In 2020, Resource Works delivered its first ever Resource Innovation Forum with the support of Cenovus Energy. Drawing speakers from Canada's top thought-leaders and innovators in the resource, environment, and investment industries, the 2020 series has continued relevance for anyone interested in the future of Canadian resources. The series has been recorded and made available below, where you can listen to our six episodes featuring guests including Dr. Deborah Yedlin, John Stackhouse, Wes Jickling and more.
Episode one: Institutional partnerships and perspectives on oil sands innovation
“Science” and “math” were recurring themes in our first online Resource Innovation Forum featuring Deborah Yedlin, Chancellor of the University of Calgary and John Stackhouse or the Royal Bank of Canada.
Our opening speaker, Deborah Yedlin, on Apollo 13 and the Canadian energy industry: “If we could put a man on the moon, if we could save three astronauts from being lost in space and potentially perishing, surely we can figure out how to address the challenges (a) of climate change, (b) of the challenges facing the energy sector and particularly the oil sands in terms of emissions and water use. . . .
"We can do this. We’ve done far more challenging things with far less computing power than we have today. . . . Science is going to provide the solution and the answers to what we face as a global community when it comes to energy use and production,” she said.
Our second speaker, John Stackhouse, Senior VP, Office of the CEO, at the Royal Bank of Canada, highlighted the dangers of ideology: "When we talk about climate change, and the passionate views, and logical views, it's important to remember: This isn’t religion. It’s math. It’s a real math problem, and it's a math problem that we can solve.
“I was struck by the Institute for Sustainable Finance’s argument that oil and gas is one of the most cost-efficient investments we can make; probably the best carbon ROI for us to hit our emissions targets. . . . In total, (investment of) about $26 billion over a decade, $2.6 billion a year, in new technology in the oil and gas sector, can get us to where we need to be.”
Stackhouse went on to note that since 2014 the number of companies in the Canadian energy index has shrunk from 52 to 14. And half the index’s value comes from just two pipeline companies. “So we've got a real math challenge there.”
Part of that challenge, he said, is due to ESG investment issues (environmental, social and governance.)
“That’s particularly true for European investors. We can talk about all the successes of Canada, but there was a New York banker on this call that I just came off who said, ‘The rest of the world has a view of Canadian oil and gas, and it's not necessarily positive.’"
And, Stackhouse said: “In the context of Canadian energy there’s a greater focus on the E than the S or G, rightly or wrongly, but right now E is a capital E, and it towers over the S and the G. ESG is drawing more attention among investors and institutional investment funds," said Stackhouse. A Royal Bank survey of 800 world investment professionals found 75 per cent of investors used ESG in their investment approach this year, up from 70 per cent in 2019.
“So how do we ensure that ESG is good for Canadian returns, particularly for oil sands investment? We see it as an opportunity. . . . ESG can contribute to the intangible value of Canadian oil and gas companies, if we think long-term and strategically about it, and develop the arguments that we think the world may be willing, and wanting, to hear. . . .
“There’s a whole new frontier of so-called green investment, well into the 2020s, that Canada can help pioneer”, he said.
“We need to understand that the technology investments of oil and gas companies are more significant perhaps than any other clean-tech spending going on today. Seventy-five per cent of Canada’s clean-tech spending, roughly, in research and development, as well as commercialization, comes from the energy industry.
“So how do we ensure investors, institutional investors, are able to recognize that in their portfolios, and say to their own members and stakeholders, ‘Look, this is where your money is going, and it is leading to material decline in carbon emissions.’”
Episode two: Collaborative innovation in Canada's oil sands
Thanks to support from Cenovus Energy, our second instalment of the Resource Innovation Forum featured Wes Jickling from COSIA. That’s a research-and-innovation partnership of nine companies, which produce 90 per cent of the oil from the oil sands.
Here’s some of what he had to say, starting with a reminder that Canada has the world’s third-largest reserves of oil —167 billion barrels, or 10 per cent of the world’s known oil reserves. Some 96 per cent of that Canadian reserve is in the Alberta oil sands. And Canada is the world’s fourth largest producer of oil.
“If you looked at a glossy brochure about what COSIA is, I would characterize it as the place where Canada’s oilsands companies come to innovate together," said Jickling.
“It was created in 2012, essentially on the principle that, when it comes to environmental stewardship, when it comes to developing clean technologies and improving the environmental performance of this industry, oil sands can go faster, further, better, together.
“If we pool our resources and we pool our expertise, we can accelerate the improvements that we are making in environmental performance.
“We would call it ‘extreme collaboration’ between nine competitors, nine major competitor-companies. And what’s happening here is the nine companies are sharing, with one another, intellectual property, technologies, they’re giving access to one another’s, and sharing subject-matter experts."
Jickling added: “This is a very Canadian thing, a very Canadian way of doing clean tech, or doing innovation and research and technology development. It’s a level of sharing and co-operation that we do not see if any other industry or any other group of competitors anywhere in the world.
“That’s extreme sharing, extreme collaboration, and it’s all about the environment.”
COSIA’s research and innovation focus on four areas: land, water, tailings, and greenhouse gases.
Each of those four areas, he said, has its own joint-venture agreements that all the companies have signed to. They share a research agenda. They develop and pursue technology pathways, and work closely together, exchanging technological information and technologies. He shared some big numbers: COSIA partners have developed and shared 1,076 technologies, at a cost of about $1.6 billion. And the impact on operations would be “much much higher” than that $1.6 billion. There are 225 projects under way today, at a cost of $62.1 million.
Outcomes include the reduction in greenhouse gases emitted, per barrel of oil sands oil, by 20 per cent from 2009-2018. “(This is) very significant. You don't see the other major producers in the world with that kind of trend-line.” And an additional reduction of 16-23 per cent is expected over the next decade.
As well, since 2012, COSIA members have reduced the intensity of fresh-water use from the Athabasca River by 46 per cent at in situ operations, and by 18 per cent at oil sands mining operations.
And there’s more: “In the oil sands we have some tremendous CO2, carbon-capture-and-storage assets. We’ve one of the world’s largest carbon-capture-and-storage facilities at the Quest facility at the Scotford refinery in Edmonton. We have the world’s biggest CO2 pipeline, the Alberta Carbon Trunk Line.”
Episode three: Emerging Potential of CCUS Technology
Episode three of the Resource Innovation Forum hosted three leading voices on innovation to discuss the emerging potential of carbon capture, utilization, and storage (CCUS) for Canada's oil and gas sector.
Margareta Dovgal moderates a discussion between Marla Orenstein (CWF), Jeff Pearson (Wolf Midstream), and Marcius Extavour (XPRIZE Foundation), covering carbon capture innovation, policy mechanisms, and more.
"CCUS is one piece of the puzzle; it’s not the only piece of the puzzle. It’s not a magic bullet. But it does seem to have a great capacity for actually helping us get to where we need to go. So very promising and very exciting," said Orenstein.
Extavour agreed, highlighting the potential for Canada to become an early adopter and leader in CCUS technology.
"There are very few countries that have the combination of the geology that we have, the existing oil and gas and engineering, deep bench of personnel, the regulatory regimes we have, the leadership at the provincial and federal levels that are interested to do something here. And this is an area that, frankly, our typical friends and rivals, like the EU, and Japan, and China, and the United States, have not already dominated. So there is, I think, still an opportunity for Canada to – that’s a very big word – but to be a leader here, and an export leader."
There's a lot at stake. Despite the enormous economic benefit provided by the oilsands, they are nonetheless a major source of emissions.
"I look at the oilsands, and the oilsands, to me, is one of the most interesting areas, because of the sheer magnitude of emissions that we see coming out of the oilsands," said Pearson.
"And to me, that’s the grand prize, I think, from a decarbonization perspective.
I think you’ll see a lot more companies starting to look for opportunities, and private capital coming in to fund those. I think, I mean, the nice thing about this relative to a lot of the other stuff I’ve worked in oil and gas is, everybody wants to do it. Everybody likes it. I don’t talk to a single person who doesn’t want to move this agenda forward. I think we’re all collectively in agreement."
Episode four: Federal Policy Challenges and Opportunities in the Patch
With net-zero on the federal policy horizon, what are the policy opportunities and challenges now before Canada's oil sands? Episode four of the Resource Innovation Forum features a conversation between our Director of Research, Margareta Dovgal, Dr. Monica Gattinger (University of Ottawa), and Aaron Henry (Canadian Chamber of Commerce).
Henry highlighted the challenge of new federal costs and taxes on oil and gas producers, with potential impacts on emissions reduction innovation.
"The oil and gas sector will be impacted by this Clean Fuel Standard. And every sort of dollar that goes up in compliance for that comes out of potentially CapEx. Which means that you’re not going to have those projects for innovation that are going to really deliver long-term dividends."
That's a theme Gattinger continued.
"I think there’s a big question of where will investment dollars come from for innovation? It’s going to take a tremendous amount of investment to transform the industry and in the current economic environment that we’re in and that we may very well continue to be in for some time with weak prices, demand depression due to COVID. I think that raises real questions about investment."
Federal contributions to emission reduction research and implementation must be part of the solution. Yet, false impressions abound when it comes to federal investments in the oilsands.
"Currently when the federal government makes an investment into the energy sector, in particular, but other energy-intensive operations, and that investment reduces emissions, we still have people who are calling that out as a subsidy to fossil fuels", said Henry. "And I think that that’s ridiculous. We need to actually get to the point where we recognize that emission reduction is good. It doesn’t matter what section it comes in. It’s important to make that happen."
Episode five: Government Supports for Innovation in the Oil Sands
For our fifth Cenovus-sponsored Resource Innovation Forum event, we were joined by David A. Dodge O.C., Special Advisor to our event partner Bennett Jones LLP and former Governor of the Bank of Canada, and Patricia Mohr, Director of Emissions Reduction Alberta and a former Vice-President and Economist at Scotiabank in Toronto.
Our discussion of government supports for oil sands innovation also covered the state of investment in the oil sands, national economic recovery efforts, how innovation in the oil sands can help emissions reduction goals, and how creating a more resilient and innovative industry is beneficial to Canadian prosperity.
Dodge presented the challenges: "I would say there are three key issues that the industry really has to take into account. One is how we’re going to reduce the production emissions in order to meet rising ESG standards around the world. Second, how we’re going to get the cost of our production down to compete in the global market, and finally, what are we going to do to increase our capacity to deliver the product to the world market?"
It's not just governments that are interested in emissions reduction, said Mohr: "It is very important that buyers in Asia, also in Europe and the United States realize the tremendous effort that Canadian oil producers are making to reduce their intensity in the oilsands, and in fact, that we are having some success at doing it."
But this will take significant technological investment by the industry. It's also something governments should be supporting.
"We can’t move forward in getting the GHG content down or indeed getting our costs down without further investments in technology in this industry," added Doge. "And so that’s the real focus, I think, if we think of the policies of Ottawa or the policies of Edmonton in that regard or Regina or Victoria for that matter."
Speaking of investments in low-carbon technology, Mohr highlighted the challenge ahead of a real hydrogen economy.
"If you want to really move to a real hydrogen economy where you’re not just using it to make fertilizers, for example, or for refining, but if you want to expand it into being a fuel for heavy vehicles or the railway or for space heating, there is some R&D that needs to be done, and it’s going to cost some real money in the form of capital to really get this going," she said.
Until low-carbon technologies are ready for widespread adoption, oil and gas remain critical. It's important to recognize the continued importance of the industry.
"This is a very, very important industry for Canada. As David said, it’s typically generates – it is by far the biggest export generator of anything. You couldn’t dream up anything to replace it," said Mohr.
"But I’d say in about 10 to 15 years, we need to shift a little bit to lower carbon products."
And with the expertise developed through investments in emissions reduction and low-carbon products, Canada can gain a new export: technology.
"One of the things that we ought to be doing is not just exporting the product but exporting the knowledge and the technology which our people are producing," said Dodge.
"That is a valuable export in and of itself."
Episode six: Hydrogen Potential - Beyond Blue, Gray or Green
In the sixth and final installment of the Resource Innovation Forum, sponsored by Cenovus Energy, we were joined by Marty Reed (Evok Innovations) and Chris Reid (Ekona Power) for a discussion on hydrogen potential in Canada. Resource Works' Director of Research, Margareta Dovgal, moderated.
Evok Innovations is a Vancouver-based tech incubator that applies Silicon Valley thinking to invest in energy transformation opportunities. One of these is Ekona Power, a company creating new solutions to produce clean, industrial-scale hydrogen at low-cost.
Hydrogen is commonly sorted by production method—resulting in blue, green, and gray hydrogen. But as the panelists noted, this simplification may not fully convey each type’s affordability and carbon intensity. Green hydrogen has the lowest emissions but has high production costs, being made through electrolysis from renewables. Meanwhile, grey and blue hydrogen are developed from fossil fuels, requiring less energy than the electrolysis process. This allows them to be a more affordable form of hydrogen energy, and blue hydrogen has the added advantage of being used along with carbon capture technologies, which dramatically lowers emissions.
Reed highlighted the potential to use all forms of hydrogen energy to achieve a double bottom line: "there's this naïve view that we can simply electrify everything, and while electrification is an important path…the simple sheer quantum of energy required is beyond our scale to bring on new electrons that fast."
Reid added: "We cannot forget about the customer and the economics in this." Blue hydrogen is a vital part of the road to developing affordable and cleaner energy.
The message is clear: whether blue or green, we need all kinds of hydrogen energy. As Reid said, "we have to be careful that perfect doesn't play the enemy of the good here. We need to throw everything plus the kitchen sink at this problem."
With development on industrial scales, Reid looks forward to a future of hydrogen energy sold for "a buck a kilogram." Reed spoke of commercial opportunities to augment, replace, and bring on more SMRs with scale and low carbon footprints, especially in agriculture. He continued that medium and long-term opportunities exist in long-haul trucking, rail, and marine transportation fuels in addition to Asian export potential.
Both Reed and Reid envisioned a future of government, industry, and unions working together to support the development of a clean and profitable hydrogen economy. This future is on its way. After consultations with stakeholder groups, the federal government announced a strategy on hydrogen energy, which can be found here. As Canada works towards developing its hydrogen energy economy, the panellists highlighted the continued need to educate our political leaders about the potential uses of carbon capture and storage technology.
With the conclusion of this webinar, Resource Works wrapped up its first-ever Resource Innovation Forum after six weeks of insight and information from innovators and thought leaders in Canadian energy.