Moving Energy Technology Forward

Canada’s Kensington Capital Partners is helping promising new energy technology become reality with its venture fund and new office in Calgary. And the firm’s Michelle Scarborough says this is just the beginning of the energy tech evolution.

An unsung hero of the recent oil and gas boom is the new technology making it possible. And in Canada, Kensington Capital Partners is looking to help provide capital for some of this new technology with a new office in Calgary and a venture capital fund.

Michelle Scarborough, a senior vice president at Kensington, will head the firm’s new office in Calgary. She has years of experience in venture capital and energy technology, and has been at the center of the oil and gas boom in Alberta.

“Technology is seen, particularly by producers, as a key tool in the toolbox to drive the transformation of the energy sector,” Scarborough says. “[Energy] has always been innovative.”

She adds that the next stage of the North American energy revolution will be tech-driven, and will transform how oil and gas is gathered in the next 10 to 20 years. In Canada, some of the key drivers will be digital oil fields, reservoir imaging, and 3D simulation, along with communications systems and real-time analytics that are used in the energy industry. Related to that is technology used in safety and security, lasers, sensors, and robotics. “These are all low-hanging fruit,” Scarborough says.

Further down the production pipeline is technology developed to improve energy efficiency and storage, water desalination and repurposing, and emissions management. “We’re seeing big changes in sustainable technologies,” Scarborough says. “All of these have an environmental, sustainable [impact].”

Kensington Capital launched the Kensington Venture Fund in November 2014 with a lead investment from the Government of Canada’s Venture Capital Action Plan, which is a $400M strategy designed to increase private sector investments in emerging Canadian technology companies. The fund will be invested throughout Canada, but Kensington decided to increase its presence in Western Canada to take advantage of opportunities coming out of the area’s underserved VC markets in energy tech, including digital oilfields, smart grids, and alternative energies.

Investing in Alberta’s energy market is not new to Kensington, a large investment manager that has funds for infrastructure and private equity, and a hedge fund. Scarborough says there has been a grassroots effort to build the energy technology revolution, and the firm wants to play a larger role in building the ecosystem, in addition to providing capital. Its venture fund has already made some investments in energy technologies, and is looking to make some more via both fund investments and direct investments.

“Alberta is a world leader in oil and gas now,” says Scarborough. “We have the third- largest reserve in the world, and we have the opportunity to take advantage of some of those things. Because of the transformational stage of energy [that we’re in], technology is making the changes more robust.”

Much like the energy revolution in North America, the advancement in technology has been happening for a few years. Scarborough assesses the technology evolution as “in the beginning stages, ” adding: “We’re going to see a movement of energy technologies, and we’re going to see a disruption in certain areas. We’re looking for the highest-potential-growth companies, those that have traction. We’re looking to build a platform that can be done globally.”

While the technology has made getting oil and gas out of the ground more efficient, there are environmental concerns to be addressed. Cost reduction, greenhouse gas emissions, and producing oil and gas in a more economical and viable way are also things that Scarborough says will be forthcoming in the energy industry.

“We’re going to see a whole new innovation set. If you think of water technologies, automation, and data analytics systems in the energy space, there are applications in adjacent industries like municipalities, agriculture, and the chemical space. It’s a very unique time in the market.”