Oil and gas innovation network has yet to spend $80 million of federal funding for cleaner technologies

A pan-Canadian innovation network that aims to produce the world’s cleanest hydrocarbon products is still gearing up to spend the bulk of its $100 million in federal funding to commercialize new, greener technologies.

Ottawa committed the funding over four years to the Clean Resource Innovation Network (CRIN) through its Strategic Innovation Fund in the March 2019 federal budget. But a contribution agreement to start the flow of funding wasn’t signed with Innovation, Science and Economic Development Canada until July 29, 2020.

The agreement provided $80 million for “technology enablement.” Seven months later, CRIN has yet to launch the first of three planned technology competition challenges for high-impact projects with clear paths to commercialization.

“None of this money [for technology enablement] has been spent yet,” said CRIN president Joy Romero, who’s also vice-president, technology and innovation at oil sands producer Canadian Natural Resources, in an email to Research Money.

CRIN was originally proposed as one of the federally supported superclusters under the $918-million Innovation Superclusters Initiative but didn’t make the final cut when Ottawa selected its five superclusters. The Parliamentary Budget Officer and others have criticized the superclusters for under-spending or not spending their federal funding fast enough to achieve Ottawa’s 10-year goals on job creation and GDP growth.

While declining to comment directly on CRIN, Nina Lothian, Alberta associate regional director at the Calgary-based Pembina Institute, said it is urgent that the oil and gas industry accelerate deployment of commercially available, cleaner production technologies. However, the industry also needs to invest in emerging “breakthrough” technologies that will significantly reduce GHG emissions as opposed to making only incremental improvements, she said.

“More delay [in deploying cleaner technologies] causes costs to increase, both in emissions from the production side but also the impacts from climate change,” Lothian said.

Emerging technologies include extracting oil sands bitumen using chemical solvents rather than injecting steam into reservoirs (which produces GHG emissions) and non-combustion applications for bitumen such as producing carbon fibres.

Technology competitions almost ready to start

CRIN is almost ready to launch technology competitions and has completed the contracting process with three competition coordinators, Romero noted. “Competition information will be shared by the end of March 2021," she said.

Since the contribution agreement was signed, CRIN has used some of $20 million (of the total $100 million) allocated for CRIN ecosystem development and support to hire a small staff to build operational capabilities. CRIN also hosted or co-hosted 23 events across the network’s seven technology theme areas, which can lead to new technology commercialization collaborations, Romero said. “This is not typically a short-term exercise for partners," she added.

There are requirements in the contribution agreement for industry to match CRIN funding in competitions for technologies at the Technology Readiness Levels 6 to 9 — which range from prototype demonstrations to proven technologies.

CRIN is looking for ways to co-develop technology and intellectual property with rewards and risks shared between innovators and producers, Romero said.

Although the funding is not yet available for new technologies, CRIN has grown to more than 2,000 members. They encompass the oil and gas industry, innovators, investors, startups, policy makers, incubators, research universities and other R&D organizations, students and young professionals.

For example, several representatives of Natural Resources Canada (NRCan) participate on CRIN’s steering committee and NRCan laboratories collaborate with CRIN’s technology theme area leaders to share resources to enable technology development.

As for the expected outcomes of CRIN’s work (reduced greenhouse gas emissions by a certain date, for example), key performance indicator metrics have yet to be confirmed with the federal government, Romero said. “Industry pull is an important aspect of all CRIN activities to ensure producer needs are met . . . and projects with the highest potential impact to reduce environmental footprint and GHG emissions [will] receive support," she added.

Oil sands’ greenhouse gas emissions continue to grow

When it comes to GHG emissions, the oil sands industry has decreased the emissions intensity of its products (amount of emissions per barrel of oil, for example), ranging from a 4 per cent to a 21 per cent reduction since 2009, said a report by the Pembina Institute, a national clean energy think tank.

Despite these improvements, absolute emissions from the oil sands continue to increase overall due to growth in production. This puts the sector on a “collision course” with Canada’s 2030 emissions-reduction target and climate plan to achieve net-zero emissions by 2050, Pembina’s report said.

The oil and gas sector as a whole was responsible for 195 million tonnes of GHG emissions in 2017 (measured as metric tonnes of carbon dioxide-equivalent, or Mt CO₂e), or 27 per cent of Canada’s total emissions of 716 Mt CO₂e, according to Environment and Climate Change Canada. The oil sands, which accounted for 81 Mt CO₂e in 2017, are the fastest-growing source of emissions in Canada.

Because of their GHG emissions, four of CRIN’s members and all oil sands producers — Canadian Natural Resources, Suncor, Cenovus Energy and Imperial Oil — were among 15 businesses blacklisted for investment in 2020 by Norway’s US$1.3-trillion sovereign wealth fund.

The Alberta government, like the federal government, needs to set a specific emissions-reduction target and implement clear policies to encourage the oil sands industry to accelerate deployment of cleaner technologies, Lothian said. “Without that clarity of policy, it’s really challenging for industry to make those investment decisions and for the investors to come to the table if it’s unclear that these technologies will be needed," she said.

The Pembina Institute’s report recommended establishing strong regulations to decarbonize the oil sands industry and “supporting an innovation ecosystem to deliver breakthrough technologies.”

In its 2021 budget last week, the Alberta government committed $73 million in 2021-22 — rising to a cumulative total of $227 million by 2023-24 — for programs to attract investment in carbon capture programs. Carbon capture and storage, which can reduce GHG emissions by 90 per cent, is used at Shell’s Quest project near Edmonton, but wider use of the technology is needed to make a significant dent in the province’s emissions.

Thousands of “orphaned” oil and gas wells still need cleaning up

Despite CRIN’s vision of producing the world’s cleanest hydrocarbons, some oil and gas companies have left a legacy of improperly abandoned and “orphaned” oil and gas wells across western Canada.

Improperly abandoned wells are non-producing inactive wells that haven’t been properly sealed and the well sites reclaimed. Orphaned wells result when the company operating them goes bankrupt and is no longer responsible for them.

As of March 2020, Alberta had approximately 95,000 inactive wells and 69,000 abandoned wells, according to the Alberta Energy Regulator (AER). The total liability tied to inactive well clean up in the province amounts to more than $30 billion.

The federal government announced funding of $1.7 billion in April 2020 to help clean up almost 150,000 inactive wells across Alberta, Saskatchewan and B.C.

In addition, the Alberta government provided more than $300 million in grants and loans to the industry-funded Orphan Well Association, which assumes responsibility for cleaning up such wells.

CRIN and Petroleum Technology Alliance Canada co-hosted a half-day workshop on Dec. 9, 2020 on tackling the backlog of inactive, unreclaimed well sites across western Canada.

“We are committed to Canada being the global leader in clean hydrocarbons from source to end use,” Romero said. “This allows hydrocarbons to be part of transformative, reliable, sustainable and affordable energy systems across Canada and around the world.”

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