Four challenges that keep oil sands CEOs up at night
Runaway growth is one of the worries, one expert says
The oil sands hold great promise as a resource. But with great promise comes great risk. Turning the thick sticky goo found in northern Alberta into products markets want is expensive and carbon intensive. So what are the risks that give senior management of oil sands companies migraines? Alberta Oil canvassed one industry analyst to get his thoughts on the matter. Here is what Scott Sharabura, a Calgary-based principal with management consulting firm Booz & Co, told us.
There is a lot of uncertainty right now about the global economic future. [Management] is looking at Europe and the United States and seeing the potential for a douple-dip recession and the obvious impact that will have on oil prices. You are also seeing supply disruptions and supply questions for Saudia Arabia, Iran and Iraq.
2. Runaway growth
One of the concerns we hear a lot from upper management is how to deal with very rapidly growing companies. If you look at the major oil sands producers in Calgary, every one of them is growing like gangbusters. It’s difficult for them to manage. You get a lot of press around labor shortages, and finding the right engineers, projects managers, etc. But I think there are a deeper set of issues below that. If you look at company capabilities, a lot of companies are struggling to figure out if they are ready to be growing this quickly. And it’s not just the people, but the business processes, the policies they have in place, the way they make decisions, their capital spending and operational spending. All of that is really taxing different parts of organizations.
3. Securing a Social License
The number of these issues management have to deal with is increasing and it’s difficult for companies to respond to that. When you’re in a turbo-charged growth environment, there are a lot of eyes on you.
4. Communicating a coherent strategy to stakeholders
Investors want to know that their money is safe with a certain company, and that when it deploys that money on activities, that the company is going to do a good job. Investors tend to lose confidence when companies seem to be randomly chasing opportunities. Companies that have that ruthless dedication to a certain set of capabilities – they know what they are good at, make tough choices and stick to that – do a lot better in the long run.