From toy shelves to the oil sands, drones are taking off in Canada

From toy shelves to the oil sands, drones are taking off in Canada

Armina Ligaya | June 14, 2014 7:50 AM ET
They come in crayon-like colours, with glowing eyes and even a sticker mustache to give the appearance of a friendly face — not exactly what most people associate with a drone.

But drones are taking off beyond the military zone and finding new uses in Canada’s commercial industries and the consumer realm.

Recreational drones — smaller or miniature toy versions of their menacing forebears aimed at hobbyist photographers and children — are already on the shelves at Canadian big-box electronics stores.

Commercial drones equipped with high-definition cameras or infrared sensors have also taken off in Canada, used by farmers to monitor crops, by film crews to capture sweeping panoramic shots, and by oil and gas companies for aerial mapping of remote sites.

Cenovus Energy has been flying its $30,000 commercial drone regularly with the approval of Transport Canada since April to map three of its sites in northern Alberta. The Calgary-based oil sands producer plans to expand its drone fleet and obtain permits to cover its sites in Southern Alberta, and potentially use the flying robots for other tasks such as monitoring vegetation, said Wade Ewen, geospatial specialist for Cenovus.

“The sky’s the limit with these things… the business units are the ones that keep coming up with ideas of how to use them,” said Mr. Ewen in an interview.

Indeed, the skies are opening up. Just this week, the U.S. authorized the first ever commercial drone flight over land.

Energy giant BP and dronemaker AeroVironment got the green light from the U.S. Department of Transportation’s Federal Aviation Administration (FAA) to conduct aerial surveys over Prudhoe Bay, Alaska.

The FAA issued a certificate of authorization for BP to survey pipelines, roads and equipment using the Puma AE — a roughly 1.4-metre long drone with a 2.9-metre wingspan, and an infrared camera — originally designed to give soldiers a birds-eye view around ridges or bends. BP’s milestone commercial drone flight was on June 8.

“These surveys on Alaska’s North Slope are another important step toward broader commercial use of unmanned aircraft,” said U.S. Transportation Secretary Anthony Foxx in a statement released on June 10. “The technology is quickly changing, and the opportunities are growing.”

But if you’re just looking to record some family video or have a bit of fun, anyone can fly a drone, also known as unmanned aerial vehicles (UAV), under Canadian law. However, the machine must weigh less than 35 kilograms and only used for recreational purposes. Users have to keep their recreational drones under 122 metres and within the operator’s line of sight.

Commercial drone use in Canada, however, has to be authorized by Transport Canada. And in the past year, the number of special flight operation certificates the regulator has issued has nearly tripled.

Applications for these are dealt with on a case-by-case basis, and can only be issued once requestors demonstrate they can acceptably manage the risks, Transport Canada says.

In 2013, the transportation and airspace regulator said it issued 945 Special Flight Operations Certificates for Unmanned Aerial Vehicles (UAVs). In 2012, it issued 345, compared to just 155 in 2011.

Canada has been ahead of our neighbours south of the border on commercial drones rules, but the U.S. is gaining ground with more comprehensive regulation in the works.

One week before the first authorized commercial drone flight over land in the U.S., the FAA said it was considering giving permission to seven filmmaking companies to use drones for aerial photography. This would mark a major stride towards more relaxed regulation of commercial drones.

The FAA expects to update the rules for commercial small unmanned aircraft under 55 pounds, or 25 kilograms, by the end of this year, a spokesman told the Financial Post but could not give specifics.

The growth in demand for commercial drones is for these smaller unmanned vehicles.

“The goal of the rules is to get the regulations and standards out there, so we can continue to move towards broader integration of unmanned aircraft on a regular basis,” the FAA spokesman said.

Transport Canada says it is watching the FAA’s regulations closely. And by September,  the federal regulator is  planning to put out its own “guidance document” on commercial drones under 25 kilograms as well, said Martin Eley, Transport Canada’s director general of civil aviation.

These incoming guidelines won’t change the existing regulation — though plans for that are in the works longer term — but will give better direction to both Transport Canada inspectors and those who want to fly commercial drones on what’s required, he said. This can help speed up the process of approvals, he added.

“At the moment, there is very little guidance… It’s hard for us to be consistent, and sometimes, some people do a lot more work than they really need to,” Mr. Eley said.

But even before BP’s June 8 flight, the FAA had authorized the use of commercial drones on a case by case basis under certain exemptions, such as for public agencies, federal, state or local governments and public universities, the FAA spokesman said.

Those requests have taken off, too. It issued 393 certificates of authorization in 2012, 424 in 2013 and 95 in 2014 as of April, the FAA said.

The FAA estimates that within five years after regulations are in place, there will be about 7,500 commercial drones operating in the United States.

It’s welcome news for Waterloo, Ont.-based dronemaker Aeryon Labs, which expects “hockey stick” growth in the coming years, said its chief executive officer Dave Kroetsch.

Its biggest customers since the company started in 2007 are militaries and governments outside of North America, as well as government and police agencies in Canada, including the RCMP.

But in the commercial space, the biggest customers for drones are in oil and gas, he said.

He would not divulge specific figures, but Aeryon Labs has seen 100% year over year sales growth in the last five years, he said.

Mr. Kroetsch credits the growing popularity of consumer drones in the toy market with boosting awareness of commercial drones. The costs have come down significantly, with hobby drones available for around $300.

People are starting to understand that these add flexibility to their business

“When we started the company, nobody knew what a UAV was,” Mr. Kroetsch said. “And, now we’re selling to a very different market. People are starting to understand that these add flexibility to their business.”

Even with price tags that can exceed $150,000 for commercial drones, buying unmanned robots can still be a cheaper and safer option than sending in a team of people to do the job, Mr. Kroetsch said.

Cenovus can save enough money during one trip using the SenseFly eBee drone — which can last around 45 minutes in the air — to cover the $30,000 price tag, said Mr. Ewen. It’s easier, faster, cheaper, and safer than sending out a traditional survey crew to their borrow pits, he added.

“It’s picking up momentum [in oil and gas.]” he said. “When we started, we were one of the pioneers to adopt it. A lot of the major players have them now, and are using them regularly.”

The biggest challenge isn’t the cost, but the sometimes four-month process to get approval from Transport Canada, he said.

Oil and gas and agriculture are the two biggest industries in Canada using drones, said Roger Haessel, chief executive at non-profit Canadian Centre for Unmanned Vehicle Systems in Medicine Hat, Alta.

The centre is pushing for Canada to allow commercial drones to fly beyond the operator’s visual line of sight, making it easier, for example, to fly over pipelines and spot any problems or potential leaks, he said.

“Beyond the visual line of sight, there’s a whole new category of work that can be done,” said Mr. Haessel.

Transport Canada is researching potential regulations and guidelines to allow for this, but it will likely be several years down the road, said Mr. Eley.

Canadian industries seem to be embracing drones, but a recent incident in Vancouver highlights the risks that remain. Last month, a drone used to shoot a commercial in downtown Vancouver hit a building and crashed to the ground, but no one was injured, the CBC reported.

After the incident, the City of Vancouver put a temporary hold on approvals of drone use while it assessed the incident with Transport Canada, a spokesman told the Financial Post. That hold has since been lifted.

“Pending updated guidelines, city staff are asking that all operators conduct a spectrum analysis on the radio signal prior to flight,” a spokesman said in an email.

Privacy issues also loom: camera-enabled drones which can hover outside an apartment window or over a fence could be easily abused.

“As drones are acquired and put to use in Canada’s public and private sectors, it will be important to circumscribe their use within an accountability structure that ensures they are justified, necessary and proportional,” said the office of the federal privacy commissioner in a 2013 report. “And that the necessary checks and balances fundamental to a democratic society are in place to stave off proliferation of uses, abuses, and function creep.”

Peter George, vice-president of sales and marketing for Parrot, which makes both consumer and commercial drones, says recreational drone users will have to respect people’s privacy, just like they would with a digital camera or smartphone.

“You can still do things like that with your smartphone,” he said at a Toronto launch of mini-drones this week. “Sure, you can’t fly 20 feet in the air, but, you can creep up on somebody in a way that is considered illegal,” Mr. George said. “There is a certain behaviour that is expected of you.”

The challenge is finding balance between safety without smothering economic opportunity, said Mr. Haessel.

“Nobody would be comfortable if this was an unregulated industry… the challenge here is finding that right balance. Between making sure everything is absolutely safe, but also, acknowledging and accepting that there are huge opportunities here and there is demand to be able to fly.”


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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