Varcoe: direction changes trigger ‘pivotal period’ for energy sector

Mick Dilger’s departure comes as a series of changes have taken place at the top of industry groups and a number of energy companies over the past year.

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Despite all the talk about the energy transition underway, another change is happening in Canada’s oil sector.

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Call it a leadership transition.

Monday, Pembina Pipeline Corp. became the last energy organization in the country to announce a major change at the top of its ranks.

The Calgary-based midsize company said its longtime CEO Mick Dilger had stepped down to “pursue other opportunities.”

The country’s third-largest pipeline company has appointed Scott Burrows as interim chief financial officer. In a press release, the company said it would work with an executive search firm to assess internal and external candidates “to lead Pembina into its next chapter.”

Dilger’s departure comes as a series of changes have taken place at the top of industry groups and a number of energy companies over the past year.

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The sector is also undergoing rapid transformation, from increased attention to energy transition plans and investor ESG concerns to the impact of rising commodity prices and sector consolidation.

Joined on Monday, Dilger declined to talk about his departure or what he will do next, but stressed that there are many opportunities for the Canadian energy industry during this time of turbulence.

“It was a great race and I had a great adventure and life is full of possibilities,” said Dilger, who had been CEO of Pembina since 2014 and previously was the company’s COO.

“Oil went from zero dollars to $ 100 and the same (trend) with gas. The producing companies have gone from poverty to wealth and they will pay off all their debts.

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“So the key question right now is: how long does it take to produce hydrocarbons? And I think that sounds a lot like four to five decades, rather than one to two decades. “

The name of Pembina Pipeline Corp.  outside Eighth Avenue Place was pictured on Tuesday, June 1, 2021.
The name of Pembina Pipeline Corp. outside Eighth Avenue Place was pictured on Tuesday, June 1, 2021. Photo by Azin Ghaffari / Postmedia

Pembina, with a market cap of $ 22 billion, faced a turbulent 2021, marked by an unsuccessful $ 8.3 billion takeover bid for Inter Pipeline Ltd. this summer. He lost to a higher bid from Brookfield Infrastructure Partners.

In June, Pembina announced a partnership with the Haisla Nation to partner with the $ 3 billion Cedar LNG project near Kitimat, British Columbia.

It also partnered this summer with the Western Indigenous Pipeline Group to own the Trans Mountain pipeline, which is owned by the federal government.

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“They are reinventing themselves beyond pipelines,” said analyst Elias Foscolos of Industrial Alliance Securities.

“Pembina Pipeline could just be Pembina Corp. at some point and… there is a fundamental change going on. “

Despite a state of flux in the sector, Dilger said the world will again consume 100 million barrels of oil per day.

“The inconvenient truth is that it is still a superb source of energy and we will need all sources of energy, not just oil and gas. We will need renewable energies, we will need everything, ”he added.

“Flux is a word. I would say it’s full of opportunities.

The steel pipes that will be used in the construction of the pipeline for the Canadian government's Trans Mountain Expansion Project are located at a storage site in Kamloops, British Columbia.
The steel pipes that will be used in the construction of the pipeline for the Canadian government’s Trans Mountain Expansion Project are located at a storage site in Kamloops, British Columbia. Photo by REUTERS / Dennis Owen / File photo

News of his departure surprised oil players, and Pembina’s stock fell 2.7 percent on Monday to close at $ 40.50, although it was still up a third for the set of the year. Earlier this month, the company posted third-quarter profits of $ 588 million.

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Dilger’s departure is another major change at a Calgary-based energy company in 2021.

Earlier this month, the president of the Canadian Association of Petroleum Producers, Tim McMillan, announced he would step down in April, while CES Energy Solutions announced last month that Ken Zinger took over from Tom Simons, who retired.

The Petroleum Services Association of Canada appointed a new CEO, Gurpreet Lail, in June, while the Canadian Energy Pipeline Association – headed by Chris Bloomer – said in October it would end by end of the year.

These announcements followed other well-telegraphed corporate initiatives earlier in the year, such as Dean Setoguchi becoming the new CEO of Keyera Corp. on January 1, while François Poirier took over the management of TC Energy.

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The industry is going through as much change in 2021 as it has been in several years, although there isn’t a single narrative that fully explains all of these moves, said Michael Tims, vice president of Matco Investments. .

“It’s a whole bunch of different situations going on,” Tims said.

However, there are some common points: the fortunes of the industry are changing with the rise in prices, the energy transition is accelerating and the pandemic is dragging on.

At CAPP, McMillan said he had been in the position for seven years, making him only the second leader to remain at the helm of the group during that time.

“It’s a good time for me to take a step back, personally. It’s good for me. But it’s also good for the industry, now that we’re back on a solid footing,” McMillan said in a recent interview.

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“It would have been very difficult to change direction a year and a half ago when the price of oil was negative.”

Tim McMillan, President and CEO of the Canadian Association of Petroleum Producers.
Tim McMillan, President and CEO of the Canadian Association of Petroleum Producers. Photo by Justin Tang /The Canadian Press, dossier

Bloomer said issues related to ESG, climate, indigenous partnerships and diversity have all gained more attention from energy companies, leading to a “major pivotal period.”

After facing the pandemic and the collapse in oil prices last year, many leaders are also tired and new skills will be needed for the future.

“It’s going to be over a year or two, but this industry is on a path to a big and fundamental change, because it’s a survival issue, it’s an economic issue,” Bloomer said.

“These things don’t happen without a reason. And it is for the whole industry to try to adapt to the new landscape, to survive and to prosper.

Chris Varcoe is a columnist for the Calgary Herald.

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