel.
Nor did George rely solely on the expedient of acquisitions. Suncor’s heavy investment in R&D enabled it to achieve substantial organic, or internal, growth as well. That’s tough to do, and requires a patience lacking in today’s abundance of short-term-thinking CEOs.
Yet George is likely best remem- bered for his blockbuster, $19.6billion acquisition of Petro-Canada in 2009, among the biggest takeovers in Canadian history. It was a sage move. Suncor was close to being a “pure play” in production, making it acutely vulnerable to swings in the notoriously volatile oil-price cycle. Petrocan, by contrast, was a major retailer and refiner (the so-called “downstream” of the industry). And that cushioned the blow for Suncor from abrupt drops in the oil price.
Suncor’s downstream assets have helped the company endure the current oil-price slump, in which Suncor has posted just one year of losses. Last year, a recovering Suncor managed to post a handsome profit of $434 million.
By proving that oilsands production can be reliably profitable, Suncor has attracted billions of dollars of capital to the oilsands, from both domestic and offshore investors.
George wasn’t infallible as a strategist, a failed Australian shale-oil pilot project being one example. And Suncor has several times been found in violation of environmental regulations, though less often than to be expected of a company its size. And Suncor’s ever-increasing production has kept it the biggest single GHG emitter in the country.
Then again, George was in the industry lead, in the 1990s, in creating an “action plan” at Suncor on climate change. Action is the operative word. Suncor invested substantially in reducing its greenhouse gas (GHG) “intensity” — that is, the amount of GHGs emitted per barrel of oil. That effort yielded a 50 per cent reduction by 2007. Pursuit of further reductions continues at today’s Suncor.
Back in 2000, Suncor began to make large investments in alternative energy. That year, George invested $100 million in wind, solar and other renewable energy projects. By 2009, Suncor was operating four wind farms.
Suncor spearheaded a tech consortium to develop a means of curbing seepage of bitumen into tailing ponds. And George spent $220 million to build a sulphur-dioxide reduction plant. A byproduct of that process is gypsum, which Suncor has used to dry out former tailing ponds prior to reforestation.
Risking the ire of peers, George met repeatedly with Greenpeace and other environmental activists. In 2010, he again broke ranks with peers by endorsing a carbon tax.
Suncor’s sprawling Fort McMurray oil-mining operation remains a blight visible from the moon. But George’s Suncor became the anti- Exxon, which even today funds climate-change-denial groups.
By stark contrast, Suncor has long acknowledged its complicity in global warming. It redirects funds that could be spent on dividends to minimizing that damage. And Suncor invests in energy alternatives that compete with the oil that is Suncor’s raison d’être.
“George turned one of the continent’s messiest industrial char ladies into something of a social, financial and environmental Cinderella,” wrote Andrew Nikiforuk, one of the tarsands’ harshest critics, in 2002, a decade into George’s Suncor tenure.
George’s Suncor landed on the Dow Jones Sustainability Index three years in a row. And with its fractious labour-relations behind it, Suncor has repeatedly appeared on rankings of Canada’s best employers.
Of course he died too young. But until his passing, George was one of the most admired, and liked, of leaders in the oilpatch and in Canadian business. He was of a kind we too seldom see. Nothing will change that.
Rick George was an exemplar of business as a noble calling.
He will be greatly missed, though his legacy is engraved in the hardest stone.