Blogs & Comment

Suncor: A new national champion

The scene at the Telus Centre in Calgary on Monday was described as carnival-like as dominant oilsands producer Suncor announced a $19-billion all-stock merger with Petro-Canada in a deal that is sure to warm the hearts of nationalists. The CEOs of the merging companies, Rick George from Suncor and Ron Brenneman from Petro-Canada, were said to be jovial and in good spirits when they announced the deal. And why wouldnt that be the case? The new company will be a large one, bringing together a long string of assets including oilsands operations, conventional oil production assets in Syria and Libya, east coast offshore assets, a chain of Sunoco and Petro-Canada gas stations, shale-gas plays in the U.S. and wind projects. It almost sounds a bit unwieldy. But what it does is guarantee the emergence of a Canadian champion in the oilsands that will ensure a big Canadian presence there as we move deeper into the post-conventional-oil era. As we all know, big international players are increasingly flocking to the patch of frozen muskeg north of Fort McMurray to develop the oilsands, which are now, basically, the largest source of politically stable, investible oil assets in the world. As the foreigners move in, having a company of the size of the new Suncor up there will ensure Canada has a homegrown player in its own backyard. In that, its a dream scenario for the government and its no surprise the leaders of two of Canada’s political parties were quick to bless the deal. Its important in the West, its important for Canada overall because of the importance of the development of the oil patch, said Flaherty in a recent CTV television interview. Michael Ignatieff, leader of the opposition was no less laudatory, applauding the deal for creating a national champion. In a way this deal sees Petro-Canada come full circle. The company was created out of the chaos of the 1973 Arab oil embargo to ensure Canada would have a player on the global oil scene. But some in Alberta saw it as eastern meddling in the affairs of the province, and it was reviled as an outsider. It looks like Alberta will get the last laugh on this one as the company will be subsumed into the Suncor banner. But even the old nationalists from the battles of the ’80s think this is a good deal. In an interview with the Calgary Herald Marc Lalonde, a minister in the Trudeau government who oversaw the controversial National Energy Program, was quoted as saying he likes the deal. The whole purpose of setting up Petro-Canada was to ensure that there would be a significant Canadian player in the field, Lalonde was quoted as saying. The concept that there would be an even larger Canadian player in the field in Canada is something that Canadians should welcome. Some of the details of the deal include a clause in the agreement that will see the two companies co-operate to convince the government to repeal a law that prevents any single owner from buying more than 20% of Petro-Canada. It also looks like well see the disappearance of Sunoco gas stations in Ontario, as those will be rebranded as Petro-Can stations, or sold. There are also rumours floating around that the Fort Hills oilsands development wont go ahead as is. As for the CEOs, the company is going to continue under the Suncor banner with current CEO Rick George at the helm. Petro-Can CEO Ron Brenneman is expected to stay with the new company and will continue as Suncor as executive vice-chair for a period before moving on. Whatever the case, the bottom line seems to be this: Canada is likely to have homegrown representation in the oilsands for years to come.