Natural Resources Committee on March 21st, 2016

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay, and perhaps in referring to the old oil sands, how broadly are these technologies adopted when they are made available, or is it more the new projects that are coming online?

[Dan Wicklum]

I think it's both. With many of the new technologies, it's not straightforward to use them to retrofit older production facilities. We have two general types of technologies we're working on for our portfolio. One is retrofittable, meaning it might be new technology, but you can use it in existing facilities. The reality is that with some of the more striking technologies, it's not that straightforward to retrofit.

We work on both in that idea of a portfolio approach to make sure we're going to be successful. We're not putting all our eggs in one basket, or counting on one, or two, or three technologies. That's why we have 252 projects.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Getting back to the lowering greenhouse gases goal, I wonder what role renewable and green energy sources might play in reaching that goal, and if you're investigating those.

[Dan Wicklum]

We have projects to do with renewables right from the algae project, and we have other companies that are taking a look at wind projects.

I think the reality is that the current state of the technology associated with renewables is not there in order to produce the dense energy we need in many cases for mobile transportation.

These are energy companies. In many cases they have this concept of a renewable in their portfolio even outside of COSIA, but we definitely have renewable projects in our portfolio. That's the notion of a portfolio approach where you hedge your bets and you take deliberate investment decisions on what proportion of your investment collectively across the sector would go to different types of opportunity areas, as we define them.

Renewables are definitely something the companies are interested in and actively pursuing.

[The Chair, Liberal, James Maloney]

Thank you. That's time.

Over to you, Mr. Tan, for seven minutes.

[Geng Tan, Liberal, Don Valley North, ON]

Thanks for your presentation.

In your presentation you showed us some major projects, I think six projects that are being conducted. You also mentioned there are 819 technologies being shared.

Can you give us some successful examples which the sector has innovated in the past?

[Dan Wicklum]

I'll go through each of our project portfolios.

In tailings, what the companies are working on and have already implemented are essentially industrial steel centrifuges. The problem with the oil sands tailings is that they end up being almost a yogourt. It's very difficult to get the solids separated from the water quickly and easily so that those solids can then be reclaimed into a natural landscape. The companies are spending an awful lot of money on developing new technologies on how to deal with these oil sands tailings, or it's called the fines.

One of the things that Syncrude has done is they have developed a very large industrial-scale centrifuge concept where the tailings are literally put into a centrifuge, spun, and the centrifugal force forces out the water. They have those operating right now. They show great promise, and they've shared all the technology with the other companies as well.

I know Shell is also pursuing a centrifuge solution. They saved millions and millions and sped up their operation by years just by taking all the good legwork that Syncrude has done rather than starting from scratch. There's one example.

Another example on land is that companies are coming together inside COSIA, and often they do things at a scale that's not possible outside an organization like COSIA.

I'm thinking of one issue, which is the boreal caribou issue. Boreal caribou are a species that live in northern Alberta, and they require large tracts of land in order to have viable populations. Pre COSIA, companies were doing reclamation on the landscape. Inside COSIA, they have the structure and the culture so that they can collaborate so that the reclamation plans mesh together inside a complete range and scale that is required for the caribou. That's the kind of thing they can do inside COSIA that they can't do individually.

I've talked about the rifled tubes, so maybe I'll leave that one.

With greenhouse gases, our molten carbonate fuel cell definitely is a flagship.

We have other things that range from what I call meaningful incremental to transformational. Meaningful incremental could be something that we call vacuum-insulated tubing. When you produce oil sands, you have to transport heat an awfully long distance, and what the companies are doing is putting tubes inside tubes and then creating a vacuum between the two of them that amounts to basically a thermos so that when you put your heated solution through the inside of the thermos, you lose less heat.

Another thing that we've done, just by way of example, is we've tried to find ways that could lead the world in using low-grade heat. Heat that's about 60°C often just gets wasted; it just flows into the atmosphere. We partnered with General Electric, where we offered a $1-million challenge to anyone in the world who can come up with new ideas of how to capture low-grade heat. We've identified a couple of solutions in Italy, the U.K., India, and the United States of America, and now those are being tested inside the oil sands context.

That's an example of how our global network is really starting to bear fruit in developing this ecosystem. With companies there's just not enough people to have individual, face-to-face interactions, so we use our partners to search the world for us as well.

[Geng Tan, Liberal, Don Valley North, ON]

Are there specific areas that you think could be improved the most or the fastest? In other words, do you think there are any—

[The Clerk of the Committee, Mr. Michel Marcotte]

Just so you know, when the picture is frozen, they can still hear, but when it goes blue we lose them for a few seconds.

They're reconnecting. Sorry.

[Geng Tan, Liberal, Don Valley North, ON]

Are there specific areas that you think could be improved? Do you think there's going to be any major technology breakthrough in the next few years?

[Dan Wicklum]

Are there any areas that need to be improved? I'll answer that from a scientific perspective, and one that I hope you don't think is trite, and that is, every area can be improved. In COSIA and these oil sands companies, we take very much a continuous improvement model. Just because things are going well doesn't mean they can't go better, quicker, more inexpensively. That's the philosophy we embrace every day at COSIA.

Having said that, we have these opportunity areas and these gaps, and when we take a look at those gaps, we map them towards our current project portfolio, our 252 projects, and technically we make an assessment as to whether there is sufficient effort in our project portfolio to close the gap. If there's not, then what we'll do the next year is launch more projects.

I'll use this as an opportunity to draw attention to another concept. In some cases we have a gap, an innovation need, and the companies think that gap is particularly amenable to telling the whole world about it. We take some of the gaps and we write them up in a three-page document, including technical specifications, into what we call a challenge. That challenge is written in a way that you don't really have to understand oil sands to understand the innovation need. Then we ship that challenge basically through a series of channels around the world so that we can have, very literally, a water engineer in Israel working on a Canadian oil sands innovation challenge. So that's one thing.

The second part of your question is whether there are technological breakthroughs. What I'd say, and again, this is a bit tongue in cheek, is that as scientists and engineers, we have a hard time scheduling our breakthroughs. If it were that easy, we'd do it. Having said that, what we have done, we believe, is created the conditions to absolutely maximize the chance of success. Innovation theory shows that when you focus, when you articulate a very specific innovation need that you have, and when you put sufficient resources against it, and attract the best minds in the world to work on those challenges and problems, you get great progress. That's where we are. By taking a portfolio approach, you can actually manage a pipeline of projects, and we have a very robust innovation pipeline of projects.

[The Chair, Liberal, James Maloney]

Excellent. Thank you.

Now we're moving into the five-minute round.

I understand, Ms. Stubbs, you're next on the list.

[Shannon Stubbs, Conservative, Lakeland, AB]

Yes, thanks, Mr. Chair.

Thank you for joining us today. Suffice to say that we can all be proud of the rapid innovation and the world-class development of oil sands, so thanks for putting that on the record here today for all of the committee members.

You've alluded to this, but I just want to note for the committee that the chief economist at the International Energy Agency, who is one of the world's foremost energy economists, recently confirmed that GHG emissions from Canada's oil sands are, in fact, quite low, especially in the global context. I'll just note that he said, “There is a lot of discussion on oil sands projects in Canada and the United States and other parts of the world, but to be frank, the additional CO2 emissions coming from the oil sands is extremely low.”

Given that emissions are quite low, and per-barrel emissions have actually been decreasing as innovation has advanced, could you expand on how innovation will further enhance the already strong carbon competitiveness of Canada's world-leading oil sands?

[Dan Wicklum]

GHGs, greenhouse gas emissions, are one of our top four priority areas. Many of the projects, not only in what we call that environmental priority area, or EPA, but also the ones in the other EPAs, have a direct reduction of energy or reduction of GHG emissions potential. Again, that's one of the company's highest priorities.

One of the things we're doing is we take what we call a directed innovation approach. You can think of innovation in two ways. One is essentially just asking anyone if they have a good idea, and then seeing if it maps to oil sands or whether it could be used in an oil sands context. That's one approach, and that can yield good results. What we try to do is exactly the opposite. We try to get the smartest, most informed, most motivated people, figuratively, in a room, and then articulate exactly what we're trying to accomplish. Then we tell that to the world. We call it very directed. It's actually creating your own future. One of the best examples of directed innovation was when President Kennedy stood up and said, “Watch us, We're going to put a person on the moon by the end of the decade.” That's the type of thing we do at COSIA: we define the future and then make it through a top-down, directed innovation approach, as opposed to a bottom-up or passive innovation approach.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you.

We know Canada has a credible and world-renowned regulatory system, although the current transitional approach does create uncertainty for an industry that needs stability and predictability now more than ever.

In light of the massive investments required and the timelines for innovation, I wonder if you have any comments on how increasing the complexity of regulations, the costs, perhaps duplicating what is already being done provincially, and expanding lengthy approval processes impact the innovative implementation and growth of Canada's oil sands.

[Dan Wicklum]

I'm going to invoke one small luxury I have, and that is the fact that we are a group of scientists and engineers helping the companies collaborate and innovate, and for this reason, we don't take positions on policy and regulation.

What I do know is that in many cases, testing new technologies or new practices requires co-operation from the regulator. We have seen that here in Alberta, where the regulator is very amenable to keeping a high standard of environmental performance but is willing, in one-off and controlled and prescribed examples, to allow the companies to test technology that may not have been permitted under a previous regulatory regime. You've touched on a very real thing, the concept of the regulator allowing innovation to happen.

[Shannon Stubbs, Conservative, Lakeland, AB]

Given Canada's position globally, and that the oil sands drive Canada's position in energy development in the world, do you know of any other examples like your organization in other energy-producing nations?

[Dan Wicklum]

Most sectors have some type of organization within which they co-operate. As far as we know, we are the only organization that pushes collaboration to the depths that we do. I'll make a quick distinction. “Co-operation” means organizations coming to the table to learn, but frankly, they are doing it for the purposes of their own company. That's the way we define it. “Collaboration” as we define it means organizations coming to a table like COSIA for the benefit of all and the regional acceleration of environmental performance improvement. They take off their competitive hat and put on a collaboration hat, and they do it for the right reasons.

To answer your question, we don't know of any other organization globally that does this like COSIA does it.

[The Chair, Liberal, James Maloney]

Mr. Harvey.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

First of all, I'd like to thank you for giving us your presentation today. I have the utmost respect for what you do in your organization.

I wonder if you could elaborate on what COSIA's priorities are for the coming year. Even more extensively, does COSIA develop a long-term framework within the pipeline structure of innovation to target what the priorities are and where you'd like to see the innovation go over 1, 5, 10, or 20 years? If so, how does this help drive innovation in environmental change, particularly in respect of climate change and greenhouse gas emissions?

[Dan Wicklum]

First of all, thank you for your kind words in describing what we're doing here at COSIA. Personally, I play some minor catalysis or leadership role. It's really the companies that deserve all the credit for doing this, especially from the top down. It's the CEOs who are making it happen. They deserve the credit for sure.

To the substance of your question, regarding the type of planning framework we can use and the timelines, that really goes fundamentally to what COSIA does as an organization. In many cases, some of these 13 companies are very sophisticated parts of global organizations that have been around for decades and decades. Imperial Oil has been around for over 100 years as part of Exxon Mobil.

Over that time, they've developed very sophisticated planning structures, dated decision-making and risk models, and so on. Each company makes its own decisions within its own company structure. We provide that overarching framework that allows them to leverage and to share, but with that we have a series of about five key tools that we use to map things like project impact versus cost, or project impact versus probability of success. We use something called a technology funnel. If you want to have good ideas and be ready for commercial implementation every year coming out one end of the funnel, you have to have lots of ideas coming in the other end of the funnel, because not all of them are going to work. We just know that. There's attrition along the way. We have a very formal funnel model whereby we take a look at each of our priority areas, with regard to what proportion of investment and projects are at what we call discover, develop, demonstrate and deploy stages. That's the latest innovation theory for project portfolio management.

With regard to the last part of your question, we have a formal five-year strategic plan. That being said, many of the projects have a longer time horizon than that. Normally, just by rule of thumb, in this type of sector, people think about a 10-year time horizon from ideation, meaning discovery or the twinkle in someone's eye, to commercial deployment. Our job is to push that down, and we have a five-year strategic plan to that end.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Okay. I have another quick question.

You have 39 associate members and you identified three key hubs earlier in your presentation. I want to touch on two of them.

Sustainable Development Technology Canada is an organization I have a lot of respect for. I've watched the work they've done in the past. The other organization is Carbon Management Canada.

With regard to those two companies and the role they play within COSIA in helping to foster development technology, could you touch on what their role is currently and how they could play a greater role in the future?

[Dan Wicklum]

For Sustainable Development Technology Canada, SDTC, I'm privileged to sit on their member council, so we do have a structural linkage there between that organization and ours.

Carbon Management Canada morphed out of a network centre of excellence that had been funded by NSERC, and they are sort of recreating themselves, but we do have a connection with those folks there as well.

I guess the trick and the art in all of this is to focus as much as you can on what you're trying to accomplish but not necessarily on how. In some cases, we take a portfolio approach. In some cases we do take a bottom-up, more passive approach. We essentially ask if anyone has a good idea about how to make a certain kind of valve.

The other end of the spectrum is to be very directed and deliberate and to say that this is the exact piece of technology that we need. We're exploring something with both SDTC and a fund in Alberta called Climate Change and Emissions Management Corporation, CCEMC, which is a multi-hundred-million dollar fund that is populated by a carbon charge that the Alberta government levies on what we call large final emitters. I sit on that board, and along with many of our partners, we're exploring the concept of directed innovation.

Instead of just asking innovators what their good ideas are, we take the time to sit back and we plan and [Technical difficulty—Editor].

[The Chair, Liberal, James Maloney]

Could you finish your answer quickly?

[Dan Wicklum]

This concept of directed innovation is at a strategic level and, at the risk of sounding heavy-handed, it's almost from a top-down perspective, saying that these are innovation priorities and then asking the innovation community to self-organize, as opposed to a more bottom-up approach. That's something I think we're certainly exploring at CCEMC and SDTC as well.