Gwyn Morgan: Trudeau has turned our most economically important industry into a pariah — a tragedy every Canadian should be concerned about
By Gwyn Morgan
My belief in the importance of Canadian-headquartered companies goes back to the early 1970s when, as a young engineer, I joined the Canadian subsidiary of a Nebraska-based oil and gas company. While I was treated well and given substantial responsibility, I yearned to work for a company where the decisions were made in Calgary, not Omaha.
That opportunity came with a new startup called the Alberta Energy Company. I joined AEC to head the building of the oil and gas division. The company grew quickly. But five years later, the entire oil and gas industry was struck a huge blow by Prime Minister Pierre Trudeau’s National Energy Program that capped oil prices below world levels and slapped a confiscatory tax on the gross revenues of energy companies.
Canadian-headquartered companies were supposed to benefit from cash grants, provided we shifted our drilling to federally owned lands. But most of those lands were in the Arctic where drilling costs were prohibitive and access to pipelines non-existent. After the Mulroney Conservatives killed the Trudeau policies in 1985, AEC got back to the job of company building.
I could never have imagined that, seventeen years later, the company would decide to export itself
Not long after I became the company’s CEO in 1994, American takeovers of Canadian oil and gas companies began accelerating. Having grown AEC into one of the two Canadian energy companies with the largest market value, rivaled only by PanCanadian Petroleum (a member the venerable Canadian Pacific group), we had managed to avoid that fate. But market intelligence revealed we were on the radar screen of the big global multinational majors, the only players with the capacity to take us out.
We knew that the best defence was to become an even larger, nationally-important energy company. On Jan. 28, 2002, Alberta Energy and PanCanadian announced a $27 billion “merger of equals” that would create the world’s largest publicly traded independent oil and gas producer. Given my career-long belief in the importance of Canadian-controlled companies, it was important that the name of our new company symbolize its status as Canada’s flagship energy company. Hence the name Encana — from the words “Energy Canada.”
Employees of the two companies united in our mission of “energy for people.” When I retired four years later, Encana was our country’s largest energy company and also the largest of all Canadian companies by stock market value. My dream of building a Canada-headquartered energy company, invulnerable to takeover, had become a reality. I could never have imagined that, seventeen years later, the company would decide to export itself.
Encana had already shifted most of its multi-billon-dollar capital program to the United States when the $6 billion acquisition of U.S. producer Newfield Exploration was announced last May. That meant that Encana’s largest production region would now be the United States, not in Canada. That was followed the move of CEO Doug Suttles from Calgary to Denver. With half its board of directors, 60 per cent of its production and the vast majority of its capital program south of the border, it was clear that Canada’s flagship energy company had become Americanized.
Apparently, the company’s board concluded even keeping a name that implies Canadian roots repels investors
That lamentable process was completed with last week’s announcement that the head office was moving to the U.S.. CEO Suttles stated that the primary reason was to attract a higher stock market valuation. Why would that be true? The answer is that the Trudeau government’s toxic policies towards what has long been Canada’s most economically important industry have transformed Canada’s oil and gas business climate from positive to pariah.
For me and the once proud current and former Canadian employees, the Americanization of the company is distressing enough, but the loss of the Encana name is particularly heart-wrenching. Apparently, the company’s board concluded even keeping a name that implies Canadian roots repels investors. That is a stark reminder of how far down our country has plummeted in the eyes of investors, a tragedy that should concern all Canadians. In the days since the announcement, I’ve been asked if I thought the federal election outcome promulgated the change in domicile. Given the re-election of national government ideologically opposed to the oil and gas industry’s very existence, it’s clear to me that its re-election struck the final blow to Encana as a Canadian headquartered company.
This is an update of an earlier column written by Gwyn Morgan
Gwyn Morgan is the retired founding CEO of Encana Corp.