Real Leaders 1 | Page 31

Growing Power Hairy Hill could become 11 times larger on the Chrapkos’ watch, from a value of single-digit millions to tripledigits of millions of dollars in five years. That would be a decisive achievement in any sector, let alone renewable energy, and this would be the Chrapko brothers’ second similar-magnitude, tangible valuecreation feat after their earlier internet deal (the US$568 million exit of their 30 month-old startup). It can be hard to interview men of few words. And when they do speak, you can easily miss their message because it comes in such a concentrated package. But one message that is impossible to miss from these YPOers is that they honor those who’ve gone before them. The mantra of Evan and Shane’s organic-farmer pioneer parents was always to leave the world a better place than it was before you came into it. That doesn’t mean you can’t do well for yourself along the way. In fact, that might be part of the challenge and the reward. As they put it, “The 3 Ps of CSR stand for People, Planet, Profit. Profit is not a dirty word as long as it’s not standing alone.” Evan had a recent, very public assignment from the Premier of Alberta (equivalent to a State’s Governor) which bore directly on this issue of profit and a sector’s ‘social license to operate.’ Chrapko joined five other energy policy experts on the province’s first ever publicly conducted Royalty Review Panel. They held public hearings over a year. Sessions were overseen by armed guards, and the panel’s private deliberations were held in rooms that were swept for bugs and recording devices. Why the fuss? Because Alberta is home to the world’s second largest oil deposits after Saudi Arabia, known as the Athabasca (Fort McMurray) tar sands. The region was recently visited by the worldfamous movie director James Cameron, cementing rumors that he modeled Avatar’s story line after what is happening in Northern Alberta. The panel’s mandate on behalf of all Alberta citizens, who own the oil and gas, was to evaluate the $15 billion (average) annual revenue stream to the Alberta treasury from royalties, fees and corporate income taxes. The panel issued a unanimous report called Our Fair Share. They recommended that Alberta should ‘negotiate’ with big oil and big gas like Sarah Palin did in Alaska. Which is to say that she didn’t; she raised royalty rates when she became governor, shortly after the preceding administration had also raised them. The panel’s recommendations would have raised Alberta’s royalties from being stuck in the bottom quartile of ‘government take’ percentages in the world on a true applesto-apples basis. Chrapko’s reasoning is that Alberta is owed more of a ‘market’ rate given its vast, high quality reserves, political stability, direct access to the US market, publicly-paid roads and hospitals, and an educated workforce – among other advantages over jurisdictions that are more hostile to oil and gas companies. The panel wanted Alberta’s royalties to be closer to those in Texas or another capitalist, democratic ‘owner’ with extremely challenging extraction conditions: Norway and its US$275 billion sovereign wealth fund. Even if entirely adopted, the Our Fair Share recommendations would have left Alberta in the bottom third or lower half of the global pack on royalty rates. For its own reasons, the Alberta government didn’t ultimately act on much of the panel’s report and in fact, lowered royalties even further in some respects. Chrapko summarizes the outcome this way, “Not smart. Not necessary. And to this day the industry still complains all the way to the bank anyway.” The interview ends toward sunset at the tasting room of the family’s organic winery and meadery. Chrapko’s father was killed in a farm accident two years ago but his mother and two sisters have taken www. enSanteWinery.com to a whole new level of success in his honor, with the help of the two brothers. It’s the world’s most Northern organic winery and meadery and they are gratified for the overwhelming deman