Technology Drives Changes in the Energy Industry
The energy industry has a very broad scope, representing industry sub-sectors such as petroleum, gas, electricity, coal, nuclear power and renewable energy (hydroelectric power, wind power, solar power and alternative fuels.) Advancements in technology are enabling all sectors of the energy industry to operate more efficiently and reduce costs.
Technology is making tremendous changes in the energy industry. Advancements in technology will create the efficiencies that will enable oil and gas producers to remain profitable at widely varying prices. The market can fluctuate substantially very quickly, causing oil and gas producers to focus on getting costs down and increasing their output up by applying new technologies.
Technology Impacts in Alternative and Renewable Energy
There is absolutely no end to the opportunities available to energy companies and entrepreneurs as well as research and development labs that create better technologies for the energy industry. For example, solar technology improvements are creating solar cells with higher generating efficiency and lower manufacturing costs.
It is, in fact, technology advancements that have enabled prices of solar cells and solar output to become incredibly affordable over a reasonably short period of time in which it has developed significant efficiencies. These efficiencies will continue as applications such as nanotechnology is applied to make alternative and renewable power better, smarter, cheaper and more effective.
The greatest opportunity in renewable energy is the development of high capacity, low cost storage batteries. The key here is the development of storage capacity for alternative and renewable power so that it can be stored until it is actually needed. This has been an issue for renewable fuels, but battery technology, as evidenced in the auto sector, have seen dramatic advances in recent years.
Technology Impacts Electric Utilities
Utilities are going through a rapid transformation due to several factors. For one, utilities are under a great deal of pressure to use less coal. Burning coal is considered “dirty and expensive.” Consequently, many utility companies are switching over to natural gas. Regulatory agencies, such as the Environmental Protection Agency (EPA), are restricting the amount of pollution utility companies are allowed to produce, forcing them to switch over to natural gas. Natural gas is beneficial for utility companies and consumers because it is clean and currently inexpensive.
Nuclear Power is Declining
The industry is shifting away from nuclear power. This is an interesting dichotomy because nuclear power, in many ways, is a clean power generating source. One of the main downsides of nuclear power is the incredibly high cost of building a new nuclear plant. In the United States, a small number of nuclear plants are expanding, while many older plants are being shut down due to aging equipment and high expenses.
Technology Impacts Liquefied Natural Gas (LNG)
An important application of energy technology is in liquified natural gas (LNG). LNG is a process whereby gas is chilled, at special terminals, to minus 260 degrees Fahrenheit. This process allows companies to take natural gas that is produced in very rich areas, chill it to incredibly low temperatures, and ship it to places that don’t have natural gas resources but have high demand for it. Improvements in tanker and storage technology are helping to reduce costs for this energy alternative.
Technology Impacts Oil Industry
Ultra deep-water drilling is another major advancement, though we saw the downside of this with the BP spill. Offshore rigs are now capable of working in 1500 feet of water and then drilling another 15,000 – 20,000 feet below that, through the earth’s surface. Below water, total well depths in the 30,000 – 35,000 foot range are being achieved. The pressures at this level are incredible. The heat, and other environmental factors, that they have to deal with in these vast, underwater wells is phenomenal. The cost is atrocious, but off-shore fields can be so productive in the capture of oil and gas that giant energy companies are willing to bear the expense. The reason they are able to do this is through the advancement of technology that allows them to find the fields, drill them and work under extreme environments.
One of the major issues that comes with technological advancement is cyber security. As the energy industry has become more dependent on technology and digitization, it is becoming more vulnerable to cyber attacks. There are many issues that come along with this, including how to deal with vendors and counter parties who need access to the data generated by utilities. The industry needs to develop ways to protect data from a technological and legal standpoint. Industries that run critical infrastructure are at the greatest risk from cyber-attacks.
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