information and eligibility guide - erf rdd informati… · information and eligibility guide...

Emissions Reduction Fund Offshore Research, Development and Demonstration Program

INFORMATION AND ELIGIBILITY GUIDE

December 2020

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TABLE OF CONTENTS

BACKGROUND .............................................................................................................................................................................................................. 3

PETROLEUM RESEARCH NEWFOUNDLAND AND LABRADOR ............................................................................... 4

OFFSHORE RD&D PROGRAM ...................................................................................................................................................................... 5

Program Objective ........................................................................................................................................................................................... 5

Program Benefits .............................................................................................................................................................................................. 5

OFFSHORE RD&D PROGRAM PROJECTS ........................................................................................................................................ 6

Eligible Projects ................................................................................................................................................................................................... 6

Project Duration ................................................................................................................................................................................................. 7

Eligible Recipients............................................................................................................................................................................................. 7

Project Conduct .................................................................................................................................................................................................. 8

Project Agreements ........................................................................................................................................................................................ 8

Project Reporting .............................................................................................................................................................................................. 8

Funding Rules ....................................................................................................................................................................................................... 8

Eligible Expenditures ..................................................................................................................................................................................... 9

OFFSHORE RD&D PROGRAM PROJECT APPLICATION PROCESS ...................................................................... 13

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BACKGROUND On April 17th, 2020 the Government of Canada announced the $750 million Emissions Reduction Fund (ERF) to

assist firms that are preparing to reduce greenhouse gas emissions (GHGs) and conduct research and development

while helping keep oil and gas workers employed.

The overall ERF objectives include:

1. Accelerating the adoption and deployment of clean technology and solutions to reduce GHG emissions,

and

2. Driving innovation in Canada’s natural resources sectors by supporting research, development and

demonstration activities to reduce emissions in Canada’s offshore oil and gas sector.

A component of this Emissions Reduction Fund includes a $33 million Offshore RD&D Program supporting

research, development and demonstration (RD&D) projects to advance solutions to reduce emissions from

Newfoundland and Labrador’s offshore industry.

Petroleum Research Newfoundland and Labrador (PRNL) is delivering the Offshore RD&D Program component of

the Government of Canada’s Emissions Reduction Fund.

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PETROLEUM RESEARCH NEWFOUNDLAND AND LABRADOR Petroleum Research Newfoundland and Labrador (PRNL) advances research and development (R&D) and

innovation projects in the offshore oil and gas industry, with a focus on health, safety and the environment. Within

the environmental focus area, PRNL’s goal is to increase understanding of the province’s offshore environment and

ecosystem, and reduce existing and potential environmental risks, including greenhouse gases (GHGs).

PRNL collaborates with local industry associations, engineering companies and other supply chain members,

governments, academic institutions, and other organizations to deliver its innovation mandate in the

Newfoundland and Labrador offshore.

PRNL is a federally incorporated, not-for-profit organization whose members include Chevron Canada Resources,

Equinor Canada, ExxonMobil Canada, Husky Energy and Suncor Energy.

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OFFSHORE RD&D PROGRAM This Information and Eligibility Guide focuses exclusively on the ERF Offshore RD&D Program. Information on the

other two programs available under the ERF (i.e. the Onshore Program and the Offshore Deployment Program) are

available on the Government of Canada ERF website (NRCan ERF).

PROGRAM OBJECTIVE

The objective of the Offshore RD&D Program is to reduce greenhouse gas (GHG)

emissions from Newfoundland and Labrador’s offshore oil and gas industry.

PROGRAM BENEFITS

The Offshore RD&D Program will benefit Canada / Canadians and the stakeholder community.

Benefits to Canada / Canadians

• Development and adoption of cleaner

technologies in offshore oil applications

resulting in reductions of GHG emissions;

• Support of an environmentally sustainable

future for Canada’s oil and gas sector while

contributing to the development of a strong

and resilient workforce; and

• Support Canada’s commitment to lower GHG

emissions under the Paris agreement.

Benefits to Stakeholders:

• The stakeholder community for this program

broadly consists of industry end-users;

technology developers and researchers.

The benefits to stakeholders are:

o Development of strategic RD&D projects that

will reduce the GHG impact of offshore oil and

gas activity; and

o A cost-effective and collaborative means to

identify and support the development and

demonstration of the most promising

technologies.

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OFFSHORE RD&D PROGRAM PROJECTS

ELIGIBLE PROJECTS

Eligible activities of Offshore RD&D Program projects must meet the program objective to reduce greenhouse gas

(GHG) emissions from Newfoundland and Labrador’s offshore oil and gas industry and contribute to program

benefits.

Eligible activities of projects include:

Demonstration Activities

• Permanent (for the normal life of the

equipment) installation of a pre-commercial

technology of first-of-kind technology in

an offshore context with the intent that it

continues to operate in its intended operational

environment;

• Permanent modification of existing processes,

equipment, or systems to accommodate an

innovative technology or process;

• Permanent installation of equipment and/or

infrastructure to support a demonstration, or

multiple demonstrations.

• Associated costs for the engineering, design

and permitting of a permanent installation as

identified in the bullets above, including

elements of a Front-End Engineering Design

study (FEED) if required as part of a

demonstration. Operation, performance

testing, and analysis of pre-commercial

equipment in its intended environment to

assess performance of an innovation. FEED

studies focus on the technical requirements as

well as financial and regulatory requirements to

complete a demonstration project. A FEED

determines the demonstration project’s

specific requirements including technology,

budget, and timelines to avoid significant

changes in the execution phase of the

demonstration project.

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Research and Development and Related Science Activities

• Development, assessment, testing and

integration of novel and innovative equipment,

software and methodologies. For example:

o Proof of concept of technologies where there

is a significant technical risk, including field

trials, bench-scale testing, pilot plants and

prototypes;

o Analytical tools and modelling software;

• Pre-demonstration field trials — limited

duration tests designed to identify further

RD&D needs before a technology can proceed

to a pre-commercialization demonstration with

limited expectation of long term operation;

• Capacity building and training (where

applicable);

• Assessments or characterization studies,

including data compilations and syntheses,

where there is a significant natural resources

sectors-related knowledge gap.

PROJECT DURATION

ERF project funding will extend from the date of project approval to March 31, 2022. Completion of physical work

paid for by the recipients or other funding may extend past the ERF project funding end date.

ELIGIBLE RECIPIENTS

To be considered for Offshore RD&D Program funding, recipients must be companies and organizations with legal

entities validly incorporated or registered in Canada. Federal government entities are not eligible recipients.

Innovations can originate from anywhere globally, but the projects must be undertaken in Canada, with technology

that is tested, piloted and demonstrated within Newfoundland and Labrador’s offshore oil industry.

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PROJECT CONDUCT

ERF Offshore RD&D Program projects will be

required to:

• Comply with all applicable federal, provincial

and municipal laws in relation to the project;

• Comply with the Canadian Environmental

Assessment Act, 2012, or the Impact

Assessment Act, if applicable;

• Comply with the requirements to consult with

Indigenous Groups as set out in Section 35 of

the Constitution Act, 1982 if applicable.

PROJECT AGREEMENTS

Following project proposal, evaluation and approval,

an RD&D services agreement will be executed

between the recipient and PRNL. The recipient will be

required to meet the obligations as outlined in the

RD&D services agreement, and are encouraged to

review the agreement for acceptability prior to

submitting an application.

PRNL’s RD&D services agreement template

will be available on the PRNL website when details

are finalized.

PROJECT REPORTING

Project reporting requirements will include financial,

progress, and performance reports.

Recipients will also be expected to provide a final

narrative report to describe how project activities

have contributed to the achievement of the Offshore

RD&D Program’s objectives and delivered relevant

benefits. Project reporting will extend for five years

beyond the ERF project funding duration of March 31,

2022 (e.g. with respect to GHG emissions, project-

related intellectual property).

FUNDING RULES

The Offshore RD&D Program funding to the

recipients will be non-repayable and may cover up to

100% of Eligible Expenditures. The funding per

project will be greater than $200,000 but will not

exceed $5 million. Funding for projects with only

Research and Development and Related Science

Activities will be greater than $200,000 but will not

exceed $2 million.

Any Eligible Expenditure incurred by the recipient

prior to or after the Eligible Expenditure Period will

not be reimbursed. The Eligible Expenditure Period is

from date of project approval to March 31, 2022,

subject to successful RD&D service agreement

execution.

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ELIGIBLE EXPENDITURES

Eligible project expenditures must be directly related to and necessary for the execution of the project, and may

include:

Salaries and benefits for employees on the recipient’s

payroll, for actual time spent by the employees on the

project.

• Salaries include wages for all personnel with

direct involvement in the project such as

engineers, scientists, technologists,

draftspeople, researchers, laboratory,

experimental and shop labour.

o All eligible personnel must be employees on

the recipient’s payroll;

o Payment in terms of shares, stock, stock options

and the like are not permissible;

o The amount invoiced will be actual gross pay for

the work performed and will include no markup

for profit, selling, administration or financing;

o The eligible payroll cost is the gross pay of the

employee (normal periodic remuneration

before deductions). Normal periodic

remuneration rates are the regular pay rates for

the period excluding premiums paid for

overtime or shift work;

o The payroll rate does not include any

reimbursement or benefit conferred in lieu of

salaries or wages;

o When hourly rates are being charged for

salaried personnel, the hourly rates will be the

periodic remuneration (annual, monthly,

weekly, etc.), divided by the total paid hours in

the period including holidays, vacation, paid

sickness time.

• Labour claims must be supported by suitable

records such as time sheets and records,

and be held for verification at time of audit.

Management personnel are required to

maintain appropriate records of time devoted to

the project.

• Benefits are defined as a reasonable prorated

share of expenses associated with the direct

labour cost such as the employer’s portion of

Canada Pension Plan, Quebec Pension Plan and

Employment Insurance, employee benefits

such as health plan and insurance, Worker’s

Compensation, sick leave and vacation plus any

other employer-paid payroll-related expenses.

• Items such as salary bonuses and other salary

incentives, stock options or vehicle use, which

have no relationship to the project or which

have been charged on an indirect basis are not

permissible;

• The determination of the fringe benefits

amount will be in accordance with generally

accepted cost accounting principles. In general,

the fringe benefits rate provided in the project

estimate will be computed once during the life

of the project and agreed on prior to the signing

of the Agreement. If retroactive adjustments are

made, these must be indicated on claims for

progress payments for PRNL approval.

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Professional, scientific, technical and contracting

services where the nature of goods or services to be

acquired from sub-contractors and consultants are set

out in the budget. The amount eligible from a sub-

contractor or a consultant will be the actual contract

amount. Costs associated with federal government

entities are not eligible.

Travel Costs, including meals and accommodation,

which are reasonable and based on National Joint

Council Rates.

(See https://www.njc-cnm.gc.ca/s3/en

or https://www.njc-cnm.gc.ca/s3/fr).

• Travel, food and lodging costs necessary for

other project activities, e.g. field trials and

demonstrations at locations away from the

project recipient’s usual location; project

planning and review meetings between the

recipient and its partner(s) are included.

Equipment and Materials such as the purchase,

installation, testing and commissioning of qualifying

equipment, materials and products, including

diagnostic and testing tools and instruments.

• Materials include those consumed in carrying

out the project, including those utilized in the

production and operation of models, prototypes

and pilot plants. Only utilities consumed to

operate equipment or processes are eligible and

may be metered and reported separately from

the total utility cost. Utilities used for buildings

are not eligible.

• Materials purchased solely for the project and

issued from the project recipient’s inventory are

eligible. All materials will be charged to the

project at the net price excluding GST after

deducting all trade discounts and similar credits.

Surplus materials will be credited to the project

at the original purchase price.

• Equipment consists of equipment acquired or

constructed exclusively for the project. In order

to be eligible, such equipment must be

identified in the project cost estimate and

approved by PRNL. All such equipment will be

charged to the project at the net price

(excluding GST) after deducting all trade

discounts and similar charges.

• Where such equipment is obtained from

another division of the project recipient or from

a related company, the eligible expenditures will

not exceed fair market value and will not include

any markup for profit, administration, selling or

financing expense.

https://www.njc-cnm.gc.ca/s3/enhttps://www.njc-cnm.gc.ca/s3/fr

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Overhead Expenses provided they are directly related

to the conduct of the project/work plan and can be

attributed to it. These may include:

• Administrative support provided directly to the

project recipient by their employee(s), valued

on the same basis as professional staff time;

• Routine laboratory and field equipment

maintenance, based on the actual cost to the

recipient that is directly related to the project;

• Heat, hydro, and office operating costs (e.g.

faxes, telephone), provided that they are

directly related to the project.

Overhead costs will be negotiated and agreed to on

an individual basis with the project recipient before

signing the RD&D services agreement.

Other expenses including laboratory and field

supplies, and materials; printing services and

translation; data collection services, including

processing, analysis and management; facility costs

for seminars, conference room rentals etc.; licence

fees and permits; capacity building and training; and

field testing services.

Eligible testing services are those conducted by

testing organizations or accredited laboratories, such

as the Canadian Standards Association, Underwriters

Laboratories and must be essential to the success of

the project.

Testing services will be charged at actual cost.

Regulatory costs, where required may be eligible e.g.

testing to comply with any federal, provincial,

municipal and other environmental standards as

applicable. All such costs should be identified in the

original proposal cost estimates.

Ineligible Expenditures

Expenditures not provided for by the Offshore RD&D

Program funds include:

• The reimbursement portion of federal

and provincial taxes;

• Salary bonuses and other salary incentives;

• Land costs;

• Legal costs;

• All costs associated with the protection

of Intellectual Property;

• Federal government entities’ costs.

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Project Expenditures Eligible

Salaries and benefits for employees on the payroll for the actual time spent by the

employees on the project Yes

Professional, scientific, technical and contracting services Yes

Travel expenditures, including meals and accommodation, based on National Joint

Council Rates Yes

Capital expenditures such as the purchase, installation, testing and commissioning

of qualifying equipment, materials and products, including diagnostic, testing tools

and instruments, and original equipment manufacturer equipment warranty

(including extended warranties where deemed appropriate to mitigate risk and

lack of capacity)

Yes

Other expenses including:

• Laboratory and field supplies, and materials;

• Printing services and translation;

• Data collection services, including processing, analysis and management;

• Facility costs for seminars, conference room rentals etc.;

• Licence fees and permits;

• Training;

• Field testing services

Yes

Overhead expenditures 2 Yes

Legal; Land; All costs associated with use of federal government resources No

GST, PST or HST, net of any tax rebate to which the recipient is entitled 1 Yes

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NOTE: The following limitations apply to the above:

1. In accordance with the departmental GST/PST/HST certification form, the reimbursable Provincial Sales Tax,

the Goods and Services Tax and Harmonized Sales Tax costs must be net of any tax rebate to which the

recipient is entitled.

2. Overhead is limited to fifteen percent (15%) of total Eligible Expenditures, minus overhead. Overhead

expenditures will be eligible provided they are directly related to the conduct of the project and can be

attributed to it. Overhead expenditures include:

o Administrative and corporate support provided directly to the project by employee(s), valued on the same basis as

professional staff time;

o Routine laboratory and field equipment maintenance, based on the actual expenditure by a recipient;

o Heat, hydro, and office operating costs (e.g. faxes, telephone).

OFFSHORE RD&D PROGRAM PROJECT APPLICATION PROCESS The project application and selection process will be available on the PRNL website as details are finalized.

If you have questions, please contact us at [email protected]

https://petroleumresearch.ca/index.php?id=195mailto:[email protected]

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