Facing intense heat, oil sands firms ink deal to share green technologies

CALGARY — The Globe and Mail

The Suncor tar sands mining operation north of Fort McMurray, Alberta, November 3, 2011. Suncor is one of the largest oil sands producers in Alberta. (© Todd Korol / Reuters/Todd Korol / Reuters)

For an industry struggling to persuade the world that its dirty oil image isn’t deserved, stagecraft matters. And so, before a broad stage in the Imperial Ballroom of Calgary’s Hyatt hotel, some of the country’s most senior business leaders lined up, one by one, to sign a document intended to herald a greener future for the oil sands.

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Everything from the stately location, to the parade of often media shy executives, to the former CFL linebacker chosen to lead the newly created Canada’s Oil Sands Innovation Alliance, was intended to show how seriously industry takes a technology sharing group formed in the face of global criticism of its environmental performance.

Steve Williams, the Suncor Energy Inc. chief operating officer, called it “a new era in oil sands development.” Chris Seasons, the president of Devon Canada, added: “We intend to set public goals and will report on progress toward meeting these goals. This is a first for our industry.”

But hidden behind the grand rhetoric and big pledges was the list of unanswered questions, and it is long. Those public goals, for example, have yet to be set. Even the types of goals – will companies commit to a certain level of greenhouse gas output? Or just to a certain percentage of improvement? – haven’t been determined. Nor has the baseline to measure improvement against.

And despite an army of lawyers labouring over this agreement for more than a year, no one quite knows what information, exactly, will be shared.

“It’s going to take some time to understand where this is going to lead us,” said Dan Wicklum, the former Calgary Stampeders player and PhD in aquatic ecology who was named chief executive officer of the new alliance. “This is a fundamentally different model. No one is doing this at this scale anywhere on the planet that we know of.”

In signing the document establishing the alliance, the dozen executives agreed to open their environmental research repositories to competitors, allowing a degree of technology sharing they believe is unparalleled in any industry anywhere. They will work through COSIA, a barebones organization with just a few staff, including one person to head, and co-ordinate work in, each of four environmental priority areas: land, water, greenhouse gases and the toxic mine effluent industry calls tailings.

But the lack of concrete goals provoked criticism from environmental groups, with Greenpeace campaigner Keith Stewart arguing that “in the absence of any commitments to real reductions in pollution, with penalties for not meeting them, this is simply another example of ‘greenwash.’ ”

Ed Whittingham, the executive director of the Calgary-based Pembina Institute, said he is “cautiously optimistic” on the alliance. But, he added, “We’ll have to see what the targets look like.”

For industry, the trickiest area has involved what technology gets spread around, and what doesn’t. “COSIA is very much about sharing what we’ve already created and less about creating new things thereafter,” said Bruce March, chief executive officer of Imperial Oil Ltd. “We’re going to try to capture what’s working best now by each individual company.”

It was tough to determine “how we would share and treat intellectual property,” Mr. March acknowledged. The system they’ve come up with allows companies to swap innovations inside the alliance, although it seems likely there will be a mechanism for financial compensation, too.

“People will put into the pot what they have, and there will be some allocation of value associated with that,” said Mr. Seasons, with Devon.

But it’s unlikely some of the most important new technologies will be shared by the group. Companies, for example, are developing more efficient ways of extracting oil sands using novel well-placement techniques and new hydrocarbon solvent cocktails.

Such innovations can create dramatic savings in greenhouse gas emissions – but under the COSIA umbrella, “that’s not environmental,” because environmental savings is not the primary goal, Mr. Seasons said. Anything deemed a “reservoir improvement” will be classified a “commercial” technology and “we’ll remain competitive on those technologies,” he said.

Still, industry sees in this alliance a chance for real betterment.

“This is not just going to be about visuals,” said John Abbott, an executive vice-president at Royal Dutch Shell PLC’s Canadian operations. “What this technology sharing does is it just reduces the learning period, so that you can get to better performance faster.”

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