How an oil tycoon plans to transform an iconic mountain town; Infrastructure; Waterous has been working on rail line linking
2024-03-23 04:23:07.311 GMT
How an oil tycoon plans to transform an iconic mountain town;
Infrastructure; Waterous has been working on rail line linking
calgary to banff for a decade
By Joe O'Connor
March 23 (National Post) -- It's 7 a.m. and the fresh cup
of coffee in Adam Waterous'hands isn't providing him fuel to
pump Strathcona Resources Ltd., which he built from scratch to
become Canada's fifth-largest oil producer before taking it
public five months ago.
Instead, the former investment banker is sitting with his
wife Jan and eager to talk about a project that seems
diametrically opposed to the interests of the Calgary-based oil
company he's executive chair of, and the oilpatch in general.
But before wading into that story, Waterous had a revealing
coming-of-age tale to share.
He and a high school buddy took the subway to what were
then Toronto's northern extremes, stuck out their thumbs and
promptly caught a lift from a kind, elderly couple in a
Cadillac who dropped the boys about an hour north of the city.
The plan was to hitchhike to Banff, Alta. It was 1979.
"I thought, 'This is going to be easy,'" he said.
That burst of early optimism died by the side of the
highway in Sudbury, Ont., where the friends were marooned for
three days waiting for a ride. Eventually, they reached the
iconic Canadian mountain town with the breathtaking scenery and
abundance of outdoorsy stuff to do. Waterous was hooked.
So much so that after spending the summer in Banff, he
spent the next two decades trying to figure out how to get back
and make it his home.
Jan, a Torontonian, likewise enjoyed a youthful brush with
the town, and was keen to do the same. Today, the couple are
the proud owners of the Mt. Norquay ski resort and, despite
their Calgary digs, consider Banff as their permanent address.
But skiing is not what Waterous is known for in business.
The 62-year-old made a mint doing deals in the oilpatch as an
investment banker with Bank of Nova Scotia before striking out
on his own in 2017 to found Waterous Energy Fund, a private-
equity player that snapped up a bunch of small oil producers,
creating the not-so-small Strathcona Resources.
Potentially far more transformative and, on its surface,
perplexing - given the origins of Waterous'substantial wealth -
than shaking things up in the energy sector is the hydrocarbon-
tycoon's plan to shake up things in Alberta and North American
mass transit circles by building a 150-kilometre rail line
connecting Banff to Calgary and to service it with an
environmentally friendly, hydrogen-powered train.
This is it not a save-the-planet solo-effort, mind you,
but a Waterous family affair, equally propelled along by Jan, a
public relations whiz, who parked a big corporate job in
Toronto to move west, and to a lesser degree the couple's
three, Harvard-educated sons who, incidentally, all have day
jobs at Waterous Energy Fund.
"Without Adam and Jan, the train would still be the most
talked about thing in Banff that is never going to happen,"
Mike Mendelman, a Banff restaurateur, said. "There have been so
many hurdles related to this project, and anybody but them
would have tired of it long ago and thrown in the towel, but
they just keep going."
In the days of yore, part of the wonder of Banff was the
journey to get there. Starting in 1888, it was a trip often
undertaken by train that delivered generations of tourists to
what was then Canadian Pacific Railway's Banff Springs Hotel,
and parts thereabouts. That passenger train kept chugging in
gradually diminishing grandeur as the town grew until 1990 when
Via Rail Canada Inc., a Crown corporation that was bleeding
money, cut its service to the mountains, cutting travellers off
from Banff unless they wanted to drive or take the bus.
Lo and behold, drive they did: around 6.5 million vehicles
pull into Banff each year, according to town statistics. That's
a lot of cars for a place with not a lot of roads to
accommodate them. During the summer tourist high season and at
points during the winter, the resort town at the heart of Banff
National Park experiences traffic jams, not on a nightmare
Toronto scale, but at a level that is neither a win for the
locals'disposition nor the environment.
On top of their aggravation is an acute housing and
affordability crisis, such that a tourist destination that
desperately needs workers to serve its more than four million
annual visitors has nowhere for those workers to live, unless
they happen to luck into a studio apartment - for $1,700 a
month.
A train, in theory, would dramatically decrease the volume
of cars and increase the labour supply by attracting workers
from stops along the line with more affordable housing options,
or so the argument goes. It is a perfectly common-sense
solution that has long seemed obvious to Banffites, Mendelman
included, and yet equally obvious was that no level of
government was poking around town to ask whether Banff wanted
its train back, or whose responsibility it was to build,
operate and fund the line.
Enter Adam and Jan Waterous, two incurable doers with
three inquisitive sons, and a zest for freewheeling family
dialogues. The town's infernal traffic problem came up over
breakfast eight years ago, and not for the first time.
"You keep asking the question, 'Well, what are they going
to do about it?'and it occurred to us, sitting around with the
boys, who is this they?" Jan said.
In that moment, the family decided the "they" would be
them. Nearly a decade on, it still is.
In the interim, the Waterouses, through the family holding
company Liricon Capital Inc., have invested millions of their
own fortune into the proposal to build a train. The wider
aspects of the project would involve restoring Banff's historic
train station, expanding upon an intercept parking lot with 600
free parking spaces intended to get drivers out of their cars
and onto shuttle buses the Waterouses already operate, and
adding a gondola service to whisk people from the train station
to Mt. Norquay's slopes.
Plenary Americas, a portfolio company of Quebec's pension
fund, the Caisse de dpt et placement du Qubec, sure seems
bullish on the idea, and has signed on as the co-developer of
the train. The other partner, should the project get the green
light, would be the Canada Infrastructure Bank, which would put
up half the estimated $2-billion construction cost. Alberta
Premier Danielle Smith likewise seems keen, to the extent the
province committed millions to explore connecting passenger
rail service to Alberta's Rocky Mountain parks system in its
Feb. 29 budget.
It is fair to say none of the above would have happened if
a couple of opposites, who have been together for almost 40
years, had not said enough was enough. Adam and Jan's divergent
natures were not evident when they were classmates (in
political theory) at Western University in London, Ont., but
they became clear upon bumping into one another in an elevator
in Toronto during the summer of 1984.
Adam was wearing an "Elect Brian Mulroney" button; Jan an
elect "John Turner" button. Both were volunteers for the
opposing campaigns to be prime minister. A wager was struck on
the outcome, and a lunch subsequently purchased by the loser
for the winner at Bemelmans, a popular Toronto haunt.
"And the rest is history," Jan said.
Part of that history, as it relates to an ambitious,
unsolicited proposal to get a $2-billion infrastructure project
built in Alberta, revolves around Adam's dogged persistence.
Back in the day, when he was a wheeling-and-dealing banker, he
had a reputation among colleagues for quirky boardroom
presentations, at times relying more on using old movie clips
rather than spreadsheets.
"Adam is clearly super smart," David Potter, who worked
closely with Waterous at Scotiabank, said. "But what really
sets him apart from all the other sharp minds I've met or
worked with over my career are his resilience and persistence.
Adam bounces back from bad news like no one else. Just moments
after suffering a business setback, he's already imagining and
planning the next even bigger success."
Jan said her husband's unbridled optimism in the wake of
apparent disaster has been crucial in their dealings with
bureaucracy: a morass of red tape, involving three levels of
government, and a cast of changing characters.
Since the train project got rolling in 2016, the
Waterouses have had brushes with three different premiers
(Rachel Notley, Jason Kenney and Smith), seven transportation
ministers, seven mayors and four communities, plus some mucky
mucks from Parks Canada who, according to the couple, love
nothing better than to say no.
"I hear 'no'as no, but Adam hears 'no'as maybe," Jan said.
"He loves to quote that line from the movie, The Big Lebowski,
'Yeah, well, that's just like your opinion, man.'" In other
words, Waterous doesn't get too fussed about opinions or the
personalities delivering them, but stays focused on the merits
of the project. Those merits don't require consultants in fancy
suits to sell them to the powers-that-be. Adam and Jan show up
to meetings themselves, including in 2017, when they first met
Jeff Genung, the mayor of Cochrane, Alta., for coffee.
Genung immediately warmed to the idea and the people
pitching it. A train would provide commuters an alternative
option from driving, ease the burden on an overburdened highway
network, increase labour mobility and attract more tourists to
Cochrane - about 30 minutes northwest of Calgary and the
hypothetical train's first stop - even if the sum of their
visit meant getting off the train to stretch their legs and
grab a bite to eat.
The mayor understands the train would be operated as a
business, with profits derived from ticket sales and a three-
tiered pricing model, with the most luxurious seats reserved
for domestic and international travellers of means bound for
some good times in Banff. But he has never sensed the
Waterouses were in it for the money.
"I genuinely think their interest in the train is doing
something that is legacy, something that could really improve
the lives of Albertans," he said.
Jan said the project isn't indeed an act of philanthropy,
though she said there are much "easier ways" to make money, and
most involve fewer headaches and substantially less red tape.
"Philanthropy, as admirable as it is, is not sustainable,"
she said. "Our model is based on the premise that the only way
to ensure that a solution is environmentally sustainable is to
also make it economically sustainable."
As for the environment, if and when the hydrogen-powered
train gets built as proposed, the line would track within the
existing Canadian Pacific Kansas City Ltd. freight rail
corridor, thereby nixing the need to cut great swaths of forest
and blast through mountains. That's a good news story for the
planet.
But pitching a clean-tech transit line that takes cars off
the road on the one hand while fuelling those cars and the
carbon economy on the other might annoy a few people in the
green camp. Strathcona Resources produces about 200,000 barrels
of oil a day, and the company plans to boost production to
325,000 barrels over the next eight years.
And yet Waterous doesn't see any contradiction between
what he does for a living and what he is trying to do for
Banff. Portraying oil as a public enemy gets him pretty
animated, and he argues that millions of people in the
developing world die each year of "energy poverty" because they
lack access to cheap fuel sources to heat, cool and cook in
their homes.
The clearest path to eliminate those deaths, he said, is
to ramp up energy production in the west while ramping down our
own energy-intensive hypocrisy by parking our cars, building
and using mass transit, and having energy producers such as
Strathcona invest in technologies that can help decarbonize the
hydrocarbon system.
"We actually think there is a moral obligation for Canada
to try and double its production over the next 15 years," he
said.
Morals aside, a Calgary-Banff train polls favourably with
the public, with 85 per cent of Calgarians expressing support
for the idea. But there is still plenty of convincing to do.
Count Sarah Elmeligi among the skeptics. The NDP MLA for
the region that includes Banff had a long pre-political career
in conservation. She is reportedly not anti-train, but wants to
see more data on what the impact on the environment and
wildlife corridors might be and whether, say, an expanded bus
service might negate the need for a multi-billion
infrastructure project before championing the cause.
Waiting on feasibility and wildlife impact studies
requires patience, but, according to Jan, the couple dutifully
take their "vitamins," and, according to Adam, they feel like a
couple of "kids" despite being in their early 60s. They are not
going anywhere.
But just in case, mom and dad have some backup. Liam,
their youngest son, was 16 when the train project started. He
recalls its humble beginnings at a makeshift booth on Banff
Avenue collecting signatures with his parents from locals in
support of the train. His parents carried the resulting data
with them to their initial meeting with the Canada
Infrastructure Bank.
Now 24, Liam is an associate with wide-ranging duties at
Waterous Energy Fund. Among his tasks on a recent morning was
doing some financial modelling for the train. Jan said her boys
bring boundless energy, spreadsheet chops and the insights of
the not-alwayscar-owning millennial to the table. Liam believes
his buddies would be willing to pay between $20 and $30 for a
ticket to Banff.
Liam describes his parents as a "funny pair." Jan is the
calm one, the listener, sounding board and a sage giver of good
advice to Adam, the "China breaker" who is constantly pushing
new ideas, and occasionally requiring his spouse to rein him in.
"Obviously, the relationship works," Liam said.
Mendelman, the Banff restaurateur, delights in a story
about Adam from around the time Strathcona Resources went
public. The hard-charging tycoon and his sons flew to Toronto
to ring the opening bell at the Toronto Stock Exchange. And yet
when Mendelman ran into Adam sometime after, he glossed over
going public and got right down to business: "How was the
skiing?" he wondered.
"Adam doesn't seem to dwell on past accomplishments,"
Mendelman said. "He seems much more interested in the future of
Banff."
It was now 9 a.m. in Calgary, and the sun was streaking
through the windows of the Waterouses'city house. Adam's coffee
was empty, but his day had just begun. It was time to get to
work as chief executive of an oil-focused energy fund, but he
was still eager to talk of hydrogen trains.
"What Jan and I are doing with the train, gondola and
intercept parking - none of these are our ideas - they have all
been around forever," he said. "We always thought they were
really good ideas, and like a lot of things in life, this is
all about leaning in and saying, 'Fine, we'll do it.'Somebody
has got to lead the parade."
Financial Post
joconnor@postmedia.com