Agility and Adaptability in any Energy Transition
image credit: Image source and rights: Siemens Energy
- Oct 22, 2020 4:06 pm GMTOct 22, 2020 11:59 am GMT
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So I have just finished up my second day at the Siemens Energy Middle East & Africa #EnergyWeek. A completely different day that took the second theme of innovation into a deeper dive around tackling the decarbonization of the hydrocarbon industry, followed by digitalizing the energy industry and a final panel about preparing societies for energy evolution
It was a mixed bag for me. Innovation is my core topic, and energy is my major focus area to apply innovation to, so this was a day of expectations and insights. I am sorry it is a little longer than I would have liked but here you go:
I heard that “innovation is in our DNA”, and no doubt it is, but one should always ask what type of innovation. Research related, technology-specific, or market-orientated. There are so many facets of innovation. I believe you need to be a little careful of making claims when the subject is so broad.
Panel one- decarbonizing the hydrocarbon industry
The panel did its job for me, in prompting many questions
The first panel discussed the hydrocarbon industry with a very specific focus on the oil and gas section, naturally as this is the Middle East. My impression is that recent shocks and the Corvid.19 crisis have certainly hit the Middle East especially hard. The panel finds its “collective feet” to respond and react and move from some tough days of retrenching in supply, ambitions and adjusting to a different flow of finances. It has, in many ways, seen the “writing on the wall” for some time with the charge of renewables and the different geographical markets shifting from the reliance on oil and gas.
I felt innovation should have been so much more “front and center” in the panel discussion. The reverting to extracting more efficiencies from an existing plant, continuing to tackle long-term problems of methane emissions, leakage, and flaring was present as issues but not foremost in mind to lead to significant initiatives in carbon capture and storage. The conclusion is CCUS is a promise, not proven to scale so we simply carry on. I believe the approach to make this CCUS is central to the Oil & Gas future in the Middle East as essential to invest in, in massive ways, and fully master.
Secondly, Gas is deemed by many as the bridge solution while the world continues to move to renewables or replace hydrocarbons with green molecules from Hydrogen. This “interim” solution is for twenty to thirty years or even more and in this time by making innovation central to solving CCUS in scale and commercial value is a challenge I would have thought the Middle East was wanting to significantly invest in this to achieve a leadership position. Perhaps it is working on this but it did not come across to me. I felt the Middle East is waiting for others to crack this CCUS in scale and commercial viability. What a lost innovating opportunity
There were many discussions on extending existing assets, and many of these seemed old assets, eeking out beyond their normal lifecycles. Is this the best route to go? We can attempt to make an old plant efficient, but why can’t new plants take their place? Designed with twenty to thirty years of use, the absolute state of the art. Make them climate-friendly in every way and taking innovative designs to make that happen. Adding oil or gas into a mixed environment with solar or wind and hydrogen to produce new green fuels needs accelerating. It is happening (project in Saudi Arabia), but it needs to be far more radical. More hybrid systems being commissioned.
Are oil and gas the enemy from a public perspective? That was raised on the panel, or as stated, is this actually emissions as our No 1 enemy? I thought that was a good point.
There was lots of talk about the coal to gas switch, and the growing coal growth still going in Asia. That is a growing concern I assume in the Middle East that it will be renewables that replace coal, not oil and gas and the markets continue to decline as Europe has signaled very specifically renewables is its future
There were discussions on the need to decarbonize brown assets, retrofits, waiting for a fair market where subsidies get removed (fair to whom as Oil and Gas have had a fair run on these in past years) Some floating of a World Carbon Bank was mentioned but will that ever transpire, the same as the carbon tax debate. They need global consensus and that is going to be hard.
I wish the panel had lifted itself out of its current position, it was a little depressing as this was the innovation focus day.
Oil and especially gas have a future for some time to come. If the Middle East players do not make some bold, innovative moves then they have lost the chance to be vibrant contributors to the energy transition, they will continue to move away, dilute and diversify and attempt to adjust to the new energy world but in diminished ways of shaping the energy future.
Do not get me wrong, I want a clean energy world but I simply felt the air of this panel as it debated was sometimes in the discussions a self-defeating, defensive mood. It seemed they were simply stuck on leveraging on the existing and extending all assets for maximum extraction. This approach may work for a shareholder short term but not competing in a very competitive world, where renewables are dominating at present. The Middle East needs to be collectively bolder.
Surely having a responsible oil and gas business that is determined to decarbonize fully, to provide fuels of the future that blend and mix the abundant resources that are available is the better way to go.
Oil and Gas need different perspectives, what I heard here was not taking that challenge on but hanging in as long as they can while adjusting to the WHOLE world moving away from Oil and Gas dependence. Increasingly we are seeing countries establishing their own renewables sources locally for growing energy independence. The reality and present mood seem acceptance of the fact that Oil and Gas are declining or is it still a little too early to tell as the world still depends on Oil & Gas for most essential industrial purposes?
I wanted to hear a very different innovation panel discussion not attempting to keep business as usual when it plainly cannot, but a collection of views for were Oil and Gas will be in 10 to 20 years and what will have changed in its current forms, from the Middle East perspective.
The second panel was Digitalizing the energy industry
The second panel was about “Digitalizing the energy industry”. The panel felt like it was a “probe and explore.” It got down into implementations and individual constraints and barriers. It did not lift up to where innovation can transform the energy industry.
In what I have read in my research and heard from others the Energy industry has been very slow to adopt digital. Digital has been around at Grid Controller, Fleet Director, or Power Plant Controller levels but not moving to the transformational level of managing the whole Energy System, that we are witnessing in the Industrial Revolution 4.0 where platforms, applications, and enormous resources are being poured into solutions.
There seems a lack of industry momentum to this, it is islands of initiatives. The people involved on the panel are at the evangelizing or spreading the digital world, working on building insider understanding, using the traditional user case approaches, slowing getting acceptance of the (valuable) part digital will play. Continuing in this “piece-meal” approach is the road to nowhere of any really different value potential.
They are seemingly are in trench warfare and that is understandable.
The value to the operations, the financial contributions are case-by-case, they reply on personal commitment and opportunity spotting. The journey to single sources of truth (data) is being broken down to allow islands of information to be changed into knowledgeable aspects that can add business value.
The analytical and predictive parts are well on their way but as there are limited platforms that “lift” industry standards, much of the data stays within the one company, not achieving that open value you can achieve in industry comparison.
The workforce perhaps within the Oil and Gas industry has been so physically orientated the shift to digital is seen as strange and alien.
What I did hear was an emerging pathway that will allow the digitalization of energy to take off and gain from scaling.
This was, in my words and interpretation, what I heard were thoughts on the beginning of a digital pathway:
1. Key is partnerships, sharing, exchanging, and bringing different skill sets to the same table
2. To get the current pilot phasing (pilot purgatory) shifting. Partly improper selection of projects, unclear end value, and lack of commitment beyond experiment and learning are holding the move to scale and commercialization
3. The energy transformation competitiveness is at a point where market volumes are declining, competitive edges are being sought. Can digital be a value enabler to make a difference? Operating in islands never brings the value that open data sharing can. It galvanizes real change
4. Scaling and deployment. The hard work on working on finding and justifying solutions based on digital applications can only go so far. The need is for a stack of (applicable) technologies and robust, dynamic, evolving platforms that oil and gas producers can tap into.
5 A real need for trust with the end-user so they begin to see how digital can augment their knowledge.
There was some mention of a digital twin idea and some work already taking place but it is not at any scale or appreciation on the same level as where the value of the Industrial Digital Twin has advanced through all its relevant parts. This prediction or innovative need was skipped over
I was expecting discussions on far more on Complex engineering tasks that can be mapped in detail through virtual simulation. How Artificial intelligence plays a key role in data management and domain expertise of Siemens AG to go beyond creating a virtual 3D model of an asset, where solutions in the future will be able to quickly incorporate all structural, electrical, mechanical, control, and instrumentation data efficiently.
Bringing sophisticated solutions is what I felt the panel was looking for, to take their initiatives onto a different level. A level that relies on the close collaboration between solution providers with the expertise in analytics, modeling, cloud computing, and AI, and operators who have in place systems so they can open up their assets to the data-gathering systems that are required for the necessary detail this digitalization world needs to bring new business value and operating models.
Clearly one day, the industry will exist in both the physical and virtual worlds, it is beginning, with the feedback boosting production, asset life, efficiency, capturing emission and energy loss points and, crucially build on safety.
I was expecting to hear more solutions about digital solutions as this was a Siemens based event but that may be a business yet to fully come from them also. It seems Siemens Energy is only beginning to focus in on this.
The final panel around “preparing societies for the energy revolution” was my highlight of the day.
The final panel was about preparing societies for energy evolutions. The panel identified the need for new skills for this new energy world. Siemens spoke about their adoption of “to Energize Society” but these are, again it seems early days.
The awareness and education of society to the energy changes will be felt nowhere more dramatically than in the Middle East. To move away from subsidies for society, low oil and gas prices, and adjust to different consumption challenges will be a challenge.
I did like the approaches that are being undertaken in both Saudi Arabia and to a more advanced level in the UAE. The notion of how we live and think, how we adapt, the understanding of diversification, and what it promises in new work and skills is a tough one to transition.
The panel talked through different initiatives. They spoke about embracing innovation, having a more agile revolution, gaining increased identification, and separation from reliance just on technology but on individual skills.
The UAE Minister, Her Excellency Minister of State for International Development, Reem Al Hashimy laid out some very clear enablers to take society through the changes occurring, not just in energy but across much of the changing world that is ahead. She spoke of Advocacy Platforms, developing localized thought leadership, providing memorable experiences to modify experiences, and inspire change as enablers.
Each panel members offer up different interesting points of view from Dr. Raja Al Gurg, Dana Al Juffall, Gina Verghi-Breuer, and HE Reem Al Hashimy, nicely moderated by Dr. Dalla Samra-Rohte gave me the best session of the day.
HE Reem Al Hashimy provided me the most memorable point “Agility and Adaptability” and that perhaps sums up the three panels and the struggles, stages they are all in, within the energy transition.
The energy transition in the Middle East, so heavily dependent on the Oil & Gas industry is yet to find its sustaining innovation ways. It has many but they need a greater catalyst and imperative to bring a lasting change. The UAE clearly shows the way but to make dramatic changes innovation needs dramatically lifting up in thinking through.
Innovation needs to be more radical and applied, less talked around, or applied in isolated islands. The Middle East from hearing from all involved does have the capability, providing it refocused in its own transformation on what it can offer the rest of the world and its own societies.