Innovative Energy Technologies Programs

 

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Introduction

Works by an Oil RigThe Energy Innovation Strategy is designed to respond to the future energy needs of Alberta by investing in research, technology and innovation that create commercial value and achieve the highest standards of environmental performance. The Innovative Energy Technologies Program (IETP) is the major component of this strategy.

The IETP represents a $200 million commitment over five years by Alberta Energy to provide royalty adjustments to a number of specific pilot and demonstration projects that use innovative technologies to increase recoveries from existing reserves and encourage responsible development of oil, natural gas, and in-situ oil sands reserves. The program is also designed to assist industry in finding commercial technical solutions to the gas over bitumen issue that will allow efficient and orderly production of both resources.

The objective is to generate royalties from the increased recovery of oil, gas and oil sands resources which might not otherwise be recovered under present technology. It is anticipated that successful technologies supported by this program will enhance resource recovery and increase royalties to fully recover, over time,  the costs of the program.

Successful applicants in the program will be provided royalty adjustments, up to a maximum of 30 per cent of approved project costs. Industry must provide the remaining 70 per cent or more of total project costs. The total industry / government commitment to important new technologies, assuming full subscription of the program, will be at least $667 million.

Application Package

Alberta Energy believes that a producer’s ability to undertake certain projects is often limited by the related technical and financial risk. Royalty reductions provided by this program will assist in reducing financial risk thereby encouraging producers to undertake the projects.

Innovative pilot and demonstration projects in the energy sector in Alberta could be eligible for approval under the program. In co-operation with the Alberta Energy Research Institute (AERI), an evaluation committee will review the applications and advise on the merits of the projects in the context of the project selection criteria.

Alberta Energy will make the final decision on which innovative pilot and demonstration projects to approve and the level of support that will be provided.

Final deadline for applications is September 30, 2008 at 4:30 P.M. (MST).

Successful applicants for round one were announced   in November 2005. The deadline for the first round of applications was March 31, 2005.

Successful applicants for round two were announced  in March 2007. The second round deadline for applications was December 31, 2005.

Two new projects were announced in November 13, 2007 Press Release   

Successful third round applications will be announced shortly.

Application Process (Pre-Application vs. Full Application)

The Pre-Application review allows Alberta Energy an opportunity to review proposals at an early stage and determine whether the proposal fits within the IETP mandate and meets one of the IETP objectives in selected energy sectors. For those proposals that meet these requirements, a full IETP application may then be submitted. This optional review deadline was May 30 2008, it acts as a complementary process to the full application evaluation.

The full application process will allow Alberta Energy to fully evaluate applications for project funding in a consistent, fair and equitable manner. Full applications received prior to the application deadline will be evaluated by Alberta Energy.

Policy and Regulations

The Innovative Energy Technologies Regulation is available from the Alberta Queen's Printer.

Frequently Asked Questions

What is the Innovative Energy Technologies Program (IETP)?
Announced June 2, 2004, this program offers royalty adjustments of up to $200-million over five years to a number of specific pilot and demonstration projects that use new or innovative technologies to increase environmentally sound recoveries from existing reserves and encourage responsible development of new oil, natural gas and in-situ oil sands reserves. The program is also designed to assist industry to find commercial technical solutions to the gas over bitumen (GOB) issue that will allow efficient and orderly production of both resources.

What are the objectives of the IETP?
The program objectives are:  
  • increasing the recovery from oil and gas deposits resulting in incremental production and royalties;
  • finding a flexible commercial technical solution to the gas over bitumen issue that will allow efficient and orderly production of both resources;
  • improving the recovery of bitumen resources by in-situ technologies;
  • improving recovery of natural gas from coal seams; and
  • dissemination of technology and information developed through the projects supported by this program.

How is the new Pre-Application review going to Work?
The new Pre-Application review process is optional and complementary to the regular full application evaluation. If an applicant chooses to submit the Pre-Application Form and the Pre-Application is received with sufficient materials (prior to the pre-determined deadline) Alberta Energy will assign the Pre-Application to a project manager for review. The applicant will then be advised whether the proposal is within the IETP mandate and meets one of the IETP objectives. Applications that meet these requirements will be asked to complete the full application in order to be considered for royalty adjustments. IETP applicants may also choose to bypass the Pre-Application review and submit a full application package to Alberta Energy prior to the IETP application deadline.

What are the anticipated benefits of this program?
The IETP is designed to encourage the development of innovative technologies that will increase resource recovery. Anticipated increases in economically recoverable reserves mean more royalty revenue to fund priority program areas such as education and health care. Further increases in the recovery of reserves, even seemingly small ones, make a big difference. A 1% increase in recoverable reserves means an additional 600 million barrels of conventional oil, 17 billion barrels of bitumen, and 2 trillion cubic feet of natural gas. Additional royalties paid to the province as a result would top $2 billion according to an estimate from the Petroleum Technology Alliance of Canada.

What is the process for approving projects for this program?
Those wishing to participate in this program must complete the application form provided and submit it to Alberta Energy by the application deadline. Applications must demonstrate how the proposal fits the program objectives by performing a self-assessment against specific evaluation criteria. Applications will also be assessed by Alberta Energy against these same criteria. As funding for this program is limited, project applications will be ranked and prioritized. The Minister of Energy will make final decisions and notifications will be sent to successful applicants with the terms and conditions of approval. Further details on the application process can be found in the application package.

When will applications for the IETP program be accepted?
Alberta Energy is now accepting fourth round application, the final deadline for applications is September 30, 2008 at 4:30 P.M. (MST).  Assessment of applications will occur following the deadlines.  Successful third round applications will be announced shortly. 

How will the royalty adjustments under this program be determined?
Projects approved under this program will be able to receive royalty adjustments of up to 30% of eligible project costs. The royalty adjustment for any one project will be limited to a maximum of $10 million. The actual level of funding for each approved project will be determined by Alberta Energy based on the merits of that project proposal and the availability of funds. Applicants must indicate other funding acquired for the project. IETP royalty adjustment could be reduced from the 30% to ensure that total government funding does not exceed 50% of total project costs.  Royalty adjustments can be applied against any of oil, natural gas or oil sands royalty obligations.
 
Are projects on Freehold or lands not in Alberta lands eligible?
Projects (or portions of projects) outside of Alberta or on Freehold lands are not eligible for funding under this program.

Do gas over bitumen (GOB) projects use the same application process as gas, oil and oil sands projects?
GOB projects will use the same application process as gas, oil and in-situ oil sands projects but may not meet all the evaluation criteria. In addition, GOB projects  must be recommended by the GOB Technical Solution Executive Steering Committee (TSESC) to be eligible. A recommendation by the TSESC must be made before the application deadline.

How much funding is allocated to each of gas, oil, oil sands and GOB?
$200 million is the program maximum. $15 million of this is allotted for the CO2 projects, $40 million for GOB projects and the approximately $48 million each for gas, oil and in-situ oil sands.

Can funding be over a number of years?
Projects may be approved for multi-year funding with funding limited to $10 million for an individual project and a program maximum of $200 million. Costs are not eligible costs in respect of an approved project if the costs are incurred before June 2, 2004 or after March 31, 2012.

What if a project is abandoned early, as it clearly is not showing positive results? Will funding be withdrawn?
Although it is hoped that approved projects have a good chance for success Alberta  Energy realizes that some projects will not work out as anticipated and expects that the proponent will notify  Alberta Energy as soon as this is known. Projects costs will still be covered up to the point that the project is terminated.

What happens if no projects are proposed for gas but too many for oil sands?
The allocation of funds between the different commodities is flexible to take into account situations such as this.

How can an industry player who does not pay royalties (service company) take advantage of this program?
Non-royalty paying industry players will partner with royalty payers to take advantage of this program. This will be necessary regardless of the program as they will require access to a reservoir to run the project.

Will project results be made public?
Yes, given Alberta Energy  is participating in the costs of the project, all technical information related to the project will be made available to the public after a two-year confidentiality period, subject to an intellectual property agreement that all successful applicants must sign prior to an approval being issued.

Will I be able to obtain a license to use a project’s patented innovative technology?
Yes. The objective of the program is to support technologies that will be widely available to the Alberta industry. Therefore, it is expected that licenses for patented innovative technology will be made be available at reasonable commercial terms. To ensure that this objective is met, successful project applicants will be required to enter into a standard form intellectual property agreement with Alberta Energy prior to an approval being issued.

Can two or more companies join together to apply for a project?
Alberta Energy encourages project partnership. The evaluation is designed as such with higher points awarded to projects with more than one proponent.

Contact Information

Matthew Foss,
Gas Development
780-422-5059
Matthew.Foss@gov.ab.ca

Dr. Eddy Isaacs,
Alberta Advanced Education and Technology
403-297-5219
Eddy.Isaacs@gov.ab.ca

Beverley Murray
IETP, Oil Development
780-427-2193
Beverley.Murray@gov.ab.ca

Last reviewed/revised: 2007-07-24