The Journey toward Sustainable Energy Development-The Experience of Suncor Energy
Coglon, David, Journal of Business Administration and Policy Analysis
The roots of Suncor Energy's enterprise as an innovative developer of hydrocarbon energy go back many years. In the late 1890s the Canadian government sponsored investigations of northern Alberta's Athabasca "tar sands" as a potential source of petroleum. Then, in the 1920s, Alberta scientist Karl Clark found a practical way to separate the bitumen from the sand. After adding hot water and caustic soda to the tarry sand using makeshift equipment that included the family washing machine, he discovered that the bitumen floated to the surface as a frothy foam, ready to be skimmed off. Clark's method was clearly workable. Yet the idea languished for decades until Suncor's precursor, the Great Canadian Oil Sands Ltd., began commercial development of oil sands at Fort McMurray, Alberta in 1967. Even then it was described as a "daring venture into an unknown field." But the company persevered with positive results.
Today, oil from northern Alberta's oil sands, including Suncor's Oil Sands operations, accounts for about one quarter of Canada's daily crude oil production. [See Figure 1] This figure is expected to continue to increase as oil from oil sands replaces declining conventional oil production.
Headquartered in Calgary, Alberta, Suncor has grown to become one of Canada's major integrated oil and gas companies, with assets of C$6.8 billion and approximately 3,000 employees. The company's Oil Sands operation, which achieved an average of 114,000 barrels of oil per day in 2000, continues to be the largest part of the business. But in addition, the company has a conventional natural gas exploration and production business in Western Canada and a refining and marketing operation in Ontario under the Sunoco brand name.
The company's growth strategy is focused on building on its existing assets while expanding globally and strengthening its presence in new segments of the energy business. A $2.8-billion expansion, called Project Millennium, is designed to more than double current oil sands production in 2002. Suncor's longer-term vision is to increase this to 400,000 to 450,000 barrels per day in 2008.
In 2000, Suncor also announced plans to invest $100 million in alternative and renewable energy by 2005. Suncor's vision for this business is to be a full-service developer of renewable energy, providing consumers with energy options that have environmental benefits and are competitively priced.
Underlying this vision of growth is Suncor's commitment to the principles of sustainable development.
"Business success isn't just about money," says Suncor CEO Rick George. "Our society has changed. In today's world a truly successful -- and sustainable -- business is one that makes a profit, and protects our planet and cares about people."
"More than 30 years ago, Suncor helped to pioneer commercial development of Canada's oil sands when many said it could not be done," says George. "This same pioneering spirit guides us on our journey to becoming a sustainable energy company."
The commitment to sustainable development reflects the company's desire to survive and prosper in a changing world. It also reflects some of the lessons learned after the company successfully reinvented itself during the early 1990s.
THE TURNAROUND AT SUNCOR
In the mid-1980s plunging world oil prices made Suncor's oil sands production uneconomic. The company's mining technique, based on giant bucket wheels and conveyor belts, was prone to breakdowns. The company was also burdened by under-performing operations in the conventional upstream and downstream businesses.
The crisis surrounding the future viability and sustainability of Suncor's operations caused the company to make important changes. In the early 1990s, under newly appointed CEO Rick George, Suncor embarked on an ambitious program to enhance existing operations and to pursue growth activities, with the aim of improving its long-term financial picture. …