Thank you, Mr. Chair.
Good evening, ladies and gentlemen.
My name is Cal Broder. I represent a company I have called BFH Corporation. I struggled with coming here today, not in the sense that it's not an honour to be here but in the sense of what to talk about, because it's such a broad area. What was presented to me was to look for ways to de-risk.
First of all I'm a businessman, but I'm also an innovator and an inventor, as was pointed out previously by SDTC. They're different. I'm also a risk-taker, and risk-takers are kind of unique for the resource industry, because they're de-risking and de-risking. They're not risk-takers anymore. There is nothing wrong with that; it's just an evolution.
What I'm looking to do is to show that we can do things differently through innovation. One of the things that we do is show that we can transport our crude oil. I'll pass it around. This is bitumen, if anyone hasn't seen it before. Bitumen is not a conventional crude oil. It's unconventional. It's not meant to be in a pipeline, quite ironically. It's meant to be a solid.
The point is to move an unconventional crude oil in a pipeline, and I have no problem with doing that, but there is a safer, better, more cost-effective way, and that's as a solid.
When we look at innovation, the challenge we have as innovators involves three things, in my mind.
One is that we have a difficult time getting through the doors of the users, of the producers, of the suppliers, of the customers.
Second, we have a problem with technology. We've talked briefly about that, and I've heard the previous conversations. An innovator wants to protect his technology. A producer and a user want to be able to use it. I've had numerous discussions and disagreements on how we would move forward with technology, because there is incongruence. They want me to share technology openly; I can't possibly share technology openly, because that would release all the proprietary information.
As a result, we have step two, which are the challenges of dealing with that confidentiality. Confidentiality is the key part, because I can sometimes get through the door, but if I can't get through confidentiality, I'm finished, and we're stuck, and that's where we've been for some time.
Step three is the demonstration.
Just to give you some background with the industry, I need to go out and find somebody from industry, one of the producers, to say, “I've got a new way to do it”, but I have to find a way to get through that door first and I have to find a way to get through the legal complications of that. Then, once I finally do that—and we've done that with some—we can finally look at a demonstration. However, we have a new technology, a new process that nobody understands. Now the law will get in, the human resources, and everybody gets in, and it again complicates and compounds everything.
What I'm trying to get across is that it's not a simple process to ask how we can de-risk the industry. How can we de-risk any innovator? You have the facilities, you have the programs, and you have the institutions in place. In my opinion, from my perspective, they might just not be that congruent to get through.
I'll give you a couple of examples. Western Economic Diversification says that we can apply for funding, and we can, but when we applied in the past, we would have to set aside money at the time of the application and wait almost18 months. SDTC is much the same. The programs are designed in such a way that they exclude a small firm, small innovators, because we have to set aside the funds at the beginning and wait 16 to 18 months in order to get approval to be able to then start our project.
We have a number of these challenges out there, but the greatest challenge is that we have a product, a service in Alberta, a product that is unique, and it's not solid oil. We've done some testing with solid oil. Even the product in the bag we've had subjected to what we call an LC50 test. We take that oil, put it into a fish tank, and see what the mortality rate is. If you do that with crude oil, any crude oil, you have great mortality, almost 100% in most cases, very quickly. When we had it done, there was no mortality, so we're looking at a safe way to move it, a safe product. We have the same product in the end; it's just a different way to move it.
The issues I see may be slightly different from what others see, and that's probably why we have the process we have. We have a patented process that shows we can move this product in a very safe way, but it is more than that. It allows us to transition from being an exporter of a crude oil to being an exporter of refined products, because our process, our technology, is a refining process that is scalable.
Earlier Mr. Thorsen from MEG said their costs to get oil out of the ground, their capital costs, are about $30,000 per flowing barrel. The cost to Suncor, which has that new Fort Hills mine, is about $84,000 a flowing barrel. It costs a lot of money.
We also look at the issue of transportation to a market. Everybody thinks the pipeline is the way to go, but our product isn't made for that. We can actually move product to the gulf coast in this format cheaper than pipeline, because for every barrel they have to ship by pipeline, they have to add half a barrel in the summertime. That adds huge costs.
Also, when we look at the landed cost of Alberta's heavy oil to the gulf coast, we see it's being landed in the refineries for very close to world prices, plus or minus 5%. That tells me we're not being shorted. It's our transportation costs that are causing the problem.
There are a lot of issues. That's why, when I came here, I didn't know where to focus, but I wanted to just throw out some points to you, because it is a very complicated process of extraction. I think what you're tasked with may be even more difficult. It sounds as though we're trying to de-risk something that we haven't been able to define, and we haven't defined what it is we want as a result. We want to be able to help the industry, but are we truly helping them the way it is, or do we look at doing different things?