New Technology Magazine

Voices Of The Future: With Canada’s energy industry at a crossroads, we ponder the way forward

Pledges made by new governments in Ottawa and Alberta to reduce the province’s and Canada’s greenhouse gas (GHG) emissions footprint will shift the direction of the energy industry over the next 15 years. The world will be watching as the industry and the country transition to a carbon-constrained future. New Technology Magazine asked a selection of energy thought leaders for their responses to questions about our energy future.

(In addition to the three questions presented in the print version of this story, a forth question has been added to the online version. Answers to all four questions from Zhihong (John) Zhou, chief technical officer and executive director, Water and Environmental Management, Alberta Innovates—Energy and Environment Solutions, have also been added as a bonus to the online version. Respondents’ biographies follow the Q&A below.)

1. What is the biggest change in the energy industry that will come about in the next 10–15 years in order to meet federal and provincial emissions targets? How will they affect the oil and gas sector in particular?

Soheil Asgarpour: Canada has the largest hydrocarbon deposits in the world, and over 90 per cent of these are unconventional. They are among the most expensive to develop and produce globally. In addition, they have higher environmental impacts that add to their cost and have been an impediment to increasing access to the U.S. market. So what is the solution?

We need to use collaborative innovation to reduce development and production costs and also reduce the environmental footprint. At PTAC we have defied the conventional wisdom of economics that states there is a trade-off between financial and environmental performance. We have proven that we can reduce costs while reducing GHG emissions. I believe that in the next 15 years, we will see an increase in the development of collaborative technologies that will ultimately result in significant reductions in both costs and GHG emissions.

Chad Park: The biggest challenge in the energy industry will be the changing market conditions being brought about by radical advances in new, low-carbon energy technology and infrastructure worldwide. To compete and remain relevant, Alberta’s oil and gas sector will need to make a big push on “decarbonizing” production, ideally making the new 100-megatonne emissions cap for the oilsands almost inconsequential. Every dollar spent on innovation to reduce emissions will pay off in continued viability of assets and resources.

Dan Wicklum: The biggest change in the energy industry is already under way: collaboration. In the oilsands sector, producers know that operating in Canada requires a high standard of environmental care. They are committed to meeting that expectation through the development of new and innovative technologies. Now, through COSIA, they are innovating together.

COSIA’s member companies are competitors when it comes to attracting capital, staffing and developing energy products. But when it comes to accelerating environmental performance improvement, they recognize that they can all make better progress by sharing technology, information and ideas. You might be able to go more quickly over the very short term alone, but you can go much further together.

John Zhou: As a major exporter of energy products and in a world moving toward a decarbonized economy, Alberta needs to make certain our energy products are GHG competitive with emissions trending toward the lowest in the world. Strong leadership and new investments in next generation technologies and accelerated innovative approaches are required if we aspire to be international leaders. Specifically, we need to:

• Lower the GHG intensity of power generation:
• Lower the GHG emissions in fossil fuel production; and
• Improve energy efficiency across the entire economy.

These changes will green the electric grid and make the conventional oil and gas sector more efficient. Energy efficiency measures such as vent gas and fugitive gas capture will go a long way in meeting provincial emission targets (no federal targets available). These changes will pose further cost challenges for the oilsands sector. However, the integration between the power sector and oilsands sector (through cogeneration) could alleviate the situation.

Mike Hanna: Confronting the brutal facts, we as a species cannot afford to burn all known fossil fuel reserves. So optimizing which fossil fuel reserves are developed and where will likely become a dynamic geopolitical issue in the next 15 years. This process will be played out through economic and political brinksmanship. Alberta’s oil and gas sector internationally and at home rightly or wrongly has had its social licence threatened with suspension. Getting the oil and gas industry’s social licence back domestically is the first hurdle. Alberta’s oil and gas sector needs to be a valued partner, not a liability, in the effort to reduce greenhouse gases.

Richard Adamson: Major investment in variable renewables such as solar and wind (which is necessary under all scenarios) as well as increasing use of CO₂ capture technologies from both power and other industrial sectors will both be in the cards. Capture is one of the few technologies that can bolt-on to existing industrial processes and that is proven at full scale today. While the race is on toward cost reduction, technical feasibility is no longer in question. This will be the preferred path to extending the life of existing high-value legacy projects.

At the same time, enhanced oil recovery, or injection of CO₂ to produce oil from old plays, will become more desirable as the value of long-term storage of CO₂ helps compensate for depressed oil prices.

On the oilsands front, the drive will be toward smaller-scale, low-emissions modular production technologies as the risk associated with large capital/long payback projects is no longer acceptable.

Robert Fedosejevs: One of the biggest changes in the next 15 years will be a relentless, increasing pressure to move away from carbon-based energy systems. This will stimulate rapid deployment of alternative energy sources, such as renewables, and increased scrutiny of emissions from all energy sources. Oil sources with the largest GHG footprint and that are furthest from the markets, such as those of Alberta, will be at risk of being the first to see reduced demand.

At the same time, one forefront technology, fusion energy, will likely make breakthrough demonstrations of significant net energy production, both in the laser fusion experiments currently underway at the Lawrence Livermore National Laboratory in California and in the international magnetic fusion project, ITER, being built in Cadarache, France. Once demonstrated scientifically, these will be followed by the rapid development of demo reactors, with planning already under way today, and we could see the first fusion power to the grid in the period of 2040-50 or sooner, especially if more resources are applied.

2. Are there areas where Alberta has a natural advantage or could aim to become a world leader in the development of new technology solutions?

Richard Adamson: Some of the greatest near-term opportunities for Alberta will come from seizing the challenge of methane emissions monitoring, detection and mitigation. There is a great deal of opportunity for development in this area, especially with understanding fugitive emissions methane from production or abandoned wells, but also of volatiles from coal and oilsands mine faces.

Solutions to these challenges have global markets. Many of the worst culprits for venting and fugitive emissions are in countries that have less rigorous regulatory regimes than ours. That will have to change, so by immediately addressing these issues Canada has an opportunity to supply solutions to developing areas of the world.

Dan Wicklum: The COSIA model is a world first, both in terms of structure and the amount of innovation it has enabled. Collaboration works. It speeds innovation and accelerates technology development. Demonstrating that very large companies can collaborate together and with third parties is a contribution to global knowledge on how to speed innovation. We are leading the world in understanding how collaboration works and using it to speed innovation. This will serve us very well over time.

The reality is that Alberta is already leading in developing new technology—we are strong in energy efficiency, water treatment, minimizing land disturbance and speeding reclamation. At COSIA, we have staked out ground in the solution space to global climate change by launching the Carbon XPrize with a co-funder. This XPrize is synergistic with the Climate Change and Emissions Management Corporation (CCEMC) Grand Challenge, and offers a cash prize to innovators that can best change carbon, which is now seen as waste, into a valuable product. I find it very exciting to see Alberta leading the planet in this area of carbon conversion.

John Zhou: Alberta has a natural advantage in renewable energy. Southern Alberta has great renewable energy resources such as solar and wind. This region also has a modest potential in pumped hydro (energy storage). This combination is a natural advantage.

Alberta could aim to become a world leader in the development of new technology solutions in the areas of:

• Energy efficiency. This includes vent gas and fugitive gas emissions reduction, and cogeneration.
• Carbon capture, utilization and storage (CCUS). Alberta is leading globally in this area. CCEMC’s Grand Challenge and the COSIA XPrize are two leading programs in CO₂ utilization on the world stage, whereas Shell Quest is one of world’s first and largest CCS projects.
• Bio-waste to energy. AI-EES/The City of Edmonton/Enerkem organic waste to biofuel technology is great example.

Mike Hanna: Alberta has highly productive wind, solar and biofuels sources—among the top ten in the world. We need to make these opportunities viable economically and accommodate them within the regulatory structures, particularly the electrical energy system. Implementing feed-in tariffs that provide new energy sources access and stable prices for power sold into the electrical grid and removing regulatory barriers to distributed micro grids are essential first steps. If hydrocarbons could be separated into hydrogen for fuel and carbon for building materials such as carbon-fibre materials, our fossil fuels would become sustainable assets.

Robert Fedosejevs: Alberta has a large-scale need for clean thermal energy to extract underground oil reserves to make it competitive with world oil producers, particularly for moving from carbon-based fuels to carbon chemistry and other value-added applications. Fusion power plants could provide such heat, reducing the GHG footprint of Alberta oil. Another natural advantage is the knowledge base in our research institutions in the many areas required to pursue the development of fusion energy. These include advanced materials (from nano to macro), lasers and photonics, plasmas, large-scale modelling, controls, robotics and power systems. The strong connections to other fusion energy research groups around the world can be leveraged in order to launch an accelerated program of research and development within Alberta. Once a significant program is established to build a critical mass of expertise, the province could then position itself to be the home of the next generation laser fusion demo reactor engaging the significant engineering skills that already exist in the province.

Chad Park: One of my favourite quotes amidst all the applicants to the Energy Futures Lab Fellowship was on this topic and came from Justin Smith of the Calgary Chamber of Commerce. Justin said, “Alberta should be the place where the world’s energy future comes to audition.” I agree. A very wide range of new technology solutions could and should be developed and tested in Alberta.

With our tremendous renewable energy resources and the commitment to transition our electricity system off coal, Alberta should become a hot market for renewables. Our lack of provincial energy efficiency programs historically means there is a lot of low-hanging fruit on energy savings. A major push now on energy efficiency should create many opportunities for new business models in commercial, industrial and residential markets and ample export opportunities.

Perhaps most significantly, with Alberta’s rich endowment of hydrocarbon resources, we have a clear economic interest in finding innovations that will allow these resources to be developed and used in a low-emission future. I think Alberta should make a major focus on developing new technologies to convert CO₂ into valuable products, as in the COSIA Carbon XPrize and CCEMC’s Grand Challenge. These technologies are exciting to me, partly because they challenge the notion that hydrocarbons are inherently unsustainable.

The way we produce and use hydrocarbons today clearly presents major sustainability challenges. But hydrogen and carbon molecules surely will have an important role to play in a sustainable future. Alberta should lead the way in developing the technologies that eliminate emissions from the use of hydrocarbons and allow them to play a role in a circular economy. It may seem like a moonshot, but breakthrough on these technologies would be transformational for Alberta.

Soheil Asgarpour: Alberta has a strong infrastructure to provide solutions through innovation. While innovation without collaboration is possible, it is often a bumpy, costly and difficult road. An example of an existing infrastructure for developing collaborative technology is PTAC. Over the past two decades, we at PTAC have developed a unique innovation ecosystem with over 190 diverse organizations: producers, federal and provincial governments, regulatory bodies, technology providers, academic institutions, service and supply companies, inventors and transporters. We have formed numerous networks to articulate challenges and identify technology solutions and have launched hundreds of consortia that have taken conceptual technology solutions all the way to field demonstration and commercialization.

An example of such a project that has addressed environmental issues while increasing corporate profitability is REMVue Slipstream Technology, which captures vented light hydrocarbons from oil tanks, condensate tanks and other instrumentation and uses it as fuel in the field. Hundreds of Slipstream units are currently operational, generating $15 million/year from the engine fuel displaced. At the same time, the carbon offset of the technology thus far is equal to taking 150,000 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 annually while generating $160 million/year from engine fuel displacement. This is simply one of over 450 PTAC projects completed to date.

3. What are the biggest barriers to innovation? How can they be overcome?

John Zhou: The biggest barriers are the cost to develop and implement any new solutions. The reality is that advancing the use of renewables and reducing GHG emissions costs money.

To overcome these barriers, strong leadership is required. Albertans need to understand and accept that changes will have to be made, and the province will have to make the necessary investments and policy changes to transition our energy system.

Chad Park: Price signals were certainly a very big one. The new provincial climate policies will help create more financial incentive for innovation.

I also think that the structure of Alberta’s innovation system is a barrier. Innovation is not a linear process, as our institutions seem to suggest—where research and development happens at one end and commercialized products come out the other. Instead, innovation comes from the unpredictable blending of people, ideas and resources. We have pockets of this kind of ecosystem approach to innovation in the province, but I think we must be far more deliberate in building an innovation ecosystem where researchers and innovators in a range of fields interact with more intention, “backcasting” from a clear set of desired principle-based breakthrough outcomes.

Social innovation is often the missing piece. The cultural landscape shapes and reflects the public imagination and creates the boundary conditions for innovation. Other jurisdictions have done a far better job of linking social, technological and financial innovation, and there is great potential in this for Alberta.

Richard Adamson: At present we frame issues in terms of renewables versus non-renewables. That is using language from an earlier crisis—oil shortages of the 1970s—to address the much different issue of climate change mitigation.

Language matters. It will shape the solutions we consider and may cause bias against useful, innovative and cost-effective options.

To build policy that supports innovation we should take care to frame it in terms of the desired outcomes: How do we reduce GHG emissions? When we frame policy in terms of renewable portfolio standards, which are quite popular in the U.S., then we create a barrier to, for example, a new device that may convert natural gas to electricity and produce carbon-based building blocks rather than GHGs.

Robert Fedosejevs: One major barrier to innovation is the lack of a realistic assessment of the mix of total energy sources that will be required in order to achieve a net zero carbon energy economy this century. This has led to complacency in the development of really innovative energy technologies. While renewable sources can serve a significant role and be deployed in less densely populated regions of the world, there will still be a large need for central base-station power plants for heavy industry, for production of transportation fuel, for desalination and to power the hundred megacities of population 10 million to 100 million in the future.

Fusion energy offers one of the only sustainable, environmentally acceptable sources to fill this need. The other barrier is a lack of the high level of investment required to support the development of innovative rather than incremental energy solutions. The power industry falls way behind other technology sectors in terms of fraction of net profits reinvested in innovative research and development. Ideas, such as laser fusion energy, which already have a number of potentially viable options to pursue, are advancing at a limited pace today but could be accelerated significantly if funding were increased dramatically. If Alberta wants to be an energy leader in the future, it should start investing significantly in such future game-changing technologies.

Soheil Asgarpour: Small- and medium-sized enterprises (SMEs) play a major role in innovation and technology development in our industry; however, they face major challenges in terms of securing funding and sites for field testing technologies. PTAC provides up to 15 per cent of the cost of each project in seed money, with no expectation on IP ownership or future revenue from the project. This approach has enabled us to act as a neutral facilitator to negotiate IP ownership between funders and SMEs. Currently, we are also working with Venture Capitals to provide additional sources of funding to our SME partners. Since PTAC’s projects go through extensive review prior to producers agreeing to provide funding and test sites, Venture Capitals believe that by providing funding to PTAC projects, they can reduce their investment risk.

Mike Hanna: From IBM research (2010) of 1,000 leading transnational chief executive officers, corporate culture and changing mindsets and attitudes were by far the top two challenges. Three challenges were closely grouped in ranked order: complexity is underestimated, shortage of resources and lack of higher management commitment. How are these overcome? The right investment for the right impact, real insights and actions, better skills and change, and solid methods and benefits were the key elements for success.

There are no technical silver bullets to save the day. Just the high cost of doing nothing or business as usual. Leadership, employee engagement and honest timely communication are prerequisites for successful change. How do we become price setters that sell value-added renewable energy solutions in a world addicted to fossil fuels?

Dan Wicklum: The world is changing quickly. There is more information available than ever before. A big challenge is wading through information and understanding what is important and what is not. Doing this with other people or organizations in a collaborative way makes it even more complex. So I would say a barrier—or maybe more a great opportunity—is to continue to develop and refine mechanisms where people and organizations can work together. The more people you have working on an innovation problem the better, but getting them to work efficiently together and to focus is the difficult part. A key part of the solution is to articulate as clearly as possible what you are trying to accomplish. It takes time, but the more clearly you can define the problems you are trying to solve, the greater the chance of success.

COSIA’s members have begun to share their innovation needs publicly through our 13 Challenges. The COSIA Challenges were developed to provide focused, actionable descriptions of the innovation gaps as well as the desired outcomes without prescribing the means for reaching the outcomes, so as not to limit potential solutions. One of the most innovative aspects of the Challenges is that they have been written in such a way that innovators without any knowledge of the oilsands industry can understand them. Better collaboration mechanisms and better technical problem definitions are ways we can speed innovation.

4. The Energy Futures Lab asked, “How can Alberta’s strengths in today’s energy system serve as a platform for the transition to the energy system that the future requires of us?” How would you answer that question?

Robert Fedosejevs: Alberta has significant strength in large energy projects and engineering expertise in many key areas required for the energy industry. Alberta also has leading scientific expertise in important technology areas required for advanced new energy technologies. In particular, in laser fusion energy, the research group at the University of Alberta is the leading Canadian group, being a player since the 1970s, and is still recognized for its expertise by the leading groups in the world. With support, the current capability can be quickly augmented.

Dan Wicklum: Canada’s oilsands producers have always been leaders in innovation. Their success in developing the technologies necessary to extract bitumen in situ from oilsands in ways that are economically viable—which was simply not possible 15 years ago—is testament to that. With every new project, individual producers have found ways to increase the economic viability and environmental sustainability of their operations. Now, through COSIA, they are working together to ensure that oilsands are a responsible part of a cleaner global energy mix. Along the way, Alberta companies will continue to develop new technologies that are useful to the whole world, not just oilsands and not just the energy sector. Just as an example, our energy efficiency and water recycling technologies have the potential to help other sectors and other regions of the world be more sustainable.

Soheil Asgarpour: The global hydrocarbon sector is going through a major transformation, moving from a resource-based to a technology-driven sector. Disruptive technologies such as multistage hydraulic fracturing and SAGD have enabled us to produce from immense unconventional deposits and create tremendous value; however, their side effects have resulted in the reduction of oil and gas prices. Moving forward, the only practical solution is to build upon the current collaborative initiatives in our industry and drive additional progress through increased partnerships in order to increase technology development by leveraging financial support and expertise.

Richard Adamson: The key to manage the transition is to make maximum use of existing skill sets and resources while recognizing that this is a long-term, multi-generational journey, not a single-term policy problem. What is likely to be implemented at scale in the next 10–15 years will mostly be solutions that are commercial or near-commercial today.

(2015-25) In this time period, large-scale decarbonization can involve either deep storage or use of CO₂ for enhanced oil recovery.

(2015-50) Work continues on next-generation industrial processes, so by 2025 they begin displacing current processes at scale as they reach end of life. Processes to convert CO₂ to other products start significantly displacing earlier, high-emissions technologies that now require bolt-on capture.

(2015-2100) Fossil resources are no longer a fuel. They are a high-value feedstock for specific specialty products such as plastics and lubricants, and are increasingly replaced by agro- and biotechnologies.

Mike Hanna: Giving new meaning to the “six pack” thought experiment—we receive thousands of consumer goods in sea cans; can we repurpose these cans into essential services? Who could do what?

• Package and install: NAIT and SAIT could work out the technical requirements to make plug-and-play modules work together and could train a workforce.
• Fill the cans: The Leduc and Nisku, Alta. industrial complex can fabricate and modularize mechanical units.
• Enable transportation and distribution to market: Logistically, drilling rigs for North Sea drilling have been fabricated in Leduc and Nisku.
• Find and harness underground and geothermal resources: Directional drilling capabilities could be used to install geothermal technology under existing cities.
• Prepare specifications: Engineering, instrumentation and verification of effectiveness can be researched and documented at the universities of Alberta and Calgary.
• Solve an immediate need in a domestic market: Modular units can be field tested in the many remote aboriginal communities lacking these services.
• Use an underused resource: Alberta has qualified engineers, lawyers and doctors from every country in the world working in service jobs, because their credentials are not recognized.
• Grow high-trust relationships and partnerships: Re-employ them to act as a new product research, design, marketing and sales force.
• Provide access to purchasing decision makers: Transnational connections of corporations operating in Alberta can provide logistical support and access to decision makers.

An integrated energy solution using on-the-shelf parts is a faster, cheaper, immediate solution as an alternative to coal plants and transmission networks. It may even build some good will in addition to profits and an ongoing revenue stream through a franchise approach to essential services. This is a price setter’s perspective.

Chad Park: As we overcome the polarized “good guys and bad guys” debates that have dominated energy narratives, we can step into a radical middle, where people and organizations across Alberta play their respective parts in preparing for and shaping the energy transition. The capabilities and resources of the energy sector can be deployed and developed with an eye to Alberta’s long-term prosperity in a low-carbon energy future.

John Zhou: To answer this, we must first look at what the future requires of us in terms of our energy system. Although energy demand is declining in OECD countries and it is peaking in China, the overall global energy demand will continue to increase in decades to come. Therefore, the future energy system has to be more diverse, efficient and reliable. The use of renewables will have to increase. Carbon capture, utilization, and storage (CCUS) will still be an important tool for GHG reduction, especially in heavy oil and oilsands production. The option of nuclear must also be considered.

Alberta’s strengths in today’s energy system can serve as a platform for the transition to the future energy system in following ways:

• On electricity side, Alberta’s current wind energy production forms a very good base for future growth. Alberta has also started looking into energy storage technologies to enable more renewables in the system. With the right policy, renewable electricity can grow significantly.
• On vent gas and fugitive gas emission reductions, Alberta is leading globally. We know where to further reduce the vent gas and have gained experience in doing so.
• Alberta has a unique strength in cogeneration that can provide steam for bitumen recovery and low-emission electricity at the same time. Cogeneration has been operating in the oilsands sector for a few decades now. With the proper policy, its benefits can be greatly expanded.
• Alberta has been pursuing cost efficient and less energy intense carbon capture technologies for the oilsands for five years. Some of the technologies are showing good potential. Alberta is leading the world in carbon capture, utilization and storage, with emphasis on the oilsands sector.

Finally, Alberta’s oilsands industry has the innovation DNA. The innovative recovery processes being developed – such as solvent recovery and electromagnetic heating -- may lead to the low-carbon, low water and low-cost recovery of bitumen.

RESPONDENTS’ BIOGRAPHIES

 Richard Adamson, President, CMC Research Institutes

Adamson has facilitated the commercialization of innovative technologies for three decades. He has overseen the transition of CMC (formerly Carbon Management Canada) from an early-stage research network to a not-for-profit accelerating the movement of technologies into industry-ready solutions. He assembled the national team that wrote the Canadian chapter of the international Deep Decarbonization Pathways Project.

Soheil Asgarpour, President, Petroleum Technology Alliance Canada

Asgarpour has over 25 years of diversified technical, business and operations experience in the oil and gas industry. He previously served as president of Innovative Oil & Gas Inc. and business leader of Oil Sands Development for the Alberta Department of Energy and has published over 40 articles in technology and business journals.

Robert Fedosejevs, Professor of Engineering, University of Alberta

Fedosejevs has over 40 years’ experience in the development of laser systems and their applications in fusion energy research, the generation of XUV and soft x-ray radiation for lithography applications, micromachining, thin film coatings and studies in ultrafast phenomena. He is a member of the Alberta Council of Technologies and the Alberta/Canada Fusion Energy Alliance.

Mike Hanna, Managing Director, Synergy Canada

Hanna has 35 years’ experience of behind the scenes facilitating and training leaders, organizations and communities to grow strategies for working on complex interdisciplinary issues. He believes balancing the social, economic and environmental elements of situations often requires examining new and existing information from a different perspective to gain breakthrough insights.

Chad Park, Executive Director, The Natural Step Canada and Director of the Energy Futures Lab

Park writes and delivers presentations on a wide range of sustainability and social innovation topics, including collaborating for systems change, sustainability-driven innovation, organizational change and sustainability leadership. In addition to leading the development the Sustainability Transition Lab, he plays key roles with the Future Fit Business Benchmark, Housing Action Lab and Natural Capital Lab.

Dan Wicklum, Chief Executive, Canada’s Oil Sands Innovation Alliance

Wicklum oversees COSIA’s efforts to enable responsible and sustainable growth of the oilsands while delivering accelerated improvement in environmental performance through collaborative action and innovation. He has held senior positions for Environment Canada and Natural Resources Canada, and was a senior policy advisor to the federal minister of Natural Resources and the Government House Leader.

Zhihong (John) Zhou, chief technical officer and executive director, Water and Environmental Management, with Alberta Innovates—Energy and Environment Solutions

Zhou is responsible for the technology portfolio of the corporation and as executive director for Water and Environment his responsibilities include carbon capture and storage, integrated land management, and oilsands tailings and water management. Zhou spent most of his career with the Alberta Research Council. In 2008-2009 he initiated a 20-member international industry consortium, Materials and Reliability in Oil Sands, and was its founding director. He is also an inventor with seven U.S. patents, two of which led to multi-million dollar commercial success.

-NTM-

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