Why Canada’s energy sector lags behind in research, development money

Underinvestment in R&D is as Canadian as maple syrup. So whose job is it to invest in new technology anyway?

March 10, 2015

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bigpic_story01It’s easy to forget sometimes, given all the rhetorical mud that gets thrown in its direction, but the oil sands began as a research project – and one of the most ambitious in Canadian history. Syncrude Canada was founded 50 years ago as a research consortium that included the provincial and federal governments, and it was tasked with finding a way to turn the bituminous sands around Fort McMurray into a commercially viable project. To say that project was a success would be something of an understatement.

But Canada’s energy sector is falling behind when it comes to the amount of money it’s investing in research and development. This is not a problem that’s unique to the energy sector, mind you, as most sectors of the Canadian economy tend to under-invest in research and development compared to their global peers. That said, as a high-cost producer in what is, for the foreseeable future at least, a low-cost world, our energy sector needs to make the necessary investments in the kinds of technology that can improve our competitiveness.

bigpic_story02That might be a tough sell. The energy sector already has a reputation for being risk averse, and it stands to reason that the inclination will only be exacerbated in the current environment where many companies are more focused on survival than success. With low revenues now testing budgets throughout the industry, it’s entirely likely that R&D levels will remain below where they need to be. But here’s the good news: there’s a growing community of accelerators, incubators and government-funded competitions that are stepping forward and meeting the challenge of de-risking technologies for the energy sector.

According to Kevin Frankowski, the executive-in-residence at Innovate Calgary and program director for Kinetica Ventures, that’s as it should be. “The core business of the energy companies is not to develop technology; it’s to develop resources and to produce those resources and get them to market. Asking them to take on technology de-risking is, I think, unrealistic – and it’s unfair. Other entities such as Innovate Calgary and Kinetica can help to do that, along with other players in the innovation ecosystem. We have a strong innovation ecosystem in Alberta, and it’s a matter of getting the right elements of that ecosystem working together in the right way.” Will it happen? If we want to be able to weather the next downturn in commodity prices better than we’re managing the current one, it pretty much has to.

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2 Responses to “Why Canada’s energy sector lags behind in research, development money”

  1. Nick says:

    The oil sands development begins as a research project supported by government decades ago and the progress is visible. However the technological progress jumped when the government was able to coordinate and fund the researches of a bright idea of twin wells and SAGD that Dr. Roger Butlet had disclosed for many years. His technological concept was proved right, but the technology was advanced for the time, because the conventional oil recovery were abundant and very cheep, and this is even true for today.
    The years 1996-2000 not only were intensive on further researches of his idea, but the oil market start being more favorable to developed further the concept on field pilots, and the insitu oil recovery of bitumen attract more and more investors, who understood the new technological concept of SAGD to develop the reserves already discovered the Bitumen, rather than risk the investment on explorations.
    Many oil operators, understood that the new discoveries by explorations were becoming more risky business, and they were attracted to further develop the bitumen which are already discovered, but have only a technological risk, which is lower than the high risk on exploration.
    Today the SAGD concept is accepted by industry, and thousands of jobs are created, and hundred thousand barrels bitumen are produced every day to the economy.
    Different research programs are in place, and for many years, or decades, since the Butler concept was proved. The industry took the new technology for granted, and the field practice, and the un-interrupted researches from government funded institutions and sometimes and from industry, other successes are achieved on researches and on applications.
    The achievements are not small, however the technological progress have not seen the second jump, and make the technology of insitu oil recovery from Alberta Bitumen resource and economical and competitive technology. The heavy oil recovery technology cannot on these moments compete with cheep oil recovery from conventional oil reservoirs.
    There are ways to further improve the heavy oil recovery, and compete with other oil recovery on conventional oil recovery. To my opinion, this is the duty of the oil operators and the researched centers funded by government or by industry. The oil operators take the permissions to develop the resources on rationale and effective way, and when these companies use and the monetary funds of many shareholders, their responsibility is even higher, to use these monetary funds effectively, and give the investors the gain promised.
    This cannot be achieved only using old technologies, but this need sound researches, and not only but this need to be implemented properly on the field.
    There is a lot potential here in Alberta and elsewhere, on further developing the conventional oil reservoirs, and the heavy oil reservoirs.
    The technologies that Calgary Innovate has, may contribute on this, or other technologies kept from individuals as know-how and are looking for cooperation, may develop faster, when the Calgary Innovate-Industry-Individuals will find each other.
    Other than these, the government interested on investing on researches and on better developing the resources, must rise funds from companies who have licensed the resources, other ways the technology will be underfunded and will develop very slowly.
    There are ways to work better, test the concepts which can be disclosed to those who are interested on further improvements on technologies. The oil operators are for producing the product and deliver it to the market, but these operators and all the investors, must develop these resources scientifically, where the government will “guide” them to the best technologies available.