Alberta's ARC

It’s Taken On Many Stripes Over The Years, But ARC’s Devotion To Oilsands Research Has Remained True

By Maurice Smith

ALBERTA WAS A VERY DIFFERENT PLACE IN 1921. A mere 16 years old, its population was just 588,000. The discovery of conventional crude oil was years away, and its residents still heated their homes with wood and coal. Agriculture was the mainstay of the economy and paved highways had not yet arrived. Yet even then, a group of farsighted individuals saw the potential for a booming hydrocarbon future.

The year marked the beginnings of the Alberta Research Council (ARC) Inc., the first provincial research council in the country. Established to quantify the province’s mineral resources, from the outset one of its primary focuses was Alberta’s bitumen deposits (along with geology and coal). While they may not have predicted the enormity of the multibillion dollar industry that was to flourish around the oilsands eight decades later, its founders — primarily a group of researchers at the University of Alberta in Edmonton — foresaw their latent promise. And the organization they gave birth to would become the single most influential in the development of technologies created to turn the oilsands into an economically viable play and make Canadian oil companies the most technologically advanced heavy oil producers on the planet.

ARC was to go through various transformations over the years, emerging as an agency today that has branched into life sciences, agriculture, forestry and manufacturing as well as energy, and that now performs research for clients around the globe. But through it all it has stuck to its oilsands focus like tar sand to a shoe.

Henry Marshall Tory, the president of the University of Alberta, and other university scientists promoted the creation of ARC, with an emphasis on the economic benefits scientific discovery could provide to the young province. The province agreed and, by Order in Council, the government of Liberal Premier Charles Stewart founded what was then called the Scientific and Industrial Research Council of Alberta.

Initially coupled with the U of A, ARC would be associated with some of its leading scientists and professors from day one. In addition to being the U of A’s first president, founder Henry Marshall Tory would contribute to the establishment of the National Research Council and Carlton University. Auspiciously enough, Tory lured as the agency’s first professional appointment Karl Clark, a chemist who would later become known as the father of the hot water treatment process for the separation of bitumen from sand, a process that to this day forms the basis of bitumen separation at the giant Suncor Energy Inc. and Syncrude Canada Ltd. oilsands facilities in the Athabasca oilsands near Fort McMurray.

ARC’s early prominence was reflected in the fact it reported directly to the premier, who also served as its official chairman. The agency fostered early research that within a decade would lead to a patent for the hot water separation process, followed by successful processing of 75 tons of bitumen at a pilot plant near Fort McMurray in 1930. By 1926, the agency had also published the province’s first geological survey map. But despite the early successes, the devastating Great Depression of the 1930s forced the province to curtail funding, leaving the agency at the mercy of the U of A to keep it alive through the lean years that followed.

Funding revived during the Second World War. In 1944, the province provided $250,000 in funding for a separation plant at Bitumount. A year later, ARC launched its first research into water flooding methods for in-situ extraction of bitumen from deeper formations.

The province’s evolution from an agricultural to an industrial economy and increasing demands for energy post-war reinvigorated oilsands research. In 1951, the province organized its first international oilsands symposium, at which it first promoted the term oilsands over tar sands. By then, the province had adopted a report by ARC researcher Sidney Blair, which recognized the economic viability of extraction, as its oilsands development policy. The symposium set off a flurry of exploration permit applications.

An emphasis on oilsands and heavy oil research continued in the 1950s, a time when ARC began to expand into other research areas, saw its staff grow to about 100 and moved into its own building on the U of A campus. Creation of a product R&D group and expansion to a new pilot facility at Clover Bar followed in the 1960s. In 1967, there was the first large-scale commercial use of Clark’s hot water separation process with the opening of the Great Canadian Oil Sands (Suncor) plant, while ARC oversaw the building of the first in-situ recovery simulator for Petrofina Canada.

Oilsands research still accounted for a quarter of the agency’s work in the 1970s as ARC began contract work and expanded research into production methods, environmental impacts and upgrading. Blossoming industry interest in the oilsands the following decade would see ARC research grow 300%. A Calgary facility, complete with an advanced computing lab, was opened in 1984 and in 1986 the research council moved into new laboratories and headquarters on Karl Clark Road in the Edmonton Research Park.

ARC was also to act as the technical arm for the Alberta Oil Sands Technology and Research Authority (AOSTRA). A pioneer developer of in-situ extraction technology, AOSTRA was established by the province in 1974 to administer a $100 million fund for oilsands research. In addition to operating the Underground Test Facility near Fort McMurray to field test steamassisted gravity drainage (SAGD) technology, in the late 1970s AOSTRA became involved with Shell Canada Limited’s Peace River in-situ pilot and operated a joint program with ARC, the Oil Sands Geology Group, for a regional resource inventory and detailed reservoir characterization. ARC and AOSTRA struck a five-year deal in 1981 to focus jointly on in-situ research. The Industrial Access program was established to allow for ARC/AOSTRA technology transfer to member companies, resulting in 200 technical reports and a half-dozen patents in its first five years.

Lean years would return however in the latter 1980s as sinking oil prices and a ballooning provincial government deficit led to belt-tightening throughout government. Layoffs followed as ARC reassessed its operations, took on a more customer-focused outlook and began shedding those operations not considered central to its strategic focus, including the Alberta Geological Survey and its Electronic Test Centre.

ARC’s adoption of a more business-like approach meant expanding contract work and joint industry projects with the private sector both in Canada and internationally, and the creation of a technology commercialization office. In 1999, ARC was incorporated as a wholly owned subsidiary of Alberta Science and Research Authority. ARC’s evolution continued throughout the 1990s as the province merged ARC with the Alberta Environmental Centre at Vegreville and ARC acquired the Calgary-based Petroleum Recovery Institute and Edmontonbased C-FER Technologies Inc. C-FER conducts applied R&D, performs fullscale testing and provides engineering consulting to the oil and gas and pipeline industries, more than half of which is from outside of Canada. As well, the George W. Govier Centre for Flow and Sensor Technologies was opened in 2001. ARC also entered into an agreement with the National Centre for Upgrading Technology in Devon, Alberta, to conduct primary and secondary upgrading research programs.

One of ARC’s most successful programs is that forged almost 20 years ago with AOSTRA, which became the Alberta Energy Research Institute (AERI) in 2000, says Phil Murray, ARC vice-president, Energy. The AERI/ARC Core Industry Research Program (AACI) provides the technical underpinning that enables industry to minimize its risk and development costs and maintain technology leadership. Including more than a dozen energy companies, its focus includes thermal recovery, gas and solvent use, reservoir maintenance and cold production.

“The consortium program focuses on finding new technologies for improving recovery of in-situ oilsands,” Murray says. “All of the major players in Alberta involved in in-situ work in the oilsands are members, and it’s been a very successful program developing better processes for SAGD and processes that are hybrid processes for SAGD, like using a solvent. They have also done some work developing technologies on in-situ combustion.”

AACI’s remarkable success was outlined in a study completed by THECIS (The Centre for Innovation Studies) two years ago, Murray says. “That audit clearly demonstrated that there was $12 in benefit coming from that program for every $1 that was invested. So it’s a very significant program, one that is really well acknowledged.

“Three years ago we also started up a new unit, the Mineable Oil Sands Business Unit, focused on helping the mining side of the industry better understand the oilsands deposits that they have, to better characterize the sands, and to improve how they can best exploit them,” says Murray. “We have a significant business with both emerging and the existing large companies that are making these multibillion-dollar investments in oilsands.”

Today’s ARC serves almost 900 clients a year and is involved in research as diverse as micro fuel cells, genomics, manure-generated energy and development of an e-coli vaccine. The province’s leading provider of applied research and technology development with a staff of close to 500 at four locations and a budget of $86 million, ARC was granted 38 patents and earned $4.4 million in royalties, licensing fees and product sales last year.

While it continues to diversify, energy research remains a staple for ARC. Its Sensors Engineering business, for example, is working with oilsands mining operators to improve bitumen extraction during the separation process. Working with Syncrude, ARC has recently developed an improved method to measure the level of froth — a mixture of air, water and bitumen that rises to the surface of the primary separation vessel — to provide a constant flow rate and optimize extraction. On the in-situ side, ARC is developing leading-edge processes combining SAGD with Vapex (vapour extraction) to boost production while lowering energy and water use. A major research project signed with Russian energy giant Lukoil recently showcases both ARC’s heavy oil expertise and its increasingly international reach. In its first such agreement with a foreign company, Lukoil has asked ARC to evaluate the use of SAGD in northern Russia’s Timan Pechora Basin.

The Alberta of 2005, celebrating its centenary, could hardly be more different from that of the frontier province of the early 1900s. As a result of game-changing technology developed by ARC and others to make oilsands extraction viable, Alberta’s massive deposits gained international recognition in 2003, catapulting Canada, with established reserves of 178 billion barrels, overnight into second place after Saudi Arabia. Its once sleepy agricultural economy has been supplanted by a technologically-driven oilsands juggernaut with more than $20 billion invested in completed projects and another $60 billion in new projects proposed. New technological hurdles — such as meeting the oilsands’ energy needs and reducing emissions, challenges that are themselves a product of the industry’s very success — ensure that R&D will remain a driver of future growth as the province continues on the road to prosperity.