Canada oil patent suits stir fears of technology slowdown

Wed Mar 26, 2014 12:55pm EDT
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By Nia Williams

CALGARY, Alberta (Reuters) - A subtle shift is under way in the Canadian oil industry, where collegial collaboration over vital new extraction technology is yielding to corporate protectionism in the race to profit from the world's third-largest reserves.

Canadian energy companies are filing four times more oil and gas technology patents than they did a decade ago and are increasingly turning to the courts to protect the processes and innovations that can make the difference between a profitable oil sands reservoir and an idle tract of land.

The change is in some ways predictable. Oil sands development has raced ahead over the past decade as conventional resources around the world decline, and companies are spending billions of dollars to develop better and cheaper methods to extract the heavy bitumen trapped underground.

But the more secretive approach threatens to discourage a long tradition of collaboration among the tight-knit community of petroleum engineers in Calgary, Canada's oil center, many of them working within an eight-block-square grid downtown.

Engineers say the increased use of patents means they must proceed more carefully with research. To avoid lawsuits or potentially expensive licenses, they need to ensure they don't use techniques or technologies already patented.

The new caution dampens the human interaction that aids the industry's evolution, say industry officials.

"This has had the effect of slowing a lot of innovation down and a lot of meaningful practical day-to-day improvements have been delayed," said Merle Johnson, chief operating officer at Connacher Oil and Gas Ltd CLL.TO. He declined to identify any specific techniques due to fears of lawsuits.

Patent litigation is on the rise. The number of cases in Federal Court doubled in 2013 from a year earlier.   Continued...

Rows of steam generators line a road at the Cenovus Energy Christina Lake Steam-Assisted Gravity Drainage (SAGD) project 120 km (74 miles) south of Fort McMurray, Alberta in this August 15, 2013 file photo. REUTERS/Todd Korol/Files