From a Resource-Driven to Technology-Driven Sector: A Shifting Paradigm in the Global Hydrocarbon Energy Industry and PTAC’s Role Within

Soheil Asgarpour, Petroleum Technology Alliance Canada, Ph.D., FCAE, FCIM, P.Eng.

Note From the Executive Editor

The unconventional nature of most Canadian hydrocarbon resources dictates the need for collaborative research and development. Since it was founded 2 decades ago with a vision of promoting such collaborative innovations, Petroleum Technology Alliance Canada (PTAC) has made significant contributions in helping to build the road toward Canada’s petroleum industry success. This article by Soheil Asgarpour, President of PTAC, provides us a brief but comprehensive summary of PTAC’s visions, strategies, and successes. I hope you will find it enjoyable and inspirational. We strongly encourage you to give your feedback regarding this session and the technical content of this article. Please send your comments to:

Jian-Yang Yuan, Osum Oil Sands Corporation

JCPT Executive Editor

PTAC is a neutral, not-for-profit organization with a volunteer board representing nearly 200 members, from producers and technology providers, to government and academia. PTAC’s mandate is to significantly improve the environmental, safety, and financial performance of the oil and gas industry through the facilitation of innovation, collaborative research and technology development, demonstration and deployment for a responsible Canadian hydrocarbon energy industry. To date, PTAC has completed more than 500 research and development projects through the formation of collaborative consortia and currently has more than 250 technical experts representing numerous organizations within industry, who participate in these consortia by providing funding and technical support.


The global hydrocarbon sector is going through a major transformation, moving from a resource-driven sector to a technology-driven one. Technology has been used to tap into immense unconventional hydrocarbon deposits, providing tremendous opportunity for economic prosperity. The side effects of this transformation, however, have not left us unscathed and have been a major factor in contributing to the current low-commodity-price environment and the temporary loss of oil and gas assets value.

Through review of the Resource Triangle Model, introduced by Masters (1979) and Gray (1977) (Fig. 1), one can observe that over the past 10 years, technological breakthroughs have resulted in massive production from unconventional shale gas, shale oil, and bitumen resources. This substantial production increase has been a major factor in increasing oil and gas supply, thereby contributing to an imbalance between supply and demand. This imbalance, along with geopolitical tension, slower economic growth of the emerging markets, and the development of new oil and gas fields, has resulted in low oil and gas prices; thereby temporarily evaporating the value of oil and gas properties.

The conventional wisdom of economics and the resource management mindset of resource-driven economies are no longer sufficient in meeting the challenges faced by our technology-driven oil and gas sector.

With the largest hydrocarbon deposits in the world, the majority of which are unconventional, Canadian resources are some of the most expensive to develop and produce, and face challenges in terms of environmental impacts, particularly in this low-priced commodity environment. Additionally, our current challenge in increasing access to the US market and new global markets is tied directly to our environmental performance.

Understanding the adaptation from a resource-driven to a technology-driven sector is imperative in recognizing the benefits of using innovation and technology development effectively to reduce both costs and the environmental footprint, improve market access, and increase reserves, production rates, and profitability, all while mitigating the commodity risk.

To fully embrace this transformation, oil and gas producers may consider to:

  1. Create a culture of innovation that promotes collaborative, creative thinking, supports taking measured risk, and allows for collaboration between all stakeholders.
  2. Participate in innovation networks and consortia to allow for collaboration with other producers, service and supply companies, academia, inventors, technology providers, government organizations, transporters, and midstream/downstream companies for development of sustainable technologies.
  3. Access new capital markets (e.g., angel investors, venture capital, and crowdfunding), to provide the required funding for innovation, development, demonstration, and deployment of sustainable technologies, which reduce costs, increase production rates and reserves, and increase value-added opportunities. By aligning the goals of producers, technology providers, and investors, this collaborative effort will result in the reduction of investment risks and an increase in return on investment for all engaged parties.
  4. Collaborate with all stakeholders both within and beyond the walls of an organization. Collaboration will allow producers to tap into the innovation ecosystem, which includes but is not limited to other producers, government organizations, regulatory bodies, service and supply companies, universities, inventors, research organizations, transporters, refineries, petrochemicals, the public, and the end users.
  5. Overhaul the old corporate social responsibility (CSR) model. While in the past, a CSR model may have provided an approach to addressing social and environmental challenges, which are directly tied to market access, our technology-driven sector demands a more-direct approach to align CSR with core business goals.

This paper presents a novel collaborative research and development model and its performance in reducing costs and the environmental footprint, and increasing production rate, reserves, and profitability of hydrocarbon development and production. In addition to development, demonstration, and deployment of numerous technologies, this model has resulted in significantly improving the current CSR model by aligning CSR goals with corporate’s core business goal of providing a sound rate of return to shareholders.

The resource triangle was conceptualized initially for the development of a large gas field by Masters (1979) and Grey (1977) (Fig. 1). I have expanded upon this concept to conclude that as we move from the top of the resource triangle downward, transmissibility (i.e., the product of permeability and inverse of viscosity), decreases. For example, tight oil and gas reservoirs have much lower permeability, while bitumen has much higher viscosity. Hence, this concept is not limited to gas alone—it can be used in hydrocarbon development. Conventional hydrocarbon deposits (i.e., low hanging fruit) are relatively small in size and difficult to find, but once it is found, it is simple to produce (i.e., top of the triangle). As we move from the top of the triangle to the bottom, the deposits become more difficult to produce, while size increases.

As we run out of low hanging fruit, the commodity price increases as a result of higher demand than supply, we move to produce from more-challenging reservoirs with lower transmissibility or more-difficult access. This in turn triggers innovation and development of breakthrough technologies, (e.g., steam-assisted gravity drainage), or disruptive technologies (e.g., the combination of horizontal drilling and multistage hydraulic fracturing in development of shale gas) that assist in increasing production from more-challenging deposits. Once there is sizable production from these deposits, an imbalance between supply and demand then forces the commodity price to decrease; an example of the current low oil and gas price economy.

The decrease in commodity price will then result in the need for producers to focus on the use of innovation and technology development to bring down costs (the period we are in currently). This results in the development of sustainable, breakthrough, or disruptive technologies, which bring down costs (i.e., development of multilateral horizontal drilling in the US, which has resulted in drilling the same number of wells with half the number of rigs).

Canadian Hydrocarbon Deposits

Canada is a prime example of how the resource triangle concept works. Canada has the largest hydrocarbon deposits in the world—four to seven times higher than Saudi Arabia, which has been used as a benchmark. Canadian hydrocarbon resources are the country’s main source of economic growth, supporting job creation, thus generating significant positive social impact.

It is a known fact that more than 90% of Canada’s hydrocarbon resources are unconventional, making our resources some of the most expensive to develop and produce in the world (Fig. 2). Moreover, considering the environmental challenges of our unconventional resources and their associated costs, we are challenged to remain competitive with other jurisdictions around the world.

Continued and sustainable development of this world-class hydrocarbon is contingent on addressing the many environmental issues associated with resource development. This, in turn, will increase our costs, resulting in Canadian hydrocarbon resources being less competitive globally, particularly in this low commodity environment. Additionally, our current challenge in increasing access to the US market and other new global markets is directly tied to our environmental performance. In the past, environmental challenges have been addressed with the mindset of a resource-driven sector, with the understanding that there is a trade-off between environmental and financial performance.

Challenges Related to the CSR Model

CSR is a self-regulatory mechanism used by corporations to ensure their activities are in compliance with existing regulations, ethical standards, and national and/or international norms. The CSR model is viewed by some as creating conflict with the corporate goal of making money. The root cause of this problem is the conventional wisdom of economics and the traditional view in business that assumes there is a trade-off between financial and environmental performance.

We can however, both reduce our environmental footprint and make a profit—the same way in that today we are producing from hydrocarbon deposits that 30 years ago were unimaginable to have commercial production. We at PTAC have proved that this is true—as an industry, we can indeed make money while reducing the environmental footprint. The performance of numerous research and development projects managed and facilitated by PTAC clearly demonstrate this point; however, before presenting the results of these projects, it is necessary to discuss the PTAC collaborative model in achieving such results.

PTAC’s Novel Approach to Collaborative Research and Development

The inspiration in the development of PTAC’s recent model came from reviewing the work of Thomas Edison extensively and the desire to expand the old PTAC model (Fig. 3). In the old PTAC model, the primary role of the organization was to act as a matchmaker between producers and technology providers. Recognizing that our sector was going through a major transformation and moving from a resource-driven sector to a technology-driven one, I felt that there was a need to expand the role of the organization to be more hands-on in using innovation and research and development to address relevant and material challenges facing the oil and gas industry, particularly in the areas of unconventional hydrocarbon development. In addition, it was very clear that we needed to put more emphasis on the field pilot testing.

The review of Edison’s work indicated clearly that the most important factor in his tremendous success was his collaborative approach to innovation and technology development. As described in literature, it takes 3,000 ideas to develop one successful product (Fig. 4).

It is clear that some sort of mechanism is required to create a significantly high number of ideas. The formation of networks allow PTAC to address common challenges faced by our industry through collaboration with multistakeholder groups consisting of producers, service and supply companies, transporters, government organizations, academia, and technology providers.

The new PTAC collaborative model consists of two open innovation funnels and one closed innovation funnel. The model begins with the formation of networks to articulate challenges and identify technology solutions. Once a technology solution is identified, a consortium is then formed to deploy and commercialize the technology. PTAC’s board of directors approved the new model and the proposal for the organization to provide up to 15% seed money to help commercialize the technology with no expectation of intellectual property (IP) ownership. This allows us to act as a neutral broker to negotiate IP ownership between the funders and technology providers. Once a technology is developed, it can be tweaked further by the funding operators based on their own operational, reservoir, and geological settings.

The PTAC model is based upon mass collaboration, which so far has resulted in immense financial and expertise leveraging in providing innovative technology solutions to reduce both cost and environmental footprint and increase production rates, reserves, and value-added opportunities.

PTAC’s activities can be divided into two areas: applied research and technology development, and demonstration and deployment.

A key example of a PTAC applied research initiative that benefits all stakeholders from both an environmental and financial perspective is the Alberta Upstream Petroleum Research Fund (AURPF). The AUPRF program has created a unique platform for collaboration between the Government of Alberta, the Alberta Energy Regulator, and industry to reduce the environmental footprint of oil and gas operations (Fig. 5).

AUPRF’s applied research studies address high-priority environmental issues related to oil and gas exploration, development, and production in Alberta.

The program covers the entire spectrum of oil and gas activities from early exploration to production, and finally retirements.

To date, more than 270 applied research projects in four environmental areas of air, ecology/biodiversity, water, and soil and groundwater have been launched.

The AUPRF program is based on the following principles:

  • Peer-reviewed applied research will provide credible and trusted results;
  • Collaboration between government, industry, and regulatory bodies will help avoid conflicts;
  • Focus on applied research studies that target development of best practices, smart policies/regulations, and identify green technologies that will significantly reduce costs and the environmental footprint;
  • Transparency is essential.

Industry as a whole has measured the performance of the AUPRF program in the areas of environmental management, maintaining the social license to operate, development of smart policies/regulations, and best practices, and its impact in avoiding adversarial hearings that otherwise would have resulted in a vacuum of scientific and engineering studies. In addition, the program has created immense financial benefits to industry which are presented in Fig. 6.

Since 2001, producers have provided CDN 19.2 million to fund AUPRF through a voluntary levy based on their production, with an additional CDN 99 million secured from other sources (e.g., Natural Sciences and Engineering Research Council of Canada and the forestry industry). This has in turn paid for the CDN 119 million cost of the program since inception. Overall, cost savings for industry from this program, so far, are estimated to be anywhere between CDN

90–350 million with additional cost savings increasing each year. This substantial cost saving validates that we can indeed make money by addressing environmental and social issues.

Another example of a successful PTAC project that addresses the environmental and societal issues while increasing corporate profitability is REMVue slipstream technology, which was developed and commercialized through a series of PTAC projects. Slipstream technology captures vented light hydrocarbons from oil tanks, condensate tanks, and other instrumentation, and uses it as fuel in the field. Hundreds of slipstream units are currently operational, generating CDN 15 million per year from the engine fuel displaced. At the same time, the carbon offset of the technology thus far is equal to taking 150,000 cars off the road annually. Should these units be implemented fully across industry operations, the carbon offset would be equal to taking 1.6 million cars off the road annually while generating CDN 160 million per year from engine fuel displacement.

Overall, PTAC was founded on the belief that the application of new and better technologies will improve oil and gas recovery, lower costs, make operations safer, and reduce the impact on the environment. Innovation without collaboration is possible but the road to it is costly, ineffective, and inefficient. We know that new research projects and technology solutions are best discovered when industry stakeholder groups work together in a structured way to identify problems and address them. We firmly believe that in working together with all stakeholders, we can create a greener and more innovative energy industry for years to come. Ultimately, PTAC’s collaborative approach to research and development stands as a model for transforming environmental challenges into business opportunities within Canada’s hydrocarbon industry.

In summary, it is clear that the global hydrocarbon industry is moving away from being driven solely by resource development, and is instead shifting toward an industry being propelled by technology and innovation. With the largest hydrocarbon deposits in the world, the majority of which are unconventional, Canadian resources are some of the most expensive to develop and produce, and face significant challenges in terms of limited market access, higher cost of developing and producing unconventional hydrocarbon resources, and their related environmental issues. Ultimately, understanding that technology development is now driving the hydrocarbon sector is imperative in recognizing the benefits of effective innovation in reducing both costs and the environmental footprint, while improving market access, increasing reserves, profitability, and production, and mitigating the commodity risk. Innovation without collaboration is possible, but is a long, difficult, and expensive process. Collaboration from all industry players, including inventors, producers, service and supply companies, government bodies, and academia is the most-effective and –efficient method in creating new and innovative technologies that better not only our industry, but our environment and society as a whole, all while reducing costs. Canadian operators understand that they are not one another’s competitors; their competitors are those producing low cost oil and gas from conventional resources. Overall, the hydrocarbon energy industry is recognizing PTAC’s 20 years of contributions—that with innovation and collaboration, we can reduce the environmental footprint of hydrocarbon development, while ensuring profitability.


The author wishes to express his gratitude to Ole Mrkles and the members of the AUPRF committees for their significant work in managing the AUPRF program and their assessment of value generated for the program, to Ken Putt for his invaluable comments, and to Katie Blanchett for editing and formatting the original paper.


Gray, J.K. 1977. Future gas reserve potential Western Canadian Sedimentary Basin: 3rd National Technical Conference, Canadian Gas Association.

Masters, J.A. 1979. Deep Basin Gas Trap, Western Canada: AAPG Bulletin 63 (2): 152–181.