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 Feature Industry Articles 
Tuesday, December 01 2015
The Oil and Gas Industry - Technological Advancements that Minimize Pollution

By Yannis Gatsiounis, General Manager, Economic Development Strategy, AngelouEconomics

The conventional wisdom has it – has had it for 20-plus years – that renewable energies will soon replace fossil fuels.

In fact, fossil fuels, especially oil and gas, will remain central to our energy future, with heavily-subsidized renewables unable to overcome the forces of economic nature to drastically increase their market share.

Congress, for one, is inching closer to lifting the decades-old ban on crude oil exports, as fracking unlocks the potential of oil and gas wells, while the U.S. economy – valued at $17 trillion – is once again on the upswing, boosting energy production along with it.

Wind and solar account for a mere 8 percent of our energy supply. Even in global capitals for wind, like Denmark and Germany, are powered by some of the world’s finest engineers-residential power rates are among the highest in the world, at 42 cents/kWh in Denmark, and 39 in Germany. According to Bloomberg, Denmark intends to retract its lofty CO2 emission targets and scrap plans to become fossil-fuel free by 2050.

When it comes to coal, the number of people employed in U.S. coal mining has fallen 15 percent over the last 20 years and mined coal by the tonnage is on the decline, having peaked in 2008 at 5.43 tonnes. The Dow Jones U.S. Coal Index, which monitors the largest traded coal companies, has dropped off 88 percent over the last five years. Coal prices are down, and increased regulation isn’t making life easier for producers.

Yet coal is still the biggest fuel source of electricity generation in the U.S. and demand abroad is on the rise. Many developing countries possess ravenous appetites for fossil fuels. The financial services group Macquarie predicts that energy consumption in Asia will rise 31 percent over the next 10 years, and two-thirds of that will be fossil fuels. And according to the International Energy Agency, coal will replace natural gas as the leading power-generating fuel across Southeast Asia.

This could bode well for the shrinking U.S. coal industry, which currently sends 25 percent of its exports to Asia and will maintain steady production over the next 30 years, according to the U.S. Energy Information Administration.

The perceived environmental benefits of alternative energies are somewhat offset by their inefficiencies; biofuels have lower energy densities, meaning more fuel must be burned to produce the same amount of energy. The electric car industry has seen an expanding roster of participating carmakers, with a record number of electric vehicles sold in 2014, but they still represent a fraction of total vehicles sold in the U.S. Insufficient range, a shortage of charging ports and high sticker prices are likely to restrict growth in the near to medium term.

The leading rationale to get off fossil fuels has been environmental, and there has been a concerted push to bring the economics in line with the aim, with governments encouraging the private sector through a range of incentives and subsidies. But there is, for Washington at least, an arguably more powerful and persuasive consideration in geopolitics, which increased domestic production related to hydraulic fracturing is radically altering by decreasing America’s dependence on Middle East oil. A lifting of restrictions on crude oil exports will increase production (up to 3.3 million more barrels a day) even as cheaper pump prices threaten to disincentivize further production.

Technological Advances
New technologies will help propel fossil fuels forward. Hydraulic fracturing is the most talked about form. Another potential game changer is supercomputing. How this will work is that imaging that provides crucial data is moving from two- to three- and even four-dimensions, increasing computer calculations and accumulation of data that will minimize risk in prospective drilling areas. Supercomputing essentially puts the idea of peak oil to bed for the foreseeable future, according to Oilprice.com.

Oilprice.com predicts that five other technologies will help secure oil and gas’s future. These include subsea processing, which will bring down costs by conducting processing activities on the seafloor rather than having to shuttle solids and fluids to and from processing facilities above water.

“Octopus,” or multi-well-pad, drilling provides access to multiple wells at the same time from one pad site. Breakthroughs in liquefied natural gas technology, including LNG seaborne tankers and floating LNG facilities, is removing the need for offshore pipelines and helping companies avoid fluctuating costs at onshore production plants. Machine to machine, or M2M, technology will improve remote monitoring and provide greater flexibility and control of resources during transport from wellhead to pipeline, according to Oilprice.com. Advances in deep water rigs will allow for deeper exploration and boost offshore discoveries.

The coal industry can be sustained in the short-term by demand from overseas markets with less stringent environmental regulation than the U.S., but its economic potential in a more environmentally conscious world will not be fully realized without clean technological breakthroughs.

Even with clean coal technology in place, coal remains a leading cause of global warming at a time when stricter U.S. environmental regulations are pending, and so the industry’s potential will include more technological advancements that minimize pollution.

The federally sponsored Clean Coal Power Initiative focuses on minimizing emissions of pollutants like particulates and mercury and improving efficiencies to reduce carbon dioxide emissions. On the efficiency front, two technologies that are under research and not yet commercially available, but could further improve coal’s cleanliness, are integrated gasification combined cycle (IGCC), which uses a gasifier to convert coal into gas and ultra supercritical pulverized coal (USPC), which is said to be  more efficient than regular pulverized coal plants. Carbon capture and storage will see improvements through post- and pre-combustion capture and oxy-coal combustion, the latter of which uses pure oxygen in the boiler to dilute CO2 in the resulting exhaust.

Cost reductions and technological advances in clean and renewable energies present a very real challenge to the future of fossil fuels. But demand, along with economic and geopolitical considerations, will ensure that the future for fossil fuels isn’t as clouded as commonly thought.

About the Author
Yannis Gatsiounis is a General Manager, Economic Development Strategy at AngelouEconomics, where he analyzes the economic and social resources available to clients and develops viable strategic paths forward.

AngelouEconomics has conducted strategic economic development, site location, and economic impact analysis for over 650 clients in the U.S. and abroad.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 01:13 pm   |  Permalink   |  Email
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