Climate efforts at Suncor may take a backseat under new CEO
Safety and profits among top priorities, says Rich Kruger, who said in an interview emissions cuts are key too
Four years after retiring to Texas, Rich Kruger is back in Calgary and taking the reins again of a major Canadian oil producer.
The former head of Imperial Oil is now chief executive of Suncor. This week, he made his first public appearance in the new role and laid out his priorities.
Kruger was brought in to turn around the company which has faced several operational problems including workplace deaths, production problems and a sagging share price compared to its peers.
Those issues cost former chief executive Mark Little his job.
On several occasions Kruger repeated his focus on four "pillars" — "safety, operational integrity, reliability and profitability."
Those are key areas where the company has struggled in recent years, but what was noticeably absent from Kruger's remarks was any attention on the company's efforts environmental performance.
Neither during his speech at the company's annual general meeting or during his address to analysts during an investor call was there a single mention of emissions, environment or climate.
"That's problematic," said Duncan Kenyon, with climate change activist group Investors for Paris Compliance, in an interview. "I was a little surprised there wasn't any discussion there."
Leadership shakeup
Kruger's appointment as Suncor's leader comes at a time when the major oilsands producers are collectively progressing toward making a sizeable financial commitment to reduce emissions from their operations in northern Alberta. Together, they have formed the Pathways Alliance. Engineering and feasibility studies are underway to build the country's largest carbon capture and storage facility, which could cost more than $16 billion.
The total Pathways plan is expensive, coming in at around $70 billion.
The regulatory process is expected to begin this fall on the carbon capture project and the companies will likely face a decision next year about whether to commit the money to make the project happen. That facility is critical for the oilsands sector to reach its short and long term environmental goals.
Without that project, Canada may also miss its 2030 climate targets, considering the oilpatch is the largest source of greenhouse gas emissions in the country.
"Time is kind of running out on being able to make the financial decisions necessary to be able to implement the type of projects they're talking about," said Kenyon, pointing to how it will take a few more years until a shovel is in the ground on the proposed project, followed by several more years of construction.
Emissions have dogged the oilsands industry's reputation for more than a decade, but there is also a financial cost as an increasing number of large global financial players and insurance companies choose to divest from Suncor and the other large companies producing oil in the Fort McMurray region.
In an interview with CBC News, Kruger said he is committed to reducing emissions at the company.
"I think it goes hand-in-hand with profitability," Kruger said. "You didn't explicitly hear a phrase at all, [but] in my mind, it's very much captured within how you become a company that delivers superior long-term shareholder value and how you have industry-leading profitability. I think that's all, that's all part of it."
Industry veteran
Kruger has nearly forty years of oilpatch experience, all with ExxonMobil and Imperial Oil (which is majority-owned by Exxon).
During his time at Imperial, the company reported its greenhouse gas emissions intensity — or emissions per barrel — from oilsands operations were reduced by 20 percent between 2013 and 2017. Kruger was also critical of provincial government cuts to Alberta Innovates, a prominent research body.
At the same time, Kruger was critical of government environmental policy such as the clean fuel standard and he had little interest in branching out into renewable energy.
When former Alberta premier Rachel Notley unveiled her climate plan in 2015, she was joined by environmental leaders and oilpatch company CEOs. At the time, that plan was described as one of the most powerful climate announcements in the province's history.
Having oilsands executives rubbing shoulders with environmental advocates was a rare moment few thought they would ever see.
Of those oilsands leaders, there was one notable absence: Imperial Oil's Kruger. He was the only major oil company executive who was missing.
Looking back on that moment, Kruger said it wasn't about opposing Notley's climate plan, but rather his objection to putting any sort of production limit on the industry.
"If we can tackle that [emissions] challenge, isn't it better that more energy comes from Canada and Alberta than somewhere else that hasn't tackled that challenge?" said Kruger. "So to me that was more of the my philosophical bent on it."
Investor praise
Kruger's hiring makes plenty of sense for Suncor and is soundly endorsed by investors, said Dennis McConaghy, a former industry executive. McConaghy points to Kruger's accomplishments and long career in the global oilpatch as strengths that he brings to Suncor.
His level of support for the Pathways project is, McConaghy said, "one of the questions that Kruger will have to address."
Kruger's first appearance as Suncor's chief executive was welcomed by many financial analysts who track the company.
"You can't imagine how happy I am to have you back in the chair," said Greg Pardy with RBC Capital Markets.
Sky-high commodity prices have brought big-time profit to the company. Still, the company has been dogged by a number of problems culminating in U.S.-based Elliott Investment Management expressing frustration in Suncor. Elliott now has three representatives on the company's board of directors.
The company's stock price hasn't kept pace with its rivals and some of Suncor's facilities have faced operational issues such as ground instability at a mining site and multiple fires at a Colorado refinery.
The largest focus though has been on safety amid a spate of workplace deaths and injuries. This past week, an oilsands worker was attacked by a bear.
Suncor has the right systems in place, but Kruger said there needs to be action to improve safety.
"Each time I saw an incident, whether at Suncor or anyone else, you feel for all the families," he said.
Amid those issues, the environmental file may fall to Suncor's chief financial officer, Kris Smith, who served as interim CEO before Kruger's hiring.
Smith promoted the Pathways group to global investors and industry leaders in March at an event in Texas.
Oilsands CEOs have been meeting every Friday to discuss the project and have also lobbying federal and provincial leaders for more funding to support the proposed carbon capture facility.
"Kris has been carrying the ball on it but, as a CEO, I will be intimately involved in it," said Kruger.
"Now, you know, who goes to what meetings and all, is still to be determined, quite frankly."
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