Canada should look to Asia as gas-export market

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Samir Brikho heads Amec PLC, a London, England-based engineering and consulting giant that, in its operating focus, is about as Canadian as oil sands and potash. Amec's engineering services for oil sands and potash projects are a major factor in generating Canadian revenue of about $1.5-billion a year, and a Canadian work force of 7,000 (including 2,600 in Alberta).

Mr. Brikho, 53, is a Lebanese-born, Swedish-trained engineer with a travel schedule that would crush lesser mortals. He landed in Calgary recently to talk about the changing U.S. energy landscape and what it means for price-challenged Canadian natural gas in 2012 and beyond.

Is Amec a Canadian or British company?

Thirty per cent of our worldwide revenues come out of Canada, so, in a way, we are both British and Canadian. In the past few years, we have transformed the company by concentrating on four markets – oil and gas; metals and minerals; clean power technologies; environment and infrastructure, with water as the driver there. Despite our divestments [from construction and other non-core businesses] we have also been making a lot of investments in Canada. We are more profitable than average in Canada, and this is the only country in which we do everything [in all of Amec's targeted sectors.]/p>

You are heavily involved in the Alberta oil sands. Are you alarmed by the delay of the Keystone XL pipeline to the U.S. Gulf Coast?

Keystone XL has been a great opportunity for Canada to export its resources to the United States, but we have started to see a big change in the U.S. – because of new energy technology, and how Americans are taking a different view from what their Canadian brothers would like to see. Was it right or wrong to [defer the decision on]the project? We will know perhaps in 30 years.

Where does this leave Canada?

Let's talk about natural gas. All the exports of Canadian gas go to one country: the U.S. For four consecutive years, we have seen that gas production in Canada has been declining because of [shrinking]demand in the U.S. It's because of shale-gas possibilities in that country. It is possible that the U.S. in 10 years will be totally self-sustaining and could be a net exporter of gas, rather than an importer. So for Canada, the game has changed.

If that's the case, why this focus on gas?

Gas is interesting because it has abundant reserves; it is attractive from an environmental point of view. I'm not saying this is the best fuel we have, but it is definitely the cleanest compared with other fossil fuels. If we installed today a combined-cycle power plant [fired by natural gas] you would be having half the carbon emissions as in a coal-fired plant. So the U.S. can meet its own aspirations on emissions just by shifting [the balance in power generation] In 15 years, it would not be impossible for the Americans to meet their high standards in terms of low emissions.

So what do we have to do in Canada?

We need to start looking at what is happening in Asia. The market is going to be Asia and no longer in the U.S. Take China, which is consuming 16.5 billion cubic metres of gas a year; the International Energy Agency anticipates it will consume 210 billion by the year 2035, about 13 times the current level. That presents us with an enormous opportunity.

And who are the suppliers of gas to China? Fifty per cent now comes from Australia and therefore Australia is building liquefied natural gas plants [with export capability] in five years they will have 10 plants. Right now in Canada, we are building three plants. It is not going to be as big here as in Australia, but we still need to be in that game.

So gas is abundant, affordable and acceptable environmentally – what I call the three As – and they can put Canada back in the game, even all the discussion about the oil sands.

So Canada should be alert to the potential of gas even at today's low prices?

In terms of the "three As," gas at the current stage ticks all the boxes, while oil sands at the moment is not ticking all the boxes … I'm not writing off the oil sands by any means, because I think there will be a technological breakthrough where we will be able to improve our carbon and water footprint. The oil sands present a great opportunity still. And after what happened with Keystone XL, the energy agendas of Alberta and Ottawa are being aligned more than ever.

Are global energy priorities changing?

In the past we thought a lot about energy security – which is why wars took place – as well as energy affordability. But now energy sustainability is on the agenda, as well. We are willing to pay higher energy prices to be sustainable. In Europe, governments are telling their citizens, "Be prepared to pay double price on your electricity bill." It you want sustainable energy, you need to be prepared to pay. We do not have a technology yet that is half the price and double the sustainability.

What gets lost in translation is that the cheapest way of getting energy is conserving the energy you already have. We will still need liquid fuel for transportation for two to three decades, at least, but we will have to use it more efficiently. Do we need to have big SUVs to move a single person from one place to another?

What do you drive?

A much smaller car now. In London, we need a big comfortable car but the average speed in the city over the past four years has been 11 miles [17 kilometres]a hour. Why do I need to have a 500-horsepower vehicle? So, instead, I have a small diesel engine in a Mercedes S-class.

Is Amec moving back into the Middle East now?

Yes, Iraq is opening up; Libya is opening up. For Amec, this is a huge opportunity, even for our business out of Canada. We do a lot of services out of here.

But does the recent flare-up of violence and tension signal there are more shoes to drop?

We're been following very closely the Arab Springs, but we need to be careful that we do not end with an Arab Autumn or an Arab Winter. That would be catastrophic. What we need to do is support governments such as Egypt, to produce more jobs.

Problems arise when you have 50 per cent of postgraduates who don't have work – this is sad for any culture of the world. You have this year after year and people are losing hope. They would like to see better possibilities for job creation and to live in prosperity. It is very difficult in making that transformation from being illiterate to being university-educated. Now they are university-educated but they don't have the jobs.

You have turned around Amec since becoming CEO in 2006. Has that meant more growth in Canada?

In revenue, Canada is now double the size in terms of business, but it continues to contribute about 30 per cent of total revenues. In other words, we have grown our Canadian business at the same pace as in the rest of the world. The challenge now is how we create another new Canada for Amec [in revenue]every couple of years.

A lot of future growth will certainly be in Canada. We have about 420 people in Saskatchewan and that number will need to grow. Saskatchewan will need energy investment of $40-billion over the next five to 10 years. We figure to be involved in about $20-billion [of that investment] which, based on our typical 10-per-cent scope [in any project] would mean a $2-billion business. Over five years, that's $400-million a year in services in Saskatchewan, which is maybe three to four times what we do today.

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SAMIR BRIKHO, chief executive officer, AMEC PLC.

Personal: Born in Lebanon, grew up in Sweden; 53 years old.

Education: Engineering degree, Royal Institute of Technology in Stockholm;

management programs at INSEAD and Stanford University.

Career highlights:

Joined Swedish engineering firm Asea out of university in 1983.

Took senior roles in ABB Ltd., created from merger of Asea and Brown Boveri of Switzerland.

Head of power systems division and chairman of ABB Lummus Global.

Appointed chief executive of Amec in October, 2006