Legal news and trends for Canadian in-house counsel and c-suite executives
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Yemen; four more working on its North Sea projects out of London, England; and another three in Dallas, working on its Gulf of Mexico projects. Five of its 34 lawyers are cur- rently dedicated to the Long Lake oil sands project in Fort McMurray, Alta., a $6.1-billion project of which it is a 50-per- cent partner, he says. They are currently charged with negoti- ating service and operational contracts with drilling and piping companies. "We're buying big pipes and Beingessner says Nexen is continuously scouring the globe for new opportuni- ties, and the technical and labour-inten- sive nature of drilling — it recently dug a 8.8-kilometre-deep well in the Gulf of Mexico, its deep- est ever — means expenses are sky-high and rising. "The shortage of skilled Rick Beingessner valves — the pots and pans of a project," he says. Beingessner says his team spends a fair amount of time on the corporate gover- nance side to make sure it's as transpar- ent as possible with the money at its dis- posal. "Our corporate governance group ensures we have the proper governance structures in place, with the right people with the right skill sets. A lot of the share- holder groups are interested in director and executive compensation," he says. Beingessner says he believes Canada is slightly ahead of the U.S. when it comes to best practices in this all-important area, including having as many indepen- dent directors as possible. "We think it's part of the sustainable approach we bring. We want to make sure we act with integrity and follow codes of conduct. It makes it much more diffi cult to do business, but we think companies that pursue best practices deliver better fi nancial results [than those that don't]," he says. labour and the cost of equip- ment are increasing all the time. Trying to be as effi cient as we can is a challenge. It's just so competitive and cost- ly; it can delay your timing [of projects]," he says. In fact, Beingessner says it wouldn't necessarily be a bad thing if the oil and gas sector were to come off its torrid pace in the not-too-distant future. That would bring down some of the prices it has to pay and ease the contractual terms it has had to "tolerate" the last few years. "The overheated sector we've seen has made our costs go up and forced us to ac- cept contractual provisions that ordinar- ily we wouldn't want to accept," he says. Nexen's in-house team also works with its operations department when it looks at new technologies to lower emissions, for example, he says. "We have to invest in the technology to see if we can limit that. Instead of send- ing it up the smokestack, we're looking at trying to pump it back into the ground. That's an evolving technology. We're helping draft the contracts to get the ex- pertise for the services and carbon-emis- sion-reduction credits too," he says. Being a public company also brings its fair share of work and challenges. McMaster says because TransCanada's shares are listed on both the Toronto and New York stock exchanges, its lawyers have to ensure the company, which has a market capitalization of about $25 bil- lion, is compliant with rules and regula- tions on both sides of the border. The scandals at Enron and WorldCom have ensured that securities, corporate gover- nance, and compliance work is increas- ingly complicated. "The regulators are keeping a close watch on what we do," he says. Despite the large in-house teams in the oil and gas sector, one thing they won't handle on their own is litigation. "We monitor it closely. Each litigation is unique. We don't have a lot of it and it would be fairly expensive and ineffi cient to have that expertise in-house," Bein- gessner says. Brinley adds Shell follows the same ap- proach and has substantial relationships with outside fi rms to handle litigation. "That will always be necessary. Litiga- tion is very diffi cult to staff in-house. It's quite intermittent. You never know when it's coming or when it's going to end. It's very labour-intensive," he said. Brinley said managing relationships with outside counsel can be tricky, par- ticularly in Calgary, which has a relatively small legal market. "It can be tough to fi nd counsel that doesn't have a confl ict. It takes a lot of time to preserve a relationship from those confl icts. Outside counsel costs have been rising too, so we make sure we have the right balance of in-house and outside counsel on any particular proj- ect," he says. IH intermittent. You never know when it's coming or when it's going to end. It's very labour-intensive." Shell Canada Ltd. C ANADIAN Lawyer INHOUSE APRIL 2008 29 "That will always be necessary. Litigation is very difficult to staff in-house. It's quite