Savanna Energy taps an underutilized labor group
Strong relationships with First Nations bolster the bottom line
Rachel Moore wants to be clear. The drilling contracts Savanna Energy Services Corp. has signed with various aboriginal groups across Western Canada are just like any other business agreement. Her work doesn’t consist of propping up downtrodden communities or doling out cash for a cause. “It’s not charity,” she says. “Communities are active economic participants in this. They put money up to invest in the rigs and we have an obligation to make sure they get a return on investment.”
Calgary-based Savanna specializes in providing conventional and hybrid rigs for complex drilling programs. Three quarters of the firm’s business is tied to oil plays; another 20 per cent is linked to liquids-rich natural gas fairways. Its equipment, which can drill wells anywhere from 500 to 5,000 meters deep, is active in basins across North America, including the Williston in North Dakota, Alberta’s Cardium play and the Eagle Ford in Texas.
The firm is also eyeing expansion opportunities in Australian coal-seam gas projects. A third service rig was delivered to the southern continent at the end of the third quarter; a fourth is destined for the land Down Under by July 2012, part of a $104-million capital program planned for 2012. Average day rates for Savanna’s equipment increased 17 per cent year-on-year between the third quarter of 2010 and 2011, leading to a 43 per cent increase in quarterly revenues and a $16.2-million jump in third-quarter operating margins last year.
The strong performance, while bolstered by high oil prices and sector-wide equipment shortages, is also underpinned by investments in people. In Canada, Savanna has been working with aboriginal communities since 2002. Band participation includes 50-50 investments on some of Savanna’s drilling and service rigs. Several First Nations including the Samson Cree Nation, the Saddle Lake First Nation and the Métis Nation of Alberta also hold shares in the drilling and service outfit.
The proactive approach to aboriginal engagement earned Savanna a Premier’s Award of Distinction in 2010. As vice-president of human resources with the firm, Moore, 40, sees the relationships as more than a public relations stunt. Working with First Nations also gives the energy services firm – no stranger to the vagaries of oil patch employment trends – access to Canada’s fastest growing labor demographic. “It really is about relationship building,” she says. “It’s taking the time to build relationships with communities, and to get to know those communities and community members.”
To do that, Savanna created an Aboriginal Partnership Team that meets with band leaders long before development starts. “As with any partnership, it’s making sure that it’s a partnership that works on both sides,” Moore says. She considers the work a step in the right direction for an industry whose relationship with its aboriginal neighbors can sometimes be adversarial.
Moore has been working in human resources ever since her days as a political science student at the University of Calgary. Between semesters, she worked at Indian and Northern Affairs Canada in Ottawa on a program called the Canadian Aboriginal Economic Development Strategy (CAEDS). She spoke to numerous band leaders and gained insight into why certain communities are prosperous while others remain troubled.
Today, that background provides Moore with the kind of direction that makes Savanna’s community involvement successful. “Nobody wants a handout, and certainly none of our [aboriginal] communities are looking for that,” she says. “They’re looking to be an active business partner. That means they’re looking to have a say in how things are run.”
Savanna made its first partnership with the Dene Tha’ First Nation, a small northern Alberta band located 100 kilometers north of High Level, Alberta. (Coincidentally, Moore’s parents used to work in the region – as a teacher and social worker – when the family lived in Fort Vermillion). Moore says Savanna is putting a greater emphasis on softening the hard edges of rig work. In part, that means listening to the concerns of workers, she says, in the hope that more of them will return for another year on the rigs. “Those are things that this industry at times has been challenged with,” she says. “We can be pretty rough and tough on our folks.”
It’s one reason Moore helped launch the upstart Aboriginal Rig Training Program, a two-week crash course in everything from job readiness to financial management. Funded entirely by Savanna, the program prepares workers for the irregular hours and strenuous labor of life on the rigs. “It is a challenging program, in that you’re asking people to leave communities and go work on rigs,” she says.
The industry has traditionally told its workers: “Do what I tell you to do, then shut up, and do what I tell you to do some more,” Moore says. That’s what she hopes to change. “We need to think a lot more creatively about how to make a company that’s welcoming to a broader cross-section of society,” she says. “That’s a pretty big challenge.”
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