Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 17 - Evidence - December 1, 2016
OTTAWA, Thursday, December 1, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:34 a.m., to study the effects of transitioning to a low carbon economy, in camera, for the consideration of a draft agenda, and in public, for the consideration of a draft budget.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I am chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room, and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and also available via webcast on the sen.parl.gc.ca website. You may also find more information on the schedule of witnesses on the website, under "Senate Committees.''
I would now ask senators around the table to introduce themselves. I will begin by introducing my colleague to my right, the deputy chair, Senator Paul Massicotte from Quebec.
Senator Griffin: Diane Griffin, Prince Edward Island.
Senator Fraser: Joan Fraser, Quebec.
Senator Ringuette: Pierrette Ringuette, New Brunswick.
Senator Patterson: Dennis Patterson, Nunavut.
Senator Seidman: Judith Seidman, Quebec.
Senator Lang: Dan Lang, Yukon.
Senator Mockler: Percy Mockler, New Brunswick.
The Chair: I would also like to introduce our staff, beginning with the clerk to my left, Maxime Fortin, and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
Colleagues, before we welcome our witness, we have before us a budget for our proposed travel on our low carbon economy study. The budget is for a two-day, one-night trip to Montreal, Quebec. If you're in agreement, I would need a motion to say that the special study budget application of $18,704 for fact-finding in Montreal, as part of the committee's study on transitioning to a low carbon economy for the fiscal year ending March 31, 2017, be approved for submission to the Standing Committee on Internal Economy, Budgets and Administration.
Senator Patterson: So moved.
The Chair: Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
The Chair: Thank you. The motion is carried.
Today marks the twenty-fifth meeting of our study on the effects of transitioning to a low carbon economy, as required to meet the government of Canada's announced targets for greenhouse gas emission reductions. I am pleased to welcome our witness from Petroleum Technology Alliance Canada, Dr. Asgarpour, President. Thank you for joining us. We look forward to your presentation, and then we'll go to some questions and answers. The floor is yours, sir.
Soheil Asgarpour, President, PTAC Petroleum Technology Alliance Canada: Thank you, Mr. Chair and honourable senators, for the opportunity to appear before you today.
You are all well aware of the challenges our industry is facing in transitioning to a low carbon economy in this difficult low commodity-price environment.
I'm not going to really talk about that. My focus is going to be on innovation. I'm looking to present information on how innovation can provide solutions to this problem. In my presentation, I would like to provide context on the importance of innovation and the role that the Petroleum Technology Alliance Canada, PTAC, plays in transitioning to a low carbon economy.
I would also like to discuss innovation challenges, solutions and pathways, as well as the research and development work conducted and undertaken to convert these challenges into opportunities, and finally to present the proposed joint super-cluster concept, which aims to take innovation in our industry to a completely different level using a collaborative approach.
The main innovation challenges our industry currently faces include great basic research that fails to advance post- publication; focus on technology push rather than market pull; lack of funding and access to sites for field demonstration of SME technologies; slow market uptake of technologies; lack of interest from venture capital to invest in clean technology; the slow advancement of technology movement from concept to commercialization; and, finally, lack of infrastructure within small producers to adopt new technologies.
Over the past two decades, PTAC has, in turn, put significant focus on addressing these challenges through numerous programs that we have conducted. PTAC itself is a unique innovation ecosystem, which serves the Canadian hydrocarbon industry by significantly improving the environmental safety and financial performance of the industry through the facilitation of innovative and collaborative research and development.
Innovation and new technologies are critical at any time, but particularly now in a constrained carbon and low oil and gas price environment.
As background, PTAC was created 20 years ago as a neutral not-for-profit organization through a joint effort led by industry and government. PTAC provides a unique platform for collaboration among industry, governments and regulatory bodies, and, through the PTAC model, industry and governments set PTAC's priorities, with technical experts from industry identifying current industry challenges and governments and regulatory bodies identifying issues pertaining to social licence, permitting and compliance.
PTAC helps to coordinate research and development priorities, leveraging funding for joint industry projects. PTAC also frequently provides seed money in order to materialize identified issues. PTAC's innovation ecosystem consists of over 200 member organizations, which are producers, service and supply companies, government, regulatory bodies, academia, SMEs, research and development providers, and transporters, with over 250 individual industry experts driving our current slate of 75 research and development projects.
Since inception in 1996, over 600 events have been held to articulate industry challenges, develop road maps, identify technology solutions, launch joint industry projects and disseminate the results of our undertakings. To exemplify our outreach and support from the industry, in 2016 alone over 420 Canadian producers voluntarily provided funding for PTAC's central environmental program.
This program has historically focused on four environmental areas: air, which is about air quality, greenhouse gas emissions and methane emission reduction; second is water; third is soil and groundwater; and fourth is ecology and biodiversity. To date, over $120 million has been spent on over 300 applied-research studies through this program, the results of which have helped industry to develop and utilize best field practices, while governments and regulatory bodies have used the results to develop smart policies and regulations.
Additionally, PTAC has led several multi-year programs dedicated to the reduction of greenhouse gas emissions. The first one is a program in collaboration with the United Nations Environment Programme's Climate & Clean Air Coalition, the GGFR, on the reduction of VOCs, black carbon and other greenhouse gas emissions from oil and gas. The second program is the Nationally Appropriate Mitigation Actions plan, in collaboration with Environment Canada, with the mandate to set baseline greenhouse gas emissions for numerous countries around the world.
Meanwhile, global conventional oil and gas production will decrease significantly.
I missed something here that I would really like to talk about, which is where we are in terms of demand for oil and gas. According to the September 2016 U.S. Energy Information Administration, we are going to see an increase of 70 per cent in demand for gas and 35 per cent for oil from now until 2040.
During this period, we are going to see a significant decline from the existing producers. Essentially, this gap is going to be created because all conventional oil and gas are on significant production declines. Clearly, this gap will need to be filled from unconventional sources, notably those available in Canada.
Canada's hydrocarbon deposits are the largest in the world, estimated to be four to seven times larger than Saudi Arabia, which is used as the benchmark. These deposits will play a pivotal role in meeting the estimated global energy demand. Over 90 per cent of Canada's hydrocarbon resources are unconventional and are some of the most expensive deposits to develop and produce in the world with significant environmental impact.
Innovation can convert challenges associated with Canada's hydrocarbon deposits into unimaginable opportunity, targeting zero emissions by 2050. In transitioning the hydrocarbon sector to a zero carbon economy by 2050, I envision the following key pathways.
The first one, which would go to 2020, is about eco-efficient technologies, carbon capture, combined with CO2 enhanced oil recovery and enhanced gas recovery, bitumen partial upgrading, development of stream generation, solar panels and solar technology to replace gas pneumatics. The second path is about low carbon bitumen production using artificial intelligence and also photonics, in situ solvent in small gas-to-liquid units and conversion of CO2 to methanol and methane. The third period, which is by 2040, is about zero bitumen emissions using application of new generation nuclear technology and application of genomics and nanotechnology.
Finally, the period that goes to 2050 is about new products and a new model for green prosperity. It is about producing carbon fibres and graphene from bitumen, metal and rare earth elements recovery from tailings, hydrogen from oil and bitumen and over 300 value-added products that can be produced from a mega complex in Alberta.
PTAC, in collaboration with other industry stakeholders, including producers, academia, technology providers and other industry not-for-profits, have joined forces in establishing an energy industry super cluster which is intended to unite all stakeholders and fast track innovation and technology development toward economic, low carbon initiatives.
In conclusion, the key messages to take away from this are: next generation innovation for emergency technologies must be impactful change that cuts across industrial and geographic boundaries.
Government and industry need to work hand in hand to overcome innovation challenges and deliver sound solutions. The current 19 proposed technology initiatives that PTAC has submitted to NRCan would play a major factor in terms of reduction of greenhouse gas emissions. Collaboration among all energy stakeholders, including industry, government and regulatory bodies across Canada is a necessary cornerstone to success. Together, we have the innovative capacity and pathways to implement clean technology that will reduce costs and greenhouse gas emissions within Canada's energy sector, creating jobs and prosperity for Canada while lowering global emissions.
Thank you once again for the opportunity to appear before you. I look forward to answering your questions.
The Chair: Thank you, sir.
Senator Massicotte: Thank you for being with us this morning. You realize that your sector, the innovation sector, is looked upon and relied upon to basically allow our oil and gas industry, and many other industries, to pass the world test to ensure continuity without affecting the planet to a large degree. It's very important. Everybody says the future is with innovation.
Having said that, you gave examples of the past, but can you give us a sense of what is real, highly probable and will be available to us in the next five to ten years maximum that will help? To what degree will it help us reduce methane, CO2, and so on? What is going to happen in the industry in the next 10 years, say?
Mr. Asgarpour: Senator, first, I agree with you. I am a believer that we should focus on the triple P: taking care of our people, making sure that our planet is safe, secure and there is no environmental impact and ensuring profitability.
To answer your question about what is practical within the next five years, I would say the biggest impact comes from eco-efficiencies: technologies that reduce costs and greenhouse gases by consuming less energy in terms of production of oil and gas. We have developed numerous technologies already. With the 19 projects that are at the commercialization stage, we can reduce methane emissions by 45 per cent by 2025.
That is significant, because North America has made that commitment as well on the 45 per cent reduction. That means retiring close to 100 coal-fired plants in terms of offset of carbon.
There are also potential solutions in terms of reducing energy for oil sands to improve the steam-oil ratio. Artificial intelligence is one that we are currently working on. It has already shown some promising results.
Senator Massicotte: What is the impact relative to GHGs? Is it a percentage of 30 or 40 per cent GHGs? What is highly probable?
Mr. Asgarpour: Is that within the next 20-year period or the next 5 years?
Senator Massicotte: Ten years.
Mr. Asgarpour: It is difficult to predict, because it's all about market uptake. It's not about developing technologies. We have developed technologies and the SlipStream would be a good example. The industry uptake has been only 10 per cent, and there are challenges related to the uptake. In terms of capacity for innovation, it would be significant. It will get us close to where we want to be, but in terms of applying them and industry uptake, that's a completely different ballgame.
Senator Massicotte: The second question I have relates to exactly that: Canada is innovative. We have a lot of intelligent people coming up with solutions. For some reason, however, it doesn't get to the bottom line. We can't convert it. We had a witness this week from C.D. Howe discouraging the government from incentivizing consumption near term and that we should focus on pure research. We had a couple of other people from your province talk to us about the difficulty in commercializing innovation.
I'm not sure, where do we sit? How do we find a solution for the fact that we have potentially good intelligence and good solutions, but we can't make them real? Where is the problem there? Everybody has a different opinion about where the problem lies, but what do we do with this problem?
Mr. Asgarpour: Senator, that's an excellent question. In my view, we need to start from the very early stage of the innovation spectrum, which is about basic research. In basic research we do a great job in terms of conducting good research, but the focus is the publication of papers. It's publish or perish.
It should be about the commercialization of those ideas. If you look at Germany, Israel and even China, that's where they put the focus. It's not even about commercialization of the technologies; it's about market uptake. And again it's not about market uptake but business-driven activities that focus on making money. If you start looking at these technologies and ask, "How can I make money from them?'' then you can move from that path of basic research all the way to commercialization.
So we've got to kind of change of culture. It starts from universities and goes all the way through the whole innovation spectrum of changing the culture that the focus is business; it's not just intellectual curiosity, publication or things like that. They are important but they're not addressing the challenges that we are facing in the industry.
Senator Seidman: That was precisely the line of questioning I was going to pursue, but I'd like to take a couple of steps back.
PTAC was formed, if I understand correctly from your website, in 1996 by oil and gas company executives to response to the low level of research and development at that time in their industry. Is that correct?
Mr. Asgarpour: Correct. It was along with them. Actually, I was one of the founding directors. At that time, I was working for Gulf Oil Canada. We had government organizations as well. Mike Ekelund was Assistant Deputy Minister of Energy at that time, and we had the chair of what is now currently the AER also as part of the formation of that group.
It happened actually in the same environment that we are here today. We were shutting down research and development centres, one after the other. We looked at our deposits and noted they were very challenging and required innovation, so how do we do it using a very cost-effective approach? We looked at several models and we came up with this idea that we need to improve performance and get better mileage from the dollars spent on R&D. That can happen through collaboration, so the model was developed through formation of consortia. Rather than each of us doing the same thing, we come together and use financial and expertise leveraging. That has made a big change.
I will give you an example. We had a project on CO2 sequestration. There was participation by the governments of Australia, the U.S., Canada, provincial governments and 25 producers. If we say a project cost is $10 and one company provides $1, the financial leveraging is 1 to 10. For that project it was 1 to 127 times.
That's where we can get better mileage in terms of our research and development money.
Senator Seidman: You say in your presentation, "$120 million has been spent on over 300 applied research studies.'' So you focus on applied research. That would be over your 20 years, so that's about $6 million a year over 20 years on R&D, and your R&D has been focused on applied research. Is that correct?
Mr. Asgarpour: That is correct. In addition to those 300 projects, over 200 focus on commercialization of technologies. Those are the big ones in terms of capital expenditure.
Senator Seidman: In terms of participation, PTAC is a Canadian company, but most of industry is international or American companies. How does that work for Canada? How does that impact Canada in a positive fashion?
Mr. Asgarpour: It is an excellent question. This is something we have said: We only work on providing solutions to challenges that Canada has. If those challenges also happen to be international, we would like to do them. Why? Because we have 140 service and supply companies that are technology providers. They can then take their technologies internationally.
So we are helping not only producers but service and supply companies, government organizations and other stakeholders that are our members.
Senator Seidman: I'd just like to clarify something, now that I've gotten to the point that Senator Massicotte was at. We've heard competing statements, even very recently, from witnesses over the course of last week and this week. We heard that Canada doesn't have sufficient tools to allow for commercialization of new technologies, that we can't get into the translation phase that allows Canada to compete in a global market — to take an idea to commercialization and then to globalization — and that Canada would benefit from a publicly funded commercialization fund. That's one aspect we heard.
Then we heard from the C.D. Howe Institute just on Tuesday night. They said quite the opposite: We need the government to invest in basic research development. I think that's the point we were at in Senator Massicotte's question to you.
I really would like to have your opinion on this, because it's quite a serious divergence of opinions.
Mr. Asgarpour: In my opinion, the biggest challenge we have in this innovation spectrum is we have small- and medium-sized enterprises that are coming up with technologies but they struggle to secure sites and funding for their projects.
Historically, before this market crisis, producers provided funding to these SME producers and sites through PTAC, but these days they don't have money. Is there a government role? Yes. Again, I don't want to get involved in policy because we're a neutral organization, but I'm going to provide my own perspective.
I'm going to say that government right now should also look at other models around the world. Germany is a good example. Israel is another, as is China. Government is engaged in providing support for commercialization of technologies. If we keep focusing on basic research, a great number of beautiful papers are going to be published, and then they're going to go to China and India. They're going to make the products, send it back to us and we're going to pay for it twice.
Is this the model we want to operate on?
Senator MacDonald: It's great to have somebody here who has such expertise and knowledge. It's a little intimidating when you're not really much of a scientist, but I'll do my best.
You said that 90 per cent of Canada's hydrocarbon resources are unconventional. I'm wondering if you could elaborate on what those unconventional sources are.
Mr. Asgarpour: Absolutely. This is an excellent question, because many experts from oil and gas ask the same question of me: How come we have four to seven times more than Saudi Arabia but our reserves are third in the world? I'll start with oil sands. Gas hydrates is another one.
With respect to oil sands, our recovery with current technologies is only 10 per cent. That doesn't mean that SAGD recovery is 10 per cent; it means we have many bitumen deposits for which we have no technologies to produce. In Saudi Arabia, they can get over 35 per cent recovery from their deposits. That's why we have huge deposits.
You can look at this as an opportunity for us, because eventually these deposits are going to be produced and will put Canada in a very important position as far as meeting market demand.
These unconventional deposits are, first, bitumen, then tight oil and tight gas, shale gas and potentially deep-water offshore projects. Also, there are amazing deposits of gas hydrates off the West Coast.
That is both a potential and a challenge, because if the temperatures start going up then we are going to be dealing with some big challenges.
I think it is very important for government, especially, to start looking at finding technologies that can tap into gas hydrates. They are not going to be commercial within the next 20 or 30 years, but eventually they will become commercial. There are huge deposits sitting there that are actually equal to oil sands deposits.
Senator MacDonald: Looking at the four key pathways that you have laid out, I'm just curious about the one for 2020. That's not that far away. How close are we to reaching some of these set goals?
Mr. Asgarpour: With the 19 projects submitted to NRCan, we are going to have full capacity to get to the 45 per cent methane reduction by 2025. The only thing these projects need to happen is to be taken to the field for testing. Once the field tests are complete, they can become immediately deployable.
We are actually working with the methane reduction oversight committee; there are three committees working under that one to make sure we are tying the gaps they have identified to the solutions we have provided. There is a direct tie- in in terms of addressing the solutions to the problems that they have identified.
Senator MacDonald: Just so I can understand this better, what does it mean to replace gas pneumatics with solar technology?
Mr. Asgarpour: What happens here is that in the industry there are numerous instruments that we need to run, and they need power. What industry has historically used is, essentially, the power that is in the gas. If you drop the pressure, that creates power and that power then generates what is required to run the equipment. Then they would vent that gas. This is an extremely small amount, but when you look at how much equipment we have, all of a sudden it becomes significant.
The technologies that have been developed through PTAC are using solar energy, and then the gas can go directly to sale line and then we can sell it.
It's marginally commercial, but with the advancement in technology we are trying to make it profitable.
Senator MacDonald: Thank you, sir.
Senator Lang: I would like to follow up. First of all, you've been in existence for over 20 years, and I think you talked about 300 projects that you have been involved in over that period.
Mr. Asgarpour: Senator, it is actually over 500. There were 300 just in environmental programs and an additional 200 involved with the commercialization of technologies. These are the projects that are completed, not the projects that we have launched.
Senator Lang: Of those 500 projects you have undertaken over the course of 20 years, how many were successfully implemented and commercialized and brought down greenhouse gas emissions?
Mr. Asgarpour: That is an excellent question, senator. For a while PTAC was measuring performance based on financial and expertise leveraging that we provide. Our board of directors said we want exactly what you asked for; we want to know how many of these projects are commercialized and provide solutions.
On our website, two PhD students from Haskayne School of Business went through every single project and identified the contribution of these projects. They have significantly reduced environmental footprint, reduced operating costs, increased production rates and created value-added opportunities.
One can look at them on our website. Of the projects that I mentioned, almost 90 of them — dealing with a clean bitumen technology action plan and also TEREE technology for emissions reduction and eco-efficiency — focus on reducing greenhouse gas emissions.
Right now, every year we are measuring the performance of these projects and their contributions. The SlipStream example I mentioned is an example of those projects. But we haven't put all of these numbers together to see what the overall number is, because it changes every month.
Senator Lang: I understand that. But if this is a success story it would seem to me that you would want to tell somebody, especially the narrative that there is nothing of any value coming out of, in this case, the oil sands, from the perspective of technology and changes to that technology. I would strongly recommend that organizations such as yours actually be out there explaining to the public, in a very scientific way, that this is where we started, this is where we are and this is where we are going. That would be of great assistance to the general public in making up their own mind about whether what we are doing on the environmental side of our oil and gas development is going in the right direction. That's number one.
Following up on Senator Massicotte's and Senator Seidman's questions, when you talk about this research and these innovations you state that commercialization is the difficult part. We can have plans and patents and take it around the world, but the question is how to implement this.
Policy-wise, from the Government of Canada's point of view and that of the provinces, everybody has a stake in this because they all get some of the revenue when this is all completed. How would you see the Government of Canada, specifically, bringing in a policy that would provide that incentive for a significant player in the oil sands, for example, to update their plant to make use of that new technology? That's where the cost is, right?
Mr. Asgarpour: Senator, let me address your first question.
I will definitely take your thoughts and share it with our board of directors, but I can tell you what our struggle is. PTAC is a neutral facilitator. We are not even in charge of advertising our own technologies and performance. We do our work and let the market decide what they want to do with it. They have told us we are not in charge of messaging; we are in charge of doing the work. That's part of the struggle. I will definitely discuss this with them in terms of changing things. There may be one way of doing this through CAPP, and then we would get this information out there.
To address your second question, senator, large oil sands producers are actively working toward finding solutions and deploying them in terms of reducing greenhouse gas emissions. It is a really high priority for them. We have a network called Phoenix which is made up of eight senior oil sands producers and I know the level of innovation that they are currently deploying within their companies.
Senator Fraser: I have a couple of questions. First, your key pathways contain very interesting and specific dates. Do you know the number of tonnes of GHGs that we can expect to see diminished?
Mr. Asgarpour: Actually, when you look at the fourth path, we are talking about zero emissions.
Senator Fraser: Zero emissions at the production level?
Mr. Asgarpour: At the production level, exactly.
Then at the fourth level, when we are talking about going to hydrogen and other value-added opportunities, we are talking about near zero even with cars using that energy. So we are talking about not just production but total.
Senator Fraser: In your first two, by 2020 and by 2030, you can't say that if we actually do this we will diminish emissions by X amount?
Mr. Asgarpour: Our job is building capacity. Again, our organization is not engaged in measuring performance or seeing what happens. What I'm showing here is the capacity for innovation.
Senator Fraser: Well, this brings me to a capacity-type question, I think, which has to do with bitumen partial upgrading.
We heard a witness last week say that to actually get it out there in the world and happening, it would probably be more profitable, useful and practical to get new customers than to ask existing customers to adopt this new thing, because it might be less profitable for them.
And we have approval for a new pipeline heading out to the Pacific; maybe there is an opportunity there. But what do the customers for the partially upgraded bitumen have to do to adapt? What kind of investments do they have to make? Once we get ourselves up and producing this stuff, what else is required to get it actually flowing?
Mr. Asgarpour: Senator, that's an excellent question, but I want to make sure I understood you correctly. Let me answer this way and see if it addresses your question.
When bitumen is partially upgraded, several things happen. First, you have fewer requirements for diluent to add to it, and because of that now your cost goes down drastically.
Second, you get more capacity in the pipeline to push more bitumen.
The third thing that happens, when partially upgraded bitumen reaches the refineries they will have to spend less money on upgrading. It would take them through a different process to upgrade, so their costs actually would go down.
Senator Fraser: But do they have to invest and change technology or can they take it as is and spend less?
Mr. Asgarpour: Exactly, they need to spend less. Having said that, it is a very complex picture because they get different crude from everyone. Sometimes actually they prefer to get extremely heavy crude because of utilizing the facilities. When they get competitive crude coming, they get a discount, and sometimes — it has happened — when they want more of the heavier material, then you get a better fee for it.
It is a very complex picture; there is not a simple answer to this question. But it's all about reducing their costs; it's about them deciding which crude to take to make more profit and it is about the competition from different countries sending that crude to the system.
Senator Fraser: I'm at the very beginning of my learning curve, chair, but I will try and digest this.
Senator Griffin: Thank you for your presentation. It's very interesting. I think I'll have to read this several times to really digest it. There is a lot of material here.
At the beginning of your presentation, you had mentioned there were seven innovation challenges. Which single one of them, if it was removed or solved, would have the greatest positive impact in terms of moving your industry forward?
Mr. Asgarpour: In order of importance, I would say the first one is getting funding and sites to SME technology providers.
The second one is the uptake of technology of SME technology providers. This is very important to make sure industry is aware of them. When you have over 450 producers in Alberta alone, and many of them are small producers that don't have technology departments, it becomes a challenge. We have done that, actually. We are doing that now, educating them in terms of what technology is available.
The third area is basic research. We need to focus on getting it to commercialization, and the work that we are doing with universities, actually helping them to understand what the challenges are. Then there are some organizations in Alberta and also NRC's IRAP program that helps some of these guys understand the business side of things, so then they will take their technologies to commercialization and make money from it. But in the order of importance, it's exactly what I mentioned, senator.
Senator Griffin: Great, thank you.
Senator Patterson: Thank you for the presentation.
You mentioned that one of the challenges of the industry is lack of funding and access to sites for field demonstration of technologies. We have the impression that the oil industry has been criticized for lack of expenditure on R&D relative to the size of their operations.
I'd like to focus on the latest application you've got to NRCan for further field testing of 19 new technologies under the TEREE program. Can you tell me the amount of money asked for of the department and are industries participating in cost-sharing this testing? If you can give us details now or later, I think that would be of interest to the committee.
Mr. Asgarpour: Senator, the industry contribution is over 50 per cent for these projects. Total program — I'm just trying to remember — I think was around $15 million, roughly, somewhere between $10 million and $15 million.
These technologies we offered addressed the first area, detection, the second area was reporting and the third area was mitigation. They address those three areas that are crucial to get to the 45 per cent reduction.
Senator Patterson: Thank you.
The government has committed to reducing emissions by 30 per cent below 2005 levels by 2030. We understand the emission gap needed to reach this goal is 291 metric tonnes. Looking at the oil and gas industry, responsible for 26 per cent of greenhouse gas emissions in Canada, do you believe this target set the Government of Canada is achievable? What is needed? Your advice to us, what should we recommend? Our report is going to the federal government. What should we recommend to the federal government to achieve that target if you believe it's achievable?
Mr. Asgarpour: I would say the technology capacity, yes, that is there. The other question is economics, because many of these technologies are not commercial at this point.
But to answer this, my belief is historically the old mindset was that there is a trade-off between financial and environmental performance. We have demonstrated that we can do both at the same time through innovation, provided that we get funding to develop technologies. Again, I will not answer this from PTAC's perspective because we cannot get involved with policy.
I will wear my own hat and say that, from my perspective, investing in innovation by government would be the greatest start. We must find economic solutions that would reduce greenhouse gas emissions, and we have already done so in many ways, but we need to increase that capacity.
Senator Patterson: Do you believe in this carbon pricing proposal that the government has set? Should the revenues from those taxes — I call them taxes — be dedicated to what you just said, funding to develop the technologies that are maybe not commercial yet?
Mr. Asgarpour: Again, senator, I am answering this question from my own perspective, but I would say I strongly agree with you. That money needs to be used for innovation, but innovation that looks at impactful technologies. Things they can make happen would make it economically feasible. So I strongly agree with you.
With respect to the policy on carbon tax, I'm not an expert in that area so I will excuse myself from answering that question.
The Chair: Thank you, senator. Maybe I will ask a few questions myself and then we'll go to second round.
How do you interact with Canada's Oil Sands Innovation Alliance? It's actually newer, we've met with them and they are doing some good work. How do you collaborate with them, or do you?
Mr. Asgarpour: Absolutely, senator. That's an excellent question. To answer it, I would say that between COSIA and PTAC, we complement each other. The way we complement is in two areas, both on scope and function. COSIA's focus is on environmental oil sands. When you look at hydrocarbon, it consists of conventional oil, tight oil, heavy oil, you name it. We manage both environmental and non-environmental issues related to all other hydrocarbons except oil sands.
When it comes to oil sands, the environmental part has so far been managed by COSIA, and PTAC has formed a network to look at reducing costs, especially downhole costs, and reserve increases, production increases and value- added opportunities.
Dan Wicklum and I frequently get together to ensure there is no duplication, and I can tell you there is no duplication. But we also work together in terms of identifying gaps and addressing those gaps. We collaborate intensely and we work together very closely.
The Chair: I think both organizations are great. I just wanted to know how the two intertwine.
Would you agree that there are lots of things done by the oil and gas industry, having spent a good part of my life in the industry, where industry has actually done a lot of small, maybe smaller things, but they don't put in a bracket that says this is R&D? They just sometimes do smarter things and move forward in those ways but don't class it as R&D.
I've mentioned to industry that it would be better if they actually identified those kinds of things and determined how much greenhouse gas you will save and then maybe it would help deter those who say that the industry, for the amount they make, don't spend enough on R&D. Would you agree with me?
Mr. Asgarpour: I agree 100 per cent, and I would like to add that I'm witnessing a significant amount of money being spent by industry on innovation. Actually, to be honest with you, I think our industry — we're not noticing it — is transitioning from a resource-driven economy to a technology-driven economy.
If you look at some of these breakthrough technologies that have happened within the oil and gas industry, be it on nanotechnology, tight oil and gas, multi-stage hydraulic fracturing, SAGD, which was developed in Canada, and many others, that really demonstrates that they are working on technology more than resources. They know where the resources are; they are not focusing on that. They are working on technologies.
Actually, the studies that have come out show that in other sectors research and development costs went down, while in the oil and gas sector those costs significantly increased. They may not be very good at advertising what they are doing, but they are heavily involved in the innovation file.
The Chair: Okay. You answered one of the questions someone asked about some innovation that's going on in Canada that's funded through your organization by oil companies, most of which are multinational and headquartered just south of us here in Houston. You said we don't do a good job of commercializing it and that ideas about that technology will end up in China and India. I can see a bit of that, but I have a hard time understanding why the multinationals, which are huge in the United States, wouldn't look at some of that and determine that it might go to the U.S. and come back to Canada. It's the same companies that do it. Why would we say that most of it would go to India and China?
Mr. Asgarpour: Senator, when I mentioned that, I was talking about basic research happening at the university level, not research and development by industry. Industry is actually extremely proactive. Their focus is on commercialization, and they do a good job of that.
The Chair: Thank you. Lastly, there were 19 different technologies on the reduction of methane that you presented to NRCan. Is there a chance we can look at that, or is that something that we can't look at? I think it would be good to have even some of these things mentioned in our report, because methane reduction is huge in the oil and gas industry. Could you help us with that?
Mr. Asgarpour: Absolutely. It would be great for me to send that information to you.
The Chair: Thank you very much.
Senator Patterson: I have a supplementary question, if I may. We hear that methane is worse than carbon dioxide in terms of greenhouse gas emissions. This is probably an ignorant question, but the government is focusing on carbon dioxide. If we are really concerned about it, should the focus not be on methane equally or more so?
Mr. Asgarpour: I agree with you, senator. Methane is an easier target, because each molecule of methane reduced would be the equivalent of almost 25 molecules of CO2 in terms of greenhouse gas emission impact. It is a relatively easier target to go after. I would agree with you 100 per cent.
Senator Seidman: I wanted to ask a quick question about the market uptake issue. You referred to that, and we indeed heard from another witness that this was really critical. From idea to penetration, 31 years is what was presented to us, which was quite serious. What is the big issue with market uptake?
Mr. Asgarpour: Well, there are two issues here, senator. One is the market uptake of the small producers, because they don't have R&D capacity. That is really not an issue for major producers.
The other one is taking time from concept to commercialization, which, yes, it used to be around 30 years, but these are old studies. For example, SlipStream took only four years from concept to commercialization. We are currently working in a much faster manner. There was hot water vapour processing, the field demonstration, again from very basic research all the way to commercialization, and that took only six years. The time has shortened significantly. I think this is not just in our industry, but everywhere.
The Chair: I'm going to let Senator Massicotte and Senator Lang ask their questions, and I would ask you to just reply to them through the clerk, if you would, please, and then we will all get the answers.
Senator Massicotte: Senator Seidman asked my same questions.
The Chair: That's great.
Senator Lang: Mr. Asgarpour, you mentioned that this year, because of the downturn in the economy, the big companies didn't necessarily have the money to finance your type of innovation and research. Perhaps you can give us information on just how much of a decline in dollars are going to be made available to you.
The Chair: Can you answer that quickly, or do you know?
Mr. Asgarpour: Essentially what happened here is there were many proposals but people didn't have money to pursue them. I can provide a list of those projects that we couldn't find funding for.
The Chair: Sure. That would be great.
Thank you very much. That was very interesting. We appreciate your attendance, your time and certainly your knowledge. I hope if we need more information we can get that from you.
Mr. Asgarpour: Thank you, senators.
The Chair: The meeting is adjourned.
(The committee adjourned.)