Battle For Energy (Part 2)
Written and Edited by Sriniketh Sukumar
We continue our discussion of where the future of energy lies from where we left off last time, which discussed the role played by solar and nuclear energy. That article can be found here. Without further ado, then, let’s discuss the outlook for oil and gas in the future, as well as some interesting exchanges during the discussion panel after the end of the presentations.
Oil and Gas:
Mr. Greg Leville, CTO for Conoco Philips and experienced in unconventional resources represented the oil and gas industry. Mr. Leville opened with the story of Mr. George Mitchell (the Texas A&M physics building is named after him), an amazing revolutionary in pioneering unconventional shale production in the United States since 2005.
The US had peak conventional production in 1972, but the decrease in production and increase in LNG imports and the pessimism that came along with persisted until 2005, when the game completely changed, due to the George Mitchell, who drove the sharp growth rate since 2005 in unconventional reservoir related production growth and shale plays. This changed the US from a net importer to an exporter.
Another master stroke played by Mr. Mitchell was combining two new and highly influential technologies: Horizontal drilling (First used in 1980) and Hydraulic fracturing (First used in 1949). The lesson we can all learn from Mr. Mitchell is to identify the next big thing, it can have industry changing results.
Some current strides in oil and gas technology are completion design evolutions, increased lateral lengths, well spacing and stacking evolution. But the greatest thing transforming the industry today is the field of data analytics. That is, empirical data and not physical theories. Field data is what drives our innovational and scientific theories. We did not have the technology to obtain such accurate and extensive data in the past, which is what makes the present-day industry so dynamic and interesting.
The E&P industry is also in the midst of a digital technology revolution. Unconventional reservoirs are conducive to analytics since they have the capacity to generate data in the order of terabytes.
As of 2016, the US has top production as a result of unconventional resources like shale gas. This resource has allowed for US growth to decrease net energy imports beyond forecasts. Predictions also include a 27% reduction in the use of coal as an energy source to reduce carbon footprint, as natural gas is a much cleaner fuel.
So, some of the advantages of the oil and gas industry is the energy security it provides, economic opportunity provided in terms of creation of jobs and significant contributions to GDP, and even has environmental benefits, as natural gas has a much lower carbon footprint than coal.
The unconventional revolution has transformed the global Oil and Gas industry, and as a result a career in the oil and gas industry is stable for decades to come.
Question and Answer Session:
Having concluded their presentations, the panel opened the discussion by establishing the common denominator: The demand for energy is not going away and is set to increase in the future. All the speakers also concurred on the idea that multiple energy sources are a necessity to keep the global energy framework functional by the end of the discussion. The panel answered various interesting questions from the audience.
Some of the highlights of the discussion are summarized below:
On government intervention:
- Import tax on solar panels has increased by 30% due to the Trump administration, impacting 400K jobs in the industry
- There was consensus that government intervention is not good for any energy industry.
On the future of Oil and Gas:
- The future of oil and gas is that while we still need oil and gas to be a major source, there needs to be different forms of energy to make the whole system work, and for that reason there is a need to move on to renewables
- Shell oil allocated $1 Billion to renewables, but this technology is not feasible to make commercial yet
On transition to Renewables:
- History of companies go up and down: Thee is not a sustained transition to renewables due to economics/ Wall St.
- If you drive nuclear out of the energy industry, you are essentially increasing carbon emissions due to the considerable fraction of CLEAN energy (in the US) provided by this source
- Nuclear powerplants are built on high sea level locations so as to not be affected as much by flooding. For example, South Texas is 40ft above sea level, and will not flood nuclear units there
- Modern solar panels can handle hailstorms and survive hurricanes
- The energy industry tends to be demonized for a lack of safety, but in reality, more safety precautions and process safety protocol is taken in Oil and Gas and Nuclear than in any other industry. Safety is every engineer’s responsibility
Downsides of Oil and Gas:
- The Earth stores energy in H-C bonds, but storage is likely the largest problem in oil and gas, nut it can release lots of energy in short times
- Oil and gas does not have the adequate energy density needed for certain application
Disposal of nuclear waste:
- All industries produce waste, it’s just that nuclear waste is radioactive, so the simple solution is to not allow it to interact with the biosphere
- In fact, waste disposal is government funded and regulated. By law, once fuel is used, power plants must return the residues/ waste back to the US department of energy
- Security: All power plants are built in strong concrete and are designed to withstand even an aircraft’s impact. These facilities are guarded (in the US) by paramilitary forces
- The wind blows for free and contains 18 Mega Watts of potential energy capacity in Texas
- USA will be the top Oil and gas producer in the coming decades. The next big thing is energy storage
Interaction between nuclear and Oil and Gas:
- Micro reactors can be used as a power source for offshore rigs
- Nuclear energy can be used in enhanced oil recovery
- Many years ago, nuclear methods were used for hydraulic fracturing
- When the design and aesthetics are taken into consideration, and not just ‘harder’ factors like technology/cost, that is the sign of a maturing market. Solar panels can increase a property’s value by $30000/-
It used to be believed that shale was only good for two things: As caprocks and for finding organic rich content. This was long ago. US is best for oil and gas. Nobody would have predicted 30 years ago that unconventional shale would be the biggest producer. The lesson here is to never give up, find the next big thing and pursue it, no matter how much your professor tells you it’s impossible.
- If we remove all subsidies: Renewables are still competitive in price
- Energy prices are not uniform around the world (this is where renewables enter)
- Innovation: Where can it meet existing technologies?
- Fusion: There is no good technology as of now
- Solar: Suited to lower income. Technology that meets customer demands will be successful
- Trump: Got things approved more quickly for oil and gas, regulation stopping certain operations. The government is not too involved, but there are negative Tariffs. No comment on this from Nuclear, but mostly negative impact on solar due to import tariffs. This is due to a negativity towards science in general. The government needs to support scientific/energy research
On Developing Skillsets:
- Petroleum engineers are retiring, making space for new talents. DO DATA ANALYTICS and internships are very valuable, they are just as important as physics
- Nuclear: Did not hire from 1980 to 2010, so there is a huge talent gap present, and lots of new opportunities
- Solar: Young and immature industry, big opportunity for growth. Have passion and drive, merge with hard skills and go even higher
- There exists a strong need to incentivize carbon reduction and renewable/alternative energy
- 80% of innovation from external, smaller 3rd party companies
- Pick the path with the best end goal value