Nancy Southern steps into the Atco Ltd. boardroom, resplendent in a brown buckskin-style vest with fringe – looking like she’s about to embark on a Western adventure.
And, of course, she is. Western Australia, that is.
“The resource projects in that area are heroic in proportion,” marvels Ms. Southern, who compares Western Australia’s over-the-moon potential with Alberta 40 or 50 years ago.
The far extremities of Australia, centred on the coastal city of Perth, are a natural resources bonanza. And her family company, which built its Alberta empire by following the resource industry, is staking big claims there.
Atco’s chief executive officer took time amid the Calgary Stampede’s social whirl (hence, the garb) to explain why her family – the pillar of the Calgary establishment, known for equestrian spectacles and generous philanthropy – is sinking $1-billion into a gas utility in Perth.
The planned takeover of West Australia Gas Networks is just history repeating itself, she says. The iconic Atco trailers, first supplied by her grandfather Donald and father Ron in the 1940s, were ubiquitous in Canada’s exploration booms, providing housing for itinerant energy and mining work forces.
To balance resources’ sharp cyclicality, Ronald Southern bought Canadian Utilities Inc. in the early 1980s, thus adding stable earnings from gas and power distribution and power generation.
Like father, like daughter. Ms. Southern now aims to replicate the pattern in Australia’s West, a thinly populated region which, like Alberta, often feels alienated from self-centred Eastern elites.
As in Alberta, first came the Atco trailers – and now comes the utilities investment.
The Southerns are not turning their backs on Alberta, and Atco remains a force in drilling, transmission and energy services from Fort McMurray to downtown Calgary. But there is more opportunity down under, and there are things Canada can learn from Australia, Ms. Southern insists.
Canada still hasn’t figured out a process to deal with environmental concerns and the issues of first nations in a way that gives companies certainty in their investments, she says. Australia, on the other hand, seems to have developed ways to manage those issues in advance.
“When you do a large project there, you already know the indigenous people have participation in the project. It’s set. It’s expensive, but you know what it is.”
She expects Canada will get to that stage, but the uncertainty of both environmental regulations and first nations negotiations with resource and pipeline companies “is slowing us down right now. We are in a state of not knowing which direction to take.”
There are also lessons to be taken by Australia from Canada. We may have moved too fast in developing the oil sands, she concedes, and Australia might be doing the same now in its resource development.
Still, that will not slow the pace of Atco’s Australian offensive. “You’re not going to get the opportunities if you are not on the ground,” she says. Will Atco become as big there as in Canada? “That’s probably 30 years away but I can’t see why not.”
The Southerns think in terms of decades and generations. Ms. Southern, 54, is the third-generation leader, having succeeded her father as president and CEO a decade ago. There is constant speculation in business circles as to whether her father, still chairman at 80, has truly loosened his reins.
Still, she does a lot of the on-the-ground spadework – including two trips to Australia to help advance the utility deal – leaving her father to play the patriarch, and the host at the family’s world-class Spruce Meadows equestrian centre south of Calgary, which is managed by her sister Linda.
It’s hectic being part of Calgary’s first family. On a Thursday in July, Nancy Southern was rushing off from interviews on the West Australian deal to attend a Stampede-related event, followed by a busy weekend at Spruce Meadows where the Governor-General presented the Queen Elizabeth II Cup.
Asked if Australia will be her legacy, in the sense that father Ron is leaving such an indelible footprint on Canada, Ms. Southern replies that her hope is to deliver a sustainable and growing company to the next generation.
None of her three children works for Atco yet – they are in their teens and twenties – and sister Linda has two teenage children.
The company inherited by these children will certainly look different. Ms. Southern, who acknowledges feeling uncomfortable in the spotlight, can become eloquent as she talks of the looming end of the company’s two aging coal-fired power plants in Alberta.
In the greenhouse-gas debate, Atco’s coal plants are tarred with same brush as the oil sands, thus denigrating the people who work “with great pride” in these plants, she says. As these plants are closed by tougher regulations, “where are those people going to go?”
She accepts that coal is a greater contributor to greenhouse-gas emissions than the oil sands, and shutting what are often referred to as legacy plants is “low-hanging fruit.” The likely tradeoff is that the coal plants will be sacrificed to protect the oil sands, she says. “I understand that, and we are not afraid,” but there has to be a sensible transition. “We can’t just have a regulation that says, ‘On July 1, 2015, you’re done.’”
If that fast phase-out occurs, she says, consumers would certainly see higher electricity costs, because there will not have been enough time to build natural-gas plants to bridge the gap. “Gas is the only bridging fuel we can use to replace that coal generation. So [the phase-out] has to be done in a prudent, reasonable manner.”
She adds that “hopefully, we are not the meat in the sandwich” in any dealings on the environment between Ottawa and Alberta.
With opportunities more constrained in Canada, Australia looks appealing for Atco, as it did in 1961 when Ron Southern first sold his trailers there. But the purchase of Canadian Utilities in 1980 was such a mouthful that Atco had to sell its Australian assets. A non-compete agreement prevented Atco from returning to Australia until the mid-1990s; today it operates trailer factories, and an independent power business in the country.
But where will Atco go after Australia? The next step, she says, is to expand more into South America, including Chile, Peru and Colombia.
But the family is always measured in its moves. There is a big bell on the wall in the executive offices, and it rings to proclaim good news. But it won’t chime for the West Australia deal until the sale is approved and completed. “You don’t want to jinx it,” Ms. Southern says.