CanaPux are a “…CN innovation under development for an environmentally secure and protected way of transporting bitumen or heavy crude.” Looking about twice the size of a single-serving yogurt container, the blackish “puck” floats in water, is not combustible or explosive, and is “environmentally inert” according to company website www.cninnovation.ca.
No doubt Canada’s oil patch is full of innovation. But, for a long time, it has appeared that the best options for transport of bitumen from Alberta related to “flexibility” or “efficiency” and not “adaptability.”
Flexibility:
When a business or organization copes well with an unexpected event – an emergency or a sudden crisis – it can be categorized as “flexibility.” A flexible organization shows a quick response to sudden overloads or unusual demands. A well-publicized example of this reactive business acumen – Maple Leaf Food’s response to tainted meat – form part of MBA case studies. (See Western’s Ivey School of Business “Urgency. Accountability. Transparency. Lessons from Maple Leaf Foods Senior VP Randy Huffman.” (2014))
In the case of the oil patch, a company shows flexibility by how well it deals with freakish weather or a mechanical breakdown. Similarly, the Alberta Government tried to use this flexibility approach when it ordered a scaling-back of oil production in early-December 2018. “The government says that this action will help to reduce volatility and narrow the differential by at least $4 per barrel and add an estimated $1.1B to the economy,” reported CTV Calgary at the time.
But flexibility is just the first step for an effective organization, business, or industry.
Efficiency:
Over recent decades, businesses and organizations did well to “find efficiencies” to achieve successes. A business could satisfy its owners or shareholders by continuously improving their current routines or methods. Goals to make more widgets or make better widgets for the same or lower price can be considered seeking efficiencies. In the auto sector, Honda and Toyota were seen as efficiency experts by North American car companies for many years.
The goal of efficiency even crept into the approach by governments and legislators. How might we provide that public service at a cheaper cost? How might we cut the red tape and remove the regulatory burden so that we can get those plans approved more quickly?
This efficiency approach came forward in Albert and BC in a few ways as governments answered the challenge “How might we transport more bitumen?” The Federal Government took steps a few years ago to add more pipelines or twin existing pipelines. And when the private sector found it too risky to continue with the pipeline addition, the Government announced they would purchase the pipeline so that it would be built.
Then, after the Federal Government’s plan hit a few timing snags, the Alberta Government announced they would purchase 7,000 new rail tankers so that an additional 120,000 barrels of oil a day could be shipped.
These are efficiency solutions to the challenge of transporting more bitumen.
Adaptability:
The CanaPux approach of CN Rail is a little different – by offering an “adaptable” solution. Having worked on the challenge a bit longer, they proactively anticipated the problem ahead of time. The CN team took the time to turn that problem into a solution.
CN developed not only a more efficient method of transport, they changed the product altogether so it could be moved more safely and easily.
First, one open-top rail car can carry 615 barrels worth of heavy crude pellets versus 390 barrels by a tank car (not including dilutive chemicals); that’s 57% more!
But, more importantly, CN’s pellets overcome many environmental worries – because the pellets are “inert”– and can be moved by existing conveyors into and from railcars and ocean freighters.
CN still has a few hurdles to overcome before the broader market uses their system. In fact, they only recently signed a “memorandum of understanding with an Asian partner to build a full-scale production facility converting 50,000 barrels a day into pellets.” (G&M B1).
Yet, if action can occur quickly, the CanaPux technology has the potential to disrupt the ways in which we currently move oil and bitumen. Can you also imagine, for instance, an environmentally-minded regulator insisting on the transport of “inert oil” only? It could also open new markets of other products might be converted to pellets and easily transported.
As Basadur Applied Creativity puts it, “Adaptability is a process of continuous deliberate change-making, beginning with the generation of new problems that ultimately may morph into new opportunities.”
In the end, however, Canada’s oil patch needs to hurry with their adaptations and innovations. Why? Because many other innovators are working on a post-oil economy that will discontinue and disrupt most oil-dependent industries.
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Dave Augustyn holds a Professional Innovation Advisor designation with Basadur Applied Creativity (www.basadur.com) and served as the Mayor of the Town of Pelham and a Niagara Regional Councillor from 2006 to 2018. You may provide your ideas and feedback to Dave at daugustyn@cogeco.ca or check out his Dave Augustyn NOW columns at www.daveaugustynnow.blogspot.com
