Controversy surrounding oil sands development has been hard on Canada’s image, but has also forced technology improvements to make extraction more efficient and less harmful to the environment. The drive is transforming the sector. Until recently seen as a sunset industry, it’s becoming a global energy technology leader. Sustainable Development Technology Canada (SDTC), a federal government initiative to develop and commercialize clean technologies, has been a big catalyst in that transformation by supporting projects worth $250-million to clean up the oil sands. Vicky Sharpe, the fund’s Ottawa-based president and CEO, spoke to Claudia Cattaneo, Western Business Columnist, about some of the new technologies in the pipeline, whether they are coming fast enough, and what’s keeping the sector from improving even faster.
Q Has the emphasis on technology development in the oil sands increased as a result of the negative publicity around it and because it is a priority for the government?
A It’s a very technology-intensive industry, so inevitably it will increase the conversation and the effort. I am sure that there will be increased efforts because this is a resource that needs to be tapped into so we need to make sure that as we see increased production levels, that we are working on a reduced energy and GHG content for each barrel. I think it is giving some more momentum to it. And it’s possible that there will be more moneys made available. We have been working on this for years, behind the scenes with our colleagues here in Alberta. There was already good work going on. But also, with the heightened spotlight, entrepreneurs are training their eyes on it as well. So you see companies wanting to apply their technologies to improve the business.
Q What types of technologies are you supporting in the oil sands?
A A big range. Tailings ponds are a big area. We have a number of technologies that are trying to reduce the amount of waste that will go to a tailings pond, and then we have technologies that are reducing the content of those tailings ponds so that they are less problematic and can be cleaned up and returned to the natural environment faster. We have a project with MEG Energy Corp. that is looking at how you move bitumen around in the pipeline. Currently there is a lot of solvent that is used in order to do that, and with this technology almost no solvent is needed. It would reduce the cost of transportation by about 25% but also help with the carbon footprint. We have got another extraction technology with a company called N-Solv Corp. at a well site where they are using a solvent rather than water. We have methodologies to improve the efficiency of well drilling. Statoil ASA is working with us on using different kinds of solvents to improve the mobility of the bitumen. If it works, it will result in 25% less water and a 25% increase in energy efficiency.
Q Are technologies being developed and implemented fast enough in the oil sands?
A It’s complicated. One of the challenges that we face is that the timing for capital investment in these companies is really critical. They don’t buy one or two widgets. The technology has to be incorporated into a massive process. Investments are intended to be there for 30 years or more, so that sunk cost is one that companies want to get through the system before they make big changes. The rate of change is very much linked to the cycles of investment that have already been put in place, and there is a big difference between the companies on where they are in that cycle. Also, many of these technologies work well at a small scale. Being able to get a large company to put at risk its process, and say ‘‘I am going to insert this technology,’’ and doing it with a little company is a big deal. That step has to be taken. If the operations folk don’t like it, it doesn’t happen. So that deliberately needs a period of time to prove itself so the company can feel it can manage the risk. With oil prices going up, that enables more technology innovation and adoption. One of the bigger issues within Canada is that we have so many great technology solutions. If they were bought in Canada it would make us more productive, more competitive. We would like to see a bigger purchase of these technologies in Canada. We’d like to get some of them into test a little faster. It’s tough to do.
Q Do you find the innovators tend to be smaller companies?
A Absolutely. Ninety-four per cent of our portfolio holders are small and medium enterprises. Typically it starts with someone in the garage. They usually left bigger companies and want to do something themselves. They mortgaged themselves to the hilt and they have these great technologies. But they need to prove it. They can’t just build a better mouse trap. They need to focus on the real market and performance characteristics that industry needs. That small/large company interface is something we spend a lot of time on, making sure that the two cultures work together constructively.
Q As a funder of technology, how would you rank in the oil industry?
A We are one of a group of players. With an industry this big, there is inevitably going to be a range of partners. So, there is a big program around carbon capture and storage, and there was a clean energy fund put together by Natural Resources Canada a few years ago, that would be an important play. You have the Canadian Association of Petroleum Producers and they are looking at what they can do. You have got the Oil Sands Leadership Initiative, which is more recent. Where SDTC is different is that this has been our focus for a lot longer than the hype and we are across the country and we are not just oil sands. We are all interdependent and we all contribute.