Commentary: Why 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.

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.

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

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

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.

This massive investment in innovation is already producing environmental 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 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 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