|
Momentum is building in
Canada’s heavy oil and oilsands sector
towards a new reality where project owners are able to work together to
achieve successes they could have alone either as quickly or as completely.
Make no mistake, competition in the sector is fierce, but not in all areas of
development—companies are finding that in many cases it makes more
sense to collaborate than to fight.
“The idea has
really caught fire,” says Greg Stringham,
vice-president of oilsands and markets with the
Canadian Association of Petroleum Producers (CAPP). “This is the first
time [industry has] come together in such a collaborative manner.”
Canada’s petroleum
industry has long been an alphabet soup of industry associations and other
forms of joint ventures. But new developments such as the 2010 creation of
both the Oil Sands Tailings Consortium (OSTC) and the Oil Sands Leadership
Initiative (OSLI) may represent the beginning of an unstoppable trend.
Beyond the OSTC and OSLI,
many technical organizations help contribute to industry innovation,
including the Canadian Oil Sands Network for Research and Development
(CONRAD) and Petroleum Technology Alliance Canada (PTAC). Indeed, OSLI
members support both PTAC and CONRAD. But the newer groups are designed to
have a wider scope and faster uptake.
Environmental consortia
like OSLI and the OSTC are focused on the idea that the industry should share
its resources in those technical areas in which everybody can benefit from
shared innovations.
The OSTC includes all the
major oilsands mining companies: Canadian Natural
Resources Limited, Imperial Oil Limited, Shell Canada, Suncor Energy Inc., Syncrude Canada Ltd., Teck Resouces and Total E&P Canada Ltd. Stringham says that the group “Brings together all
of the stakeholders that are involved in tailings through collaboration,
breaks down the corporate barriers and enables companies to work together to
find solutions” to a difficult environmental problem.
Similarly, OSLI is based
on the assertion that the industry should only compete in areas where it
makes economic sense to compete.
A collaborative network
that includes ConocoPhillips Canada, Nexen Inc.,
Shell, Statoil Canada, Suncor and Total, OSLI has four main areas of focus:
water management, technology breakthroughs, sustainable communities and land
stewardship. The ultimate beneficiaries of the approach are local communities
and the air, water and land affected by oilsands
development and production.
One of the key elements
of OSLI is that it is designed to reduce cycle times and paperwork. Companies
can share research without first signing joint venture agreements, for
example. Also, it reportedly honours each
company’s intellectual property but honours
rules about non-competitive behaviour.
The Public Relations Factor
It’s important to
distinguish these new collaborative organizations from others—which are
many—that exist. For example, the In Situ Oil Sands Alliance (IOSA)
describes itself as having been formed in 2007 to address
“Geopolitical, economic, ecological, infrastructure and social
realities” facing in situ oilsands producers.
Largely the responsibility rests on CAPP’s shoulders to manage oilsands communications.
By contrast, OSTC
executive director Alan Fair says his organization and OSLI do very little in
terms of communication with the public. “It is quite important to keep
[technical] organizations separate from the ones that have communication as
their focus. [Our] purpose is to raise the environmental bar for the
industry.”
From his perspective at
CAPP, Stringham recognizes the importance of both
functions. “We understand how foundational environmental performance
is. It isn’t only about perception. It’s also about the
performance aspects of the development of the oilsands.”
For its part, in 2010
CAPP launched a program called Responsible Canadian Energy based on
transparent communication of performance data from energy production
operations across the country. Stringham says that
the issue isn’t really about collaboration or competition. The industry
needs both.
“In downhole and extraction technologies and everything else
that’s involved with taking oil out of the ground, the competition is
intense. However in the environment, we don’t compete. By working
together we can make sure that everybody is using the latest and the best
environmental technologies…Environmental issues are not a competitive
concern, but something that needs to be worked on collaboratively.”
For example, as Fair
points out, there really aren’t any serious issues around land
ownership in the oilsands sector anymore. For the
most part, land ownership has already been established; properties
don’t often change hands.
“Now the public has
an expectation that the companies will work together to meet some of these
environmental challenges. From a business perspective, any time you can get a
group of companies to work together, you eliminate duplication of effort and
the industry as a whole becomes much more efficient.”
This is particularly
important for an industry that faces not only a volatile market environment
and uncertain global outlook, but also an increasing level of hyper-scrutiny
from environmental groups.
Role Reversals
In a very real sense, the
industry’s use of these technical consortia is a leveraging of one of
the great traditions of the oilsands sector. The
leading edge of good oilsands development has
always been science, and some of the most significant developments have been
the result of collaborative groups.
One of the first
important investigators of the oilsands industry,
about 100 years ago, was a scientist employed by the Geological Survey of
Canada named Sidney Ells. In the 1920s came the Alberta Research
Council’s Karl Clark, whose hot water extraction process fundamentally
transformed the sector.
The continual presence of
provincial funding for basic oilsands
research--even during the Great Depression, when Alberta defaulted on its
debt--has played a vital role in helping make the industry viable.
After the Geological
Survey came the Alberta Research Council, which was followed 50 years later
by the Alberta Oil Sands Technology and Research Authority (AOSTRA). AOSTRA
used government funding to encourage the industry to invest in the oilsands. According to industry consultant Bob Taylor, it
“was the major catalyst in leapfrogging oilsands
development forward.” AOSTRA’s main focus was to make in situ
resources both technically and economically recoverable. More than $1billion
of spending in field pilots resulted, and AOSTRA activity led directly to the
definitive proof of steam assisted gravity drainage (SAGD).
Fast forward to the
present. One of the present iterations of public investment in the industry
is Alberta Innovates -Technology Futures. This Crown corporation trend
incorporates the 90-year-old Alberta Research Council and plays an important
role in moving technologies along the development path. Another is Alberta
Innovates – Energy and Environmental Solutions, another highly
respected Crown Corporation led by president Eddy Isaacs. It’s an
important source of expertise for the sector, with a tremendous reservoir of
expertise and experience – for example, senior advisor Duke du Plessis began research on the oilsands
more than 50 years ago.
But as it applies to
energy, the Alberta Innovates initiatives are relatively small. This raises
the question of whether the province – the owner of the resource
– is doing enough to encourage the development of new oilsands technologies. Put another way, in recent years
there has been no AOSTRA-like leadership in advancing oilsands
related technological innovation in the province.
AOSTRA 2 and NASA II?
Last May, the Premier's
Council for Economic Strategy recognized this issue, identifying it in a
report titled Shaping Alberta's Future. The group proposed creating
the Global Centre for Energy, which would “require collaboration among
industry, researchers and government,” the report proclaims, adding
that “To ensure Alberta realizes the full potential of its energy
resources over the decades to come, it is time to launch another large-scale
collaborative effort like AOSTRA and make it a strategic priority for the
province.”
The authors suggested a
program that is “a crucible for accelerating innovation to transform
environmental and operational performance. Design it to be a catalyst and
funder of collaborative research, a meeting place of diverse interests, and a
showcase of achievement. Make Alberta internationally respected for
pioneering research, with authoritative evidence and industrial-strength
solutions.”
Unfortunately, the
Premier’s Council on Economic Strategy now reports to the Cabinet
Office rather than the Premier's Office, Perhaps this explains why there are
no bold initiatives in sight.
Doug James and Bob
Taylor--the main forces behind the Energy Futures Network, a think tank--have
put forward to both government and industry the notion that the province
needs to bring more resources to bear on the oilsands.
In a paper titled AOSTRA 2, they make a strong case for a new
collaborative industry/government research and development program.
“This must be a private-public initiative from the beginning,”
they argue, “but it would be best if it were industry led.”
The paper is full of
ideas and principles, but the authors’ main concern is that
“multiple technologies needed to be developed in parallel, both to
share cost and risk and to move more quickly.” They propose an
organization that sets the goal but doesn’t predetermine how – a
bit like NASA’s approach to landing on the moon.
On the issue of NASA,
perhaps it’s best to leave the last word to Preston Manning –
head of the Manning Foundation for Building Democracy. In a recent
presentation to an OSLI “Big Ideas” forum, Manning proposed the
notion of collaboration on a continental scale. “Today, both Canada and
the US have a somewhat different security concern – the need to reduce
North American dependence on offshore petroleum resources and increase the
availability and delivery of North American sources energy. So why not agree
on sustainable continental energy security as a mutual goal and establish a
similar organization to NASA – NASA II, where NASA stands for the North
America Sustainability Agency – to bring large-scale public and private
resources and scientific expertise in both our countries to bear on the goal
of sustainable continental energy security?”
Peter McKenzie-Brown
Language Instinct
|
