Mid-cap Britain: OptaSense
By turning a fibre-optic cable into thousands of microphones, OptaSense is able to protect key infrastructure assets and monitor fracking. But its technology has many more potential applications. By Peter Curtis
This article appeared in the September edition of Business Voice, the CBI magazine
'We've armed people with information that they've never seen before, so they are thinking about their business models in a completely different way'- Magnus McEwen-King
You don’t meet many bosses of new UK technology companies who are convinced that their firm can transform how industries work, but Magnus McEwen-King, managing director of OptaSense, is that bullish about the potential of a business that has created over 100 jobs in the past year and makes 99 per cent of its income from exports.
In effect, the Farnborough-based firm’s acoustic sensing technology turns a fibre-optic cable, which could be up to 50km in length, into thousands of microphones. It does this by shining a pulse of light down the fibre and measuring the light reflected back, which is known as backscatter. This is affected in different ways by variables such as temperature, vibration and chemicals, allowing the company to use computer algorithms to detect and measure different types of activity along the cable.
OptaSense, an autonomous subsidiary of FTSE-250 defence group QinetiQ, has applied this new technology to make a breakthrough in the oil industry. Last year it signed a £26.5m deal with Shell to monitor the hydraulic fracturing process (fracking). It’s a market that’s only likely to grow: nations are increasingly looking to tap their shale gas reserves for both cost and energy-security reasons, while environmental concerns about the process have led to calls for better monitoring. By attaching fibre to a well that’s being fracked, McEwen-King says, OptaSense “can provide data in the fracturing process itself. Until now, you’ve really had to use observation wells and listen in from afar.”
A second key application is monitoring the condition of infrastructure assets such as oil pipelines using existing telecoms cables. One example is Cairn Energy’s 670km Mangala development pipeline in India. By installing 18 PC-sized boxes at nine locations, OptaSense has created more than 63,000 sensors, enabling Cairn to monitor threats to, or problems with, the pipeline at a fraction of the cost of conventional sensors or CCTV cameras.
“The biggest competitor we have is conventional thinking,” McEwen-King says. “The technology is fibre sensing; the product is information. We’ve armed people with information that they’ve never seen before, so they are thinking about their business models in a completely different way.”
As an example, he explains that, because customers in the pipeline industry can now see far more information along a pipe’s length, they can increasingly focus on preventing leaks, rather than finding and repairing them. “Wouldn’t you have liked to have known when someone was drilling on your pipe or digging a hole to get to it?” he says. “Or perhaps you’d have liked an alarm three weeks ago when a vehicle stopped next to it at 3am on three consecutive nights? If you had acted on that information, you could have prevented that leak.”
The breakthrough for distributed fibre sensing came in 2004-05, when laser technology was refined to such an extent that a highly consistent pulse could be sent down a cable. It was very much a British invention, with its origins in research at the University of Southampton. OptaSense (at that time a division of QinetiQ) was then able to apply its expertise in signal processing – the firm’s roots stretch back to the Air Ministry Telecommunications Research Establishment at Malvern, which did ground-breaking work on radar in World War Two.
“The distributed acoustic sensor creates huge amounts of data that need to be analysed and sorted in real time – just the same as with a radar array,” McEwen-King explains. “We have people who know how to make sense of thousands of acoustic channels processed in real time and give an answer back.”
He adds: “There are lots of people out there who can create a fibre that listens – a fibre ear. But we have put a brain behind it: the signals processing and algorithm.”
This expertise has helped OptaSense to grow rapidly. When it was formally incorporated as a QinetiQ subsidiary in 2008 it had only three employees, including McEwen-King. Today it has 160. Its turnover isn’t separately disclosed, but he says the company is “profitable and cash-generative” and expects it to reach £100m in annual revenues by 2016. The firm exports to more than 35 countries, with offices in locations including Dubai, Calgary and Cambridge, Massachusetts, as well as a centre of technical excellence in Dorset.
Distributed fibre sensing is one of a number of potentially high-growth technologies that QinetiQ’s group chief executive, Leo Quinn, wants to scale up as part of his strategy to turn the company around. McEwen-King says that QinetiQ’s backing benefits OptaSense in two ways: “First and foremost is technical excellence – people around the world recognise the brand and say ‘it works’ because the QinetiQ name is behind it.”
The second is something that’s vital to any mid-cap: a sense of financial provenance and stability to reassure clients seeking long-term partners. “Shell would not do a deal of that size with a smaller, VC-backed company,” McEwen-King says.
But he adds that OptaSense’s structure – it’s legally distinct from QinetiQ’s defence businesses and is held by a separate optics holding group at the plc level – is designed to maximise its entrepreneurial agility to pursue business in markets such as China, Russia and Africa. QinetiQ’s defence businesses are government-accredited, so for security reasons they are more restricted than OptaSense is (as a purely commercial concern) in their choice of customers.
A partnership approach
To seize these opportunities, OptaSense is seeking partners in a wide range of industries – something that McEwen-King believes is the right approach, given the potential scale of the firm’s global market. “We know we can’t do everything,” he says.
In the rail industry, for example, OptaSense is in the final stages of choosing a global rail signalling partner that will integrate fibre sensing technology into its signalling systems. This could help railway companies to detect trespassers – tackling problems ranging from cable thefts and graffiti to suicide attempts and terrorist attacks – and monitor the condition of trains and track. The firm is working on a system to detect rock falls in the US, for instance.
Other applications for the technology include monitoring road traffic and border security. McEwen-King points out that the company has a technical and data services division that’s exploring how the data it collects could be used to solve problems for third parties – and how the technology could be applied in new areas. One possibility, although it remains hypothetical at this stage, is whether its systems could detect warning signs of earthquakes. “Quakes today are recorded using point sensors that could be 500km apart,” he says. “But we have a continuous sensor, so we’re seeing pictures of earthquakes that have a huge degree of resolution and fidelity.”
It’s this kind of potential that makes McEwen-King believe that OptaSense’s ambition to become the “Earth’s nervous system” is justified. “How could you possibly operate your body without one?” he asks. “Roads, railways, pipelines: these are all the arteries of commerce and yet we’re operating them without a nervous system.”
In brief: OptaSense
Turnover: Not disclosed, but forecast to be £100m by middle of the decade.
Peter Curtis is editor of Business Voice