A few years ago, a new publishing phenomenon exploded onto bookshelves, an exciting development for music fans. A wave of books from aging rock stars appeared, oddly similar recollections of squalid and sordid lifestyles lived by a “lucky” few who pursued misbehaviour with a vengeance, to the extent their record sales allowed. This circle of musicians seemed to compete with each other to show how badly one could live their life, each reminiscing about the glory days of being shuttled through airports unconscious on luggage carts and ingesting every substance this side of bleach. As the decades took their toll and the cash flow dried up, the now mildly pot-bellied, pencil-legged legends, whose concert drawing power is as diminished as their rock star hair, whose blood couldn’t be donated for use in a tractor never mind another living human, turned to writing books to put food on the table and possibly some drugs in the glove compartment.
Wading through a dozen of these books from former “heroes” (hey, it sounds like a pretty great lifestyle when you’re 15), something interesting emerges. A singular social circle would sometimes generate an astonishing number of successful bands that knew each other, socialized together, developed together, and probably slept in the same hedges at one point or another. There was a sort of synergistic energy that generated far more success per capita than average. The LA scene of the 70s and 80s, for example, generated a dozen or so top bands at roughly the same time, whereas Milwaukee, for a different example, generated none. Similar scenes happened in New York and London with punks, Nashville with country music, Seattle with grunge, and so on. Each city has a music scene that interests that city, but certain dense power centres interested the entire world through some sort of real but intangible concentration/inspiration/multiplier effect.
Outside of that monkeys-with-money world, similar circles of creativity exist in business as well. Silicon Valley is famous for a similar phenomenon; placing thousands of bright, energetic tech minds together, in cultural melting pots where skin colour or nationality are as irrelevant to tech companies as laundry detergent was to Mötley Crüe, a stunningly fertile ground is created where new businesses start and thrive in numbers that other regions can’t come close to.
Canada’s energy sector is and has been no different. Well, it tends to shower more and imbibe less narcotics than, say, Guns ‘n’ Roses did, but the community of innovation has a similar multiplier effect. For decades, the oil patch has attracted bright, energetic, educated young people that, to paraphrase one sadly recently departed rock star (Neil Peart, Rush), choose to attack the day like birds of prey, not like scavengers under cover. As such, the talent pool in the sector remains deep and highly capable of the synergistic power most usually associated with places like Silicon Valley.
Despite the trauma sustained by the industry over the past half-decade – the 2014 oil price collapse, sometimes-negative natural gas prices, hostile governments, and the demands from a motley parade of ignorant users that the industry must cease to exist – that spirit is still alive. True, many of the older generation have headed for the hills, and many more of those would bolt in a second if their businesses hadn’t been so decimated, but the culture of innovation and growth is still alive. It just looks a little different.
The game has changed. That creative, business-starting spirit was once sort of wildcatter-related; find prospects, raise money, drill wells, get rich. That brought along hundreds of affiliated service companies: buy a truck, start hauling, buy more trucks, get rich. Same for countless other services. While it was never easy, it was far easier to get ahead than in other areas with nothing happening at all.
Times are changing though. No, not because of Big Media’s refrain that hydrocarbons are doomed; they are not, and won’t be for many decades (don’t be too swayed by BP’s new religion; twenty years ago they were “Beyond Petroleum” for a few green years also before abandoning solar in 2011). What’s changing is the way the business operates (part of which is definitely a true green shift). Such changes aren’t always fun for all, but change has always been part of the landscape. The industry moved from vertical wells to horizontal, with concurrent big changes in the scale of operations and requirements. A frack sand industry popped up at the same time as a seismic industry saw its prospects change markedly. And so on and so on.
At least two broad areas represent the new wave of undergrowth. First is technology, of course. New businesses have grown in drilling management, operations management, data management, water management, and all sorts of other managements as a new breed of entrepreneur rushes to take advantage of the latest tech tools that didn’t exist a decade ago.
Another area is in the repackaging/repurposing of what we do with our energy. The default is fading from the old habit of “stuff it in a pipeline and see what we get”; people are examining new uses for product from large scale petrochemical businesses to small scale food growing opportunities to power generation to emission-reduction sectors. I can’t even begin to catalog it all, but the evidence is out there if one looks.
At the end of the day, what drives these circles of concentrated innovation is the ability to succeed, to get ahead, to be innovative, to make money, plus a strong and motivated talent pool. For that culture to thrive, there has to be a visible path toward these objectives.
The oil patch is shape-shifting, but the opportunity is still there. Forget the doom and gloom in the media, when the likes of the leader of the Green party declare that “oil is dead”. There is no reason whatsoever to pay attention to such brainless proclamations (if for no other reason than to observe the number of votes her party attracted on the base of such platforms, in the midst of an overpowering climate media blitz the likes of which we’ve never seen).
What is changing is where the areas for growth are. No longer is the industry built on “growth at all costs” producers who simply hope to sell to bigger entities, that just doesn’t happen anymore. There will be growth and there will be consolidation, but not using the same business model that worked 15 years ago.
Alberta has a hugely talented, youthful population, with bright minds drawn here from across the country and, in fact, the whole world. The older guard, the CAPPs of the world, need to embrace and foster the consistent spirit of innovation as the next wave of growth and opportunity. That doesn’t mean turning one’s back on the existing industry, which will continue to produce hydrocarbons for decades; it simply means that the exciting growth opportunities will come from new areas that may not even exist yet. But a culture of innovation and energetic enthusiasm will provide fertile ground for the next boom, whatever it may look like. And despite the negative mood that is as tangible as smoke, that culture still exists here.
There’s no point in getting hung up on the hatred of ignoramuses, not when there’s work to do and opportunity to be had. It just looks different. Instead of lamenting the death of the old model, why not have a look around the new one? It is quite fascinating, and fun to watch. Just like those rock stars were in their mother-cringing prime.