The Alberta oil patch is still too full of “mavericks” to effectively solve the problems that lie before it, many of which require a broad embrace of innovation that does not yet exist, the departing Canadian head of Total SA says.
“We are still too many mavericks around our own ideas,” said Jean-Michel Gires, who led the French energy giant’s operations in Canada for just over three years. His last day is Friday, and when he leaves for a job at Total’s Paris headquarters he will leave behind an industry that, he says, has sung a good tune on innovation but has yet to change the corporate culture needed to make real advances.
In an interview Wednesday, he criticized companies for “saying we are the best in the world and we can develop technology by ourselves and we don’t need the other ones to do so, thank you very much.” A more effective way to make big change, he said, is for companies, universities, government and even venture capital to co-ordinate efforts.
Right now, there “is too much fragmentation and not yet enough of a cluster,” he said. “The long term of this province is very much about development of its natural resources, and we need a very efficient cluster to be organized around that.”
Engaging smaller innovators is a particular challenge – garage inventors can change the world, but the oil sands, which spends money by the billion, has not traditionally paid enough attention to that potential resource, Mr. Gires said.
“They could be playing a role if they were given a chance and we could have more appetite to develop further startups.”
The need for innovation has become a widely repeated mantra in the oil sands industry, which faces numerous challenges in its environmental and financial performance. Barrels from the oil sands are often called the most expensive in the world, which also makes them the most vulnerable to competition from growing production in the U.S., for example. The need to lower the cost of making oil sands crude has driven an industry-wide re-examination of underlying economics, led by Suncor Energy Inc.
Total is a partner with Suncor on three major oil sands projects – two mines and an upgrader, which transforms heavy crude into lighter oil – and, as a result, has found itself caught up in Suncor’s bid to pare back costs rather than merely pursue growth. The partnership cost Total $1.75-billion, and was arguably the chief achievement by Mr. Gires during his time in Canada.
But Suncor has now publicly said that it is willing to abandon some of those projects if necessary, a statement that has led to speculation that friction is developing between the two partners.
Mr. Gires said that is “not really” the case. “It’s a normal phase we are going through,” he said. He declined to comment on whether Total could press ahead with one of the projects if Suncor pulls out: “I would prefer you to investigate that with my successor,” he said, adding, “Total and Suncor are going to deliver a lot. Be ready.”
Despite rising uncertainty in the oil patch – Ben Brunnen, economist at the Calgary Chamber of Commerce, has tracked a $1-billion decline in energy investment in the past six months, for example – Total remains committed to its goal of spending $20-billion in the oil sands by 2020, Mr. Gires said.
“We have still exactly the same plan,” he said.
He added: “Oil sands are an important bet for the long term. It’s a huge resource. It’s able to deliver very significant production of oil for a long duration,” he said.
Mr. Gires is leaving Canada as part of Total’s normal rotation of executives, he said. He credited Alberta with being a “very friendly type of environment” and “open to new ideas.” He said he was particularly pleased to contribute to an industry shift toward collaboration, most recently through the formation of Canada’s Oil Sands Innovation Alliance. It promises to break down intellectual property barriers and allow cross-company sharing of technologies that can improve the environment.
Mr. Gires will be succeeded by André Goffart, who has served as a vice-president of exploration for Total in Russia.
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