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Working with Unconventional Oil Producers I-Can Innovation School
Rick Tofani VP New Ventures (acting) October 20th, 2011
AITF’s Vision and Mission
• Vision: AITF is recognized as Canada’s leader in generating prosperity by accelerating innovation and entrepreneurship.
• Mandate: Our business is to help build globally competitive commerce in Alberta.
Edmonton Edmonton
Devon
600 employees 100,000 m2 of bench
and pilot-scale facilities Industry driven contract
research programs 1,000+ industry clients
per year Funding programs
focused on talent development
Six regional innovation networks
‘Bringing Technology to Market’ funding programs
$160 million annual budget
Vegreville
Alberta Innovates – Technology Futures
Alberta Innovates – Technology Futures
Mandate: Tech Futures' business is to build globally competitive commerce in Alberta through
Facilitating the commercial use of new technologies Developing new knowledge-based industry clusters Encouraging an entrepreneurial culture in Alberta
Tech Futures offers Technical R&D support and advisory services Innovation and talent development programs Regionally accessible commercialization support
Alberta Innovates – Technology Futures
Funding Programs
Post Secondary Investments – funding programs for research chairs (research intensive institutions) and research and commercialization centers ($25 million)
New Ventures – a number funding programs for industry (6), university TTO’s & college applied research offices, technology development advisors (TDAs) and NGOs ($35 million)
Heavy Oil and Oil Sands (HOOS)
The HOOS group at Tech Futures is currently working in the following sub-program areas: •Recovery technologies •Surface separation technologies •Production technologies •Quantitative imaging centre •Analytical laboratory support
Focus: technology development Funding: internal investment, government and industry partners
Strategic Research
Technical Services TechnologyCommercialization
Focus: testing, problem solving, developmentFunding: fee-for-service
Focus: product/processdevelopmentFunding: internal investment, industry partners, other investors
……all in collaboration with other stakeholders such as Canadian and international industry, government, universities and colleges ($100 million/year)
AITF A/R and Commercialization Program Model
Our business is to help build globally competitive commerce in Alberta.
Innovation Bridges the Gap
Traditional ARC Focus Industry Focus
AITF’s Focus Now
Commercial Product Discovery
Oil Sands and Heavy Oil Focus!
Oil Sands Statistics (2009)
• Capital investment: – $13.5 billion ($20.7 in 2008) – $104 billion of infrastructure
built from 1999–2009 – $40 billion expected by then
end of 2012 • Provincial Royalties: $2.2B • Proven Reserves at Year End:
– 169.9 billion barrels – 80% by In situ, 20% by mining
• Industry Revenues: $23.3B •Employment: 136,200 (direct)
• Production: – 1.5 million bbl/d (741,000
bbl/d in 2002) • Mining: 55% • In-situ: 45%
– Oil sands production will grow
• 3.5 million bbl/d by 2015 • 4.0 million bbl/d by 2020
For more information go to: www.energy.alberta.ca/OilSands/791.asp
Nature of Resource
65.1 billions of m3 (24.5%)
12.4 billions of m3 (4.7%)
103.1 billions of m3 (38.8%)
85.18 billions of m3 (32%)
Thin
Challenging
Accesible
Carbonate
Initial Bitumen Resources (insitu)
Source: ERCB ST98-2010
AR
C fo
unde
d
Time
Bitu
mou
nt
Sun
cor
Syn
crud
e
Col
d La
ke
SA
GD
tech
nolo
gy
1921 1945 1965 1975 1985 2000
Rise of Oil Sands
Government R&D $ vs Production 2009
0
20
40
60
80
100
120
140
160
180
1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
$ (C
A M
illio
ns)
.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Mill
ion
Bar
rels
.New Projects Online
Stakeholder Challenges/Opportunities •Canadian Association of Petroleum Producers (CAPP) • Costs continue to increase
– Capital is global, not just regional – One of the major operating costs
is fuel (natural gas) • Labour availability • Infrastructure
– Private: pipelines, upgraders, refineries (new markets), etc.
– Public: roads, housing, education, health care, etc.
• Environmental Protection – Air, water, land, wildlife
• New markets – Diluent supply and upgrading
• Government Policy – royalty, value-added &
environmental
•Alberta Innovates – Energy & Environment Solutions (AIEES) • Challenges – technology innovation • Natural gas substitution
– Rising cost and future availability of natural gas in 2008 but 2011?
– Steam generation – Hydrogen for upgrading
• Improved recovery processes – Significant portion of resource
not currently economic • Air emissions, land & water management
– Land disturbance / reclamation costs
– Manage water demands • High GHG emissions add significant risks
OLD
Conveyor & Tumblers (80°C)
Vertical Wells
Dragline & Bucketwheel
Coal fired Power Plant
NEW
SAGD Horizontal Wells
Truck & Shovel
Low Energy Extraction 25 - 50° C
Hydrotransport
Co-Gen Power Plants
Energy Efficiency
45% Reduction in
C02 per barrel
(1990 vs 2008 technology)
Oil Sands: Improved Efficiency
Hybrid Solvent
Electrical Energy
Lower Energy Extraction Hydrotransport
Polygeneration
Oil Sands: Future • Near zero emissions of sulphur, nitrogen
oxides, particulates, mercury, trace elements and organics
• 40-50% reduction in CO2 emissions by efficiency improvements, near 100% reduction with carbon management and storage
• Limited net water use
• Maximized solid waste usage and value added products
• Full and effective site remediation & reclamation
• Low thermal signatures
SAG-D Steam Assisted Gravity Drainage
AACI Research Program
AITF Core Industry Research Program "To develop significantly improved, economically viable and environmentally sustainable in-situ recovery technologies for heavy oil and bitumen through research evaluation and technology partnerships"
AACI Research Program
Focused: In situ recovery of heavy oil and bitumen Reservoir and near wellbore phenomena
Stable program currently in 28th year Industry driven & directed 19 industry members 1 government member 1 vote / member 70+ staff at one time
~ $ 3.8 million / year
AACI Members: 2010/11
• Alberta Innovates – Energy & Environmental Solutions
• Alberta Innovates - Technology Futures
• BP Petroleum • Canadian Natural Resources • Chevron • Computer Modelling Group • ConocoPhillips • Devon Canada • ENI • Husky Oil
• NOTE: $140k/member AITF investment, $1.1 m/yr
• Imperial Oil Resources • JACOS • Marathon Oil Canada • Nexen • Oilsands Quest Inc. • Repsol YPF • Schlumberger • Shell International • Statoil • Suncor • Total
RD&D Delivery Mechanisms • Value proposition well defined!
Good technology roadmap defined and evergreened Need strong implementation strategy (5 year windows)
• Champion(s) in place and passionate! • Adequately funded – but not too much! • Collaboration open to all stakeholders
Finding the win-win (i.e., AITF/Idaho National Lab) • Pre-competitive vs competitive research • Strong program design in place (the technical business case):
Representatives of government/producers focus on program direction and decision making
Foundation of program is the relationship Trust and confidentiality critical
Flexible business/contractual mechanisms Understanding of IP ownership, management and use rights Effective RD&D program management and administration
AITF Working Arrangements • Flexible mechanisms for short- & long-term benefit:
Joint government-industry research projects & consortia Contract R&D Occupancy and service agreements
• Medium to large-scale demonstration projects • Intellectual property management, licensing & commercialization
support (Recently lost mgmnt contract - $1m/year for IP) • Support to industry:
Help link, both technically and personally, to the appropriate Alberta based energy operator
Provide technical support to adapt technology to the Alberta situation and environment Helps to focus activity in the Alberta energy industry and dramatically reduce
their risk in developing business opportunities
• Collaborative work with academia, government and research institutes, and industry
AACI Leadership Structure
Policy & Program
Committee
Program Manager
Ideation Leader
Project Leaders
Evaluation Leader
Project Leaders
Technology Development
Leaders
Project Leaders
IP Leader
IP Creators & Improvers
Field Application
Leaders
Project Leaders
Program Administrator
Technical Committee
AACI Technologies
Current technologies being researched:
Expanding Solvent SAGD (& Declining Pressure ES-SAGD) Steam Butane Hybrid (SBH) Process Multi-Stage Combustion Assisted Gravity Drainage (MS-CAGD)
Process Cyclic Solvent Injection (CSI) Steam Assisted Gravity Drainage (SAGD) Waterflooding
AACI Program Structure
IP Stage
Program Support Area
Program Management, Capital Amortization, Misc. Supporting Projects
Ideation Incubator Stage
Field Support Stage Commercial recovery processes research & field piloting support
Idea understandable & reasonable
Idea likely achievable & commercial
Idea developed as far as reasonable
AACI Prog ram Structure and Flow Chart
Development Stage
Evaluation Stage
Tripartite Strategy Laboratory - Scaled - Field scale - Mechanistic
Numerical Simulation - High level users - Model development
Field - Data - Testing - Pilot support
Uncertainty Reduction
Process
Development
AACI Research Program Membership Benefits
Access to research results from all years of program
Prompt disclosure by all is practiced
Maintains R&D capacity/skills to support all industry
Free License for use of technology developed during membership
Publication and promotional rights – upon approval
One vote on Policy and Program Committee
One vote on Technical Committee
Unlimited attendance at workshops and conferences
Direct communication between researchers and engineering and field staff throughout the year
Learnings & Benefits
Learning Never Stops and there’s always new issues, priorities or obstacles!
Partners go, new partners come in, people and therefore ideas perceptions change (regularly).
Need to over communicate and focus. Over $1 billion per year in Royalties to the GoA from
SAGD operations, but its really about the outcomes ..Building the oilsands industry. SAGD & others enables
OSTECH/OS-PORT – next generation technology portal and technology assessment and therefore ongoing new opportunities for the AITF (AACI) Program.
Building a “technology test mine” in Fort McMurray…is required to test technology at pilot stages.
Defining Innovation
• Never forget the most important element of innovation !
• http://www.youtube.com/watch?v=C7nqzi4VrW8
Questions and Comments from
Others !
