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.
Alberta Innovates – Technology Futures
Edmonton
Edmonton
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Devon
Vegreville
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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
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
AITF A/R and Commercialization
Program Model
Strategic Research
Focus: technology development
Technical Services
Focus: testing, problem
solving, development
Funding: fee-for-service
Funding: internal investment,
government and industry partners
Technology
Commercialization
Focus: product/process
development
Funding: 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)
Innovation Bridges the Gap
Commercial
Product
Discovery
Traditional ARC Focus
Industry Focus
AITF’s Focus Now
Our business is to help build globally competitive commerce in Alberta.
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
• 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
• Industry Revenues: $23.3B
•Employment: 136,200 (direct)
For more information go to: www.energy.alberta.ca/OilSands/791.asp
Nature of Resource
65.1 billions of
m3 (24.5%)
85.18 billions of
m3 (32%)
12.4 billions of
m3 (4.7%)
Thin
Challenging
103.1 billions of
m3 (38.8%)
Accesible
Carbonate
Initial Bitumen Resources (insitu)
Source: ERCB ST98-2010
1921
1945
1965
Time
SAGD technology
1975
Cold Lake
Syncrude
Suncor
Bitumount
ARC founded
Rise of Oil Sands
1985
2000
Government R&D $ vs Production 2009
180
5000
160
4500
4000
140
$ (CA Millions)
.
New Projects Online
3000
100
2500
80
2000
60
1500
40
1000
20
500
0
0
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
2017
Million Barrels .
3500
120
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
Oil Sands: Improved Efficiency
OLD
NEW
Dragline & Bucketwheel
Energy
Efficiency
Truck & Shovel
Conveyor & Tumblers (80°C)
Vertical Wells
Coal fired
Power Plant
45%
Reduction in
C02 per
barrel
Low Energy Extraction
25 - 50° C
Hydrotransport
SAGD Horizontal Wells
(1990 vs 2008
technology)
Co-Gen Power Plants
Oil Sands: Future
• Near zero emissions of sulphur, nitrogen
oxides, particulates, mercury, trace
elements and organics
Electrical Energy
Lower Energy Extraction
Hydrotransport
• 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
Hybrid Solvent
• Full and effective site remediation &
reclamation
• Low thermal signatures
Polygeneration
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
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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
Technical
Committee
Program
Manager
Program
Administrator
Ideation Leader
Evaluation
Leader
Technology
Development
Leaders
IP Leader
Field
Application
Leaders
Project Leaders
Project Leaders
Project Leaders
IP Creators &
Improvers
Project Leaders
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
Ideation Incubator Stage
Idea understandable & reasonable
Evaluation Stage
IP
Stage
Idea likely achievable & commercial
Development Stage
Idea developed as far as reasonable
Field Support Stage
Commercial recovery processes
research & field piloting support
Program Support Area
Program Management, Capital Amortization,
Misc. Supporting Projects
AACI Program Structure and Flow Chart
Tripartite Strategy
Laboratory
Field
- Data
- Scaled
- Field scale
- Mechanistic
- Testing
- Pilot support
Uncertainty
Reduction
Process
Development
Numerical Simulation
- High level users
- Model 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 !
Contact Information
Rick Tofani
Vice President New Ventures
(acting)
403.210.5203
rick.tofani@albertainnovates.ca