Sunday, June 30, 2013

Hidden Risks, Challenges and Solutions Relating to Commercialization of Technologies for the Extractive and Utility Industries

Technology is helping reinvent how the energy industry approaches extraction, power generation, regulations and sustainability in its business operations. A surge in technology innovation is reflected in investment trends into innovations targeted to help the oil and gas and electric utility industries respond to increasing regulations, an increase in the number of patents relating to the extractive industries and an increased number of business models focused on technology deployment.

Integrating new technologies that can facilitate extraction, minimize environmental impact and positively impact a company’s bottom line are increasingly sought after and new business models that involve multiple stakeholder engagement can expedite the process. A Bain report highlights development of “globally competitive clusters” defined as geographic concentrations of interconnected companies, specialized suppliers, service providers and associated institutions in related sectors to increase productivity and lower the cost of doing business. In another example, national oil companies play a big role in driving technology development. Brazil’s Petrobas has developed leading-edge technology for deep-water exploration, development and production.
While technology deployment represents huge business opportunity, commercialization of technology can pose a number of legal challenges to companies in the energy industry and those that are approaching the energy industry. In particular, there are key issues that every company should be aware of, for example: (1) the consequences of public disclosure; (2) the consequences of a failure to define ownership of technology; (3) the difference between trade secret and patent protection and the impact on talent acquisition; and (4) the challenges that may arise from employee developed technology - just to name a few. Beyond the intellectual property issues, testing technology under real world conditions can raise challenges in the regulatory arena. For example, achallenge can arise when an early stage innovator asks a utility or a company in the extractive industry to modify an existing permit so that they can test technology under unique parameters. In effect, the innovator is asking the utility to put their permit or “stack” at risk, a scenario referred to as “stack risk”, and asking the utility to accept the uncertainty of the regulatory process.
It's further no surprise that access to financing is often a barrier to these emerging companies. Power generation and natural resource extraction are cost intensive industries. For some technologies, the fully deployed cost could be $200-$300 million. A number of energy related venture capital firms fund promising startup companies in energy technology, materials and related businesses. Large corporations fund some of these venture capital firms and many have created venture funds of their own. Chevron Venture Capital for example, finds and makes investments in early-stage companies offering technology valuable to Chevron, then helps Chevron business units implement that technology. Chevron Venture Capital searches for technologies that will enable Chevron to operate more efficiently, expand operations, or launch viable new businesses.
More specifically, Chevron seeks investment opportunities in four critical and broad categories, namely: the spectrum of oil and gas (including infrastructure, enhanced oil recovery and water remediation to name a few), emerging/alternative energy, advanced materials, communications and networking to support industrial and remote applications and information technologies.
Shell created Shell Technology Ventures to promote and accelerate advanced technologies and game-changing innovation. The Shell Technology Ventures team invests in companies across the energy sector to speed up the development and deployment of new technologies that they foresee will complement their business. Shell seeks to make investments in early-stage technology companies that accelerate deployment of oil and gas technologies, investments in early-stage technology companies and projects focused on future energy technologies, as well as Shell spin-off technologies.
For technology companies, the ultimate goal is to move from proof of concept to market integration. There are a number of organizations that were established to assist with market confirmation and to accelerate deployment while also often providing additional access to capital. It is also important to note that not all innovation involves new technology and sometimes the fastest solution is adaptation of existing technologies. The Oil and Gas Innovation Center was established to identify new technology ventures that might apply to the oil and gas space. The Oil and Gas Innovation Center also provides the opportunity for emerging technology to confirm with industry a need for their technology solution another critical element to commercialization.
Another organization that recognizes the importance of adaptation of existing technologies is the Research Partnership to Secure Energy for America (RPSEA), a non-profit established to cooperatively find solutions to energy production in the United States and offer funding opportunities in specific technology areas. “Their mission is: to facilitate a cooperative effort to identify and develop new methods and integrated systems for exploring, producing, and transporting-to-market energy or other derivative products from ultra-deepwater and unconventional natural gas and other petroleum resources, and to ensure that small producers continue to have access to the technical and knowledge resources necessary to continue their important contribution to energy production in the U.S.
In summary, the energy industry presents huge opportunity for new technology ventures. It is critical however, for companies to protect their intellectual property, define ownership up-front and confirm that their solution directly comports with the identified problem.
At de la Torre Law, LLC we understand intellectual property and the energy industry. We can help you confirm opportunity and protect your interests. Contact us today to learn how.

No comments:

Post a Comment