The energy transition revolution can’t happen without revolutionary technology
The energy industry is entering a new era, triggered by the relentless rise of renewables, electric cars and smart grids. And like previous industrial revolutions, technology – and the willingness to embrace it – will determine the winners and losers.
By Dietmar Siersdorfer
Over the past decade, the greatest disruptor in the energy industry has been the unlocking of vast shale oil and gas reserves in the U.S. But the next breakthroughs won’t come from better drilling rigs. They will emerge from digitalizing the existing energy infrastructure and improving the way data is collected, analyzed and used to maximize efficiency and minimize the environmental impact of fossil fuel extraction and consumption.
Global energy demand will grow an expected 50 percent by 2050, and there are still over one billion people who lack access to power, so it’s important to maintain investment in oil, gas and power generation to meet these needs. At the same time, we must tackle the challenges of climate change and massively reduce CO2 and other emissions. There’s consensus that new technology has an important role to play to solve this problem.
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But the industry remains strained. For the past five years, oil and gas companies faced “lower for longer” forecasts for crude prices and slashed investment budgets, including crucial spending on technology. Some energy experts don’t see annual investment reaching the $600 billion necessary to meet future oil demand through the next decade. Such a shortfall would limit the broad deployment and development of promising technologies.
Some producers are reluctant to allocate capital to projects that won’t show returns for years. Others are concerned about sharing data and cybersecurity, reinforcing the industry’s preference for tech conservatism. The slow pace of adoption, however, isn’t uniform and many companies, especially in the Middle East, are on the cutting edge of digitalization and devote considerable resources to technology.
Innovations in the oil and gas sector today, from exploration to downstream projects, are aimed at squeezing maximum value from each barrel. Along this chain, some advances are no-brainers, like switching out a half-century-old gas engine with a highly efficient and connected electric drive or installing sensors that allow for real-time production optimization.
The greater promise lies in technology that’s still in its infancy and may not be the obvious choice, yet. Potentially disruptive technologies such as artificial intelligence, ‘digital twins’ and additive manufacturing are among the most important developments today.
Siemens has been researching and developing these solutions for years, and we have had some success deploying them for customers around the world. We can now use 3D printing techniques to make gas turbine parts, which can quickly deliver components when they are needed while using up to two-thirds less material.
Software allows energy companies and manufacturers to create digital twins, or virtual copies, to design, test and train on new equipment and processes in a risk-free environment. And the potential of AI is no longer theoretical: reams of data from sensors are already being fed into AI-enabled controllers that predict and preempt critical failures, enhance safety and security, and constantly learn to optimize output.
These advances fall within a broad set of themes that will aid the energy transition by making both hydrocarbon and renewable energy supplies secure, greener and digitalized. If we embrace these strategies, we can help foster economic prosperity, serve society and protect the environment. Furthermore, we now know through our own efforts to be carbon neutral by 2030, that there is a strong business case for sustainability.
Just a few weeks ago the world was captivated by youth protesting global inaction on climate change. Siemens supports the Paris climate agreement, and we have already started years ago to work on products and solution to help minimize the environmental footprint of our customers and Siemens as a whole.
We must strike a balance that benefits society in the energy transition. Maximizing output and lowering costs is an imperative all businesses face. But the energy industry can still thrive while protecting the planet if we invest in, and adopt, the revolutionary technologies necessary for this new era.
January 28, 2020
Dietmar Siersdorfer is CEO of Siemens Middle East and CEO of Siemens LLC United Arab Emirates since December 2013.
This article has originally been published on LinkedIn.
Combined picture credits: Siemens AG
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