1

FixO3 - Deliverable D5.2: List of Current Commercial Sector Needs from Ocean Observatory Sector

Project 312463 - Fixed Point Open Ocean Observatories Network

Work Package number WP5

Work Package title Innovation Through Industry

Deliverable number D5.2

Deliverable title List of Commercial Sector Needs

Description Meeting between open ocean observatory researchers and the commercial sector to discuss current advances in marine technology/research and what the commercial sectors needs/requirements are over the next 5-10 years (discuss the likely 5 innovative products/services)

Lead beneficiary SLR

Lead authors Nick O’Neill (SLR), Charlie Carlisle (SLR)

Contributors IFEMER, UiT, UPC

Submitted by Luisa Cristini

2

I. Introduction ........................................................................................................................................... 3

II. Background ............................................................................................................................................ 3

III. Method of Investigation .................................................................................................................... 4

i. Conferences attended ....................................................................................................................... 4

ii. Stakeholder Engagement .................................................................................................................. 4

IV. Results and Findings .......................................................................................................................... 5

i. Our Market ........................................................................................................................................ 5

ii. Ocean Observatories and the Offshore Oil & Gas Industry ............................................................... 8

V. Recommendations ................................................................................................................................. 9

ANNEXES ...................................................................................................................................................... 10

References ................................................................................................................................................... 10

Table of contents

3

I. Introduction

The objectives of WP5 of FIXO3 is to promote interaction between the ocean observatory research community and the commercial sector, proactively promote FixO3 and wider open ocean observatory products and services to the commercial sector, identify innovative products & services within the ocean observatory community and develop targeted IPR agreements to encourage interest by the commercial sector. There is a need to commercialize- and ultimately create jobs- from ideas developed through publicly-funded research. The most relevant indicators of commercialisation performance are the rate of spin-out company formation and the number of technologies licensed to industry. This report summarizes the deliverable of Task 5.2 which was to meet with open ocean observatory researchers and the commercial sector to discuss current advances in marine technology research and identify the needs of the commercial sector over the next 5 to 10 years. Matching innovative scientific products with commercial needs will lead to spin-out company formation and the licensing of new technologies by companies.

II. Background

The ESONET, ESONIM and ESONET Network of Excellence projects included tasks that addressed the potential end users of ocean observatory data products and services. The opportunity for ESONET is to combine their product (data from ocean sensor infrastructure) with services (data processing, interpretation and forecasting) to deliver medium term value while engaging in pure scientific research that will drive innovation in the future. There is increasing commercial interest by the private sector in using ocean observatories for environmental monitoring. Below is a PEST diagram that illustrates some of the external developments that present opportunities to the ESONET business:

Sociological Technological

Recognition of climate change

Fears about environmental damage

Public fascination with ocean life & secrets

Fears about tsunamis & earthquakes

Security fears

More smart sensors on the market

Improved bandwidth

Better power systems for remote subsea operations

Increased access to broadband in homes

Reduced costs for fibre optic cabling

More off the shelve solutions

Economic Political & Legal

Increasing private sector spend on environmental monitoring

Public sector investment in innovation as driver of economic growth

Increasing natural hazard insurance claims

Investment in bio-prospecting by pharma industry

New markets in emerging economies

Demand for environmental security

Need for marine spatial planning

Drive for sustainable development of marine resources

UNCLOS & need for international oversight of deep ocean resources for common good

The contract award notices in the marine sector relevant to ESONET were reviewed in 2010 by the ESONET

NoE and updated in 2013 (see Annex 3). The findings of the review in 2010 concluded that:

1. There is a market for the products and services developed by the partners of the ESONET NoE.

2. Most of the customers are US, European and national research agencies, military navies, coast

guard agencies and the oil industry.

3. There was an increase in the number of large value contracts originating from the growing

economies of Brazil, Russia, India and China in 2010.

4. European companies are winning these contracts against stiff competition from US companies.

Investment by the public sector in ESONET infrastructure in Europe will be a driver for innovation that will

supply more products and services to the growing economies in Africa, Asia and the Middle East.

4

This report updates the market research work of the 2010 ESONET NoE Report and identifies the current

advances in marine technology/research and what the commercial sector’s needs/requirements are over

the next 5-10 years.

III. Method of Investigation

An indicator of commercial interest in products and services from ocean observatories is the number of contract awards that have been made in 2013 for these products and services. Contract awards for 2013 were reviewed on websites and in maritime industry trade journals to identify current needs and requirements for products and services associated with ocean observatories.

A number of one-to-one meetings were organized with private equity companies that provide venture

capital investment for early stage companies with pioneering technologies. A number of ocean observatory

technologies at TRL7 stage were presented including water quality sensors, anti-biofouling and deep water

power and control systems. The meetings provided an opportunity to obtain insights into the future needs

of, in particular, the oil exploration industry which is increasingly moving into deeper water as new oil and

gas prospects are being discovered.

i. Conferences attended

A number of conferences and workshops were attended in advance of and after the FixO3 Project commencement date with a view to identifying FixO3 suppliers who had products and services they wished to commercialise and potential service company partners who have access to new markets.

Title Location Date Remarks

SPE Offshore Europe

Conference & Exhibition

Aberdeen 3rd – 6th September

2013

Showcases the innovation,

solutions and tools

required to operate in the

offshore Oil & Gas Sector

UK-IMON International

Workshop on New

Monitoring Technologies

Southampton 10th – 12th

September 2013

A workshop to identify

those technologies that

can increase the efficiency

and reduce the cost of UK

marine monitoring over

the next 5–10 years.

Oceanology International

2014

Excel London March 2014 OilTech Investment

Network

European Maritime Day

Conference

Bremen

Congress Center

28215 Bremen

May 2014 EMD face to face meetings

with other maritime

stakeholders

EGU Vienna May 2014

The list of contacts that were interviewed is in Annex 1.

ii. Stakeholder Engagement

Stakeholder engagement began with interviews with FixO3 partners. WP2 collected all relevant technical information on hardware, software and middleware characteristics of each FixO3 site. WP12 has identified CO2 measurement, pH measurement and passive acoustic data processing as products and services to be further developed.

5

At Oceanology International 2014 presentations were made to the Oiltech Investment Network. The

members of the Network include Altira Group LLC, a Denver based venture capital firm, BP Technology

Ventures, Chevron Technology Ventures, Conoco Phillips, Energy Ventures, based in Stavanger, Aberdeen

and Houston, GE Ventures, Investinor, a Norwegian government venture firm, Lime Rock Partners, Saudi

Aramco Ventures, Shell Technology Ventures, Statoil Technology Invest, and Viking Venture, a leading

Nordic technology focused venture firm. Discussions with these venture capital firms identified the qualities

that venture capital companies look for in start-up companies and the technologies that the oil industry

wishes to invest in to meet current and future challenges.

In addition invitations to apply for access to the FixO3 observatory infrastructure were distributed to

targeted exhibitors at the Oceanology International 2014 exhibition. The distribution of TNA invitations

allowed researchers Charlie Carlisle and Nick O’Neill to discuss current and future industry needs with

ocean engineering, communications, senor technology, environmental management, data interpretation,

management and processing, inspection, maintenance and repair and metocean companies.

The UK IMON International Workshop on New Monitoring Technologies held at NOC in September 2013

provided information on current and future industry needs from ocean observation.

The NeXOS Project, composed of 21 partners including public entities, companies and scientific

organisations from 6 European countries, is developing new cost-effective, innovative and compact

integrated multifunctional sensor systems (ocean optics, ocean passive acoustics, and sensors for an

Ecosystem Approach to Fisheries (EAF)), which can be deployed from mobile and fixed ocean observing

platforms, as well as to develop downstream services for the Global Ocean Observing System (GOOS), Good

Environmental Status (GES) of European marine waters (Marine Framework Strategy Directive) and the

European Common Fisheries Policy (CFP). Consultations were held with the NeXOS partners to better

understand the products and services that are required to implement new European marine policy.

IV. Results and Findings

i. Our Market

The estimated turnover in the UK based marine science and technology business in 2013 was £1.05 billion,

of which Oil & Gas makes up 39%, and the trend is upwards (Society of Marine Industries, 2013). The target

market within the marine science and technology business for products and services developed by ocean

observatories is the Ocean environmental monitoring & metocean analysis sector (Figure 1). The key

segments within that sector are Autonomy & Sensors (sensor technologies, biofouling & robotics) and

Marine Information & Computing Technologies. The problem for FIXO3 products and services in this market

is that ocean observation technology is largely at prototype (TRL 7) stage and lacks certification appropriate

for key market segments, such as oil & gas operations.

Figure 2 shows the breakdown of customers in the marine science and technology business. Oil and gas

companies make up nearly 40%. Renewable Energy and Environmental Monitoring also make up a

significant percentage of the marine science and technology business. There are emerging business areas in

biotechnology and carbon capture and storage (Baussant, 2013).

6

Figure 1 Ocean Observatory Infrastructure

Figure 2 Market Size marine science and technology (Source: Annual Review of UK Marine Scientific Industries 2013)

7

Figure 3 Market Trend marine science and technology (Source: Annual Review of UK Marine Scientific Industries 2012)

It is helpful to think of the marine science and technology business in terms of its supply chain with top tier

customer companies buying products and services from service companies who in turn buy products, such

as sensors, from manufacturing companies and data products from modelling companies. The tier 4

scientific ocean observation community is a potential source of data, products and services to tier 3 and 2

service companies (see Figure 4). In the case of ocean observatories, which are currently managed by the

scientific community much of the technology has been developed in the scientific laboratory to TRL 5 to 7

stage.

Tier 4

Tier 3

Tier 2

Tier 1 Oil & Gas E&P Companies

Environmental Monitoring

Service Company

Equipment & Sensor

Manufacturer

Survey Vessels

Providers

Metocean Forecasting

Service Company

Metocean Modellers

Products, data & services from ocean observatories

Figure 4 A Simplified Supply Chain Diagram for Oil & Gas E&P

Suppliers who have successfully commercialised products and services have a number of criteria in

common. They offer a clear value proposition to their customers; they have strong and credible

management; they have realistic expectations and they have prepared a convincing pitch.

Credible management usually has a track record of start-up companies; the principals demonstrate

emotional maturity under stress and they employ a strong well balanced technical team. The value

proposition shows the customer what is in the product offer for him. The product either saves the

customer money or creates value for the customer. The convincing pitch is about business, not the

8

technology. It will show clearly the route to market with timelines. Risks will be identified with plans to

overcome or reduce them. The pitch will state how much of the owner’s money is invested, how much

venture capital is involved and how the money will be spent. The owners of the company will have realistic

expectations of the money to be made and must be prepared to give equity to venture capital investors.

These criteria will be used to guide the selection of partner companies and suppliers within FIXO3 wishing

to commercialise their products and services.

Since oil and gas companies make up almost 40% of the marine science and technology business this group of customers was examined in more detail. The oil and gas companies are top tier companies in the supply chain. They buy products and services from service companies who in turn purchase or lease equipment from manufacturers. They also buy metocean forecast models that are based on data supplied to metocean service companies by ocean observatories. The quickest route to market for innovative products and services from the ocean observatory scientific community is to obtain a patent and then partner with an offshore oil and gas service supply company.

ii. Ocean Observatories and the Offshore Oil & Gas Industry

Technology is critical to oil and gas Exploration and Production (E&P). Technology adoption is aligned with corporate strategy. The value proposition for adopting new technology must be linked to revenue generation. Oil and gas exploration companies are operating in deeper, colder water for longer periods to extract oil and gas from new deep water prospects. The ocean observation products and services on offer must reduce drilling costs, increase recovery, reduce health and safety risk, or avoid environmental damage (see Table 1). Ocean observation products and services contribute to providing legislative compliance with environmental policy and data and information to support E&P operational decisions. The tier 3 service companies that supply the oil and gas industry supply the same services to the offshore renewable energy sector, particularly for offshore wind and ocean wave energy converters.

Table 1 Services based on ocean observation data

Sector Segment Services based on Ocean Observation Oil and Gas Offshore Offshore Design Support Renewable Energy Offshore Metocean Information Services Marine Operations & Risk Environmental Assessment and Management

Current and wave data is used in offshore engineering design support for offshore structures and vessels. Data and information provided by ocean observatories improve the models used in metocean forecasting. Better metocean forecasting improves oil and gas E&P performance by allowing cost effective operational decisions to be made (e.g. when can a shuttle tanker come alongside an FPSO to take produced oil to market; what riser design is required for a new subsea development in deep water). Metocean service companies input ocean observation data to numerical modeling and analytical tools to generate a range of spatial and temporal wind, wave and current data products. These are used to understand the impact of the physical environment on offshore structures.

The cost benefit of environmental monitoring is that it will reduce the project lifecycle by supporting

regulatory compliance and therefore deliver early production revenue. Environmental monitoring will also

be an enabler to access new resources in deep water and Polar Regions.

Oil companies such as BP and Statoil are actively using ocean observatory infrastructure to support

environmental monitoring of E&P operations (e.g. http://www.delos-project.org/index.php).

As well as the data and data products there are also individual products or components of the ocean

observatory that may be of interest to the oil and gas service sector.

Credible Management

Clear Value

Proposition

Realistic Expectations Convincing Pitch

9

For the science community TRL5 can be cost effective. Scientists may use “fit for purpose” scientific equipment for many years. However one anticipated outcome of R&D research funding is new products and services that could be commercialised to create spin off companies, revenue and employment. With this objective in mind the products and services currently used on ocean observatories were examined to identify suitable candidates for commercialisation. The ESONET Yellow Pages (http://www.esonetyellowpages.com/) which lists all of those products and services was examined. A number of potential candidates emerged (see Table 2).

Table 2 Innovative Products developed on Ocean Observatories applicable to Oil & Gas Deep Water Developments

Sector Segment Products developed on Ocean Observatories Oil and Gas Offshore Subsea Communications (e.g. Wi-Fi) Renewable Energy Offshore New Sensor Technology High Definition Cameras & Subsea LED Lighting Anti-biofouling techniques Subsea Connectors Passive acoustic monitoring & data processing

The products that are at demonstration stage which have applications outside the scientific community in environmental monitoring include innovative subsea communication, new sensor technologies (pH, water salinity, pCO2 , acoustic and optical sensors), anti-biofouling techniques, subsea connectors, passive acoustic data processing, and high definition subsea cameras with LED lighting.

The NeXOS Project has identified a number of priority products required by the ocean science community.

These include a bio-fouling protection system, a matrix-fluorescence sensor for the detection of dissolved

substances (such as polycyclic aromatic hydrocarbons) and (coloured) dissolved organic matter, a

hyperspectral cavity absorption sensor for investigation of phytoplankton and other absorbing

components, and a carbon sensor to measure carbon cycle relevant parameters such as pH, CO2 and CH4.

These technologies fit into the Autonomy & Sensors (sensor technologies, biofouling & robotics) segment

of the ocean environmental sector of the marine science and technology business and are potential

candidates for commercialisation.

V. Recommendations

In summary there is a market at this time for products and services developed by FIXO3 partners with

mainly US and European national research agencies, military navies, coast guard agencies and the oil

industry particularly in the area of environmental monitoring. There is a need for the public sector to give a

lead by including FIXO3 supplier companies in public procurement for ocean observation services. FIXO3

supplier companies must ensure that their product and service is at the appropriate technology readiness

level for deployment by industry and have a clear value proposition for their customers. For instance

accurate environmental monitoring in the oil industry reduces the risk of project delays with associated

revenue losses. The data supplied by ocean observatories is used by metocean modellers to improve

metocean and climate change forecasting. The end users of these models, for example insurance

companies, are often not aware of the original source of the data. Therefore FIXO3 supplier companies

must concentrate their marketing efforts on Tier 3 customer companies (see Figure 4).

Based on the analysis of consultees responses the following approach is recommended: FIXO3 suppliers

that provide products developed on ocean observatories with potential application in the offshore oil and

gas and renewable energy sectors (see Table 2) will be interviewed and their commitment to

commercialisation of their products assessed. Those willing to proceed will be advised on protection of

their IPR prior to identifying potential partners and routes to market.

10

ANNEXES

Annex 1 : List of Contacts

Annex 2 : OilTech Investment Network Funders

Annex 3 : Contract Award Notices

References Baussant, T. (2013, September). A review and assessment of monitoring technologies with emphasis on oil

& gas: existing and promising sensing techniques. UK-IMON International Workshop on New Monitoring .

Society of Marine Industries. (2013). Annual Review of UK Marine Scientific Industries . London: Association

of Marine Scientific Industries .

11

Annex 1 : List of Consultees

Name Company Description

Robin Stephens BMT Argoss Provide maritime, meteorological and oceanographic (metocean) consultancy services and specialise in weather forecasting, metocean operabilty and design and vessel response behaviour.

Adrian Boyle CathxOcean Provide integrated imaging solutions for ROV, AUV and fixed Observation platforms deployed in industries such as Oil & Gas, Oceanographic Research, Security & Defence.

Laurent Mortier Ecole Nationale Superieure de Technieques Avancees

ENSTA ParisTech belongs to the foremost graduate schools of engineering in France and keeps pace with changes in the leading edge technologies

Tomas Hvamb Energy Ventures Venture capital firm actively seeking early to mid-stage growth investments in companies that deliver a marketable, proprietary product or service with potential in the upstream oil & gas sector

Enrico Sassi Gas Survey Geophysical, geotechnical, seismic, bathymetric, oceanography, topographical and environmental surveys

Brian Terry Genesis Group Newfoundland

Marine technology commercialisation & business incubation

Craig Watson Harrison Goddard Foote LLP

Patents, Trade Marks, IP Solicitors

Jim Hanlon

Institute for Ocean Research Enterprise Canada

Brokering partnerships among industry, universities, government and private institutions, to enhance the competitiveness of ocean industries

Charlotte Lord Institute of Marine Engineering, Science & Technology

The international professional body for all marine professionals.

Rainer Sternfold Marine Explore Inc. Proprietary cloud platform for managing big data from the ocean scientific community

Gerry Scott National Oceanography Centre

Enterprise & Commercialisation Manager

Ian M. Leggett Ocean Expert Limited Retired Head of Shell Metocean Services now consulting

Tom Dakin Ocean Networks Canada Innovation Centre

Sensor Technology Development Officer

Mike Baker OTM Consulting Ltd Helping oil and gas operators and their suppliers to identify commercialise and deploy new technologies.

Dr Hong Kwang, Yeo Sonor Link Limited Technology Company

12

Annex 2 : OilTech Investment Network Funders

13

14

Annex 3 : Contract Award Notices

Contracting Entity Notice Type Contractor

NameAddress Main Activity Date of Contract Award Contract Award / Invitation to Tender Description of equipment and services Contract value Name2 Address3

Maritime and Coastguard Agency

Bay 1/05, Spring Place,

105 Commercial Road,

S015 1EG Southampton

UNITED KINGDOM

Surveying, hydrographic, oceanographic and hydrological

instruments and appliances11/08/2010 Contract award

Survey computers, on-line survey software, multibeam processing

software, seabed classification software, network server and removable

storage device, velocity dips,tidal observation equipment, land survey

equipment (for establishing tide stations)

1 213 640 GBP NetSurvey Ltd

Oathill Farm,

Claydon Road,

Croperdy, OX17

1QA Banbury, UK

European Commission, Directorate-General for

Enterprise and Industry, Directorate H —

Aerospace Industries, GMES, Security and

Defence,

Unit H3, avenue

d'Auderghem/Oudergem

selaan 45 (BREY 9/098),

1049 Bruxelles/Brussel,

BELGIUM.

Assist the Commission services in the evaluation, monitoring of

projects in the frame of the GMES initiative, and/or the

assessment/validation of products/services offered by those projects

N/A Notice date 28/4/2009 Call for EOISupport to evaluation of GMES proposals and/or monitoring of projects

and validation of GMES product and servicesEuro 339,000+ N/A N/A

European Commission, Directorate-General for

the Environment, SRD.2

BU 5, 00/122, 1049

Brussels, Belgium

Assisting the European Commission in setting up a Web-based

European clearing house enhancing information structuring and

sharing on climate change impacts, vulnerability and adaptation

17/08/2010 Contract award

Developing the concept, functionalities, scope, information sources,

data structure and Web user interface of the clearing house, on the

basis of a concept note drafted by the European Commission;

Eur 1,000,000Alterra — Stichting Dienst

Landbouwkundig Onderzoek

Droevendaalsestee

g 3/3a, 6708

Wageningen,

Netherlands

EuropeAid/130397/D/SER/SN. EDF National

Authorising Officer,

Directorate of Debt and

Investment, 25 rue

Amadou Assane Ndoye

X St Michel, PO Box

6843, Dakar Étoile,

Dakar, SENEGAL,

Preparing an integrated management plan for coastal areas (PGIZC),

integrating combating coastal erosion and adapting to climate

change

20/10/2010 ITT

Providing a tool to monitor the coastline, give alerts and help with

planning; building up the institutional and legislative framework for

managing coastal areas with a view to implementing the PGIZC;

producing a concerted draft integrated plan for coastal areas with the

various parties, covering the entire coastline of Senegal and in detail for

at least 4 target areas

1 100 000 EUR. N/A N/A

European Environment Agency

Kongens Nytorv 6, 1050

Copenhagen K,

DENMARK

Support the development of decision support tools for strategic

environmental policy issues13/05/2009 Call for EOI

Support the development of visualisation tools, model interfaces and

diffusion methods at different spatial and temporal scales (including

web, games, capacity strengthening), so as to provide decision support

tools in the appropriate format for decision makers.

N/A N/A

UK Met Office Fitzroy Road, EX1 3PB

Exeter, UKSupply of Meteorological Data Acquisition System 04/03/2010 ITT

Provide the Central Processing and Management System and supply of relevant sensors N/A

Brazilian Naval Commission (BNC) Supply of three oceanographic and meteorological data collection

buoys10/03/2010 Contract award

AXYS Technologies, Inc.

Chevron North Sea Ltd

Deepwater current measurements 23/10/2010 Contract award

900m mooring comprising a combination of TRDI 75kHz Longranger

ADCP, several Nortek Aquadopp single point current meters and an

RBR water level recorder

Metocean Services International

Sandy Bay,

Tasmania 7006,

Australia

U.S. Naval Facilities Engineering Command

Hawaii

Advance the design for an Ocean Thermal Energy Conversion

(OTEC) pilot plant off the coast of Hawaii.24/11/2010 Contract award

Develop critical system components and designs for an OTEC pilot

plant, which leverages the temperature difference between warmer

water at the ocean's surface and colder water below to produce clean

power.

USD4.4m Lockheed Martin

Far Eastern Regional Hydrometeorological

Research Institute (FERHRI) Russian Far EastProduction and delivery of an SAIC Tsunami Buoy (STB) system 25/05/2010 Contract award

Science Applications International

Corporation (SAIC)USA

Institute of Oceanology, Chinese Academy of

Sciences (IOCAS)

Complete handling system for an oceanographic research vessel,

including the ODIM CTCU deepwater technology,01/12/2009 Contract award NOK 44m ODIM Norway

Contracting Entity Notice Type Contractor

NameAddress Main Activity Date of Contract Award Contract Award / Invitation to Tender Description of equipment and services Contract value Name2 Address3

MeyGen Limited Renewable Energy April 17th 2012 Contract Award

Conducting both baseline and operational noise measurements from

prototype tidal devices to assess the potential effects of underwater

noise on marine life

Not known Kongsberg Maritime Ltd UK

US Department of Defense Defense Nov 11th 2013 Contract AwardEngineering services, repair and training support for the Navy's MK18 unmanned

underwater vehicle family of systems.$26,231,287 Hydroid Inc USA

Pacific Marine Environmental Laboratory (PMEL).

NOAAMarine Environmental Monitoring June 7th 2013 Contract Award Provide acoustic release transponders and associated equipment $2,500,000 EdgeTech USA

PEMEX Oil exploration Oct 25th 2013 Contract Award Ultra deep water geotechnical and pilot hole (drilling and logging) Not Known Fugro

Statoil Oil exploration Dec 26th 2013 Contract AwardSeabed engineering, trenching, cable laying etc for permanent reservoir

monitoringNot Known DeepOcean UK, Ltd UK