As you said, I have the privilege of being the chief executive of Canada's Oil Sands Innovation Alliance, or COSIA.
We were deliberate in choosing our organization's name because we wanted it to reflect the fact that oil sands are a national resource that can be developed sustainably, from coast to coast to coast.
I'd just like to point out that by testifying in front of the committee today, we are saving almost 500 kilograms of carbon from being liberated into the atmosphere. As we enter a carbon-constrained world, we all need to be willing and able to step up and communicate and interact differently.
I have about 10 minutes of presentation that's going to be centred on about eight slides, but I would very much like to preserve most of my time with you for questions at the end.
The slide in front of you now should appear as a circle, or a ring of logos; it's slide 2. At the top of the slide is the vision of our alliance. Simply put, the vision of these 13 oil sands companies, which joined together four years ago inside a new legal structure, is to accelerate the pace of their environmental performance improvement in Canada's oil sands. That's why we're here. That's what we do. We accelerate the pace of environmental performance improvement. We do it through two concepts. One is collaboration; the other is innovation.
I'll unpack a little bit more detail in terms of what that means in the COSIA context. These 13 companies collectively account for about 90% of the daily production of Canada's oil sands. Before COSIA they competed on environmental performance. Through COSIA they collaborate. What that means, to put a point on it, is that they share with each other the knowledge, practices, and technologies that they know and own, all to accelerate their performance improvement. Inside of COSIA, we think that this collaboration is pushed as deeply as in any alliance or industry association we know of anywhere on the planet.
Let me give you an example. All of these companies own proprietary technology. Inside of COSIA, for the first time they give each other patent use rights, royalty free, in perpetuity, and irrevocably if it's going to help them accelerate their performance improvement in the oil sands. Essentially what they've decided is that when it comes to environmental performance, collaboration is a better model than competition. They're still in full compliance with competition law, but when it comes to environmental performance, they collaborate.
The first thing they do is share their technologies. So far they've shared almost 820 technologies that cost about $1.3 billion to develop.
The second thing the 13 companies inside COSIA do, along with 39 formal partners that have been made partners inside of an associate membership program by signing a memorandum of understanding with COSIA, is they develop a planning framework so that they codify and articulate the highest innovation priorities for new knowledge, new practices, and new technologies.
The third thing that they do collectively, themselves, and with a global network of partners is launch new projects to develop and test new technologies. Our current project portfolio is about 250 projects with a price tag of about $450 million.
Let's go to the next slide. I'm going to give you a little bit more detail in each of those areas where the companies share, plan, and deliver. The slide in front of you is a bit complex. I won't go into the details. It's a cascade of rectangles. In the upper left-hand corner is the COSIA charter and vision. The charter is essentially a document that the CEOs of each of these 13 oil sands companies has signed, committing to themselves and to each other that they would do things differently. They would push collaboration to depths that large companies have not done previously in the world.
The bottom right-hand rectangle talks about a project portfolio. This is really a list of our 250 projects. We needed to develop a series of more detailed and technical concepts that would link the ability to make sure we're launching exactly the right projects in the bottom right-hand box with the ability to deliver on the vision of responsible development in the upper left-hand box.
Without going into detail, I'll just say that these companies have defined the technical concepts. We call them opportunity areas or gaps or challenges. They are exceedingly refined articulations of an innovation need, that is, exactly what type of technology we need in order to reduce greenhouse gas emissions or use less water, for example. This is the planning framework that we've made fit for purpose and we have populated since COSIA was launched.
On the next slide we have four concepts, all of which we call aspirations. Now that we have these 13 companies working together, we have to define what success is, what they are trying to accomplish. We do that through two main concepts. One is called an aspiration and the other is called a goal. They're similar but different.
An aspiration is what you see in front of you. I won't go into the details, but I'll draw your attention to the bottom box where the companies collectively say that their aspiration in terms of greenhouse gas emissions is to produce their oil with lower greenhouse gas emissions than other sources do. Said otherwise, they want to be the best. They want to be the best in class at what they do.
On the next slide, we have the concept of a goal, which is similar to an aspiration. This is quantitative. We have three goals. I'll give you an example of one right now. This is public and we do report publicly on progress towards this goal. For in situ water performance, the companies have said collectively that they want to reduce their freshwater use intensity by 50% by 2022. Setting this kind of aspiration and this kind of goal allows both technical people inside of these companies and their partners to understand what new technologies they need to develop and test in order to deliver on these goals.
I'm happy to say that we reported for the first time against this goal in the fall of 2015. Between 2012 and 2014, which is within the life history of COSIA, the companies reduced their freshwater use intensity by 36%. We have a similar goal for mining companies, which is to reduce freshwater use by 30%. Again, I'm pleased to say that we're almost at that goal.
Next we have a very busy slide full of logos. This tells you the level of partnership that these companies are at with COSIA. These are our 39 associate members. We have really two major types of associate members. One type is organizations that have innovation capacity internally, which have staff and budgets. In many cases these are some of the most innovative and technologically intense organizations in the world. I'm looking at General Electric, IBM, and Veolia. The second type of associate member is what we call a hub organization. There are just too many companies, organizations, universities, and governments around the world that we need to link into to have a direct relationship with each one of them. We've therefore launched a series of partner hubs, shown in the middle band with a white background on the slide in front of you. We develop a very intense relationship with these organizations. They really rarely understand the opportunity areas, the gaps, and the challenges that the COSIA companies have. They take those innovation priorities and they use them in their existing network. We may not touch partners of these hub organizations, but through those hubs we extend our reach and our touch to literally hundreds and hundreds more people and organizations around the planet. Essentially our goal is to have a very detailed technological innovation ecosystem in which the best minds and the best organizations in the world understand the technological needs of the oil sands sector, and they accelerate solutions that come back to the companies.
On the next slide, labelled “Innovation in Action - E-TAP”, I wanted to flag that there are two real ways for third parties to plug into COSIA. One is very formal, very structured, and frankly, quite intensive, through our associate membership program. E-TAP, on the slide in front of you, is exactly the opposite. Any party in the world, ranging from a large company to a garage entrepreneur, can go to the COSIA website and submit an idea very quickly and very safely by filling out a very simple template. We put those ideas in front of the oil sands companies immediately.
You don't have to be an associate member; you can be an individual, an organization, a student, or anyone to get your innovation idea in front of the COSIA companies very quickly. What the companies do through COSIA is send back direct feedback, again quickly, to the innovation entrepreneur, either with an affirmative “yes, we like your idea and we'd like to advance it” or potentially with feedback such as “your idea may not be pertinent at this time, but here are the types of things you could work on to make it more attractive to the companies”. So far, we have almost 600 ideas coming in through E-TAP.
On the next slide, I'm going to give about six project examples, to give you an idea of what some of the 250 projects we have inside our COSIA project portfolio are like.
The first one on the list is an XPRIZE. The concept of an XPRIZE, you may remember, came into popularity when a prize was offered to the first team that could take a manned space vehicle into orbit, return it to Earth safely, then return it to orbit and again safely to Earth within two weeks. You may remember that a team won that competition and was awarded $20 million. That technology has now been licensed and is the start of a burgeoning space tourism industry with Richard Branson and others.
COSIA has partnered with an American energy company called NRG to offer a $20-million prize to any team in the world that can take carbon dioxide and change it into a valuable product. What we feel we're doing with this is reconceptualizing or reimagining carbon. Right now, it's a waste. What would happen if we could make it into a valuable resource? It would fundamentally change the way we look at carbon and fundamentally change the climate change game.
That's not to say that many of the COSIA projects are not developing technology that would decrease emissions in the first place, but we believe in developing as many tools in the tool box as we can, and the COSIA carbon XPRIZE and the $20-million prize to reimagine carbon is one of them.
The second project on the list is the SkyStrat, a flying rig. It's essentially a new type of oil drilling platform that can be lifted by helicopter into an area, negating the need for any type of connecting road and dramatically and markedly decreasing the fragmentation of the landscape and the amount of disturbance of it.
The third is a fuel cell. There are fuel cells that use a compound called molten carbonate for electron transfer. They're now being used commercially in the Orient. We have taken that technology and are in the middle of testing it in the oil sands context. If initial modelling is correct, it could decrease GHG emissions, even using existing technology, by up to 30%.
The fourth project is rifle tubes. Many of the technologies that we work on are transformative; they will fundamentally change the technological landscape of the oil sands and other adjacent sectors. Sometimes lots of small innovations can add up to big things as well. This is the rifle tubes. Right now, in order to produce oil in the oil sands, you usually need to produce steam. The way that—
We're back. I'm just going to assume that I can keep going, in the interest of time.
To produce oil from the oil sands, usually you need steam. The way most companies make steam is they have a pipe through which they put water, and then they heat the outside of the pipe to make the water steam inside the pipe. As it turns out, if you put spiralled lines inside the pipe and you spiral the water, it heats much more evenly. This uses less water and up to 6% less energy, which of course would be up to 6% less in GHGs emitted. This is not a huge technological breakthrough. It has been used in other areas, such as the rifling inside the barrel of a gun, but it is the type of thing that our engineers think about every day.
I have two more examples, Mr. Chair. One is the water technology development centre. This is a $160-million dedicated facility that we are building to test technology. What we are finding is that even if we have good ideas about how to test technology, our testing infrastructure has to keep up with the demand. There is enough motivation among these companies for the infrastructure not to be a bottleneck to progress that we are developing a dedicated, fit-for-purpose water technology development centre.
The last example is an eye-in-the-sky satellite. There is a Montreal company called GHGSat, which is about to launch a satellite that could dramatically increase the resolution of monitoring greenhouse gas emissions. Several of our companies are teaming up with this Montreal company in order to improve the information collection in the Canadian oil sands.
Mr. Chair, my last slide is a sum-up of results to date of COSIA. We were launched about four years ago. We have completed and populated a planning framework. We have 104 written articulations of priority needs that we and our 39 associate members are distributing around the globe to key partners to accelerate the development of solutions. The total number of active projects in our portfolio right now is 252, with a $480-million price tag. The number of technologies actually shared is 819, which cost about $1.3 billion to develop. Those technologies are now being implemented, and the actual environmental impacts are being realized, such as, for example, our 36% decrease in freshwater use intensity.
We have developed an associate member program, now with 39 associate members, to increase our leverage and reach literally around the world. We have associate members from Israel and the U.K., and our hub members reach every continent.
We have been actually quite quiet since we were launched. We really felt that we needed substance in delivery before we started to talk about COSIA. We feel that that's there now, so 2016 is a year when we will be speaking a little more to key partners and key opinion leaders about what we are doing.
My last point is about our E-TAP, where not just associate members can plug into COSIA, but anyone—including anyone on this committee—who has a good environmental innovation idea. You can propose it to these oil sands companies for direct and immediate follow-up. Of course, as always, third party intellectual property is protected. These companies are willing to test third party technologies. We are not asking third parties to share. That is not the way the world works. Third party intellectual property is completely protected.
That is my presentation, Mr. Chair. I would be happy to answer questions to the best of my ability.
I'd say there are two elements to that question. I'll touch on this notion of accelerating implementation which is a core part of COSIA's mandate.
One of the benefits when COSIA companies share is that they can share test results. We have many situations where one company tests one piece of technology and then shares the test results with all the others. The understanding and the expectation is that other companies test as well and also share their results. Before COSIA, each company had to test every technology. With COSIA now, for example, each company could test one water technology, share the results, and each company would have the results of 13 tests. That's the acceleration and it's much more cost-effective.
In terms of how our organization can be used to influence our reputation, I feel that reputation is a function of substance and communications. We are the one organization in the Canadian oil sands that deals with substance collectively. Each of these companies holds the burden and responsibility to improve their performance, but we are the only organization within which they come, work together, do things quicker, do things more effectively, and do things cheaper. We are about substance.
In terms of communication, there are many organizations that have roles to play in international communication. The Government of Canada has a strong role, as do the provincial governments, individual companies, and individual commentators. That space is actually quite packed. There are many organizations that have a role in communication.
We're the organization that has the role to actually deliver on substance, to help companies improve their performance more quickly. Because of that, I don't want to get pushed out of our strategic space, so I want to ensure that we concentrate on substance.
Having said that, the companies have said, in 2016, they would like our organization to play an increasing role in communications as well.
One of the things that COSIA does is it brings an overarching collaboration hub to all the individual companies' projects. Current innovation theory suggests that you don't want to put all your eggs in one basket. It's sort of like investing. Frankly, you want to take a portfolio approach and invest in many different types of projects, some big, some small, some quite expensive, some not, some absolutely transformative but probably higher risk, and some, frankly, not as transformative but very meaningfully incremental, with a high degree of success. I'll tell you about a couple of examples of projects in our portfolio.
The Canadian Natural Resources one essentially takes waste heat, waste carbon dioxide, and puts it into a bioreactor with designer types of algae. Through a series of processes, refinements, and fermentations what you get is a product that could be used for anything from a solvent to synthetic jet fuel. Fundamentally, it's the concept of taking waste and turning it into a resource, turning the paradigm upside down. That's one that we have.
Another one that just came to mind is something called solvents. Right now, in our in situ practice, much of it is injecting steam deep into the ground, melting the bitumen away from the sand, and then bringing the water, steam, and bitumen to the surface. Some companies are working on solvents so they would never have to use water, and because of that, they wouldn't have to use energy to turn it into steam. They would inject solvents deep into the ground, dissolve the bitumen away from the sand, then bring it all to the surface, extract the bitumen and recycle the solvent. That is the type of fundamentally disruptive technology or transformational technology that companies are working on in many cases.
I'll approach the answer to that question in two ways.
One is that the model itself is designed to leverage. What that means, of course, going back to my water technology testing example, is that companies don't have to do everything. They don't have to test every technology. They can count on their collaborators inside of COSIA to do an awful lot of work, because they know they're going to get those results back. Just the concept of leverage itself, by definition, is about 13:1, all things being equal. It's a little more complex than that, more complex than you might have expected, but basically, a company can get the same amount of innovation done—discovery, development, demonstration, and deployment—much more cheaply and quickly because they're actually in the alliance itself. That's one thing I would say.
The second thing is that much of the environmental performance improvement that these companies are relentlessly pursuing, frankly, is about waste. It is about how we could use less energy and how we could waste less energy. How could we use less water? How could we take the waste of tailings and turn it into a resource, or not produce it in the first place?
Fundamentally, the concept of producing waste is not good for these companies, just like it's not good for any company, any individual, or any sector. Fundamentally, if they produce less waste, it's almost always an economic advantage to those companies, because it reduces their operating costs in a co-benefit way. If we find them a way to decrease GHG emissions, it really means that they're not using as much energy and they're lowering the cost base. It's the same for water. It's the same for not disturbing wetlands to begin with. It's the same for not producing as much tailings to begin with. Fundamentally, at the environmental nexus is an issue of cost and environmental performance.
I'll go through each of our project portfolios.
In tailings, what the companies are working on and have already implemented are essentially industrial steel centrifuges. The problem with the oil sands tailings is that they end up being almost a yogourt. It's very difficult to get the solids separated from the water quickly and easily so that those solids can then be reclaimed into a natural landscape. The companies are spending an awful lot of money on developing new technologies on how to deal with these oil sands tailings, or it's called the fines.
One of the things that Syncrude has done is they have developed a very large industrial-scale centrifuge concept where the tailings are literally put into a centrifuge, spun, and the centrifugal force forces out the water. They have those operating right now. They show great promise, and they've shared all the technology with the other companies as well.
I know Shell is also pursuing a centrifuge solution. They saved millions and millions and sped up their operation by years just by taking all the good legwork that Syncrude has done rather than starting from scratch. There's one example.
Another example on land is that companies are coming together inside COSIA, and often they do things at a scale that's not possible outside an organization like COSIA.
I'm thinking of one issue, which is the boreal caribou issue. Boreal caribou are a species that live in northern Alberta, and they require large tracts of land in order to have viable populations. Pre COSIA, companies were doing reclamation on the landscape. Inside COSIA, they have the structure and the culture so that they can collaborate so that the reclamation plans mesh together inside a complete range and scale that is required for the caribou. That's the kind of thing they can do inside COSIA that they can't do individually.
I've talked about the rifled tubes, so maybe I'll leave that one.
With greenhouse gases, our molten carbonate fuel cell definitely is a flagship.
We have other things that range from what I call meaningful incremental to transformational. Meaningful incremental could be something that we call vacuum-insulated tubing. When you produce oil sands, you have to transport heat an awfully long distance, and what the companies are doing is putting tubes inside tubes and then creating a vacuum between the two of them that amounts to basically a thermos so that when you put your heated solution through the inside of the thermos, you lose less heat.
Another thing that we've done, just by way of example, is we've tried to find ways that could lead the world in using low-grade heat. Heat that's about 60°C often just gets wasted; it just flows into the atmosphere. We partnered with General Electric, where we offered a $1-million challenge to anyone in the world who can come up with new ideas of how to capture low-grade heat. We've identified a couple of solutions in Italy, the U.K., India, and the United States of America, and now those are being tested inside the oil sands context.
That's an example of how our global network is really starting to bear fruit in developing this ecosystem. With companies there's just not enough people to have individual, face-to-face interactions, so we use our partners to search the world for us as well.
Are there any areas that need to be improved? I'll answer that from a scientific perspective, and one that I hope you don't think is trite, and that is, every area can be improved. In COSIA and these oil sands companies, we take very much a continuous improvement model. Just because things are going well doesn't mean they can't go better, quicker, more inexpensively. That's the philosophy we embrace every day at COSIA.
Having said that, we have these opportunity areas and these gaps, and when we take a look at those gaps, we map them towards our current project portfolio, our 252 projects, and technically we make an assessment as to whether there is sufficient effort in our project portfolio to close the gap. If there's not, then what we'll do the next year is launch more projects.
I'll use this as an opportunity to draw attention to another concept. In some cases we have a gap, an innovation need, and the companies think that gap is particularly amenable to telling the whole world about it. We take some of the gaps and we write them up in a three-page document, including technical specifications, into what we call a challenge. That challenge is written in a way that you don't really have to understand oil sands to understand the innovation need. Then we ship that challenge basically through a series of channels around the world so that we can have, very literally, a water engineer in Israel working on a Canadian oil sands innovation challenge. So that's one thing.
The second part of your question is whether there are technological breakthroughs. What I'd say, and again, this is a bit tongue in cheek, is that as scientists and engineers, we have a hard time scheduling our breakthroughs. If it were that easy, we'd do it. Having said that, what we have done, we believe, is created the conditions to absolutely maximize the chance of success. Innovation theory shows that when you focus, when you articulate a very specific innovation need that you have, and when you put sufficient resources against it, and attract the best minds in the world to work on those challenges and problems, you get great progress. That's where we are. By taking a portfolio approach, you can actually manage a pipeline of projects, and we have a very robust innovation pipeline of projects.