Don't tell Harbir Chhina that Canada's oil sands sector doesn't innovate. As one of the pioneers of SAGD, the steam-assisted gravity drainage system for drawing sticky bitumen out of the ground, the Cenovus Energy Inc. executive vice-president in charge of oil sands says energy companies from around the world should be beating a path to Canada's doorstep to ask, "How did you guys get this oil out? How did you make money doing this?"
To those who complain that Canadian energy producers spend far too little of their revenues on research and development, Mr. Chhina says the past decade has seen millions of dollars put into R&D and new technologies. This has led to inventions such as a drilling rig that can be flown by helicopter to remote areas (eliminating the need for access roads) and pumps that reduce the amount of water used in the SAGD process.
While he argues the economics aren't there for Calgary-based Cenovus to build plants for processing oil in Canada, he said the company has pushed to ensure it remains on the leading edge of crude-oil production. The man in charge of operations at sites including Foster Creek, Christina Lake and Narrows Lake believes smart, well-trained people working in the oil sands will make the difference in coming years.
Does Canada need to focus more on creating a finished, tangible product? That has been the criticism – that we're too focused on exporting raw resources.
We didn't think it was for the best interests of our shareholders, in terms of creating value, to start to build upgraders and refineries in Canada … Those refineries have been there for decades and decades in the United States, and we felt that our product going south was the way to go. But in the future, there are other companies trying to look at upgrading the oil here in Alberta. So those projects make sense, some of them, but it doesn't make sense to refine everything here in Alberta.
Finance Minister Jim Flaherty slashed R&D tax credits in last year's federal budget. How do you think Ottawa will get better at spurring R&D and science-based entrepreneurship in Canada?
Could there be more credits to spur more R&D? Definitely … When I look at 10 years ago and what we're spending today, we're spending about 10 times more on technology and R&D …We do what's called an innovation summit, every two years in May. We'll take a great percentage of our employees – 1,500 to 2,000 people for two days – just to talk about innovation and the different things that people are working on … We're trying to build a culture of innovation within our company, to get everybody thinking and challenging the status quo, and looking for better ways.
Will the Canadian Oil Sands Industry Alliance play a substantial role in spurring real innovations in the oil sands?
We're still kind of nailing down COSIA exactly and what the contributions are going to be for each company. The real value in COSIA is going to be in going forward, and doing projects right from the start. It's kind of hard when you're three-quarters of the way into a project to get other parties involved. But if you do it right from the beginning, it becomes a lot easier to progress new technologies, innovation, and share in the cost of doing this stuff.
What are the trends in in-situ extraction that the public might not know about?
A big trend is solvents … It's where we put steam and butane together, which drops our steam-to-oil ratios by up to 30 per cent. That's a big achievement. That really helps the economic benefits and the environmental benefits … So you put in less steam and you put in more butane, and overall the results are substantially better.
But doesn't that raise different environmental concerns? People are always wary of chemicals going into groundwater.
Take the example of the Bic lighter, which people carry in their pocket. … It's not a chemical, it's like a household item … Cenovus and a lot of other companies are looking at a lot of other solvents … In the future what you're going to see is we're going to use less and less steam, and lower and lower temperatures, and more and more of these solvents – which is going to improve everything.
What are a couple of other favourite projects of yours?
One of the ones I'm really proud of … is electric submersible pumps. What ESP means is that we'll be able to run SAGD at a lower steam-to-oil ratio, and a lower steam-to-oil ratio means we're using less water, less emissions, we become more efficient.
The existence of the technology is one thing. But aren't a lot of these new technologies too expensive for everyday use or for commercial use?
A lot of them, yes, it is an extra expense. Even the SAP [solvent-aided process] does cost a little bit more. But you have to look at the overall benefit. The overall benefit is that the economics overall are improving with these technologies, and our environmental footprint is decreasing with these technologies.
Looking into the future, 10 years from now, how much do you think you'll be able to improve on the footprint of in situ?
That's a great question. I believe we just finished our first inning in a baseball game. I think we have a long way to go. One of the things I always tell everybody is that to an engineer, 80 per cent of solving a problem is knowing the problem.