1. Silver Lining Energy:Silver Lining Energy:
our way to long termour way to long term
profit and sustainabilityprofit and sustainability
Presentation to the Board, April 17, 2014Presentation to the Board, April 17, 2014
By Andrea Garnier SpongbergBy Andrea Garnier Spongberg
2. We have an opportunity toWe have an opportunity to
lead the world in it’slead the world in it’s
search for cleaner, moresearch for cleaner, more
responsible energyresponsible energy
We have significant research and engineeringWe have significant research and engineering
capacity. Using that capacity for research andcapacity. Using that capacity for research and
development will yield valuable goodwill.development will yield valuable goodwill.
We have a choice to make which will impact not onlyWe have a choice to make which will impact not only
our company but our childrens’ children as well.our company but our childrens’ children as well.
Done right, this development could make ourDone right, this development could make our
company a game changer and a household name.company a game changer and a household name.
3. The issueThe issue
• We have leased land from the Alberta GovernmentWe have leased land from the Alberta Government
for oil sands development just north of Edmonton.for oil sands development just north of Edmonton.
• How can we ensure that our investment will give usHow can we ensure that our investment will give us
good return at the same time as being as responsiblegood return at the same time as being as responsible
and sustainable as possible?and sustainable as possible?
• I will consider a number of options and present wellI will consider a number of options and present well
reasoned conclusions, utilizing two DM models, forreasoned conclusions, utilizing two DM models, for
the Board’s consideration.the Board’s consideration.
4. Option #1Option #1
Mining bitumen traditionally (business as usual) hasMining bitumen traditionally (business as usual) has
become an onerous and expensive process, not tobecome an onerous and expensive process, not to
mention non-sustainable. Environmental legislationmention non-sustainable. Environmental legislation
requires tailing ponds to be bullet proof, reclamationrequires tailing ponds to be bullet proof, reclamation
to be gold-plated and emissions to be lower thanto be gold-plated and emissions to be lower than
reasonably do-able. Only 20% of the product laysreasonably do-able. Only 20% of the product lays
within two hundred feet of the surface meaning lowwithin two hundred feet of the surface meaning low
sustainability for the mine in the long term. Productsustainability for the mine in the long term. Product
is shipped out and no value add is applied, leavingis shipped out and no value add is applied, leaving
opportunities on the table. Fracking for natural gasopportunities on the table. Fracking for natural gas
will soon be banned due to NIMBY, thereforewill soon be banned due to NIMBY, therefore
bitumen remains our most efficient source of energy.bitumen remains our most efficient source of energy.
5. Option #2Option #2
Mining bitumen using waterless steam assistedMining bitumen using waterless steam assisted
gravity drainage has better ROI with lessgravity drainage has better ROI with less
environmental issues. Solvents are injected intoenvironmental issues. Solvents are injected into
deep product sources, reducing water use, carbondeep product sources, reducing water use, carbon
footprint and land disturbance. Product is pumpedfootprint and land disturbance. Product is pumped
to the surface and diluted and then shipped orto the surface and diluted and then shipped or
pipelined to refineries far away and unprovenpipelined to refineries far away and unproven
markets. Dilbit (diluted bitumen) shipments aremarkets. Dilbit (diluted bitumen) shipments are
becoming an environmental quagmire however.becoming an environmental quagmire however.
Public pressure will reduce options for shipping. ThePublic pressure will reduce options for shipping. The
lack of value add decreases the opportunities forlack of value add decreases the opportunities for
investment.investment.
6. Option #3Option #3
Mining using the waterless SAGD method using aMining using the waterless SAGD method using a
Toshiba nuclear reactor as fuel. Then refining theToshiba nuclear reactor as fuel. Then refining the
bitumen using David Black’s method (Fischer-bitumen using David Black’s method (Fischer-
Tropsch) to produce clean diesel, gasoline and jetTropsch) to produce clean diesel, gasoline and jet
fuel. This option would produce value-addedfuel. This option would produce value-added
products at a world class level for environmental andproducts at a world class level for environmental and
corporate responsibility as well as turn a healthycorporate responsibility as well as turn a healthy
profit. Workers would be bussed in from Edmontonprofit. Workers would be bussed in from Edmonton
to provide much needed jobs for Canadians. Theto provide much needed jobs for Canadians. The
fuels could be trucked to strong markets all overfuels could be trucked to strong markets all over
North America via a very safe and proven method.North America via a very safe and proven method.
7. Option #4Option #4
Relinquishing the lease on the oil sands land from theRelinquishing the lease on the oil sands land from the
Alberta Government (which may incur penalties).Alberta Government (which may incur penalties).
Purchasing rights to appropriate land to pursuePurchasing rights to appropriate land to pursue
unproven, research-intensive alternative energyunproven, research-intensive alternative energy
technology and delivery methods. This includestechnology and delivery methods. This includes
solar, wind, nuclear, hydro, hydrogen, natural gas,solar, wind, nuclear, hydro, hydrogen, natural gas,
clean coal, green fuel or tidal power. These methodsclean coal, green fuel or tidal power. These methods
are mostly non-sustainable with regard to ROI andare mostly non-sustainable with regard to ROI and
scale. They do not make enough energy to meetscale. They do not make enough energy to meet
even current demands, let alone future demands.even current demands, let alone future demands.
8. The Kepner Tregoe DMThe Kepner Tregoe DM
ModelModel
Decision Statement: We want to make a profitableDecision Statement: We want to make a profitable
sustainable product.sustainable product.
Strategic requirements: profit and low riskStrategic requirements: profit and low risk
Operational objectives: sustainability and greenOperational objectives: sustainability and green
Restraints: legislation and cost/price of energyRestraints: legislation and cost/price of energy
OBJECTIVE WEIGHT
PROFIT 10
LOW RISK 8
ENVIRONMENTALLY SOUND 7
SUSTAINABILITY 6
9. The optionsThe options
1. Mining bitumen alone, stripping and reclaiming1. Mining bitumen alone, stripping and reclaiming
2. Mining bitumen alone, drilling using steam assisted2. Mining bitumen alone, drilling using steam assisted
gravity drainage processgravity drainage process
3. Mining bitumen using one of the above processes with3. Mining bitumen using one of the above processes with
nuclear power and refining in situnuclear power and refining in situ
4. Relinquishing the lease and pursuing alternative4. Relinquishing the lease and pursuing alternative
energy such as solar, wind, nuclear, wood, hydro, naturalenergy such as solar, wind, nuclear, wood, hydro, natural
gas, coal, green fuel or tidal powergas, coal, green fuel or tidal power
OPTION 4 IS ELIMINATED DUE TO HIGH COSTS, LACK OFOPTION 4 IS ELIMINATED DUE TO HIGH COSTS, LACK OF
PROVEN PROFIT AND RELATIVELY HIGH RISK.PROVEN PROFIT AND RELATIVELY HIGH RISK.
11. Scoring and finalScoring and final
weighted scoresweighted scores
OBJECTIVE WEIGHT #3 SATISFACTION WEIGHTED SCORE
PROFIT 10 8 80
LOW RISK 8 5 40
ENV. FRIENDLY 7 6 42
SUSTAINABLE 6 6 36
OPTION TOTAL WEIGHTED SCORE
#3 SAGD/NUCLEAR/REFINERY 198
#2 SAGDMINING 183
#1 STRIP MINING 170
OPTION #1 IS REMOVED AND THE NEGATIVE EFFECTS OF #3 AND #2 WILL BE SCORED
12. Final scoring KT DMFinal scoring KT DM
modelmodel
Using the Kepner Tregoe DM model reveals that onlyUsing the Kepner Tregoe DM model reveals that only
Option #3 overcomes the adverse affect ofOption #3 overcomes the adverse affect of
transportation to market issues and reducingtransportation to market issues and reducing
greenhouse gas emissions through the use of nucleargreenhouse gas emissions through the use of nuclear
power.power.
OPTION #3 SAGD/NUCLEAR/REFINERY IS THEOPTION #3 SAGD/NUCLEAR/REFINERY IS THE
WINNING OPTION USING KEPNER TREGOE DMWINNING OPTION USING KEPNER TREGOE DM
MODELMODEL
Let’s use another DM model to assess the sameLet’s use another DM model to assess the same
options: the PrOACT Structured DM Frameworkoptions: the PrOACT Structured DM Framework
used by BC Hydroused by BC Hydro
13. The PrOACT StructuredThe PrOACT Structured
DM FrameworkDM Framework
Pr – define the problemPr – define the problem
O – specify the objectives and measuresO – specify the objectives and measures
A – create imaginative alternativesA – create imaginative alternatives
C – identify the consequencesC – identify the consequences
T – clarify the trade-offsT – clarify the trade-offs
14. PrOACT DM frameworkPrOACT DM framework
Problem: How do we generate long term energyProblem: How do we generate long term energy
profits with minimal risk?profits with minimal risk?
Objectives: profit, low risk, environmentally friendly,Objectives: profit, low risk, environmentally friendly,
sustainable over long termsustainable over long term
Alternatives: strip mine bitumen; SAGD mineAlternatives: strip mine bitumen; SAGD mine
bitumen; SAGD mine bitumen with nuclear energybitumen; SAGD mine bitumen with nuclear energy
and refine in situ; develop alternative energy.and refine in situ; develop alternative energy.
Consequences:Consequences:
Strip mine SAGD SAGD plus Alt energy
profit moderate moderate moderate low
Low risk moderate moderate moderate low
Env. friendly Very low low high high
sustainable Very low moderate high moderate
15. PrOACT Tradeoffs, Uncertainties and RiskPrOACT Tradeoffs, Uncertainties and Risk
ToleranceTolerance
Strip mine SAGD SAGD plus Alt. energy
Profit 4 4 4 1
Low risk 3 3 3 1
Env. friendly 1 2 4 5
Sustainability 1 3 5 4
Uncertainties: Environmental Legislation may prohibit transport of bitumen
and fracking, resulting in higher prices for bitumen refined in situ.
Risk Tolerance: Based on our risk tolerance it would seem that Option 3
SAGD powered by nuclear plus refining in situ would have the least risk and
the best potential for meeting all objectives.
16. ConclusionConclusion
Utilizing two Decision Making models we are able toUtilizing two Decision Making models we are able to
see a pattern emerge. Clearly Option #3 of thesee a pattern emerge. Clearly Option #3 of the
waterless SAGD bitumen mining method powered bywaterless SAGD bitumen mining method powered by
a Toshiba Nuclear plant accompanied with a Fischer-a Toshiba Nuclear plant accompanied with a Fischer-
Tropsch method refinery in situ will fulfill our overallTropsch method refinery in situ will fulfill our overall
objectives for longterm profitability and a relativelyobjectives for longterm profitability and a relatively
low risk energy producing operation. We will reducelow risk energy producing operation. We will reduce
environmental/public conflict while providing longenvironmental/public conflict while providing long
term value to our shareholders.term value to our shareholders.
17. ReferencesReferences
Black, D. (April 29, 2013) The case for the Kitimat Refinery.Black, D. (April 29, 2013) The case for the Kitimat Refinery.
National PostNational Post
Hammond, Keeney and Raiffa (1998) Smart Choices: AHammond, Keeney and Raiffa (1998) Smart Choices: A
Practical Guide to Making Better Decisions. Boston:Practical Guide to Making Better Decisions. Boston:
Harvard Business School Press.Harvard Business School Press.
Oil Sands innovation. ImperialOil.ca. Retrieved April 15,Oil Sands innovation. ImperialOil.ca. Retrieved April 15,
2014.2014.
Leach, A. (Nov. 10, 2013) Extraction vs. Upgrading.Leach, A. (Nov. 10, 2013) Extraction vs. Upgrading.
Andrewleach.caAndrewleach.ca
Weaver,A. (Feb. 9,2014) BC and the Alberta Tar Sands.Weaver,A. (Feb. 9,2014) BC and the Alberta Tar Sands.
Andrewweavermla.ca/news/Andrewweavermla.ca/news/
