THE ongoing technology boom that is reshaping the oil and gas industry and providing access to resources once deemed unattainable is also redefining the global energy map, an energy expert says in Deloitte Energy’s Next Frontiers paper.
“It’s not about the resources; it’s about the technology to access the resources,” says Dr Joseph Stanislaw , independent senior adviser at Deloitte and a co-founder and former CEO of Cambridge Energy Research Associates (Cera). His whitepaper, “Next Frontiers: How Technology is Radically Reshaping Supply, Demand & the Energy of Geopolitics,” examines various aspects of the changing global energy landscape. “In the case of unconventional shales, for example, we’ve known about them for decades or longer, but technology is what has made those resources real,” he says. “Technology is the value-creator,” he adds.
Advanced hydraulic fracturing technologies and horizontal drilling methods have made the US the No 1 producer in the world, with natural gas from shale accounting for more than 30 per cent of US natural gas production, compared with just 2 per cent in 2001, he notes.
Energy companies now rank among the most important and sophisticated technology companies in the world, Dr Stanislaw says. “The modern-day wildcatters are energy-technology entrepreneurs – geoscientists and software engineers – who drill wells on computer screens before drilling in the field. Three-dimensional computer imaging, along with new steel alloys for drill bits and other innovations are radically changing energy development production,” he says.
NEW PLAYERS TO THE GAME
Key developments, Dr Stanislaw notes, include the arrival of dozens of new energy-rich countries such as Brazil, the Philippines, Argentina, Angola and Suriname, Poland and Israel to the international energy scene, as well as the expanding role of energy in on geopolitics.
“No change may be more important than the introduction into the energy game of dozens of new players, including reinforced superpowers like Brazil, Canada and Russia.
“Areas with high resource potential have gone from being easy to develop to difficult, and the situation in those countries will remain difficult,” Dr Stanislaw continues. “But the more we push the resource horizon to those areas, there will be openings for companies with the technology.”
Argentina, for example, a country with huge reserves of tight shale gas and oil, recently renationalised its energy company YPF. “But that company can’t develop those resources on its own,” he points out. “China is holding blind positions in US shale plays to try and learn about the technology,” he adds.
Dr Stanislaw believes the biggest challenges for the industry lie in ultra-deepwater areas such as Brazil, East and West Africa, and the Gulf of Mexico, and in the Arctic. “The Arctic will become a bigger province over time because there is a large resource base there. We have not touched the onshore reserves yet; that’s maybe a decade away. We need to consider developing the technology to access those resources in an environmentally safe and appropriate way.” He also believes it is important to use resources such as water to produce oil and gas more efficiently.
Deloitte’s Energy’s Next Frontiers paper discusses how recent technology advancements in efficiency management, unconventional fossil fuels and clean energy, have fundamentally changed the energy game and redrawn the global energy map. Also how energy companies now rank among the most important – and sophisticated – technology companies in the world. The economic, environmental, and geopolitical consequences of the technological transformation are profoundly affecting our lives and our future.
The Energy-Technology Revolution is Redefining the Global Energy Game: Recent technology advancements in efficiency management, unconventional fossil fuels and clean energy, have fundamentally changed the energy game and redrawn the global energy map. The economic, environmental, national security, and geopolitical consequences of the technological transformation are profoundly affecting our lives and our future.
New Game, New Rules: While the old-style “Great Game” among nations of vying for control of territories with energy reserves holds true, the game has changed to focus on controlling technology assets – both hardware and software.
Energy companies now rank among the most important – and sophisticated – technology companies in the world.
Information Technology Is Energy Technology: information technology companies are pioneering every front of the energy revolution by:
• Cutting energy consumption through software-driven construction and energy management;
• Empowering individuals to understand their energy use; and
• Enabling virtual design and testing of energy systems, including solar arrays, wind turbines, and nuclear plants.
This energy-technology revolution is changing the rules of the game, as well as the players, winners and losers, where the game is played, and even its ultimate rewards.
Top Technology Game Changers: One of the top major technologies is also most underappreciated. The management of energy use and improvements in efficiency could have a greater impact on the global energy picture than any other development.
The other most transformative changes are in the oil and gas industries, where new technology has brought massive new reserves into play.
The continual evolution of energy storage and renewable energy technologies is expected to boost electricity generation from renewables worldwide to 17 per cent by 2030.
Unlocking Energy Supplies: Cutting-edge technology is unlocking geological potential in places and ways hardly imaginable even a few years ago. The mode-day version of wildcatters are energy-technology entrepreneurs – geoscientists and software engineers who drill wells on computer screens before drilling in the field.
Three-dimensional computer imaging, along with new steel alloys for drill bits and many other innovations are radically changing energy development and production.
Advanced hydraulic fracturing technologies employed in shale gas development have enabled the US to become the number-one producer of natural gas in the world, and natural gas from shale has gone from accounting for just 2 per cent of US natural gas production in 2001 to over 30 per cent today.
New offshore and unconventional oil technologies have reduced imports to 46 per cent and increased US domestic oil production by 12 per cent since 2008. This is the first increase in a quarter-century and has confounded predictions that domestic output was set on an inexorable downtrend. America could eventually achieve the goal of energy independence if the US seizes the opportunity through appropriate policy, investments in infrastructure, and intelligent energy management.
New Players, New Rules: No change may be more important than the introduction into the energy game of dozens of new players, such as new or reinforced superpowers like Brazil, Canada and Russia. Growing energy producers include Philippines, Argentina, Angola and Suriname, Poland, and Israel. These developments are redrawing the energy map worldwide and shifting the dynamics of political power.
The Power of One: New technologies also have empowered corporations and individuals, providing every person with the ability to proactively manage their energy consumption and carbon footprint. This represents a foundational shift in the power differential between individuals and governments.
New energy-related software and hardware on the market and in development – smart meters, smart appliances, demand management programs, and so forth – liberate individual actors from being at the mercy of broader forces. The use of energy can now become a conscious act – and an act of conscience. It’s not about being virtuous, it’s about being profitable – and, at little to no cost, virtue is achieved. By understanding and managing energy use, individuals save money, companies increase profits, and both lessen the environmental impact. Everyone wins.
The Power of One: The role for efficiency technologies has never been more critical. Peak electricity demand is rising faster than overall demand. Google data centres continuously drew 260 million watts – about a quarter of an average nuclear power plant – so they pioneered technologies today to use only 50 per cent of the energy other data centres consume.
Efficiency technology innovations extend to other industries such as shipping:
• Ships are being retrofitted to run on efficient, cleaner natural gas;
• Giant high-tech sails can provide most of a ship’s propulsion and unfurl/fold up with a button, avoiding the need for large crews;
• New paints for ships that repel the barnacles and mussels that stick to hulls and slow down vessels – thus increasing fuel efficiency by 40 per cent;
• An “air cavity system” can enable a ship to glide at low friction through the water by injecting air around the submerged part of the ship’s hull, creating a carpet of bubbles under the vessel.
Governments Hold the Key: One of the most profound longer-term trends is that energy is a central force in global economics and politics, at the heart of major global issues – economics, poverty reduction, climate change, clean water.
Secure, stable energy supplies will become more important as new sources of instability are introduced into the equation, such as trade wars and cyber attacks.
Governments need to encourage energy technology innovations. Factors that will determine the winners and losers in the new energy game:
• Developing a visionary and stable national policy framework;
• Building national infrastructure;
• Making deep, long-term commitments to R&D;
• Referee the level playing field with a legislative framework;
• Enforce transparency and accountability to turn the public into an ally.
