BC Business
Gwyn Morgan isn’t a member of the Vancouver Board of Trade. And EnCana, the company he runs, can’t be found on our TOP 100 list.
Gwyn Morgan isn’t a member of the Vancouver Board of Trade. And EnCana, the company he runs, can’t be found on our TOP 100 list. But don’t let EnCana’s Calgary postal code distract you. The oil and gas giant is not only the largest landowner in B.C., but the largest investor too. Its capital program is worth more than $6 billion annually and each month B.C. receives more than $100 million of that. If his company isn’t a household name yet, Morgan, 59, says: just wait, it will be. Canadian connection When I graduated from engineering (in 1967) there was very little choice in terms of who I was going to work for. All of the oil and gas companies in Calgary were foreign-owned and based in Houston. Early in my career, when I had to go to the States to get decisions made, I developed this feeling that: A) Wouldn’t it be great if we had more companies where the decisions could be made in Canada? And B) If we actually had some shareholders here… So the opportunity to create AEC (Alberta Energy Co.) stimulated me. Over the years I became very passionate about building Canadian-headquartered companies. And that was one of the things that drove the merger. As you’ll remember, three years ago many Canadian oil and gas companies were being taken over. People were saying ‘AEC is one of the strongest but can it really survive?’ And ‘Pan Canadian is one of the strongest but …’ By merging the two in 2002 we had the chance to build a company that was stronger and – without being too modest about it – better than any of our competitors. We’re now the largest company ever headquartered west of Toronto. Under pressure We’re going to drill wells and expand our business for decades to come. It’s a very stable long-term business. The resource is here – what’s missing is the people and the training. We get a huge number of applicants, but the problem is that a lot of them simply don’t have the skills. We’re in a pretty sophisticated business – there are a lot of pressures around natural gas facilities – so you need to know what you’re doing. Historically most of the expertise has been in Alberta, and the drilling season is only about three months, so you have a great wave of people coming to B.C. and going home again. That’s not good for the province, it’s not good for communities and it’s not good for us. We need to create the opportunity to have people live and work here year-round. Huge tracts of land We sold our U.K. business last fall and we’re planning to sell our operations in Ecuador and the Gulf of Mexico. We’re concentrating on North American natural gas. We have three key areas: Alberta, B.C. and Texas. Those are the cornerstones. We drill what are called ‘tight gas’ plays. Our concentration is on these huge accumulations of gas that have been here forever but never produced. It requires a long, long commitment to develop the technologies and acquire the land. That means huge upfront capital. You need to have confidence in the business climate. The election in May Well, we’re certainly interested. You know, it’s not by accident that if you look at the number of wells drilled in northern Alberta compared to the number in northern B.C., you don’t need anyone to tell you where the border is – it’s remarkably clear. The last number of years under the Campbell government’s policies – working together with industry, rather than the opposite – has created a confidence factor. That’s awfully important and we’re interested in that continuing. We’ve placed a lot of marbles on the line here. Bigger than forestry EnCana is the largest corporate source of revenues to the government in B.C. and we have been for a number of years. As a whole, our industry is responsible for close to $2 billion a year in revenues for the government – that’s just royalties and land sales. It doesn’t include the income tax from the 12,000 people working in the industry here. The total impact is something like $12 billion a year. That’s enormous – bigger than any other industry in the province including, of course, forest products. Getting buy-in In recent years, most of our competitors have been looking outside of North America because, generally speaking, North American gas assets are on the decline. So for the biggest company to say: ‘We’re going to focus on just North America’… well, we couldn’t come out and do that overnight. People wouldn’t understand. So we made the decision to divest in Mexico and Ecuador, spent a year or more explaining to investors in a very focused way that we had unconventional resources here that were untapped and almost unknown in the business. We had to do that before we could announce anything. We’ve had good acceptance since then measured by the fact that our stock has outperformed the sector. The offshore issue What you’re going to find offshore is the larger conventional fields with a certain life index. They’re good projects, but they’re not our focus. We’ve had some great success drilling in the Gulf of Mexico and off the coast of England, but we didn’t have a clear competitive advantage there. We’ve built the company around these huge areas where we can develop and produce for decades. And we have more land than anyone else in North America. That’s really how we distinguish ourselves from the competition. We applaud the government for trying to open up the offshore because it is truly a resource for all of B.C. If you look in just northeast B.C. alone there is a tremendous amount of natural gas. There’s natural gas from coal that hasn’t even been touched yet. Looking to 2015 Ten years from now, people in B.C. are going to know what their number one industry is. There’s going to be more people directly involved in the business. We won’t have to explain the oil and gas industry. On being the CEO of a US$35-billion company I think it’s a progressive thing. I was a farm kid brought up in very simple surroundings. We didn’t even have running water until I was 12. We knew what it meant to work. But I never dreamed of running a company this size. When I think about it, it’s beyond imagination. But your successes, and even failures, lead to more opportunities. Of course, part of it’s attitude. My wife likes to say, “I never have any problems, I only have opportunities.” Running flat out I work out every day. Stretching, cycling, skipping rope, running, yoga, core strength – all that stuff. And everybody who works around me knows that I need some time for that every day.