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CAPP’s member magazine

Volume 4 . Issue 3 August 2016

ENERGY EXAMINED.

COSIA AT THE CROSSROADS:

THE ENVIRONMENTAL INNOVATION ISSUE

Turning the corner in the drive to improve environmental performance

MEET THE INNOVATORS: Profiles of leaders in oil and natural gas innovation

WHAT’S UP AT CAPP: Q2

TRANS MOUNTAIN TOOLKIT

THE CLIMATE AND INNOVATION TASK GROUP Publication Number: 2016-9203


TABLE OF CONTENTS Volume 4 Issue 3 THE ENVIRONMENTAL INNOVATION ISSUE

The official member magazine for the Canadian Association of Petroleum Producers (CAPP) Volume 4 Issue 3 Publication Number: 2016-9203 context@capp.ca | www.capp.ca/context

12 PUBLISHER Jeff Gaulin, vice-president communications CAPP Jeff.Gaulin@capp.ca MANAGING EDITOR

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18

Brenda Jones, manager communications CAPP Brenda.Jones@capp.ca EDITOR

DEPARTMENTS

Andrew Mah, communications advisor CAPP Andrew.Mah@capp.ca

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President and CEO’s Message

ART DIRECTOR

4

Safety 101

Birdeen Selzer, Blunt Strategic in co-operation with mindjello creative

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What’s Up at CAPP?

CONTRIBUTORS

16

O&G 101:

17

inContext

DISTRIBUTION AND MEMBER UPDATES

18

Energy Citizen Toolkit

Janine.Vandenberghe@capp.ca

R&D Funding

FEATURES 8

12

Brian Buchsdruecker, David Coglon, Mark Cromwell, Jason Dziver, Greg Locke

Janine Vandenberghe, administrative assistant CAPP Please contact for changes in contact names and delivery addresses. CONTEXT CONCEPT, STRATEGY AND PRODUCT DEVELOPMENT

COSIA at the Crossroads

Agnes Zalewski, Blunt Strategic

Turning the corner in the drive to improve environmental performance in the oil sands, and beyond.

CAPP EXECUTIVE TEAM

The Innovators

EXECUTIVE VICE-PRESIDENT

Bringing innovation to the forefront while helping solve key environmental challenges for Canada’s oil and natural gas industry. CONTEXT IS PRINTED ON 100 PER CENT POST‑CONSUMER FIBRE, MANUFACTURED USING BIOGAS ENERGY

PRESIDENT AND CEO Tim McMillan Terry Abel

Tim.McMillan@capp.ca Terry.Abel@capp.ca

VICE-PRESIDENT, POLICY AND PERFORMANCE Alex Ferguson

Alex.Ferguson@capp.ca

VICE-PRESIDENT, COMMUNICATIONS Jeff Gaulin

Jeff.Gaulin@capp.ca

VICE-PRESIDENT, WESTERN CANADA OPERATIONS Brad Herald

Brad.Herald@capp.ca

VICE-PRESIDENT, PIPELINE REGULATION AND GENERAL COUNSEL Nick Schultz

Nick.Schultz@capp.ca

Printed in Canada by McAra Printing. Copyright © 2016

BY USING

484

Canadian Association of Petroleum Producers. All rights reserved.

KG OF RECYCLED MATERIAL WE SAVED:

9 TREES 33,149 LITRES OF WATER 95 DAYS OF WATER CONSUMPTION

406 KG OF WASTE 8 WASTE CONTAINERS

1,333 KG C0 8,969 KM DRIVEN

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Reproduction in whole or in part is strictly prohibited. OFFICES Calgary: 2100, 350 – 7th Ave SW, Calgary, Alberta T2P 3N9, Tel: 403-267-1100 Ottawa: 1000, 275 Slater Street, Ottawa, Ontario K1P 5H9, Tel: 613-288-2126 St. John’s: 1 004, 235 Water Street, St. John’s, Newfoundland and Labrador, A1C 1B6, Tel: 709-724-4200 Victoria: 360B Harbour Road, Victoria, British Columbia, V9A 3S1, Tel: 778-265-3819

8 MMBTU

36,840 60W LIGHT BULBS FOR ONE HOUR

1.8 KG NOX

EMISSIONS OF ONE TRUCK DURING 5 DAYS

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CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

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PRESIDENT AND CEO’S MESSAGE

INNOVATION

MATTERS

Innovation is a mantra within Canada’s oil and natural gas industry. The word itself may be overused at times, but what it means to our industry, Canada and the world, cannot be overstated.

We are leaders in innovation: we are confident that it can help solve many of the environmental challenges we face today and those in the future—and we have good reason for thinking so. The fact is, our entire Canadian oil and gas industry is founded on innovation. Before the 1960s, the idea that you could extract economically viable amounts of oil trapped in the vast oil sand deposits of northern Alberta was met with skepticism and more than a few failed early attempts. But in 1967, Great Canadian Oil Sands Limited, with support from the Alberta government, having pioneered new technologies for bitumen extraction and upgrading, launched the world’s first large-scale commercial oil sands operation. The endeavour required incredibly creative, out-of-the-box thinking and cutting-edge science and engineering techniques. It turned the oil sands from a curious geological phenomenon into a valued resource: one that today generates billions of dollars of revenue while creating hundreds of thousands of jobs for workers all across Canada. The same spirit of innovation enabled pioneers to find ways of safely and reliably extracting previously inaccessible deposits of natural gas and oil from shale rock, as well as from remote deposits under the ocean floor. Our industry attracts some of the brightest scientists, researchers and engineers in the world. We continually

invest in research and development that leads to both breakthroughs and continuous improvement. This is why, although we face significant environmental challenges, I am confident our industry can do its part in meeting those challenges.

2015 Paris Climate Conference. While we as an industry are just one part of a collective effort that includes government, regulators and energy consumers, we do not shy away from the prospect of being a leader. We thrive upon it.

“For Canada’s oil and natural gas industry, innovation is in our DNA.”

Doing so will enable the growth of our industry and the long-term prosperity of Canadians. It will help establish us as a supplier of choice to a world that will continue to rely on oil and natural gas for decades to come. The International Energy Agency forecasts global energy demand to increase by nearly one third between 2013 and 2040, with fossil fuels continuing to be a key fuel source that moves people, keeps them warm and provides energy security. At the same time, recent commitments by governments around the world to transition to a lower-carbon economy mean that consumers will increasingly look for energy that is produced the Canadian way: in an environmentally responsible, transparent and stringently regulated manner.

For Canada’s oil and natural gas industry, innovation is in our DNA. It comes out strongest when we are faced with a compelling challenge: such as the need to improve environmental performance, meet stringent environmental regulations, and remain competitive in the global market. Since 2000, we’ve seen a quadrupling in oil-related patent applications by Canadian inventors as a share of total patent applications at Canada’s Intellectual Property Office (CD Howe, 2016). A report by the Science, Technology and Innovation Council found that research and development investment in the Canadian oil and gas industry has increased almost 14-fold from 1999 to 2015. Canada’s Oil Sands Innovation Alliance (COSIA) has developed and shared 819 distinct technologies valued at $1.3 billion.

Canada showed its commitment to be a leader in reducing GHG emissions at the

This massive investment in innovation is already producing environmental Continued Next Page >>

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PRESIDENT AND CEO’S MESSAGE

dividends. When it comes to oil sands in situ and mining extraction processes, technology and energy efficiency improvements have allowed us to reduce the amount of greenhouse gas emissions generated per barrel of oil produced. Freshwater use intensity by oil sands operators has also fallen—by more than 30 per cent. We’re among the leaders globally in methane reduction, land reclamation, carbon capture and storage, and the reduction of air contaminants like sulphur dioxide and nitrogen oxide. We are currently developing a wave of technologies that will help accelerate the land reclamation of tailings ponds. Not only are these technologies driving improvements in our own industry; Canada’s oil and gas industry innovations are finding applications in other industries such as mining, forestry and water treatment. As well, we are setting the standard for sustainable development, with countries around the world coming to Canada

14-fold increase 1999

R&D investment in the Canadian oil and gas extraction industry has increased dramatically from 1999 to 2015. (STIC, 2016)

2015

seeking our expertise on how to extract resources in a manner that is sustainable, responsible and cost-effective. Canada is seen as a world leader on environmental performance, scoring ahead of the USA, Russia and Venezuela in Yale’s latest Environmental Performance Index report. Through collaboration engines like COSIA, funding agencies, and the significant investment in dollars, people and time that individual companies

WELCOME

NEW MEMBERS

contribute to environmental research and innovation, we are going to see these trends continue. The spirit of innovation that extracted oil from sand, natural gas from shale rock and both from our offshore waters, is the same spirit that is driving environmental innovation for Canada into the 21st century. Tim McMillan President and CEO Canadian Association of Petroleum Producers

PRODUCERS:

ASSOCIATES:

• Aitken Creek Gas Storage ULC

• Maxxam Analytics International Corporation

• Bow River Energy Ltd • Openfield Energy Ltd

Q2 2016 Visit www.capp.ca/about-us/membership to view our full list of members.

SAFETY 101:

What's wrong with this picture?

Illustration: Mark Cromwell

An oil tanker has taken on a load of oil and is heading out of a Canadian harbour. This happens regularly, with 80 million tonnes of oil shipped safely every year along Canada’s east and west coasts. However, something is missing in this picture. What is it? Visit bit.ly/1QR9s3H to view the answer. 4

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WHAT’S UP AT CAPP?

WHAT’S UP

AT CAPP

Crude Oil Forecast, Wildfire Action and New Tailings Regs; Plus In Depth on the Climate and Innovation Task Group

Taking Action on Wildfires Fort McMurray

Beth Lau, manager of oil supply and transportation at CAPP

2016 Crude Oil, Markets and Transportation Forecast The 2016 Crude Oil, Markets and Transportation report forecasts oil production based on data and surveys of Canadian producers. Released in June, this annual CAPP report indicates that Canada’s crude oil production will continue to grow, though at a slower pace compared to previous reports. By 2030, supply of Western Canadian crude oil will increase by 1.55 million barrels a day (b/d) to a total of 5.5 million, driven primarily by oil sands production.

In response to the wildfires that forced the evacuation of Fort McMurray in May and that devastated parts of the city and surrounding areas, CAPP partnered with other energy sector associations including PSAC, CAODC, EPAC and OSCA to form the Energy Together coalition. Energy Together allows industry to provide a coordinated response in support of Fort McMurray and area residents. This included creating an industry portal for donations to the Red Cross relief effort that has raised close to $450,000 to date—monies used to provide key relief and aid during the evacuation and disaster response. Through this coalition, CAPP and its partners will continue supporting the community of Fort McMurray—working with government and community groups to provide resources and equipment needed for long-term recovery and rebuilding. For more information, contact Matthew O’Connor, media relations advisor, Matthew.OConnor@capp.ca.

Slave Lake

“The medium-term growth from now to 2020 is relatively unchanged compared to last year, as oil sands projects currently under construction are expected to continue to proceed as planned,” notes Beth Lau, manager of oil supply and transportation. The report highlights the need for more pipelines as supply will soon exceed the existing capacity of Canada’s pipeline network. Download the report at bit.ly/1DJxPXP. More information: contact Beth.Lau@capp.ca. CAPP.CA/CONTEXT

Slave Lake Legacy Centre opened June 11. Photo: Courtesy Manasc Isaac

On June 11, stakeholders from the Slave Lake Region gathered to celebrate the grand opening of Slave Lake’s Legacy Centre. The opening occurs five years after the 2011 Slave Lake Wildfire which devastated the region. The centre is a multi-purpose familyoriented community space that includes a daycare, playground, theatre/arts space and FireSmart information centre. The project was kickstarted by an initial $6.4 million donation made by 12 energy companies, with CAPP coordinating communication and administration of the donation. CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

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WHAT’S UP AT CAPP?

Alberta Policy Progress Caribou Range Plans

New Tailings Regulations: Directive 085

On June 8, the Alberta Government released draft range plans for the Little Smoky and A La Peche caribou ranges in west-central Alberta. Key elements include:

In July, the Alberta Energy Regulator (AER) released Directive 085 under the Oil Sands Conservation Act. The directive, which replaces Directive 074, establishes requirements operators must meet with regards to managing fluid tailings at oil sands mining projects. Under D085, project-specific triggers and limits are set for each operation to ensure fluid tailings are in a ready-to-reclaim state within 10 years of the end-of-mine life.

•C  ontinued resource access for existing mineral land tenure owners; • Tenure extensions in exchange for voluntary deferrals of industry activity; • Contemplation for new issuance of mineral land tenure in the future; and, • Up-front government funding for seismic line restoration (repaid by industry over a 30-year time span). “The commitment to a working landscape and the recognition of the energy sector’s minimal impact to caribou habitat are reflected in these plans,” notes Sherry Sian, manager of land policy and integrated resource development at CAPP. “These plans are a significant departure from an initial government proposal to impose a five-year moratorium.” The plans are the culmination of several years’ work among government and affected stakeholders through the Multi-stakeholder Advisory Group, of which CAPP was a participant.

Griggs adds that CAPP and members, led by the Tailings Management Framework Implementation Committee, have been engaged for a number of years, providing support through consultations with government and working to help address the many technical issues involved with the regulations. “There was significant investment by member companies supporting CAPP, and I think by working together we’ve achieved a positive outcome that establishes a clear and achievable regulatory environment for industry—one that ensures full reclamation of oil sands tailings over a reasonable timeframe,” says Griggs.

For more information, contact Sherry.Sian@capp.ca.

For more information, contact Martyn.Griggs@capp.ca.

Get the Liability Fact Sheet The recent Redwater decision by an Alberta Court of Queen’s Bench judge has raised concerns among industry, regulators, and the public over issues of orphan wells and land reclamation liabilities. Learn more about orphan wells with CAPP’s new Liability Fact Sheet. Download it at bit.ly/2aIHZSX

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“A key outcome for industry was building into the regulations a recognition of the uniqueness of each operation, taking into account geology, differences in technology and where operators are at in the life cycle of their operations,” says Martyn Griggs, manager of oil sands policy at CAPP.

CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

Coming Soon: Canada’s Natural Gas Website CAPP launches an updated www.CanadasNaturalGas.ca website the week of September 6.

www.CanadasNaturalGas.ca

“Key updates include up-todate information focused around issues and questions people have about natural gas, and an easier to navigate and search design,” says Brenda Jones, manager of communications at CAPP. “Also important is that the site will now be available in both French and English.” For more information, contact Brenda.Jones@capp.ca.

Did You Know? Industry has invested more than $10 billion on tailings management and spends more than $50 million a year on research and development to advance technologies and solutions to tailings.

CAPP.CA/CONTEXT


WHAT’S UP AT CAPP?

Q&A: About the Climate and Innovation Task Group, with Krista Phillips

A: We’ve seen over the past year a real acceleration of the climate policy agenda at both federal and provincial levels. We’re also seeing a clear and deepening relationship between climate policy and innovation initiatives—no government talks about climate without also mentioning a strong role for innovation and technology. Likewise, CAPP and its members feel it is important to link the two, and for industry to provide timely input on effective approaches to align and synergize climate policy and innovation policy across different jurisdictions. The creation of the Climate and Innovation Task Group allows for enhanced focus and robust decisionmaking at the Board level. This group will oversee and direct all climate and innovation policy work on behalf of the CAPP Board. This includes identifying and prioritizing developments in climate and innovation policy and regulatory issues, and developing the corresponding policy and advocacy responses. I think the group will enable a strong and proactive voice for industry in this space. It’s CAPP’s intention for industry to be a leader in climate and innovation, and this task group is a key step toward that outcome. Q: Is this new for CAPP? Why is it significant? A: It’s worth emphasizing that our attention to this area is not new. Climate and innovation have always been a priority for CAPP’s Board, and it’s very much a part of the work we do here on a daily basis. For example, we’ve already been making tremendous progress in the area of methane emissions mitigation through work being done by the methane task group at CAPP. CAPP.CA/CONTEXT

What’s new, though, is that governments are actually doing something about climate policy. With so many provincial governments developing policies, and with the federal government also getting involved, and everyone working towards some fairly ambitious deadlines, the policy and regulatory landscape has gotten very complicated. In this challenging environment, it’s important for CAPP to have a group with clear oversight regarding climate and innovation issues, and who can be very focused, dynamic and proactive in handling these issues.

Photo: Andrew Mah

Q: The CAPP Board recently announced the creation of a climate and innovation task group. Why was the group created? What will it do?

Krista Phillips, manager of climate & environmental policy Krista.Phillips@capp.ca

Eric Axford, executive vice-president of business services at for Suncor has volunteered to lead the group as its chair.

“It’s important to have a group with clear oversight regarding climate and innovation issues.” Q: Who is on this task group?

Q: What can members do to help?

A: The Board identified a need to keep the group relatively small so that it could be nimble and responsive to the ever-changing external context. At the same time, it was important the group reflect the diversity of operations among our members, and possess the different types of expertise needed to handle the complex dimensions of climate policy development and the interrelated innovation agenda.

A: I would say that a key for members is to continue to support the excellent innovation collaboration engines industry has already developed, including the Canada’s Oil Sands Innovation Alliance (COSIA) and Petroleum Technology Alliance of Canada (PTAC).

As such, a group of eight members has been appointed by the Board to the group. Individuals were selected representing diverse operations expertise, communications expertise and industry performance expertise. We’re pleased by the enthusiasm with which members have responded to this initiative, and are appreciative that

CAPP’s new Climate and Innovation Task Group will oversee and direct all climate and innovation policy work on behalf of the CAPP Board.

At CAPP, we’ve been fortunate to continually receive strong support from our members who volunteer on the various committees and working groups approaching climate and innovation from a variety of perspectives. I know we’ll be calling on members time and again for their time and expertise. Lastly, I would say that while a shift to a low-carbon future is clearly a challenge for a fossil-fuel based industry like ours, I believe we’ll be able to accomplish great things if we all have the attitude that this is also a tremendous opportunity for industry and CAPP members to step forward with innovative thoughts and ideas. We’ve always been at the forefront of innovation and I see climate as the enabler of a new wave of innovation for our industry. CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

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FEATURE STORY

COSIA:

INNOVATION AT THE CROSSROADS Turning the corner in the drive to improve environmental performance in the oil sands, and beyond BY DAVID COGLON 8

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FEATURE STORY When Devon Canada’s Jacob Denis talks about a new boiler design being investigated at his company, you can hear the pride in his voice. “There are a lot of companies closely watching progress on this technology,” says the senior technical advisor on Devon’s technology development team.

It’s a subtle innovation, but one that could have profound impacts for an industry seeking to reduce water use and its GHG emissions intensity. “This is one of those technologies that enables higher steam throughput along with reduced environmental impacts. So it’s potentially very important to Devon and other producers,” says Denis, who four years ago put together a business case for the technology. Company leaders backed his vision, leading to the technology being introduced as a pilot project at Devon’s Jackfish 2 thermal oil sands facility in 2013.

Rifled Tubes for Steam Generation Internal ribbing introduces centrifugal force, causing water to spin and propel forward like a bullet. This helps to separate water from steam and more evenly distribute water inside the pipe, ensuring there are no dry spots which can lead to tube failure. The result: better heat transfer and better steam quality.

Pipe Wall

SMOOTH

RIFLED

Surface Water Film Layer Water droplets entrained with steam

CAPP.CA/CONTEXT

Jacob Denis, senior technical advisor, Devon Canada, led a project using innovative rifled tubes to improve efficiency and environmental outcomes during steam generation at in situ oil sands operations.

Ten months later, results validated uplift in steam quality from the normal 78 per cent up to 90 per cent, along with lower water requirements, less boiler blowdown (waste water) and improved energy efficiency. There’s more testing to be done, but the project has stirred excitement inside the industry. Devon’s project is the kind of example Dan Wicklum, chief executive of Canada’s Oil Sands Innovation Alliance (COSIA), likes to point to when he talks about how the power of technology is steadily transforming the oil sands sector. His organization exists at the crossroads for technology development in the industry. Formed four years ago, COSIA was created so Canada’s 13 leading oil sands companies could do things differently to tackle the challenge of improving industry’s environmental performance. Their aim is to draw on each other’s technology expertise, finding innovative answers to the industry’s toughest challenges — and do it faster. “Creating innovation involves a lot of work — a lot of blind alleys and lots of measured failures. But if we can create a system that’s focused, well-resourced and brings the best people together to work in the best ways, then we will be successful. And that’s what we’re doing at COSIA,” Wicklum says.

Photo: Brian Buchsdruecker

The technology he’s referring to features rifled (ribbed) tubes, instead of the smooth tubes traditionally used in the boilers that generate the steam needed to melt and recover underground bitumen in in situ operations.

COSIA has established four environmental priority areas (EPAs): greenhouse gases, water, land and tailings. COSIA has set challenging aspirational goals for each EPA (see figure below).

COSIA’s Four Environmental Priority Areas and Goals GREENHOUSE GASES EPA: To produce oil with lower greenhouse gas emissions than other sources of oil. WATER EPA: To produce energy with no adverse impact on water. LAND EPA: To be world leaders in land management. TAILINGS EPA: To transform tailings from a waste into a resource that speeds up reclamation.

To deliver progress against these goals, member companies have set up working groups, identified what they want to accomplish and embarked on a mix of short-term and long-term projects. “We’ve defined opportunity areas and gaps as the difference from where we are and where we want to be in the future, and we have launched projects to close the gaps,” says Wayne Hillier, director for COSIA’s Water EPA. Members have signed joint venture agreements that define how they CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

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Photo: Jason Dziver

FEATURE STORY

“Our industry doesn’t have a monopoly on smart people. So we’re reaching out to collaborate with other experts worldwide to find new solutions.” — Dan Wicklum, chief executive of Canada’s Oil Sands Innovation Alliance

collaborate. The agreements, which are an innovation in themselves, allow for each company’s proprietary technologies to be shared among the group via royalty-free patent-use rights. “As far as we know, COSIA members are pushing the paradigm of sharing technology further than any other sector in the world,” says John Brogly, director for COSIA’s Tailings EPA.

bear. An example is the Water Technology Development Centre to be located at Suncor’s Firebag in situ facility. Projected to open in 2019, the $165-million centre will allow operators to test drive new water treatment and recycling technologies.

At the same time, members are undertaking higher risk, unconventional projects with the potential to create breakthrough technologies. An example includes the development of a molten carbonate fuel cell technology that would capture CO2 while generating clean electricity.

Finally, COSIA has adopted an open sourcing approach to identify technologies created for other purposes that might be useful to closing gaps in the oil sands. Through its associate members program, COSIA has signed memorandum of understanding agreements (MOUs) with 40 organizations. These include large multinationals like General Electric and IBM, academic institutions and innovation hubs like Alberta Innovates and Sustainable Development Technology Canada. COSIA also recently introduced its Environmental Technology Assessment Portal (E-TAP) which allows anyone, even a weekend inventor working from his or her garage, to submit an idea for consideration.

Sharing has led to more strategic and proactive collaborations—joint industry projects where costs (and risk) are shared among two or more members, allowing for greater scale and a wider diversity of resources and expertise to be brought to

“Oil sands companies have fantastic, world-class people working for them, but the industry doesn’t have a monopoly on smart people. So we’re reaching out to collaborate with other experts worldwide to find new solutions,” Wicklum explains.

This effort is driving a vast array of incremental improvement projects — everything from enhancing cogeneration of heat and power, to increasing waste heat recovery, and exploring new ways to accelerate reclamation of mine tailings.

Perhaps the biggest example yet of COSIA’s open approach to sourcing innovation has been the NRG COSIA Carbon XPRIZE. Last September, eight COSIA members led by ConocoPhillips partnered with the XPRIZE Foundation and NRG Energy, a U.S. power company, to launch the Carbon XPRIZE. The US$20million XPRIZE challenges teams from around the world to develop innovative approaches to convert CO2 emissions from fossil fuels into valuable products, like building materials, alternative fuels and other items we use every day. In October, the XPRIZE committee will announce semi-finalists. While XPRIZE is an inherently high-profile endeavour, everything COSIA is doing is under scrutiny, with high expectations for immediate results. This doesn’t always jive with research and development timelines that can stretch over years from discovery to deployment. Wicklum says he’s very aware of the high expectations surrounding COSIA, and he thinks the alliance is delivering, with real and measurable progress starting to be achieved by member companies. “Collaboration to foster innovation is never easy. It takes work. But I’ve seen

Photo: Courtesy Canadian Natural

“A success for COSIA isn’t just a success for oil sands — it’s ultimately a success for Canada and others around the world.” — Joy Romero, vice-president, technology and innovation at Canadian Natural.

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FEATURE STORY

firsthand how companies have embraced the COSIA model over the last four years and have really started to drive it. That’s extremely encouraging,” he says. So far, companies have made about 350 implementation decisions involving technologies developed through COSIA. In other words, not only are technologies being shared, they’re being adopted and are delivering improvements on the ground. And members are starting to make important headway on environmental challenges — notably, reducing the amount of fresh water needed to produce a barrel of bitumen. Between 2012 and 2014, freshwater use intensity among COSIA companies fell by 30 per cent for mining operations and 36 per cent for steam-driven projects.

COSIA charter, reaffirming their commitment to the alliance. These actions signal strong, unwavering support for COSIA among the industry and its senior leaders. “Collaboration and learning from each other, within and beyond our industry, is a great way to bring more smart minds and funding to advance technology and innovation. And COSIA is a fantastic example of how companies are already sharing solutions as well as collaborating to address technology gaps,” says Harbir Chhina, executive vice-president of oil sands development at Cenovus. “What is exciting has been the level of collaboration that’s developed as a result of COSIA. Collaboration in the oil sands is not new — we’ve been doing it for 25 or 30 years — but not at the full

Photo: Courtesy Cenovus

“COSIA is a fantastic example of how companies are already sharing solutions as well as collaborating to address technology gaps.” —H  arbir Chhina, vice-president of oil sands development at Cenovus

“Not only is the COSIA model making sense in terms of promoting collaboration, but the resulting technologies are being used and making an impact on environmental performance changes,” Wicklum says.

open, transparent level we’re doing it now through COSIA,” adds Joy Romero, Natural’s vice-president, technology and innovation.

Other signs show the organization is on the right track.

Others say that COSIA provides yet another benefit — sharing project costs — a message that particularly resonates in today’s sub-US$50 per barrel world.

Despite the pinch from low crude oil prices, COSIA members continue to push hard to advance new projects. (The number of active COSIA projects this year is up to 252, from 219 last year.) And recently, in June, the CEOs of member companies re-signed the

“We want to accelerate the pace of our environmental improvement initiatives. And we want to do that at a lower cost, to the extent we can share project costs and avoid duplicating efforts. And that’s become even more important, given the economy,” says Rick Gallant, Imperial’s

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Highlighting Innovation COSIA member companies have developed and shared 819 technologies costing about $1.3 billion. Some projects underway: IN-PLACE ELECTRO-KINETIC REMEDIATION: Electrodes are inserted into a deposit of fine fluid tailings and an electric current is applied which causes the release of water and consolidation of fine particles. OIL SANDS VEGETATION COOPERATIVE: A collaborative effort to collect and store seeds from a wide variety of species. These seeds will be used to revegetate the landscape after operations have ceased and the land is reclaimed to a natural state. COSIA IN SPACE: An investigation into the use of state-of-the-art satellite technology to measure fugitive GHG emissions coming from tailings ponds and mine faces. Learn more about these and other projects at www.cosia.ca.

vice-president of upstream engineering, and chair of COSIA’s shareholder steering committee. Finally, insiders say COSIA has created a made-in-Canada model for innovation that’s not only gaining traction throughout the sector, but is attracting interest in other places as well. In fact, in the last two years, COSIA member delegations have traveled as far away as to Israel to not only source new clean technologies that could benefit the sector but to promote Canadian technical solutions to issues such as water treatment. It seems that, like an ever-widening ripple effect, COSIA is creating new possibilities as it continues to evolve. “Through the solutions we are developing, we’re advancing innovations that not only can be applied to Canada’s oil sands, but to resource industries around the world. So a success for COSIA isn’t just a success for oil sands — it’s ultimately a success for Canada and others around the world,” Romero says. CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

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THE

INNOVATORS

FEATURE STORY

Bringing innovation to the forefront while helping solve key environmental challenges for Canada’s oil and natural gas industry. BY ANDREW MAH 12

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FEATURE STORY

THE INNOVATOR: Dr. Baiyu (Helen) Zhang

”As a researcher, I’m always trying to look forward to the next generation technologies. Innovation is my first concern.”

Associate Professor Faculty of Engineering and Applied Science, Memorial University of Newfoundland

Making Greener Offshore Dispersants DR. ZHANG is an associate professor at Memorial University in Newfoundland and Labrador. A member of their civil engineering department, she has focused her research on the development of environmental technologies for sustainable development of natural resources in ocean and harsh environments. THE CHALLENGE: While marine oil spills are rare, spill mitigation and clean-up can be challenging. Physical methods of collecting the oil on the surface using booms and absorbent sweeps are effective in relatively calm waters. Dispersants—compounds that break an oil slick into dispersed droplets—can be effective under harsh wind and wave conditions such as frequently exist in the north Atlantic Ocean off Canada’s East Coast. Novel, environmentally friendly and cost-effective dispersants which can be applied in the region are thus needed. THE INNOVATION: Dr. Zhang and her team of researchers at Memorial University recently completed a study that explores the possibility that bacteria could be used to create compounds called biosurfactants. These biologically produced compounds could be used to generate bio-dispersants in case of an oil spill.

Photo: Greg Locke, Stray Light Media, Inc

By isolating biosurfactant-producing bacteria from the north Atlantic Ocean, Dr. Zhang increased the likelihood that the green bio-dispersants created would be highly biodegradable via indigenous bacteria, and effective under cold-water conditions. Over the course of a three-year study, co-funded by Newfoundland and Labrador’s Research Development Corporation (RDC) and the industrysupported Petroleum Research

Newfoundland and Labrador (PRNL), Dr. Zhang and her team tested thousands of different strains of bacteria. She was able to narrow her focus to five strains of bacteria capable of producing biosurfactants. She then explored how process optimization and genetic enhancements could be used to increase biosurfactant yield and effectiveness. “The bacterial strains we isolated and the associated bio-dispersants work pretty well,” concluded Dr. Zhang, though with the proviso that further testing is needed to ensure the technology can be scaled up to work on a commercial scale. THOUGHTS ON INNOVATION AND THE ENVIRONMENT: Dr. Zhang earned her Bachelor and Masters degrees from the renowned Jilin University in China. She came to Canada in 2001, completing a doctoral degree in environmental systems engineering from the University of Regina. She joined Memorial University in 2010 and received early tenure in 2015. An expert in the area of biotechnology, Zhang notes, “I’m personally very interested in biotechnologies: they can be very environmentally friendly, particularly when applied to waste management issues related to resource development.” Dr. Zhang adds that she enjoys the independence she’s permitted as a researcher within Canada’s particular academic environment, and the opportunity to work with peers on real-world problems in collaboration with industry. She especially enjoys the opportunity to be truly innovative. ”As a researcher, I’m always trying to look forward to the next generation technologies. Innovation is my first concern,” says Dr. Zhang. CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

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FEATURE STORY THE INNOVATOR: Dr. Aref Najafi Process Innovation Lead

“The most exciting part of my work is the freedom to try different approaches and ideas, to apply out-of-the-box thinking while solving real-world problems.”

Bitumen Production, Horizon Oil Sands, Canadian Natural Resources Limited

tailings so that they form a homogeneous, semi-cohesive mass when deposited. “The results are very encouraging,” he says, “I believe because of adopting the culture of innovation, our tailings challenge is under control. That’s a big achievement for us.” Photo: Courtesy Kevin Gill/Canadian Natural

Solving the Tailings Challenge AS THE PROCESS INNOVATION LEAD with bitumen production at Canadian Natural Resources Limited, Dr. Najafi’s title almost says it all—it’s his team’s job to come up with innovative new processes to improve both environmental performance and cost efficiencies for oil sands operations at Canadian Natural. THE CHALLENGE: A byproduct of oil sands mining extraction of bitumen is fine fluid tailings. These are a mixture of water, sand, clay and residual oil that are stored in ponds during mining operations to allow continuous recycling of process water. Unfortunately, without intervention, it can take up to 50 years for tailings to consolidate and dry out, delaying land reclamation of the site. Companies are developing technologies to accelerate the conversion of tailings into a stable, solid material suitable for reclamation. While these technologies have shown promise in a lab setting, it can be tough to know how they’ll respond to realworld conditions. THE INNOVATION: Dr. Najafi led the creation of the Applied Process Innovation Center (APIC), a 3,600-square-foot facility located at 14

CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

Canadian Natural’s Horizon Oil Sands site. APIC can recreate all phases of tailings technologies—from treatment in a plant to deposition into a pond, and long-term settling over time—while simulating a host of variable conditions, including weather. “For example,” Dr. Najafi notes, “What happens if there are storm conditions? Will the material break down and fail?” Using state-of-the-art equipment, computer software and mathematical models, researchers at APIC can test the robustness of their tailings technologies against things like seasonal variation, extreme weather conditions, and changes in the chemical composition of the tailings. As well, using specialized pressure and temperature-controlled chambers, it’s possible in just weeks to simulate what the tailings material would look like after decades of exposure in the real world. These kinds of simulations enable companies to test their tailings technologies, discover weaknesses and risks for failure, and find solutions to eliminate them. Dr. Najafi is using APIC to test and enhance Canadian Natural’s Non-Segregated Tailings (NST) technology, which dewaters

THOUGHTS ON INNOVATION AND THE ENVIRONMENT: Born and raised in Iran, Dr. Najafi moved to Canada, obtaining a Master of Reservoir Engineering from the University of Calgary, and a Ph.D. in Chemical Engineering from the University of Alberta. He got into the oil sands and then tailings research because he loves a unique challenge with practical applications. “The most exciting part of my work is the freedom to try different approaches and ideas, to apply out-of-the-box thinking while solving real-world problems,” he says. He credits his team’s success to the innovation culture at Canadian Natural, including embracing Lean Six Sigma, an organizational methodology for encouraging continuous improvement among staff, from leadership to management and front-line workers. With designations as an Environmental Professional (EP) registered with ECO Canada and a Certified Energy Manager (CEM) with the Association of Energy Engineers, Dr. Najafi is passionate about protecting the environment. He notes that what’s good for the environment is often good for the business as well. “If we reduce the size of tailings ponds, that’s good for the environment. But it also saves cost because we don’t have to maintain a large area for tailings.” CAPP.CA/CONTEXT


FEATURE STORY

Making Safer Fracturing Additives

THE INNOVATOR: Bill O’Neil Lab Manager, Trican Research and Development Centre

AS THE LAB MANAGER of Trican’s Research and Development hub, Bill O’Neil leads a staff of 22 chemists and technicians. Their focus is on developing the next generation of fracturing fluid additives and cement compounds for wellbore isolation. THE CHALLENGE: Hydraulic fracturing involves the use of water pumped under pressure deep into the earth to fracture shale formations, thereby releasing embedded natural gas or oil. The water is mixed with sand, as well as a variety of additives that perform key functions such as reducing friction (allowing less water and/or higher pressures to be used) and preventing corrosion of the well pipe. There are concerns, however, that some additives can be harmful to the environment and unsafe for workers. THE INNOVATION: To meet the needs of upstream producers focused on environmentally safe yet cost-effective products, O’Neil’s team has developed a number of clean technology product lines, including hydraulic fracturing fluid additives that are near food-grade specification. “We also had an internal strategy to systematically eliminate bad additives—compounds with persisting toxic effects,” says O’Neil. “Why expose our own people and the environment to these additives when we can find or develop alternatives?” A recent innovation that O’Neil is especially proud of is the development of friction reducers that can be transported as dry powder products to a hydraulic fracturing well site before being mixed into the fracturing fluid. “Normally these compounds exist in liquid form—suspended in petroleum oil, which means there’s a risk of a spill during transport,” says O’Neil. Moving to a powder form means less material needs to be hauled to the site—reducing environmental risk, GHG emissions and road damage. CAPP.CA/CONTEXT

Photo: Jason Dziver

THOUGHTS ON INNOVATION AND THE ENVIRONMENT: O’Neil first joined Trican as a summer student lab technician 21 years ago, and hasn’t looked back. He appreciates the investment Trican has made to research and development while fostering a culture of innovation.

O’Neil strongly believes that robust resource development and strong environmental standards can coexist, particularly with a focus on continuous improvement. “I absolutely believe we can operate and be absolutely safe. In my time with the

“Why expose our own people and the environment to these chemicals when we can find or develop alternatives?” “We’re given the opportunity to really explore—to play with new ideas and approaches and daydream solutions to problems. We’ll never lose that—not under my watch,” O’Neil says.

industry, we’ve made great strides—even in things like managing a site, equipment design and other technologies. There are things today that didn’t even exist 20 years ago.” CONTEXT . VOLUME 4 . ISSUE 3 . AUGUST 2016

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O&G 101

OIL AND GAS 101:

FUNDING ENVIRONMENTAL INNOVATION

Got a bright idea for a technology or process to reduce environmental impacts? The following chart outlines potential sources of support for environmental innovation projects related to the oil and natural gas industry.

CANADA’S OIL SANDS INNOVATION ALLIANCE (COSIA)

OFFSHORE ENERGY RESEARCH ASSOCIATION OF NOVA SCOTIA (OERA)

PETROLEUM RESEARCH NEWFOUNDLAND AND LABRADOR (PRNL)

A partnership among 13 companies operating in Canada’s oil sands with a revolutionary agreement to collaborate on and share environmental innovation research and technologies. COSIA has an Environmental Technology Assessment Portal (E-TAP) whereby innovators can submit ideas for consideration for partnership and support.

An independent organization that funds and facilitates collaborative offshore energy and environmental research and development. Priorities include geoscience and marine sound research.

A membership-based organization that facilitates research and technology development on behalf of the Newfoundland and Labrador offshore oil and gas industry. Innovators can submit proposals for projects that address the operational, technical and business needs of the offshore industry.

More: www.oera.ca

More: www.pr-ac.ca BC OIL AND GAS RESEARCH AND INNOVATION SOCIETY (BC OGRIS):

More: www.cosia.ca PETROLEUM TECHNOLOGY ALLIANCE OF CANADA (PTAC) An association whose mission is to facilitate innovation, collaborative research and technology development, for a responsible Canadian hydrocarbon energy industry. Innovators can submit project proposals to PTAC for consideration for funding and support.

BC OGRIS supports applied research concerning environmental matters related to oil and gas exploration and development in British Columbia. BC OGRIS identifies high-priority knowledge gaps and solicits proposals for funding.

IDEA FOR ENVIRONMENTAL INNOVATION IN OIL AND NATURAL GAS

More: www.bcogris.ca ALBERTA INNOVATES— ENERGY AND ENVIRONMENT SOLUTIONS (AI-EES):

More: www.ptac.org

The lead provincial agency for advancing energy and environmental technology innovation in Alberta. Innovators can apply to AI-EES for funding for projects that help convert Alberta’s natural resources into environmentally responsible energy.

SUSTAINABLE DEVELOPMENT TECHNOLOGY CANADA (SDTC) SDTC receives federal support to fund Canadian cleantech projects. Innovators can apply for direct support of projects that address climate change, air quality, clean water and clean soil. The SDTC also offers joint funding, partnering with CCEMC and AI-EES. More: www.sdtc.ca

More: www.ai-ees.ca CLIMATE CHANGE EMISSIONS MANAGEMENT CORPORATION (CCEMC):

A funding program through the Government of Saskatchewan that supports research, development and demonstration of new technologies that facilitate expanded production of Saskatchewan’s oil and natural gas resources. Innovators can apply for funding projects involving new technologies related to the environmental impact of oil and natural gas activity.

The CCEMC establishes or participates in funding for initiatives that reduce emissions of greenhouse gases or improve Alberta’s ability to adapt to climate change. The CCEMC is funded via Alberta’s Climate Change and Emissions Management Fund. Twice a year (spring and fall), the CCEMC calls for Expressions of Interest where innovators can submit proposals for consideration.

More: www.economy.gov.sk.ca/SPRI

More: ccemc.ca

SASKATCHEWAN PETROLEUM RESEARCH INCENTIVE (SPRI):

Note: The list is by no means comprehensive as there are many government agencies, academic institutions, research councils and non-governmental organizations that support technological innovation across a broad set of industries; the organizations listed here are merely among those most directly related to environmental issues and/or the oil and gas industry in Canada.

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CAPP.CA/CONTEXT


inCONTEXT

ENVIRONMENTAL PROTECTION SPENDING BY INDUSTRY According to Statistics Canada, Canadian businesses reported spending $10.9 billion on environmental protection in 2012 (the latest year for which Statistics Canada has published data). The lion’s share of that spending—$4.7 billion—was by the oil and natural gas industry. About half of this money was spent on capital investment projects: investments designed to improve longterm pollution prevention, abatement and control.

4%

3%

OIL & GAS EXTRACTION MINING ELECTRICAL POWER PRIMARY METALS OTHER MANUFACTURING PAPER MANUFACTURING PETROLEUM & COAL PRODUCTS FOOD CHEMICALS TRANSPORTATION EQUIPMENT

3% 2%

5% 6%

TOTAL: $10.9 billion

43%

OIL & NATURAL GAS:

$4.7 billion

9%

12% 12% CAPP.CA/CONTEXT

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ENERGY CITIZEN TOOLKIT

THE TRANS MOUNTAIN EXPANSION PROJECT: EVERYTHING YOU NEED TO KNOW MYTH: No oil ships out from the West Coast and it’s not safe to begin now. FACTS: Since 1956, tankers have transported petroleum products from the Westridge Marine Terminal out through Port Metro Vancouver without a single spill.

Myth Buster: Marine Safety

•C  urrently, five tankers a month carry oil from Trans Mountain for export. This would increase to 34 a month once the pipeline is expanded. •C  anada has world-leading safety standards for marine transport using tankers, including mandatory use of double-hull tankers, and the use of marine pilots with knowledge of local waters when navigating harbours and busy waterways. Learn more at: bit.ly/2aytNNb. • In the unlikely event of a spill, Canada also has highly trained, expert spill response organizations including the Western Canada Marine Response Corporation.

Why It’s Important: By the Numbers PROJECTED CAPITAL COST:

$6.8 billion

infrastructure injection into Canada’s economy

9 99 99 5 % of liquid petroleum products transported by transmission pipelines in Canada between 2011 and 2015 were moved safely. (CEPA, 2016).

KAMPLOOPS GOVERNMENT REVENUES:

$46.7 billion in taxes and royalties from construction and 20 years of operation.

Trans Mountain:

JOBS:

37,000

direct, indirect and induced jobs would be created per year over 20 years of operations. Based on a report by the Conference Board of Canada.

Current capacity:

300,000 b/d

LEARN MORE: Visit conferenceboard.ca and search for the report Who Benefits? A Summary of the Economic Impacts that Result from the Trans Mountain Expansion Project.

Capacity after expansion:

BURNABY

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890,000 b/d CAPP.CA/CONTEXT


ENERGY CITIZEN TOOLKIT

EDMONTON

What You Can Do: In May, the National Energy Board (NEB) released a report recommending approval of TMEP subject to 157 conditions. The final decision is now in the hands of the federal cabinet in Ottawa. The government must make a decision by December 2016. Subsequent to the NEB report, the federal government has announced the creation of a Ministerial Panel to conduct additional consultation with communities and Aboriginal groups. The Canada’s Energy Citizens program is taking a lead role providing Canadians with information and tools to take an active role supporting this project. You can: • Write a letter to Your MP by going to www.supporttransmountain.ca.

BRITISH COLUMBIA

• Find out when the ministerial panel will be in your community at www.bcfortransmountain.ca. Also, sign-up for email alerts ensuring you get the most up-to-date information regarding the hearings.

ALBERTA

• Like Canada’s Energy Citizens on FaceBook (www.facebook.com/ canadasenergycitizens); we provide a steady stream of Trans Mountain-related information and further opportunities to support the project, both on and off-line. • Take the Government of Canada’s short questionnaire on the Trans Mountain project at www.nrcan.gc.ca/questionnaire/18721

Why it’s Needed: Growing Production, New Markets in Asia Global energy demand will increase, driven by growing economies and improving living conditions in Asia, particularly China and India. With Canada’s oil sands projected to increase supply by more than 1.5 million barrels per day by 2030 (CAPP, 2016), Canada has an opportunity to become a supplier of choice to these emerging markets, while generating long-term economic benefits and prosperity for Canadians. Exporting oil overseas has the added benefit of diversifying markets and ensuring Canada gets fair market prices for its oil. Workers construct the original Trans Mountain pipeline in 1952.

103.5 million b/d

Photo: Courtesy Trans Mountain.

What is Trans Mountain? Trans Mountain is a 1,150-kilometre pipeline built in 1953. It carries oil from Strathcona County (near Edmonton) to the Westridge Marine Terminal Facility in Burnaby. The Trans Mountain Expansion Project (TMEP) would build a second pipeline alongside the existing pipeline to increase overall oil transportation capacity. If approved, construction would begin September 2017 with service beginning December 2019.

CAPP.CA/CONTEXT

90.6 million b/d G LO BA L O IL D

EM AN D

(I E A , 20

15 )

2040

2014

5.5 million b/d 4.0 million b/d

Increasing Canadian oil supply can help meet rising global demand.

W ES TE RN CA 2015

N AD IA N CR U D

E O IL SU PP LY

(C A P P, 20

16)

2030

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For Hazen Murphy, this cargo lift took 30 years to complete. Working at every level of the industry, Newfoundlanders and Labradorians are building a safety culture for all.

Hazen Murphy, Crane Operator

Requiring years of experience and a specialized depth of knowledge, the path to a career as an offshore crane operator is a long one. When Hazen Murphy’s offshore career began in 2000, he had already logged 14 years onshore as a crane operator. Two of those years of crane experience were at the Bull Arm site building both the Hibernia platform and the topsides for the Terra Nova FPSO, making the offshore a natural fit. To date, his combined offshore and onshore hours on the job total over 60,000. Hazen brings a lifetime of experience and awareness of the safety needs involved to carry out every single lift.

To learn more, visit atlanticcanadaoffshore.ca

Capp context 4 3 online final pd  

Context Magazine CAPP's quarterly members' magazine Summer Edition: The Environmental Innovation Issue