The Panama Canal of Refineries: Ian MacGregor's $12 Billion Achievement

The Panama Canal of Refineries: Ian MacGregor's $12 Billion Achievement

Kelly Kennedy: Welcome to episode 138 of the business development podcast. And today we bring you a Canadian legend, Ian MacGregor, founder of Northwest refining responsible for the Sturgeon refinery just outside of Edmonton, which in modern costs was equivalent to building the Panama canal stick with us. You're not going to want to miss this.

Intro: The Great Mark Cuban once said, business happens over years and years. Value is measured in the total upside of a business relationship, not by how much you squeezed out in any one deal. And we couldn't agree more. This is the Business Development Podcast. Based in Edmonton, Alberta, Canada. And broadcasting to the world.

You'll get there. Expert business development advice, tips, and experiences. And you'll hear interviews with business owners, CEOs, and business development reps. You'll get actionable advice on how to grow business. Brought to you by Capital Business Development. CapitalBD.ca Let's do it. Welcome to the Business Development Podcast.

And now your expert host, Kelly Kennedy.

Kelly Kennedy: Welcome to episode 138 of the Business Development Podcast. And for today's expert guest interview, we have an Alberta legend. Today, we're bringing to you guys, Ian MacGregor. Ian is a visionary engineer and entrepreneur known for his relentless drive to solve complex problems through innovative solutions.

Born with a natural curiosity and a passion for building things, Ian has dedicated his career to turning ideas into reality, often starting from scratch. With a background in engineering and a love for numbers, Ian thrives on the challenge of transforming concepts into tangible outcomes. His career highlights include pioneering projects such as the Sturgeon Refinery and the Alberta Carbon Trunkline, both which began as mere sketches on a napkin.

but evolved into groundbreaking initiatives that revolutionized the energy industry. Ian's latest venture embodies his commitment to tackling some of the world's most pressing environmental challenges, while simultaneously fostering economic growth. His plans to establish plants in Alberta's industrial heartland to extract CO2 from the air and produce hydrogen not only demonstrates his innovative spirit, But also his unwavering dedication to creating sustainable solutions that benefit both the environment and society, driven by his belief in the power of collaboration and his desire to make a positive impact.

Ian envisions a future where his plants not only reduce carbon emissions, but also create jobs in remote communities and promote forest management practices that mitigate the risk of wildfires. Despite the inevitable challenges and skeptics along the way, Ian remains undeterred Fueled by his passion for building a better future with his track record of success and his unwavering determination, Ian MacGregor continues to inspire others to think boldly, act decisively in pursuit of meaningful change.

Ian, it's an honor to have you on the show today.

Ian MacGregor: Oh, thanks very much. And I'd like to thank my mom for writing that introduction, too.

Kelly Kennedy: I had a little bit of help in that, by the way.

Ian, I have to say, it's an absolute honor to have you on the show. I'm a huge fan. We talked about this a little bit briefly before the show, but to be honest, I and many, many, many Albertans owe a debt of gratitude to you, and I don't think my career would be what it is today had you not endeavored on the, on the refineries that you've chosen to build in your lifetime.

Ian MacGregor: Oh, well, glad to hear that. I mean, that was a big part of the reason for building it. We, we thought these things are very durable sources of value in the economy. They create, they're almost like a center of gravity out there when you get them operational. I think sturgeon non, non oil operating costs are about half a billion dollars a year.

What that means is all the people in machine shops and Tim Hortons and tire stores and all the stuff around the refinery is affected by that. And it's going to be there for, I think it probably be there for a hundred years. So I think good thing to do.

Kelly Kennedy: Absolutely. Absolutely. You know, there's not many things that leave a legacy like that anymore.

Ian MacGregor: You're lucky if you get to build one, right? I mean, my life is about, it's either broken and I get to fix it or it's not there and I get to build it. So, you know, that was good. I figured it out at the end. So when we went through it, so I tried to figure out a lot of stuff. We spent a lot of money out there, you know.

We spent 12, 12 billion. That was about twice what we thought it was going to cost when we started. So that was bad. And I was trying to figure out what else has cost 12 billion. It's hard to find stuff like that. So I looked at, I found the Panama canal when they finished it, cost 375 million. And if you inflate that to today, it's about 12 billion Canadians.

So I thought, wow, that's pretty good.

Kelly Kennedy: Wow, wow, that is unreal. So basically, you built the Albertan Panama Canal.

Ian MacGregor: Believe me, I mean, I didn't build it, but people gave me the opportunity to do it.

Kelly Kennedy: Well, we, we greatly appreciate it. Ian, I wanted to have you on here because you have done so much in your lifetime.

And with our goal here on the business development podcast, always to educate and inspire having somebody of your caliber on here to walk us through your journey is an honor, and I appreciate it immensely. I would love it if you would take us back, you know you know, just from my digging, you've been doing this on some level since about 1959.

Ian MacGregor: I don't know. 59. I don't know. I'm not that old. So, you know I'll tell you the story. So my dad worked in a machine shop. He worked in barber machinery. So he was the guy who did the scheduling for the shop in Calgary. And they had a, they had an operation in Edmonton too. And He would take me to work with him on Saturday mornings.

And so back in those days, we'd get to the front doors, like not, I mean, today they'd wrap you in, you know, bubble wrap to let you go in the shop. If you're at my age, back in those days, we'd get the front door. My dad said, go see what they're doing on the shop. They're probably doing something. So I'd hang around because I have a little kid and people are kids.

They show me what they were doing. And after, you know, 10 years of doing that, I can run any machine in a machine shop. So I do that kind of work. And so I went to school and because I could fix motorcycles, my mom was bound and determined that I was going to go to university. So I had to go to university from the time I was zero.

She was telling me I was going to university. So she decides. You can fix motorcycles and you know, it's not a machine stuff. That's probably, that sounds like a mechanical engineer. So that's why I'm a mechanical engineer. She made me. So I'm not the most. I'm not the easiest guy in the world to be around and so I wasn't probably not going to be able to get to work in a normal conventional way, so I couldn't get a job.

I could get a job, but I didn't want to have one. So I went to grad school for a while. I'm in the grad students office one day and there's these two salesman looking guys in there and they're asking the secretary. Is there somebody around here who can build a machine? I don't know why they ended up at the university.

It's probably the worst possible place on the planet to go to get a machine built. But there they were. So I listened to them talk for a while and I said, I could do that. So I go over to them and I say, I could build a machine like that. So they don't have any other alternatives. So they pick me. I get this job.

I have no clue how to build a machine. And I have no idea how much it should cost. So I make up a number of 5, 000 bucks, which is to me, I'm making like 300 bucks a month and 5, 000, you should be able to do anything for that. So I got the job of building this machine. Then I go home to my dad, I got no money, I'm in grad school, and I say to my dad, I need to borrow 2, 500 bucks because I want to buy a lathe and a milling machine and a drill.

To my dad's credit, he never says, you don't know anything about what you're doing. He never, it never said anything like, I said, yeah, good idea, go ahead.

So that's how I started. I rented a double garage, put the stuff in there. It turned out I couldn't build a machine. It was worth like a hundred thousand dollars to build it,

but it got me started and so for about I don't know, first 10 years of that we did a lot of fixing broken stuff. And then eventually we ended up building gas processing equipment.

So, you know, small gas plants, drilling rigs, built a lot of drilling rigs. Really anything in the oil field. We started building and we ended up with a decent size outfit with a couple of hundred people working and building stuff. And then the National Energy Program came and we went broke. So I lost everything when we went broke.

Kelly Kennedy: Can you explain to the listeners what the National Energy Program was?

Ian MacGregor: It was essentially that some guys in Ottawa decided they didn't like the oil industry and they wanted to make all the oil industry go up to the Arctic and spend all the money up there that was being spent in Alberta. Transcribed And there was a confiscatory tax regime that they put in that essentially made all the oil companies here go out of business more or less.

And that lasted for probably, I don't know, 10 years. Then they realized this is dumb. So then they went back to normal taxing and everything was okay again, but by that point, I'd gone broke.

Kelly Kennedy: So unfortunate.

Ian MacGregor: So I was lucky because machine shops are terrible businesses, at least with somebody like me running them, they're terrible.

But there's some people, and I think they're all in Edmonton that know how to run machine shops. There might be two of them in Calgary, but most of them are in Edmonton. And somebody like me as an amateur in that world, and every time I go there, I realized how dumb what we decided to do was, but it got me going.

Kelly Kennedy: Was that, was that Abacus?

Ian MacGregor: That was Abacus. Yeah, we made it called an Abax in the end. Yeah. Cause there used to be an outfit called Abacus cities. That was like a giant real estate developer and they were going broke when we were called Abacus. And so we had to change our name because everybody, every start of every conversation is yes.

Kelly Kennedy: That is not how you want to be known, even if it's by accident. So Ian, take us from Abacus into Solex Energy.

Ian MacGregor: Yeah, so what we did so we essentially went broke in that business, but we decided we were going to start, we were good at building gas plants. And so we decided we could build these really small standardized gas plants and they would go on a flare gas stream and they'd recover the liquids in a rich flare gas stream.

And there were a lot of those around Alberta, like hundreds of them. So we built this little plant and it was like a half the cost of a normal gas processing plant for its capacity. And then we, we went around and started talking, people say, Hey, we can put one of these little gas plants on your flare gas stream.

And, you know, there's a hundred barrels a day of liquids in there. You get 50 and we get 50. And so we talked to all these companies and they just hated us. And we got hooked up with a guy named Andy Younger and Andy built the natural gas liquid system for Gulf. So Andy could phone the boss of any oil company anywhere.

Everybody knew Andy. So we'd go, Andy'd phone up and say, Hey, you got a flare or we want to send the solar guys down to see, and we'd go down and meet the guy. And this is some president of Norsen or something, some big oil company. He'd send us down into the bowels of the thing. We talked to the guy who was in charge of the flare.

Yeah. He talked to us and said, Jesus, I just hate this thing. I don't want this goddamn thing out of my lease. So then we go back and he phoned the president again. We go through that cycle, maybe sometimes 10 times before we got wow. And every now and then we'd get a job. So we had about, I don't know, half a dozen, maybe five of these little plants out there.

And we're pestering the shit out of these people to make them do it. Finally, the guy says to me one day, why don't you just buy this goddamn thing? We don't want to order it anyway, then you can put away everyone out there. So I'm thinking, well, maybe we could buy it. Why, why couldn't we buy it? So we buy this little oil property.

And because we came from the machine shop business where you're going broke every Friday, you know, we're cheap. We're really, really cheap. So when we go and take over an oil property, Chris, it looks like these guys are stealing money. It looks like there's money all over. So we bought it. It turns out.

Okay. So then we think, well, why don't we try and buy another one? So we go and see the guy and say, Hey, we'd like to, you got this crappy oil reserve. You want it? You don't want to, or do you want to sell it? It was just at the time when the big guys were thinking, we want to get rid of all this crap in our inventory.

And so it was taking us too much brainpower to run it. So we bought these things and we bought a bunch of them. And essentially it was, you know, we, we just thought, you know, We can make money when other people can't. So we're buying them in a gas environment where gas costs, we're selling gas for a buck.

And then the gas price goes to two bucks. So it's like, we're just, we're making money like never before. I never imagined.

Sorry,

Kelly Kennedy: Ian. What was that like for you at that time?

Ian MacGregor: Was unbelievable. I mean, it's just like, you know, And there was no process. So now there's this giant, if you sell something, there's an auction sale process and it's highly back in those days, you just pull the guy up and say, Hey, I want to buy it. And you say, ah, I don't want to sell it or come on and see me.

So I'm sitting in my office one day and I get a call from this guy and he says, we really like what you guys are doing. We think, you know, it's really, it's really good stuff. And we'd like to come and talk to you about, you know, maybe trying to buy out. So I was like, yeah, so I say, sure. Yeah. Come on over.

I go see my partner and my partner says it always just been broke. Like this is like three years earlier. We've been flat broke. So he says he comes and sees me and I go to see my partner first and say, how much is enough for you? He says, if I got 2 million bucks. We can, I can live for the rest of my life on that.

But if we get to two, we've been broke. If we get 2 million bucks, I'm out. I say, same for me. That's about my number two. So the guy comes to my office and he's beating around the bush and I don't want to say anything. I never sold anything like this before. I never sold a company.

Jesus. I finally get around and say, so what do you think this thing's worth anyway?

And so for us to get 2 million, we need to get 10 million for it because we have other people there with us. So the guy says, well you know, we're, we're, we're thinking of something like a hundred million bucks, but we don't want to offend you.

So I say to the guy, well, you're in the ballpark.

Kelly Kennedy: Wow. Wow, that's amazing.

Ian MacGregor: So we sold out and then we started over after that. We bought the Taylor straddle plant. So that was Taylor gas liquids. That was a really big straddle plant up in Taylor, BC being run very poorly. It was owned by Patrick at a terrible operation. We took it over, fixed it up, and then we doubled his size.

And we sold it in I'm going to say 95 or 96 for about a hundred.

Kelly Kennedy: Is that the plant when you're first driving into town on the right hand side?

Ian MacGregor: Yeah, well, there's two in there. So on one side is the sour gas processing operation, the McMahon plant, and then. This plant takes the output from that and cryogenically refrigerates the gas to get the liquids out of it.

Kelly Kennedy: Oh, wow. Wow. Yeah, that's, those facilities are big.

Ian MacGregor: Yeah, it was big. Yeah, yeah.

Kelly Kennedy: Wow.

My gosh, my gosh. And so you did that for a couple years and then did you, did you end up selling that?

Ian MacGregor: We put it in an income truss, so it was the time of income truss and myself and my partner kind of retraded into the woods. We were still there, but we weren't. You know, the rather young guys that work for us running it and we doubled his size and that was going okay.

And then we had a big fire out there. And so I had about a 50 million fire. It was an accident. And we and we kind of burned the thing down. And so we had to fix that. And I had to fight with the insurance company for, I was endlessly. And finally I just got to a point where I think, Jesus, I don't want to spend the rest of my life fighting with insurance companies.

So, so I quit and decided I'm going to do something else. So I knew some of the guys at Pan Canadian. And I went to the, to them and I said, look, you guys are, you're leaking out of margin every time the oil price goes up, all the service contractors, they increase their prices. You guys don't make any more money in high oil prices than you do in the oil prices.

How about you let me try and start some service companies that will be captive and then when we get them working right, we'll, you know, we'll work for other people, but we've got to start with Bank of Canada. So we started a bunch of service companies doing that. We didn't start CalFrac, but we had a big, you know, Cal, we were a big part of CalFrac back in the day.

We used to own 30 percent of it and we started a big country and or two services. We're in the seismic business. And then in that same, in that same sort of time, we bought the world's largest deep water semi submersible drilling rig. It was called the Eric Rowdy. And I found it down in, it was in Pascagoula, Mississippi and some Norwegian guys were building it.

And they spent about 600 million us on it getting to where they were, but they're about 80 percent complete. So it was the kind of rig that. Was useful off the East coast of Canada was a deep water, a harsh environment, right? It was the biggest ring in the world when we bought it. And so we figured out a way to buy it with no money.

We got the bondholders who had loaned the 600 million just to stand still. We towed it up to Halifax, completed construction, formed a new drilling contractor, and then drilled for a couple of years off the East coast. And that turned out to be a pretty good round trip, you know, trade.

Kelly Kennedy: Wow. What was that like going essentially from land based?

Yeah. You know, out to deep water.

Ian MacGregor: It was okay. I mean, I worked a lot in the Arctic on offshore stuff up there. We built a, we, I had an idea to put case glory holes in. So up there iceberg scrape along the bottom of the ocean. So you have to put the wellhead down in some kind of hole. So the icebergs flow across it.

And people were judging these big depressions. And I got the idea I could build a machine to drill a hole and put the wellhead down in that case hole. And so that worked and we drilled a lot of them and put them in up there. And so we, I've worked offshore up there quite a bit. Yeah. So it was okay. We knew some about it.

Not, not enough to do what we were doing, but you know. If we're doing something we can study really good, we can figure it out quick.

Kelly Kennedy: Wow. Wow. Yeah, it's and I imagine too like by that point you're working with such big teams of incredibly smart people that just about everything is possible.

Ian MacGregor: Yeah, I mean, we try and not work with big teams.

I mean, you know, we try and start with half a dozen people who are really smart, really motivated. They work together and, you know, we try and figure out how to do something different than other people have done it before. When we figure it out, then they turn out to be, then we need bigger teams to work at the scale we work at.

But usually we start, we're a long time in the, you know, I call it working on, we work in the flat earth. So if the earth was flat, We work right on the edge. And so, you know, you can buy, you can buy stuff really cheaply on the edge. No one cares about it. You can buy long dated options on the edge for almost nothing.

And then our job is to convert those options into significant value by building a business around them. And then we have to worry about falling off the edge of the earth all the time. So we've got to be careful of that.

Kelly Kennedy: Wow. Wow. And it's, it's wild too, because you found so much success in that. In that theory and in that model.

And yet there's so many people, like you said, that would have never been able to do it.

Ian MacGregor: Oh, I don't know about that. I mean, I think this, I think Alberta is full of people who can do stuff like that. It's one of the most amazing places in the world. And so, you know, I just believe. You can do things here that are impossible in other places and and there's lots of people that can do it.

There's no unique beings here.

Kelly Kennedy: I think so, but I also think unfortunately especially, you know, our bright engineers working in the oil and gas sector or who are just kind of getting out of university right now and could, could be doing things to change the world. On some levels, they're being persuaded not to, and it's really, it's really too bad.

Ian MacGregor: You know, I, I still believe that that is a basic. Part of who we are here and I think it starts because, you know, it used to be an agricultural place when we started off here, you know, we went from being explorers to farmers and we are farmers for a long time. It's a really, really tough environment.

Agricultural is, you know, we don't get the water at the right times. The soil is crappy, everything's bad, but you can, I mean, you can make a living as a farmer, but it's a tough living. And you learn a couple of things. You learn complaining does nothing. I got it. I can't complain about anything. And so that is at the core of who we are.

And then in 1947, Leduc shows up and it's like, Holy shit, look at this. It's a lottery. Look, someone won it. And then all the commercial activity flows from that. But the really interesting thing in Alberta was we had this wonderful regulator. And the regulator was really good and really thoughtful and really commercial.

We still got that today. And so the regulatory environment we have here produces the environment where you can be entrepreneurial and, and our toughness that comes from being a bunch of, you know, we're, we're descendants of a bunch of really tough farmers that allows us to accept adversity and be relentless in our pursuit.

And we all got it in some way. If you came from here or even if you come from somewhere else, you get it and you start fitting into that.

Kelly Kennedy: Yeah. Yeah. I I've had the pleasure to know a lot of of entrepreneurs, especially Albertan entrepreneurs, and you're right. They all got a little bit of grit to them, don't they?

Ian MacGregor: Oh yeah. I mean, you can't, you can't, you can't do this work unless you, you know, I call it, The business plan is I'm a Roopa. I just head until I bump into something and then I back up and try and get around it. If I do that enough times, I'll get around it.

Kelly Kennedy: Yes. Yes. You know, what's always surprised me is we've had a lot of entrepreneurs, you know, like you who, you know, their initial venture or their second venture, it really didn't go well.

And I was always impressed by the fact that they picked themselves up, dusted themselves off and kept going and succeeded despite adversity.

Ian MacGregor: Yeah, I mean, I don't think you ever, you know, when I started over again, I never thought I was going to fail. I just thought I made a mistake and, you know, I learned something from it and get going again, but, you know, quit moving around.

It's like,

Kelly Kennedy: Yeah, that's that's one way to look at it for sure. There's a lot of people who really struggle with that and they don't recovery. And like I said, I think it does take special people to be able to To lose something like that and be able to just pick themselves up and do it again.

Ian MacGregor: Yeah. I mean, I think what you have to decide is early on, if you're going to be an entrepreneur, you're essentially a hunter.

And if there are some entrepreneurs that are farmers, but farmers, but they're rare and there's no, there's no higher value. Calling. It's just my base disposition is I like being a farmer. I can accept those risks. I optimize, optimize, optimize, get better and, you know, get better at doing things, reduce costs and get, I live by doing that.

Then there's another group of people and you send them into the forest and you say, hey, there's food in there somewhere. You guys got to go and find it. And if you find something, you know, you might find enough food for the rest of your life if you find the right thing, but you don't know where it is.

You got to find it. And so some people don't like that feeling and you shouldn't do that kind of work unless you like the feeling. But if you like the feeling, then go do that. And if you like the other feeling where I like, repeatability, focusing on cause, branding, you know, then be a farmer, pick things that are in that attribute.

And I think sometimes people pick the wrong thing.

Kelly Kennedy: Yeah. Yeah, for sure. I know when I started my company and we initially found our initial success, I remember looking at that and thinking, my God, why didn't I do this way sooner? And then, and then the second thought I had Ian is, I don't think I could ever work for somebody again.

It really does change you as a, as a human.

Ian MacGregor: So I've known that for a long time when I was in university, you know, and in fourth year, they have these interviews. So the people come and interview all of fourth year engineers for jobs. So I get an interview with, It was Calgary Power back then. So, my mom finds out I got this interview with Calgary Power.

She says to me, If those guys offer you a job, you take it. They've got a hell of a pension plan. She didn't say hello. She said they got a good pension plan. So, I go to this interview. I think, this guy is dope. There's no way I'm working for these guys. And I can tell he's getting ready to offer me a job.

And so I have to get out of the room before he offers me the job because my mom finds out the last memory I have of him, he's getting up with all these papers and I'm closing the door to get out.

Kelly Kennedy: That's funny. That's funny. Yeah. So take us, take us then into Ultima Energy Trust. What was that?

Ian MacGregor: So we worked with Pan-Canadian and Pan-Canadian had done something called the Weyburn Project in Saskatchewan, and Wayburn was bringing CO2 up from a a coal gasification facility down in LER, North Dakota up to Weyburn.

And they were gonna put the CO2 in a really old oil field called Weyburn, discovered in 1954. And that was gonna be the first sort of sequestration, but it was an EOR project back in those days. And so there was a problem that they had down there and they asked me if I'd go down and have a look at it and see if I could do something and I was able to and it looked pretty cool.

So at the end of it, Pan Canadian said we've, we, we, we own too much of this. We want to sell a piece of it and we think maybe you should buy it, you know, that would be okay with us. So it was 11 percent and, and I say, well, that seems like a lot of money. What's over there. This is like 70 million bucks or something.

So I say, well, I haven't got that kind of money. I can't buy it. He says, Oh, we'll lend you the money. And then you can figure it out to finance out after you get going. So I bought myself, my partner bought 11 percent of waiver. And then we figured out, we found this broken, the income trust lost all their money.

And it was called Maxim Energy Trust or something like that. So we took it over and we put the interest that we got from Pan Canadian in Ultima, the money for Pan Canadian. And that turned out to be, when we owned Ultima, it was the best performing trust on the TSE for the time that we owned it. On a total return basis.

Kelly Kennedy: Wow. Wow. What doesn't cease to amaze me, Ian, is just the broadness of scope of your career. Just the variance of everything that you've done. It's so varied that most people would look at that and say, How did he ever do it? How did he ever take those skills from one industry to another and still find so much success?

Ian MacGregor: You know, I think the underlying factors are more or less the same. I think finance is a division of engineering, law is a division of engineering, everything's, everything's got something to do with engineering, you gotta figure that out. And then, usually what we do is complex technically, so there is some technical complexity to it.

And that keeps the competition away because they hate that. They, you know, that's something they got to go to consultants to understand. We can figure it out. We know what we're doing and we can assess the risks of what it is. So there's a special place in the world for us. Cause we were broad spectrum on all the different things you need to do.

And we can figure out how it works or what's broken, where we can fix it. And but the attributes are really just, it's the same thing over and over again, it's just a theme.

Kelly Kennedy: And then from there I believe you were working at Ambyint after that. Is that correct?

Ian MacGregor: Yeah, so we started Ambyint. The guy that worked for me was he was a, I learned a lot on that one.

He was a genius. So he's as smart as anybody you're going to meet in terms of. And when you meet these guys, you're thinking, Holy shit, you know, stuff that I can't even, I can barely think of. So he came up with this idea. Ambyint was a really, really advanced, a controller for a pump jack. And so when you have a really deviated horizontal, well, those are top pumping some of them.

And so this thing really made a difference. You can, you can stop breaking the equipment if you had this thing. It was a good idea. And so we funded him because he worked for us in another business and done well there. So we funded him. And that went well for a long period of time. Then the oil price went down, we screwed it up.

He was a really difficult guy. And so when you're around him, it's like, holy shit, this isn't much fun. And it got to be so little fun that essentially we had to move out. And then the new guy that came in was not his intellectual equal. And so we ended up turning it into a commoditized business.

I would say, you know, where I'm at is they kind of fixed it now, but it's like 15 years to get to where we are. And it was, it was, it was not what we envisioned when we started, but it's a business now and I think they're doing okay.

Kelly Kennedy: I see. I see. Okay. So you just exited.

Ian MacGregor: No, we still got equity, but I think it's so far under water.

It ain't worth much.

Kelly Kennedy: Well, that's all right. You got, you, you've, you've won so many other ones. What's one, right?

Ian MacGregor: I think the guys that are there now are actually doing the right things and they're, they're probably rehabilitated, but we're way down on the capital.

Kelly Kennedy: Okay. Okay. Awesome. And then what's next?

Ian MacGregor: So we're working on this hydrogen idea right now, so you know, we, we we still have a significant interest in the carbon sequestration business because we think that's, you know, a large part of the future of Alberta, probably.

And so on the carbon sequestration theme, we started investigating that, I would say. Probably three years ago now, and our normal approach is we get some really smart guys. So I'm pretty old, so we get 40 year old guys, so I call them young guys, but they're not really young. And and they, and we work together on an idea and we fund that ourselves.

We don't look for any outside money. We just fund that ourselves and try to So we started with the idea, when you look at all the projections about climate change and warming and all that stuff, there is no way you're going to meet the projections unless you can figure out a way to take CO2 out of the atmosphere.

It's just impossible. You can't reduce things fast enough, you can't do things fast enough, and they're so expensive when you try and do them, but it just isn't going to work. So we started with the idea, you've got to take CO2 out. And then we're sitting around thinking, well, Christ, you're starting at 400 parts per million of concentration.

Are there any other mines in the world that start at 400 parts per million? That's not very good. And, you know, if you, if you think about 400 parts per million, no one knows what it looks like. But if you think take a teaspoon of milk and get a, get a clear container, that's like you know, like a two quart container, put the tea in there.

That's 400 parts per million. So it's really hard to get that out. So we started looking at it and saying, people are trying to make machines to do that. But we think that's really tough because the machines need to be horrendously big and they lose a lot of, they use a lot of energy and water and stuff.

So you start thinking, well, there's a machine that's doing that already. It's called a tree. And it runs on solar power and it sits out there and lives on the water.

Kelly Kennedy: That sounds really green.

Ian MacGregor: 30 percent carbon when you start. So it's lived by on that 400 parts per million has turned it into 30%. So I think that sounds pretty good. Canada has 8 percent of the world's trees. That sounds pretty good. And when we cut them down for lumber, like we used to have a pulp business in Canada, but it's been kind of evaporating because it's a long ways away from the market.

We don't need as much paper and all that stuff. So there's still pulp business here, but it's definitely in decline. About 60 percent of the Canadian forest, when you cut it down for lumber, ends up being scrap. So either leave it in the forest and burn it, or just leave it and let it rot. Or I take it to a sawmill and then I got slabs and tops and branches and all that.

So all that stuff is 60 percent of the trees in your forest end up being scrap. Or low value fiber. So we thought, well, Jesus, that's a really good feedstock. It's 30 percent carbon and it came out of the air. So why don't we start there? When we built Sturgeon, there's something called a gasifier, and so it takes the very worst part of the barrels of stuff that isn't worth any money, like coal.

It's liquid, it's Sturgeon, but it's essentially the highest carbon material, and you put that in a gasifier, and the gasifier makes hydrogen and pure CO2. And we picked that process path because we wanted to use the CO2 for EOR in Alberta and we needed 100 percent purity CO2 to move it around. So we picked that process and one of the, you know, the unknown problems in Sturgeon was when we started up, we had a lot of trouble with the gas fire, just plain didn't work.

And so we tried to work with the guys who sold it to us to get it fixed and we didn't think we were going to be able to get it fixed with them. So we took over ourselves and do it. And we got some of the smartest guys. They all look like farmers. So we got all these Alberta guys, but they got PhDs and lumberjack shirts on. And these guys are smart off the scale. So we figured out how to fix this thing. And the really interesting thing in fixing it was lots of people have tried to fix them before. We brought the guy who was a welder, who was going to put it together to the meeting, so he came with all these computer analysis guys, you know, the finite element guys, the computer flow guys, all these guys that are PhDs, off the scale intellects, and the welders there, he's saying, well, I can't build this, I can't build that, you don't want this, you don't want that, so, so, what's differentiated about what we did was, we could build it, and nobody else had ever approached it from that way before, so we got it to work.

When we started the burners, which are the things that were failing and making the gas fire not work lasted 40 hours. And when we finished with it, the last one lasted 10, 000 hours. Wow. And that's solely because we could make them to a precision that has never been achieved by anything I ever been like when we weld it together, the closing weld shrinks six millimeters.

We have to control a tolerance within a gap in inside this thing with that six millimeter shrinkage. We have to control it within a 10th of a millimeter. So it's about a half a human hair. It's amazing when he does it. I can give you the drawings. Here's the drawings. You got to paint by number set. You can never paint the Mona Lisa from a paint by number set.

Kelly Kennedy: No, no, that's, it's unbelievable. The things that we are capable of creating, it really is.

Ian MacGregor: That was just amazing. And the whole process, I mean, it was really, people ask me if it was stressful. Yeah. We were losing a million bucks a day while all this was going on and it took about nine months to fix it. So there was some element of stress during that time.

Yes. But we fixed it, and it works good, and you can do that here.

Kelly Kennedy: My gosh, yeah, it's, it's just so funny because, you know, the level of stress that I'm sure that you have had to deal with, most people could not even imagine what that must be like.

Ian MacGregor: At least once a week, there would be an article in the paper saying, Ian's a really bad guy. He did, he talked to the government into doing this.

I was, I was every second week. And then sometimes it's just a bad guy. And then sometimes it was like, this thing's never going to work. We had all the money they spent. It's all that stuff. Fortunately, you don't hear that anymore. I like what happened to all those guys.

Kelly Kennedy: That was something that I really wanted to talk to you about because my gosh, that must be. Incredibly hard. And I know that you're a tough person. I know that, I know that you have more grit than most. There's no question there, but it must be hard to be thrown under the bus like that when you're actually doing something that's so great for Canada as a whole.

Ian MacGregor: You know, if you do the right thing, it'll work out. And you have to, you have to have a fundamental belief in that. I always believe in that. I thought, you know, they don't know what they're talking about. They're going to say stuff that's dumb and they're going to say stuff that you wish they didn't say.

Really what I think is they make it tougher for the next guy and you know they get way too much air time when they're out there saying these outrageous things and you know, of course, you never hear from them again like, where are those guys now? They're, you know, complaining about something else. So, you know, that, that, that's unfortunate, but it's part of doing this stuff.

You're going to have, you know, when they're this big, they're this public, there's not much stuff going wrong. You're going to have critics, who cares?

Kelly Kennedy: Yeah, I just I think it's I think it's very unfair because I think at the end of the day, you know, every single person that I've talked to in Alberta, they do care about the environment, oil and gas or not, like the reality is, we're doing things that help the environment, we probably make the cleanest energy on earth.

And yet we still face so much discrimination. And it just seems Very unfair.

Ian MacGregor: Yeah, the world's unfair, but you know, we're doing okay. We built the world's largest carbon sequestration. It's in operation. It's been in operation for six years now. No one even knows about it.

Kelly Kennedy: Yeah, and actually, I think that's something that would be really interesting, you being an engineer.

Can you explain to us how carbon sequestration works?

Ian MacGregor: Sure. So we make, so there's a bunch of different ways where we make carbon dioxide in things that we do pretty well. Everything, you know, if you make fertilizer, when you make that, when you need the hydrogen to make the fertilizer, the hydrogen, you made a molecule of CO2 when you made the hydrogen to make it.

So all the way through all the industrial processes from things like fertilizer for agriculture, diesel fuel for your car petrochemicals, all of them start with hydrogen. And when you make a molecule of hydrogen, you make a molecule of CO2. There's other ways we make it. So sometimes we burn things and we make CO2 in the exhaust.

So the more dilute the source is, the more expensive it is to get it out. So air is the most dilute. It's the most expensive to get things out. Then you got combustion. So I burn natural gas. That's the next most dilute. Then I burn coal. It's better. 12%. Natural gas is 5%. Coal is 12%. When I make hydrogen, the stream can either be 60 percent pure, or it Or a hundred percent pure, depending on the way I made it.

So we decided when we built the refinery, we're making a hundred percent. We designed that refinery to capture the CO2 emissions right from the start. It's the first refinery in the world where someone decided they're going to manage the carbon dioxide in from the emissions and all the other ones bent or were added to as an afterthought to try and capture it.

So we made the refinery. So it's a hundred percent. Pure CO2. And the reason for doing that is then you can compress it and turn it into a liquid. If you have any nitrogen in that stream, you can't compress it. It won't turn into a liquid. So you just, you can't deal with it. You got to get the nitrogen out.

That's really expensive. So we made it so there was no nitrogen in it. So the first step is you get pure CO2, you compress it, you turn it into a liquid. And then you can put it in a pipe just like all the other stuff we put in pipes so we can move it around. Once it's so liquid, we can move it. So, we then just have to figure out where do I put it?

And what we thought was, well, the central part of Alberta looks like that Weyburn Reservoir I was talking about in Saskatchewan, right? There's a billion barrels of oil to come out of the central part of the province if you put CO2 in. So, back in those days, there were no CO2 taxes. There was no nothing.

But the CO2 had value. If we put it in and got oil up. So that was the whole thesis there.

Kelly Kennedy: It's like fracking a little bit?

Ian MacGregor: No, not really. No, the CO2 is like paint thinner. So when you put the CO2 in the oil that's down there, the oil is stuck. So it's in some kind of matrix where it can't Once these other reservoirs get to the end of their life, there's still a lot of oil in them.

But it's okay. And when you put the CO2 in, it's just like putting paint through it. And it makes the oil flow. So you can get a lot of the oil out that's stuck with, without putting the CO2 in. Wow. But it's not fracking. You're not really going back to high pressures or anything. It's just like, you're going to normal pressure.

You just pump it stuff through and it's picking up the oil.

Kelly Kennedy: Interesting. My gosh. How did you guys figure that out?

Ian MacGregor: Well, it was what they were doing a waiver and they say, you know, we just watch when we go there and say, well, this is pretty cool. Look at the oil coming out.

Kelly Kennedy: Wow. Wow. Yeah, no, that's awesome. That's awesome. I wanted to spend some time on hydrogen. You know, why did you, why did you focus in on hydrogen?

Ian MacGregor: So really what we're focusing in on is we say, okay, we started off we say, what's taken CO2 out of the air? Okay. And they can get into carbon and once it's made into carbon, it's a source of energy.

So there's energy and wood is definitely not as good energy as wood to get stuff out of it. So you can put wood, because it's high carbon, you can put wood in a gasifier, just like, it's a different variant of the same thing that we had at Sturgeon, but it's still a gasifier. So you put wood in there, the carbon turns into CO2, and then the energy and the water that's flowing around in there turn into hydrogen.

If you make the reaction occur right, the The water hydrogen gets pulled off the, you know, the pulled apart. So you get the hydrogen out and you get CO2. So we thought, well, this is a really cool path. And we got all these enormous quantities of feedstock in Alberta. And so, you know, we're thinking, well, this looks like something that might work.

So, and for us, We started looking at this, like there's all kinds of CO2 taxes talked about. Some of them are, you know, some of them are really high. We're talking about taxes going to 170 bucks a ton. There's taxes on fuel. In addition to that, they're like in BC, those taxes, like 400 bucks a ton. So the taxes are really getting high.

We didn't think if you, if you applied this with everything, we don't think the world will function with that level of taxes into it. So people are going to write, you know, you can see it cracks at the edges now when the people find out how much CO2 tax they're saying, we're not going to pay you that. So we started with the idea, you got to be able to do this for a hundred bucks a ton.

If you can't get to it, if you can't take CO2 out of the air and put the CO2 underground, if you can't do that for a hundred bucks a ton, it ain't gonna work. And over the long term and over at the scale we want to work. Like we're trying to work at a colossal scale. We're not, we're not interested in building a gas station.

We want to build a refinery. So we started looking into it and there are ways to do this and And, and so we found somebody who'd done really a lot of woodwork and they had a pilot plant and they had a full scale plant running and they were building other stuff and so we went to them and said, Hey, we know something about gasification, you guys do, how about you let us try and do this?

So they, they're, they're helping us out a lot. They're called SunGas and they're really good guys. So we figured out a way to build a plant. When we started, we were going to build a really big one, like a refinery, and we were going to make wood pellets and transfer the pellets to the refinery. And with the CO2 taxes, when we started, we thought, ah, that can work.

That can be economic. As we started thinking about it, we started thinking these taxes are way too high. We can't plan for these to the future. This just is not going to, it's not going to happen. So that's where the a hundred bucks a ton. So then we had to go through the whole idea again and say, how can we get the costs down so you can do it for a hundred bucks a ton?

And so what we decided was there is a way to do that in Alberta. And the way to do it is we've got all these sour gas plants all over the place and they're all on their last legs. People haven't been looking for that kind of, you know, that kind of a place to, to, we're not looking for sour gas reserves now.

We're looking for a different kind of reserve. So the sour gas plants are old and there are, you know, they're down to the minimum size that they can run out. So we've decided we can take what we do out to the sour gas plant. And it turns out a hell of them are places where there's forestry operations too.

Wow. And so we can put one of our plants there and we can share a lot of stuff that's in the sour gas plant that's not used anymore. So, you know, the amine unit and the office building and the utilities and all those things we can share with them. And get our costs down and that's on the path to get to a hundred bucks a ton.

And then the other thing that we want to do is I've never built in anything in China again. We part, we built part of the refinery in China. So there's two rounds. I'll go on. If you'll let me, is it okay to go on?

Kelly Kennedy: Sure. Absolutely.

Ian MacGregor: So one round is it's cheaper to build stuff in China. No, it's not. It's not.

When anybody says that, put tape over their mouth.

It's cheaper to build in Edmonton if you do it right. So, then, what happens is we build stuff in Alberta, we build all this stuff, it's called modularized. So we build these things, they're 20 by 20 by 100 feet long. They're all full of equipment and stuff. And so when you're thinking, well, geez, that sounds like a good idea.

It's just going to be like a bunch of Lego. We're just going to take it out to the thing and put it all together. The problem with that is when you build a refinery, we have 7, 000 pieces of equipment in that refinery that cost more than 100, 000. So like a pump or a heat exchanger or something like that.

So when you're building the module, first of all, when you start off a refinery, you don't have any engineering. So you're engineering and building at the same time, all the way through. When you start off, you order the pump and you're building the module. You get all the modules done. They do a good job and then there's no pump.

So the guys out in the field are waiting for the module. It's gotta be in sequence, right? I got, I need, I need number 93 now.

So 93 doesn't have its pump in it. So what do you do? Send it out there. We got to get it out there. So now you got a module out there, and there's probably three modules by the time you get the pump on top of it.

Now I got to get the pump inside there. And you blame that on the guys who did it, did the work. You don't say, that's the fault of the owners. That's the fault of the engineers that did this thing. It's the fault of the pump supplier. No, no. The guy at the end of the chain, he always gets blamed for it. So Alberta labor is really, really expensive because of that.

Yeah, because the guys at the front end don't know what they're doing. So we decided we got to do this a different way. We'd have to do it like manufacturing. It's not modularization. It's manufactured when it leaves the shop, it's finished. It's never going to be touched by somebody who's a construct.

Well, it's going to be constructed by a touch by a construction window, set it on the files and turn it off. So we're trying to build this thing that way. And it's, we think it's a different, different approach to these scale of projects. And I'm planning on doing that in Edmonton. And if I do it right, I'll leave something behind that's the size of a car company, be the size of Ford Canada when I'm done.

Kelly Kennedy: Wow. Well, I was going to say, like, I remember that. I remember that modular boom in Edmonton, right? It was huge. They built gigantic facilities and then it all just went away.

Ian MacGregor: We've got these, we've got this reputation around the world that it's really high cost. It's not true. It's high cost because of the way we do it.

We're doing it for the very first time. We order this equipment. It doesn't show up when you plan for it to show up and you need it in sequence. And if you don't have it, it's a disaster. And if you look back at these things, I bet that's 80 percent of all the cost overruns we have are related to them.

Kelly Kennedy: Wow. Yeah. I, I remember that cause it was huge. It was huge industry, especially here in Alberta. So are you telling me you're going to kick that, you're going to kickstart that again?

Ian MacGregor: Well, I'm going to do it in a different way. When you, when you know, when you go, we're going to build these things in a factory inside in Edmonton.

There's lots of people who can do it there really well. We're going to do that inside, and when it comes out of there, it's going to bend together before. It's like a car. I don't start building a car before I have the door handles. I'm not putting the engine in and then waiting for the door handles. When I need the door handles, they're there.

So, we're going to do this the same way.

Kelly Kennedy: Amazing. I'm, I'm very much looking forward to seeing this.

No, that's amazing. That's amazing. Ian, I wanted to talk to you a little bit about hydrogen. You know, being where you're at, what do you think the future of hydrogen is for Canada? What

Ian MacGregor: I think is lots of noise, lots of people talking about all the things you can do with hydrogen. Inside the refinery, it's virgin is the world's largest blue hydrogen.

So we know a fair amount about hydrogen. And what I say is hydrogen is a really, really dangerous thing to be around. And yeah, you know, you've, I tell people you find hydrogen leaks by the explosion, you know, so.

Kelly Kennedy: The Hindenburg agrees with you.

Ian MacGregor: So 95 percent of the hydrogen that's used in the world. It's used in an industrial facility, an oil refinery or a fertilizer plant.

That's about 85 or maybe 90 percent of it. And then petrochemical uses are the other ones. They're all industrial uses with heavy, you know, heavy procedures and safety and all kinds of things around them. So you can use hydrogen in other places, but it's really an expensive thing. It's really costs a lot of money to make hydrogen.

It's really difficult to move around. It doesn't move easy because it's, you know, it takes really high pressures to move very much. Okay. And if you get a leak, it's, it's really a serious thing. It's not like a natural gas leak where probably I can smell it and I got to do something. It's like, no, I can't smell it because I blew up.

So, and the other thing we kind of missed is if I put hydrogen in the front end of these processes. So if I make the hydrogen the way we are, because we take the carbon capturing attributes in the tree, And we sequester the CO2, the hydrogen that comes out is like the tree, it's carbon captured hydrogen.

So it's, it's carbon intensity is not zero, it's negative by a lot because the tree took all that carbon out. So when you put that in the front end of our processes, the big industrial processes we have in Alberta, so refining, petrochemicals, fertilizer, if you put that hydrogen in the front end, You significantly decarbonize all the products that come out of it.

That's an easy use. We know how to do that here today. We don't have to wait 20 years for somebody to make a hydrogen service stations up place. And I got to get hydrogen to it. And it's really expensive when I do. This is like, I can use it in the stuff that we got today. So that's what we're focusing on.

Kelly Kennedy: Wow. Okay. I, it was one of the things that I wondered because, you know, we got this huge push right now for electric cars. You and me both know we're in Alberta. This makes no sense in Alberta to have a pure electric car. You just, you go too far. The distances are too far. It, it doesn't make sense. And I always thought potentially hydrogen would make sense and then it would burn clean.

Like to me, it seemed like a good idea, but I didn't realize how hard it would be to do it.

Ian MacGregor: So in some world, That is probably true, but that, that world is at least 20 years away. Maybe, maybe 40 years, maybe never, but it's a long way out. And you know, I'm getting kind of old. I can't be working on stuff.

It's going to be something 20 years from now. It's got to be like, you know, I want to do the five year off a little. That's good enough for me. So, you know, we, we, we think we're onto something really cool. I deal with this. We think you can do it here. We think there's lots of places to do it here. And we think we're going to create a, I mean, the real thing that's fun for me is two things.

I don't know. I don't know anything about reconciliation. What can somebody like me, what possible contribution did I make to that? If I can create lots of forestry jobs, I think that's a contribution. I think they're in the places where indigenous people live. I think they'll work doing this and I think they'll, they'll be more participatory in our economic system if we create good jobs out there.

So that's really important to me and we can use a lot of, you know, there's a lot of material that comes. So that's good. And then I want to create a new manufacturing industry at Edmonton. I want to build these things. So, you know, it's like Ford Canada, when you drive it in this community, you're thinking, Oh, look at all this stuff coming out of there.

So that would make me happy if I did that.

Kelly Kennedy: It would be amazing. And you're right. Edmonton's amazing. You know what I mean? I love our province. I love our country. And I just, you know, this is where it's about. It's about innovation. It's about building the next big thing. And we definitely need more big thinkers like you, Ian.

Ian MacGregor: I dunno about that.

Kelly Kennedy: Ian, we're talking to a lot of entrepreneurs, I'm sure. I'm sure they've really, really loved this interview and we're coming up to the end and you know, I was just hoping, you know, you've spent your entire life as an entrepreneur. You've founded numerous, numerous ventures, you've. Achieved amazing success.

And you've helped not only Alberta, not only Edmonton and Calgary, but frankly, Canada as a whole. Immensely. What, what kind of advice might you give to the next generation?

Ian MacGregor: I start with the idea there are no really great ideas. There's okay ideas, but there's no really great one. Don't look for the greatest idea.

If you're an entrepreneur, don't start looking around for the greatest idea. Look for an okay one. And then figure out what you need to execute it and have really good people around you. It's all about the people you're around with. And really when it gets down to it, all these things are going to have trouble, continuous trouble when you're in that entrepreneurial world.

You have to be around people that are fun to be around when things are going bad. Everybody's fun to be around when it's going good, but when it's bad, that's a small group. So you have to have a small group that can go after those things and then you can do, you still can do big stuff. That doesn't constrain what you can do.

Yup. But you have to do things where you're focused on how am I going to do it, how am I going to execute it, and I have to, you know, I have to have confidence in the people I got.

Kelly Kennedy: Absolutely. Yeah, I agree. Have confidence, have the right people around you, it makes all the difference. One of the other questions that I had, just before we close up today, was you have had a lot of success in multiple ventures.

What inspired you to start to step outside of the box of what you were comfortable with?

Ian MacGregor: I thought about it that way. It just was, you know, you're looking around, you keep your eyes open when you're looking around, you see something, hey, that looks cool, and then you go into it a little bit, and when you go into it, you're going into it, you're trying to understand it, so if we're working on something, I'm never going to be a golfer, I don't like golf, so I'm not going to do that kind of work.

But when I'm looking into something, that's like golf for me, it doesn't really interest me. So when I'm looking, I'm really looking, and the people around me are the same ilk. So we understand stuff. I would say we look at 50 things, and most of them are, you know, you thought it was something really cool, and it wasn't.

Once you got in there thinking, this isn't cool, this isn't crappy. So then you just back up the car, keep driving, and look for the next one. And eventually you find one, and you go a little ways, and it's still looking cool. And you keep going, and it's still looking cool. So you just keep, eventually it's okay, and then it turns into a business of some sort.

Kelly Kennedy: Wow. Wow. No, it, it is unreal. I, I You know, I, I'm very inspired by the work you've done. And I just wanted to say, you know, on behalf of Canadians, thank you so much for your service to our country and all the great things that you've done. Cause you know, the reality is you've changed the world. You've left your mark and I know I appreciate it immensely.

Ian MacGregor: Well, thanks for letting me live here. I love it.

Kelly Kennedy: Ian, that takes us to the end today. Thank you so much for joining us. This has been episode 138 of the business development podcast. We have been graced by Ian MacGregor, serial entrepreneur and founder of Northwest refining until next time. We'll catch you on the flip side.

Outro: Kelly has 15 years in sales and business development experience within the Alberta oil and gas industry and founded his own business development firm in 2020, his passion and his specialization. Is in customer relationship generation and business development. The show is brought to you by Capital Business Development, your Business Development Specialists.

For more, we invite you to the website @ www.capitalbd.ca. See you next time on the Business Development Podcast.