TheFutureEconomy.ca: How competitive is the Canadian oil and gas industry today?
Suzanne West: To me Canada is like a Tale of Two Cities; we have so many opportunities to really step up into a leadership space but we have to change what we are doing and the way we are thinking. We are blessed with some of the best resources in the world, not just fossil fuels but also renewables, we have some super smart, talented and resourceful people, we have stable governments, we have access to capital, we have so many positive things going for ourselves. But in many cases we still have some old mindsets to overcome that are keeping us stuck in the nostalgia of the past, and preventing us from being more cost and carbon competitive. And frankly, those two goals are important but to me they are very low baseline; I want Canadians to be bold, aspirational and lead the world in changing how we think about sustainable development. I believe we can have ‘and’ solutions that can smash energy and environment together in a really healthy, abundant way for everybody rather than fighting for the pieces of the pie because energy is going to be a huge part of our future – it will define us at some level. Energy is a huge part of this country too and as a proud Canadian I want it to continue to be a very prosperous sector of our country but we have to change how we are producing it and we have to change how we are using it.
“Canada has so many opportunities to really step up into a leadership space but we have to change what we are doing and the way we are thinking.”
There are a lot of initiatives out with the goal of facilitating collaboration within the industry to reach these goals. Is there any one in particular that you would highlight?
There are indeed a number of initiatives that are trying to help the industry collaborate because collaboration is not just a feel good thing; it is a space for massive opportunity. The one that I would point to is the federal government’s recent Innovation Superclusters Initiative, and in particular the Clean Resource Innovation Network (CRIN) here in Alberta that has been formed as the supercluster for the energy industry. We have been in discussions to see how we can best help and add value to that group, and I think it is the right concept with the right structure. But at the end of the day, it will still take human beings changing some of their mindsets and some of their fears and some of their reluctance to share to make this kind of initiative effectual. People need to feel it inside themselves and see the importance of changing internally; otherwise it will still fall a bit short of where we want to be. But I am seeing changes in people but not everybody of course. And those companies and individuals that have the greatest capacity to appreciate diversity, to harness the best of the world that is around us and to leverage the systems will be the ones that not only survive but truly thrive.
How disruptive do you expect the electric car to be for the oil and gas industry? Do you own one yourself?
I do. I drive a Tesla. It is the car of the future and it is an amazing car. In my mind, there is no disconnect between being an oil and gas executive and owning a Tesla. I care deeply about the environment and I cannot stand driving a car that pollutes the environment.
In my view, the energy of the future is power. Eventually everything will be electric so we must think about how to produce clean power and we have to stop using combustion engine vehicles. And I think this transition is all going to happen much faster than people think because it is going to happen not just from an ideology perspective but also on a practical basis. Basically, an electric vehicle’s engine is 98% efficient, compared to a combustion vehicle which is around 20% efficient. A combustion vehicle’s engine has about over 2,000 parts that require maintenance and an electric car’s has 14. And on the performance side, by 2030 you will be able to buy an electric car for about $15,000 that will have the performance of a Porsche. It will become an easy choice.
“In many cases we still have some old mindsets to overcome that are keeping us stuck in the nostalgia of the past, and preventing us from being more cost and carbon competitive.”
This transition is happening way faster than my industry thinks it is happening. People do not even know that Canada has the longest electrified highway in the world. I can drive my Tesla from Vancouver to PEI without a problem. And the range is increasing continually; within 5 years Tesla will have cars with a range of 1,000 kilometers. Eventually, we are not going to drive them either because they are all going to be autonomous. We might not even own cars. People are not paying attention to the impermanence of things in terms of the disruption that is occurring and it’s not just electric cars; we may not own anything in the future, we may not need food in the future, we may not even die in the future. Some experts are projecting that by 2040 Artificial Intelligence (AI) could be completely integrated with our brains. Some of it isn’t necessarily good but it is disrupting so much of how we are used to participating in the world, we have to be aware and help shape our future by using our higher consciousness to make the right choices with technology. We simply can’t support more combustion vehicle engines on this planet going forward, the planet deserves better and the human beings on this planet deserve better.
You are an active promoter of ‘clean hydrocarbons’. What does this concept mean to you and is that the oil and gas industry of the future?
The problem to me is not that we produce hydrocarbons, the problem is how we produce them and what we use them for. Those are the two challenges that I am embarking on and trying to change the paradigms around. We use fossil fuels for plastics, chemicals, computers, clothing and all sorts of stuff, and we are still going to need those products for a long time. But we are going to produce hydrocarbons without any GHG emissions or air, water and land pollution, and without using fresh water either. We are not there yet but that is where we are heading and I will not rest until we get there. That is what I call a clean hydrocarbon. Then, how we consume that product is the next phase. If we can produce a clean hydrocarbon, we will have addressed the upstream side of the problem. Ultimately, we need to produce and use hydrocarbons in a clean way and I am at least going to do the first part.
“I want Canadians to be bold, aspirational and lead the world in changing how we think about sustainable development.”
Where are you focusing your efforts today to achieve this goal?
There are three things we need to get to clean hydrocarbons: one is technology, two is a mindset change and three is collaboration. We are working on all three of those things and the mindset is the most challenging one as it is not only the mindset of the people at Imaginea but also people that are on the ground operating our assets, people who create development plans, and others. We have to disrupt our own thinking.
In terms of collaboration, we have been spending a lot of time developing an ecosystem for clean hydrocarbons. We have just received a tentative approval for a proposal that we have with the government to baseline all of our measurements. We are going to audit all of our facilities to show where we produce pollution and use fresh water, and then we are going to open source the data to the government. We are basically going to show how bad we are so that we can use this information to inform all sorts of things from innovation to policy, and then we are going to go out and find all the commercially available technologies that are economic today that address some of those gaps and we are going to implement them at Imaginea. Then, we are going to re-baseline everything so that we can show the industry where it is possible to make a difference today – however big or small. This is already a very collaborative project with GE building a ‘digital twin’ of our assets, and with PwC we are engaged in a collaborative project with SAIT and the universities so that we are tapped into not just new ideas coming out but different ways of thinking.
“We are going to produce hydrocarbons for clean energy, plastics or other products but we are going to produce them without any GHG emission or air, water and land pollution, and without using fresh water either.”
We are also working with the Mexican government to export some of our ideas outside of our country. We have a full job jar of how we are getting there; we are trying to build 22 platforms that will get us to clean hydrocarbons be it from digitization to block chain and our transparent measurements. There are a number of things we need to do and we are doing them.
Scaling up is key for technology SMEs and one of the challenges they experience is how to engage potential clients who aren’t always open to partner or take risks with them. What are you doing differently?
We created the ImagineaXL accelerator because we see so many game changing technologies. The real uniqueness about our accelerator is that Imaginea Energy is the guaranteed early adopter and we pick the technology as the end user. So the technology company knows there is market pull because at last 100 other companies experience the exact same problem as we do.
Another key ingredient is that we are going to open source all the results, which very few accelerators do because most early adopters want the competitive advantage of the technology. I am not looking for a competitive advantage; I want to change the world. So we are just going to go and tell everybody what the black box does. So we protect technology companies’ IP, which is why we are having a lot of disruptive companies come to us.
The first company in your accelerator is Absolute Combustion, what did you like about that company in particular?
Absolute Combustion is a picture perfect 3P (Planet, People & Profits) solution that we are so excited about. It is a completely disruptive technology that basically produces high efficiency heat. Their heater is 87-89% efficient, which is twice as efficient as the current heater that heats our treater. We estimate that we will save 35% on fuel. Also, the technology is flameless, so it is much safer from an operations and safety perspective. On top of that, it provides 100% combustion, which no other heater does, and it produces zero carbon monoxide.
We were very excited to announce Absolute Combustion as the first funding of our accelerator and we are basically funding them to build us a 5 million Btu unit to replace the one we use at our Jenner oil fields. We are going to baseline everything before they get there so we know exactly how much fuel we are using, what our temperatures are, what our pressures are and what our emissions are. Then we are going to install their technology and we are going to re-baseline it for 90 days so that we can have good data that has veracity and that we can show any other oil company. So it is a very exciting technology that I think is going to transform many industries that require heat. It is just a superior technology in all three Ps.
How will this model add value for all parties involved?
The business proposition was designed so that everybody is aligned both mentally and financially in terms of commercializing the technology. There are specific performance hurdles to achieve and the investors of the accelerator must first make 1,5 times their investment. Then Imaginea gets 20% of the profits. So we are incentivized to go tell our 100 best friends to buy this technology and to help them commercialize it because ultimately the investor benefits, we benefit and the technology company grows, becomes more relevant and more profitable. It is a full alignment with everyone helping each other get to the same place because we all win. And that is quite rare.
What are the top three most promising technologies with the accelerator that could profoundly impact the oil and gas industry?
One, we are looking at probably four different types of technologies that fall under the category of partial to full upgrading. We want to move away from refining and we are going to produce our products locally. We have to get out of sending our product to refineries because the environmental impact of that is too high. The cost impact is also high; I give away $20 of my revenue because I produce medium crude, while my netback is $13. I could potentially almost double my cash flow if I could upgrade locally, and there are technologies that we are looking at that would potentially get us either part of the way or even all the way there. If we could create local and modular refineries, that would be a game changer for our industry for sure.
“Using what we already have, we can change the product that we are producing to a clean hydrocarbon and still be relevant in the world by producing important products and clean energy for the world.”
Two, we have an emission-free, vibration-free compressor that is going to game change not only our industry, but every industry that uses a compressor. The company has basically taken the best of reciprocating and screw compressors, and stuck them together. It is cheaper and it has 25% of the energy footprint of a regular compressor. It is a perfect 3P solution as well because compressors are one of the biggest methane emitters, and methane is a terrible emission that we produce in this industry.
Three, I am going to say some of the technologies that are going to alter how we drill. Drilling is a very impactful operation and if we can change how we do it, we can utilize more of our existing assets.
Imaginea is, by oil and gas industry standards, a tiny company. How are you achieving all this? What are you doing fundamentally differently?
I have always thought that a command and control kind of organizational model is very draconian and it is not how to tap into the innovation, collaboration and crazy imagination of human beings. That is actually the reason I started my first company because I was frustrated that everyone thought it was crazy to run a company differently. For example, we have no hierarchy within our organization so we have no middle managers. We teach people how to make good decisions all by themselves. So when I list all these things we do it is because we have people that are basically self-mastered and they are hustling. This organization can go so fast – you give us something to do and you will be shocked at how fast we can pump it out.
Our people understand the system and they are aware of their contributions and talents. We also teach deep communication, innovation and creativity so that people aren’t afraid of failure and we can learn faster. We teach personal development and we have two internal coaches that help our employees be the best version of themselves, to get rid of their biases and conditioning and all the stuff that is hampering them from being their extraordinary, best self. I have a Shaman come and give power animals to everyone. We have meditation every morning. We have crystals everywhere that show us the energy in the office, and we have skateboards in the office. Spirituality is part of who we are and we believe we are physical, mental, emotional and spiritual beings. We offer free boot camps here, we do free spin classes and we are all about physicality as well.
Are you more of a guru than a CEO? How do you see your role in all this?
In my world, I just have a different job and I have to do mine just as well as everyone else. I am the visionary, the strategist, I am a right-brained thinker and I need to do my job because I can see where we are going. I also need to inspire my people and others to help us get there. I am just as important here as anyone else. The big difference is the fact that I believe leadership is a service job, not a power job. My job is to help my people be as successful as they can be.
What is your vision for the oil and gas industry in a future decarbonized world and in that context, what would be your advice to your peers?
I am not saying everybody else is wrong, I am just saying this is my vision of the future and I am willing to go put all my time, energy and money into showing that it is possible. I could be wrong but as far as I am concerned, if I am wrong, all I am doing is creating a better company.
To answer your question, to me the future is definitely a decarbonized economy and we have to reinvent ourselves. We have to do it because it is the right thing to do for the next 10 generations. We have to stop thinking about our product as fossil fuels and start to think about it as the molecules of hydrogen and carbon and what these important molecules can be. We need to use our imaginations and produce important products like carbon fibre or clean energy, and do so without harming our planet.
Kodak did not go out of business because it was a bad business but because it was producing a product nobody wanted anymore, and it went really quickly. In my mind it would be a tragedy for our industry to experience the same thing and get ‘kodaked’. We have spent trillions of dollars, we have amazing assets and we have amazing people with so much talent and so many ideas that we could repurpose. Using what we already have, we can change the product that we are producing to a clean hydrocarbon and still be relevant in the world by producing important products and clean energy for the world. The need for energy is growing but we need to change how we are producing it and how we are using it.
I am super excited about the future. I have no time for a pity party because we have to think of the world as “I have to reinvent myself every five years” – and everybody should be thinking about that. The projections are that 60% of the jobs we’ll have 15 years from now do not even exist today. That is the level of disruption that is coming. We must assume everything is impermanent, be excited about it and create the future that we want – and to just do it with our imaginations, our hearts, our minds and our souls. That is the future I see.