As we start into 2020 - the year of perfect vision - I’d like to stop and acknowledge the incredible successes the amazing team at Acceleware achieved in 2019.
First and foremost, we continued to develop and add to our sizeable base of intellectual property. We started the year off hot by filing three new patent applications in quick succession. We eventually filed six new patent applications, responded to several patent office actions, and made substantial progress on an additional four future patent applications. Intellectual property is a key asset for Acceleware, and we will continue to make significant investments in creating it and protecting it. It is an essential part of our culture to stimulate and nurture innovation, which is evidenced by our truly talented group of inventors. I’m looking forward to seeing more applications filed and hopefully patents granted in 2020. I would be remiss if I did not specifically single out our prolific inventors: Dr. Michal Okoniewski, Dr. Damir Pasalic, Pedro Vaca and Lynn Tessier - you guys create magic.
In 2019 we substantially overhauled the way we go to market with seismic imaging software. We determined that it was important to get closer to our customers, so we started selling software licenses directly to end users. As a result, we saw a significant improvement in license revenue last year, particularly for AxRTM and AxFWI. In addition, AxFDTD electromagnetic software enjoyed good success in 2019 and it remains a critical component of our AxHEAT RF heating software. In 2020, we will be continuing the direct selling model for seismic, we will continue to develop AxFDTD, and are going to investigate the application of AxRTM and AxFWI to oil sands development, not just for RF XL deployments but also for traditional SAGD. It is critically important for oil sands developers to understand the progress of steam chambers over time, and we think the Acceleware seismic toolkit might be the ideal solution. Eric Trouillot and Tamara Wallington made sure software sales exceeded expectations in 2019, while Dr. Yilong Qin continued to push the envelope on reverse time migration and full waveform inversion. Michal, Ewa Okoniewska, and Mahbod Salmasi made sure AxFDTD continues to lead the industry in speed and features and delivers what we need to continue developing RF XL.
We spent a great deal of 2019 completing the mechanical design of RF XL, and de-risking each element thoroughly. Each component from the GE Research designed and built radio frequency converter to the horizontal antennae have been painstakingly designed and tested to ensure they will operate as intended in a variety of downhole conditions. As of the end of 2019 we have a design that is ready to go – de-risked, manufacturable, deployable and with a volume cost profile that confirms our capital cost projections. It is truly amazing to me what our team has been able to accomplish while wrestling with the often-competing demands of function, complexity and cost. We are ready to go – I can’t wait to see this “run-in-hole” in 2020! Of course, this would not have happened without the complete attention to detail of Laura McIntyre, the inspiration of Lynn and Michal, and the logistics prowess of Tamara.
Speaking of GE, near the end of 2018 I attended the first article testing of the revolutionary and proprietary silicon carbide (SiC) RF converter we developed in partnership with GE Research. Throughout 2019 we continued to improve and test the design to the point that in December I was able to attend final acceptance testing of the converter. Along the way we benefitted from GE’s expertise to ensure that the converter meets our requirements for cost, efficiency and function. The efficiency of the converter is the single largest contributor to the operating cost profile of RF XL, and our testing shows that the converter’s efficiency meets or exceeds our requirements. We can only expect the efficiency to further improve in production. GE staff also attended field testing of the converter at our “ditch test” facility in central Alberta, and they will be back in Alberta for the big test hopefully later this year. The RF converter design represents a significant component of Acceleware’s intellectual property base, and 2019 proved that we chose the right partner. As always, Michal made sure the final RF converter fully met our requirements, with solid design input from John Nielson, Damir and Mahbod.
While we were working on our technology, mechanical design and de-risking, and the RF converter, we benefitted from the expertise of our incredible partners. In particular we enjoyed an extremely productive two-way information flow with our “major oil sands partner.” It has been incredibly helpful to be on the receiving end of a vast information pipeline that is the result of our partner’s years of in-situ production experience. We have received valuable input on materials selection, drilling techniques, and completion technologies. Laura made sure the information kept flowing in a productive way, with help from Michal and Lynn.
Once we had a completed the prototype RF converter, we wanted to make sure it performed well with a real-world load. Late last year we repeated the RF XL field test we first conducted in 2017, this time with the super-efficient GE converter. The test results demonstrated the synergies realized by incorporating GE’s SiC platform with the capabilities inherent in the RF XL technology. The field test was the largest and most effective assessment completed to date for the RF converter, and achieved the following outcomes:
150 kW of power was successfully injected into a simulated “ditch-test’ reservoir, a 75% increase over maximum power levels injected in 2017.
Converter efficiency was consistent with design expectations and demonstrated that the overall efficiency of the commercial-scale converter will exceed 97%, a critical requirement in ensuring RF XL’s successful economic and GHG-reduction performance.
The converter demonstrated seamless adaptability to a wide range of load impedance levels throughout the test, confirming the converter’s ability to perform under a variety of operating conditions.
The test was a success because of the tireless work of Lynn, Michal, John, Damir, Mahbod, and Laura.
In 2019 we invested significant effort in updating our positioning and branding. Most importantly, we created an all new website and video with a strong clean-tech positioning. In my opinion, the new website built under the direction of Mike Tourigny, Shannon Kadoski, and Kate Tourigny does a great job of telling the Acceleware story.
We were also Invited by the Clean Resource innovation Network (CRIN) to present to government and other stakeholders in Ottawa in May. Based on the success of the CRIN event we held a full-house event co-hosted with CRIN and Petroleum Technology Alliance Canada in June to discuss the state of clean-tech innovation in oil and gas in Alberta. These events set the stage for Acceleware to create workgroups now underway that are expanding our reach in advocating for innovation awareness and assistance in 2020. All of this helped to secure interest from JWN to complete a series of articles on Acceleware that started in January 2020 and will continue throughout the year.
One more important success in 2019 – Acceleware hired the immensely talented Tracy Grierson as the company’s CFO. Thanks to Tracy and Tamara, my life was easier and certainly less crowded in 2019.
Despite all these great successes the year was not one without challenges. It was nice to see the provincial and federal elections behind us. While I’m generally pleased to see a pro-development and pro-business government in the provincial capital, some of the policy decisions made in the year were particularly challenging for Acceleware. For example, the UCP government eliminated the long-standing Scientific Research and Experimental Development tax credit. As a refundable tax credit, this was a real source of funding for our company and in 2020 would have enabled us to hire two or three additional highly educated Albertans to work on developing our promising technology. Among the reasons that the government gave for eliminating the SR&ED tax credit was that their data suggested companies conduct R&D in Alberta but commercialize the technology elsewhere. This would certainly not be the case for Acceleware as ours is a made-in-Alberta, for-Alberta solution, that if successful would create hundreds of high paying jobs and generate significant tax revenue for our province. Similarly, Acceleware was able to raise capital for RF XL development from investors with the help of the Alberta Investor Tax Credit (AITC). The AITC was instrumental in providing the patient capital we needed to compliment the federal and provincial government funding we received to test RF XL. Far from “picking winners” this program, at least in the case of Acceleware, allows companies to create high-paying tech jobs in resource-adjacent industries.
The biggest challenge for us in 2019 was getting our commercial-scale test of RF XL underway. In late 2018, our test site partner Prosper Petroleum along with Acceleware applied to the Alberta Energy Regulatory (AER) to conduct a test of RF XL at Prosper’s Rigel facility. However, approval has taken longer than expected. While we don’t have an official reason for the delay, it appears that a combination of several factors such as the election and eventual change in government, turmoil at the AER, and lingering indigenous concerns about Rigel, may have all conspired against us. Beginning in 2019 and continuing now we are addressing this challenge by actively seeking an alternative location of our RF XL test. Led by Mike, with help from Laura, Michal and Heath Williamson we are 100% focused on securing a site so that we can start the RF XL test in 2020. We know we have a great story, with great benefits for Alberta and Canada. We just need a forward-thinking partner with oil sands assets to help us make it happen. There is so much history of innovation in the oil and gas industry in Alberta, let’s not stop now – we can do this.
