Key oil­patch sec­tors to get new lead­ers

De­par­ture of top ex­ec­u­tives isn’t un­ex­pected, but it’s mean­ing­ful

Calgary Herald - - NEWS - CHRIS VAR­COE Chris Var­coe is a Cal­gary Her­ald colum­nist. cvar­[email protected]­media.com

Two key fig­ures are leav­ing their posts in Al­berta’s en­ergy uni­verse in the com­ing weeks dur­ing a pe­riod of up­heaval for the sec­tor.

But two fa­mil­iar fig­ures will be step­ping in to re­place them.

The Al­berta Elec­tric Sys­tem Op­er­a­tor, which man­ages and op­er­ates the prov­ince’s power grid, an­nounced Tues­day chief ex­ec­u­tive David Erick­son will leave the or­ga­ni­za­tion Jan. 31 after al­most a decade in the job.

He will be re­placed by Michael Law, AESO’s chief oper­at­ing of­fi­cer and the point per­son in Al­berta’s tran­si­tion to a new elec­tric­ity ca­pac­ity mar­ket.

Mean­while, one of the most prom­i­nent oil­patch voices is go­ing to re­tire next month.

Gary Leach, who has spent 12 years as pres­i­dent of the Ex­plor­ers and Pro­duc­ers As­so­ci­a­tion of Canada, will of­fi­cially step down on Nov. 12.

Tris­tan Good­man, an ex­ec­u­tive with the Al­berta En­ergy Reg­u­la­tor, will re­place him at the Cal­gary-based in­dus­try as­so­ci­a­tion. “At some point, it’s time to get off the play­ing field and toss the foot­ball to some­body who wants to move the ball down the field,” Leach, 65, said Wed­nes­day.

The de­par­ture of such se­nior ex­ec­u­tives isn’t un­ex­pected, but it is mean­ing­ful.

Both have played ma­jor roles in the de­vel­op­ment of Al­berta’s en­ergy in­dus­try over the past decade.

Erick­son guided the prov­ince’s elec­tric­ity sys­tem dur­ing the large-scale re­build of its trans­mis­sion sys­tem and as it shifted to­ward adding more re­new­able gen­er­a­tion.

Leach has been an ef­fec­tive in­dus­try spokesman, lead­ing the coun­try’s small, in­ter­me­di­ate and in­de­pen­dent oil and gas pro­duc­ers dur­ing an evo­lu­tion­ary pe­riod.

A Cal­gary-raised lawyer, Leach took over the Small Ex­plor­ers and Pro­duc­ers As­so­ci­a­tion of Canada in 2006 (as it was then called) and headed the group when it short­ened its name seven years later.

The change re­flected the forces sweep­ing across the oil­patch, such as the grow­ing cap­i­tal re­quire­ments on pro­duc­ers as the shale rev­o­lu­tion took off.

“The dol­lars re­quired just got big­ger and we saw our mem­bers grow in size,” Leach said.

“You are in­vest­ing $200, $300 or $400 mil­lion a year — in the Cana­dian busi­ness world that’s not small — and the scale of op­er­a­tions was get­ting big­ger.”

Dur­ing his ten­ure, Leach wit­nessed dra­matic pol­icy shifts, such as the con­tentious 2007 “fair share” roy­alty re­view by the Stel­mach govern­ment and the Not­ley govern­ment’s roy­alty ex­am­i­na­tion in 2015.

The rise and fall in com­mod­ity prices — bench­mark oil prices topped US$147 a bar­rel in 2008, and plunged be­low $27 a bar­rel in 2016 — marked a try­ing time for smaller pro­duc­ers as many re­trenched, strug­gled or failed.

When he took on the job more than a decade ago, EPAC had 300 mem­bers; to­day it has about 150, although the com­pa­nies are gen­er­ally larger.

Leach said an­other is­sue he’s seen un­fold has been the grow­ing global con­cern around cli­mate change, and the pub­lic shift has im­pacted Canada’s fos­sil fuel sec­tor.

The de­bate spilled into ar­eas such as build­ing oil pipe­lines and the bat­tle over North­ern Gate­way, En­ergy East and the Trans Moun­tain ex­pan­sion.

Leach be­lieves Canada has enor­mous re­sources to tap, but some politi­cians strug­gle with the broader ques­tion of grow­ing oil and gas pro­duc­tion.

“The U.S. sees their en­ergy en­dow­ment as a huge strate­gic ad­van­tage,” he added. “Canada hasn’t grasped that op­por­tu­nity.”

The chal­lenges in Al­berta’s elec­tric­ity sec­tor are no less daunt­ing.

Erick­son, who joined AESO as its chief fi­nan­cial of­fi­cer, said he’s con­tem­plated for sev­eral months step­ping down as he ap­proached his 20th year with the or­ga­ni­za­tion.

With the shift firmly un­der­way to­ward a new elec­tric­ity ca­pac­ity mar­ket and the tran­si­tion to more re­new­able power, “it seemed like a good time to go and try to do some­thing else,” said Erick­son, who turns 55 in Jan­uary.

“We’re at a log­i­cal jump­ing off point.”

Dur­ing Erick­son’s ten­ure, AESO em­barked upon an ag­gres­sive — and of­ten con­tro­ver­sial — plan to build elec­tric­ity trans­mis­sion lines in Al­berta.

At the time, the prov­ince was suf­fer­ing from an in­fra­struc­ture deficit, as it hadn’t built new power lines in 20 years, although con­sump­tion had al­most dou­bled.

The re­build is al­most com­plete and has cost con­sumers about $10 bil­lion over the past decade, but it needed to be done, he said.

“The chal­lenge with that was it clearly im­pacts a lot of peo­ple,” Erick­son said. “It im­pacts landown­ers and they had a lot of le­git­i­mate ques­tions … and it im­pacts the peo­ple who pay the bills.”

Some of the big­gest pol­icy is­sues in the in­dus­try have un­folded in re­cent years.

As part of the NDP govern­ment’s plan to over­haul the elec­tric­ity sec­tor, Al­berta is phas­ing out coal-fired power plants and aims to add 5,000 megawatts of re­new­able en­ergy by 2030.

A ca­pac­ity mar­ket, which be­gins oper­at­ing in 2021, will see gen­er­a­tors re­ceive pay­ments for hav­ing power avail­able, re­gard­less of whether it’s sold into the mar­ket. It is in­tended to en­tice pri­vate-sec­tor in­vest­ment into build­ing new gen­er­a­tion.

While the move to dereg­u­late Al­berta’s power in­dus­try al­most 20 years ago was com­plex, to­day’s tran­si­tion “is or­ders of mag­ni­tude harder,” said Erick­son, who was paid $926,976 in com­pen­sa­tion in 2017.

“Not only are we bring­ing in the ca­pac­ity mar­ket, which is ab­so­lutely the right thing to be do­ing, we’re also chang­ing the way in which we’re pro­duc­ing and mov­ing power around, be­cause of the phas­ing out of coal and the in­tro­duc­tion of re­new­ables,” he said.

“I’m con­fi­dent it is go­ing to work out fine.”

En­ergy Min­is­ter Marg McCuaig-Boyd said Erick­son has played a crit­i­cal role in mov­ing Al­berta to­ward its goal of see­ing re­new­able power mak­ing up 30

At some point, it’s time to get off the play­ing field and toss the foot­ball to some­body who wants to move the ball down the field.

per cent of gen­er­a­tion by 2030.

“He’s be­come a very trusted ad­viser,” she said. “He has the abil­ity to make com­plex sit­u­a­tions un­der­stand­able and (he’s) very rea­soned and thought­ful.”

Those kinds of skills will be needed by the new crop of lead­ers in the years to come.

The names are chang­ing at the top of th­ese or­ga­ni­za­tions, but the far-reach­ing chal­lenges for Al­berta’s en­ergy in­dus­try re­main just as oner­ous as be­fore.

IAN KUCERAK

Gary Leach, pres­i­dent of the Ex­plor­ers and Pro­duc­ers As­so­ci­a­tion of Canada, will step down Nov. 12.

David Erick­son

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