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INNOVATIONPOLICYWHITEPAPERSERIES2017-04
DIGITALIZINGEXTRACTIVEINDUSTRIES: STATE-OF-THE-ARTTOTHEART-OF-THE-POSSIBLE:
OPPORTUNITIESANDCHALLENGESFORCANADA
RayGosineandPeterWarrian
1
TableofContents
AbouttheAuthors...........................................................................................................................2
Glossary...........................................................................................................................................3
ExecutiveSummary.........................................................................................................................5
(1.0)BriefIntroductiontoDigitalization.........................................................................................8
(2.0)Canada’sExtractiveIndustriesandDigitalization...................................................................8
(3.0)MiningContext.....................................................................................................................14
(3.1)DigitalizationinMining.....................................................................................................17
(4.0)OilandGasContext..............................................................................................................20
(4.1)DigitalizationinOilandGas..............................................................................................23
(5.0)OtherConsiderations............................................................................................................28
(5.1)RegulationandTechnologicalProgress............................................................................28
(5.2)Technology,EmploymentImpacts,andEducationandTraining......................................32
(5.3)TechnologyfromOtherSectors........................................................................................40
(5.4)TheRoleofSmallandMedium-sizedEnterprises(SMEs).................................................42
(5.5)OtherApproachestoInnovation......................................................................................43
(6.0)MiningandOilandGas:DigitalSynergy...............................................................................47
(7.0)ConclusionsandNextSteps..................................................................................................49
(8.0)References............................................................................................................................51
Pleasecitethisdocumentas:
Gosine,R.,&Warrian,P.(2017).Digitalizingextractiveindustries:thestate-of-the-arttotheart-of-the-possible.MunkSchoolofGlobalAffairsInnovationPolicyLabWhitePaperSeries2017-004.RetrievedfromInnovationPolicyLabWebSite:https://munkschool.utoronto.ca/ipl/publications/type/white-paper-series/
2
AbouttheAuthors
Dr.RayGosineisaVisitingProfessorattheMunkSchoolofGlobalAffairs,Universityof
Toronto,andaProfessorofEngineering,MemorialUniversityofNewfoundland.Hehas
heldvariousseniorrolesatMemorialUniversity,includingVice-PresidentResearch(pro
tempore),DeanofEngineering,andtheJ.I.Clark/C-COREChairofIntelligentSystemsfor
OperationsinHarshEnvironments.HealsoheldanNSERCChairinIndustrial
AutomationattheUniversityofBritishColumbia.Dr.GosineisaFellowoftheCanadian
AcademyofEngineering(FCAE)andaFellowofEngineersCanada(FEC).
Dr.Gosine’sresearchisintheareasofintelligentsystems,robotics,andautomation
withaparticularinterestintheapplicationsofthesetechnologiestonaturalresource
industries.Heisinterestedinthebroaderimplicationsofadvancedtechnologies,andhe
recentlychairedaPublicReviewPanel(www.nlhfrp.ca)thatconsideredthescientific,
technical,socio-economic,publicpolicy,regulatory,environmental,andpublichealth
issuesassociatedwithunconventionaloilandgasdevelopment(i.e.,fracking).
Dr.PeterWarrianisaSeniorResearchFellowattheMunkSchoolofGlobalAffairs,
UniversityofToronto.HeisCanada’sleadingacademicexpertonthesteelindustry,and
hewasformerlytheResearchDirectoroftheUnitedSteelworkersofAmericaandthe
ChiefEconomistoftheProvinceofOntario.
Dr.Warrian’scurrentresearchisonknowledgenetworks,supplychains,anddigital
manufacturing.AsamemberoftheInnovationSystemsResearchNetwork(ISRN),
fundedbytheSocialSciencesandHumanitiesResearchCouncilofCanada(SSHRC),he
hasworkedontheinterfacebetweenthesteelindustryandtheautoindustry,
particularlyintheareaoflightweightmaterialsandtheinteractionofsoftwareand
advancedmaterials.
3
Glossary(AdaptedfromWikipediaandtheGartnerITGlossary)
Analytics:thediscovery,interpretation,andcommunicationofmeaningfulpatternsin
data
Automation:theuseofcomputer-controlledsystemstooperateequipmentwith
minimalorreducedhumanintervention
AutomationAnxiety:fearabouttheimpactsofautomationonpeoples’workanddaily
life,includingfearaboutthesafetyofautomationtechnologyanditscapacitytoreplace
humanlabourandexpertise
BigData:largeand/orcomplexdatasetsthatcannotbeprocessedusingtraditionaldata
processingsoftware
ArtificialIntelligence(AI):intelligenceexhibitedbymachinestomimicthecognitive
functionsthathumansassociatewithotherhumanminds,suchaslearningand
problem-solving
AutonomousVehicles:avehiclethatcandriveitselfusingvariousdigitaltechnologiesforrouteplanning,navigation,environmentalsensing,andobstacleavoidance
DARPA:DefenseAdvancedProjectsResearchAgencyintheUnitedStates
DigitalTechnology:computerizeddevices,systems,andprocesses
Digitalization:ongoingadoptionofdigitaltechnologiesacrosssociety
DisruptiveTechnology:technologytypicallyproducedbyoutsidersandentrepreneursratherthanmarket-leadingcompaniesthatcreatesanewmarketandvaluenetwork
andeventuallydisruptsanexistingmarketandvaluenetwork,displacingestablished
marketleadingfirms,products,andalliances
E&P:explorationandproductionwithintheoilandgasindustry
GeomaticSurvey:usinginstrumentationtogathergeographicorspatiallyreferenced
information
GrossDomesticProduct(GDP):thetotalvalueofallgoodsandservicesproducedwithinacountryoraregion,whichgivesanindicationofthesizeofaneconomy
Human-computerInteraction:theinterfacebetweenpeople(users)andcomputers
Human-robotInteraction:theinterfacebetweenpeople(users)androbotsIndustry4.0:thecurrenttrendofautomationanddigitalizationacrossindustries
Innovation:theapplicationofbettersolutionstomeetnewrequirements,unarticulated
needs,orexistingmarketneedsthroughmore-effectiveproducts,processes,services,
technologies,orbusinessmodels
IntelligentSystems:aphysicalsystemthatincorporatesartificialintelligenceintoits
function
4
InternetofThings(IoT):thenetworkofphysicaldevices,vehicles,andotheritems
embeddedwithelectronics,software,sensors,andactuatorsthatenabletheseobjects
tocollectandexchangedata
LHD:Load-Haul-Dumpminingvehiclethatissimilartoafront-endloader
Metocean:thecombinationofwind,wave,andclimateconditions
MobileComputing:human–computerinteractionusingacomputertransportedduring
normalusage
NSERC:NaturalSciencesandEngineeringResearchCouncilwhichfundsacademic
researchinCanada
PeakOilDemand:correspondstothetimewhentheglobaldemandforoilreachesits
maximumlevel,afterwhichdemanddecreases
Production:theprocessofextractingmineralsandoilandgasresources
R&D:ResearchandDevelopment
RemotelyOperatedVehicle(ROV):atetheredunderwatermobiledevicethatis
unoccupied,highlymaneuverable,andoperatedbyacrewaboardavessel
Robots:computer-programmablemachinesthatcantaketheplace,partiallyorfully,of
humanstocarryoutacomplexseriesofactionsautomatically
SeismicSurvey:generatingsoundwavesandmeasuringtheirreflectionsfromwithin
thesurfaceoftheearthinordertobuildupanimageofthesubsurface
SmallandMedium-sizedEnterprise(SME):inCanadaasmallormedium-sized
enterpriseisabusinessthathaslessthan500employees,with98%ofSMEshaving
fewerthan100employees
SupplyChain:systemoforganizations,people,activities,information,andresources
involvedinmovingaproductorservicefromsuppliertocustomer
Tele-operation:operationofasystemormachine,typicallyarobot,atadistance
Transportation-as-a-Service(TaaS):describesashiftawayfrompersonallyowned
modesoftransportationandtowardsmobilitysolutionsthatareconsumedasaservice-
alsoknownasMobility-as-a-Service(MaaS)
UpstreamOilandGasIndustry:companiesthatsearchforpotentialundergroundor
underwatercrudeoilandnaturalgasfields,drillexploratorywells,andsubsequently
drillandoperatethewellsthatrecoverandbringthecrudeoilorrawnaturalgastothe
surface
ValueChain:setofactivitiesthatafirmoperatinginaspecificindustryperformsin
ordertodeliveravaluableproductorserviceforthemarket
WearableTechnology:digitaltechnologywornbyahumaninordertocarryouta
particularfunction,suchastocollectdataorprovidesensoryaugmentation
5
ExecutiveSummary
Industriesbasedonextractiveresources,primarilymineralsandoilandgasresources,
areimportanttotheCanadianeconomyintermsoftheircontributionstoemployment,
grossdomesticproduct(GDP),capitalexpenditure,construction-relatedinvestment,
revenuestogovernments,exportvalue,andinvestmentinCanadiancompanies.
Extractivesindustriesaretrulypan-Canadianandimportantfrombothanational
perspectiveandaregionalperspective,especiallyforresourceregions.Thecompanies
aremultinationalinscope,withglobalworkforces,supplychains,andconsumersof
theircommodities.
Asmoreaccessibleresourcesarefullyexploited,therearetechnicalandscientific
challengestobeovercometodigdeeperorextractlowergrademineralsandtodrillin
moreremoteorchallengingareastoproduceoilandgas.Therearealsochallenges
arisingfromthecomplexityoftheunderlyingeconomicsofextractiveindustries,which
areexacerbatedbyprotractedcommoditypricevariability,interspersedwithoccasional
andsurprisingpriceshocks.Thesedifficulteconomicsarefurthercompoundedbythe
increasingchallengesresultingfromsatisfyingtheperceivedandrealentitlementsof
variousstakeholders.Thereisarequirementtoachieveandmaintainwin-win-win
relationshipsamongcommunities,governments,andindustrystakeholders,allofwhich
are`invested’inresourcedevelopmentprojectsandhaveincreasedexpectationswith
respecttoreturns.
Extractiveindustries,likemanyothersectorsoftheeconomy,willbesignificantly
impactedbydisruptivedigitaltechnologies,variouslyreferredtoasdigitalization,
Industry4.0,andtheFourthIndustrialRevolution.Thesetechnologiesincludeadvanced
robotics,bigdataandanalytics,artificialintelligence,mobilecomputing,wearable
technology,internetofthings(IoT),andautonomousandnear-autonomousvehicles.
Whilethereiswidespreadbeliefthatdigitalizationwilltransformextractiveindustries,
thetimelinesandconsequencesforsuchatransformationarelessclear.
6
Lookingforward,extractiveindustriesoperatinginCanadamustaddresschallengesby
developing,adopting,integrating,andapplyingrecentandemergingdigital
technologies.Itisonlythroughinnovationthatthechallengesexperiencedbyextractive
industriesinrecentyears,andwhichareexpectedtopersistorworsenintothefuture,
canbeaddressedsuccessfully.Inadditiontohelpingtoaddresschallenges,anembrace
ofdigitaltechnologycouldleadtonewandcurrentlyunknownopportunities.
Forbothminingandoilandgascompanies,thefuturecouldincludeheavilydigitalized
assets(i.e.,oilrigs,miningequipment),capableofhighlevelsofautonomyandinter-
assetcooperation,operatingwithinchallengingnaturalenvironments(e.g.,adeepor
remotemineorfaroffshoreoilfield)monitoredusingadvancedembeddedandremote
intelligentsensortechnology.Thesedigitalizedassetsandintelligentsensor
technologiescouldbeconnectedviainnovativecommunicationsystemstodigital
enterprises(i.e.,missioncontrolcentresandotherremotecentresofexcellence),where
expertswouldmonitorproductionoperationsremotely,interactviatechnologywitha
limitednumberoffieldworkersatproductionsites,andperformcomputationalanalysis
ondatacollectedfromremoteoperationstooptimizeproduction,equipment
maintenance,andassetutilization,whilesimultaneouslyensuringregulatory
compliance.Thedigitalenterprisecouldbepartofadigitalworldinwhichtechnology
wouldbedeployedtoimprovesupplychainmanagementandresourcemanagement,to
balancesupplyanddemandforproduct,tomanagecontractingamongprojectpartners,
andtohelpsecureandmaintainpublicconfidence.
Globally,digitaltechnologywilltransformextractiveindustries.ForCanada,this
providesanopportunitytoleadindevelopingandcommercializingtheenabling
technologies,inintegratingthesetechnologiesintoglobaloperations,andin
consideringthebroadersocio-economicandregulatoryconsequencesofdigitalization
oftheseextractiveindustries.
7
DigitalizationofextractiveindustriesinCanadawillposeopportunitiesandchallenges
foradiverserangeofstakeholders.Inadditiontotheoperatingandsupplyandservice
companies,individualsandcommunitieswillbeaffectedbydigitalization,aswill
governmentsandinstitutions(e.g.,educationsystems,regionaldevelopment
organizations,unions,andregulators).Successfullyaddressingtheopportunitiesand
challengeswillrequireearlyandeffectiveengagementofallstakeholdersthatis
informedbyrealisticdigitalizationscenarios,timeframesfortheirimplementation,and
assessmentofthebroaderissuesandimpacts.
8
(1.0)BriefIntroductiontoDigitalization
Disruptivedigitaltechnologies,includingadvancedrobotics,artificialintelligence,
mobilecomputing,internetofthings(IoT),andautonomousandnear-autonomous
vehicles,wereassessedtobeamongthetop12emergingtechnologiesthatare
expectedtotransformpeoples’livesandthenatureofwork(Manyika,Chui,Bughin,
Dobbs,Bisson,&Marrs,2013).Variouslyreferredtoasdigitalization,Industry4.0,and
theFourthIndustrialRevolution,suchtechnologieswilllikelybeubiquitous,with
applicationsacrossindustrialandconsumermarkets(BDC,2017).
Asdigitalizationisadvancedandappliedacrossindustries,thedevelopmentofthese
digitaltechnologieswill,bynecessity,includediverseplayers,manyofwhichhavenot
traditionallybeenpartofthesupplychainforlargeindustry.Thecompetitiveadvantage
offirms“mighterodeorbeenhancedadecadefromnowbyemergingtechnologies—
howtechnologiesmightbringthemnewcustomersorforcethemtodefendtheir
existingbasesorinspirethemtoinventnewstrategies”(Manyika,Chui,Bughin,Dobbs,
Bisson,&Marrs,2013).ThisistrueforCanada’snaturalresourceindustries,in
particular`extractive’industriesbasedonmineralandoilandgasresources.
(2.0)Canada’sExtractiveIndustriesandDigitalization
Canada’snaturalresourceindustriesareimportanttotheCanadianeconomyintermsof
theircontributionstoemployment,grossdomesticproduct(GDP),capitalexpenditure,
construction-relatedinvestment,revenuestogovernments,exportvalue,and
investmentinCanadiancompanies(NRCan,2017a).Furthermore,theyhelpCanada
contributetowardmeetingtheprojectedglobaldemandforenergy.Onanannual
basis,theeconomicimpactsofnaturalresourceindustriesincludeapproximately1.75
milliondirectandindirectjobs(~11%ofnationalemployment),16%ofGDP,38%of
non-residentialcapitalinvestment,$25billioningovernmentrevenues,$201billionin
9
exportvalue,and$582billioninpubliclytradedcompanyvalue.Themajorityofthese
contributionsareassociatedwithdevelopmentofmineralandoilandgasresources.
AccordingtoStatisticsCanada,“mining,quarrying,andoilandgasextraction”are
amongthetopcontributorstoCanada’sGDP,withacombinedannualcontributionof
approximately$150billionandalmost25%growthinthe12monthspriortoMay2017
(StatisticsCanada,2017a).In2016,therewereapproximately260,000peopledirectly
employedintheseextractiveindustries(StatisticsCanada,2017b).Thereismineral
productioninallprovincesandterritoriesofCanada,withOntario,Quebec,andBritish
Columbialeadingintermsofproductionvalue,followedbySaskatchewan,Alberta,and
NewfoundlandandLabrador(NRCan,2017b).Thereisoilandgasproductioninseven
Canadianprovinces,includingNewfoundlandandLabrador,NovaScotia,New
Brunswick,Manitoba,Saskatchewan,Alberta,andBritishColumbia,withprospectsfor
resourcesinNorthernCanada,Quebec,andPrinceEdwardIsland(CAPP,2017a).These
industriesaretrulypan-Canadianandimportantfrombothanationalperspectiveanda
regionalperspective,especiallyforresourceregions.Thecompanies,however,are
multinationalinscope,withglobalworkforces,supplychains,andconsumersoftheir
commodities.
Whileitisimportanttorecognizethesignificanceofextractiveindustriestoallregions
ofCanada,itisequallyimportanttoappreciatethatthefutureoftheseindustries
entailsconsiderableuncertainty.Asmoreaccessibleresourcesarefullyexploited,there
aretechnicalandscientificchallengestobeovercometodigdeeperorextractlower
grademineralsandtodrillinmoreremoteorchallengingareastoproduceoilandgas.
Therearealsochallengesarisingfromthecomplexityoftheunderlyingeconomicsof
extractiveindustries,whichareexacerbatedbyprotractedcommoditypricevariability,
interspersedwithoccasionalandsurprisingpriceshocks.Thesedifficulteconomicsare
furthercompoundedbytheincreasingchallengesresultingfromsatisfyingtheperceived
andrealentitlementsofvariousstakeholders.Thereisarequirementtoachieveand
10
maintainwin-win-winrelationshipsamongcommunities,governments,andindustry
stakeholders,allofwhichare`invested’inresourcedevelopmentprojectsandhave
increasedexpectationswithrespecttoreturns.
Ingeneral,miningandoilandgascompanieshaveadoptedaconservativeapproachto
investinginresearchanddevelopment(R&D)inCanadacomparedwithotherindustrial
sectors(ResearchInfosource,2017a).Bywayofillustration,withtheexceptionof
CanadianNaturalResourcesLimited,therewerenooilandgasorminingcompaniesin
thetop15corporateR&DspendersinCanadain2016.Inaddition,foralloilandgas
andminingcompanies,theR&Dexpendituresasapercentageoftotalrevenueswere
amongthelowestofanyindustries.Inmanycases,theirR&Dexpenditureswerelower
byafactorof10ormore.ItisimportanttoappreciatethatweakR&Dinvestmentby
extractiveindustriesinCanadapredatesthecurrentdepressionincommodityprices.In
fact,thepositionofextractiveindustriesamongCanada’scorporateR&Dspenders
remainssimilartotheirpositionin2010(ResearchInfosource,2010).
Thereisalsoconsiderablediscussionabouttheappetiteforminingandoilandgas
companiestoadoptnewtechnologies.Canada’sminingindustrywasoncethoughttobe
aworldleaderintermsofembracingnewtechnology.Forinstance,a2001report
preparedfortheMiningAssociationofCanadanoted“theCanadianminingindustryhas
undergoneaprofoundtransformationtoahigh-techindustryandisnowoneofthe
world’smostdynamicandtechnologicallyadvanced.Withitsstronglinkstootherhigh
technologyindustriesbothasauseroftheirtechnologiesandasasupplierofinputs,it
isadrivingforceinCanada’snewknowledge-basedeconomy”(GlobalEconomics,
2001).Fastforwardto2017whenBarrick’sChiefInnovationOfficer,reflectingonthe
roleofdigitaltechnologyintheminingindustry,stated“theminingindustryistheleast
digitizedindustryintheworld.Itisalsoanindustrythathasbeenslowtoadoptchange
andinnovation”(Barrick,2017).Arecentreviewofthestart-of-the-artofrobotic
miningtechnologyalsonotedthat“theresourceindustryhasaconservativehistoryand
11
theimplementationofnewtechnologiesandprocessesmustoftenovercomesignificant
resistancetochange”(Marshall,Bonchis,Nebot,&Scheding,2016).Thisresistanceis
thoughttoresultfrom“skepticismabouttechnologyandfearoflosingone’sjob”.
Someanalystsbelievetheslowpaceoftechnologyadoptionisnotduetoalackof
receptivitytonewtechnology,sincethereareexamplesof`digitalmining’datingback
tothe1950s.Rather,practicalissueschallengeminingcompanies,includingthe
perceptionofahighcostofimplementation,poorly-definedbusinesscases,andalack
ofdigitaleducationandunderstanding(EY,2017a).Others,however,feelthemining
industryissimplycontenttoutilizethesametechnologyandprocessesthatare
standardacrossthesector(Koven,2014).Preliminaryworktocomparetheadoptionof
digitaltechnologyinCanada’sagricultureandpotash/uraniumminingindustries
suggestedagriculturefollowsstandardadoptiontheorywhenitcomestodigital
technology,whilethatisnotthecaseforthepotash/uraniummining(Phillips&Wixted,
2017).
AsdiscussedbySteenetal,thenatureofinnovationintheminingsectormaybe
“differentfromotherindustries”andwouldnotbe“wellcapturedbytraditional
innovationmeasuressuchasR&Dexpenditureandpatents”(Steen,Macaulay,Kunz,&
Jackson,2017).Innovationtendstooccurinthesupplychains,andunderstandingthe
relationshipsbetweenminingcompaniesandthesupplychainsisimportantfor
understandinghowinnovationoccursintheminingsector.
Concernshavealsobeenexpressedwithrespecttotheadoptionofnewtechnologiesby
theoilandgasindustry.Inparticular,itwassuggestedthe“speedofadoptionlags
behindotherindustriesthataresubjecttothesamerashofsafety,legal,commercial
andfinancialpressuresfacedbyenergycompanies”(LR,2015a).Others,however,see
thecurrentlow-priceoilenvironmentasprovidingtheimpetusforoilandgas
12
companiesthathavebeenslowtoadoptthelatestinnovationstoembraceinnovative
technology-basedsolutions(Constas,2017).
Thereareheightenedexpectationsrelatedtothehealth,safety,andenvironment(HSE)
performanceofextractiveindustriesandtotheachievementofshared-valuesamong
extractiveindustriesandthecommunitiesandregionswheretheseresourcesare
exploited.Bytheirnature,extractiveindustriesmodifytheenvironmentinwhichthey
operate,oftenimpactingtheenvironmentnegatively.Withgrowingpoliticalandpublic
awarenessaboutanthropogenicclimatechangeandtheneed,fromcountriesto
individuals,tocountertheeffectsofclimatechange,extractiveindustriesarechallenged
tominimizethenegativeenvironmentalimpactsfromtheiroperations.
Increasedconcernaboutriskstopublichealthandworkersafetyfromtheprocesses
usedbyextractiveindustrieshavefurtherraisedthestakesforminingandoilandgas
companies.Addressingpublicconcernabouttheimpactsontheenvironment,public
health,andworkersafetywillbeaprerequisiteforsecuringthepublicconfidence
requiredtoinitiatefutureresourcedevelopmentprojects,toincreaseproductivityand
theefficiencyofexistingoperations,andtobecompetitiveandwell-positionedto
exportCanadiancommoditiesintovolatileworldmarkets.Moreover,thiscannotbe
achievedbya`business-as-usual’approach.Forexample,cost-cuttingasatacticfor
achievingproductivityimprovementisthoughttohavereachedapointofdiminishing
returnsfortheoilandgasindustry(Farah,2016).AsproposedbyE&Y,“thepresent
lowoilpriceisdisruptivebynatureandcallsformorethanjustrapidreductionofcost
throughdownsizingorbudgetcutsacrosstheorganization”(EY,2015b).
ExtractiveindustriesoperatinginCanadamust`disrupt’thewaytheydobusiness.This
couldincludethedevelopment,integration,andcreativewide-spreadapplicationof
recentandemergingdisruptivetechnology,particularlydigitaltechnology.Itisonly
throughinnovationthatthechallengesexperiencedbyextractiveindustriesinrecent
13
years,andwhichareexpectedtopersistorworsenintothefuture,canbeaddressed
successfully.
Inadditiontohelpingaddresschallenges,anembraceofdigitaltechnologycouldleadto
newandcurrentlyunknownopportunities.Adigitaltransformationcouldgiveriseto
potentialbenefitsofcapitalizingonnewrevenueopportunities,loweringcosts,and
improvingefficiency(Geissbauer,Vedso,&Schrauf,2016).Digitaltechnologymayalso
helpextractiveindustriesmeetcorporatesocialresponsibilityexpectations(Roscoe,
2015).Forexample,digitaltechnologymayenableimprovedtraceabilityofthesocial
andenvironmentalimpactsofglobalsupplychainsforextractiveindustries.
Furthermore,useofdigitaltechnologycouldhelpincreasetransparencyandimprove
communicationsamongdiversestakeholders.
Communities,companies,andgovernmentsthathavetraditionallybenefitted(e.g.,
employment,royalties,taxes,revenues,andprofits)fromCanada’sextractiveresources
needtounderstandhowdisruptivetechnologiescouldaffectthefuturebenefitsthat
maybederivedfromexploitingtheseresources.Thequestionaboutwhoisbenefitting
fromresourceextractionprojectsisanemergingissueforresourcedevelopment,with
concernaboutdecouplingvaluecreationfromthesiteofproduction.Forexample,in
thecaseofemploymentbenefitsinminingregions,theintroductionofremote
operationscentres,dependingontheirlocations,couldleadtoanurbanizationofthe
miningworkforce,withareductioninruralemploymentopportunities(McNab,Onate,
Brereton,Horberry,Lynas,&Franks,2013).Itisalsoimportanttounderstandand
acknowledgethatdigitalizationhasthepotentialtofacilitateagreaterdecouplingof
valuecreationfromthesiteofproductionand,asaresult,furtherchangethenature
anddistributionofbenefits.
Canada’sextractiveresourcesareexploitedbymultinationalcorporationsthatrequirea
competitiveadvantagetooperateinCanada.Anycompetitiveadvantagearisingfrom
14
digitalizationthatmaybenefitCanadawilldependonanumberofcriticalfactors,
includingacorporateculturethatsupportsinnovation;effectiveandefficientregulation
thatcanaccommodatetechnologicalchange;accesstohighlyqualifiedpeoplewhocan
supportadigitalizedindustry;andinnovativewin-win-winrelationshipsamong
communities,governments,andindustry.Technologyalonewillnotprovidethe
competitiveadvantagethatwillkeeptheseindustriesoperatinginCanada.
(3.0)MiningContext
Canada’sminingindustry“suppliestherawmaterialsneededtoproducemanyofthe
consumergoodswerelyoninourdailylives,aswellasthoseofthefuture,from
utensilsandhandtoolstosmartphonesandelectriccars”(NRCan,2017b).TheMining
AssociationofCanadareportedtheCanadianminingindustryprovidedover550,000
directandindirectjobs,contributed$56billiontowardsGDP,andaccountedfor19%of
thevalueofgoodsexportedfromCanada(MAC,2016).
Overthepast10years,Chinaemergedasthesinglelargestconsumerofmanybase
metals(Armbrecht,2015).Thesebasemetalsareessentialforglobalindustrial
productionandconstruction,withcommoditypricesservingasanimportantindicator
ofglobaleconomicchanges(Matsumoto,2015).Thepricesforironoreandbasemetals,
includingcopperandnickel,generallydeclinedbetween2011-2016,butshowedsome
modestincreasesin2017(InfoMine,2017).Concernsaboutwhethertherewouldbe
sustaineddemandforbasemetalsbyChina,coupledwithincreasesinsuppliesfrom
developingcountries,arethoughttobebehindthedeclineinbasemetalpricesafter
2011(Matsumoto,2015).Copper,however,ralliedattheendof2016basedonan
increaseinimportsbyChinaand,followingtheU.S.election,basedonthemistaken
beliefthatthePresident-elect’s$500billioninfrastructureplanwouldsignificantly
increasedemand(Jamasmie,2017).Whilepricesforpreciousmetals,suchasgold,are
subjecttodifferentforcesthanthoseinfluencingbasemetalprices,goldpriceshave
declinedsignificantlysince2011(InfoMine,2017).
15
In2016,Canada’sprimarymineralproductsbyproductionvalueincludedgold,copper,
potash,ironore,coal,andnickel,representing60%ofthetotalmineralsproduction
value.Commoditypricesandproductionvolumes,however,canchangerapidly,as
illustratedbysignificantchangesinproductionvaluesbetween2015and2016for
Canada’sprimarymineralproducts.Formetalproduction,ironoreandgoldproduction
valuesincreasedbyover30%andalmost9%,respectively.Nickelproductionvaluewas
downapproximately16%,whilecopperproductionvaluewasdownbyjustover9%.
Metalproductionvolumeswerecomparablebetween2015and2016.Theproduction
volumeofpotashdeclinedbyjustover11%,whiletheproductionvaluedecreasedby
almost37%.Canadaalsoaspirestobeamajorproducerofrareearthelementsthatare
increasinglyimportantformanufacturingcomponentsanddevices,suchaswind
turbines,hybridandelectricvehicles,batteries,medicalimagingequipment,speciality
glass,lasers,andcomputers(NRCan,2016).
Ingeneral,mineralpricesarebasedonacomplexsetoffactors,includinggeopolitics,
speculativeinvestment,andsupplyanddemand,inparticulartheevolvingdemandsof
emergingeconomies.Asaconsequence,pricesarepronetoshocksandcyclesresulting
inlong-termuncertaintywithintheglobalminingindustry.Thedownturninmineral
pricesbetween2011-2016forcedtheminingindustrytodrivedowncoststothepoint
wherefurthercost-cuttingwouldresultindiminishingreturns(Deloitte,2017).
Embracingnewtechnologies,manyofwhichwouldbefoundbeyondthemining
industry,couldenablesignificantproductivitygainsbyminingcompaniesinthefuture.
AsnotedbyMcKinsey,lowergradeoresandlongerhauldistanceshavecontributedto
decreasingproductivitylevelsacrossworldwideminingoperations,withadropbyas
muchas28%over10years(Durrant-Whyte,Geraghty,Pujol,&Sellschop,2015).Other
factorscontributingtothedeclineinproductivityincludeadecreaseinlabour
productivityduetoinexperiencedteams,highturnover,anagingworkforce,andafocus
16
onvolumeratherthanefficiency;adecreaseincapitalproductivityduetopoor
equipmentutilizationandalackofinnovativetechnology;andafailuretocapitalizeon
economiesofscaleasminesexpanded,leadingtoincreasedoverheadcostsand
managementinefficiencies(EY,2017b).Ingeneral,therehasbeenlittleincentiveto
investininnovationinitiativesduringperiodsofhighcommoditypricesandlittle
capacitytodosoduringtimesoflowprices.
Forsomeminerals,extractiondependsonbeingabletomineefficientlyandsafelyat
greatdepth.SomeofthedeepestminesintheworldaregoldminesinSouthAfricaat
depthsofapproximately4kilometres(WorldAtlas,2017).Canada’sdeepestminesare
theKiddCreekcopper/zincmineinTimmins,Ontarioatadepthofalmost3kilometres,
andtheCreightonnickelmineinSudbury,Ontarioatadepthofapproximately2.6
kilometres.Deepminingexacerbatestheefficiencyandsafetychallengesfor
undergroundmining.InthecaseofdeepmininginSudbury,atdepthsbelow2.5
kilometrestherearechallengesfromheatandrockstressconditionsthatcannegatively
impactonthesafetyandstabilityoftheundergroundenvironment,requiringincreased
ventilationandotherinfrastructuretosupportpeopleandequipment(VellaH.,2017).
Themovetowardsourcesofrenewableenergyraisestheprospectforseabedminingto
meetthedemandformineralsrequiredtomanufacturerenewableenergysystems.For
example,highefficiencysolarpanelsaremanufacturedusingtellurium(DOE,2016)
(Shukman,2017).OnetelluriumdepositneartheCanaryIslandsisthoughttorepresent
one-twelfthoftheworld’ssupplyatconcentrationsvastlyhigherthanland-based
deposits.TheInternationalSeabedAuthority,ofwhichCanadaisamemberstate,is
developingaMiningCodetosupporttheregulationofmarinemineralsprospecting,
exploration,andexploitationinseabedareasoutsideofnationaljurisdiction(ISA,2017).
Developmentandapplicationofautomationtechnologiesfeatureprominentlyina
Norwegianpilotprogrammeondeepseamining,particularlyinrelationtomineral
17
explorationandextraction(NTNU,2017).Automationcouldhelpminimizethenegative
environmentalimpactsofsuchindustrialactivity.
(3.1)DigitalizationinMining
Ithasbeenproposedthatdigitalizationwouldenableabreakthroughinimproving
productivity,safety,andenvironmentalperformancefortheminingindustry(Arnoldi,
2017).Initspredictionofthetoptrendsfor2017fortheminingindustry,Deloitterated
thedigitalrevolutionamongthetopissueswiththepotentialtotransformtheindustry
(Deloitte,2017).Whiletheminingindustryhasadoptedadvancedmineplanningand
modelingsoftwaretoolstooptimizeminedesignsandproductionoperations,these
toolstendtogeneratedesignsthatarebasedonastandardsuiteofminedesignsor
thatuseexistingoperatingequipmentandmethods.
Formanyyears,undergroundminershavebeenworkingwithtele-operateddrillingand
loadingmachines(Cosbey,Mann,Maennling,Toledano,Geipel,&Brauch,2016).Early
advancesincludedtele-operatedLoad-Haul-Dump(LHD)vehiclesthatutilizedline-of-
sightremoteoperation.TheoperatorstoodatasafedistancefromtheLHDasitwas
beingloadedunderunsupportedground.Inthisapplication,theoperatorusedachest-
mountedconsoletoguidetheLHDthroughtheloadingprocessandinbackingaway
fromtheorepile.TheoperatorwouldthengetbackontheLHDandmanuallydrivethe
vehicletoitsunloadingpoint,unloadthevehicle,andreturntotheloadingpointwhere
thetele-operatedloadingprocesswasrepeated(Caterpillar,2017).Marshalletal
providedanoverviewofmodernminingpracticeandastate-of-the-artreviewofmining
roboticsforbothsurfaceandundergroundminingoperations(Marshall,Bonchis,Nebot,
&Scheding,2016).
Inlate1990sandearly2000s,CanadianindustryandacademiawereleadersinR&D
relatedtotele-operatedminingwiththesupportofPRECARN,anindustryconsortium
designedtotranslateadvancedresearchinroboticsandintelligentsystemsinto
18
practicaluse(TheScientist,1987).In1998,CanadiannickelminingcompanyInco
articulatedavisionforautomatedminingwhereby“fromanylocationintheworld,a
tele-operatorcaninstructintelligent,automatedminingequipmenttoexecutetheir
missions.Iftheequipmentencountersanunexpectedsituationbeyonditsabilityto
manage,itwillaskforhelp.Thetele-operatorwillrespondimmediatelytorequestsfor
helpfromawiderangeofintelligent,automatedminingequipment”(Inco,1998).
WiththesupportofPRECARN,Incoalongwithtechnologyprovidersandacademic
partnerspursuedaseriesoftechnologydevelopmentprojectstoautomatevarious
typesofminingvehiclesandoperationsinordertoimproveproductivity(Werniuk,
2001).In2007,OricaLtd.,incollaborationwiththeCommonwealthScientificand
IndustrialResearchOrganisation(CSIRO)fromAustraliaandC-COREfromCanada,
demonstratedtele-operationofanexplosiveemulsionloader(C-CORE,2007).Dueto
thetechnologylimitationsofthetime,theseprojectsgenerallyfocusedonsingle-point,
ratherthansystem-wide,solutions.Today’stechnologycansupportmoreradical
innovation,targetingtheentirevaluechainandprovidingthegreatestprospectfor
transformationinproductivity.PRECARNwasalsoinstrumentalinsupportingindustry-
universitycollaborationrelatedtohuman-machineinteractionforheavyequipment,
leadingtothespin-offofMotionMetricsInternationalfromtheUniversityofBritish
Columbiain2000(ICICS,2010).Today,MotionMetricsInternationalcontinuesto
developmachinevisionandsensorsystemsdirectedtowardimproving“safety,
efficiency,andproductivityinmining”(MMI,2017).
Duringthisperiod,therewerealsoresearchchairsatCanadianuniversitiesfocusedon
miningautomation,includingtheNSERC/NorandaChairinMiningAutomationatEcole
PolytechniquedeMontrealandaCanadaResearchChair(CRC)inRoboticsandMine
AutomationatLaurentianUniversity.PenguinASI,atechnologycompanybasednear
Sudbury,Ontarioanddevelopingautomationtechnologies,isaspin-offfromthework
oftheCRCatLaurentian(MiningGlobal,2014).
19
Otherrecentadvanceshavebeendemonstratedforundergroundmineoperations,
includinglocatingminersonthesurface,orawayfromtheminesite,andoutofdanger,
withadvancedhuman-machineinterfacetoolsforremotesupervisionandcontrolof
multiplehighly-automatedminingrobotshavingauto-pilotandnavigationcapability.
Thecurrentstate-of-the-artinvolvesautomationofdiscretephasesoftheminingcycle
ratherfullautomationoftheminesite(Watkins,2017).
InSeptember2016,BarrickandCiscoannouncedanambitiouspartnershiptointegrate
digitaltechnologyacrossallofitsmineoperationsatCortez,Nevada(Barrick,2016).
MiningandconstructionequipmentmanufacturerAltasCopcoofferstele-operatedand
autonomousvehicles,withtheprimarydriversforautomationbeingsafety,
productivity,qualifiedlabor,andproductioncosts(AtlasCopco,2015).Sandvik,another
manufacturerofautomatedLHDs,reporteda30%improvementinhaulageproductivity
throughuseoftheirsystems(Sandvik,2017).Therehavebeenreportsofconsiderable
advancesinthedevelopmentandapplicationofautonomoustrucksforsurfacemining
applicationsatBHPBillitonandRioTintomines,andatSuncoroilsandsoperations
(Simonite,2016)(Gershgom,2016)(Topf,2016).
Inthefuture,manydirectproductionjobsinminingcouldbecarriedoutfromoperation
centresdistantfromproductionsites.Suchoperationscouldbesaferbecauseof
reducedexposureofworkerstodangerousandinhospitableenvironments,with
increasedproductivity,lowerenvironmentalimpact,reducedenergyrequirements,and
lowercapitalandoperatingcosts.Forexample,whilelocatingequipmentoperatorsata
distancefromproductionsitesmaydecreaseproductivitybyremovingsomeofthecues
(i.e.,visual,audible,tactileandolfactory)theyhaveattherockface,thereareefficiency
gainsfromsignificantlydecreasedtransittimestotheproductionsites.
20
Overall,disruptivetechnologies,suchastheinternetofthings(IoT),bigdataand
analytics,automatedvehicletechnology,robotics,advancedimagingandsensing
systems,wearablecomputing,andotherintelligentsystemstechnology,couldbecome
commonplacewithintheminingindustry.Theirwidespreadapplicationwouldfacilitate
greaterconnectivityandautonomyofassets,withincreasedamountsofdatacollected
andprocessedinreal-timetoaidinplanning,optimization,andexecutionofoperations.
Thesetechnologiescouldhelpmanageandcoordinatevariousmanually-operated,
remotely-controlled,semi-automated,andautomatedvehiclesandmachineryworking
simultaneouslyataproductionsite.
Whilethebenefitsofemergingdigitaltechnologiesmayberealizedbythemining
industry,thiswouldrequirecompaniestoembraceIndustry4.0,achoicethat“couldbe
themostimportantstrategicdecisionthatcompaniesmake”(Yeates,2017).Currently,
fewerthan10%ofminingcompaniesarethoughttohavedevelopedadigitalstrategy.
(4.0)OilandGasContext
Canada’soilandgasindustryisthefifthlargestproducerofoilandgasintheworld,
withsignificantresourcesexportedtointernationalmarkets(NRCan,2017c).Canada
ranksthirdintermsoflargestcrudeoilreserves.Thecontributionofoilandgasto
Canada’sGDPwasestimatedtobe7.5%,oraround$135billionannually(Ivey,2016).
TheCanadianAssociationofPetroleumProducers(CAPP)estimatedthedirectand
indirectemploymentinCanada’soilandgasindustrywasapproximately425,000people
(CAPP,2017b).Furthermore,everyprovinceinCanadabenefittedfromthedirectand
indirectjobscreatedbytheoilandgasindustry,withOntario,aprovincecurrently
withoutoilandgasproduction,experiencing12%oftheemploymentimpact(CERI,
2017).Thereisconcerntherecentlossoftalentfromtheoilandgasindustrytoother
industriesasaresultofthedownturninoilpriceswillmakeitdifficulttoattract
qualifiedemployeeswhentheoilandgasindustryrebounds.Thecontributionsbyoil
21
andgasworkerstoGDPsignificantlyexceedsthenationalaverageofGDPcontributions
fromworkersinotherindustries(Ivey,2016).
Aswithprojectionsofdemandformineralresources,thereisalsoconsiderable
uncertaintyanddebateregardingthelong-termdemandforpetroleumresources.
Currently,gasolineconsumptionforautomobilescountsforalmost50%ofpetroleum
consumption(EIA,2017).Disruptivetechnologiesandchangesindriverhabits,suchas
improvedelectricvehicles(EVs)capableofgreaterdistances,autonomousvehicles,and
Transportation-as-a-Servicemodelsofpersonaltransportation,couldleadtoa
reductioninfuelconsumptionbyownersoflightvehicles,ascoulddecisionsby
governmentstobanorlimitthenumberofvehiclesusinginternalcombustionengines.
TheUnitedKingdomandFrancerecentlyannouncedbansonthesaleofnewvehicles
withinternalcombustionengines(ICEs),effective2040(UK,2017)(Chrisafis&Vaughan
,2017).Volvoalsoannouncedthat,effective2019,allofitsnewvehicleswouldbe
hybridorelectricvehicles(MarshallA.,2017b).Ithasbeenproposed,however,that
theremaybeinsufficientdifferentiationbetweentheperformanceofelectricvehicles
andconventionalICE-basedvehiclestocauseconsumerstomoveawayfromICE-based
vehiclesinsignificantnumbers(TertzakianP.,2017a).Thedecisionsbysomecountries
toannouncebans,therefore,areattemptstooverridemarketforces.Thisisnotto
minimizetheimmediateimpactofEVsontheoilandgasindustry.Thebansandplans
ofcompanieslikeVolvoarethoughttobeimpactingthe“psychologyofinvestorswho
financeoilassets,servicesandinfrastructure”suchthat“theresultofallthisnext-
decadeconfusionisthatlessmoneyisgoingtobeflowingintotheoilbusiness”
(TertzakianP.,2017b).
Whileoilcompanieshavestartedtodiscussthenotionof‘peakoildemand’,thereis
disagreementamongmajoroilcompanieswithrespecttowhenthiswilloccur.Itis
importanttonotethattherecentdiscussionsaroundpeakoildemandareincontrastto
22
previousreferencesto`peakoil’,whichreferredtothetimewhenmaximumoil
productionwouldbereached,afterwhichproductionwoulddeclinedespitecontinuing
strongdemand(Rapier,2017).Earlierpeakoilconcernspredatedthesurgeinthe
developmentofunconventionaloilresourcesintheU.S.usinghydraulicfracturing
technologyandthepushtowardalternativesourcesoffuel.TheWallStreetJournal
recentlyreportedStatoilandShellareprojectingpeakoildemandwilloccurby2025-
2030,whileExxonandChevrondonotbelievepeakoildemandisinsight(Cook&
Cherney,2017).
Inits2017OutlookforEnergy,ExxonMobilprojecteda25%increaseintheglobal
demandforenergyoverthenext23years,drivenbyanincreaseinpopulationandin
thestandardoflivingindevelopingcountries(ExxonMobil,2017).Thisgrowthwould
bepredominantlyfromIndiaandChina,anditwouldalsobedrivenbya50%increasein
theenergydemandfromcommercialtransportationandbynaturalgasreplacingcoalas
afuelsource.BPprojectedasimilarincreaseinglobalenergydemand,withanincrease
by30%overthenext20years,primarilyfromrisingprosperityinemergingeconomies
(BP,2017).IntheBPforecast,thedemandforoilwouldcontinuetogrow,butata
slowerpacethanrecentlyexperiencedandwithdemandgrowthdrivenbynon-
combusteduseofoil.BPalsoprojectedreductionsinfueldemandfromimprovedfuel
efficiencyandelectrificationwouldbeoverpoweredbyincreaseddemandforcartravel
asthemiddleclassgrowsinemergingeconomies.
Regardlessoftheirprojectedtimeframesforpeakoildemand,majoroilandgas
companiesseerenewablesasafastgrowingcomponentoftheenergysectorandare
positioningtheircompaniesinthatspaceaccordingly.Therealsoappearstobea
consensusthatlow-costoilproducerswillhaveasignificantcompetitiveadvantage
duringperiodsofslowdemandgrowth.Withtheanticipatedslowdowninthedemand
foroil,someanalystspredictnaturalgaswillemergeasthedominantenergysource
23
overthenext20years,supplying27%oftheenergydemand,withvariousrenewable
sourcessupplyingapproximately50%(Ambrose,2017)(DNVGL,2017).
Asdiscussedpreviouslyformineralcommodityprices,theworldpriceofoilisbasedon
acomplexsetoffactors,includingsupply,demand,geopolitics,andspeculative
investment.Oilprices,likemineralprices,arepronetopriceshocksandcyclesleading
tolong-termuncertainty.Unlikeoil,however,challengestodatewithtransportation
havelimitedthescopefornaturalgastobeaglobalcommodityandforconvergenceto
aglobalpricefornaturalgas.ThiscouldchangewithLiquefiedNaturalGas(LNG),which
facilitatesmarinetransportationofnaturalgasandrepresentsa“supplysourcemobile
enoughtoplugsupplyanddemandgapsininternationalmarkets”(Bresciani,Inia,&
Lambert,2014).
From2002-2008,theworldpriceforoilsawagenerallysteadyincreasefrom
approximately$25/barreltoahighofapproximately$145/barrelinmid-2008
(Macrotrends,2017).Overthefollowing6months,oilpricesdeclineddramaticallytoa
lowofapproximately$35/barrel.Oilpricesreboundedfrom2009-2011andleveledout
near$100/barreluntilJune2014.ByJan2015,priceshaddroppedtoapproximately
$45/barrel.Inearly2016,thepriceofoildroppedfurthertojustunder$30/barrel,and
inthesecondhalfof2017pricesrosetoapproximately$65/barrel.Thereisdebate
amonganalystsaboutwhethertherecentoilpricechangesarecyclical,ashadbeen
thoughttobethenatureoftheoilindustry,orstructural,correspondingtoaperiod
whenoilpriceswillbelowerformuchlonger(Fattoch,2016).
(4.1)DigitalizationinOilandGas
Withthistumultuousbackdrop,digitalizationoftheoilandgasindustryhasbeen
proposedasanecessaryradicaltransformationoftheindustry(PwC,2016a).Digital
technologiesareseenaskeytotransformingoperationsinordertocreatenew
opportunitiesforprofitsfollowingthelatestperiodofoilpricedecline(Choudhry,
24
Mohammad,Tan,&Ward,2016).Ithasbeensuggestedthatdigitaltechnologyhas
traditionallybeenemployedbytheoilandgasindustryasameansofcostreduction
(PwC,2016a).Itcould,however,providemuchmore,includingenablingnew
approachestooperationsthatwouldallowcompaniestocontinuetoproduce“oiland
gas,butinwaysthatwillbevirtuallyunrecognizable”.
Otherdriversofadigitaltransformationintheoilandgasindustryincludeapushof“oil
andgasoperatorsintonewfrontiers–deeperwaters,moreremotereservoirsand
unconventionalplays–thatwereonceoutofreach”(EY,2016).IntheCanadian
context,digitalizationmaybeessentialfordevelopingdeep-water,far-offshoreoiland
gasresources,suchasthosebeingpursuedbyStatoilandHuskyEnergyintheFlemish
PassBasin,locatedapproximate500kilometresoffCanada’seastcoast(Statoil,2017b)
(Husky,2017).Forsuchfar-offshoredevelopment,itwillnotbepracticaltotransport
thelargenumbersofworkersbackandforthfromproductionplatformsasrequired
usingconventionalapproachestooperations.
AsignificantcollaborationbasedinNorway,whichincludedStatoil,BP,IBM,andother
industryandacademicpartners,wascarriedoutfrom2006-2014withtheobjectiveto
“developnewmethodsandtoolsfor‘integratedoperations’,whichcanbeembeddedin
improvedworkprocessesintheoilcompaniesandenhancedproductsandservices
fromthesuppliers”(CIOPI,2006).In2016,StatoilopenedaJointOperationsCentrein
Bergen,Norwaytoutilizeintegratedoperationsinsupportofsafety,vessel
optimization,emergencyresponse,supplylogistics,andmachineryconditionmonitoring
acrossmultipleoperatingoilfields.PetroleumResearchNewfoundlandandLabrador
(PRNL),anorganizationthatfundsandcoordinatesresearchonbehalfoftheeast-coast
offshoreoilandgascompanies,identifiedintegratedoperationsasapriorityareafor
researchanddevelopmentinvestmentbyitsmembercompanies(PRNL,2017).Inthe
caseofNewfoundlandLabrador,PRNLhighlightedanopportunitytoleverageexpertise
25
locallyinareassuchasoceanandsubseatechnology,remotesensing,andautonomous
underwatervehicles(AUVs).
ArecentreportbyAccenturehighlighteddigitalizationasakeyenablerfortheoiland
gasindustrywithrespecttovaluecreationinthefuture(Accenture,2017).
Digitalizationcouldhelpindustrydealwithincreasingchallengesinattractingtalentand
inmeetinghigherexpectationstoreduceclimatechangeimpacts.Whiletheoilandgas
industryhasadopteddigitaltechnologyasithasmatured,thereisconsiderable
variabilityamongupstreamoperatorswithrespecttotheextenttowhichdigitalization
hasoccurred(PwC,2016b).
Regardlessoftheuptaketodate,digitalizationintheoilandgasindustryisanticipated
tobringstructuralchangessimilarinimpactoncostsandoperationstothatfeltbythe
introductionofhorizontaldrillingandhydraulicfracturing(EndressA.,2017a).Itis
expectedoilandgasoperationswillevolvefromprimarilymanualoperationsrequiring
largenumbersofpeopleonaproductionplatformtomoreautomatedoperations,
whereasmallnumberofhighlytrainedgeneralistsworkonaremoteplatform
connectedtosophisticatedmissionsupportinmuchthesamewayasastronautswork
onthespacestation.
Digitaltechnologycouldenableimprovedreal-timemonitoringoftheoffshore
operatingenvironment,leadingtobetteroperationaldecision-making;lower
operationalrisk;positiveimpactsonhealth,safety,andenvironment;andenhanced
productivity.Inthenearterm(i.e.,3-5years),thetopdigitaltechnologyfocusareas
areanticipatedtoincludebigdata,analytics,internetofthings(IoT),andmobile
devices,whilethesubsequent5-yearperiodisexpectedtoseeafocusonrobotics,
autonomousvehicles,artificialintelligence(AI),andwearabletechnology(Accenture,
2017).
26
Statoilrecentlyarticulatedavisionofbeingaglobaldigitalleaderandoutlineda
roadmapforsevenspecificdigitalizationprojectstobeexecutedunderaDigitalCentre
ofExcellence(Statoil,2017a).ForStatoil,theareasofparticularinterestunderitsdigital
roadmapincludedigitalizationofworkprocesses,advanceddataanalytics,robotics,and
remotecontrol.Similarly,Shellembraceddigitalinnovationwithpriorityareasfor
upstreamoilandgasoperations,including3-Dprinting,robotics,advancedanalytics,
andhighperformancecomputing(Shell,2017a).ForBP,artificialintelligencecould
makeitpossibleto“combinedatasetsaboutareassuchasflowratesandpressuresand
equipmentvibrationwithdatafromthenaturalenvironment,suchasseismic
informationandoceanwaveheight,totransformthewaywerunandoptimizeour
operations”(BP,2016a).Chevronseesautomationoftheiroperations,generating
betterdata,andtranslatingthatdataintousefulinformationasenablingthecompany
to“operatemoresafely,reliablyandefficiently;reducecosts;recovermoreresources;
andbettermanagerisks”,therebyhelpingtorealizethepotentialvaluefrombillionsof
dollarsofassetsacrossthecompany(Chevron,2017).
Remotecontrolofoilproductionsystemsisnotnew.In1975,Exxondemonstrated
remotecontrolofasubmergedproductionsystemintheGulfofMexico(NewScientist,
1975).Modernremotedrillingoperations,whichutilizedistributedsensors,high-speed
communications,anddata-miningtechniquestofacilitateaccesstodeeper,more
remote,andmorecomplexresources,havebeendemonstratedoverthelastdecade
(Leber,2012).Chevronestimatedsuchtechnologycouldleadtoproductivity
improvementsof8%andrecoveryimprovementsof6%(Chevron,2017).Collaborative
workenvironments,whichutilizehigh-qualityvideoconferencing,smartwells,reservoir
surveillancesolutions,fibreoptics,andreal-timeproductionmonitoring,are
commonplaceintheoilandgasindustry(Shell,2017b).Thistechnologyallowsfield
workerstointeractwithspecialistcolleagueswhoremotelymonitorfieldconditionsin
ordertooptimizeoperations.ThePerdidoprojectintheGulfofMexicowasShell’sfirst
fullyintegrateddigitaloilfield(Perrons,2010).
27
Therearealsoexamplesofrobotic-typesystemsbeingusedwithintheupstreamoiland
gasindustry.Theseincludetele-operated“ironroughnecks”whichallowdrillersto
handledrillingoperationsremotelyaspipesegmentsareconnectedordisconnected
automatically,increasingthesafetyandefficiencyofaoncedangerousjob(RIA,2017).
Thisequipmentoperatesinmuchthesamewayasthetele-operatedLHDdescribedfor
theundergroundminingindustry.Schlumberger,amajoroilandgasserviceprovider,
offersarangeofroboticandautonomousvehicleservicesrelatedtodatacollectionin
theoffshoreenvironment(Schlumberger,2016).Applicationsincludehydrocarbon
detectionandmapping,marinegeomaticsurveys,seismicsurveys,metoceandata
collection,seamammalmonitoring,andenvironmentalmonitoring.Robotsand
unmannedvehicleshavealsobeenreportedformonitoring,inspecting,andmapping
applicationsbytheoilandgasindustry(BP,2014)(ExxonMobil,2016)(Torres,2016).BP
andOceaneeringpartneredonalarge-scaleAUVtrialintheGulfofMexicoforsurveying
pipelinesandsubseainfrastructureusingavarietyofmarineautonomoussystems,
includingremotelyoperatedvehicles(ROVs),waveandunderwatergliders,and
autonomoussurfaceandunderwatervehicles(BP,2016b).
Advancedroboticoffshoredrillingsystemshavealsobeendeveloped,althoughthereis
reluctanceonthepartofindustrytoembracefullautomation.Instead,“smart
automationtechnologyinformshumandrillerswhoultimatelytakeallkeydecisions”
(VellaH.,2016).Oneofthelimitingfactorsfortheuptakeofautomateddrilling
technologyisthelargenumberofcapitalintensive,butunderutilized,conventional
floatingrigs.Fullyautomateddrillingwouldrequirenewlydesignedandconstructed
drillingrigswhicharenotlikelytobebuiltintheforeseeablefuture.
Asdiscussedpreviouslyfortheminingindustry,managingthechallengesand
opportunitiesofdigitalizationrequiresoilandgascompaniestohavedigitalstrategies,
ratherthanad-hocdigitalinitiatives.Animportantsteptowarddevelopingeffective
28
digitalstrategiesisleadershipcommitment.Arecentsurveyshowedonly3%ofoiland
gascompanieshaveestablishedseniorexecutive-levelpositionsto“navigatetheopen
seaofthedigitaltransformation”(EndressA.,2017b).InthecaseoftheShellPerdido
digitaloilfieldproject,digitalization“happenedmorecompletelyandquicklythan
expectedbecauseoftheemergenceofchampionswhounderstoodthevalueofthese
technologies”(Perrons,2010).Itwasalsoobservedthatthe“journeytowardbecoming
anintegrateddigitaloilfieldwouldnothaveyieldedthehighlypositiveoutcomesthatit
didwithoutthestrongsupportwithinthePerdidoteam,therelevantShellE&P
communities,andbothBPandChevron”.
(5.0)OtherConsiderations
Thereareanumberofotherimportantfactorstobeconsideredfordigitalizationof
Canada’sminingandoilandgasindustries.First,theseindustriesaresubjectto
extensiveregulation,bothprovincialandfederal,thatmayaffecttherateof
technologicalprogressandinnovation.Secondly,digitalizationwillhaveanimpacton
thelevelandnatureofemployment,withimplicationsforeducationandtraining
programsrequiredforthefutureworkforce,forthe`valueproposition’forcommunities
inresourceregions,andforlevelsof`technologicalanxiety’amongthegeneralpublic.
Thirdly,advancesindigitaltechnologiesareexpectedtocomeprimarilyfromoutsideof
theextractiveindustries,andthiswillrequirereconsiderationoftraditionalsupply
chainsandtheroleofsmallandmedium-sizedenterprises(SMEs)andotherinnovators
andapproachestoinnovation.
(5.1)RegulationandTechnologicalProgress
Theminingandoilandgasindustriesaresubjecttoheavyregulationbecausesomeof
theiractivitieshavethepotential,ifnotcarriedoutproperly,toresultinseriousand
lastingharmtotheenvironmentandtoworkerhealthandsafety.Inaddition,there
couldbeharmtonearbycommunitiesandtopublichealth.Thereinliesaconundrum.
Therearecompetingpressurestoinnovate,astheoperatingenvironmentsfor
29
extractiveindustriesbecomemorechallengingandbeyondconventionalapproaches,
andtostrengthenregulationstomanagetheincreasedrisksassociatedwithoperations
inthosemorechallengingenvironments(LR,2015b).Therateofregulatorychangeis
generallymuchslowerthantherateoftechnologicalchange.
Asaconsequenceofthepotentialforsignificantharm,extractiveindustriesareoften
subjectedto`prescriptive’regulationsthatdetailhowtheiractivitiesmustbecarried
out.Thisisincontrasttomore`performance-based’or`outcomes-based’regulations
thatdefinedesiredoutcomesorlevelsofperformanceandleaveindustrytodetermine
howtocarryouttheiractivitieswhileensuringperformancetargetsaremet.Thelatter
approachtoregulationhasbeenproposedasbeingmoreamenabletotheadoptionof
newtechnologies(NRCan,2013).
In1996,theGovernmentofCanadaconfirmedprovincialjurisdictionforregulationof
miningdevelopmentsthroughitsMineralsandMetalsPolicy(NRCan,1996).Whilethe
MineralsandMetalsPolicycallsforregulationtobeperformance-basedratherthan
prescriptive,approachestoregulationofminingactivitiesvarywidelyacrossCanada.
InCanada,thereisaninitiativeunderway–FrontierandOffshoreRegulatoryRenewal
Initiative(FORRI)–tomodernizetheregulatoryprocessforoilandgasactivitiesthatare
underthejurisdictionofthefederalgovernment(NRCan,2017d).InputfromCanadian
industryintotheFORRIconsultationprocesscalledforacommitmenttoeffective
implementationofaperformance-basedregulatorysystemsupportedbyguidelinesand
othertoolsconsistentwithaperformance-basedmanagementapproach(CAPP,2016).
ForonshoreoilandgasinCanada,regulationisunderprovincialjurisdiction.InAlberta,
newanduniquescientificandtechnologicalchallengesofunconventionaloilandgas
development,aswellastheneedfornewtechnologiesandapproachestooperations,
providedtheimpetustoconsider“risk-basedandplay-focused”approachesto
30
regulationofunconventionalresourcedevelopments(ERCB,2012).Apublicreviewof
potentialunconventionaloilandgasdevelopmentinWesternNewfoundland
recommendedaregulatoryframeworkwithanappropriatemixofperformance-based
andprescriptiveregulations(Gosine,Dusseault,Gagnon,Keough,&Locke,2016).Such
anapproachwouldallowforevolutionofregulationsasnewknowledgeandexperience
aregained,andwouldbesupportiveofinnovationandtheadoptionofnewtechnology.
Astudyofgreenminingtechnologyhighlightedthatthe“potentialfordelaysinthe
environmentalassessmentprocesswithintroducinganewtechnologythatdoesnot
haveademonstratedtrackrecordactsasadeterrentforsomeminingcompanies”
(MNP,2011).Furthermore,thestudyhighlightedthatmanyminingcompaniesmay
notbeabletoaffordthetimeandresourcesneededtogeneratetheverifiableevidence
requiredbyregulatorsabouttheperformanceofanewtechnology.Asaconsequence,
industrytendstouseproventechnologies,ratherthanriskdelaysornon-approvalof
innovativetechnologyapplications.Astudyoftheimpactofenvironmentalregulations
oninnovationintheAustralianoilandgasindustrysuggested“thelessprescriptive
natureoftheregulatoryapproachtakenbytheQueenslandgovernmentissupporting
innovation”andthatcompaniesare“strivingtomaketheiroperationsvery
environmentallyrobustandgoingbeyondcompliance”(Ford,Steen,&Verreynne,
2014).
Inthecontextofoilandgasregulations,itwasproposedthat“regulatorsmustcreatean
environmentthatenablesinnovation”andthey“mustengagewithtechnicalexperts
fromindustrytoidentifynewideasforsupportinginnovations,beopenandflexibleto
pilottestingactivitiesandemployingamoreoutcomes-basedapproachtoregulationin
ordertosupportinnovation“(EY,2015a).Thiscallforclosercooperationbetween
regulatorsandotherstakeholdersinordertoimprovetheregulatoryframeworkandto
facilitatetherequiredinnovationisnotuniquetoCanada.Lloyd’sRegister,aglobal
engineeringorganization,proposed“ablendofthebestexpertisefrombusiness,
31
academics,regulatorsandgovernments”wouldleadtoabetterunderstandingofrisks,
while“ablendofdesignskills,applicationofscience,operations,riskappetiteand
consequencetogetherwithlegislationregimes”wouldleadtomoreappropriate
regulations(LR,2015b).
Withintheoffshoreoilandgasindustry,internationalclassificationsocieties,suchas
Lloyd’sRegister,theAmericanBureauofShipping,andDNV-GL,setandmonitor
standardsforthedesign,construction,operation,inspection,andmaintenanceof
offshorestructuresandvessels.TheseclassificationsocietiesfeatureinCanadian
offshorepetroleumregulationsandtheyplayacriticalroleinensuringsafetyand
environmentalperformanceofoffshoreoperations.
RecentforesightexercisesbytheLloyd’sRegisterFoundation(LRF)consideredthe
emergenceofbigdata,analytics,robotics,andautonomoussystems(LRF,2014)(LRF,
2016).TheseexercisesreviewedtheimplicationsfortheindustriesLloyd’sRegister
servesandfortheworkdonebyLloyd’sRegisterinthecertificationandassuranceof
industryassets.
Withrespecttobigdataandanalytics,LRFproposedaparadigmshifttowardsdata-
centricengineeringwhere“dataconsiderationsareatthecoreofengineeringdesign”
withresultingimprovementsin“performance,safety,reliabilityandefficiencyofassets,
infrastructuresandcomplexmachines”(LRF,2014).Arangeofdatamanagement
issues,includingstandards,collection,storage,andsecurity,wouldbepartofthe
engineeringlife-cycleandwouldimpactonapproachestodesigning,manufacturing,
maintaining,anddecommissioningassets.Thedataitselfwouldbeanasset,requiring
verificationofthepedigree,quality,andaccuracyofdata.Thecertificationandquality
assurancerolesplayedbyorganizationssuchasLloyd’sRegisterwouldneedtoadapt
accordinglyifadata-centricengineeringapproachwasadoptedbyindustry.
32
Intermsofroboticsandautonomoussystems(RAS),LRFhighlightedcriticalissuessuch
asthedependabilityandappropriatenessofactionofRAS,methodsofRAS`learning’,
exchangeofcontrolbetweenhumanoperatorsandRAS,systemsecurity,publictrust
andethicalframeworksforapplicationsofRAS,andanxietyaboutemployment
disruption(LRF,2016).Also,theneedfor“livinglaboratoriesinexistinginfrastructure”
washighlightedasameansofprovidingthenecessaryfocustoundertakebasicR&D,
performfirstdemonstrationsofprototypes,andde-riskandcertifysystemsthatcould
beputintonormaloperation.Thisrequiresregulatoryframeworksthataresupportive
ofinnovationandapproachestounderstandingandmanagingtheassociatedrisks.
(5.2)Technology,EmploymentImpacts,andEducationandTraining
Thefusionofadvancedtechnologiesandthe“transformationofentiresystemsof
production,management,andgovernance”maydisruptlabourmarkets(Schwab,2016).
Atthispointthereisconsiderableuncertaintyabouttheimpactsonthenumberofjobs
andthetimingofsuchimpacts,althoughthereisgeneralagreementthatthenatureof
workwillchangesignificantly.Therearealsogrowingconcerns,or`automation
anxiety’,aboutthe“replacementofcomplexcognitivetasksandhumandecisionmaking
byalgorithms,machinelearningandothercomputationaltechniques”(Sussex,2017).
Schwabnotedthatifautomationsubstitutesforlabour,“thenetdisplacementof
workersbymachinesmightexacerbatethegapbetweenreturnstocapitalandreturns
tolabor”(Schwab,2016).Someresearchersbelievetheimpactofautomationonjobs
wouldbeconsiderablylargerthanwhatmanyanalystshavebeenprojecting(Ticoll,
2017).Schwabalsonoted,however,theimpactsareunclearandtheapplicationof
automationcouldleadtoanoverallincreaseinsaferandmorerewardingemployment
opportunities(Schwab,2016).Keyissues,however,includethelocationsofthesenew
jobs,aswellastherequirededucationandskilllevels.Forextractiveindustries,thereis
aquestionaboutwhethernewjobsthatcouldresultfromdigitalizationwouldbenefit
individualsinresourcecommunitiesandregions.
33
ArecentreportfromtheInternationalFederationofRobotics(IFR),anadvocacygroup
forrobotics,proposed“robotscomplementandaugment,ratherthansubstitutefor,
labourandindoingso,raisethequalityofworkandthewagesofthosefulfillingnew
tasks”and“automationhasledoveralltoanincreaseinlabourdemandandpositive
impactonwages”(IFR,2017).TheIFRreportproposedthatlessthan10%ofjobs
involvingmanuallaborcouldbefullyautomated,androbotsmaycomplementand
augmentmanuallabourforsomejobs.Middle-income/middle-skilljobswouldbeprone
tolossthroughautomation,whilethedemandforhigh-skilljobswouldincrease,as
wouldwages.Thisisconsistentwiththeperspectivethat“automationdoesindeed
substituteforlabor—asitistypicallyintendedtodo.However,automationalso
complementslabor,raisesoutputinwaysthatleadtohigherdemandforlabor,and
interactswithadjustmentsinlaborsupply”(Autor,2015).Between2010-2015,theIFR
reportedthattheU.S.automotiveindustryinstalled60,000newrobots,whiletherewas
anoverallincreaseinemploymentof230,000jobsintheindustryoverthesameperiod
(IFR,2016).Thereport,however,didnotdiscussotherfactors,suchasincreasesin
production,thatmayhaveinfluencedoverallemploymentnumbers.
Somepractitionersrefertothenextgenerationofmachinesthatworkwithandassist
workers,ratherthanreplacethem,as`cobots’orcollaborativerobots(Hollinger,2016).
Collaborativeroboticsisparticularlyattractiveforworkactivitiesforwhichhuman
judgmentisrequiredandwherethephysicalenvironmentpresentsergonomic
challenges.Forcertainjobactivities,studieshaveshownhuman-robotteamsaremore
productivethanhumansorrobotsworkingalone(Tobe,2015).
Inautomobileassemblyplants,someindustrialrobotshavebeenreplacedbycobots
withtheprimaryobjectivetoimprovethesafetyandeaseoftasksforworkerson
assemblylines.Cobotshavebeenproposedaspartofthesolutiontoattractingand
retainingtherequiredworkersforthemanufacturingindustryatatimewhenmany
34
currentworkersareretiring(Gonzalez,2016).Cobotscouldalsobeaviabletechnology
tosupportthemanufacturingoperationsofsmallersuppliersthatneedgreater
flexibilityandportabilityoftechnologythanistypicallyprovidedbylarge-scale,fixed-in-
placeroboticmanufacturingsystems.
Autorstated“journalistsandevenexpertcommentatorstendtooverstatetheextentof
machinesubstitutionforhumanlaborandignorethestrongcomplementarities
betweenautomationandlaborthatincreaseproductivity,raiseearnings,andaugment
demandforlabor”(Autor,2015).HeadlinesinCanadianpopularpress,suchas
“Driverlesstruckscouldmean‘gameover’forthousandsofjobs”,fuelconcernsabout
theimpactsofautomationonemployment(Grant,2015).Thearticlehighlighted
Canadianminingandoilandgascompaniesasearlyadoptersofautomatedtruck
technology.
Anotherrecentstudysuggestedthatwhilealmosthalfofallworkactivitiesacrossthe
economycouldbeautomated,lessthan5%ofalloccupationscouldbeautomatedusing
existingtechnologies(Manyika,etal.,2017).Itwasestimated60%ofalloccupations
haveatleast30%oftheiractivitiesthatcouldbeautomated,with“physicalactivitiesin
highlystructuredandpredictableenvironments,aswellasthecollectionandprocessing
ofdata”,beingtheactivitiesmosteasilyautomated.
Manyikapresentedacasestudyofthepotentialforautomationinanoilandgascontrol
room.Theproposedadvantagesofautomationincluded“betterpersonnelsafety,
greaterefficiency,higherthroughput,improvedagility,andcostreductionsfrom
relocatingoperatorsfromremotesitestocentralizedoffices”.Furthermore,
technologiessuchasintelligentsensorsandanalyticscould“enablepredictive
maintenance,whichisjustone-quarterthecostofreactivemaintenance”.Itwas
estimated80%ofthevaluecreatedfromautomationofthecontrolroomwouldresult
fromperformancegains,while20%wouldresultfromlaboursubstitution.
35
Otheranalystssuggestedbetterutilizationofexistingcomputingtechnologyintheoil
andgasindustrycouldseepositivefinancialimpactsofupto$3billionforamajoroil
andgascompany(Ward,2016).Ofthisamount,$1billioninsavingswouldaccruefrom
moreefficientdeploymentofengineeringresources,allowingcompaniestostayahead
oftheincreasingchallengetofindtalent.
Whilesomejobswithinoilandgascompanieswouldbeeliminatedbyautomation,
therewouldbeanincreaseindemandfordigitallyliterateemployees,suchasdata
analystsandengineers(Kline,2017).Alongasimilartheme,Accenturepredicted
digitalizationwillbothdemandandenableafundamentallydifferentworkforceinthe
oilandgasindustryand,whilesomemanualjobswillbereplacedbydigitaltechnology,
other“moredigitally-orientedjobswillbecreatedtotaketheirplace”(Sloman,
Holsman,&Cantrell,2014).TheLloyd’sRegisterFoundation(LRF)proposedthe
changingnatureoftheworkforcewouldfurtherchallengealllevelsoftheeducation
system,fromtheprimaryandsecondaryschoolsystem,throughpost-secondary
institutions,toorganizationsofferingongoingtrainingandeducationtoprofessionalsin
industry(LRF,2016).
Fortheminingindustry,theoverallemploymentimpactsasaresultofdigitalizationare
alsosubjecttodebate(Davis,2017).Inthefuture,asaresultofwidespread
digitalizationoffieldoperationsandback-officeprocesses,someanalystsbelievedigital
miningwillinvolvefarfewerpeople(Deloitte,2017).Thefutureworkerswouldalso
havedifferentskillsetsthanrequiredtodaybytheminingindustry.Currently,local
employmentisacriticalpartofthevaluepropositionthatminingcompaniesare
expectedtodeliveruponthroughouttheiroperationsincommunitieswithextractive
resources.
36
Whethera25-yearvisionforautonomousminingcanberealizedisanopenquestion.A
studyledbytheUniversityofQueenslandconsideredthesocialdimensionsof
autonomousandremoteoperationsandconcludedthat"autonomoustechnologies
seemlikelytoreduceadditionaljobscreatedthroughminingindustrygrowth,rather
thanleadingtoanetreductioninminingemployment”(McNab,Onate,Brereton,
Horberry,Lynas,&Franks,2013).Thestudyfindingsnotedthatsomejobs,suchas
drivingtrucksormanuallyoperatingundergroundequipment,woulddisappear,while
newjobs,whichwouldbeincreasinglyconcentratedinurbanareas,wouldrequire
differentcompetencies.Benefitsofautomationwereproposedtoincludeimproved
safetyandreducedriskforworkers.
Onechallengeforautomationistheintegrationofautomatedtechnologyintoexisting
minesites(Jensen,2016).Othershavenotedtherewillalwaysbeaneedfor
infrastructuretosupportpeopleworkingundergroundsince“soonerorlaterequipment
alwaysbreaksdownandsomebodyhastogoandfixit”(VellaH.,2017).Within
existingundergroundminingoperations,largeequipmentisdismantledandrebuilt
undergroundsothereisaneedforin-siturepairandmaintenanceofequipment,
includingautomatedvehicles.
Dramaticadjustmentstoemploymentinanindustrycanprovidetheimpetusfor
innovationandentrepreneurshipbythosewhoaredisplaced.Followingamajor
downsizingbytheminingindustryinSudburyin1981,anumberof“unemployed
miners,armedwithtacitknowledgeofthemajorminingcompanies,createdsmalland
medium-sizedenterprises(SMEs)toservethelocalminingindustry”(Hall,2017).Today,
thereareover300supplyandservicecompaniesintheSudburyarea,employing
approximately13,500people.
WhethertheSudburyexperiencewillholdupthroughaworkforcedisruptionfrom
digitalizationisanopenquestion.Areleaseoflabourasaresultofwidespread
37
digitalizationoftheminingandoilandgasindustrieswouldbecomplicatedbya
significantknowledgegapwithrespecttodigitaltechnologyanddigitalinnovation
amongthosedisplaced.Itisunlikelythatknowledgeofapre-digitalizedindustrywould
beasufficientbaseuponwhichtoofferadvancedtechnicalservicestoadigitalized
industry.UnliketheSudburyexperience,theexpertiseneededbyextractiveindustries
followingdigitaldisruptionwouldbefound,toasignificantextent,outsideofthe
extractiveindustries,inothersectorsandlocationsthataremoreproactiveinadvancing
digitaltechnologiesandtheirapplications.Furthermore,thecurrentalignmentof
educationandtrainingprogramsatsomepost-secondaryinstitutionstomeetthe
currentemploymentneedsofextractiveindustriesmayfallshortintermsofpositioning
youngpeoplewithanaffinitytoresourceregionsforcareersindigitalizedextractive
industries.
Aswithprojectionsaboutthechangingnatureofemploymentintheoilandgas
industry,miningindustryanalystshavepointedtotheneedto“buildaworkforceofthe
futurebyattractinghighlydiversepeoplewithanewsetofdigitalskills”(Deloitte,
2017).Theminingindustry“willincreasinglyfindthemselvescompetingforscarce
technicaltalentwithmoreattractivepureplaydigitaldisruptors”.
Arecentsurveyofover2000companiesin26countriesaboutIndustry4.0identifiedthe
lackoftrainingandadigitalculturedeficitamongexistingworkforcesasthetop
challengesfacedbycompanies(Geissbauer,Vedso,&Schrauf,2016).Theneedto
addresseducationandtrainingrequirementsincludesupgradingknowledgeandskills
forexistingworkforces,aswellaspreparinguniversityandcollegegraduatesbetterfor
careersindigitalizedindustries.
Understandingtheemploymentimpactsofdigitalizationoftheminingandoilandgas
industrieswillbeimportant,bothtothecompaniesandtothecommunitiesandregions
inwhichthereareresourcedevelopments.Forminingandoilandgasdevelopments,
38
animportantelementofthehistoricalvaluepropositionislocalemployment,including
direct,indirect,andinducedemployment,acrossalleducationandskilllevels.Other
elementsincludetheconsumptionoflocalgoodsandservicesandrevenuesfromtaxes
androyalties.
ForextractiveresourcedevelopmentprojectsinCanada,therearenegotiatedbenefits
agreementsthatdefinehowcommunitiesandregionsparticipateintheemployment
andeconomicactivitiesarisingfromresourcedevelopmentprojects.Asanexample,
fortheHebronoffshoreoilandgasdevelopmentproject,thebenefitsagreement
stipulatedaminimumnumberofperson-hoursofengineeringandconstructionwork
hadtobedoneinNewfoundlandandLabrador(NL)priortothestartofoilproduction
(Hebron,2008).OtherrequirementsincludedfinancialsupportfortheNLsupplyand
servicesectortoengagewiththeengineeringofficesoftheproponentsortheirout-of-
provincesuppliers,andadefinedlevelofR&DexpenditurebytheproponentswithinNL
overthelifetimeoftheproject.Theproponent’sbenefitscommitmentsaremonitored
bytheCanada-NewfoundlandOffshorePetroleumBoard(C-NLOPB)andtheproponents
filepublicquarterlyandannualreportsregardingtheirperformanceinmeetingtheir
commitments(HMDC,2017).
InthecontextofmininginCanada,impactandbenefitsagreements(IBAs)are
negotiatedbetweenminingcompaniesandAboriginalcommunitiesto“documentina
contractualformthebenefitsthatalocalcommunitycanexpectfromthedevelopment
ofalocalresourceinexchangeforitssupportandcooperation”(IBARN,2006).The
IBAstypicallyaddressissuessuchasenvironmentalprotection,includingspecial
concernsaboutwildlife;protectionofAboriginalsocialandculturalvalues;education,
training,andemployment;healthandsafety;businessopportunities;Aboriginalaccess
totheprojectsite;financialarrangements;anddisputeresolutionmechanisms(Vale,
2017).Aboriginalcommunities“holdinherentrightsintheirtraditionalterritories,and
thusshouldshareinemploymentandfinancialbenefitsfromdevelopmentprojectson
39
thoselands”(Kielland,2015).Generally,IBAsareinadditiontoresourcerevenue
sharingarrangementsbetweenprojectproponentsandgovernments.
Whilebenefitsagreementstypicallydealwithdirectemploymentrequirements,the
second-ordereffectsassociatedwithchangesinemploymentlevelsasaresultof
digitalizationalsoneedtobeunderstood.Forexample,therewouldbeincometax
impactsassociatedwithchangesinemploymentlevelsorchangestolocalsalariespaid
byindustryasaresultofincreasedautomation(Balch,2016).Areductionindirect
employmentinaregionwouldalsoresultinareductionininducedemploymentinthat
region.
Withtheriseoftheconceptof‘sociallicencetooperate’(SLO),whichissometimes
referredtoas`sociallicence’or`publicconfidence’,theimpactofdigitalizationon
employmentandotherelementsofthevaluepropositionwillbeparticularlyimportant
tounderstand(Mann&Cosbey,2016).Forbothminingandoilandgascompanies,
developingandmaintainingatrustrelationshipwiththecommunitiesinwhichthey
operateisrecognizedasarealityofdoingbusinessinthefuture(Sanyal,2012)(Latimer,
2015).AUniversityofQueenslandstudyidentifiedkey“socialdimensionsof
automation”,includingthestructureoftheworkforceandworkforcemanagement
practices;workplaceandpublichealthandsafety;mining-relatedregionaldevelopment
opportunities;andAboriginalemploymentandcommunityrelations(McNab,Onate,
Brereton,Horberry,Lynas,&Franks,2013).
Dependingontheultimateimpactofdigitalizationofextractiveindustriesonthe
employmentcomponentofthevalueproposition,theremayneedtobearebalancing
oftheweightingontheotherhistoricalcomponentsortheintroductionofnew
componentsofthevalueproposition.Newcomponentscouldincludeintroducingmore
localdownstreamprocessingofextractedresources,developingvalue-addedproducts
thatwouldbemanufacturedlocally,supportingmorewidespreadinfrastructure
40
improvementsthatbenefitcommunitiesandoperations,andincreasingknowledgeand
technologytransfertolocalcommunitiesthatcouldbemorewidelyutilizedinother
sectorsoftheeconomy(Cosbey,Mann,Maennling,Toledano,Geipel,&Brauch,2016).
Policymakerswillneedtobeengagedearlyinordertomitigatethenegativesocial
impactsofemploymentloss(LRF,2016).Giventheincreasedattentiongenerallyinthe
media,includingsocialmedia,regardingtheimpactsofautomationonthefutureof
work,securingpublicconfidenceforextractiveresourceprojectswillbefurther
complicatedbyautomationanxiety.
(5.3)TechnologyfromOtherSectors
Theenablingdigitaltechnologiesandapproachestotheirintegrationintosystemsare
commonacrossmanyindustrysectors,albeitwithsomeadaptationstailoredtosectoral
differences.Learningfromotherindustriesthathaveadoptednewtechnologiesand
approachestotheirapplicationwillbeimportant(Jacquand,2017).Inparticular,
technologiesdevelopedanddeployedforthemanufacturing,forestry,agriculture,
automotive,aerospace,biotechnology,financialtechnology,andgamingsectorsmaybe
adaptedandadoptedforapplicationsbyextractiveindustries.
Bywayofillustration,newfinancialtechnologiesbeingemployedinthefinancialsector
mayplayimportantrolesinthefutureofextractiveindustries(Koeppen,Shrier,&
Bazilian,2017).Specifically,blockchaintechnologymaybeutilizedinapplicationsto
increasetransparencyandprovideefficiencyinregulatorycompliance,toenhancedata
security,tofacilitatesmartcontracts,andtoimprovelogistics.Suchtechnologyhasthe
potentialtoimprovemanagementofsupplychainsforextractiveindustries(IBM,2016).
Thistechnologymayalsomakeitpossibleforaprovenorereservetobeconvertedinto
digitizedassetspriortoitbeingmined.Thiscouldincludeorebitsthatcanbebought
andsoldelectronically(BusinessWire,2017).
41
Suchtechnologymayalsofacilitatenewvaluepropositionsforcommunitiesinwhich
extractiveindustriesoperateinordertosecurethesocialandeconomicfuturesofthose
communities.Inotherwords,itmaybepossibletogeneratefinancialrevenuestreams
intocommunitiesintheabsenceofcurrentproduction.Inthetraditionalmining
lifecycle,miningcompanypensions,whichguaranteerevenuebeingpaidtoformer
companyemployeeslongafteractivemininghasceasedandtheminingcompanyhas
leftthecommunity,havebeenacriticalsocialandeconomicstabilizerforsingle-
industryminingtowns.Insomecases,thesepensionsmayhavehelpedavoid`ghost-
town’outcomesforcommunities.Astherequirementforongoingpublicconfidencein
extractivesindustriesinCanadabecomesmorewidespread,digitaltechnologymay
supportindustryindeliveringanearlyvaluepropositiontocommunitiesandinhaving
newvaluepropositionoptionsatlaterstagesofprojects.
Unlike20yearsagowhenautonomousvehicletechnologywasbeingpioneeredbythe
miningindustrytoimproveproductivityandsafetyinanichemarket,todaythis
technologyisbeingadvancedbytheautomotiveindustryandbytechnologycompanies,
suchasFord,GeneralMotors,Tesla,Uber,Google,Blackberry,andApple,formuch
largerconsumermarkets(Davies,2017)(Tesla,2016)(MarshallA.,2017a)(Blackberry,
2017)(Moren,2017).Inparticular,researchdirectedtowardsystemsthatenhancethe
safetyofhumans(e.g.,otherdriversandpedestrians)onroadsutilizedbyautonomous
automobilescouldalsobeusefulforintroducingautomatedminingrobotsinto
establishedminesthatuseconventionalapproachestoproduction(Condliffe,2016).
Theexperienceoftheautomotiveandmanufacturingindustryintheapplicationof
collaborativerobotics,orcobots,isalsoparticularlyrelevantandimportanttoconsider.
Regardlessofwhetherfullautomationcanultimatelybeachieved,thecomplexnature
ofthephysicalenvironmentsforbothminingandoffshoreoilandgasdevelopmentwill
necessitatecloseinteractionandcollaborationbetweenhumansandmachinesforthe
foreseeablefuture.
42
(5.4)TheRoleofSmallandMedium-sizedEnterprises(SMEs)
Withtheexceptionofthemineralexplorationsector,modernextractiveindustriestend
tobedominatedbylargeglobalfirms.Thelastcommoditiesboomescalatedmergers
andacquisitionsamongalreadyhighlyconcentratedcompanies.Manyofthesedeals
wereover-leveragedandbasedonunrealisticexpectationsforcommoditymarkets.In
somecases,individualunitsandpropertiesfromtheseventureshavebeendismantled
andsoldoff.Historically,conservativeandrisk-averseminingandoilandgas
companieslookedtowardsimilarlyconservativeandrisk-aversesupplyandservice
providers.Thesecharacteristicsarenotconducivetoinnovationandmayimpedethe
adoptionandadaptionofdisruptivetechnologiesbyextractiveindustries(Brownlee,
2016).
Inthecaseofsomelargecorporations,suchasLockheedandApple,a“skunkworks”
approachhasbeenusedtoprovidekeytechnicalandscientificstaffwiththetimeand
resourcestoengageinbreakthroughinnovationawayfromnormalcompanyoperations
(May,2012).Itisalsothecasethatdisruptivetechnologiesareoftendrivenbysmaller,
moreagile,andlesstraditionalfirms,manyofwhicharenotpartofthesupplychains
forlargeextractiveindustries.Asaresult,largeextractiveindustriesmaynotbenefit
fromthedisruptivetechnologiesoriginatingfromthesesmallerinnovativecompanies.
Unfortunately,manySMEsdonothaveagoodunderstandingofneedsofthelarger
companiesnortheirprocurementprocesses.Thislackofunderstandingisperpetuated
bythefacttherearelimitedmechanismsforinteractionbetweenSMEsandthelarge
operatingcompaniesandtheirsuppliers.Similarly,decision-makersinextractive
industriesandamongtheirlargersuppliersareoftenunawareofthetechnologyand
capacityavailablethroughSMEs.
Giventheprospectforwidespreadapplicationofdisruptivetechnologiesinconsumer
productsandacrossindustrysectors,thereispotentialforhigherlevelsofinnovation
43
andentrepreneurship,leadingtonewopportunitiesforSMEsandforthecreationof
newtechnology-basedcompanies(Manyika,Chui,Bughin,Dobbs,Bisson,&Marrs,
2013).Theneedforextractiveindustriestoembracedisruptivetechnologymayleadto
better,moreeffectiveengagementbetweenextractiveindustriesandtechnology
developers,includingSMEsandotherinnovators,traditionallyoperatingoutsideofthe
supplychainsforminingandoilandgascompanies.Newwaysofestablishing
collaborationsamongkeyplayersneedtobeexploredbyextractiveindustries.
DigitalizationprovidesanopportunityforinnovativeCanadiantechnologytoenhance
theviabilityofCanada’sextractiveindustriesandtocreateexportopportunitiesfor
Canada’stechnologycompanies,particularlySMEs.Withrespecttoenablingexport
opportunitiesforSMEs,however,Canadaischallenged.AsnotedbytheAdvisory
CouncilonEconomicGrowth,“ingeneral,Canadiancorporationsarerelativelyslowto
adoptnewtechnologyandseemreluctanttobuyfromyoungorsmallerfirms”(ACEG,
2017).TheAdvisoryCouncilwentontosuggestthatlargercompaniescouldsupport
growthofSMEs,bothbyactingasearlycustomersandbyconnectingSMEswithother
companiesintheirsupplychains.InorderforCanadianSMEstobesuccessfulin
participatinginaglobalsupplychainfortheenergyindustry,itwasproposed
governmentmust“usepolicytoensurestable,robustdomesticdemandintarget
energysectorsandconsequentlyspurindustryinnovation”(McKinsey,2013).
(5.5)OtherApproachestoInnovation
Ithasbeenlongarguedthatinnovationisasocialprocesswithinwhichpeopleinteract
todevelopideasandknowledgethatunderpinmarketableproductsandservices
(Maxwell,2003).AsdiscussedbySmithetal.,“successfulinnovativefirmsareusually
thosewhichareopentotheirenvironments.Thatis,theyengageininteractivelearning
involvingotherinstitutions:partners,rivals,andawiderangeofotherknowledge-
creatingandknowledge-holdinginstitutions”(Smith,Dietrichs,&Nas,2015).The“easy
wins”withrespecttoincrementalimprovementshavelargelybeenachieved,and
44
ground-breaking,transformativeinnovationswillcome“fromlookingattheworldfrom
severalperspectivesatonce-engineering,finance,design,marketing,moral,legal,and
soforth-andsynthesizingthemintosomethingthat’sgreaterthanthesumofthe
parts”(Jarvis,2016).
Innovationapproachesfromothersectorsneedtobeconsidered,suchastheHacking
Healthmovement,establishedin2012inMontrealandsubsequentlyexpanded
internationally.This`openinnovation’approachbringsfreshthinkingtoaddressing
challengesinthehealthcaresectorandtoengagingpeoplewiththeknowledgeand
skills,oftenfromoutsidethesector,neededtoadvancehealthcareintothe21stcentury
(Lindeman,2015).A`hackathon’bringstogetherhealthprofessionals,policymakers,
technologyproviders,technologydevelopers,studentsandfaculty,entrepreneurs,and
investorstogeneratefreshideas,toshareinsights,andtodevelopcreativesolutions
(HackingHealth,2017).Extractiveindustriesrecentlystartedtoexplorethismoreopen
andcreativeapproachtoinnovation(OGA,2016)(CMIC,2017a).Anupcoming54-hour
openinnovationhackathoninVancouverwillconsiderthree`challenges’involvingthe
useofdigitaltechnologyandanalyticstoimprovetheperformanceofdiscrete
componentsofminingoperations(Unearthed,2017).
Anotheropeninnovationapproachinvolves`crowdsourcing’solutionstomajor
challengesbyengagingabroadrangeofexpertiseandunconventionalthinking.Inthe
caseoftheoilandgasindustry,Sweden’sDraupnerEnergywasestablishedin2015to
“leveragecrowdsourcingandnetworkedinnovationoveraninternetplatformto
identifyanddelivernovelideas,innovativeprojectsolutions,developenergyandcarbon
captureandstorageprojects,andmovethemtomarket”(Draupner,2017).In2015and
2016,StatoilandGeneralElectricco-sponsoredglobalopeninnovationchallengesto
solicitconceptsforreducingtheamountofsandandwaterusedinunconventionaloil
andgasdevelopment(GE-Statoil,2015)(Statoil-GE,2016).Statoilrecentlyissuedan
45
openinnovationchallengetoconsiderhowdigitalizationcouldchangehowenergyis
producedandconsumed(Statoil,2017c).
WithintheCanadianminingindustry,theCEOofGoldcorp,inspiredbytheopen-source
softwaremovement,believedthatcrowdsourcingnewideasaboutwheretodigcould
“speedupexplorationandimprovehisoddsofdiscovery”atanunderperformingmine
inOntario(Tischler,2002).Goldcorplaunchedaninnovativechallengethatmadeallof
thecompany’sproprietarygeologicaldataavailableonthecompany’swebsite.The
challengeletoutsideexpertshaveaccesstothedatatoidentify“wherethenextsix
millionouncesofgold”wouldbefoundinreturnfora$575,000prize(ideaconnection,
2009).Itwasestimatedthatthechallenge“cuttwo,maybethreeyearsoffthe
company’sexplorationtime.Andtheworthofthisgoldhassofarexceeded$6billionin
value”.In2007,BarrickGoldlauncheditsUnlocktheValueProgramtochallenge
researchersfromaroundtheworldtoliberate180millionouncesofsilverthatwas
containedingoldreservesintheVeladeromineinArgentina(Barrick,2007).The
Barrickchallengestatedthat“experienceinminingisnotrequiredbecauseweare
lookingforinnovationandnewapproaches”.
In2015,IntegraGoldCorporation,whichisnowownedbyEldoradoGold,announcedit
wasmaking70yearsofprospectingdataavailableontheinternetinorderto“let
peoplewhoaren’tusuallyinvolvedinexplorationbringcreativedataanalysismethods
tothetable”andto“injectsomemuch-neededinnovationintoanindustrythat’s
strugglingwithhighcostsandlowcommodityprices”(FP,2015).Datacollectedfroma
growingnumberofdigitaldevicesdeployedacrossoilandgasandminingoperations
couldprovidearichsourceofrawmaterialforcrowdsourcingnewinternetofthings
(IoT)productsandservices(Ratzesberger,2015).
Othermodelsforpromotinginnovationincludelonger-term(e.g.,12-18months)design
competitionstodevelopanddemonstrategame-changingtechnology.Anearly
46
exampleofthe“prizechallengemodel”wastheDARPAGrandChallenge,an
autonomousvehiclechallenge,withavisionto“encouragenewwavesofresearchand
developmentthatwillspurcontinuedinnovation,encouragecommercialinvestment,
andlowerthecostofadvancedtechnologies”(DARPA,2014).Reflectingontheimpact
ofthechallengeprogram10yearsafteritwaslaunched,DARPAconcluded“thefresh
thinkingtheybroughtwasthesparkthathastriggeredmajoradvancesinthe
developmentofautonomousroboticgroundvehicletechnologyintheyearssince”.
AmorerecentexampleoftheprizechallengemodelistheHyperloopPodinternational
competitionthattargetedanew`fifthmode’oftransportation(SpaceX,2017).This
internationalstudentcompetitionwaslaunchedinresponsetoaproposaltobuilda
conventionalbullettrainasasolutiontostatewidemasstransitinCalifornia(Musk,
2013).Fromover1000teamsthatinitiallyappliedforthecompetition,115teams
submitteddesignsinJanuary2016and30wereselectedtobuildtheirdesignsandtodo
preliminarytestingontheHyperlooptrackinJanuary2017.Afullcompetitionamong
24teamswasheldinAugust2017,andafurthercompetitionissetformid-2018.
Anotherillustrationofthisapproachisthe8thAnnualRoboticMiningCompetitionthat
willbehostedbytheU.S.NationalAeronauticsandSpaceAdministration(NASA).This
competitionwillbringtogether50U.S.universityteams(NASA,2017).
In2017,theGovernmentofCanadalaunchedtheInnovationSuperclustersInitiative(ISI)
to“acceleratethegrowthanddevelopmentofbusiness-ledinnovationsuperclustersin
Canada,translatingthestrengthsofourinnovationecosystemsintonewcommercial
andglobalopportunitiesforgrowthandcompetitiveness”(ISI,2017).Boththemining
andoilandgasindustriesaspiretoleadsuperclusters,includingaminingcleantech
clusterandadigitaloceansclusterinvolvingtheoilandgasindustry(CMIC,2017b)
(ResearchInfosource,2017).
47
Bothofthesesuperclusterinitiativeswouldseemajorinvestmentsbyindustryand
governmenttobringtogetheranarrayofcollaboratingcompaniesandorganizationsto
advanceinnovationandmoveCanadianindustryintoaworld-leadingposition.For
example,theminingcleantechsuperclusterisan“industry-led,multi-stakeholder
consortiumcomprisedoffourexistingclusters,which,combined,represent11large
companies(includingeightresourcecompanies),13post-secondaryinstitutions,42
SMEsand25othersupportorganizations”(CMIC,2017b).Thedigitaloceans
superclusterwouldbringtheoffshoreoilandgasindustrytogetherwithotherocean
industriestoadvancetechnologiesthatcouldbedevelopedandadaptedacross
industries(ResearchInfosource,2017).
(6.0)MiningandOilandGas:DigitalSynergy
Intermsofexploringtheopportunitiesandchallengesrelatedtodigitalizationof
extractiveindustries,thereistremendoussynergybetweentheminingindustryandthe
oilandgasindustry,particularlybetweenminingandoffshoreoilandgasproduction
operations.Bothminingandoffshoreoilandgasareglobalindustriesinvolvedin
increasinglyremoteproductionoperationsinharshenvironmentsthat,bytheirvery
nature,modifytheenvironment.Boththesupplierstotheseindustriesandthe
customersareinternationalinscope.
MiningandoilandgasactivitiesgeneratesignificantexportvalueforCanadaand
employ,directlyandindirectly,alargenumberofpeoplewithawidearrayofexpertise
andskill.Employmentrepresentsamajorpartofthevaluepropositionbetweenthe
industriesandresourcecommunities.Theemploymentimpactsarenationalinscope
andparticularlyimportanttoregionswherethereisresourcedevelopment.
Digitaltechnologyhasthepotentialtoimprove,expedite,andreducethecostfor
evaluationofresources.Thiscouldleadtonewresourcedevelopmentprojectsthat
maynothavebeenevaluatedintheabsenceofimprovedresourceassessmenttools
48
thatprovideforthecollectionandprocessingofdatathatwouldpreviouslynothave
possible.
Theneedtolooktodigitaltechnologytoincreaseoperationalefficiencyinorderto
remaingloballycompetitivecouldsignificantlychangethelevelsandnatureof
employmentinextractiveindustries,and,hence,thevaluepropositionforgovernments
andresourcecommunities.This,coupledwithageneralanxietyamongthepublicabout
impactsofautomationtechnologies,furthercomplicatesthepublicconfidencedynamic.
Boththeminingandoilandgasindustriesarealreadysubjectedtoincreasingchallenges
withrespecttoachievingandmaintainingthepublicconfidencenecessarytocarryout
resourcedevelopmentprojects.
Bothsectorsarecapitalintensivewithlongpaybackperiodsoninvestments.The
financialrisk,coupledwiththecyclicalnatureofcommoditypricingandpriceshocks,
hascontributedtoweakinvestmentinR&Dandslowuptakeofnewtechnology
comparedwithotherinnovativesectorsoftheeconomy.
Bothindustrieshaverecognizedtheneedtoembracedigitaltechnologyiftheyareto
survive,letaloneflourish.Thereisanopportunityfortheseindustriestoworktogether
tounderstandtheirdigitalfutures,andthoseoftheiremployeesandtheresource
communitiesandregionsinwhichtheseindustrieswishtooperate.
Forbothminingandoilandgascompanies,thefuturecouldincludeheavilydigitalized
assets(i.e.,oilrigs,miningequipment),capableofhighlevelsofautonomyandinter-
assetcooperation,operatingwithinchallengingnaturalenvironments(e.g.,adeepor
remotemineorfaroffshoreoilfield)monitoredusingadvancedembeddedandremote
intelligentsensortechnology.Thesedigitalizedassetsandintelligentsensor
technologiescouldbeconnectedviainnovativecommunicationsystemstodigital
enterprises(i.e.,missioncontrolcentresandotherremotecentresofexcellence),where
49
expertswouldmonitorproductionoperationsremotely,interactviatechnologywitha
limitednumberoffieldworkersatproductionsites,andperformcomputationalanalysis
ondatacollectedfromremoteoperationstooptimizeproduction,equipment
maintenance,andassetutilization,whilesimultaneouslyensuringregulatory
compliance.Thedigitalenterprisecouldbepartofadigitalworldinwhichtechnology
wouldbedeployedtoimprovesupplychainmanagementandresourcemanagement,to
balancesupplyanddemandforproduct,tomanagecontractingamongprojectpartners,
andtohelpsecureandmaintainpublicconfidence.
(7.0)ConclusionsandNextSteps
Thenextgenerationofminingsharesanemergingvisionofincreaseddigitalizationof
productionoperationswiththeoffshoreoilandgasindustryofthefuture.Giventhe
importanceoftheminingandoilandgasindustriestotheCanadianeconomy,itis
criticalthatCanadapreparesforthedigitalfutureoftheseextractiveindustries.
Challengesresultingfromdigitalizationoftheseindustries,however,mustbeidentified,
understood,andaddressedbyadiverserangeofstakeholders.Someofthese
challengesincludeintegrationwithlegacyproductionoperations,impactson
employmentandthenatureofwork,securingtalentwiththerequirededucationand
skills,morecomplicatedrelationshipswithgovernmentsandcommunities,andbeing
innovativewhilecomplyingwithregulatoryrequirements.
Whilederivingeconomicbenefitfromminingandtheoilandgasresourcescould
continuetobeimportanttoCanada,itwillbecriticalforresourcesindustries,andthe
supportingsupplierandservicecompanies,tounderstandemergingdigitaltechnology,
asinnovators,consumers,andexportersofsuchtechnology.Aspartofthedigital
economy,modernminingandoilandgascompaniesmayaccruebenefitsincluding
increasingthesafetyofworkers,improvingenvironmentalperformance,protecting
publichealth,improvingproductivityandefficiencyofoperations,shorteningthe
50
exploration-development-productioncycletime,increasingreliabilityofequipment,and
reducingcapitalinfrastructurecosts.
Thechallengesandopportunitiesfromdigitalizationcomeatatimeofconsiderable
mediahypeabouttechnologiessuchasartificialintelligenceandautomation.Some
pioneersinthefield,suchasRodneyBrooks,havelamentedthe“hysteriaabouthow
powerfultheywillbecome,howquickly,andwhattheywilldotojobs”(Brooks,2017).
Brooksdidnotsuggestthattherewillnotbechallengesandimpactsfromthese
technologies,butthesewillnotbeassuddenorunexpectedassomepredict.Finally,as
notedbyBrooks,“almostallinnovationsinroboticsandAItakefar,far,longertobe
reallywidelydeployedthanpeopleinthefieldandoutsidethefieldimagine”.Thisis
nottosaythatstakeholdersinCanada’sextractiveindustriescanaffordtodelay
preparingforadigitalfuture.
Globally,digitaltechnologywilltransformextractiveindustries.ForCanada,this
providesanopportunitytoleadindevelopingandcommercializingtheenabling
technologies,inintegratingthesetechnologiesintoglobaloperations,andin
consideringthebroadersocio-economicandregulatoryconsequencesofdigitalization
oftheseextractiveindustries.
DigitalizationofextractiveindustriesinCanadawillcertainlyposeopportunitiesand
challengesforadiverserangeofstakeholders.Inadditiontotheoperatingandsupply
andservicecompanies,individualsandcommunitieswillbeaffectedbydigitalization,as
willgovernmentsandinstitutions(e.g.,educationsystems,regionaldevelopment
organizations,unions,andregulators).Successfullyaddressingtheopportunitiesand
challengeswillrequireearlyandeffectiveengagementofallstakeholdersthatis
informedbyrealisticdigitalizationscenarios,timeframesfortheirimplementation,and
assessmentofthebroaderissuesandimpacts.
51
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