A strong commitment to research
- There's really no room for people like us, tells the management in METAS. Despite good support from network as NCE Subsea and major customers, the financial support from government and other sources of risk capital is far too small.
Photo: CEO Olav Birkeland and CTO, Terje Torkelsen are convinced that their investment in the R&D-projects, Aaldog and AcuGas, will be profitable and generate further research in future.
The research-intensive project, AALDOG is close to completion. Both the theoretical verification where CMR was main partner and the practical verification in Samnanger-fjord last autumn are completed successfully. The objective of the project, which now is in its third and final year, is to develop equipment and software based on active acoustics to detect oil and gas leaks from subsea installations.
- In the nearest future the detector will be tested in "real life" at a Statoil location. At the end of the year we then will have a detector that can be put into production, notably after the industry has qualified it, says CTO, Terje Torkelsen. He expects introduction to market will happen in 2015.
Price to leakage experts
Leakage detection is the key word for two of the main development projects of the company that last year was awarded Subsea Upcoming Company of the Year 2011. Besides AALDOG, they also have great focus on their second research intensive project, AcuGas. Here the objective is to develop equipment that detects leaks from CO2 deposits on the seabed.
- Sure, it was very nice to win it. The prize awarded by NCE Subsea has been noticed in the industry. We have joined a great club and the prize shows we are on the right track, says Torkelsen.
Still he does not believe the prize has been noticed by the common man and woman. However this kind of honor must rather wait until the technology is ready to guard the environment at the seabed, is the philosophy.
- Heavy investments
Heavy development projects require partnerships. Beside Norwegian Research Council and Statoil that contribute with half of the development costs, also strong research groups are engaged in both projects.
R&D is costly. While AALDOG has a total budget of 24 million, AcuGas is estimated to cost 14 million. Although Norwegian Research Council and Statoil contribute greatly, still METAS has to finance about the half itself. Total investment for the two projects amounts to 19 million kroner which is a substantial burden for a relative young company.
- Sure, when the sale comes so much later than the expenses, the cash flow becomes tight. It is hard to carry these large expenses alone, admits CEO Olav Birkeland.
While the AALDOG-detector presumably will generate revenue from 2015, the road to market for AcuGas is even longer.
- There are few companies who will spend several million dollars for CO2 storage-sensors if such equipment not are required by law, believes Torkelsen and points to the fact that the future of CO2 storage is to some extent uncertain.
- But regardless of future of CO2 storage and type of regulations for this, there still will be room for this kind of equipment, complements Birkeland. He tells METAS has had promising discussions with customers and partners on alternative of use the technology.
Due to the strong sales of other products to Saudi Arabia and Brazil outside the North Sea, METAS has managed to fund the developments. But it is no secret that METAS has been looking for partners who can help to cover the development costs. Financial partners will give a more robust situation and a faster market introduction for new products.
Seeking risk capital
Torkelsen and Birkeland share both a common frustration and dream.
- There's really no room for people like us, states Birkeland.
He states that too many companies are not able to carry the economic burden of such investments.
- No, it's not easy to get funding. Such support requires that tR&D-company raise the same amount of money. A “yes” from the Norwegian Research Council is then not necessarily good news, adds Torkelsen ironic.
They believe it should be easier to gain access to risk capital and funding for R&D-projects and ask rhetorically whether NCE Subsea could take on a role here.
- Surely the state has a job to do in this field, for instance a sort of stock market for R&D- companies. Working out such an idea could be a fruitful task, points Birkeland out.
He believes strongly that the current funding system should be improved.
- The financial arrangements that Innovation Norway and the Norwegian Research Council provide today, is too crappy. Today only a minority of those who start projects succeeds. Most of them, simply give up, summarizes Birkeland.
The importance of quality
In addition to funding, quality is a key stone for a R&D-company which develops equipment for sea water and seabed.
- To us, quality of the products is crucial. Sale is ultimately depending on quality and we ourselves must be willing to pay for it, says Torkelsen.
This means that METAS also impose strict requirements on their subcontractors with regard to quality.
- It is surely a quality mark to be a member of NCE Subsea and we often pick suppliers among them.
However membership is not a sufficient condition to be subcontracted.
- One must also prove the ability to deliver good quality.
NCE Subsea is committed to promote cooperation between SMEs and research institutions. METAS which grew out of the Department for observation methodology at Institute of Marine Research (IMR), collaborates today with a number of other research departments within the institution, such as research department of observation methodology and department of plankton. In addition METAS also collaborates with CMR, Centre for Geobiology at UiB and UNI Research in their respective areas. Research departments at Kongsberg Group are also important partners.
Reaches for more research
Despite harsh economic realities that shortens the company’s horizon, they still dare to dream big for the future.
- Our dream is to build a larger research entity out here. We have proved to the Norwegian Research Council that we are able to carry out large, research intensive projects. That will hopefully count positively, the research director states.