The Evolution of the Oil and Gas Technology Policy - Research Paper Example

The Evolution of the Oil and Gas Technology Policy Introduction Earth is endowed with natural resources, which can be optimally tapped through science and technology. Although, these resources are widely distributed, certain countries have more ‘quantity’ of these resources than others, and due to the effective extraction and utilization by these countries, using science and technology, they are able to elevate their economic status and thereby their citizens’ living standards. Among the various natural resources, oil and gas have been having high value as well as consumption throughout the world, and the countries having rich deposits of it are getting immensely benefited. Canada is one such country, which has an immense endowment of oil as well as natural gas resources, and by extracting, refining and also transporting these resources, it is not only providing high number jobs to its citizens but also strongly contributing to its economy as well as trade balance. Although, these oil and gas deposits have naturally developed more than a billion years ago, it is due to the expertise as well as technology adoption of the Canadians, they are able to effectively extract it, process it, transport it and achieve success. From finding the first deposits in 1850s to the current optimum expansion throughout Canada, oil and gas companies with the support of the government are carrying out extensive operations, both onshore as well as offshore. The support of the government is critical because with all the oil and gas resources belonging to the Federal government, their laws and policies plays a key role in the tapping of these oil and gas resources, particularly in the usage of technology. With government policies and use of technology being interrelated, the focus will be on how the evolution of the Canadian oil and gas sector and the resultant formulation of policies have impacted and still impacting the evolution of the oil and gas technology policies as well. Background The Canadian crude oil and gas industry had its origins in 1850, when James Miller Williams, a carriage maker from Hamilton, Ontario, “dug and drilled the first commercial oil wells in southwestern Ontario and established North America’s first integrated oil company.” (Bott & Carson, 2012).The other key fuel of the petroleum era, natural gas, was first discovered in New Brunswick in 1859, with Eugene Coste, an entrepreneur, being the first Canadian to find and develop natural gas resources on a large scale, first in Ontario and later in Alberta. (Bott & Carson, 2012). From those humble beginnings, Canada has developed into one of the oil and gas producing giants of the world, with reserves being present and extraction process being carried out in sizable parts of Canada. At the same time, oil and gas producing areas in Canada is primarily divided into three regions, namely Western Canada Sedimentary Basin, Eastern Canada Sedimentary Basin and finally Southern Ontario Region. Among these three regions, the Western Canada Sedimentary Basin comprising most of Alberta and Saskatchewan and parts of British Columbia, Manitoba, Yukon and the Northwest Territories, is regarded as the most productive hydrocarbon area, with the Geological Survey of Canada estimating that this basin contains about 57 per cent of Canada’s original in-place conventional petroleum resources. (Bott & Carson, 2012). Although, Western Canada Sedimentary Basin continues to hold good reserves, the current trend is, newer exploration and developments are moving on to Eastern Canada Sedimentary Basin. The first and key reason for this moving is due to that particular area’s potential geology, as it is the home to the Atlantic Margin, one of Canada’s major oil and gas rich sedimentary rock regions. (Bott & Carson, 2007). In addition, from the practical and economic point of view, producing oil and gas in the East Coast appears an effective strategy because it is in close proximity with the prospective energy markets or regions of northeastern United States as well as Central Canada. “U.S. demand for Canadian crude oil and natural gas has increased steadily over the past 15 years. As a result, Canada now fills 18 per cent of U.S. natural gas requirements.” (Bott, 2004). Apart from these two regions and the traditional Ontario region, Canadian oil and gas industry is spreading its wings into the Canadian Arctic region. This expansion of Canadian oil and gas industry over the years is primarily due to the government policies and importantly due to the evolution of oil and gas exploration technologies. Review of various issues in the evolution of oil and gas technologies As mentioned above, with the provincial governments and thereby the federal government having rights over the oil and gas reserves, it is natural that the policy decisions taken by the governments could directly or indirectly impact the oil companies’ functioning, particularly its’ technology adoption. Basically, Canadian people and thereby the government own the offshore oil and gas resources, and so under the legislated agreements called accords, between the federal government and the provinces, both the governments receive revenues from the developments in the form of royalties. (Bott & Carson, 2007). In addition, government through Federal-provincial boards is only responsible for the issuance as well as the administering of the exploration and development rights, protection of the environment, ensuring of the safe working conditions, and finally collection and distribution of the resources, with the goal of maximum recovery and minimum waste. (Bott & Carson, 2012). Due to this prominent and encompassing role, governments have been coming up with various policies from the earlier times, and that is impacting the evolution of the oil and gas technologies and the related policies. One of the key policy decisions taken by the government, which initiated as well as organized the role of science and technology in the oil and gas sector, was the establishment of the Geological survey of Canada (GsC) in 1842. Regarded to be the first scientific agency of Canada, it was also nation’s first government organizations or body of any kind. GsC’s initial work was finding out coal as well as other minerals, and then only it started exploring oil and gas reserves. Throughout the later part of the 19th century, GsC played a major role in finding prospective oil and gas reserves, in association with the private parties. “In its long history, the GsC has played a key role in gathering, recording and analyzing basic information about Canada’s natural resources and other aspects of the nation’s geology.” (Bott & Carson, 2012). In the 1900’s also, GsC continued to play a major as well as supportive role in the finding of new reserves as well as in the exploration of existing reserves. Then, in the mid part of the 20th century, after the World Wars, when various technological innovations were happening in all the fields, GsC using the relevant innovations played a key part in the optimum elevation of Canadian oil and gas sector. For example, it was in 1950s, “airplane and aerial photography were supplemented by the helicopter as basic tools for geological mapping”, and that “increased the pace of geological mapping at a spectacular rate”, further developing the sector. (Vodden, 1992). One of the pivotal events in Canadian oil and gas history was the discovery and the resultant exploration of oil in Leduc in 1947, because it brought wholesome changes not only to the industry but also positively changed Canadians’ lives. That is, when Imperial Oil struck oil in Leduc in Alberta, using the then developing technologies, it created a major oil boom throughout Western Canada, as sizable quantities of oil and also natural gas was extracted. (Brune & Sweeny, 2012). With the governments also getting interested in these potential discoveries, they facilitated effective extraction, thereby achieving high production quite quickly. In addition, it developed the economy of the whole area, as many Canadians got profitable employment. Importantly, this increased production of oil, throughout the 1950s, in a way replaced coal as the largest source of energy in Canada. This further led to the invention as well as entry of more technological options, which positively impacted Canadians’ lives. That is, extensive production and usage of oil replacing coal led to the development oil dependent technological tools like automobiles, industry related machineries, etc. “Canadians embraced the new products and services of the oil age, from shiny cars and plastics to air travel. In most regions of Canada, wood and coal furnaces were steadily replaced with cleaner, more convenient oil or natural gas heating.” (Bott & Carson, 2012). Speaking of extraction of cleaner natural gas, a key happening in the evolution of the Canadian oil and gas technology, was the laying of technology aided cross- country pipelines. That is, prospective postwar discoveries of oil and natural gas in Western Canada sparked off a long-lasting boom in the construction of extensive pipeline. With the government wanting to fully tap the potential, it gave the go ahead for the constructions of pipelines throughout Canada. (Brune & Sweeny, 2012). However, what aided this boom in the construction was the invention and the resultant availability of construction related technological tools from steel pipes to welding methods. This was pointed out by Bott & Carson (2012), who stated that, “At the same time, improvements in welding methods and the quality of steel pipe and construction equipment made longer-distance, higher-pressure crude oil and natural gas transportation systems possible.” Adoption of these technologies was further motivated by the Federal government’s decision to build trans-Canada pipelines, thereby facilitating flow of natural gas from Alberta to majority of Canada. “The discovery of large natural gas reservoirs in Alberta and improvements in the technology of pipelining created new possibilities, with pipelines bringing natural gas to Vancouver, Winnipeg, Toronto and Montreal in the late 1950s.” (“Energys History in Alberta”, n. d). Pipelines continued to expand to newer territories even to neighboring United States, as production accentuated in line with the increasing demand. For the expansion of the pipelines also, technology played a key role, as existing lines were extended by “adding pumping or compression capacity, laying additional pipe, or both.” (Bott & Carson, 2012). Then, quite crucially, when computers and other automation related remote controls made its appearance in the 1960s, this extensive system of pipelines were made more efficient, with monitoring and operations becoming easier. The decade of 1960s also witnessed evolution of technologies as far as the finding and interpretation of seismic data is concerned. As seismic data garnered using reflection seismology can provide good inputs regarding the prospective resources, it was aptly used, with the advent of then advanced computers and the related tools complementing it. “In the 1960s, the processing, presentation and interpretation of seismic data was revolutionized by the introduction of computers, digitally recorded data and the common depth point method of shooting and recording.” (“Geophysics”, 2002). Then, as the technologies evolved and developed in the next few decades, oil companies started using newer techniques to further narrow down the location of the reserves. That is, after using seismic data to generally locate the reserves, oil and gas companies in association with scientists started the practice of satellite surveying, which “helped to outline regional geological structures and to search for surface signs of possible crude oil and natural gas deposits.” (Bott & Carson, 2012). With the aerial technologies also undergoing advancements, aerial surveys were extensively carried out. These surveys photographed the probable surfaces, and measured its magnetic fields, gravity as well as radiation levels, all of which were used to locate the sedimentary basins, which are likely to contain petroleum. (Hope & Eaton, 2002). All these technologies were implemented with the government and its agencies including scientific agencies playing a key supporting role in it. As part of the evolution of the Canadian oil and gas technology policies, key decisions were taken in the conservation of environment. Oil and gas production process was an environmentally sensitive process, and could be even considered as a chaotic business due to the extensive impacts it has on the environment. This oil and natural gas production was going on those unorganized lines until the 1930s, when both the Federal as well as the provincial governments stepped in to bring order to the production practices by initiating number of constructive policies, so it is environmentally friendly as much as possible. (Plourde, 2010). However, those early practices were mostly ineffective, due to lack of scientific support. It was in the decades from the 1940s to the 1970s, when the oil and gas sector in Canada was booming, oil companies and other contractors started implementing basic level environmental regulations, due to the governments’ policies. After that start, further reductions in environmental impacts were achieved in the 1990s, as the industry due to the constant vigil of the governments, “improved refinery efficiency, reduced the sulphur content of fuels, reformulated gasoline, captured hydrocarbon vapours and worked with stakeholders to better understand public concerns.” (Bott & Carson, 2012). This technology based environmental conservation efforts continued in the 2000s, with a foundation created by Federal government called Sustainable Development Technology Canada (SDTC) playing the prominent role. This foundation is given the responsibility to operate a $550 million fund, which can be used particularly in the oil and gas sector, “to support the development and demonstration of clean technologies — solutions that address issues of climate change, clean air, clean water, and clean soil to deliver environmental, economic and health benefits to Canadians.” (SDTC, 2006). In that direction, SDTC has divided technology development process under key categories, with technologies being elicited for improving energy efficiency and to enhance production, even while reducing or eliminating destructive pollutants or gases emissions. For improving energy efficiency, SDTC is funding number of technology development projects like the project to increase the “production of steam and heated solvents that reduce energy costs and GHG emissions, and lower steam pressures for steam assisted gravity drainage (SAGD).” (SDTC, 2006). The other most promising technologies, which are in the anvil, which could enhance production even while reducing GHG emissions on a per unit of production basis is the process of CO2 Capture, Transport and Storage. This area is focused on the capture, transport, and storage of CO2 in distant geological reservoirs, “after it is produced as a means to prevent GHG emissions from being released into the atmosphere (permanence of CO2 storage not yet confirmed) from the oil and gas industry.” (SDTC, 2006). Conclusion From the above analysis of the evolution of the Canada’s oil and gas technology policies, it is clear that technologies have been aptly incorporated at regular intervals, as the Canadian oil and gas sector made giant strides from humble beginnings, with the governments playing a prominent role. As Canada was endowed with optimum oil and gas reserves, it led to effective extraction, refining and production of oil and gas, with activities being carried out primarily in three key regions. Government for its part took the first step by establishing Canada’s first scientific agency, Geological Survey of Canada. After initial support by GsC, oil and gas companies in line with the advancing technological advancements and other innovations and inventions, included various technologies as part of their operations over the decades. This utilization of technologies optimally improved the whole production process, and aided in reaching the maximum people, even while conserving the environment. References Bott, R. D. (2004). Canada’s Canada’s evolving Offshore Oil and Gas Industry. Retrieved from: http://www.em.gov.bc.ca/DL/offshore/Reports/OffshoreFAMar2004_low.pdf Bott, R. D. and Carson, D. M. (2007). Canada’s evolving Offshore Oil and Gas Industry. Retrieved from: https://www.centreforenergy.com/Shopping/uploads/111.pdf Bott, R. D. and Carson, D. M. (2012). Evolution of Canada’s Oil and Gas Industry. Retrieved from: http://www.centreforenergy.com/shopping/uploads/122.pdf?5420143210 Brune, N & Sweeny, A. (2012). Canada - The New Nation. Northern Blue Publishing. “Energys History in Alberta.” (n. d). Alberta Energy. Retrieved from: http://www.energy.alberta.ca/about_us/1133.asp “Geophysics.” (2002). Collections Canada. Retrieved from: http://www.collectionscanada.gc.ca/eppp- archive/100/205/301/ic/cdc/www.abheritage.ca/abresources/history/history_leduc_after_geo.html Hope, J & Eaton, D. (2002). Crustal structure beneath the Western Canada Sedimentary Basin. Canadian Journal of Earth Sciences, 39(3): 291-312. Plourde, A. (2010). Oil and Gas in the Canadian Federation. Retrieved from: http://www.economics.ualberta.ca/~/media/economics/FacultyAndStaff/WPs/WP2010-01-Plourde.pdf SDTC. (2006). Clean Conventional Fuel — Oil and Gas. Retrieved from: http://www.sdtc.ca/uploads/documents/en/CleanConventionalFuel-OilandGas.pdf Vodden, C. (1992). No stone unturned: the first 150 years of the Geological Survey of Canada. Minister of Supply and Services. Read More