Innovation Energy: Oilsands step up to take on clean tech challenge

The energy industry gets a bad rap when it comes to innovation, yet the oilpatch is by far the largest spender on clean tech in Canada, to the tune of billion a year. As part of its continuing…

Innovation Energy: Oilsands step up to take on clean tech challenge

Curated via Twitter from FP Tech Desk’s twitter account….

She said CNRL’s Horizon oilsands mine has reduced its emissions by 37 per cent in the past six years. “Our industry was painted as ‘dirty oil. ’ We are not a dirty oil,” she said, adding that if the global oil industry were forced to produce its crude at Canadian standards, the world would see an immediate 23 per cent reduction in emissions from oil and gas activities. “It’s not easy,” Romero said, adding that she understands there will always be critics and there will always be pressure on oilsands operators, even as they undertake increasingly large-scale projects to reduce emissions. “This mis-linking between ‘clean’ and what we’re doing has to stop because we’re hurting the Canadian economy.

In an email, Canadian Oil Sands Innovation Alliance spokesperson Rob Gray said external research has validated the industry’s forecast that it can reduce its emissions between 10 per cent and 30 per cent in the next five years. “This is one of the areas where it’s going to take a lot of money,” said Gary Bunio, general manager of oilsands strategic technology at Suncor Energy Inc. , of his company’s goal to reduce its emissions by 30 per cent by 2030.

Part of the tension is because Canadian oilsands companies are piloting increasingly ambitious technologies on a larger and larger scale since they continue to face increasing pressure to reduce emissions. “Often the CRA will confuse experimentation at a scaled-up level with commercial production,” Vandale said, adding this creates a disincentive for energy companies, already struggling with low prices for their products, to allocate additional funds to ambitious clean-tech projects.

But Romero, like others in the industry, has been frustrated by the inconsistent administration of the tax credits, since they are frequently awarded for small-scale emissions reduction technologies outside the energy sector, but oil and gas companies pilot these technologies on a much larger scale and have a more difficult time accessing the credits. “The idea behind clean-tech and innovation credits is a great idea, but it has to be administered properly by people who understand what is happening in the industry,” said Joanne Vandale, a partner on the taxation team in the Calgary office of Osler, Hoskin & Harcourt LLP.

At steam-based oilsands projects, any reduction in water usage leads directly to emissions reductions because less energy is spent turning water into steam. “That has sparked a whole bunch of new ideas for me,” Chhina said, adding he intends to ask the company’s wider management team to green light pilot projects for “purely solvent-based” extraction later this year.

In 2018, Suncor spent $635 million on research and development: $400 million of that was spent on “strategic” R&D and $200 million on “transformative digital technologies. ” It is currently piloting a range of new technologies at its mining and steam-based oilsands facilities to cut emissions and is considering investing in a new cogeneration power plant in the oilsands to reduce emissions from its power usage.

Canadian oilsands companies have for years been besieged by environmentalists, pressured by governments and encouraged by institutional shareholders to reduce their emissions and the overall environmental impact of what one international researcher calls “the most scrutinized source of crude oil in the world.

Indeed, the domestic oil patch is by far the largest spender on clean technology in Canada, accounting for 75 per cent of the $1. 4 billion spent annually, according to a study that Global Advantage Consulting Group Inc. conducted for the Clean Resource Innovation Network. “Anybody that doesn’t see us as clean-tech is sadly mistaken,” said Joy Romero, vice-president of technology and innovation at Canadian Natural Resources Ltd. , the country’s largest upstream oil and gas producer.

The intensity of upstream emissions from the Canadian oilsands has declined by 20 per cent since 2012 “and could fall another approximately 20 per cent over the coming decade,” according to a September 2018 study by IHS Markit. “On a full life-cycle basis, this would bring the industry closer to the U. S. average.

CNRL’s in-pit extraction process eliminates the need for tailing ponds which pose serious environmental risks. “I’m not sure that it necessarily reduces the amount of work that resource companies try to do in the clean-tech area or in technological advances to reduce carbon footprint, but when you’re pricing out the cost of those pilot projects, the availability of the SR&ED credit often has a big question mark next to it,” she said, adding, “It’s less reliable than it should be.

But despite spending hundreds of millions of dollars on mitigating environmental damage and even though managers, such as former Suncor chief executive Steve Williams, describe oilsands crude as “carbon competitive,” environmental activists have continued to tag oilsands crude with the “dirty oil” label. “Canada’s oil is high cost and high carbon, and it is struggling to compete in a global market,” Stand.

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