There is rarely a dull moment in the professional life of Pierre Alvarez.

Yet, the 43-year-old native of Trail, B.C., seems relaxed and comfortable at the epicentre of the action in the oilpatch as president of the Canadian Association of Petroleum Producers (CAPP), which represents 150 industry members.

Mike Sturk, Business Edge
Pierre Alvarez says technology will play a key role in reducing emissions

On this day, Alvarez is particularly busy dealing with the industry’s hot spots, from the bubbling cauldron in the Calgary ’patch over the Kyoto Protocol to the maelstrom in Ottawa over the firing of Finance Minister Paul Martin.

Yet Alvarez, who is armed with a master’s degree in political science, leaves the impression he wouldn’t trade the action for anything, unless perhaps it was a family getaway to his “favourite spot in the world” – a tiny, tranquil island on Great Slave Lake in the Northwest Territories.

1. What are your memories of a boyhood in Trail, B.C.?

“The biggest thing is how technology has changed the town. The part of the (zinc) plant I used to work at in the summers used to employ 350 people. They’ve doubled production and cut the workforce by 70 per cent. It is amazing to me how air quality has improved hugely because of technology. So it’s different going home. You can’t go home again, as they say.”

2. Why did you choose to study political science?

“Coming from Western Canada, I was always interested in what made Canada tick. It was always an interest of mine to get into the political world and see how it worked. I went straight from Queen’s University to Ottawa (to work in the office of former energy minister Pat Carney), and it was a tremendous learning experience. Time in government teaches you two or three things that I think are very, very important. Firstly, it teaches you how difficult it is to move a machine as big as government. Secondly, you learn that the cycles of government are very real, and the windows of opportunity to make meaningful reform are, unfortunately, brief. So you have to move early on. Thirdly, it showed me the diversity of Canada and how the needs of different regions are so dramatically different.”

3. Who have your mentors been?

“Clearly, the energy minister then, Carney, had a huge impact in the sense of showing the importance of a well-defined plan and clear sense of what the priorities were during her two-year term as energy minister. She drove towards her plan. It showed me the absolutely critical importance of clarity of vision. The other person was Nellie Cournoyer, the former premier of Northwest Territories. I worked for her when she was premier. I think what struck me was her capacity to not only deal with the business of government, but to understand what the implications are to people in the communities. If you look around Calgary, there are several (oilpatch) executives, like Gwyn Morgan, Rick George, Eric Newell and Charlie Fischer, who exhibit those same traits.”

4. What was the experience like of working for 10 years in Yellowknife?

“I loved it. From a lifestyle point of view, it provides an access to the outdoors that is unparalleled. From late May to early September, my family’s focus was centered around being on the water. Secondly, because the north has a relatively small population and yet so many things going on with diamonds, mining and new infrastructure, you have an opportunity to become involved in exciting projects in a personal way far more quickly and more easily than if you are in a city of a million people.”

5. Was it an easy decision moving from Yellowknife to Calgary to assume the reins at CAPP?

“From a family point of view, it was a very difficult decision. We really did enjoy where we were. On the other hand, Calgary is a tremendously vibrant city and has opportunities for a young family that are unparalleled . . . In terms of taking the job, I was flattered to be offered it and took it without hesitation.”

6. What are the ramifications for the energy industry of Paul Martin’s departure?

“Clearly, one of our top five issues at the federal level was corporate income tax reform. We have been making, I think, some real progress with the department (of finance) in terms of their understanding of the issues facing our sector, particularly in regards to the international competitiveness and the need for us to keep up with other regimes such as the Americans, who have been cutting taxes very drastically. So clearly, any time you lose a minister like Martin, who was kind of committed to seeing these changes made, it’s a setback. On the other hand, we’ve had lots of experience with (John) Manley, and we’re hopeful that he will work with us to get this done in the next three or four months.”

7. How important is the issue of tax reform?

“The tax issue and climate change are the top two issues. The oil and gas and mining sectors have not been eligible for the tax reductions that the rest of the economy received. In the tax year 2001, we were one per cent behind the rest of the economy, and in 2002, we’re paying three per cent higher taxes than the rest of the economy. And for 2003, if the resolution is brought forward, it’ll be five per cent more than the rest of the economy. So, clearly, that’s a huge piece of business for us.”

8. What bothers you about the controversial Kyoto Protocol and climate-change issues?

“I think one of the unfortunate aspects of the Kyoto issue is that the debate has focused almost exclusively on the protocol and the ratification of the protocol at the expense of a broader debate about how we can become more efficient as a society – whether it is the consumption of air, production of CO2 or water or land use. You’ve seen this industry take a tremendously high-profile role, committing itself to continued and better improvement. I think what we’ve got to ensure that happens with Kyoto is that we do a proper costing and a proper analysis so we know what we’re signing up for.”

9. How do you view the issue?

“It’s not just an industry issue, but it’s a consumer issue. We also have to look at how we can work with government and the environmental community to continue to improve the performance of the consumer, because, ultimately, 80 per cent of (greenhouse gas) emissions come from consumers, whether it’s industrial consumers like factories or individual consumers. We also need to see whether governments are prepared to really deal with the consumption issue, primarily in the major urban centres of Vancouver, Montreal and Toronto. That’s where the majority of the emissions are coming from. We (energy industry) represent a small part of the consumption of fossil fuels and production of CO2. A big part of it is lifestyle – how we do business, how we live, what we drive, what our appliances are, how we get to work.”

10. If Kyoto isn’t the answer, what is?

“Our focus really has been that, rather than looking at spending hundreds of millions or billions of dollars purchasing foreign credits under Kyoto, are we not better off as a country looking at how to spend our resources on really looking at domestic emissions reductions? Ultimately, technology is one thing that will greatly reduce emissions. But technology doesn’t happen overnight, nor is it implemented quickly. So there’s clearly a role for government there.”

11. Are you satisfied with the environmental responsibility shown in the oilpatch?

“Clearly, you can always do better, but I think there are some tremendous success stories out there. Our stewardship initiative is an effort by the industry to benchmark our performance in environmental, health and safety, to benchmark companies against each other, to identify where the shortcomings are and to work on those things on a priority basis. And I think we have seen a tremendous response by companies.”

12. What’s your outlook for the industry and commodities?

“Natural gas is clearly seen as a fuel of choice. It’s clean burning and the U.S. markets have grown considerably. We’ve seen U.S. production level off. So with the economy and the demand for natural gas continuing to grow, there is strength on the natural gas side. I think on the oil side, North Americans are increasingly concerned about where their oil comes from. Do they want it to come from politically unstable regions, whether it’s in the Middle East or parts of South America? And so there’s no question there is upwards pressure on price and there’s also clear recognition that both customers in Canada and the U.S. want closer-to-home supplies or more secure supplies.”

13. Longer term, how do you see the energy industry in Canada evolving?

14. How do you foresee change in the way companies do business?

“I think the business will be driven by technology which will allow us to reduce costs and reduce environmental footprint. It will allow us to compete with those lower-cost areas, so long as the public policy environment is the right one. So that’s what we’re really trying to press home with governments at all levels; that there are options. We need to be competitive, and there’s a pretty good resource base in Canada. But it’s capital intensive, and we need the right framework to exploit that.”

15. Do you foresee the consolidation trend continuing?

“It’s a cycle. The management teams that sold out last year, led by people like Steve Savidant, Dave Johnson, Don Archibald, are back in the game and starting again. It goes up and it goes down.”

16. Are you concerned about the loss of head offices to the U.S.?

“There’s no doubt it has had some negative impact on some of the support services around town. But I think the biggest question is the speed at which it comes back, and not whether it comes back.”

17. How would you characterize the current state of the industry?

“I think the industry certainly took advantage of the price increases last year to clean up their financial books, to reduce their debt and strengthen their balance sheets. I think they were very prudent with their cash, not spending it all. I think we’re seeing the emergence of strong Canadian companies that are able to participate not only internationally, but in a lot of the opportunities in Canada. And I think people feel reasonably good about the outlook, subject to a couple of key decisions concerning Kyoto and the tax issue.”

“Clearly, it has had to change and grow as the industry has grown. We need to look at how we communicate with Canadians and do a better job of getting information out to people. That’s a big part of our business that we’re going to have to focus on a whole lot more. We have to look at who our key audiences are. It’s no longer just rural Alberta and Saskatchewan anymore. It’s the fishermen off the East Coast, it’s the chief in Fort McKay, and it’s the communities up and down the MacKenzie Valley.”

19. What’s the best part of being president of CAPP?

“I am fortunate enough to work with the most senior levels of companies around town and government and civic officials. There is a quality of thought and debate that you just don’t get in a lot of jobs. From an interest and excitement point of view, there is no question that working with that quality of people is, bar none, the best part of the job.”

20. So you’re comfortable in this chair?

IN PROFILE: Pierre Alvarez

* Born/raised/age: Trail, B.C., 43.

* Title: President, Canadian Association of Petroleum Producers.

* Education: Bachelor of arts, political science, University of British Columbia; master’s, political science, Queen’s University; graduate of director’s program, Richard Ivey School of Business, University of Western Ontario.

* Career: Prior to being appointed president of CAPP in 1999, Alvarez was president of ASA Inc. and chairman of the Northwest Territories Power Corp., for which he was president and CEO from 1996-98. From 1988-1995, he worked for the government of the Northwest Territories as deputy minister of energy, mines and petroleum resources, secretary to cabinet and deputy minister to the executive council.

* Passions: Fishing, boating, golf.

THE ORGANIZATION: Canadian Association of Petroleum Producers

* Profile: CAPP is the voice of Canada's oil and gas industry, representing about 150 companies that explore for, develop and produce natural gas, natural gas liquids, crude and synthetic crude oil, bitumen and elemental sulphur throughout Canada. CAPP member companies produce more than 97 per cent of Canada’s natural gas and crude oil. The organization has 43 employees at offices in Calgary, Halifax and St. John’s and is 100-per-cent funded by its members.

* Mission: To enhance the economic well-being and sustainability of the Canadian upstream petroleum industry in a socially, environmentally and technically responsible and safe manner.

* Web site: www.capp.ca

* Head office: 2100 350 7th Ave. S.W., Calgary, AB T2P 3N9.

* Phone/Fax: 403-267-1100, 403-261-4622.