CALGARY
The second day of Canada 3.0 2014 offered delegates a deeper dive into the Canadian energy sector, including key insights into what energy companies look for from technology companies.
The day kicked off with a market overview by Terry Abel, the Director of Oil Sands at the Canadian Association of Petroleum Producers. A key takeaway from his talk was that a continued shift to unconventional oil means cost competitiveness will become even more important to energy producers, as price and access to market remain the two major factors affecting growth of the Canadian market.
The role technology could play in helping to achieve cost reductions was stressed throughout the day, although panelists on the “Technology needs and solution matchmaking” panel also highlighted the need for technology companies to understand the energy industry.
“Just having a good technology or idea is not enough,” said Heather Herring, Manager of Innovation at Laricina Energy. “Entrepreneurs need to understand the challenges the industry is facing.”
Peter Garrett, president of Innovate Calgary, agreed, underlining that “the notion that IT guys can arrive and just show the energy guys how to innovate won’t work.” The most successful companies that Innovate Calgary works with are those that understand the energy industry best.
When asked the best way to access the market, panelists stressed that each problem requires a unique approach. Large producers are often reluctant to work with smaller tech companies on asset-intensive work, but venture capitalist Eric Schmadtke noted that “if you’re bringing something like data analytics, large companies have signaled they’re willing to work with tech upstarts.”
In other, more capital-intensive areas, Garrett suggested energy service industry companies can be a better option as they are extremely price sensitive and therefore willing to adopt technology to achieve cost savings.
Another strategy is to develop ‘bolt-on technologies’ that improve performance without forcing companies to overhaul their entire process. Herring emphasized that this entailed much less risk for companies, and also didn’t force them to admit their initial decisions were a mistake.
The afternoon session on digital oilfields provided further insight for technology companies looking to break into the energy sector.
Steve Reece, the Manager of Business Services at Enerplus, explained that it wasn’t enough for companies to understand the energy sector – but they had to understand the needs of different sized producers as well.
“The solutions for a mid-size producer (such as Enerplus) will be much different than those of a major or small producer,” Reece said. By way of comparative scale, Enerplus is an $800-million company with more than 700 employees – which would be considered a large enterprise in Canada’s technology sector.
James Freeman of Zedi went further, noting that the energy sector in Alberta was fertile ground for tech companies because “we have a lot of small and medium sized energy companies where it is easier to get to the decision makers.” He suggested technology companies should focus on talking to small companies who have shown a willingness to work with them.
A potentially innovative solution to a common problem surfaced as the session wound to a close, with a question to the panel about whether a mechanism to allow smaller companies to achieve process and security certification would help larger companies in dealing with them. Both Reece and Freeman agreed this would be useful, as it would remove many of the worries about stability and longevity that larger companies have when dealing with smaller tech startups.
The discussion provided a great segue into Day 3 of Canada 3.0, which will feature a hands-on workshop on “Overcoming Barriers to Innovation,” to provide concrete recommendations coming out of the conference. More to come on the workshop, and the individual experiences technology companies have had at Canada 3.0 2014.