The environmental and financial challenges facing Canada’s oil producers—especially those in the oil sands or shale fields—are driving change. The industry is facing the double-barreled test of being one of the world’s highest cost producers operating in one of the toughest regulatory jurisdictions on earth. But innovation needs cash and involves risk.
Rather than reinvent the wheel to solve problems they share in common, oil and gas producers in Alberta fund the Petroleum Technology Alliance of Canada (PTAC) programs. Collaboration extends to other industry associations through the Alberta Upstream Petroleum Research Fund, which provides market-driven research on the industry’s environmental footprint. The program is led by the Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada (EPAC). It is managed by PTAC, putting its president, Soheil Asgarpour, at the front of the industry’s battle to cut carbon and costs out of the barrel.
What’s your model and can you give an example of a network and a technology it has developed?
The PTAC model is based on a number of networks; each of which has its own terms of reference and guidelines. They identify potential technology solutions that can be worked on in a collaborative manner with all industry stakeholders. Some of these network focus areas include tight oil and gas, oil sands, steam oil ratio and decreasing GHGs through technology that also increases efficiency.
An example of one of these networks is the Technology for Emissions Reduction and Eco-Efficiency (TEREE) and its REMVue technologies. REMVue technologies were developed and commercialized through a series of projects under TEREE between 2004 and 2012. They capture vented hydrocarbons from oil and condensate tanks, compressor packing and other instrumentation and use it as fuel in the field process and also through air fuel optimization. Hundreds of units are operational, generating $28.8 million per year from the engine fuel displaced. The carbon offset of the technology is equivalent to taking 120,000 cars off the road annually. Should these units be fully implemented across industry operations, the carbon offset would be equal to taking 1.6 million cars off the road while generating $160 million per year from fuel displacement.
The Alberta Upstream Petroleum Research Fund (AUPRF) program is another PTAC network that has been instrumental in driving environmental best practices to the field and creating datasets for regulators to establish informed regulations. From 2000 to 2014, producers provided over $19 million in funding to AUPRF. Combined with $99 million from other sources, for example, NSERC and other beneficiary industries such as forestry, these funds have been leveraged into $119 million in total research dollars. Industry estimates a value creation in the range of $90 million to $350 million. This rate of return clearly demonstrates the value created by the program by simultaneously reducing costs and improving environmental outcomes. The AUPRF program has proven that business can indeed make a profit while addressing social and environmental concerns.
What’s a key environmental issue PTAC is targeting?
The UN is saying, ‘Let’s find an economic solution in reducing the environmental impact of rich gas flaring and venting, which results in soot. The WHO says number one cause of death is no longer car accidents or cancer—it’s air pollution.
How do project teams pitch to PTAC to get backing for a project?
Technology Information Sessions are one of the key starting points for members to solicit their technology or project idea, and in turn gauge and receive support from other stakeholders. A company makes a presentation in front of a group of industry experts, who tell PTAC if they want to create a consortium and/or establish a joint industry project (JIP) on the material being presented. Should a JIP be launched, PTAC has the capacity to provide up to 15 percent of project costs as seed money, and receives absolutely no ownership or financial rewards—we’re a neutral broker between funders and developers.
What challenges do smaller firms with a technological innovation face?
Small and medium-sized firms face two challenges: securing funding and securing a site. A technology has to be tested in the field and it needs to work in Alberta’s climate. Before the economic downturn, producers would provide the field test site and the money, but are now no longer able to fund all the technologies, so we approach venture capital firms.
What’s the success rate?
Silicon Valley has the same rate of success as Alberta—95 percent of energy technology startups fail to be profitable. But in the case of Silicon Valley, the five percent success stories become $2-billion IPOs, which offset investing in the 95 percent that fail. In Alberta, the return will be a lot less, so we asked venture capitalists if we got the success rate to 50 to 60 percent and had already persuaded producers to back the technology, would they fund it. They agreed. Since PTAC field pilot projects are cherry picked through a comprehensive approach by producers who are willing to jeopardize their operations to field test the technologies, they have much higher chance of success. PTAC has launched over 500 projects since 1996. The over 300 AUPRF projects all are peer reviewed by experts, providing further credibility to their findings.
What has been technology’s biggest impact?
We are going through a major transformation in our industry, shifting from a resource-based industry, to one based on technology development. Disruptive technologies such as SAGD and multi-stage hydraulic fracturing have enabled us to tap into gigantic unconventional deposits.
The same way that innovation and disruptive technologies have helped us to access massive hydrocarbon deposits, we will be able to develop disruptive technologies to reduce cost and environmental footprint of our unconventional deposits and be competitive with the Middle East.
By Alberta Oil Staff
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