The 2013 World Economic Forum stated in its Global Competitiveness Reportthat firms must,“design and develop cutting-edge products and processes to maintain a competitive edge and move toward even higher value-added activities. This progression requires an environment that is conducive to innovative activity and supported by both the public and the private sectors. In particular, it means sufficient investment in research and development (R&D)…”
While R&D may require funding and hard work, it is essential for generating higher value economic activity, prosperity, and improved quality of life.
In 2009, the Government of Newfoundland and Labrador took decisive action to embrace this economic principal with a groundbreaking R&D initiative to build a stronger knowledge-based economy and plot a course toward sustained prosperity.
The initiative resulted in the creation of the Research and Development Corporation (RDC), an arm’s-length crown corporation with a mandate to strengthen R&D for the long-term economic development if the province.
RDC is committed to making strategic investments in business-led and academic-led R&D,with a focus on increased private-sector investment. This commitment provides tremendous opportunities for innovative, results-oriented companies in Newfoundland and Labrador – and from around the world.
To achieve results, RDC offers a full suite offunding programs and targeted initiatives aimed at enhancing thequality and quantity of business-led and collaborative R&D.One of RDC’s main priorities is to increase thelevel of business investment in R&D in theprovince to match the higher levels achievedin leading national and internationaljurisdictions. RDC aims to increase R&D in its priority sectors of energy, mining and minerals, and ocean technology to capitalize on the province’s competitive strengths and maximize the potential for economic impact. The province welcomes proposals and initiatives that will bring new R&D projects to the province.
In 2013–2014, RDC’s commercial R&Dproject approvals exceeded non-commercialprojects – a positive indicator of growingbusiness investment in R&D.During the year,57 RDC projects hadinvestment from businesses. RDC is investing$10 million in these projects, with totalproject costs of $34 million.A further 78 projects supportedR&D collaborations between businessand academia or government partners.
Newfoundland and Labrador is a ‘real-time Arctic laboratory.’
RDC believes in playing to its strengths, or rather, to the province’s strengths. For Newfoundland and Labrador those strengths relate to the cold, harsh, ice-prone waters that surround most of the province, and the sub-Arctic climate. For generations Newfoundlanders and Labradorians have successfully worked in this challenging environment and exported their expertise to other regions around the world. Most recently this has led to the development of a strong ocean technology cluster, significant advances in ice science and ice-related R&D, harsh environment remediation work, development of simulators, and advances in remote sensing technology applications.
As a result, Newfoundland and Labrador has been described as “a real-time Arctic laboratory,” by Statoil’s Senior VP Exploration for North America. In other words, Newfoundland and Labrador is a realistic, cost-effective proving ground for work that will ultimately take place in harsher, more extreme environments such as the high Arctic. This is an accessible Arctic-like location, with significant, globally competitive R&D infrastructure and expertise. To leverage this competitive position and capture economic value, RDC has placed a strategic focus on supporting Arctic and harsh-environment R&D.
This focus has resulted in RDC investing $22 million in 97 Arctic and harsh environment R&D projects since 2009. RDC’s flagship program is ArcticTECH, launched in 2012, which supports commercial and non-commercial R&D projects, with RDC contributions of up to $500,000.
RDC has been instrumental in increasing new R&D investment by industry. Most notably, in March 2013 Statoil established a $5 million Arctic R&D Step Up initiative in collaboration with RDC. This initiative represents not only a major boost to the local R&D landscape, but also Statoil’s first major investment in R&D outside of Norway.
Consider the case of the Hibernia oil platform, the world’s first offshore gravitybased structure (GBS) built to withstand an iceberg impact. Built with the latest technology available at the time, it was engineered and constructed to withstand a strike from six-million ton iceberg.
But in the 20 years since Hibernia was constructed, significant advancements in ice management, monitoring, and engineering have taken place through R&D. As a result, construction requirements for the next offshore GBS could be safely reduced. The result: the Hebron GBS could be designed and built two-thirds the size of Hibernia, resulting in a saving of approximately $1 billion in construction costs.
Another characteristic of Newfoundland and Labrador’s harsh environment is corrosivity. Wind, wave, salt spray, fog, freezing & thawing, frozen precipitation of all forms, all help make this province a deeply corrosive environment. And again, it is also an accessible environment.
RDC recognizes that it can enhance R&D capacity through the development of new R&D assets that leverage this proximity to harsh environments. These assets can be owned by RDC, academia or private enterprise. The assets can help industry solve technical challenges, such as corrosion. They can also help support the attraction and development of businesses and leading researchers, and strengthen the province’s competitive position in areas such as Arctic and harsh-environment technologies.
RDC’s Atmospheric Corrosion Test Site is one such opportunity. The new site offers year-round fieldtesting to advance the development of solutions and technologiesthat protect vital industry assets. This facility iswell suited for corrosion research and development projects.Its location at the exposed headlands of the southern AvalonPeninsula in the North Atlantic Oceanrepresents one of the harshest and most corrosive naturalenvironments in North America. The site is strategically located in Argentia,just 90 minutes from the globally recognized R&Dfacilities and institutions in the St. John’s area.
In 2013, RDC commissioned Wade Locke Economic Consulting to prepare an independent analysis of the economic impacts of research and development in the province, and of RDC in particular. Dr. Locke found that every dollar RDC invests generates $2.4 in total overall R&D project activity, $6 in inter-firm sales (business revenues) and $2.2 in income. His analysis determined that every million dollars invested by RDC results in 21 person years of employment.
While Dr. Locke’s findings speak to RDC’s impact to date, the real prize of R&D is the application of new discoveries in the provincial economy to generate new businesses, create new products, and grow employment. Dr. Locke’s analysis highlighted this long-term potential, stating that “as impressive as these economic impacts are, they pale in comparison to the potential economic impacts that will be realized as RDC-supported R&D initiatives continue to improve innovation and productivity within the province over a longer term.”
Dr. Locke undertook a close examination of two R&D projects supported by RDC, one of which could provide significant dividends is the Hibernia Enhanced Oil Recovery (EOR) Laboratory at Memorial University. This new lab houses state-of-theart equipment that will allow researchers to perform enhanced oil recovery experiments under realistic reservoir conditions. It has the potential to unlock 50–100 million barrels of oil and increase the value of output by $5–10 billion. This would mean an additional $2.1–$4.4 billion in royalties for the province.
These fundamental investments support a high-performing R&D environment that consistently solves technical challenges and translates them into economic activity. The resources are being put in place. The R&D that could benefit the province and change the world is underway.
With the Newfoundland and Labrador Oil and Gas Industries Association (Noia)
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