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People and Petroleum: Earning Public Support for Responsible Petroleum Development
Tuesday, 1 October 2013 - 10:15am
Preston Manning's remarks to the 2013 B.C. Energy Conference:
"I want to begin by thanking you for the opportunity once again to visit Fort St. John and to participate in this BC Energy Conference.
I speak at numerous conferences across the country and one thing that disturbs me about some of them is that all they often do is â€œdiscussâ€ problems and solutions, but rarely commit to â€œdoing anythingâ€ about them. But that is not the case with the Peace River Country and Fort St. John which is "can do" country.
The first time I came up here in the 1980s I was looking for a candidate to represent the Reform Party in the 1988 federal election. I was met by Short Tompkins whom some of you will remember - bush pilot, construction contractor, and all-around Fort St. John character. Short did not say, "You want a candidate? Let''s discuss it." No, Short said, "You want a candidate? I'll get one."
Then he got in his pickup, drove out into a farmer's field, hauled a young farmer off the combine, and advised him that he was going to be a candidate in the next federal election. And lo and behold that young Fort St. John farmer - Jay Hill - went on to become an MP, the Whip and House Leader for an Opposition Party and for a Minority Government, and finally the House Leader and a Cabinet Minister in Stephen Harper's majority government - all because a Fort St. John community leader said "Let's do it, not just discuss it." This truly is "can do" country and it is one of the most admirable features of the Peace Country.
Now as I understand it there are really three main groups of people at this conference - oil and gas industry people of all kinds, representatives of the various levels of government, and community leaders mainly from Fort St. John and district. And you are met together to discuss ways and means of ensuring responsible, sustainable growth for the energy sector - growth which is not only essential to the economic wellbeing of this community, but also essential to the economic wellbeing of British Columbia and Canada.
The Greatest Obstacle
So, what is the greatest obstacle today to future sustainable growth of the petroleum sector of the energy economy - the greatest obstacle to proceeding with resource development through hydraulic fracking and the construction of pipelines, LNG plants, and other processing facilities?
I suggest that the greatest obstacle is not technical although there certainly are technological challenges. It is not even financial, although raising the capital for petroleum development is always a challenge.
Is not the greatest obstacle to future sustainable growth of the petroleum sector the lack of public support for such development - the increasing difficulty of getting a so-called "social licence" to proceed even if the developer conforms to all the laws governing such developments and has agreed to meet all the conditions laid down by the regulators?
What Can Be Done?
What can be done - what more can be done - to earn genuine public support for responsible petroleum development?
What more can industry do, what more can political and government people do, to earn that support? What more can community leaders in places like Fort St. John do to reconcile industry interests and public interests in responsible petroleum development?
Or put another way, suppose the name of an energy project is on a ballot and the task is to get a plurality (not necessarily a majority but a plurality) of voters to mark an X beside that name rather than alternatives such as "no project" or "some other project," what would need to be done to win that plurality support?
Let me provide three suggestions - one for industry, one for political and government people, and one for community leaders - suggestions that hopefully will be helpful as you wrestle with these challenges throughout your conference and in the days ahead.
I. For Industry - Make a greater and earlier effort to integrate rather than separate petroleum development and environmental conservation.
As you all know, increasingly the greatest public objection over petroleum developments of all kinds centres around their environmental impacts. I know great strides have been made in trying to respond to environmental concerns, but I believe more needs to be done better and earlier in the decision making and project planning process.
It's my observation that older executives and decision makers in the industry still tend to think of the resource economy in these terms: There's Exploration, Extraction, Development, Processing, Distribution, and Consumption - and then, oh yes, there's the Environment. But environment still tends to come across as an afterthought, an "add on" in response to public pressure, an "externality," to use the economists' term.
Younger decision makers however, and younger people generally who are often the most hostile to petroleum development, don't think of resource development that way. In their thinking they integrate, rather than separate, resource development and environmental conservation at every step along the way.
So there's Exploration, but where are the provisions for avoiding or mitigating the Environmental impacts of Exploration right at the get-go?
There's Extraction and Processing - five tons of oil sands to produce 60 gallons of gasoline - but where are the provisions for avoiding or mitigating the Environmental Impacts of Extraction and Processing right at the outset? And so on all along the chain from Exploration to final Consumption.
In other words, if you're giving campaign speeches for an Energy Project whose name is on the public ballot, for every sentence you have about Exploration you need a sentence acknowledging and dealing with its environmental impacts; for every sentence you have about Development you need a parallel sentence acknowledging and dealing with its environmental impacts. Better to present/discuss petroleum development and environmental conservation in parallel rather than in sequence.
Historical Note: It's ironic that in Alberta we got closer in some respects to integrating gas development and environmental conservation in the early days of Turner Valley than in later years. Turner Valley, discovered in 1914 - a naphtha field producing copious quantities of gas which was flared. Concern led to the creation, not of the Alberta Oil and Gas Development Board but of the Alberta Oil and Gas Conservation Board which sought to strike a balance between oil production and environmental conservation by limiting flaring.
Toward Full Cost Accounting: It seems to me that the petroleum industry is being pushed by public, political, and regulatory pressure toward what the economists call Full Cost Accounting for energy projects: Design the project but at every stage determine the environmental impacts, adopt best practices for avoiding or mitigating them, cost out those avoidance and mitigation measures, and be prepared to have those costs eventually integrated into the ultimate price of the product via pollution levies or some other yet to be discovered mechanism for integrating energy development cost with those of environmental conservation.
Integrate rather than separate petroleum development and environmental conservation in every communication on the subject. With one additional proviso, I might add, for governments pushing full cost accounting.
It seems to me that the petroleum industry has a legitimate right to say to any government or regulatory body moving toward full cost accounting: If you are going to apply this type of thinking to the petroleum industry, then you must also apply it to every other energy source. There is no such thing as an environmentally neutral energy source. It's true that energy from hydro doesn't produce CO2 from hydrocarbon combustion, but the hydro companies of Canada have flooded forest areas and carbon sinks the size of Lake Ontario. So where is the reservoir levy for the hydro people, the radiation levy for the nuclear people, the pollution levy for the wind and solar producers, and so on â€“ integrating the presentation and costs of energy development and environmental conservation, not just for the petroleum sector, but across the board.
II. For Political and Government People - What more can be done by you to earn greater public support for responsible petroleum development? Two things.
1. Focus more on identifying and convincing the "undecided" with respect to supporting a petroleum project or not.
On many contentious issues, there is often one group of voters at one end - let's say in support of a proposal - and there is another group of voters at the other end who are unalterably opposed no matter what. But then there is also a group in the mushy middle who are somewhat undecided - who may see some benefits in the proposal but also see some problems. The challenge for the proponent is to get these folks to fall on the positive side rather than the negative side of the issue and one way of doing so is to convince them that time is of the essence - that there is not unlimited time and opportunity for them to make up their minds if the benefits of the proposed project are to be realized by themselves and others.
I think for example of what happened to the old Mackenzie Valley Pipeline project which was originally proposed in the 1960s to move gas from the far north to southern markets. It had its supporters but it was also opposed and delayed by environmental and aboriginal concerns, some of which were certainly legitimate. But then there was a significant group of northerners who felt the benefits outweighed the costs but were persuaded to go along with the opposition and delays in hopes of a better deal down the road. And as we all know the better deal down the road never came. Every year the project was delayed, the costs of constructing it went higher. And changes in technology, alternative gas supplies, prices, and market demand now make it unlikely that that project, despite winning NEB approval, will ever proceed or that northerners will ever realize whatever benefits the project once promised.
My point is that there is a fairly narrow window for proceeding with these various energy projects proposed for British Columbia and Western Canada - from pipelines to LNG plants to oil sands developments. The Americans are moving closer to energy self sufficiency and becoming less dependent on Canadian petroleum. They have accelerated plans for LNG plants on the west coast, as do the Australians and others. And Canada's reputation for having an orderly and secure process for authorizing responsible energy production is being questioned as seemingly incapable of securing the "social license" required for projects to proceed regardless of what other legal approvals they may have obtained.
Shakespeare said it best when he wrote, "There is a tide in the affairs of men, Which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. - And we must take the current when it serves, or lose our ventures." Sound advice to the undecided in the mushy middle who want the benefits of responsible energy development but think we have unlimited time and opportunity to realize them.
2. Second, a cautionary note to political people and governments seeking to earn greater public support for responsible petroleum development: Don't over-promise.
This may seem like a very modest proposal, but I think it is worth making. Governments today have a credibility problem - all governments. The public doesn't trust them or what they say, particularly when government messages come out of the mouths of elected officials.
Our Centre does regular polling on the subject of trust in elected officials and some of the recent statistics are appalling:
- 58% of Canadians consider elected officials to be generally unprincipled.
- 77% of Canadians have an unfavourable view of elected officials.
- 90% of Canadians see elected officials as more concerned with money than with their constituents.
When you dig into these statistics, one of the most basic reasons for this mistrust has to do with promises made by politicians that were vastly overblown and therefore could not possibly be kept regardless of the good intentions of the promisor.
And so to regain some of this trust we advise political people, especially elected officials, to "keep your promises modest." Better to be able to deliver on a modest promise, than to make an overblown promise and be incapable of keeping it.
With respect to energy development projects in British Columbia, it is true that eventually these projects will deliver accelerated growth, jobs, and substantial tax revenues to the province. But this will take time.
In the case of innovative projects, it can take a long time for them to achieve long-term profitability and sustainability. For example, it took twenty-six years before the first commercial oil sands plant began to earn more than its cost of capital.
It's important therefore that energy projects be given the time to get into a profitable and sustainable position, capable of attracting more investment into the sector, before leaping all over them with excessive taxes and royalty regimes in order to meet overblown promises of what they can contribute to provincial revenues and deficit/debt reduction.
It is always dangerous from a political credibility standpoint to count your chickens before they hatch, and even more dangerous to count your chickens even before the rooster has got into the hen house.
III. Finally, what more can be done by community leaders to earn greater public support for responsible petroleum development?
Here I want to focus on community leaders' playing a major role in mediating conflicting interests.
In every resource community there will be people who favour accelerated development, and those who oppose it for various reasons. In other words, there will be conflicting interests. This is normal and to be expected - it's a feature of the political aspect of any community.
It raises the question, however, of how such conflicts are to be resolved and by whom, not only in particular communities but in the Province as a whole. And if one rejects violence as the means of addressing and resolving serious conflicts of interests, what are the peaceful alternatives?
At one end of the spectrum is judicial mediation - ultimately turning disputes between resource developers, landowners, environmentalists, and aboriginals over to the lawyers and the courts. Sometimes this is the only alternative when all other means have been exhausted - but it is expensive and time consuming, and it creates winners and losers, which can poison community and corporate relations for decades.
In the middle of the mediation spectrum there is all the necessary community and public relations work done by the proponents of energy projects which can do a great deal to increase their acceptability.
But there is another form of mediation - much less formal and much more community based â€“ which can lead to out-of-court resolution of disputes and depends on community-based leaders and mediators.
Sometimes - not always but sometimes - there will be an individual or organization in the community who is uniquely qualified to work with both sides to a dispute - someone who can intimately identify with the conservationists or the aboriginal communities because they are part of them but who can also identify with the resource company, again perhaps because they have also worked with or for one of those.
This unique type of mediator internalizes the conflict because he or she can see both sides, and is thus able and willing to identify and communicate with both sides and effectively explain the positions of each to the other.
These unique mediators are often misunderstood by each side - at least initially - the environmentalists or aboriginals thinking he or she is in cahoots with the company and the company thinking he is just a front for those who oppose the company's project. This type of mediator needs to be so personally committed to resolving disputes and misunderstandings that he or she is willing to sacrifice his or her own interests and reputation to bring conflicted parties together.
But if there happens to be someone or some organization in your midst with that kind of position, mind set, and relationship - they can be worth their weight in gold.
Why do I even mention this type of out-of-court mediation? Because I have seen it work on the rare occasion in the oil patch, and the reconciliation it achieves is of a higher quality than any reconciliation achieved by judicial decisions or political compromises.
For example, there is a scientist I know - a biologist who often did work for companies with oil sands interests and often testified for them on technical matters before regulatory tribunals. You might have thought he was a company man. But this scientist also got to know and respect a family who owned a piece of farm land right next to the proposed site of a large upgrader, and he agreed to represent them at the regulatory hearing into the proposed project. By doing so he jeopardized his prospects of ever doing work for the company again, and no doubt there were those who counselled the family that they shouldn't trust him because of his industry associations.
In other words, he ran the risk of being suspected and rejected by both sides. But instead, because of the way he conducted himself, he eventually ended up commanding the respect of both parties and the regulators. He managed to develop a short list of practical things that the company could do to alleviate the stress that the proposed project created for the landowner - from bio-monitoring and measuring of fugitive emissions to better control of flaring and risk management protocols, to mention only a few. And because he knew the company, and knew what they had done elsewhere, every mitigation measure and stress-relieving initiative he proposed was something the company had previously agreed to and instituted somewhere else.
When he was finished presenting the family's case, and the regulator asked if anyone wanted to cross-examine or oppose, the company not only declined to do so but readily agreed to implement the remedial measures proposed. This is not to say that a perfect solution was achieved â€“ what was achieved was a compromise solution with a lot of work still to be done to meet the needs of both parties. But in this case, it was this unique mediator who created enough common ground to make that compromise and work possible.
These kinds of mediators cannot be parachuted into a community or company or conflict situation. They are already embedded there, which is the key to their effectiveness. The challenge is to find them and to support them in their reconciling role.
Conclusion: What more can be done by industry, political people, governments, and community leaders to earn more public support for responsible energy development?
- For Industry: Make a greater effort to integrate rather than separate petroleum development and environmental conservation.
Present resource development and environmental conservation in parallel rather than in sequence, and move with conditions toward full cost accounting.
- For Political and Government People: Focus more on identifying and convincing the "undecided" that time is of the essence if the benefits of responsible petroleum development are to be realized.
Gently remind folks of the lost opportunities of the Mackenzie Valley Pipeline and don't over promise. Let the rooster get into the hen house and do his thing, before counting your income from chickens.
- And for Communities: Value those who provide responsible leadership, both pro and con, with respect to energy resource development. But specially value and support those community leaders uniquely qualified to reconcile conflicting interests.
Earning public support for responsible energy development is a great undertaking at the heart of which is the successful reconciliation of conflicting interests. I want to wish you every success in this conference and in your future endeavours."