Steve Williams wasn’t convinced. Living in England, with two decades of experience in the oil industry, he didn’t consider the job of CFO at Suncor as his natural next step. But then CEO Rick George managed to persuade him. Seventeen years later, having succeeded George in 2012, Williams is wrapping up a momentous run at the top of Canada’s largest energy producer.
The notches in his belt include a hostile takeover of Canadian Oil Sands, the launch of the massive Fort Hills project, and the killing in 2013 of the vaunted Voyageur expansion. Along the way, he dove headlong into the Canadian experience, living for a time in the harsh reality of Fort McMurray, grappling with the intransigence of federal and provincial politicians, and leading the oil patch toward environmental awareness.
Now retiring just as the Canadian industry is struggling out of a gut-wrenching downturn, Williams is sure he has set up Suncor to succeed, no matter what the future may bring.
You’ve been CEO of Suncor for seven years. You’re only 62. Why is now the right time to retire?
I think not enough CEOs leave companies at the right time, at the top of their game. Suncor is in fantastic health. I've got a fantastic replacement in Mark Little. So it's the right time.
As you look back over 17 years there, what’s your best memory?
Employee behaviour following the fires (see footnote 1 below) in Fort McMurray.
What was unique about that?
They needed no leadership; they just did the right thing. That's against a background of unambiguous values and focus around safety, and a high degree of empowerment to do the right thing.
You made two major pledges when you took over as CEO: to double Suncor’s production by the end of the decade and to make it the lowest-cost operator in the oil sands. How did you do?
We’re pretty much there. They are complicated parameters. If you look at production, we have had days in the last month with over 900,000 barrels a day. When I first came to Suncor, gosh, we would have been down at the 200,000 to 300,000 level. So we’ve largely got there. In U.S. dollar terms, our operating costs for our base plant are below $20 a barrel. You never say you’re finished on that stuff.
Let me make sure I understand, because your goal was “lowestcost operator.” Am I right to say that cost per barrel for Canadian Natural Resources and Cenovus are both lower (see footnote 2) than Suncor?
Uh, no. You're not right. That's why I say it's complicated. And there's an element of judgment.
Who reduced throughput coming into Christmas, because they couldn’t make any money on it? It was those two companies—I don’t want to reference them; that’s for you to do if you choose—but those two companies shut capacity voluntarily, because their costs were too high. It’s great having a low cost at your mine, but Suncor’s is an integrated model (see footnote 3), which gets that product to the markets where it’s needed.
So in getting it to the customer, we were the lower-cost producer.
Fort Hills launched in 2013, when oil was $95 a barrel. Would you start that project today?
Gosh, that's a good question. I'm glad we've taken Fort Hills, and it's been an incredibly successful project. If it started from scratch now, it would be very difficult to justify. I don't see big grassroots mines like that being approved in the next five or 10 years.
The oil patch is going through a tough time. If you look back, was $100-a-barrel oil the worst thing that could’ve happened?
Yes and no. Energy prices that are too high cause an industry to make different decisions, good and bad. At Suncor, we don't respond to short-term oil prices.
Our strategy is based on a price in the $50 to $60 range (see footnote 4) because our projects are capital-intensive, take a long time to build and operate for a very long time. So spot prices are interesting but not particularly relevant. But it definitely caused the industry to over-invest for a period.
There seems to be a sentiment in the West that the rest of Canada doesn’t care about trouble in the oil patch. Do you agree?
If anything, support for the industry is increasing. Support for pipelines is growing. The realization that climate change is happening and we need to do something about it. But Canada is naïvely hurting itself—damaging its economy by not producing its sustainable oil and gas, whilst our partner to the south has increased its production by four million barrels a day over the last five years, whilst it's pouring out of the Middle East and Russia.
It makes absolutely no sense.
Premier Rachel Notley ordered a cutback of 325,000 barrels a day at the start of 2019. Some of your competitors agreed with that, but you were against it. Why?
I spoke to the premier yesterday on exactly this issue. As a general principle, I think political intervention in markets is not helpful. It takes away the predictability investors need to put big capital into Canada and into the industry. Investors lose confidence that they can plan on what's going to happen to the money they are putting into countries. As a direct result, the inward flow of capital is generally starting to dry up. It is having a significant effect on a lot of the smaller and mid-size companies.
How do you feel the Trudeau government has handled the energy file?
Overall, I have been disappointed in Canada's handling of the industry for a long period. It is successive governments. We've got the resource. We've justified the projects. We've attracted the capital. We've got our investors' commitments to do it, and the political and regulatory system has let us down. In the time we have been playing around with these pipelines in Canada, the growth of the U.S. industry has been bigger than the whole of the Canadian industry. They're putting pipelines in, they're sorting out their own problems down there, and we have been singularly lacking in progress.
We are now one of the most unpredictable jurisdictions in the developed world.
What’s the biggest impediment to getting more pipelines built?
It's mired in regulation and procedure, and I think you have to rise above it in the end. I think this government is out there trying to get these pipelines built. They have invested in Trans Mountain.
But it's too little, too late.
So you agreed with the government’s decision to buy the Trans Mountain pipeline?
It was the best of bad options.
We should never have got in that position. There were companies completely willing to build those pipelines, and to get into a position where only a government can build a pipeline like that is a failure of the regulatory system.
They were willing to build it, but there were people in the way.
You have to have some conviction. Of course we are a democratic country. We want all sorts of people to have all points of view. But you need a regulatory process that works and a rule of law.
Are you saying, “Listen to environmentalists and Indigenous groups, but barrel ahead anyway”?
Not barrel ahead. But we have to do things in the public interest.
We have fabulous relations with First Nations. They are partners with us in major projects. You are always going to get some dissenters, and that's a legitimate part of a democratic process. But it doesn't mean you stop.
Let’s talk about climate change. Can we agree that the oil industry in general has behaved a lot like the tobacco industry did when cigarettes were linked to cancer?
No! It’s a complete and absolute misrepresentation! (see footnote 5)
I’m speaking of Exxon and the Global Climate Coalition of major oil companies that worked to muddy the public’s understanding of climate change.
Tobacco was a health hazard. The energy industry is responsible for the overall improvement in quality of life for our generation, the one before and the one that's coming. So I think it's a complete misrepresentation.
Is there no truth to the idea that the oil industry worked against the broad acceptance that climate change is caused by humans?
It's a complicated and difficult debate. At Suncor, our view is, climate change is happening; we need to get into the solution space. We have been trying to lower the impact of our own businesses, and we have made huge progress. Over the last four or five years, some of the significant American players—your Exxons, your Chevrons—have started to take much clearer positions where they accept climate change and the need to work on these files, and they have plans to do that and to more fully disclose what's going on.
Ontario Premier Doug Ford claims the federal carbon tax will plunge Canada into recession. What’s your reaction to that?
[Long pause] You know, it takes lots of things for economies to work and not work. I understand his comment.
Do you agree with it?
[He sighs.] It’s complicated. I don’t want to avoid the question. I’m on the record that a carbon tax, if designed properly, should be revenue- and economy-neutral.
If you increase the tax on fuel, you decrease it somewhere else. Then you recycle that tax into energy efficiency and innovation. If those policies were pursued, then you wouldn't have an impact on the economy.
What’s the long-term prognosis for the oil sands?
I think the long-term future of the Canadian oil and gas industry and for Suncor is very bright. We have one of the biggest reserves in the world. Wherever I go around the world, their choice is they would like Canadian oil and gas before any other oil and gas source.
Make a prediction: What’s the major source of energy in 2050?
I mean, that's just around the corner. If you went 100 or 200 years out, I think it will be either something that hasn't been invented yet or nuclear power.
No. The sun doesn't shine in lots of places, so you've got an interruptible supply. We haven't sorted the battery issue yet. To be honest, I think it will be a mix of all energy sources—wind, solar tidal. Nuclear, I think, will be big for the population centres and non-interruptible supplies.
Mark Little (see footnote 6) takes over in May. Can you share a piece of advice you’ve given him?
[Long pause] I have to be very cautious. I'd say steady as she goes. No big left turns. No big right turns.
Presumably you’ve given him more pointed advice than that.
I have, but I don't think it should be here right now.
Now that you don’t have to live in Calgary, will you be moving back to England?
No, I'm a hard-core Canadian.
- A 2016 oil sands fire forced Suncor to evacuate 10,000 people and caused losses of as high as $1 billion.
- Canadian Natural Resources reported its cost per barrel at $18. The cost for Cenovus is $9.
- As an “integrated” oil company, Suncor pumps bitumen from the oil sands, then ships and refines the oil at its own facilities across the country.
- Suncor also tests its projects down into the $40s and considers their potential if prices were to rise into the $80s.
- Williams worked for the Exxon-owned Esso Petroleum Co. for 18 years, until 1995.
- An oil-patch veteran, Little is now Suncor’s president and COO.
Trevor Cole is the award-winning author of five books, including The Whisky King, a non-fiction account of Canada’s most infamous mobster bootlegger.