INNOVATIONPOLICYWHITEPAPERSERIES2017-04

DIGITALIZINGEXTRACTIVEINDUSTRIES: STATE-OF-THE-ARTTOTHEART-OF-THE-POSSIBLE:

OPPORTUNITIESANDCHALLENGESFORCANADA

RayGosineandPeterWarrian

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TableofContents

AbouttheAuthors...........................................................................................................................2

Glossary...........................................................................................................................................3

ExecutiveSummary.........................................................................................................................5

(1.0)BriefIntroductiontoDigitalization.........................................................................................8

(2.0)Canada’sExtractiveIndustriesandDigitalization...................................................................8

(3.0)MiningContext.....................................................................................................................14

(3.1)DigitalizationinMining.....................................................................................................17

(4.0)OilandGasContext..............................................................................................................20

(4.1)DigitalizationinOilandGas..............................................................................................23

(5.0)OtherConsiderations............................................................................................................28

(5.1)RegulationandTechnologicalProgress............................................................................28

(5.2)Technology,EmploymentImpacts,andEducationandTraining......................................32

(5.3)TechnologyfromOtherSectors........................................................................................40

(5.4)TheRoleofSmallandMedium-sizedEnterprises(SMEs).................................................42

(5.5)OtherApproachestoInnovation......................................................................................43

(6.0)MiningandOilandGas:DigitalSynergy...............................................................................47

(7.0)ConclusionsandNextSteps..................................................................................................49

(8.0)References............................................................................................................................51

Pleasecitethisdocumentas:

Gosine,R.,&Warrian,P.(2017).Digitalizingextractiveindustries:thestate-of-the-arttotheart-of-the-possible.MunkSchoolofGlobalAffairsInnovationPolicyLabWhitePaperSeries2017-004.RetrievedfromInnovationPolicyLabWebSite:https://munkschool.utoronto.ca/ipl/publications/type/white-paper-series/

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AbouttheAuthors

Dr.RayGosineisaVisitingProfessorattheMunkSchoolofGlobalAffairs,Universityof

Toronto,andaProfessorofEngineering,MemorialUniversityofNewfoundland.Hehas

heldvariousseniorrolesatMemorialUniversity,includingVice-PresidentResearch(pro

tempore),DeanofEngineering,andtheJ.I.Clark/C-COREChairofIntelligentSystemsfor

OperationsinHarshEnvironments.HealsoheldanNSERCChairinIndustrial

AutomationattheUniversityofBritishColumbia.Dr.GosineisaFellowoftheCanadian

AcademyofEngineering(FCAE)andaFellowofEngineersCanada(FEC).

Dr.Gosine’sresearchisintheareasofintelligentsystems,robotics,andautomation

withaparticularinterestintheapplicationsofthesetechnologiestonaturalresource

industries.Heisinterestedinthebroaderimplicationsofadvancedtechnologies,andhe

recentlychairedaPublicReviewPanel(www.nlhfrp.ca)thatconsideredthescientific,

technical,socio-economic,publicpolicy,regulatory,environmental,andpublichealth

issuesassociatedwithunconventionaloilandgasdevelopment(i.e.,fracking).

Dr.PeterWarrianisaSeniorResearchFellowattheMunkSchoolofGlobalAffairs,

UniversityofToronto.HeisCanada’sleadingacademicexpertonthesteelindustry,and

hewasformerlytheResearchDirectoroftheUnitedSteelworkersofAmericaandthe

ChiefEconomistoftheProvinceofOntario.

Dr.Warrian’scurrentresearchisonknowledgenetworks,supplychains,anddigital

manufacturing.AsamemberoftheInnovationSystemsResearchNetwork(ISRN),

fundedbytheSocialSciencesandHumanitiesResearchCouncilofCanada(SSHRC),he

hasworkedontheinterfacebetweenthesteelindustryandtheautoindustry,

particularlyintheareaoflightweightmaterialsandtheinteractionofsoftwareand

advancedmaterials.

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Glossary(AdaptedfromWikipediaandtheGartnerITGlossary)

Analytics:thediscovery,interpretation,andcommunicationofmeaningfulpatternsin

data

Automation:theuseofcomputer-controlledsystemstooperateequipmentwith

minimalorreducedhumanintervention

AutomationAnxiety:fearabouttheimpactsofautomationonpeoples’workanddaily

life,includingfearaboutthesafetyofautomationtechnologyanditscapacitytoreplace

humanlabourandexpertise

BigData:largeand/orcomplexdatasetsthatcannotbeprocessedusingtraditionaldata

processingsoftware

ArtificialIntelligence(AI):intelligenceexhibitedbymachinestomimicthecognitive

functionsthathumansassociatewithotherhumanminds,suchaslearningand

problem-solving

AutonomousVehicles:avehiclethatcandriveitselfusingvariousdigitaltechnologiesforrouteplanning,navigation,environmentalsensing,andobstacleavoidance

DARPA:DefenseAdvancedProjectsResearchAgencyintheUnitedStates

DigitalTechnology:computerizeddevices,systems,andprocesses

Digitalization:ongoingadoptionofdigitaltechnologiesacrosssociety

DisruptiveTechnology:technologytypicallyproducedbyoutsidersandentrepreneursratherthanmarket-leadingcompaniesthatcreatesanewmarketandvaluenetwork

andeventuallydisruptsanexistingmarketandvaluenetwork,displacingestablished

marketleadingfirms,products,andalliances

E&P:explorationandproductionwithintheoilandgasindustry

GeomaticSurvey:usinginstrumentationtogathergeographicorspatiallyreferenced

information

GrossDomesticProduct(GDP):thetotalvalueofallgoodsandservicesproducedwithinacountryoraregion,whichgivesanindicationofthesizeofaneconomy

Human-computerInteraction:theinterfacebetweenpeople(users)andcomputers

Human-robotInteraction:theinterfacebetweenpeople(users)androbotsIndustry4.0:thecurrenttrendofautomationanddigitalizationacrossindustries

Innovation:theapplicationofbettersolutionstomeetnewrequirements,unarticulated

needs,orexistingmarketneedsthroughmore-effectiveproducts,processes,services,

technologies,orbusinessmodels

IntelligentSystems:aphysicalsystemthatincorporatesartificialintelligenceintoits

function

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InternetofThings(IoT):thenetworkofphysicaldevices,vehicles,andotheritems

embeddedwithelectronics,software,sensors,andactuatorsthatenabletheseobjects

tocollectandexchangedata

LHD:Load-Haul-Dumpminingvehiclethatissimilartoafront-endloader

Metocean:thecombinationofwind,wave,andclimateconditions

MobileComputing:human–computerinteractionusingacomputertransportedduring

normalusage

NSERC:NaturalSciencesandEngineeringResearchCouncilwhichfundsacademic

researchinCanada

PeakOilDemand:correspondstothetimewhentheglobaldemandforoilreachesits

maximumlevel,afterwhichdemanddecreases

Production:theprocessofextractingmineralsandoilandgasresources

R&D:ResearchandDevelopment

RemotelyOperatedVehicle(ROV):atetheredunderwatermobiledevicethatis

unoccupied,highlymaneuverable,andoperatedbyacrewaboardavessel

Robots:computer-programmablemachinesthatcantaketheplace,partiallyorfully,of

humanstocarryoutacomplexseriesofactionsautomatically

SeismicSurvey:generatingsoundwavesandmeasuringtheirreflectionsfromwithin

thesurfaceoftheearthinordertobuildupanimageofthesubsurface

SmallandMedium-sizedEnterprise(SME):inCanadaasmallormedium-sized

enterpriseisabusinessthathaslessthan500employees,with98%ofSMEshaving

fewerthan100employees

SupplyChain:systemoforganizations,people,activities,information,andresources

involvedinmovingaproductorservicefromsuppliertocustomer

Tele-operation:operationofasystemormachine,typicallyarobot,atadistance

Transportation-as-a-Service(TaaS):describesashiftawayfrompersonallyowned

modesoftransportationandtowardsmobilitysolutionsthatareconsumedasaservice-

alsoknownasMobility-as-a-Service(MaaS)

UpstreamOilandGasIndustry:companiesthatsearchforpotentialundergroundor

underwatercrudeoilandnaturalgasfields,drillexploratorywells,andsubsequently

drillandoperatethewellsthatrecoverandbringthecrudeoilorrawnaturalgastothe

surface

ValueChain:setofactivitiesthatafirmoperatinginaspecificindustryperformsin

ordertodeliveravaluableproductorserviceforthemarket

WearableTechnology:digitaltechnologywornbyahumaninordertocarryouta

particularfunction,suchastocollectdataorprovidesensoryaugmentation

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ExecutiveSummary

Industriesbasedonextractiveresources,primarilymineralsandoilandgasresources,

areimportanttotheCanadianeconomyintermsoftheircontributionstoemployment,

grossdomesticproduct(GDP),capitalexpenditure,construction-relatedinvestment,

revenuestogovernments,exportvalue,andinvestmentinCanadiancompanies.

Extractivesindustriesaretrulypan-Canadianandimportantfrombothanational

perspectiveandaregionalperspective,especiallyforresourceregions.Thecompanies

aremultinationalinscope,withglobalworkforces,supplychains,andconsumersof

theircommodities.

Asmoreaccessibleresourcesarefullyexploited,therearetechnicalandscientific

challengestobeovercometodigdeeperorextractlowergrademineralsandtodrillin

moreremoteorchallengingareastoproduceoilandgas.Therearealsochallenges

arisingfromthecomplexityoftheunderlyingeconomicsofextractiveindustries,which

areexacerbatedbyprotractedcommoditypricevariability,interspersedwithoccasional

andsurprisingpriceshocks.Thesedifficulteconomicsarefurthercompoundedbythe

increasingchallengesresultingfromsatisfyingtheperceivedandrealentitlementsof

variousstakeholders.Thereisarequirementtoachieveandmaintainwin-win-win

relationshipsamongcommunities,governments,andindustrystakeholders,allofwhich

are`invested’inresourcedevelopmentprojectsandhaveincreasedexpectationswith

respecttoreturns.

Extractiveindustries,likemanyothersectorsoftheeconomy,willbesignificantly

impactedbydisruptivedigitaltechnologies,variouslyreferredtoasdigitalization,

Industry4.0,andtheFourthIndustrialRevolution.Thesetechnologiesincludeadvanced

robotics,bigdataandanalytics,artificialintelligence,mobilecomputing,wearable

technology,internetofthings(IoT),andautonomousandnear-autonomousvehicles.

Whilethereiswidespreadbeliefthatdigitalizationwilltransformextractiveindustries,

thetimelinesandconsequencesforsuchatransformationarelessclear.

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Lookingforward,extractiveindustriesoperatinginCanadamustaddresschallengesby

developing,adopting,integrating,andapplyingrecentandemergingdigital

technologies.Itisonlythroughinnovationthatthechallengesexperiencedbyextractive

industriesinrecentyears,andwhichareexpectedtopersistorworsenintothefuture,

canbeaddressedsuccessfully.Inadditiontohelpingtoaddresschallenges,anembrace

ofdigitaltechnologycouldleadtonewandcurrentlyunknownopportunities.

Forbothminingandoilandgascompanies,thefuturecouldincludeheavilydigitalized

assets(i.e.,oilrigs,miningequipment),capableofhighlevelsofautonomyandinter-

assetcooperation,operatingwithinchallengingnaturalenvironments(e.g.,adeepor

remotemineorfaroffshoreoilfield)monitoredusingadvancedembeddedandremote

intelligentsensortechnology.Thesedigitalizedassetsandintelligentsensor

technologiescouldbeconnectedviainnovativecommunicationsystemstodigital

enterprises(i.e.,missioncontrolcentresandotherremotecentresofexcellence),where

expertswouldmonitorproductionoperationsremotely,interactviatechnologywitha

limitednumberoffieldworkersatproductionsites,andperformcomputationalanalysis

ondatacollectedfromremoteoperationstooptimizeproduction,equipment

maintenance,andassetutilization,whilesimultaneouslyensuringregulatory

compliance.Thedigitalenterprisecouldbepartofadigitalworldinwhichtechnology

wouldbedeployedtoimprovesupplychainmanagementandresourcemanagement,to

balancesupplyanddemandforproduct,tomanagecontractingamongprojectpartners,

andtohelpsecureandmaintainpublicconfidence.

Globally,digitaltechnologywilltransformextractiveindustries.ForCanada,this

providesanopportunitytoleadindevelopingandcommercializingtheenabling

technologies,inintegratingthesetechnologiesintoglobaloperations,andin

consideringthebroadersocio-economicandregulatoryconsequencesofdigitalization

oftheseextractiveindustries.

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DigitalizationofextractiveindustriesinCanadawillposeopportunitiesandchallenges

foradiverserangeofstakeholders.Inadditiontotheoperatingandsupplyandservice

companies,individualsandcommunitieswillbeaffectedbydigitalization,aswill

governmentsandinstitutions(e.g.,educationsystems,regionaldevelopment

organizations,unions,andregulators).Successfullyaddressingtheopportunitiesand

challengeswillrequireearlyandeffectiveengagementofallstakeholdersthatis

informedbyrealisticdigitalizationscenarios,timeframesfortheirimplementation,and

assessmentofthebroaderissuesandimpacts.

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(1.0)BriefIntroductiontoDigitalization

Disruptivedigitaltechnologies,includingadvancedrobotics,artificialintelligence,

mobilecomputing,internetofthings(IoT),andautonomousandnear-autonomous

vehicles,wereassessedtobeamongthetop12emergingtechnologiesthatare

expectedtotransformpeoples’livesandthenatureofwork(Manyika,Chui,Bughin,

Dobbs,Bisson,&Marrs,2013).Variouslyreferredtoasdigitalization,Industry4.0,and

theFourthIndustrialRevolution,suchtechnologieswilllikelybeubiquitous,with

applicationsacrossindustrialandconsumermarkets(BDC,2017).

Asdigitalizationisadvancedandappliedacrossindustries,thedevelopmentofthese

digitaltechnologieswill,bynecessity,includediverseplayers,manyofwhichhavenot

traditionallybeenpartofthesupplychainforlargeindustry.Thecompetitiveadvantage

offirms“mighterodeorbeenhancedadecadefromnowbyemergingtechnologies—

howtechnologiesmightbringthemnewcustomersorforcethemtodefendtheir

existingbasesorinspirethemtoinventnewstrategies”(Manyika,Chui,Bughin,Dobbs,

Bisson,&Marrs,2013).ThisistrueforCanada’snaturalresourceindustries,in

particular`extractive’industriesbasedonmineralandoilandgasresources.

(2.0)Canada’sExtractiveIndustriesandDigitalization

Canada’snaturalresourceindustriesareimportanttotheCanadianeconomyintermsof

theircontributionstoemployment,grossdomesticproduct(GDP),capitalexpenditure,

construction-relatedinvestment,revenuestogovernments,exportvalue,and

investmentinCanadiancompanies(NRCan,2017a).Furthermore,theyhelpCanada

contributetowardmeetingtheprojectedglobaldemandforenergy.Onanannual

basis,theeconomicimpactsofnaturalresourceindustriesincludeapproximately1.75

milliondirectandindirectjobs(~11%ofnationalemployment),16%ofGDP,38%of

non-residentialcapitalinvestment,$25billioningovernmentrevenues,$201billionin

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exportvalue,and$582billioninpubliclytradedcompanyvalue.Themajorityofthese

contributionsareassociatedwithdevelopmentofmineralandoilandgasresources.

AccordingtoStatisticsCanada,“mining,quarrying,andoilandgasextraction”are

amongthetopcontributorstoCanada’sGDP,withacombinedannualcontributionof

approximately$150billionandalmost25%growthinthe12monthspriortoMay2017

(StatisticsCanada,2017a).In2016,therewereapproximately260,000peopledirectly

employedintheseextractiveindustries(StatisticsCanada,2017b).Thereismineral

productioninallprovincesandterritoriesofCanada,withOntario,Quebec,andBritish

Columbialeadingintermsofproductionvalue,followedbySaskatchewan,Alberta,and

NewfoundlandandLabrador(NRCan,2017b).Thereisoilandgasproductioninseven

Canadianprovinces,includingNewfoundlandandLabrador,NovaScotia,New

Brunswick,Manitoba,Saskatchewan,Alberta,andBritishColumbia,withprospectsfor

resourcesinNorthernCanada,Quebec,andPrinceEdwardIsland(CAPP,2017a).These

industriesaretrulypan-Canadianandimportantfrombothanationalperspectiveanda

regionalperspective,especiallyforresourceregions.Thecompanies,however,are

multinationalinscope,withglobalworkforces,supplychains,andconsumersoftheir

commodities.

Whileitisimportanttorecognizethesignificanceofextractiveindustriestoallregions

ofCanada,itisequallyimportanttoappreciatethatthefutureoftheseindustries

entailsconsiderableuncertainty.Asmoreaccessibleresourcesarefullyexploited,there

aretechnicalandscientificchallengestobeovercometodigdeeperorextractlower

grademineralsandtodrillinmoreremoteorchallengingareastoproduceoilandgas.

Therearealsochallengesarisingfromthecomplexityoftheunderlyingeconomicsof

extractiveindustries,whichareexacerbatedbyprotractedcommoditypricevariability,

interspersedwithoccasionalandsurprisingpriceshocks.Thesedifficulteconomicsare

furthercompoundedbytheincreasingchallengesresultingfromsatisfyingtheperceived

andrealentitlementsofvariousstakeholders.Thereisarequirementtoachieveand

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maintainwin-win-winrelationshipsamongcommunities,governments,andindustry

stakeholders,allofwhichare`invested’inresourcedevelopmentprojectsandhave

increasedexpectationswithrespecttoreturns.

Ingeneral,miningandoilandgascompanieshaveadoptedaconservativeapproachto

investinginresearchanddevelopment(R&D)inCanadacomparedwithotherindustrial

sectors(ResearchInfosource,2017a).Bywayofillustration,withtheexceptionof

CanadianNaturalResourcesLimited,therewerenooilandgasorminingcompaniesin

thetop15corporateR&DspendersinCanadain2016.Inaddition,foralloilandgas

andminingcompanies,theR&Dexpendituresasapercentageoftotalrevenueswere

amongthelowestofanyindustries.Inmanycases,theirR&Dexpenditureswerelower

byafactorof10ormore.ItisimportanttoappreciatethatweakR&Dinvestmentby

extractiveindustriesinCanadapredatesthecurrentdepressionincommodityprices.In

fact,thepositionofextractiveindustriesamongCanada’scorporateR&Dspenders

remainssimilartotheirpositionin2010(ResearchInfosource,2010).

Thereisalsoconsiderablediscussionabouttheappetiteforminingandoilandgas

companiestoadoptnewtechnologies.Canada’sminingindustrywasoncethoughttobe

aworldleaderintermsofembracingnewtechnology.Forinstance,a2001report

preparedfortheMiningAssociationofCanadanoted“theCanadianminingindustryhas

undergoneaprofoundtransformationtoahigh-techindustryandisnowoneofthe

world’smostdynamicandtechnologicallyadvanced.Withitsstronglinkstootherhigh

technologyindustriesbothasauseroftheirtechnologiesandasasupplierofinputs,it

isadrivingforceinCanada’snewknowledge-basedeconomy”(GlobalEconomics,

2001).Fastforwardto2017whenBarrick’sChiefInnovationOfficer,reflectingonthe

roleofdigitaltechnologyintheminingindustry,stated“theminingindustryistheleast

digitizedindustryintheworld.Itisalsoanindustrythathasbeenslowtoadoptchange

andinnovation”(Barrick,2017).Arecentreviewofthestart-of-the-artofrobotic

miningtechnologyalsonotedthat“theresourceindustryhasaconservativehistoryand

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theimplementationofnewtechnologiesandprocessesmustoftenovercomesignificant

resistancetochange”(Marshall,Bonchis,Nebot,&Scheding,2016).Thisresistanceis

thoughttoresultfrom“skepticismabouttechnologyandfearoflosingone’sjob”.

Someanalystsbelievetheslowpaceoftechnologyadoptionisnotduetoalackof

receptivitytonewtechnology,sincethereareexamplesof`digitalmining’datingback

tothe1950s.Rather,practicalissueschallengeminingcompanies,includingthe

perceptionofahighcostofimplementation,poorly-definedbusinesscases,andalack

ofdigitaleducationandunderstanding(EY,2017a).Others,however,feelthemining

industryissimplycontenttoutilizethesametechnologyandprocessesthatare

standardacrossthesector(Koven,2014).Preliminaryworktocomparetheadoptionof

digitaltechnologyinCanada’sagricultureandpotash/uraniumminingindustries

suggestedagriculturefollowsstandardadoptiontheorywhenitcomestodigital

technology,whilethatisnotthecaseforthepotash/uraniummining(Phillips&Wixted,

2017).

AsdiscussedbySteenetal,thenatureofinnovationintheminingsectormaybe

“differentfromotherindustries”andwouldnotbe“wellcapturedbytraditional

innovationmeasuressuchasR&Dexpenditureandpatents”(Steen,Macaulay,Kunz,&

Jackson,2017).Innovationtendstooccurinthesupplychains,andunderstandingthe

relationshipsbetweenminingcompaniesandthesupplychainsisimportantfor

understandinghowinnovationoccursintheminingsector.

Concernshavealsobeenexpressedwithrespecttotheadoptionofnewtechnologiesby

theoilandgasindustry.Inparticular,itwassuggestedthe“speedofadoptionlags

behindotherindustriesthataresubjecttothesamerashofsafety,legal,commercial

andfinancialpressuresfacedbyenergycompanies”(LR,2015a).Others,however,see

thecurrentlow-priceoilenvironmentasprovidingtheimpetusforoilandgas

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companiesthathavebeenslowtoadoptthelatestinnovationstoembraceinnovative

technology-basedsolutions(Constas,2017).

Thereareheightenedexpectationsrelatedtothehealth,safety,andenvironment(HSE)

performanceofextractiveindustriesandtotheachievementofshared-valuesamong

extractiveindustriesandthecommunitiesandregionswheretheseresourcesare

exploited.Bytheirnature,extractiveindustriesmodifytheenvironmentinwhichthey

operate,oftenimpactingtheenvironmentnegatively.Withgrowingpoliticalandpublic

awarenessaboutanthropogenicclimatechangeandtheneed,fromcountriesto

individuals,tocountertheeffectsofclimatechange,extractiveindustriesarechallenged

tominimizethenegativeenvironmentalimpactsfromtheiroperations.

Increasedconcernaboutriskstopublichealthandworkersafetyfromtheprocesses

usedbyextractiveindustrieshavefurtherraisedthestakesforminingandoilandgas

companies.Addressingpublicconcernabouttheimpactsontheenvironment,public

health,andworkersafetywillbeaprerequisiteforsecuringthepublicconfidence

requiredtoinitiatefutureresourcedevelopmentprojects,toincreaseproductivityand

theefficiencyofexistingoperations,andtobecompetitiveandwell-positionedto

exportCanadiancommoditiesintovolatileworldmarkets.Moreover,thiscannotbe

achievedbya`business-as-usual’approach.Forexample,cost-cuttingasatacticfor

achievingproductivityimprovementisthoughttohavereachedapointofdiminishing

returnsfortheoilandgasindustry(Farah,2016).AsproposedbyE&Y,“thepresent

lowoilpriceisdisruptivebynatureandcallsformorethanjustrapidreductionofcost

throughdownsizingorbudgetcutsacrosstheorganization”(EY,2015b).

ExtractiveindustriesoperatinginCanadamust`disrupt’thewaytheydobusiness.This

couldincludethedevelopment,integration,andcreativewide-spreadapplicationof

recentandemergingdisruptivetechnology,particularlydigitaltechnology.Itisonly

throughinnovationthatthechallengesexperiencedbyextractiveindustriesinrecent

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years,andwhichareexpectedtopersistorworsenintothefuture,canbeaddressed

successfully.

Inadditiontohelpingaddresschallenges,anembraceofdigitaltechnologycouldleadto

newandcurrentlyunknownopportunities.Adigitaltransformationcouldgiveriseto

potentialbenefitsofcapitalizingonnewrevenueopportunities,loweringcosts,and

improvingefficiency(Geissbauer,Vedso,&Schrauf,2016).Digitaltechnologymayalso

helpextractiveindustriesmeetcorporatesocialresponsibilityexpectations(Roscoe,

2015).Forexample,digitaltechnologymayenableimprovedtraceabilityofthesocial

andenvironmentalimpactsofglobalsupplychainsforextractiveindustries.

Furthermore,useofdigitaltechnologycouldhelpincreasetransparencyandimprove

communicationsamongdiversestakeholders.

Communities,companies,andgovernmentsthathavetraditionallybenefitted(e.g.,

employment,royalties,taxes,revenues,andprofits)fromCanada’sextractiveresources

needtounderstandhowdisruptivetechnologiescouldaffectthefuturebenefitsthat

maybederivedfromexploitingtheseresources.Thequestionaboutwhoisbenefitting

fromresourceextractionprojectsisanemergingissueforresourcedevelopment,with

concernaboutdecouplingvaluecreationfromthesiteofproduction.Forexample,in

thecaseofemploymentbenefitsinminingregions,theintroductionofremote

operationscentres,dependingontheirlocations,couldleadtoanurbanizationofthe

miningworkforce,withareductioninruralemploymentopportunities(McNab,Onate,

Brereton,Horberry,Lynas,&Franks,2013).Itisalsoimportanttounderstandand

acknowledgethatdigitalizationhasthepotentialtofacilitateagreaterdecouplingof

valuecreationfromthesiteofproductionand,asaresult,furtherchangethenature

anddistributionofbenefits.

Canada’sextractiveresourcesareexploitedbymultinationalcorporationsthatrequirea

competitiveadvantagetooperateinCanada.Anycompetitiveadvantagearisingfrom

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digitalizationthatmaybenefitCanadawilldependonanumberofcriticalfactors,

includingacorporateculturethatsupportsinnovation;effectiveandefficientregulation

thatcanaccommodatetechnologicalchange;accesstohighlyqualifiedpeoplewhocan

supportadigitalizedindustry;andinnovativewin-win-winrelationshipsamong

communities,governments,andindustry.Technologyalonewillnotprovidethe

competitiveadvantagethatwillkeeptheseindustriesoperatinginCanada.

(3.0)MiningContext

Canada’sminingindustry“suppliestherawmaterialsneededtoproducemanyofthe

consumergoodswerelyoninourdailylives,aswellasthoseofthefuture,from

utensilsandhandtoolstosmartphonesandelectriccars”(NRCan,2017b).TheMining

AssociationofCanadareportedtheCanadianminingindustryprovidedover550,000

directandindirectjobs,contributed$56billiontowardsGDP,andaccountedfor19%of

thevalueofgoodsexportedfromCanada(MAC,2016).

Overthepast10years,Chinaemergedasthesinglelargestconsumerofmanybase

metals(Armbrecht,2015).Thesebasemetalsareessentialforglobalindustrial

productionandconstruction,withcommoditypricesservingasanimportantindicator

ofglobaleconomicchanges(Matsumoto,2015).Thepricesforironoreandbasemetals,

includingcopperandnickel,generallydeclinedbetween2011-2016,butshowedsome

modestincreasesin2017(InfoMine,2017).Concernsaboutwhethertherewouldbe

sustaineddemandforbasemetalsbyChina,coupledwithincreasesinsuppliesfrom

developingcountries,arethoughttobebehindthedeclineinbasemetalpricesafter

2011(Matsumoto,2015).Copper,however,ralliedattheendof2016basedonan

increaseinimportsbyChinaand,followingtheU.S.election,basedonthemistaken

beliefthatthePresident-elect’s$500billioninfrastructureplanwouldsignificantly

increasedemand(Jamasmie,2017).Whilepricesforpreciousmetals,suchasgold,are

subjecttodifferentforcesthanthoseinfluencingbasemetalprices,goldpriceshave

declinedsignificantlysince2011(InfoMine,2017).

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In2016,Canada’sprimarymineralproductsbyproductionvalueincludedgold,copper,

potash,ironore,coal,andnickel,representing60%ofthetotalmineralsproduction

value.Commoditypricesandproductionvolumes,however,canchangerapidly,as

illustratedbysignificantchangesinproductionvaluesbetween2015and2016for

Canada’sprimarymineralproducts.Formetalproduction,ironoreandgoldproduction

valuesincreasedbyover30%andalmost9%,respectively.Nickelproductionvaluewas

downapproximately16%,whilecopperproductionvaluewasdownbyjustover9%.

Metalproductionvolumeswerecomparablebetween2015and2016.Theproduction

volumeofpotashdeclinedbyjustover11%,whiletheproductionvaluedecreasedby

almost37%.Canadaalsoaspirestobeamajorproducerofrareearthelementsthatare

increasinglyimportantformanufacturingcomponentsanddevices,suchaswind

turbines,hybridandelectricvehicles,batteries,medicalimagingequipment,speciality

glass,lasers,andcomputers(NRCan,2016).

Ingeneral,mineralpricesarebasedonacomplexsetoffactors,includinggeopolitics,

speculativeinvestment,andsupplyanddemand,inparticulartheevolvingdemandsof

emergingeconomies.Asaconsequence,pricesarepronetoshocksandcyclesresulting

inlong-termuncertaintywithintheglobalminingindustry.Thedownturninmineral

pricesbetween2011-2016forcedtheminingindustrytodrivedowncoststothepoint

wherefurthercost-cuttingwouldresultindiminishingreturns(Deloitte,2017).

Embracingnewtechnologies,manyofwhichwouldbefoundbeyondthemining

industry,couldenablesignificantproductivitygainsbyminingcompaniesinthefuture.

AsnotedbyMcKinsey,lowergradeoresandlongerhauldistanceshavecontributedto

decreasingproductivitylevelsacrossworldwideminingoperations,withadropbyas

muchas28%over10years(Durrant-Whyte,Geraghty,Pujol,&Sellschop,2015).Other

factorscontributingtothedeclineinproductivityincludeadecreaseinlabour

productivityduetoinexperiencedteams,highturnover,anagingworkforce,andafocus

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onvolumeratherthanefficiency;adecreaseincapitalproductivityduetopoor

equipmentutilizationandalackofinnovativetechnology;andafailuretocapitalizeon

economiesofscaleasminesexpanded,leadingtoincreasedoverheadcostsand

managementinefficiencies(EY,2017b).Ingeneral,therehasbeenlittleincentiveto

investininnovationinitiativesduringperiodsofhighcommoditypricesandlittle

capacitytodosoduringtimesoflowprices.

Forsomeminerals,extractiondependsonbeingabletomineefficientlyandsafelyat

greatdepth.SomeofthedeepestminesintheworldaregoldminesinSouthAfricaat

depthsofapproximately4kilometres(WorldAtlas,2017).Canada’sdeepestminesare

theKiddCreekcopper/zincmineinTimmins,Ontarioatadepthofalmost3kilometres,

andtheCreightonnickelmineinSudbury,Ontarioatadepthofapproximately2.6

kilometres.Deepminingexacerbatestheefficiencyandsafetychallengesfor

undergroundmining.InthecaseofdeepmininginSudbury,atdepthsbelow2.5

kilometrestherearechallengesfromheatandrockstressconditionsthatcannegatively

impactonthesafetyandstabilityoftheundergroundenvironment,requiringincreased

ventilationandotherinfrastructuretosupportpeopleandequipment(VellaH.,2017).

Themovetowardsourcesofrenewableenergyraisestheprospectforseabedminingto

meetthedemandformineralsrequiredtomanufacturerenewableenergysystems.For

example,highefficiencysolarpanelsaremanufacturedusingtellurium(DOE,2016)

(Shukman,2017).OnetelluriumdepositneartheCanaryIslandsisthoughttorepresent

one-twelfthoftheworld’ssupplyatconcentrationsvastlyhigherthanland-based

deposits.TheInternationalSeabedAuthority,ofwhichCanadaisamemberstate,is

developingaMiningCodetosupporttheregulationofmarinemineralsprospecting,

exploration,andexploitationinseabedareasoutsideofnationaljurisdiction(ISA,2017).

Developmentandapplicationofautomationtechnologiesfeatureprominentlyina

Norwegianpilotprogrammeondeepseamining,particularlyinrelationtomineral

17

explorationandextraction(NTNU,2017).Automationcouldhelpminimizethenegative

environmentalimpactsofsuchindustrialactivity.

(3.1)DigitalizationinMining

Ithasbeenproposedthatdigitalizationwouldenableabreakthroughinimproving

productivity,safety,andenvironmentalperformancefortheminingindustry(Arnoldi,

2017).Initspredictionofthetoptrendsfor2017fortheminingindustry,Deloitterated

thedigitalrevolutionamongthetopissueswiththepotentialtotransformtheindustry

(Deloitte,2017).Whiletheminingindustryhasadoptedadvancedmineplanningand

modelingsoftwaretoolstooptimizeminedesignsandproductionoperations,these

toolstendtogeneratedesignsthatarebasedonastandardsuiteofminedesignsor

thatuseexistingoperatingequipmentandmethods.

Formanyyears,undergroundminershavebeenworkingwithtele-operateddrillingand

loadingmachines(Cosbey,Mann,Maennling,Toledano,Geipel,&Brauch,2016).Early

advancesincludedtele-operatedLoad-Haul-Dump(LHD)vehiclesthatutilizedline-of-

sightremoteoperation.TheoperatorstoodatasafedistancefromtheLHDasitwas

beingloadedunderunsupportedground.Inthisapplication,theoperatorusedachest-

mountedconsoletoguidetheLHDthroughtheloadingprocessandinbackingaway

fromtheorepile.TheoperatorwouldthengetbackontheLHDandmanuallydrivethe

vehicletoitsunloadingpoint,unloadthevehicle,andreturntotheloadingpointwhere

thetele-operatedloadingprocesswasrepeated(Caterpillar,2017).Marshalletal

providedanoverviewofmodernminingpracticeandastate-of-the-artreviewofmining

roboticsforbothsurfaceandundergroundminingoperations(Marshall,Bonchis,Nebot,

&Scheding,2016).

Inlate1990sandearly2000s,CanadianindustryandacademiawereleadersinR&D

relatedtotele-operatedminingwiththesupportofPRECARN,anindustryconsortium

designedtotranslateadvancedresearchinroboticsandintelligentsystemsinto

18

practicaluse(TheScientist,1987).In1998,CanadiannickelminingcompanyInco

articulatedavisionforautomatedminingwhereby“fromanylocationintheworld,a

tele-operatorcaninstructintelligent,automatedminingequipmenttoexecutetheir

missions.Iftheequipmentencountersanunexpectedsituationbeyonditsabilityto

manage,itwillaskforhelp.Thetele-operatorwillrespondimmediatelytorequestsfor

helpfromawiderangeofintelligent,automatedminingequipment”(Inco,1998).

WiththesupportofPRECARN,Incoalongwithtechnologyprovidersandacademic

partnerspursuedaseriesoftechnologydevelopmentprojectstoautomatevarious

typesofminingvehiclesandoperationsinordertoimproveproductivity(Werniuk,

2001).In2007,OricaLtd.,incollaborationwiththeCommonwealthScientificand

IndustrialResearchOrganisation(CSIRO)fromAustraliaandC-COREfromCanada,

demonstratedtele-operationofanexplosiveemulsionloader(C-CORE,2007).Dueto

thetechnologylimitationsofthetime,theseprojectsgenerallyfocusedonsingle-point,

ratherthansystem-wide,solutions.Today’stechnologycansupportmoreradical

innovation,targetingtheentirevaluechainandprovidingthegreatestprospectfor

transformationinproductivity.PRECARNwasalsoinstrumentalinsupportingindustry-

universitycollaborationrelatedtohuman-machineinteractionforheavyequipment,

leadingtothespin-offofMotionMetricsInternationalfromtheUniversityofBritish

Columbiain2000(ICICS,2010).Today,MotionMetricsInternationalcontinuesto

developmachinevisionandsensorsystemsdirectedtowardimproving“safety,

efficiency,andproductivityinmining”(MMI,2017).

Duringthisperiod,therewerealsoresearchchairsatCanadianuniversitiesfocusedon

miningautomation,includingtheNSERC/NorandaChairinMiningAutomationatEcole

PolytechniquedeMontrealandaCanadaResearchChair(CRC)inRoboticsandMine

AutomationatLaurentianUniversity.PenguinASI,atechnologycompanybasednear

Sudbury,Ontarioanddevelopingautomationtechnologies,isaspin-offfromthework

oftheCRCatLaurentian(MiningGlobal,2014).

19

Otherrecentadvanceshavebeendemonstratedforundergroundmineoperations,

includinglocatingminersonthesurface,orawayfromtheminesite,andoutofdanger,

withadvancedhuman-machineinterfacetoolsforremotesupervisionandcontrolof

multiplehighly-automatedminingrobotshavingauto-pilotandnavigationcapability.

Thecurrentstate-of-the-artinvolvesautomationofdiscretephasesoftheminingcycle

ratherfullautomationoftheminesite(Watkins,2017).

InSeptember2016,BarrickandCiscoannouncedanambitiouspartnershiptointegrate

digitaltechnologyacrossallofitsmineoperationsatCortez,Nevada(Barrick,2016).

MiningandconstructionequipmentmanufacturerAltasCopcoofferstele-operatedand

autonomousvehicles,withtheprimarydriversforautomationbeingsafety,

productivity,qualifiedlabor,andproductioncosts(AtlasCopco,2015).Sandvik,another

manufacturerofautomatedLHDs,reporteda30%improvementinhaulageproductivity

throughuseoftheirsystems(Sandvik,2017).Therehavebeenreportsofconsiderable

advancesinthedevelopmentandapplicationofautonomoustrucksforsurfacemining

applicationsatBHPBillitonandRioTintomines,andatSuncoroilsandsoperations

(Simonite,2016)(Gershgom,2016)(Topf,2016).

Inthefuture,manydirectproductionjobsinminingcouldbecarriedoutfromoperation

centresdistantfromproductionsites.Suchoperationscouldbesaferbecauseof

reducedexposureofworkerstodangerousandinhospitableenvironments,with

increasedproductivity,lowerenvironmentalimpact,reducedenergyrequirements,and

lowercapitalandoperatingcosts.Forexample,whilelocatingequipmentoperatorsata

distancefromproductionsitesmaydecreaseproductivitybyremovingsomeofthecues

(i.e.,visual,audible,tactileandolfactory)theyhaveattherockface,thereareefficiency

gainsfromsignificantlydecreasedtransittimestotheproductionsites.

20

Overall,disruptivetechnologies,suchastheinternetofthings(IoT),bigdataand

analytics,automatedvehicletechnology,robotics,advancedimagingandsensing

systems,wearablecomputing,andotherintelligentsystemstechnology,couldbecome

commonplacewithintheminingindustry.Theirwidespreadapplicationwouldfacilitate

greaterconnectivityandautonomyofassets,withincreasedamountsofdatacollected

andprocessedinreal-timetoaidinplanning,optimization,andexecutionofoperations.

Thesetechnologiescouldhelpmanageandcoordinatevariousmanually-operated,

remotely-controlled,semi-automated,andautomatedvehiclesandmachineryworking

simultaneouslyataproductionsite.

Whilethebenefitsofemergingdigitaltechnologiesmayberealizedbythemining

industry,thiswouldrequirecompaniestoembraceIndustry4.0,achoicethat“couldbe

themostimportantstrategicdecisionthatcompaniesmake”(Yeates,2017).Currently,

fewerthan10%ofminingcompaniesarethoughttohavedevelopedadigitalstrategy.

(4.0)OilandGasContext

Canada’soilandgasindustryisthefifthlargestproducerofoilandgasintheworld,

withsignificantresourcesexportedtointernationalmarkets(NRCan,2017c).Canada

ranksthirdintermsoflargestcrudeoilreserves.Thecontributionofoilandgasto

Canada’sGDPwasestimatedtobe7.5%,oraround$135billionannually(Ivey,2016).

TheCanadianAssociationofPetroleumProducers(CAPP)estimatedthedirectand

indirectemploymentinCanada’soilandgasindustrywasapproximately425,000people

(CAPP,2017b).Furthermore,everyprovinceinCanadabenefittedfromthedirectand

indirectjobscreatedbytheoilandgasindustry,withOntario,aprovincecurrently

withoutoilandgasproduction,experiencing12%oftheemploymentimpact(CERI,

2017).Thereisconcerntherecentlossoftalentfromtheoilandgasindustrytoother

industriesasaresultofthedownturninoilpriceswillmakeitdifficulttoattract

qualifiedemployeeswhentheoilandgasindustryrebounds.Thecontributionsbyoil

21

andgasworkerstoGDPsignificantlyexceedsthenationalaverageofGDPcontributions

fromworkersinotherindustries(Ivey,2016).

Aswithprojectionsofdemandformineralresources,thereisalsoconsiderable

uncertaintyanddebateregardingthelong-termdemandforpetroleumresources.

Currently,gasolineconsumptionforautomobilescountsforalmost50%ofpetroleum

consumption(EIA,2017).Disruptivetechnologiesandchangesindriverhabits,suchas

improvedelectricvehicles(EVs)capableofgreaterdistances,autonomousvehicles,and

Transportation-as-a-Servicemodelsofpersonaltransportation,couldleadtoa

reductioninfuelconsumptionbyownersoflightvehicles,ascoulddecisionsby

governmentstobanorlimitthenumberofvehiclesusinginternalcombustionengines.

TheUnitedKingdomandFrancerecentlyannouncedbansonthesaleofnewvehicles

withinternalcombustionengines(ICEs),effective2040(UK,2017)(Chrisafis&Vaughan

,2017).Volvoalsoannouncedthat,effective2019,allofitsnewvehicleswouldbe

hybridorelectricvehicles(MarshallA.,2017b).Ithasbeenproposed,however,that

theremaybeinsufficientdifferentiationbetweentheperformanceofelectricvehicles

andconventionalICE-basedvehiclestocauseconsumerstomoveawayfromICE-based

vehiclesinsignificantnumbers(TertzakianP.,2017a).Thedecisionsbysomecountries

toannouncebans,therefore,areattemptstooverridemarketforces.Thisisnotto

minimizetheimmediateimpactofEVsontheoilandgasindustry.Thebansandplans

ofcompanieslikeVolvoarethoughttobeimpactingthe“psychologyofinvestorswho

financeoilassets,servicesandinfrastructure”suchthat“theresultofallthisnext-

decadeconfusionisthatlessmoneyisgoingtobeflowingintotheoilbusiness”

(TertzakianP.,2017b).

Whileoilcompanieshavestartedtodiscussthenotionof‘peakoildemand’,thereis

disagreementamongmajoroilcompanieswithrespecttowhenthiswilloccur.Itis

importanttonotethattherecentdiscussionsaroundpeakoildemandareincontrastto

22

previousreferencesto`peakoil’,whichreferredtothetimewhenmaximumoil

productionwouldbereached,afterwhichproductionwoulddeclinedespitecontinuing

strongdemand(Rapier,2017).Earlierpeakoilconcernspredatedthesurgeinthe

developmentofunconventionaloilresourcesintheU.S.usinghydraulicfracturing

technologyandthepushtowardalternativesourcesoffuel.TheWallStreetJournal

recentlyreportedStatoilandShellareprojectingpeakoildemandwilloccurby2025-

2030,whileExxonandChevrondonotbelievepeakoildemandisinsight(Cook&

Cherney,2017).

Inits2017OutlookforEnergy,ExxonMobilprojecteda25%increaseintheglobal

demandforenergyoverthenext23years,drivenbyanincreaseinpopulationandin

thestandardoflivingindevelopingcountries(ExxonMobil,2017).Thisgrowthwould

bepredominantlyfromIndiaandChina,anditwouldalsobedrivenbya50%increasein

theenergydemandfromcommercialtransportationandbynaturalgasreplacingcoalas

afuelsource.BPprojectedasimilarincreaseinglobalenergydemand,withanincrease

by30%overthenext20years,primarilyfromrisingprosperityinemergingeconomies

(BP,2017).IntheBPforecast,thedemandforoilwouldcontinuetogrow,butata

slowerpacethanrecentlyexperiencedandwithdemandgrowthdrivenbynon-

combusteduseofoil.BPalsoprojectedreductionsinfueldemandfromimprovedfuel

efficiencyandelectrificationwouldbeoverpoweredbyincreaseddemandforcartravel

asthemiddleclassgrowsinemergingeconomies.

Regardlessoftheirprojectedtimeframesforpeakoildemand,majoroilandgas

companiesseerenewablesasafastgrowingcomponentoftheenergysectorandare

positioningtheircompaniesinthatspaceaccordingly.Therealsoappearstobea

consensusthatlow-costoilproducerswillhaveasignificantcompetitiveadvantage

duringperiodsofslowdemandgrowth.Withtheanticipatedslowdowninthedemand

foroil,someanalystspredictnaturalgaswillemergeasthedominantenergysource

23

overthenext20years,supplying27%oftheenergydemand,withvariousrenewable

sourcessupplyingapproximately50%(Ambrose,2017)(DNVGL,2017).

Asdiscussedpreviouslyformineralcommodityprices,theworldpriceofoilisbasedon

acomplexsetoffactors,includingsupply,demand,geopolitics,andspeculative

investment.Oilprices,likemineralprices,arepronetopriceshocksandcyclesleading

tolong-termuncertainty.Unlikeoil,however,challengestodatewithtransportation

havelimitedthescopefornaturalgastobeaglobalcommodityandforconvergenceto

aglobalpricefornaturalgas.ThiscouldchangewithLiquefiedNaturalGas(LNG),which

facilitatesmarinetransportationofnaturalgasandrepresentsa“supplysourcemobile

enoughtoplugsupplyanddemandgapsininternationalmarkets”(Bresciani,Inia,&

Lambert,2014).

From2002-2008,theworldpriceforoilsawagenerallysteadyincreasefrom

approximately$25/barreltoahighofapproximately$145/barrelinmid-2008

(Macrotrends,2017).Overthefollowing6months,oilpricesdeclineddramaticallytoa

lowofapproximately$35/barrel.Oilpricesreboundedfrom2009-2011andleveledout

near$100/barreluntilJune2014.ByJan2015,priceshaddroppedtoapproximately

$45/barrel.Inearly2016,thepriceofoildroppedfurthertojustunder$30/barrel,and

inthesecondhalfof2017pricesrosetoapproximately$65/barrel.Thereisdebate

amonganalystsaboutwhethertherecentoilpricechangesarecyclical,ashadbeen

thoughttobethenatureoftheoilindustry,orstructural,correspondingtoaperiod

whenoilpriceswillbelowerformuchlonger(Fattoch,2016).

(4.1)DigitalizationinOilandGas

Withthistumultuousbackdrop,digitalizationoftheoilandgasindustryhasbeen

proposedasanecessaryradicaltransformationoftheindustry(PwC,2016a).Digital

technologiesareseenaskeytotransformingoperationsinordertocreatenew

opportunitiesforprofitsfollowingthelatestperiodofoilpricedecline(Choudhry,

24

Mohammad,Tan,&Ward,2016).Ithasbeensuggestedthatdigitaltechnologyhas

traditionallybeenemployedbytheoilandgasindustryasameansofcostreduction

(PwC,2016a).Itcould,however,providemuchmore,includingenablingnew

approachestooperationsthatwouldallowcompaniestocontinuetoproduce“oiland

gas,butinwaysthatwillbevirtuallyunrecognizable”.

Otherdriversofadigitaltransformationintheoilandgasindustryincludeapushof“oil

andgasoperatorsintonewfrontiers–deeperwaters,moreremotereservoirsand

unconventionalplays–thatwereonceoutofreach”(EY,2016).IntheCanadian

context,digitalizationmaybeessentialfordevelopingdeep-water,far-offshoreoiland

gasresources,suchasthosebeingpursuedbyStatoilandHuskyEnergyintheFlemish

PassBasin,locatedapproximate500kilometresoffCanada’seastcoast(Statoil,2017b)

(Husky,2017).Forsuchfar-offshoredevelopment,itwillnotbepracticaltotransport

thelargenumbersofworkersbackandforthfromproductionplatformsasrequired

usingconventionalapproachestooperations.

AsignificantcollaborationbasedinNorway,whichincludedStatoil,BP,IBM,andother

industryandacademicpartners,wascarriedoutfrom2006-2014withtheobjectiveto

“developnewmethodsandtoolsfor‘integratedoperations’,whichcanbeembeddedin

improvedworkprocessesintheoilcompaniesandenhancedproductsandservices

fromthesuppliers”(CIOPI,2006).In2016,StatoilopenedaJointOperationsCentrein

Bergen,Norwaytoutilizeintegratedoperationsinsupportofsafety,vessel

optimization,emergencyresponse,supplylogistics,andmachineryconditionmonitoring

acrossmultipleoperatingoilfields.PetroleumResearchNewfoundlandandLabrador

(PRNL),anorganizationthatfundsandcoordinatesresearchonbehalfoftheeast-coast

offshoreoilandgascompanies,identifiedintegratedoperationsasapriorityareafor

researchanddevelopmentinvestmentbyitsmembercompanies(PRNL,2017).Inthe

caseofNewfoundlandLabrador,PRNLhighlightedanopportunitytoleverageexpertise

25

locallyinareassuchasoceanandsubseatechnology,remotesensing,andautonomous

underwatervehicles(AUVs).

ArecentreportbyAccenturehighlighteddigitalizationasakeyenablerfortheoiland

gasindustrywithrespecttovaluecreationinthefuture(Accenture,2017).

Digitalizationcouldhelpindustrydealwithincreasingchallengesinattractingtalentand

inmeetinghigherexpectationstoreduceclimatechangeimpacts.Whiletheoilandgas

industryhasadopteddigitaltechnologyasithasmatured,thereisconsiderable

variabilityamongupstreamoperatorswithrespecttotheextenttowhichdigitalization

hasoccurred(PwC,2016b).

Regardlessoftheuptaketodate,digitalizationintheoilandgasindustryisanticipated

tobringstructuralchangessimilarinimpactoncostsandoperationstothatfeltbythe

introductionofhorizontaldrillingandhydraulicfracturing(EndressA.,2017a).Itis

expectedoilandgasoperationswillevolvefromprimarilymanualoperationsrequiring

largenumbersofpeopleonaproductionplatformtomoreautomatedoperations,

whereasmallnumberofhighlytrainedgeneralistsworkonaremoteplatform

connectedtosophisticatedmissionsupportinmuchthesamewayasastronautswork

onthespacestation.

Digitaltechnologycouldenableimprovedreal-timemonitoringoftheoffshore

operatingenvironment,leadingtobetteroperationaldecision-making;lower

operationalrisk;positiveimpactsonhealth,safety,andenvironment;andenhanced

productivity.Inthenearterm(i.e.,3-5years),thetopdigitaltechnologyfocusareas

areanticipatedtoincludebigdata,analytics,internetofthings(IoT),andmobile

devices,whilethesubsequent5-yearperiodisexpectedtoseeafocusonrobotics,

autonomousvehicles,artificialintelligence(AI),andwearabletechnology(Accenture,

2017).

26

Statoilrecentlyarticulatedavisionofbeingaglobaldigitalleaderandoutlineda

roadmapforsevenspecificdigitalizationprojectstobeexecutedunderaDigitalCentre

ofExcellence(Statoil,2017a).ForStatoil,theareasofparticularinterestunderitsdigital

roadmapincludedigitalizationofworkprocesses,advanceddataanalytics,robotics,and

remotecontrol.Similarly,Shellembraceddigitalinnovationwithpriorityareasfor

upstreamoilandgasoperations,including3-Dprinting,robotics,advancedanalytics,

andhighperformancecomputing(Shell,2017a).ForBP,artificialintelligencecould

makeitpossibleto“combinedatasetsaboutareassuchasflowratesandpressuresand

equipmentvibrationwithdatafromthenaturalenvironment,suchasseismic

informationandoceanwaveheight,totransformthewaywerunandoptimizeour

operations”(BP,2016a).Chevronseesautomationoftheiroperations,generating

betterdata,andtranslatingthatdataintousefulinformationasenablingthecompany

to“operatemoresafely,reliablyandefficiently;reducecosts;recovermoreresources;

andbettermanagerisks”,therebyhelpingtorealizethepotentialvaluefrombillionsof

dollarsofassetsacrossthecompany(Chevron,2017).

Remotecontrolofoilproductionsystemsisnotnew.In1975,Exxondemonstrated

remotecontrolofasubmergedproductionsystemintheGulfofMexico(NewScientist,

1975).Modernremotedrillingoperations,whichutilizedistributedsensors,high-speed

communications,anddata-miningtechniquestofacilitateaccesstodeeper,more

remote,andmorecomplexresources,havebeendemonstratedoverthelastdecade

(Leber,2012).Chevronestimatedsuchtechnologycouldleadtoproductivity

improvementsof8%andrecoveryimprovementsof6%(Chevron,2017).Collaborative

workenvironments,whichutilizehigh-qualityvideoconferencing,smartwells,reservoir

surveillancesolutions,fibreoptics,andreal-timeproductionmonitoring,are

commonplaceintheoilandgasindustry(Shell,2017b).Thistechnologyallowsfield

workerstointeractwithspecialistcolleagueswhoremotelymonitorfieldconditionsin

ordertooptimizeoperations.ThePerdidoprojectintheGulfofMexicowasShell’sfirst

fullyintegrateddigitaloilfield(Perrons,2010).

27

Therearealsoexamplesofrobotic-typesystemsbeingusedwithintheupstreamoiland

gasindustry.Theseincludetele-operated“ironroughnecks”whichallowdrillersto

handledrillingoperationsremotelyaspipesegmentsareconnectedordisconnected

automatically,increasingthesafetyandefficiencyofaoncedangerousjob(RIA,2017).

Thisequipmentoperatesinmuchthesamewayasthetele-operatedLHDdescribedfor

theundergroundminingindustry.Schlumberger,amajoroilandgasserviceprovider,

offersarangeofroboticandautonomousvehicleservicesrelatedtodatacollectionin

theoffshoreenvironment(Schlumberger,2016).Applicationsincludehydrocarbon

detectionandmapping,marinegeomaticsurveys,seismicsurveys,metoceandata

collection,seamammalmonitoring,andenvironmentalmonitoring.Robotsand

unmannedvehicleshavealsobeenreportedformonitoring,inspecting,andmapping

applicationsbytheoilandgasindustry(BP,2014)(ExxonMobil,2016)(Torres,2016).BP

andOceaneeringpartneredonalarge-scaleAUVtrialintheGulfofMexicoforsurveying

pipelinesandsubseainfrastructureusingavarietyofmarineautonomoussystems,

includingremotelyoperatedvehicles(ROVs),waveandunderwatergliders,and

autonomoussurfaceandunderwatervehicles(BP,2016b).

Advancedroboticoffshoredrillingsystemshavealsobeendeveloped,althoughthereis

reluctanceonthepartofindustrytoembracefullautomation.Instead,“smart

automationtechnologyinformshumandrillerswhoultimatelytakeallkeydecisions”

(VellaH.,2016).Oneofthelimitingfactorsfortheuptakeofautomateddrilling

technologyisthelargenumberofcapitalintensive,butunderutilized,conventional

floatingrigs.Fullyautomateddrillingwouldrequirenewlydesignedandconstructed

drillingrigswhicharenotlikelytobebuiltintheforeseeablefuture.

Asdiscussedpreviouslyfortheminingindustry,managingthechallengesand

opportunitiesofdigitalizationrequiresoilandgascompaniestohavedigitalstrategies,

ratherthanad-hocdigitalinitiatives.Animportantsteptowarddevelopingeffective

28

digitalstrategiesisleadershipcommitment.Arecentsurveyshowedonly3%ofoiland

gascompanieshaveestablishedseniorexecutive-levelpositionsto“navigatetheopen

seaofthedigitaltransformation”(EndressA.,2017b).InthecaseoftheShellPerdido

digitaloilfieldproject,digitalization“happenedmorecompletelyandquicklythan

expectedbecauseoftheemergenceofchampionswhounderstoodthevalueofthese

technologies”(Perrons,2010).Itwasalsoobservedthatthe“journeytowardbecoming

anintegrateddigitaloilfieldwouldnothaveyieldedthehighlypositiveoutcomesthatit

didwithoutthestrongsupportwithinthePerdidoteam,therelevantShellE&P

communities,andbothBPandChevron”.

(5.0)OtherConsiderations

Thereareanumberofotherimportantfactorstobeconsideredfordigitalizationof

Canada’sminingandoilandgasindustries.First,theseindustriesaresubjectto

extensiveregulation,bothprovincialandfederal,thatmayaffecttherateof

technologicalprogressandinnovation.Secondly,digitalizationwillhaveanimpacton

thelevelandnatureofemployment,withimplicationsforeducationandtraining

programsrequiredforthefutureworkforce,forthe`valueproposition’forcommunities

inresourceregions,andforlevelsof`technologicalanxiety’amongthegeneralpublic.

Thirdly,advancesindigitaltechnologiesareexpectedtocomeprimarilyfromoutsideof

theextractiveindustries,andthiswillrequirereconsiderationoftraditionalsupply

chainsandtheroleofsmallandmedium-sizedenterprises(SMEs)andotherinnovators

andapproachestoinnovation.

(5.1)RegulationandTechnologicalProgress

Theminingandoilandgasindustriesaresubjecttoheavyregulationbecausesomeof

theiractivitieshavethepotential,ifnotcarriedoutproperly,toresultinseriousand

lastingharmtotheenvironmentandtoworkerhealthandsafety.Inaddition,there

couldbeharmtonearbycommunitiesandtopublichealth.Thereinliesaconundrum.

Therearecompetingpressurestoinnovate,astheoperatingenvironmentsfor

29

extractiveindustriesbecomemorechallengingandbeyondconventionalapproaches,

andtostrengthenregulationstomanagetheincreasedrisksassociatedwithoperations

inthosemorechallengingenvironments(LR,2015b).Therateofregulatorychangeis

generallymuchslowerthantherateoftechnologicalchange.

Asaconsequenceofthepotentialforsignificantharm,extractiveindustriesareoften

subjectedto`prescriptive’regulationsthatdetailhowtheiractivitiesmustbecarried

out.Thisisincontrasttomore`performance-based’or`outcomes-based’regulations

thatdefinedesiredoutcomesorlevelsofperformanceandleaveindustrytodetermine

howtocarryouttheiractivitieswhileensuringperformancetargetsaremet.Thelatter

approachtoregulationhasbeenproposedasbeingmoreamenabletotheadoptionof

newtechnologies(NRCan,2013).

In1996,theGovernmentofCanadaconfirmedprovincialjurisdictionforregulationof

miningdevelopmentsthroughitsMineralsandMetalsPolicy(NRCan,1996).Whilethe

MineralsandMetalsPolicycallsforregulationtobeperformance-basedratherthan

prescriptive,approachestoregulationofminingactivitiesvarywidelyacrossCanada.

InCanada,thereisaninitiativeunderway–FrontierandOffshoreRegulatoryRenewal

Initiative(FORRI)–tomodernizetheregulatoryprocessforoilandgasactivitiesthatare

underthejurisdictionofthefederalgovernment(NRCan,2017d).InputfromCanadian

industryintotheFORRIconsultationprocesscalledforacommitmenttoeffective

implementationofaperformance-basedregulatorysystemsupportedbyguidelinesand

othertoolsconsistentwithaperformance-basedmanagementapproach(CAPP,2016).

ForonshoreoilandgasinCanada,regulationisunderprovincialjurisdiction.InAlberta,

newanduniquescientificandtechnologicalchallengesofunconventionaloilandgas

development,aswellastheneedfornewtechnologiesandapproachestooperations,

providedtheimpetustoconsider“risk-basedandplay-focused”approachesto

30

regulationofunconventionalresourcedevelopments(ERCB,2012).Apublicreviewof

potentialunconventionaloilandgasdevelopmentinWesternNewfoundland

recommendedaregulatoryframeworkwithanappropriatemixofperformance-based

andprescriptiveregulations(Gosine,Dusseault,Gagnon,Keough,&Locke,2016).Such

anapproachwouldallowforevolutionofregulationsasnewknowledgeandexperience

aregained,andwouldbesupportiveofinnovationandtheadoptionofnewtechnology.

Astudyofgreenminingtechnologyhighlightedthatthe“potentialfordelaysinthe

environmentalassessmentprocesswithintroducinganewtechnologythatdoesnot

haveademonstratedtrackrecordactsasadeterrentforsomeminingcompanies”

(MNP,2011).Furthermore,thestudyhighlightedthatmanyminingcompaniesmay

notbeabletoaffordthetimeandresourcesneededtogeneratetheverifiableevidence

requiredbyregulatorsabouttheperformanceofanewtechnology.Asaconsequence,

industrytendstouseproventechnologies,ratherthanriskdelaysornon-approvalof

innovativetechnologyapplications.Astudyoftheimpactofenvironmentalregulations

oninnovationintheAustralianoilandgasindustrysuggested“thelessprescriptive

natureoftheregulatoryapproachtakenbytheQueenslandgovernmentissupporting

innovation”andthatcompaniesare“strivingtomaketheiroperationsvery

environmentallyrobustandgoingbeyondcompliance”(Ford,Steen,&Verreynne,

2014).

Inthecontextofoilandgasregulations,itwasproposedthat“regulatorsmustcreatean

environmentthatenablesinnovation”andthey“mustengagewithtechnicalexperts

fromindustrytoidentifynewideasforsupportinginnovations,beopenandflexibleto

pilottestingactivitiesandemployingamoreoutcomes-basedapproachtoregulationin

ordertosupportinnovation“(EY,2015a).Thiscallforclosercooperationbetween

regulatorsandotherstakeholdersinordertoimprovetheregulatoryframeworkandto

facilitatetherequiredinnovationisnotuniquetoCanada.Lloyd’sRegister,aglobal

engineeringorganization,proposed“ablendofthebestexpertisefrombusiness,

31

academics,regulatorsandgovernments”wouldleadtoabetterunderstandingofrisks,

while“ablendofdesignskills,applicationofscience,operations,riskappetiteand

consequencetogetherwithlegislationregimes”wouldleadtomoreappropriate

regulations(LR,2015b).

Withintheoffshoreoilandgasindustry,internationalclassificationsocieties,suchas

Lloyd’sRegister,theAmericanBureauofShipping,andDNV-GL,setandmonitor

standardsforthedesign,construction,operation,inspection,andmaintenanceof

offshorestructuresandvessels.TheseclassificationsocietiesfeatureinCanadian

offshorepetroleumregulationsandtheyplayacriticalroleinensuringsafetyand

environmentalperformanceofoffshoreoperations.

RecentforesightexercisesbytheLloyd’sRegisterFoundation(LRF)consideredthe

emergenceofbigdata,analytics,robotics,andautonomoussystems(LRF,2014)(LRF,

2016).TheseexercisesreviewedtheimplicationsfortheindustriesLloyd’sRegister

servesandfortheworkdonebyLloyd’sRegisterinthecertificationandassuranceof

industryassets.

Withrespecttobigdataandanalytics,LRFproposedaparadigmshifttowardsdata-

centricengineeringwhere“dataconsiderationsareatthecoreofengineeringdesign”

withresultingimprovementsin“performance,safety,reliabilityandefficiencyofassets,

infrastructuresandcomplexmachines”(LRF,2014).Arangeofdatamanagement

issues,includingstandards,collection,storage,andsecurity,wouldbepartofthe

engineeringlife-cycleandwouldimpactonapproachestodesigning,manufacturing,

maintaining,anddecommissioningassets.Thedataitselfwouldbeanasset,requiring

verificationofthepedigree,quality,andaccuracyofdata.Thecertificationandquality

assurancerolesplayedbyorganizationssuchasLloyd’sRegisterwouldneedtoadapt

accordinglyifadata-centricengineeringapproachwasadoptedbyindustry.

32

Intermsofroboticsandautonomoussystems(RAS),LRFhighlightedcriticalissuessuch

asthedependabilityandappropriatenessofactionofRAS,methodsofRAS`learning’,

exchangeofcontrolbetweenhumanoperatorsandRAS,systemsecurity,publictrust

andethicalframeworksforapplicationsofRAS,andanxietyaboutemployment

disruption(LRF,2016).Also,theneedfor“livinglaboratoriesinexistinginfrastructure”

washighlightedasameansofprovidingthenecessaryfocustoundertakebasicR&D,

performfirstdemonstrationsofprototypes,andde-riskandcertifysystemsthatcould

beputintonormaloperation.Thisrequiresregulatoryframeworksthataresupportive

ofinnovationandapproachestounderstandingandmanagingtheassociatedrisks.

(5.2)Technology,EmploymentImpacts,andEducationandTraining

Thefusionofadvancedtechnologiesandthe“transformationofentiresystemsof

production,management,andgovernance”maydisruptlabourmarkets(Schwab,2016).

Atthispointthereisconsiderableuncertaintyabouttheimpactsonthenumberofjobs

andthetimingofsuchimpacts,althoughthereisgeneralagreementthatthenatureof

workwillchangesignificantly.Therearealsogrowingconcerns,or`automation

anxiety’,aboutthe“replacementofcomplexcognitivetasksandhumandecisionmaking

byalgorithms,machinelearningandothercomputationaltechniques”(Sussex,2017).

Schwabnotedthatifautomationsubstitutesforlabour,“thenetdisplacementof

workersbymachinesmightexacerbatethegapbetweenreturnstocapitalandreturns

tolabor”(Schwab,2016).Someresearchersbelievetheimpactofautomationonjobs

wouldbeconsiderablylargerthanwhatmanyanalystshavebeenprojecting(Ticoll,

2017).Schwabalsonoted,however,theimpactsareunclearandtheapplicationof

automationcouldleadtoanoverallincreaseinsaferandmorerewardingemployment

opportunities(Schwab,2016).Keyissues,however,includethelocationsofthesenew

jobs,aswellastherequirededucationandskilllevels.Forextractiveindustries,thereis

aquestionaboutwhethernewjobsthatcouldresultfromdigitalizationwouldbenefit

individualsinresourcecommunitiesandregions.

33

ArecentreportfromtheInternationalFederationofRobotics(IFR),anadvocacygroup

forrobotics,proposed“robotscomplementandaugment,ratherthansubstitutefor,

labourandindoingso,raisethequalityofworkandthewagesofthosefulfillingnew

tasks”and“automationhasledoveralltoanincreaseinlabourdemandandpositive

impactonwages”(IFR,2017).TheIFRreportproposedthatlessthan10%ofjobs

involvingmanuallaborcouldbefullyautomated,androbotsmaycomplementand

augmentmanuallabourforsomejobs.Middle-income/middle-skilljobswouldbeprone

tolossthroughautomation,whilethedemandforhigh-skilljobswouldincrease,as

wouldwages.Thisisconsistentwiththeperspectivethat“automationdoesindeed

substituteforlabor—asitistypicallyintendedtodo.However,automationalso

complementslabor,raisesoutputinwaysthatleadtohigherdemandforlabor,and

interactswithadjustmentsinlaborsupply”(Autor,2015).Between2010-2015,theIFR

reportedthattheU.S.automotiveindustryinstalled60,000newrobots,whiletherewas

anoverallincreaseinemploymentof230,000jobsintheindustryoverthesameperiod

(IFR,2016).Thereport,however,didnotdiscussotherfactors,suchasincreasesin

production,thatmayhaveinfluencedoverallemploymentnumbers.

Somepractitionersrefertothenextgenerationofmachinesthatworkwithandassist

workers,ratherthanreplacethem,as`cobots’orcollaborativerobots(Hollinger,2016).

Collaborativeroboticsisparticularlyattractiveforworkactivitiesforwhichhuman

judgmentisrequiredandwherethephysicalenvironmentpresentsergonomic

challenges.Forcertainjobactivities,studieshaveshownhuman-robotteamsaremore

productivethanhumansorrobotsworkingalone(Tobe,2015).

Inautomobileassemblyplants,someindustrialrobotshavebeenreplacedbycobots

withtheprimaryobjectivetoimprovethesafetyandeaseoftasksforworkerson

assemblylines.Cobotshavebeenproposedaspartofthesolutiontoattractingand

retainingtherequiredworkersforthemanufacturingindustryatatimewhenmany

34

currentworkersareretiring(Gonzalez,2016).Cobotscouldalsobeaviabletechnology

tosupportthemanufacturingoperationsofsmallersuppliersthatneedgreater

flexibilityandportabilityoftechnologythanistypicallyprovidedbylarge-scale,fixed-in-

placeroboticmanufacturingsystems.

Autorstated“journalistsandevenexpertcommentatorstendtooverstatetheextentof

machinesubstitutionforhumanlaborandignorethestrongcomplementarities

betweenautomationandlaborthatincreaseproductivity,raiseearnings,andaugment

demandforlabor”(Autor,2015).HeadlinesinCanadianpopularpress,suchas

“Driverlesstruckscouldmean‘gameover’forthousandsofjobs”,fuelconcernsabout

theimpactsofautomationonemployment(Grant,2015).Thearticlehighlighted

Canadianminingandoilandgascompaniesasearlyadoptersofautomatedtruck

technology.

Anotherrecentstudysuggestedthatwhilealmosthalfofallworkactivitiesacrossthe

economycouldbeautomated,lessthan5%ofalloccupationscouldbeautomatedusing

existingtechnologies(Manyika,etal.,2017).Itwasestimated60%ofalloccupations

haveatleast30%oftheiractivitiesthatcouldbeautomated,with“physicalactivitiesin

highlystructuredandpredictableenvironments,aswellasthecollectionandprocessing

ofdata”,beingtheactivitiesmosteasilyautomated.

Manyikapresentedacasestudyofthepotentialforautomationinanoilandgascontrol

room.Theproposedadvantagesofautomationincluded“betterpersonnelsafety,

greaterefficiency,higherthroughput,improvedagility,andcostreductionsfrom

relocatingoperatorsfromremotesitestocentralizedoffices”.Furthermore,

technologiessuchasintelligentsensorsandanalyticscould“enablepredictive

maintenance,whichisjustone-quarterthecostofreactivemaintenance”.Itwas

estimated80%ofthevaluecreatedfromautomationofthecontrolroomwouldresult

fromperformancegains,while20%wouldresultfromlaboursubstitution.

35

Otheranalystssuggestedbetterutilizationofexistingcomputingtechnologyintheoil

andgasindustrycouldseepositivefinancialimpactsofupto$3billionforamajoroil

andgascompany(Ward,2016).Ofthisamount,$1billioninsavingswouldaccruefrom

moreefficientdeploymentofengineeringresources,allowingcompaniestostayahead

oftheincreasingchallengetofindtalent.

Whilesomejobswithinoilandgascompanieswouldbeeliminatedbyautomation,

therewouldbeanincreaseindemandfordigitallyliterateemployees,suchasdata

analystsandengineers(Kline,2017).Alongasimilartheme,Accenturepredicted

digitalizationwillbothdemandandenableafundamentallydifferentworkforceinthe

oilandgasindustryand,whilesomemanualjobswillbereplacedbydigitaltechnology,

other“moredigitally-orientedjobswillbecreatedtotaketheirplace”(Sloman,

Holsman,&Cantrell,2014).TheLloyd’sRegisterFoundation(LRF)proposedthe

changingnatureoftheworkforcewouldfurtherchallengealllevelsoftheeducation

system,fromtheprimaryandsecondaryschoolsystem,throughpost-secondary

institutions,toorganizationsofferingongoingtrainingandeducationtoprofessionalsin

industry(LRF,2016).

Fortheminingindustry,theoverallemploymentimpactsasaresultofdigitalizationare

alsosubjecttodebate(Davis,2017).Inthefuture,asaresultofwidespread

digitalizationoffieldoperationsandback-officeprocesses,someanalystsbelievedigital

miningwillinvolvefarfewerpeople(Deloitte,2017).Thefutureworkerswouldalso

havedifferentskillsetsthanrequiredtodaybytheminingindustry.Currently,local

employmentisacriticalpartofthevaluepropositionthatminingcompaniesare

expectedtodeliveruponthroughouttheiroperationsincommunitieswithextractive

resources.

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Whethera25-yearvisionforautonomousminingcanberealizedisanopenquestion.A

studyledbytheUniversityofQueenslandconsideredthesocialdimensionsof

autonomousandremoteoperationsandconcludedthat"autonomoustechnologies

seemlikelytoreduceadditionaljobscreatedthroughminingindustrygrowth,rather

thanleadingtoanetreductioninminingemployment”(McNab,Onate,Brereton,

Horberry,Lynas,&Franks,2013).Thestudyfindingsnotedthatsomejobs,suchas

drivingtrucksormanuallyoperatingundergroundequipment,woulddisappear,while

newjobs,whichwouldbeincreasinglyconcentratedinurbanareas,wouldrequire

differentcompetencies.Benefitsofautomationwereproposedtoincludeimproved

safetyandreducedriskforworkers.

Onechallengeforautomationistheintegrationofautomatedtechnologyintoexisting

minesites(Jensen,2016).Othershavenotedtherewillalwaysbeaneedfor

infrastructuretosupportpeopleworkingundergroundsince“soonerorlaterequipment

alwaysbreaksdownandsomebodyhastogoandfixit”(VellaH.,2017).Within

existingundergroundminingoperations,largeequipmentisdismantledandrebuilt

undergroundsothereisaneedforin-siturepairandmaintenanceofequipment,

includingautomatedvehicles.

Dramaticadjustmentstoemploymentinanindustrycanprovidetheimpetusfor

innovationandentrepreneurshipbythosewhoaredisplaced.Followingamajor

downsizingbytheminingindustryinSudburyin1981,anumberof“unemployed

miners,armedwithtacitknowledgeofthemajorminingcompanies,createdsmalland

medium-sizedenterprises(SMEs)toservethelocalminingindustry”(Hall,2017).Today,

thereareover300supplyandservicecompaniesintheSudburyarea,employing

approximately13,500people.

WhethertheSudburyexperiencewillholdupthroughaworkforcedisruptionfrom

digitalizationisanopenquestion.Areleaseoflabourasaresultofwidespread

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digitalizationoftheminingandoilandgasindustrieswouldbecomplicatedbya

significantknowledgegapwithrespecttodigitaltechnologyanddigitalinnovation

amongthosedisplaced.Itisunlikelythatknowledgeofapre-digitalizedindustrywould

beasufficientbaseuponwhichtoofferadvancedtechnicalservicestoadigitalized

industry.UnliketheSudburyexperience,theexpertiseneededbyextractiveindustries

followingdigitaldisruptionwouldbefound,toasignificantextent,outsideofthe

extractiveindustries,inothersectorsandlocationsthataremoreproactiveinadvancing

digitaltechnologiesandtheirapplications.Furthermore,thecurrentalignmentof

educationandtrainingprogramsatsomepost-secondaryinstitutionstomeetthe

currentemploymentneedsofextractiveindustriesmayfallshortintermsofpositioning

youngpeoplewithanaffinitytoresourceregionsforcareersindigitalizedextractive

industries.

Aswithprojectionsaboutthechangingnatureofemploymentintheoilandgas

industry,miningindustryanalystshavepointedtotheneedto“buildaworkforceofthe

futurebyattractinghighlydiversepeoplewithanewsetofdigitalskills”(Deloitte,

2017).Theminingindustry“willincreasinglyfindthemselvescompetingforscarce

technicaltalentwithmoreattractivepureplaydigitaldisruptors”.

Arecentsurveyofover2000companiesin26countriesaboutIndustry4.0identifiedthe

lackoftrainingandadigitalculturedeficitamongexistingworkforcesasthetop

challengesfacedbycompanies(Geissbauer,Vedso,&Schrauf,2016).Theneedto

addresseducationandtrainingrequirementsincludesupgradingknowledgeandskills

forexistingworkforces,aswellaspreparinguniversityandcollegegraduatesbetterfor

careersindigitalizedindustries.

Understandingtheemploymentimpactsofdigitalizationoftheminingandoilandgas

industrieswillbeimportant,bothtothecompaniesandtothecommunitiesandregions

inwhichthereareresourcedevelopments.Forminingandoilandgasdevelopments,

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animportantelementofthehistoricalvaluepropositionislocalemployment,including

direct,indirect,andinducedemployment,acrossalleducationandskilllevels.Other

elementsincludetheconsumptionoflocalgoodsandservicesandrevenuesfromtaxes

androyalties.

ForextractiveresourcedevelopmentprojectsinCanada,therearenegotiatedbenefits

agreementsthatdefinehowcommunitiesandregionsparticipateintheemployment

andeconomicactivitiesarisingfromresourcedevelopmentprojects.Asanexample,

fortheHebronoffshoreoilandgasdevelopmentproject,thebenefitsagreement

stipulatedaminimumnumberofperson-hoursofengineeringandconstructionwork

hadtobedoneinNewfoundlandandLabrador(NL)priortothestartofoilproduction

(Hebron,2008).OtherrequirementsincludedfinancialsupportfortheNLsupplyand

servicesectortoengagewiththeengineeringofficesoftheproponentsortheirout-of-

provincesuppliers,andadefinedlevelofR&DexpenditurebytheproponentswithinNL

overthelifetimeoftheproject.Theproponent’sbenefitscommitmentsaremonitored

bytheCanada-NewfoundlandOffshorePetroleumBoard(C-NLOPB)andtheproponents

filepublicquarterlyandannualreportsregardingtheirperformanceinmeetingtheir

commitments(HMDC,2017).

InthecontextofmininginCanada,impactandbenefitsagreements(IBAs)are

negotiatedbetweenminingcompaniesandAboriginalcommunitiesto“documentina

contractualformthebenefitsthatalocalcommunitycanexpectfromthedevelopment

ofalocalresourceinexchangeforitssupportandcooperation”(IBARN,2006).The

IBAstypicallyaddressissuessuchasenvironmentalprotection,includingspecial

concernsaboutwildlife;protectionofAboriginalsocialandculturalvalues;education,

training,andemployment;healthandsafety;businessopportunities;Aboriginalaccess

totheprojectsite;financialarrangements;anddisputeresolutionmechanisms(Vale,

2017).Aboriginalcommunities“holdinherentrightsintheirtraditionalterritories,and

thusshouldshareinemploymentandfinancialbenefitsfromdevelopmentprojectson

39

thoselands”(Kielland,2015).Generally,IBAsareinadditiontoresourcerevenue

sharingarrangementsbetweenprojectproponentsandgovernments.

Whilebenefitsagreementstypicallydealwithdirectemploymentrequirements,the

second-ordereffectsassociatedwithchangesinemploymentlevelsasaresultof

digitalizationalsoneedtobeunderstood.Forexample,therewouldbeincometax

impactsassociatedwithchangesinemploymentlevelsorchangestolocalsalariespaid

byindustryasaresultofincreasedautomation(Balch,2016).Areductionindirect

employmentinaregionwouldalsoresultinareductionininducedemploymentinthat

region.

Withtheriseoftheconceptof‘sociallicencetooperate’(SLO),whichissometimes

referredtoas`sociallicence’or`publicconfidence’,theimpactofdigitalizationon

employmentandotherelementsofthevaluepropositionwillbeparticularlyimportant

tounderstand(Mann&Cosbey,2016).Forbothminingandoilandgascompanies,

developingandmaintainingatrustrelationshipwiththecommunitiesinwhichthey

operateisrecognizedasarealityofdoingbusinessinthefuture(Sanyal,2012)(Latimer,

2015).AUniversityofQueenslandstudyidentifiedkey“socialdimensionsof

automation”,includingthestructureoftheworkforceandworkforcemanagement

practices;workplaceandpublichealthandsafety;mining-relatedregionaldevelopment

opportunities;andAboriginalemploymentandcommunityrelations(McNab,Onate,

Brereton,Horberry,Lynas,&Franks,2013).

Dependingontheultimateimpactofdigitalizationofextractiveindustriesonthe

employmentcomponentofthevalueproposition,theremayneedtobearebalancing

oftheweightingontheotherhistoricalcomponentsortheintroductionofnew

componentsofthevalueproposition.Newcomponentscouldincludeintroducingmore

localdownstreamprocessingofextractedresources,developingvalue-addedproducts

thatwouldbemanufacturedlocally,supportingmorewidespreadinfrastructure

40

improvementsthatbenefitcommunitiesandoperations,andincreasingknowledgeand

technologytransfertolocalcommunitiesthatcouldbemorewidelyutilizedinother

sectorsoftheeconomy(Cosbey,Mann,Maennling,Toledano,Geipel,&Brauch,2016).

Policymakerswillneedtobeengagedearlyinordertomitigatethenegativesocial

impactsofemploymentloss(LRF,2016).Giventheincreasedattentiongenerallyinthe

media,includingsocialmedia,regardingtheimpactsofautomationonthefutureof

work,securingpublicconfidenceforextractiveresourceprojectswillbefurther

complicatedbyautomationanxiety.

(5.3)TechnologyfromOtherSectors

Theenablingdigitaltechnologiesandapproachestotheirintegrationintosystemsare

commonacrossmanyindustrysectors,albeitwithsomeadaptationstailoredtosectoral

differences.Learningfromotherindustriesthathaveadoptednewtechnologiesand

approachestotheirapplicationwillbeimportant(Jacquand,2017).Inparticular,

technologiesdevelopedanddeployedforthemanufacturing,forestry,agriculture,

automotive,aerospace,biotechnology,financialtechnology,andgamingsectorsmaybe

adaptedandadoptedforapplicationsbyextractiveindustries.

Bywayofillustration,newfinancialtechnologiesbeingemployedinthefinancialsector

mayplayimportantrolesinthefutureofextractiveindustries(Koeppen,Shrier,&

Bazilian,2017).Specifically,blockchaintechnologymaybeutilizedinapplicationsto

increasetransparencyandprovideefficiencyinregulatorycompliance,toenhancedata

security,tofacilitatesmartcontracts,andtoimprovelogistics.Suchtechnologyhasthe

potentialtoimprovemanagementofsupplychainsforextractiveindustries(IBM,2016).

Thistechnologymayalsomakeitpossibleforaprovenorereservetobeconvertedinto

digitizedassetspriortoitbeingmined.Thiscouldincludeorebitsthatcanbebought

andsoldelectronically(BusinessWire,2017).

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Suchtechnologymayalsofacilitatenewvaluepropositionsforcommunitiesinwhich

extractiveindustriesoperateinordertosecurethesocialandeconomicfuturesofthose

communities.Inotherwords,itmaybepossibletogeneratefinancialrevenuestreams

intocommunitiesintheabsenceofcurrentproduction.Inthetraditionalmining

lifecycle,miningcompanypensions,whichguaranteerevenuebeingpaidtoformer

companyemployeeslongafteractivemininghasceasedandtheminingcompanyhas

leftthecommunity,havebeenacriticalsocialandeconomicstabilizerforsingle-

industryminingtowns.Insomecases,thesepensionsmayhavehelpedavoid`ghost-

town’outcomesforcommunities.Astherequirementforongoingpublicconfidencein

extractivesindustriesinCanadabecomesmorewidespread,digitaltechnologymay

supportindustryindeliveringanearlyvaluepropositiontocommunitiesandinhaving

newvaluepropositionoptionsatlaterstagesofprojects.

Unlike20yearsagowhenautonomousvehicletechnologywasbeingpioneeredbythe

miningindustrytoimproveproductivityandsafetyinanichemarket,todaythis

technologyisbeingadvancedbytheautomotiveindustryandbytechnologycompanies,

suchasFord,GeneralMotors,Tesla,Uber,Google,Blackberry,andApple,formuch

largerconsumermarkets(Davies,2017)(Tesla,2016)(MarshallA.,2017a)(Blackberry,

2017)(Moren,2017).Inparticular,researchdirectedtowardsystemsthatenhancethe

safetyofhumans(e.g.,otherdriversandpedestrians)onroadsutilizedbyautonomous

automobilescouldalsobeusefulforintroducingautomatedminingrobotsinto

establishedminesthatuseconventionalapproachestoproduction(Condliffe,2016).

Theexperienceoftheautomotiveandmanufacturingindustryintheapplicationof

collaborativerobotics,orcobots,isalsoparticularlyrelevantandimportanttoconsider.

Regardlessofwhetherfullautomationcanultimatelybeachieved,thecomplexnature

ofthephysicalenvironmentsforbothminingandoffshoreoilandgasdevelopmentwill

necessitatecloseinteractionandcollaborationbetweenhumansandmachinesforthe

foreseeablefuture.

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(5.4)TheRoleofSmallandMedium-sizedEnterprises(SMEs)

Withtheexceptionofthemineralexplorationsector,modernextractiveindustriestend

tobedominatedbylargeglobalfirms.Thelastcommoditiesboomescalatedmergers

andacquisitionsamongalreadyhighlyconcentratedcompanies.Manyofthesedeals

wereover-leveragedandbasedonunrealisticexpectationsforcommoditymarkets.In

somecases,individualunitsandpropertiesfromtheseventureshavebeendismantled

andsoldoff.Historically,conservativeandrisk-averseminingandoilandgas

companieslookedtowardsimilarlyconservativeandrisk-aversesupplyandservice

providers.Thesecharacteristicsarenotconducivetoinnovationandmayimpedethe

adoptionandadaptionofdisruptivetechnologiesbyextractiveindustries(Brownlee,

2016).

Inthecaseofsomelargecorporations,suchasLockheedandApple,a“skunkworks”

approachhasbeenusedtoprovidekeytechnicalandscientificstaffwiththetimeand

resourcestoengageinbreakthroughinnovationawayfromnormalcompanyoperations

(May,2012).Itisalsothecasethatdisruptivetechnologiesareoftendrivenbysmaller,

moreagile,andlesstraditionalfirms,manyofwhicharenotpartofthesupplychains

forlargeextractiveindustries.Asaresult,largeextractiveindustriesmaynotbenefit

fromthedisruptivetechnologiesoriginatingfromthesesmallerinnovativecompanies.

Unfortunately,manySMEsdonothaveagoodunderstandingofneedsofthelarger

companiesnortheirprocurementprocesses.Thislackofunderstandingisperpetuated

bythefacttherearelimitedmechanismsforinteractionbetweenSMEsandthelarge

operatingcompaniesandtheirsuppliers.Similarly,decision-makersinextractive

industriesandamongtheirlargersuppliersareoftenunawareofthetechnologyand

capacityavailablethroughSMEs.

Giventheprospectforwidespreadapplicationofdisruptivetechnologiesinconsumer

productsandacrossindustrysectors,thereispotentialforhigherlevelsofinnovation

43

andentrepreneurship,leadingtonewopportunitiesforSMEsandforthecreationof

newtechnology-basedcompanies(Manyika,Chui,Bughin,Dobbs,Bisson,&Marrs,

2013).Theneedforextractiveindustriestoembracedisruptivetechnologymayleadto

better,moreeffectiveengagementbetweenextractiveindustriesandtechnology

developers,includingSMEsandotherinnovators,traditionallyoperatingoutsideofthe

supplychainsforminingandoilandgascompanies.Newwaysofestablishing

collaborationsamongkeyplayersneedtobeexploredbyextractiveindustries.

DigitalizationprovidesanopportunityforinnovativeCanadiantechnologytoenhance

theviabilityofCanada’sextractiveindustriesandtocreateexportopportunitiesfor

Canada’stechnologycompanies,particularlySMEs.Withrespecttoenablingexport

opportunitiesforSMEs,however,Canadaischallenged.AsnotedbytheAdvisory

CouncilonEconomicGrowth,“ingeneral,Canadiancorporationsarerelativelyslowto

adoptnewtechnologyandseemreluctanttobuyfromyoungorsmallerfirms”(ACEG,

2017).TheAdvisoryCouncilwentontosuggestthatlargercompaniescouldsupport

growthofSMEs,bothbyactingasearlycustomersandbyconnectingSMEswithother

companiesintheirsupplychains.InorderforCanadianSMEstobesuccessfulin

participatinginaglobalsupplychainfortheenergyindustry,itwasproposed

governmentmust“usepolicytoensurestable,robustdomesticdemandintarget

energysectorsandconsequentlyspurindustryinnovation”(McKinsey,2013).

(5.5)OtherApproachestoInnovation

Ithasbeenlongarguedthatinnovationisasocialprocesswithinwhichpeopleinteract

todevelopideasandknowledgethatunderpinmarketableproductsandservices

(Maxwell,2003).AsdiscussedbySmithetal.,“successfulinnovativefirmsareusually

thosewhichareopentotheirenvironments.Thatis,theyengageininteractivelearning

involvingotherinstitutions:partners,rivals,andawiderangeofotherknowledge-

creatingandknowledge-holdinginstitutions”(Smith,Dietrichs,&Nas,2015).The“easy

wins”withrespecttoincrementalimprovementshavelargelybeenachieved,and

44

ground-breaking,transformativeinnovationswillcome“fromlookingattheworldfrom

severalperspectivesatonce-engineering,finance,design,marketing,moral,legal,and

soforth-andsynthesizingthemintosomethingthat’sgreaterthanthesumofthe

parts”(Jarvis,2016).

Innovationapproachesfromothersectorsneedtobeconsidered,suchastheHacking

Healthmovement,establishedin2012inMontrealandsubsequentlyexpanded

internationally.This`openinnovation’approachbringsfreshthinkingtoaddressing

challengesinthehealthcaresectorandtoengagingpeoplewiththeknowledgeand

skills,oftenfromoutsidethesector,neededtoadvancehealthcareintothe21stcentury

(Lindeman,2015).A`hackathon’bringstogetherhealthprofessionals,policymakers,

technologyproviders,technologydevelopers,studentsandfaculty,entrepreneurs,and

investorstogeneratefreshideas,toshareinsights,andtodevelopcreativesolutions

(HackingHealth,2017).Extractiveindustriesrecentlystartedtoexplorethismoreopen

andcreativeapproachtoinnovation(OGA,2016)(CMIC,2017a).Anupcoming54-hour

openinnovationhackathoninVancouverwillconsiderthree`challenges’involvingthe

useofdigitaltechnologyandanalyticstoimprovetheperformanceofdiscrete

componentsofminingoperations(Unearthed,2017).

Anotheropeninnovationapproachinvolves`crowdsourcing’solutionstomajor

challengesbyengagingabroadrangeofexpertiseandunconventionalthinking.Inthe

caseoftheoilandgasindustry,Sweden’sDraupnerEnergywasestablishedin2015to

“leveragecrowdsourcingandnetworkedinnovationoveraninternetplatformto

identifyanddelivernovelideas,innovativeprojectsolutions,developenergyandcarbon

captureandstorageprojects,andmovethemtomarket”(Draupner,2017).In2015and

2016,StatoilandGeneralElectricco-sponsoredglobalopeninnovationchallengesto

solicitconceptsforreducingtheamountofsandandwaterusedinunconventionaloil

andgasdevelopment(GE-Statoil,2015)(Statoil-GE,2016).Statoilrecentlyissuedan

45

openinnovationchallengetoconsiderhowdigitalizationcouldchangehowenergyis

producedandconsumed(Statoil,2017c).

WithintheCanadianminingindustry,theCEOofGoldcorp,inspiredbytheopen-source

softwaremovement,believedthatcrowdsourcingnewideasaboutwheretodigcould

“speedupexplorationandimprovehisoddsofdiscovery”atanunderperformingmine

inOntario(Tischler,2002).Goldcorplaunchedaninnovativechallengethatmadeallof

thecompany’sproprietarygeologicaldataavailableonthecompany’swebsite.The

challengeletoutsideexpertshaveaccesstothedatatoidentify“wherethenextsix

millionouncesofgold”wouldbefoundinreturnfora$575,000prize(ideaconnection,

2009).Itwasestimatedthatthechallenge“cuttwo,maybethreeyearsoffthe

company’sexplorationtime.Andtheworthofthisgoldhassofarexceeded$6billionin

value”.In2007,BarrickGoldlauncheditsUnlocktheValueProgramtochallenge

researchersfromaroundtheworldtoliberate180millionouncesofsilverthatwas

containedingoldreservesintheVeladeromineinArgentina(Barrick,2007).The

Barrickchallengestatedthat“experienceinminingisnotrequiredbecauseweare

lookingforinnovationandnewapproaches”.

In2015,IntegraGoldCorporation,whichisnowownedbyEldoradoGold,announcedit

wasmaking70yearsofprospectingdataavailableontheinternetinorderto“let

peoplewhoaren’tusuallyinvolvedinexplorationbringcreativedataanalysismethods

tothetable”andto“injectsomemuch-neededinnovationintoanindustrythat’s

strugglingwithhighcostsandlowcommodityprices”(FP,2015).Datacollectedfroma

growingnumberofdigitaldevicesdeployedacrossoilandgasandminingoperations

couldprovidearichsourceofrawmaterialforcrowdsourcingnewinternetofthings

(IoT)productsandservices(Ratzesberger,2015).

Othermodelsforpromotinginnovationincludelonger-term(e.g.,12-18months)design

competitionstodevelopanddemonstrategame-changingtechnology.Anearly

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exampleofthe“prizechallengemodel”wastheDARPAGrandChallenge,an

autonomousvehiclechallenge,withavisionto“encouragenewwavesofresearchand

developmentthatwillspurcontinuedinnovation,encouragecommercialinvestment,

andlowerthecostofadvancedtechnologies”(DARPA,2014).Reflectingontheimpact

ofthechallengeprogram10yearsafteritwaslaunched,DARPAconcluded“thefresh

thinkingtheybroughtwasthesparkthathastriggeredmajoradvancesinthe

developmentofautonomousroboticgroundvehicletechnologyintheyearssince”.

AmorerecentexampleoftheprizechallengemodelistheHyperloopPodinternational

competitionthattargetedanew`fifthmode’oftransportation(SpaceX,2017).This

internationalstudentcompetitionwaslaunchedinresponsetoaproposaltobuilda

conventionalbullettrainasasolutiontostatewidemasstransitinCalifornia(Musk,

2013).Fromover1000teamsthatinitiallyappliedforthecompetition,115teams

submitteddesignsinJanuary2016and30wereselectedtobuildtheirdesignsandtodo

preliminarytestingontheHyperlooptrackinJanuary2017.Afullcompetitionamong

24teamswasheldinAugust2017,andafurthercompetitionissetformid-2018.

Anotherillustrationofthisapproachisthe8thAnnualRoboticMiningCompetitionthat

willbehostedbytheU.S.NationalAeronauticsandSpaceAdministration(NASA).This

competitionwillbringtogether50U.S.universityteams(NASA,2017).

In2017,theGovernmentofCanadalaunchedtheInnovationSuperclustersInitiative(ISI)

to“acceleratethegrowthanddevelopmentofbusiness-ledinnovationsuperclustersin

Canada,translatingthestrengthsofourinnovationecosystemsintonewcommercial

andglobalopportunitiesforgrowthandcompetitiveness”(ISI,2017).Boththemining

andoilandgasindustriesaspiretoleadsuperclusters,includingaminingcleantech

clusterandadigitaloceansclusterinvolvingtheoilandgasindustry(CMIC,2017b)

(ResearchInfosource,2017).

47

Bothofthesesuperclusterinitiativeswouldseemajorinvestmentsbyindustryand

governmenttobringtogetheranarrayofcollaboratingcompaniesandorganizationsto

advanceinnovationandmoveCanadianindustryintoaworld-leadingposition.For

example,theminingcleantechsuperclusterisan“industry-led,multi-stakeholder

consortiumcomprisedoffourexistingclusters,which,combined,represent11large

companies(includingeightresourcecompanies),13post-secondaryinstitutions,42

SMEsand25othersupportorganizations”(CMIC,2017b).Thedigitaloceans

superclusterwouldbringtheoffshoreoilandgasindustrytogetherwithotherocean

industriestoadvancetechnologiesthatcouldbedevelopedandadaptedacross

industries(ResearchInfosource,2017).

(6.0)MiningandOilandGas:DigitalSynergy

Intermsofexploringtheopportunitiesandchallengesrelatedtodigitalizationof

extractiveindustries,thereistremendoussynergybetweentheminingindustryandthe

oilandgasindustry,particularlybetweenminingandoffshoreoilandgasproduction

operations.Bothminingandoffshoreoilandgasareglobalindustriesinvolvedin

increasinglyremoteproductionoperationsinharshenvironmentsthat,bytheirvery

nature,modifytheenvironment.Boththesupplierstotheseindustriesandthe

customersareinternationalinscope.

MiningandoilandgasactivitiesgeneratesignificantexportvalueforCanadaand

employ,directlyandindirectly,alargenumberofpeoplewithawidearrayofexpertise

andskill.Employmentrepresentsamajorpartofthevaluepropositionbetweenthe

industriesandresourcecommunities.Theemploymentimpactsarenationalinscope

andparticularlyimportanttoregionswherethereisresourcedevelopment.

Digitaltechnologyhasthepotentialtoimprove,expedite,andreducethecostfor

evaluationofresources.Thiscouldleadtonewresourcedevelopmentprojectsthat

maynothavebeenevaluatedintheabsenceofimprovedresourceassessmenttools

48

thatprovideforthecollectionandprocessingofdatathatwouldpreviouslynothave

possible.

Theneedtolooktodigitaltechnologytoincreaseoperationalefficiencyinorderto

remaingloballycompetitivecouldsignificantlychangethelevelsandnatureof

employmentinextractiveindustries,and,hence,thevaluepropositionforgovernments

andresourcecommunities.This,coupledwithageneralanxietyamongthepublicabout

impactsofautomationtechnologies,furthercomplicatesthepublicconfidencedynamic.

Boththeminingandoilandgasindustriesarealreadysubjectedtoincreasingchallenges

withrespecttoachievingandmaintainingthepublicconfidencenecessarytocarryout

resourcedevelopmentprojects.

Bothsectorsarecapitalintensivewithlongpaybackperiodsoninvestments.The

financialrisk,coupledwiththecyclicalnatureofcommoditypricingandpriceshocks,

hascontributedtoweakinvestmentinR&Dandslowuptakeofnewtechnology

comparedwithotherinnovativesectorsoftheeconomy.

Bothindustrieshaverecognizedtheneedtoembracedigitaltechnologyiftheyareto

survive,letaloneflourish.Thereisanopportunityfortheseindustriestoworktogether

tounderstandtheirdigitalfutures,andthoseoftheiremployeesandtheresource

communitiesandregionsinwhichtheseindustrieswishtooperate.

Forbothminingandoilandgascompanies,thefuturecouldincludeheavilydigitalized

assets(i.e.,oilrigs,miningequipment),capableofhighlevelsofautonomyandinter-

assetcooperation,operatingwithinchallengingnaturalenvironments(e.g.,adeepor

remotemineorfaroffshoreoilfield)monitoredusingadvancedembeddedandremote

intelligentsensortechnology.Thesedigitalizedassetsandintelligentsensor

technologiescouldbeconnectedviainnovativecommunicationsystemstodigital

enterprises(i.e.,missioncontrolcentresandotherremotecentresofexcellence),where

49

expertswouldmonitorproductionoperationsremotely,interactviatechnologywitha

limitednumberoffieldworkersatproductionsites,andperformcomputationalanalysis

ondatacollectedfromremoteoperationstooptimizeproduction,equipment

maintenance,andassetutilization,whilesimultaneouslyensuringregulatory

compliance.Thedigitalenterprisecouldbepartofadigitalworldinwhichtechnology

wouldbedeployedtoimprovesupplychainmanagementandresourcemanagement,to

balancesupplyanddemandforproduct,tomanagecontractingamongprojectpartners,

andtohelpsecureandmaintainpublicconfidence.

(7.0)ConclusionsandNextSteps

Thenextgenerationofminingsharesanemergingvisionofincreaseddigitalizationof

productionoperationswiththeoffshoreoilandgasindustryofthefuture.Giventhe

importanceoftheminingandoilandgasindustriestotheCanadianeconomy,itis

criticalthatCanadapreparesforthedigitalfutureoftheseextractiveindustries.

Challengesresultingfromdigitalizationoftheseindustries,however,mustbeidentified,

understood,andaddressedbyadiverserangeofstakeholders.Someofthese

challengesincludeintegrationwithlegacyproductionoperations,impactson

employmentandthenatureofwork,securingtalentwiththerequirededucationand

skills,morecomplicatedrelationshipswithgovernmentsandcommunities,andbeing

innovativewhilecomplyingwithregulatoryrequirements.

Whilederivingeconomicbenefitfromminingandtheoilandgasresourcescould

continuetobeimportanttoCanada,itwillbecriticalforresourcesindustries,andthe

supportingsupplierandservicecompanies,tounderstandemergingdigitaltechnology,

asinnovators,consumers,andexportersofsuchtechnology.Aspartofthedigital

economy,modernminingandoilandgascompaniesmayaccruebenefitsincluding

increasingthesafetyofworkers,improvingenvironmentalperformance,protecting

publichealth,improvingproductivityandefficiencyofoperations,shorteningthe

50

exploration-development-productioncycletime,increasingreliabilityofequipment,and

reducingcapitalinfrastructurecosts.

Thechallengesandopportunitiesfromdigitalizationcomeatatimeofconsiderable

mediahypeabouttechnologiessuchasartificialintelligenceandautomation.Some

pioneersinthefield,suchasRodneyBrooks,havelamentedthe“hysteriaabouthow

powerfultheywillbecome,howquickly,andwhattheywilldotojobs”(Brooks,2017).

Brooksdidnotsuggestthattherewillnotbechallengesandimpactsfromthese

technologies,butthesewillnotbeassuddenorunexpectedassomepredict.Finally,as

notedbyBrooks,“almostallinnovationsinroboticsandAItakefar,far,longertobe

reallywidelydeployedthanpeopleinthefieldandoutsidethefieldimagine”.Thisis

nottosaythatstakeholdersinCanada’sextractiveindustriescanaffordtodelay

preparingforadigitalfuture.

Globally,digitaltechnologywilltransformextractiveindustries.ForCanada,this

providesanopportunitytoleadindevelopingandcommercializingtheenabling

technologies,inintegratingthesetechnologiesintoglobaloperations,andin

consideringthebroadersocio-economicandregulatoryconsequencesofdigitalization

oftheseextractiveindustries.

DigitalizationofextractiveindustriesinCanadawillcertainlyposeopportunitiesand

challengesforadiverserangeofstakeholders.Inadditiontotheoperatingandsupply

andservicecompanies,individualsandcommunitieswillbeaffectedbydigitalization,as

willgovernmentsandinstitutions(e.g.,educationsystems,regionaldevelopment

organizations,unions,andregulators).Successfullyaddressingtheopportunitiesand

challengeswillrequireearlyandeffectiveengagementofallstakeholdersthatis

informedbyrealisticdigitalizationscenarios,timeframesfortheirimplementation,and

assessmentofthebroaderissuesandimpacts.

51

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