For those who are old enough to remember there is the famous adage in Alberta, “Please God let there be another Oil Boom. I promise not to piss it all away next time”. That seems to be a common refrain these days. The pain has been real and has manifested itself through increasing unemployment rates, rising levels of personal and corporate insolvency, growing statistics of escalating suicide rates, domestic abuse and failed marriages. But the stark and harsh reality is that there is no mystical horseman on the horizon, looking to ride in and save the day. Whether it is the closure of equity markets, the rising cost of debt markets, the increasing challenges associated with older assets, and the growth in “environmental” investing, the currents against the industry are real and they are here to stay.
It is time to tear off the Band-Aid and move on. No, there is not going to be another junior oil and gas boom in this province, and those businesses that are here are going to have to keep doing their jobs better and better, not only to maintain their existing shareholders but also because it is the right thing to do. Do I believe that the world is going to transition off oil and gas in the foreseeable future? Not in my lifetime. But the external focus on the industry is here to stay and we must be best in class in order to keep doing what we are doing. Moreover, though I think Alberta is going through a painful transition, oil and gas (and all its wonderful associated products) will remain a core part of our identity for many years to come. Companies the likes of Cenovus, Canadian Natural, Imperial, Suncor and Husky, with their long-life assets and integrated operations will continue to be the core of this province going forward. Moreover, the “smaller” entrepreneurial companies the likes of Whitecap, ARC, Crescent Point, MEG, Tourmaline and TORC et al, will continue to find a way to succeed. Why? Because they have the assets, the scale and the diversity required to prosper.
Despite all the malaise and navel-gazing that is going on throughout the province, and the talk of separation and the angst being created from a disingenuous and dysfunctional relationship between ourselves and the current federal government, I am actually very optimistic about the opportunities that lay before us. This province has one of the best-educated workforces that anyone looking to start a business could hope for. We have a population that understands and embraces risk and is willing to roll the dice to create an opportunity. We were the trailblazers in raising venture capital, long before it became trendy to do so in The Valley, and it gave rise to the likes of Peters & Co. and FirstEnergy Capital which helped raise billions for those trailblazers. Yes, there is some retooling required, and it won’t be easy, but this is a province that does not back down from a challenge. Hell, we’ll embrace it.
Whether it is top tier education from the likes of the University of Alberta and their world-leading research in artificial intelligence, to Google opening a DeepMind lab in Edmonton, to the cutting-edge work that has been done by the likes of the Creative Destruction Lab in Calgary, there are some tremendous things going on within this province. Look around you and you will hear of lots of tremendously innovative companies starting up, like Attabotics who is designing a robotic warehousing and fulfillment system to revolutionize supply chain management and has grown to over 100 employees. Calgary based Solium became one of the largest providers of stock option management programs in the world and continues to hire. If you look, you will suddenly you become aware of a whole plethora of opportunities that are fomenting just below the surface, looking for an opportunity to erupt. Yes, we need to re-examine tax incentives to attract some of those next generation opportunities, but tax incentives only reduce a burden, they don’t create an outflow. Moreover, there are a lot of ancillary benefits that come with new investment, from increased spending, to investment in other sectors. Remember, a tax incentive is only a benefit when you are in the position to pay taxes in the first place. An empty office generates nothing.
Fatigue has been a part of my world for the past five years and, to state the obvious, I’m tired of it. We must continue to advocate for an industry that operates under some of the highest standards in the world and that can play an important role going forward in terms of making a real impact on global clean energy needs while meaningfully contributing to Canada’s high living standards. But we must also start to look forward. We need to take that “get up and go” mentality and apply it to the next generation of Alberta, one which I hope my children will have an opportunity to be a part of.
William Lacey is the chief financial officer of Steelhead Petroleum Ltd.