Imagine if in the middle of an incredibly tight oil market and $140-a-barrel crude there was a potentially groundbreaking discovery whereby green technology could be used to recoup some of the estimated six trillion barrels of heavy conventional oil left untapped in mature or abandoned wells.
And imagine if this technology was being developed in Calgary to boot. You'd think Alberta oil companies or the provincial government, already struggling to burnish their environmentally smeared reputation, would be all over it like bitumen on a front-end loader. But you'd be wrong.
University of Calgary researchers believe they have solved the puzzle of how naturally occurring anaerobic bacteria convert crude oil into methane, the primary component of natural gas. More significantly, their findings – published last January in the prestigious academic journal, Nature – show how the conversion process, which normally takes tens of millions of years, can be shortened to a few hundred days by feeding the microbes a cocktail of nutrients.
The findings have so far been limited to lab tests, but the possibilities are potentially huge. Some 70 to 90 per cent of conventional reserves are left in the ground because the oil is too thick to pump to the surface economically. If microbes could be used to recover even 1 or 2 per cent more of a reservoir, by converting the thick crude to lighter natural gas, it would be significant, says Paul Cataford, president of University Technologies International, the University of Calgary's technology transfer office. “It's free money and it's completely green.”
It all sounds tailor made for Alberta, which has seen its conventional oil production cut in half in the past two decades and is grappling to establish its environmental credentials, as an increasingly powerful green lobby in the U.S. and Canada targets its much more destructive, “dirty” oil sands production.
And yet, when it came time to spin out the technology into a startup company earlier this year, Mr. Cataford, a seasoned Bay Street investment banker, came up dry when he went knocking on doors in Calgary to finance the venture, called Profero Energy. Instead, a venture fund out of Newcastle, England – where the research originated before one of the scientists involved was recruited to the University of Calgary – is coughing up as much as $5-million to test the process in declining wells in Alberta and Saskatchewan.
That's chump change for the oil patch. Last year alone, five of the leading energy players, Suncor Energy, EnCana, Canadian Natural Resources, Petro-Canada and Husky netted some $16-billion in profits. This year, the windfall is expected to translate into a record $12-billion surplus for provincial coffers. “I was told ‘we don't do that,'” Mr. Cataford says. “The technology was too ‘early stage,' it was not proven.”
Maybe so. But Profero is just one drop in a vast well of innovative malaise. For decades Canada has engaged in a national exercise of self-flagellation over its seeming failure to take chances on risky ventures and turn invention into real enterprise. The presidents of universities, where many discoveries originate, bemoan inadequate government funding. Venture capitalists blame sticky-fingered universities reluctant to share patents while governments conjure up misguided labour-sponsored venture funds to compensate for the dearth of private financing.
And all the while, others – Americans, Europeans – seem to have no problem financing and acquiring Canadian innovations, whether they be medical devices, oil-eating microbes or those spongy, multicoloured shoes, Crocs.
Mr. Cataford, maybe because he comes from the finance world, cuts the venture capitalists and private investors some slack. Profero Energy, still in its infancy, is more of a “tool” whereas funds and companies are hardwired to back startups with a recognizable operational structure and management. Maybe if oil companies were given a tax break in return for investing in nascent technology, he adds, there would be more uptake.
Mr. Cataford argues the real challenge, however, is to fill a sweeping void in early-stage venture financing – an area where private funding is loath to go. Successive governments have spent billions trying to bridge the gap, but to little avail. Stephen Harper's Tories are putting $195-million toward 18 ‘centres of excellence' for commercialization and research, while in June newly minted Alberta Premier Ed Stelmach launched a $178-million “action plan” to help commercialize technology.
Whether these latest incarnations are able to crack the commercialization conundrum remains to be seen. In the meantime, we are still confounded by how to turn technology developed in publicly funded universities into a benefit for the country, beyond merely selling licenses to foreign companies. If we could figure that out, now that would be a real breakthrough.
Andrea Mandel-Campbell is a contributing editor at BNN and author of the book Why Mexicans Don't Drink Molson.
