The document discusses the development of a battery pack that can capture wasted energy generated during the lowering of a drilling rig's top drive. The battery pack would install in place of one of the rig's generators, allowing the captured energy to be reused and reducing fuel costs by up to 10% per rig. Recent advances in battery technology have enabled this solution, though no rig operators have adopted it yet. The company Powera plans to manufacture and sell these battery packs, which could save rig operators $800 per day in fuel costs.

3. During the operation of a conventional drilling rig, the top drive is lifted up and
down hundreds of times in order to make the well. It is held up by wire rope that is
fixed on one end and manipulated with the drawworks winch on the other. Every
time the top drive is lifted the drawworks consumes energy. When lowering the top
drive, the drawworks uses regenerative braking to control the descent generating
a significant amount of energy. This energy can rarely be consumed by other
components on the rig and is sent to a braking resistor that converts that
electricity to waste heat.
Until recently, there was no commercially viable way to capture, store, and deliver
that energy back to the rig when it can be used. Recent advancements in battery
technology has changed this fact, however no rig operators are adopting this
technology yet. Powera will design, manufacture, and sell advanced battery packs
that will result in fuel savings of up to 10%, potentially saving the rig operator $800
per day.

4. The battery pack can be installed in place
of one of the four generators present in
most rigs. This way it does not require any
additional space and can be readily wired
into the rigs electrical system, minimizing
installation time and impact to operations.

5. The cells in the core of the
battery pack are highly durable
and well insulated to operate
reliably in the most extreme
conditions.

7. Year Revenue $ million Growth %
2015 4,600.3 -28.1
2016 3,485.1 -24.3
2017 3,793.1 8.8
2018 4,655.1 22.7
2019 4,533.0 -2.6
IBISWorld (2019, June).

8. In the five years leading up to 2019, majority of products and services was oil and
gas field drilling machinery and equipment. This showcases the opportunity for the
battery pack to enter the market, since it minimizes wasted energy and puts it to
use.
Since the majority of oil extracting companies use diesel oil drilling rigs and about
50% of all products and services in the industry is the machinery that the battery
pack is targeted to improve, there is a sizable potential market with wealthy
potential customers that would like to reduce expenses on one of the essencial
machines. Oil companies will be intrigued to have the battery pack available to
them, since machinery providers benefit from the inflexible demand for the
standard products on the market.
Although the industry growth is not as sharp as it was in 2016-2017 period, the
industry revenue percent change is consistently growing and oil and gas remains
a $4.5 billion industry.

9. Customer Behavior - Small vs. Large Companies
Looking at the websites of the most prominent drilling
companies in the world, there’s often a section
providing overviews of small innovations they’ve been
incorporating which have been increasing productivity
and serviceability. These companies would be
somewhat dependant on the state of the economy and
how much money they’re willing to spend to improve
versus how happy they are to stay with the clients that
would hire them whether they had our product or not.
With the space being dominated by a few large drilling
companies with a host of small ones, there’s enough
competition to make each one consider innovative
ways of staying ahead of the curve.
Smaller drilling contractors are often competing
against other companies for projects due to
limited lasting client relations. During this
competition, often the contractor that could do
the job for the least amount of money wins out.
Therefore, if our product provides a payoff that
allows smaller companies to decrease their
prices substantially, they would find it beneficial
enough to invest in. On the other hand, if the
economy is in a downturn, smaller companies
would have a more difficult time obtaining
money to invest in new innovations.
At the end of the day, all companies are being pushed to stay ahead of the curve by the economy, public opinion and
competition and the way they do this is by adopting minor innovations.

10. Customer Behavior - Conventional vs. Unconventional
Large customers continuously make efforts to increase their productivity and
efficiency because this is a sector that has potential but companies have
limited capital. This provides incentive to take any steps to save money in the
long term. To be safe, they tend to be “followers” in the technological realm
which means if we gain one, we can gain many. Therefore, although the
energy efficiency would be good to advertise for large companies, our
product’s popularity would depend on its financial payoff and the capital of the
customer based on the state of the current economy.
Unconventional drilling - Horizontally drill into
oil layer and “break” surrounding geology to
release gas/oil.
The success of these companies was based on conventional assets and
methods which means the culture of some companies can still tend to
the conservative side. Regardless, their financial responses to
challenges are often dealt with technological advancements and their
higher capital allows them to constantly invest in what helps their
efficiency.

11. Target Market
The first area of focus will be locally in Alberta with a few large drilling companies such as Foraco and
Boart Longyear, two of the three largest mineral drilling companies in the world, being prominent here
along with one of the largest land drilling companies by revenue, Precision Drilling. BC is more prominent
when it comes to unconventional drilling and would provide an opportunity for us to grow into that high
potential stream during Alberta’s economic downturns while the US’s large possession of rigs would allow
us to move South if need be. Due to the presence of a large amount of land drilling companies in North
America, our focus would be strictly on onshore drilling companies. There is a small amount of potential to
move into offshore drilling as we gain more capital and can therefore innovate further, due to their use of
diesel engines.

12. Business Model
Revenue Expenses
Cost of Product
Maintenance
Team Overhead
Flat Rate - Cheaper in
Bulk
Free - Paid 50% Energy
Savings
OR

13. 93
Active Rigs
Alberta
466
Active Rigs
Canada
806
Active Rigs
In the United States
These active rigs, and the ones in
construction or FEED stages would be
our potential customers

14. Unique Competitive Advantage:
First to Market
As our product can be reverse engineered and replicated we must:
1. File a Patent and seek strong legal counsel
2. Capitalize on early adopters, maximizing first to market advantage

15. Current Market Trends

17. Year Revenue $ million Growth %
2015 4,600.3 -28.1
2016 3,485.1 -24.3
2017 3,793.1 8.8
2018 4,655.1 22.7
2019 4,533.0 -2.6
Mining, oil and gas
machinery industry revenue
growth
IBISWorld (2019, June).

18. In the current environment of economic decline in Alberta, especially in the oil and gas
industry, businesses will be looking for machinery that will save their capital like the
battery pack.
With infrastructure startup and incorporation or proprietorship considerations (as they
relate to fixed start up costs and office expenses) the largest question surrounding the
feasibility is in the cost-benefit analysis for our potential customers. Taking sources
from our industry knowledge, as well as operating off of current vendor quotes for
various materials required, an estimate for a drilling rig construction and solution
implementation is broken down in the following pages.

27. In consideration of this, the cost of implementing this solution before any charge is under 5%
(4.31147%) of the total rig cost, and is therefore relatively insignificant in cost. However, the
total expenditure is still $29,150 at cost - and will need to be contrasted in cost benefit
analysis versus fuel cost saved.
Given an increase of 15% efficiency per the design of our product, our pricing of charge per
installation at $50,000 and Prometheus Energy quoting a $2000/day Diesel cost for an
average drilling rig - the estimated savings are:
$300/day / $2050/week /$109,200/year

28. There is therefore a net savings of $59,200 per annum, which then needs to account for the cost of
lost revenue during installation. Given an average rig produces 15 barrels per day and a timeline of
5 days for installation, there is an additional net loss of profit at $4500. The net benefit is there than
$54,700/year saved or approximately $1050/week saved.
While this is overall still beneficial for the drilling company as a whole, the return margins appear
relatively low and so long term impact beyond the initial first investment is where the benefit lies. It
is worth noting that the cost as a whole is also incredibly low overall, and so companies seeking to
reduce their carbon footprint in the midst of governmental and social pressures would likely opt for
this solution as benefits of this product implementation go far beyond financial and are not readily
measurable.

29. Early Adopters
Getting on AVL for
Large Drillers
Government Grants
and Subsidies
Reopening
Market Saturation

30. ● Early adopters of waste heat recovery units are reaping the benefits of increased efficiency, lesser environmental
impact, and increased profitability. However, some larger companies can be complacent about not adopting the
technology and buying our product. It may not be in their best interest to install our product in the short run, and in
the long run they may be exploring the renewable energy sector. Our product would be ineffective if they transition
to renewable energy.
● A Variable Frequency Drive (VFD) converts alternating current (AC) power to direct current (DC) through a rectifier.
The rectified power is then filtered and stored in the DC bus. The inverter converts it back to AC power with the
proper frequency and voltage for the motor, via pulse-width modulation. Companies can use VFDs to feed energy
back to the incoming power supply through regenerative braking. During motor braking process, the motor
becomes the energy generator. Drives with built-in regenerative capabilities can reclaim the excess energy that
would otherwise be lost, lessening the need for braking resistors and cooling equipment, and associated wiring,
labour installation, and maintenance cost. Industrial users can then return recovered energy to the AC motor or to
the utility or reuse it to power pumps or cooling fans.
● Large oil and gas companies, including LaFarge and TC Energy (formerly TransCanada Corporation), are
implementing waste heat recovery units (WHRU) in their facilities. They are only being utilized in secondary
components, such as compressors and heat exchangers. The benefits include reduced greenhouse gas (GHG)
emissions of up to 44,000 Tonnes of CO2
emissions and addition of $1.3 Million per year in tax rebates. Although,
the technology is not being used on a large enough scale like our product.
Alternative Solutions

31. ● Our product is highly differentiated and there are currently no direct competitors in the industry. But upon
seeing our success, there would be increased threat from new entrants and substitutes. Large oil and gas
corporations would have the resources to reverse engineer our product and manufacture them by
themselves for their own oil rigs. VFDs already pose a threat to our business because they tackle a similar
problem by recovering waste heat energy and returning recovered energy to the AC motor or to the utility
or reuse it to power pumps or cooling fans.
● Government regulations and policies can threaten our business. Especially stricter environmental laws
can motivate companies to transition to greener energy sources, such as solar cells and windmills.
Renewable energy sources already provides 17% of Canada’s total primary energy supply. The most
popular renewable energy source in Canada is hydro, which accounts for 64.1% of total renewable energy
supply. Wind and solar energy are the fastest growing sources of electricity. Already a lot of resources are
being invested in advancing renewable energy. Government of Alberta recently announced up to $70
Million in funding for projects developing technologies to reduce greenhouse gas (GHG) emissions.
Additional government incentives would only further encourage big energy companies to transition.
Industry Threats

32. Emilia
Electrical Engineer
Specializing in Power
Justin
Mechanical Engineer
Drilling Rig Designer
Adi
Mechanical Engineer
Oil & Gas and Process Control Specialist
Eric
Civil Engineer
Field Technician
Chris
Finance and Risk Analysis
Diana
Sales, Marketing and
Operations

33. Next Steps
Manufacturing
Facilities
More Oil Rig
Owners
Support
Infrastructures
Our team has a sound technical knowledge on oil rigs and how to
develop the product. The next step for our business would be to
recruit and connect with people who have the skills that we currently
need to further strengthen the team. We would request Chris to:
● Leverage his network in the oil and gas industry and connect
us with more oil rig owners
● Educate us on the optimal method to manufacture our product,
manufacturing facilities, and how to streamline the
manufacturing process
● Impart his knowledge on the necessary infrastructure to
operate a business; HR, accountant, staff recruitment, and
raising capital
Next Steps

35. Bibliography:
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Case Studies for Performance Tooling from Boart Longyear. (2019). Retrieved from
https://www.boartlongyear.com/products-casestudies/
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https://clients1-ibisworld-com.ezproxy.lib.ucalgary.ca/reports/ca/industry/ataglance.aspx?entid=676)
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Nov. 2019].
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https://www.nrcan.gc.ca/science-data/data-analysis/energy-data-analysis/energy-facts/renewable-energy-facts/20069

36. Bibliography:
Samarova, M. (2018). Top 12 mineral exploration drilling contractors | Coring Magazine. Retrieved from
https://coringmagazine.com/article/top-10-mineral-exploration-drilling-contractors/
Staff, M. (2019). 11 GHG reduction techs awarded new Alberta funding | Tech Innovation | JWN Energy. Retrieved 25 November 2019,
from https://www.jwnenergy.com/article/2019/2/11-ghg-reduction-techs-awarded-new-alberta-funding/
Stark, M., Blackford, T., Vargas, M., Sorice, J., & Davis, M. (2014). Achieving High Performance in Unconventional Operations.
Retrieved from
https://www.accenture.com/t20160513t024221__w__/in-en/_acnmedia/accenture/conversion-assets/dotcom/documents/global/pdf/
dualpub_11/accenture-high-performance-unconventional-operations.pdf
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