CALGARY – Access to international markets is the “fundamental question” confronting the oilsands industry and all parties must work together to find a solution, says the co-founder of oilsands producer MEG Energy Corp.
“There’s lots of talk about it but it’s going to take action … we collectively have to throw our shoulder to the wheel on this and, through our actions, actually do something about it,” said Bill McCaffrey, 60, in an interview Monday after the company announced his retirement as director and CEO.
“And everybody has to own it,” he said. “Even retired guys have to own it.”
A lack of pipeline space to move growing production of oilsands bitumen from northern Alberta to markets overseas or in the United States is being blamed for higher-than-normal discounts for Canadian heavy oil compared with New York benchmark prices.
Delays and continued political, Indigenous and environmental opposition in B.C. to the $7.4-billion expansion of the Trans Mountain pipeline between Edmonton and the Vancouver area prompted builder Kinder Morgan Canada to announce a May 31 deadline to either be convinced the line will be built or it will be cancelled.
The access problem has affected MEG Energy, which reported producing a record 90,000 barrels of bitumen per day from its steam-driven facilities in the fourth quarter of 2017.
McCaffrey said he had been thinking about retiring for a few years but didn’t think it would be right to leave when the company was struggling in the wake of the oil price crash of 2014.
The recent sale of MEG’s half interest in the Access Pipeline from northern Alberta to Edmonton for $1.6 billion — to be used to pay down debt and fund a $275-million 13,000-barrel-per-day expansion of its existing works — provides assurance that the company is again on the right path even if prices remain low, he said.
MEG said Monday that director Harvey Doerr is to act as interim CEO while it searches for a permanent replacement for McCaffery, who has agreed to stay on as an adviser.
McCaffrey, an engineer, worked for Amoco Canada for over 17 years before founding MEG Energy in 1999 with Steve Turner and Dave Wizinsky.
The trio amassed a large oilsands land position in northern Alberta before a major land rush developed in the mid-2000s. MEG built its first steam-driven oilsands project before going public in 2010.
“In 1999, oil prices were US$11 per barrel. Who’s buying oilsands then? Well, we were,” McCaffrey said. “We played for the long term, not for the short haul.”
McCaffrey said his intent is to play a lot of golf and travel with his wife and grown children but he admitted he may “flunk” retirement and be drawn back to play a role again in the oil business.
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Companies in this story: (TSX:MEG)