New Inventions – Coal Bed Methane
Extensive experimental research by the oil and gas industry is currently being targeted to new or improved coalbed methane technology. New product or process development funding (or existing product/process improvement) that ultimately result in discovery of new reserves, turning potential reserves into proven reserves, or increasing the bottom line through improvements to coalbed methane technology, may qualify for SR&ED tax incentives or IRAP funding. For SR&ED funding, there is no requirement for a patent for the new inventions; as long as the criteria are met and the technological challenges could not be met from knowledge available in the public domain, or solved using routine practices in oil and gas engineering. Coalbed methane technology is no longer viewed as a neophyte field by the SR&ED or, in some cases, other research grants programs and as such must be carefully evaluated for eligibility.

New Inventions in the Coal Bed Methane Industry
The SR&ED tax credit definition specifically excludes the activities of “prospecting, exploring or drilling for, or producing, minerals, petroleum, or natural gas” and “commercial production of a new or improved material device, or product”. The development cycle of Coal Bed Methane is associated with enormous costs and necessity for field trials which can involve the complications connected with the above exclusion. Joint venture and other arrangements for sharing risk in the oil patch can also cast a commercial veneer to a project that can threaten to exclude it from the SR&ED program as well. However, if your company’s new product (or process) development process (or existing product/process improvement) has distinguished experimental research and development activity that qualifies from that which does not, SR&ED funding can be accessible for qualifying activity. TSGI may be able to assist with that segregation process, and can also assist you with developing tracking processes for future claims. Coal Bed Methane experimental research is an expensive proposition and often requires testing in a field environment, sometimes, out of necessity, with potential or existing customers, requiring careful segregation of activity necessary for the experimental research from regular commercial or exploration activity.

Oil and Gas Engineering
On the positive side of the ledger, “engineering” activity (along with other support activity) commensurate with the needs and in support of technological advancement that is embodied in a new product (or process) development process (or existing product/process improvement) is specifically included as a qualifying activity in the definition of SR&ED. Oil and Gas companies in Alberta and elsewhere in Canada may have significant such supporting activity for new inventions or improvements to coalbed methane.

TSGI Experience
TSGI, located in Calgary, Alberta, Canada currently has clients in, and has filed numerous SR&ED claims in the field of, experimental research and development of coalbed methane.