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Professional Profile: Pumping profits

|Written By Jennifer McPhee
Professional Profile: Pumping profits

As senior vice-president and general counsel for Suncor Energy Inc., Terrence Hopwood must have a comprehensive understanding of the company’s extensive operations. That’s no small feat when your employer is an expanding energy giant experiencing a global oil and gas boom.

Suncor, a pioneer in Canada’s burgeoning oil sands business, plans to increase production at its oil sands operation in Fort McMurray, Alta., to 350,000 barrels a day in 2008, and is constructing a third upgrader to boost production to 500,000 barrels per day in 2010 to 2012.

Beyond extracting and upgrading, Suncor:
•develops and produces natural gas in western Canada;
•refines crude oil and markets its products in Ontario and to the United States; and
•owns and operates two refineries, one in Denver, Colo., and the other in Sarnia, Ont.

The company has also invested in renewable energy, primarily in Alberta and Saskatchewan, and expects to see four wind power operations up and running with a capacity to generate 147 megawatts of energy by the end of 2007.

And this list doesn’t even cover it all.

“There’s been a lot on all fronts,” says Hopwood, who joined Suncor as legal counsel almost 20 years ago and has since watched the company’s market capitalization climb from roughly $800 million to more than $40 billion.
“It’s changed very dramatically in terms of size and scope,” he says, noting that in 1988, Suncor produced just 50,000 barrels of oil daily and now cranks out the equivalent of 300,000 barrels.

Hopwood heads a legal department of 25 lawyers, and sits on Suncor’s corporate committee. “I spend the majority of my time on business matters,” he says. “The philosophy of the company in terms of the lawyers is that we are business people who have legal expertise. The prime function of these people is to serve the interests of our business, and work hand-in-glove with the operations personnel.”

A lot is at stake when deals are struck with service providers that impact oil sands operations. These deals can be worth more than $1 billion, can take one year to complete, and the contractual agreements may stand for more than 20 years. To ensure nothing is overlooked, a core group of four or five people on the deal team chart out all options in painstaking detail using an economic modeler in order to fully comprehend the potential pros, cons, and trade-offs of proceeding down various paths.

The grueling negotiations process often requires putting in 12- to 18-hour days over several months. “You have to be able to imagine every conceivable circumstance possible,” he says.

“You have to have the flexibility built into these contractual arrangements that will accommodate, to the extent possible, various outcomes.

“It’s exhausting and it demands a lot of different skill sets, not the least of which is the ability to maintain an energy level over that time frame.”

Even though Hopwood now works for one of Canada’s largest companies, he honed his diverse skill set by starting up two comparatively tiny oil and gas companies. After his 1979 call to the bar, Hopwood articled in Winnipeg, then practised for two-and-a-half years with Bennett Jones LLP in Calgary before a client lured him away from private practice. He helped start Morgan Hydrocarbons — a public company that built and financed a natural gas straddle plant (a plant that extracts liquid gas from liquid-rich natural gas).

Next, he founded a junior pool capital company called Triple Crown, quintupled the company’s production over several years, and orchestrated its reverse takeover.

Because both companies had neither Suncor’s budget nor staff, he immersed himself in all areas of these businesses and quickly acquired the legal and non-legal expertise to take on his next challenge.

More recently, Hopwood acted as chair of the Calgary Chamber of Commerce and is now immediate past chair.
“I’m really proud of this city,” he says. “It’s matured and become a much more sophisticated business centre. You can really see the opportunity here.

"I thought I recognized it when I came out, but the opportunities here have blossomed to a much greater extent than anybody, including myself, could have imagined.”

However, the oil and gas boom does have a downside. With so much competition both in and outside of the energy sector, it’s getting tougher to attract top-notch employees, including lawyers. Keeping abreast of ongoing regulatory and business changes is also challenging, and the escalating price of commodities means service providers are increasing their cost structure.

“As a result, you find yourself being squeezed in terms of margins,” he says.

Despite the difficulties that come with prosperous times, Hopwood isn’t going anywhere.