One of the biggest developments in Canada’s tar sands is happening on the 26th floor of the Transamerica Building in San Francisco.
It’s there that URS Corp has its headquarters, and its there that the company is building a formidable engineering and construction empire aimed at exploiting oil and gas reserves in North America.
As recently as three years ago URS Corp was mostly concentrated on pursuing engineering and construction projects not directly related to the oil and gas industry. During George W. Bush’s bellicose presidency URS Corp bought up several military-industrial contractors and then went on to win big contracts to “rebuild” Iraq and Afghanistan. URS also won plum contracts to manage nuclear weapons labs and handle radioactive waste for the United States. Warfare was the booming business back then.
Today’s big business is oil and gas, especially Canada’s tar sands, and in the hard to access geologic formations that produce hydrocarbons only through fracking. That’s why URS Corp is fast transforming into a giant oil and gas engineering firm. The company, along with many investors, seems to be taking the position that development of the Canadian tar sands stands a good chance of proceeding, as does the profusion of fracked oil and gas wells across America.
Today URS obtains 30 percent of its total revenue from oil and gas related work. They design and help build mining and refining facilities for tar sands oil. They build giant pipelines to transport oil and gas across continents. Back in 2011 URS Corp didn’t even have an oil and gas segment in its corporate structure.
As URS Corp’s managers describe in their most recent annual report, they purchased Canada’s largest oil and gas services company, Flint Engineering, to “significantly increasing our oil and gas services in North America, particularly to the unconventional segments of this market.” Unconventional oil means the black gooey stuff refined from tar sands and sucked from wells made productive through hydrological fracturing.
URS Corp specifically singles out the Keystone XL Pipeline as being crucial to the future profitability of their oil and gas business. “[S]hould the proposed Keystone XL or other similar proposed pipeline project applications be denied or further delayed by the federal government,” the company’s management explain, “then there may be a slowing of spending in the development of the Canadian oil sands.”
In another section of their annual report to shareholders, URS executives admit that “we may continue to be affected by a slowdown in project activity due to continued low natural gas prices and limited pipeline capacity for oil produced in the Canadian oil sands.”
It appears that URS Corp’s big bet on Keystone XL, the tar sands, and fracking, has attracted some other gamblers to the table. Two hedge funds have recently taken long positions in URS Corp stock. Two New York City hedge funds, both with offices in the GM Building on 5th Avenue, now hold about 17 percent of URS Corp stock. Glenview Capital Management and Jana Partners both ranked among the top earning hedge funds in 2013.
As I wrote last year, URS Corp is hardly alone among California companies with an interest in Canada’s tar sands, and the fracking boom. The Bay Area is an epicenter of firms, from Chevron to Bechtel, with multi-billion dollar interests in exploiting the last and dirtiest drops of oil.