CEO of Suncor Rick Kruger said in an August, 2023, earnings call that the Suncor of old had been neglecting 'the business drivers of today' in pursuit of future-focused, clean and low-carbon energy pursuits.Shaun Robinson/The Globe and Mail
It wasn’t long after Rich Kruger took over as head of Suncor SU-T that he began ruffling political feathers.
The native Minnesotan was lured out of retirement, and back to Calgary, in early 2023; four years after he left Imperial Oil after a 39-year career with Exxon Mobil Corp. XOM-N, Imperial’s U.S. parent company, Mr. Kruger was chief executive of one of its main competitors.
Barely five months into his new job, in August, 2023, he said on an earnings call that the Suncor of old had been neglecting “the business drivers of today” in pursuit of future-focused, clean and low-carbon energy pursuits, with a “disproportionate emphasis on the longer-term energy transition.”
Those comments became something of a political football between Ottawa and Alberta, and Mr. Kruger was asked by the natural resources parliamentary committee to come to the nation’s capital and explain his remarks. A few months later, he and other fossil-fuel executives were called to testify at the environment and sustainable development committee to face questions about plans to reduce emissions, and why Canadians are paying so much for gas at the pump despite record industry profits.
Not long after that, the federal government passed a hefty omnibus bill that included a contentious, last-minute change to the Competition Act. Billed as an anti-greenwashing measure, Bill C-59 aims to stamp out false or exaggerated environmental claims.
The Globe and Mail sat down with Mr. Kruger recently to get his take on the politics of oil and gas, and talk about where Suncor goes from here – including the future of its oil sands Base Plant site north of Fort McMurray, Alta.
When you first took over, on your first or your second earnings call, you talked about focusing on oil. That was taken by many as, “Suncor is throwing sustainability to the wind.” Do you regret that phrasing?
I don’t regret it at all. But do I think my words were interpreted accurately? No.
The vast majority of our work force – we have nearly 16,000 employees – they are driving trucks, operating shovels, running refineries each and every day. So to be sure they’re crystal clear on how we want them to work safely and efficiently, that’s who I talk to.
There’s a much smaller subset of us that are looking at, “Okay, five years out, 10 years out, 20 years out, what are those key strategic decisions we need to take so that this company is successful for the long term?” We’ll still do that. But if I have 16,000 people confused, and all I talk to them about is the energy transition and years in the future, I think that can create confusion within an organization about what’s important. Are those topics not important? No, they’re very important. But there’s a smaller subset of people who decide when we move into a new business line on an alternate energy supply, for example, or when we progress major decarbonization investments.
Mr. Kruger believes Canadians look to their leaders 'to get together, roll up their sleeves, and work together in the best long-term interests of this country and of their grandchildren.'Shaun Robinson/The Globe and Mail
So would it be fair to say it was about clarifying the message to Suncor’s workers about what you want them to focus on?
Yes, but also to the investment community. We had a business that was fundamentally underperforming in our base business, so if I didn’t reassure the investment community that we have a renewed or heightened focus on our base business, all those other words about what we may do or become in the years ahead are kind of hollow. Because you’ve got to get your base business right.
The best way we can ensure a long, sustainable, healthy future is to get today right, and to have it be profitable and high-performing. Then we will be better positioned to participate in whatever the future holds.
You’ve been hauled to parliamentary committees twice now. How do you feel about that?
Energy and the environment is such an important topic, both in Canada and to the globe, so I actually welcome opportunities to debate and engage on those topics. The way some of the meetings unfold, I don’t think we always use our time the best in those meetings. But I welcome the opportunity to participate in them, because I think these are topics that are so important to Canada and Canadians.
I think Canadians look to their leaders – whether they’re business leaders or political leaders – to get together, roll up their sleeves, and work together in the best long-term interests of this country and of their grandchildren. So I don’t have any reservations or hesitation to engage in those kinds of dialogues. Business and government owe it to Canadians to have real, material conversations on those topics, and I’m willing to do that as much and as often as it takes.
What are your thoughts on Bill C-59?
I get back to the fundamentals – the activities and priorities we’re placing on environmental performance and emissions reduction, they’re unchanged. Bill C-59 just brings in an ambiguity and an uncertainty that is a reverse onus of proof and asking us to adhere to or measure up against unclear, unknown or undefined international standards. So it’s created a level of risk or uncertainty.
We’re going to keep charging ahead on all those things that we think are good for business and good for the environment, while – we hope – some of the needed clarity of Bill C-59 gets resolved so we can once again communicate to our shareholders, our employees and interested parties the good work that we think we’re doing.
Mr. Kruger says Bill C-59 'brings in an ambiguity and an uncertainty that is a reverse onus of proof and asking us to adhere to or measure up against unclear, unknown or undefined international standards.'Shaun Robinson/The Globe and Mail
What’s still to do at Suncor?
The phrase I’ve used repeatedly is “focus is on the fundamentals.” The fundamentals are safety, the reliability of our business, the operational integrity, and ultimately the profitability. Ninety-eight, 99 per cent of my work force works on today’s business, and they need to be very clear of what we expect. I’ve been here a bit over a year. I am quite pleased with where we are. But I keep seeing more and more opportunity for us to get even better and stronger. And that’s what’s fun. That’s what gets you out of bed in the morning and energized – the ability to take this enterprise to a higher level of performance.
Analysts often bring up the question of Base Plant. It’s an old asset. Those resources continue to deplete and Suncor is considering an extension project. What are your plans there?
In the oil and gas business, all resources are ultimately depletable. What is most important is that the upgraders we have are full and generate value. With our Fort Hills acquisition last year where we now have 100 per cent of that operation, we have physically integrated bitumen supplies to keep the upgraders full for the long-term. So then the question becomes: As the base mine eventually depletes, or any other asset we have eventually depletes, what is our long-term bitumen development strategy? The answer there is it depends on the business environment.
Right now we’re going through the long list of internal opportunities we have, and we’re getting deep in defining them from a technical resource quality, from an engineering design, standpoint. We’re looking at that seriatim, whether that’s debottlenecking our existing facilities at Firebag or Fort hills, whether that’s developing a first or second phase of Lewis that can benefit from proximity to the Base Plant, whether that’s the two phases of Firebag south that can benefit from regional synergies. We’re looking at that full gamut of opportunities. I’m quite comfortable that with the upgraders full now, we have the time, patience and quality of the opportunities so that when we launch, we can measure twice, cut once and get it right.
But I think it’s a misnomer to talk about replacing the Base Mine, because that’s a choice. The Base Mine depletes no different than if we were in the Montney or if we were in West Texas, or offshore somewhere – resources deplete, companies decide how to allocate capital to achieve a given production level or a value. For us, it’s not about any set production level, it’s about shareholder value. If developing an incremental resource in the future adds the most value, that’s what we’ll do. If continuing to buy back shares adds the most value, we’ll do that. Or, more likely, some combination thereof.
This interview has been edited and condensed.