In a modern building on Research Road, the northern edge of the University of Calgary campus, the groves of academia meet the outside world. It’s a fitting location for Gushor Inc.

The firm is young, entrepreneurial and designed to make commercial items out of advanced and groundbreaking research done by teams of university professors and graduate students. The target market is the oil and gas industry. The chief executive officer unites business and scholarship. Steve Larter is also a U of C professor and scientific director of Carbon Management Canada, a new national “center of excellence” endowed with a $25-million federal government grant. IBM is far older and bigger but its immaculate downtown Calgary building, with its new age decor of rich symbols highlighted by Spartan brightness, gives visitors a feeling of entering a laboratory. Both IBM and Gushor work on technology aimed at improving efficiency, productivity and cleanliness.

“In our starting phase, Gushor is sort of an incubator of the university,” says Larter. “We get use of this facility, office and some lab space. The idea is that if it succeeds, we will be out in a proper commercial center.” He won 2009 kudos like the trophy for outstanding commercial achievement at the Alberta Science and Technology Awards and election as a fellow of Britain’s Royal Society. But Larter feels a little frustrated by slow market acceptance for some of his programs on the cutting edge of the emerging next generation in oil sands production, steam-assisted gravity drainage, or SAGD for short. It seems no one wants to be the first adopter.

“Our take on it is we need a revolution,” he says. “And it’s not just a technical revolution. It’s almost a social revolution in how we deploy technology, probably 50 per cent technical and 50 per cent structural.” He says this need is not necessarily restricted to Alberta’s economic mainstay. “But it’s most crucial in the energy industry. Carbon is on everyone’s mind and it looks like a pretty big problem. Even if we had technologies that could solve that problem today, if you look historically at the rate new technology replaces old, it won’t happen fast enough. If you want to meet our targets made today, you’ve got to replace technologies in 40 years. If you look in the past – coal replacing wood, oil replacing coal – to achieve 80 per cent adoption, you’re looking at the end of the 21st century.”

Larter’s ideas are advanced even for oil sands professionals, who take pride in calling their field the industry’s technical frontier. His research interests lie in the production of heavy oil, petroleum biodegradation and the deep biosphere. The recent focus of his research is in novel uses of petroleum reservoirs as in-situ or underground refineries, where native microorganisms can be harnessed to speed up natural processes of oil and gas formation to recover as methane or hydrogen rather than heavy oil. The ultimate goal of such visionary work is emission-free energy production from bitumen deposits.

“We’ve got these complex reservoirs that to get anything out of is an achievement,” he says. “And, basically, SAGD today doesn’t look that different from 1981 [when the concept took form]. Why isn’t it different? Why don’t we have 20, 30 or 50 technologies competing for the one that’s going to give us zero emissions? In that sense, you have to say there has probably been a market failure of innovation in the energy industry.”

Larter blames some of the lack of progress on the competitive intellectual property (IP) environment of oil patch research. “The patent system tends to force everybody into kind of a monopoly position, yet they all face the same problems,” he says. “They’ve all got complex reservoirs and know it is a difficult thing to do. And yet they’re all trying to do it by themselves.” He contrasts the prevailing regime to other industries like pharmaceuticals, which use patent pools to seek common objectives. “And with software there are no patents really – and people still make a lot of money. I think the IP model in the energy industry is particularly destructive. Everybody’s got their secret and no one’s sharing.”

He reckons the oil sands are ideal for a new IP regime because there are no exploration results to hide. The field is all about production and technology. He credits the surviving streak of secrecy to the industry’s roots as a hotly competitive hunt for the buried treasure of naturally flowing oil and gas reservoirs.

Larter likes the software industry model. “There’s a famous quote from Bill Gates to the effect that if in the early stages of the software industry we’d had to deal with patents, the industry would be at a complete standstill. They just used copyright and went to the do-it-faster-than-anybody else model. So you’ve had this explosion of technology, this explosion of competition that I don’t see in the energy industry.”

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