John Zhou is one of the people helping to accelerate Alberta’s drive to develop clean energy. An inventor (he has seven U.S. patents) and a geologist by training, he’s spent nearly 30 years in research and innovation in energy and the environment. Now as vice-president of clean energy for Alberta Innovates, the province’s largest research and innovation agency, he’s overseeing programs to support development of green energy, advanced oil recovery technologies and finding new uses for bitumen. Context recently spoke to Zhou to get his perspective on innovation activity that could dramatically change the way oil is produced and used.
Q: Innovation isn’t something we always intuitively associate with oil and natural gas. Do you think Canadians would be surprised about the extent of innovation that’s taking place in the industry?
A: Canadians would be very surprised, and there are different reasons for this. In large part, the public discourse has largely been directed to climate change concerns and the pipeline. People assume the production of oil is easy. It’s not, especially in the case of the oil sands. Also, we rarely talk about the past success of innovation in the industry.
Q: What then should Canadians understand?
A: A few points. First, the significant economic impact of the oil and gas industry to the country. This is something that is not appreciated by many Canadians. Second, innovation is what has made Canadian oil sands industry a reality. We wouldn’t produce 2.8 million barrels of oil per day from oil sands without innovation. Third, innovation is crucial for the industry to remain competitive, and continue to be a contributor to the Canadian economy.
Q: Can you elaborate?
A: Well, if you look at the global situation, there’s rapid shale oil production and offshore development. Technologies in these areas are advancing so quickly, with remarkable reductions in operating costs. At the same time, there’s a strong push for renewable energy, driving the oil and gas industry to be cleaner. The Canadian oil and gas sector will need to keep up. We have to be competitive on cost and in terms of environmental impact, especially greenhouse gas (GHG) emissions. This will require investments in innovation.
Q: So, what are some innovation trends you’re seeing in industry?
A: On the in situ recovery side, I see lots of innovation taking place, and it’s very exciting. There are a few recovery technologies moving beyond concept and lab testing to full-scale field testing. These involve adding solvents to steam, switching to solvents in later production cycles, or replacing steam completely with solvents. These are technologies that could reduce both operating costs and GHG emissions significantly. I think there will be a technological revolution in this sector in the next three to five years.
We’re also seeing growing commitment to partial upgrading capacity in the province. The Alberta government has launched $1 billion in loan guarantees and grants to support bitumen partial upgrading in the province. This investment is going to have some real impacts to the industry in the next five to 10 years.
Both of these developments could make the industry more competitive in the short and medium term.
The industry is also looking at adding value for bitumen beyond its use as a combustion fuel. By using asphaltenes in the bitumen, we could create high value materials such as carbon fibers or asphalts. At Alberta Innovates, we’ve launched a Beyond Bitumen Combustion program to further development of these potential products and their production technologies. We’re looking at how the oil sands can be used to serve non-combustion markets. Because this is early stage, Alberta Innovates is taking a leadership role to ensure Alberta is prepared to address this potential market.
Q: Is the industry innovating fast enough?
A: I want to say yes. But today in Canada the industry faces a significant competitive disadvantage that affects growth, and that has an impact on investments in innovation. Other countries are discussing how they can use the best technologies to find and produce oil more economically. But here in Canada we’re in a very different conversation. We’re debating the market access issue. There continues to be uncertainty in our regulatory processes. If we can create more certainty on these issues, the industry will better be able to grow and innovate as fast it can.
Q: What gives you optimism about future innovation in the industry?
A: All of the in situ recovery technologies I mentioned are very exciting. We’re seeing strong interest in the province to recent announcements around bitumen partial upgrading and Bitumen Beyond Combustion. Government commitments to climate change are also encouraging industry to look for new technologies to cut emissions. There’s certainly a lot of innovation activity being generated in these spaces. If we can address the issues I mentioned—getting clarity on regulations and certainty on market access—we’ll see industry innovation grow even further.
This is part 4 of 5 in a series of Q&As with thought leaders on how innovation is playing a role in the development of Canadian oil and natural gas as an energy source for tomorrow.