Challenges in Innovation Success Paths Presentation to Edmonton SPARK Conference November 7, 2017

Transcription

1 Challenges in Innovation Success Paths Presentation to Edmonton SPARK Conference November 7, 2017

2 Canada s opportunity and Oil Sands Sector Challenges Oil sands represent a very large, accessible liquid petroleum resource base Access to world s oil reserves Global crude oil reserves by country, GBOE 1 Restricted Other Canada (97% oil sands) Open to private sector 1 before royalties Source: International Energy Agency, Oil & Gas Journal, Imperial Oil Despite growth in renewables, petroleum will continue to be used for four key purposes: Lubricants, Petrochemicals, Long Distance Transportation, and Agriculture Oil sands faces challenge in being a supplier for the world s energy need: Market access is constrained and more expensive than for some competing energy sources Many vocal stakeholders view our environmental impacts as a reason to prohibit growth Current economics for greenfield projects is not highly favourable But Oil Sands has key features that will allow it to compete successfully: Strong track record of improving water, GHG and land footprint intensity Stable rules based political environment Strong and innovative workforce, and focused successful and profitable operators 2 Innovations deliver needed step change in cost/environmental performance

3 History of Suncor technology & innovation 3 OIL SANDS MINING 1967 GCOS (Suncor) First oil sands mine production 1978 Syncrude s first oil from oil sands mining 1997 CT Tailings innovation 2012 Nikanotee Fen 1967 Pioneers of tailings sand construction 1992 Suncor first to phase in truck and shovel oil sands mining 2003 Stuart Oil Shale demo with Taciuk processor 2014 First oil sands AHS pilot Early R&D work IN SITU 1984 AOSTRA UTF (underground test facility) SAGD process pilot at MacKay River 2002 First commercial SAGD oil from MacKay River 2004 First commercial SAGD oil from Firebag 2011 Firebag - First downhole pump to be steamed 2013 MacKay River - First commercial NCG approval for SAGD operations 2004 Start of MacKay River Co-generation 2014/15/16/17 solvent and surfactant injection pilots across all in situ assets Suncor has a 50 year history of using innovations to deliver business success

4 4 Portfolio approach to technology development Reduce GHG emissions intensity Reduce costs & improve profitability Reduce tailings / water / land footprint Subsurface & Surface processes (Next Generation SAGD) In Situ Enhanced SAGD recovery processes (steam + additives) Steam generation technology (e.g. DCSG) Non-steam recovery processes (e.g. EASE, NSolv) Extraction processes (waterless) & Feed Fines Avoidance Mining and Extraction Froth treatment technologies (PFT) Tailings processes & Wetland reclamation (closure & PASS) Autonomous haul system (AHS) Alternate value chain partial upgrading Refining and Upgrading Renewable fuels - diluent De-salting Alternate octane All Business Units Data Analytics/AI Portfolio needed to address wide range of technology opportunities

5 Our Approach to Technology Development Accelerate the deployment of innovative technology to achieve our business goals by leveraging internal & external resources Business Goals Cost CO 2 Alternate Fuels Co-Products Process Goals Less Metal Less Energy Competence Elegance Stepping outside the lab: Piloting the ESEIEH project Path to deployment is critical and often overlooked aspect of innovation 5

6 Focus on path to deployment The process of moving from idea to commercialization idea concept pilot demo commercialization Begin with the end in mind commercial deployment Large systemic innovations are delivered through integrated programs Programs require as much design and effort as the invention Understand the constraints in a path to deployment The path you actually take End Result You are here 6 Example: Autonomous Trucks: Invention & System design by Komatsu Single truck Bench / proof of concept at Suncor in 2014 Six Truck Commercial Scale Proposed commercial implementation

7 Innovation in Large Systems and Heavy Industry is Unique Innovation is not new, it s been occurring for centuries Early innovation was centered in Universities, Gov t labs, military, large companies During the 60s, IT and Pharma became innovation centers Drugs and IT hardware have huge markets, strong scale economy, low input costs Software is created with little capital, low barriers to entry, and infinite scale up Many Co s reduced R&D to buy successful innovations without funding failures Venture Capital Industry developed to fund best ideas Heavy Industry Innovation Can be based on science/r&d concepts To be disruptive requires process innovation and large scale of installed kit Often required as much or more internal change as the installed innovation Rewards to 1st adopter often not clearly better than fast follower so collaboration can be very valuable Requires minimum 4 stages of pilot/demonstration to achieve commercial scale (at least one, perhaps two more than tech industries ) Integration of new concept with existing process is often complex, impairs reliability, takes years to smooth out Partnership between inventor/innovator/supplier and customer often essential to share risk and needs to share reward 7 Heavy industry innovation is very unlike IT, Pharma, or Software

8 Innovation in Large Systems and Heavy Industry is Unique High Failure Rate Low Whiteboard Bench 1-10 B/d 2-5,000 B/d 30,000 B/d Effort and $ investment Pilot Demo Commercial 8 Progress to deployment is slow (~10 years), expensive, risky

9 Constraints to Innovation Success Constraint Stage Description Solution Ideas? Lack of Ideas Technology Failure Runway overshoot Fail Slow Product too costly FOAK Roadblock Lack of Funding Customer too *&#&!^!#^$ Idea/Basic Research Idea Demo All All Pilot Demo Demo or FOAK install All Pilot Demo FOAK: First of a Kind TEA: Technical Economic Assessment *&#&$^!#^$: You fill in as appropriate Limited new ideas to address technical gaps and challenges Technology used fails to meet expected performance Ideas fail as products due to slow development and loss of funds or support Supporting ideas past where they are shown unsuccessful Technology too expensive for market Successful technology fails due to no buyers Differing view as on value vs. risk of concept Customer seen as slow, conservative, risk averse Crowd Source, Pure/Applied Research, Prize Competitions Early review of technical fundamentals and risks. Fail fast on some ideas to fund others More discipline assessing commercial viability Earlier TEA, revamp to simplify Earlier engagement with customers to determine needs Shared upside, JV instead of equity Earlier engagement with customers to determine needs Many constraints can be resolved with customer engagement 9

10 Background Material Further Background 10

11 TRL and CRL comparison Technology Readiness Level (NASA) and Commercial Readiness Level mapped on the Technology Development Chain Graphic courtesy: Commercial risk and path to deployment are not reflected in TRL 11

12 Transformational, Strategic and Continuous Improvement Technology Continuous Improvement (CI) Strategic Technology (ST) Transformational Technology (ET) Technology applications to improve existing operations Characteristics <3 years Minor infrastructure change Commonly vendor supplied technologies New technologies to dramatically change operations Characteristics > 3 years Significant infrastructure change Suncor led technological advancements New technologies which dramatically change marketplace Characteristics > 3 years Significant market change Suncor & External technological & business advancements Path to deployment Path to deployment Engineering or Operations Major project Path to deployment Joint project Each type requires different focus, timeframe, skillset 12

13 The next challenge reduce our environmental impact 30% by 2030 We expect success Clear focus on commercialization through a path to deployment Culture and approach that enables collaboration Leveraging the world of innovation rather than attempting to do everything in house Suncor team with the skills, experience, and resources to deliver Oilsands Mining: Automation Measurement Haul systems 13 Water and Tailings Salinity/recycle Mine Closure In Situ SOR reduction Solvents Electric

14 How much has really changed? Political Challenges 1980s Ottawa begins the controversial National Energy Program Economic Viability Challenges 1986/1999/2009/2014 International oil prices crashed, diving to $10 per barrel by 1986 Global oil gluts and price weakness lasted into the early 2000 s Oil prices fell to less than half of the production costs of Suncor and Syncrude. -Edmonton Journal Files/The Canadian Press At that time, the oilsands had been led by two pioneering mining projects Syncrude and Suncor Energy that had begun with a bold vision, but struggled mightily to finally become profitable. -Calgary Herald Files/The Canadian Press Reliability Challenges 70 s 90 s We are either freezing it, or burning it down. Rick George At the oil sands facility, the compressor house catches fire in -45C weather. When extinguished, the building is covered in ice that is chipped away. 14

15 TRL Description (modified from NASA)