Industry puts public good ahead of private gain from studies of new energy alternative
August 27, 2003
Asian and North American corporate interests have elected to place public good ahead of private gain from a Canadian-led, international research effort to unlock the scientific mysteries surrounding methane hydrates - a potentially vast, new source of hydrocarbon energy. The private sponsors of the $28-million, 2002 Mallik research program, a tripartite initiative involving the world’s first investigation of methane hydrate extraction techniques, will release the scientific findings a full year ahead of schedule at a meeting of the world’s major oil and gas interests this December in Tokyo.
“We’re extremely pleased that our business partners have acknowledged the value of sharing our findings in advance of the original timetable,” says project leader Scott Dallimore, a research scientist at the Geological Survey of Canada (GSC). “Their decision allows us to sustain the considerable momentum we’ve gathered during the last decade in this frontier field of science.”
The move to uncap the findings early was spearheaded earlier this year by the Japan National Oil Corp, a government-funded, privately operated business. “They made the proposal, agreed to by all parties, that the scientific results be made available to one and all.”
All industry partners originally wanted to safeguard their individual findings for a longer period with a view to gaining a head start in commercial exploitation. But, says Dallimore, “the Japanese correctly understood that the best way to move the science and technology forward at this early stage is to work collaboratively with all interested parties by disclosing the results ahead of schedule”.
As the largest single cash contributor to the project, the Japanese plainly possessed clout in the intellectual property (IP) disclosure discussions. In fact, the Japanese, together with the Gas Authority of India (also government-funded and privately operated), provided the lion’s share of the total cash resources, which represented about 60% of the total project costs. Other cash contributors included Germany’s GSC-equivalent, the US Department of Energy and the GSC itself. The remaining industry and public sector partners provided in-kind support.
The original moratorium on IP disclosure was a strong drawing card for Asian and North American business interests, notes Dallimore. “Even though we’re under disclosure strains as publicly-funded scientists, we had to swallow our principles a bit in the case because we knew that was the best route to get this ambitious project off the ground.”
The Mallik program involved more than 100 leading government and industry scientists from Canada, Japan, Germany, the United States, India, and China. The fieldwork, which wrapped up in March 2002, entailed drilling three methane hydrate research wells in the Canadian Arctic to depths of more than a kilometer, the world’s deepest-ever penetration into permafrost tundra.
DELAYING IP RELEASE COMMON
Prior to launching Mallik, the partners executed no fewer than 17 lengthy legal agreements, all of which touched on IP contributions and the sharing of property rights. In this case, the parties share equally in the IP rights, rather than on a pro rata basis geared to precise contributions.
“We believe we negotiated favourable agreements on behalf of the public interest,” submits Dallimore. “Now, we’re ready to release the findings less than two years after we completed the project and that really isn’t a long time in science.”
He notes that in today’s funding environment, with its ever-increasing expectation of private sector participation, federal scientists face a tougher challenge in striking a balance between protecting IP for commercial gain and releasing results for public interest. As a result, protracted IP confidentiality accords are becoming more commonplace.
“Just look at Canada’s Ocean Drilling Program, which is almost entirely publicly funded. It has a confidentiality agreement in the order of two years, so the kind of arrangement we made is not unusual these days.”
While IP considerations were integral to winning industry support for Mallik, he says the GSC’s long-standing reputation as one of the world’s leading geological research organizations also played an important role. “I don’t believe we could have done this project were it not for the international prestige that the GSC has earned since it began more than 160 years ago.”
The GSC also helped propel Mallik when it elevated gas hydrate research from project to program status. Prior to that shift, there was virtually no funding assurance. Now, as one of 11 targeted research programs at GSC, the methane hydrate effort receives A-base funding for operations and maintenance, together with salary support for up to 20 staff.
HUGE ENERGY OPPORTUNITY
Methane hydrates are essentially natural gas compressed into solid form and trapped in ice-like structures under intense pressure and extremely cold temperatures. Emanating from the earth’s molten core, they’ve been discovered throughout the world, primarily in deep ocean environments and in the permafrost regions of the Arctic.
The hydrocarbon industry’s commercial interest hinges on the understanding that as much as 164 cubic meters of clean-burning natural gas can be extracted from a single cubic meter of methane hydrate. Even the most conservative estimates of energy reserves (which vary by up to three orders of magnitude) indicate gas hydrates could satisfy the planet’s energy needs at current consumption rates for the next millennium.
“At minimum, there’s at least as much energy stored in gas hydrates as there is in all other hydro-carbons combined, including coal, oil, natural gas and tar sands,” notes Dallimore. But he cautions that the commercial opportunity is still some years away.
Technologically, methane hydrates are at the same stage of development as the Alberta Tar Sands were about 30 years ago. He says little was known about Tar Sands’ extraction processes at that time. Today, however, because of the vision of scientists (primarily at the Alberta Research Council), together with more than half a billion dollars in publicly-funded R&D (supplied mainly by the Alberta Government), the Tar Sands represent a multi-billion industry that generates over 20% of Canada’s oil supply.
As was the case with the Tar Sands development, he says the major unknown for methane hydrate researchers is the amount of energy input required for cost-effective resource recovery. For methane hydrates, energy is required to create the necessary heat and/or pressure relief to dissociate natural gas from the solid hydrate. “Because we are trying to release pressure, rather than add it as we do with conventional hydro-carbon extraction, we must devise entirely new technologies for hydrate exploitation.”
By Vincent Wright