POWER April 2014 - 8

SPEAKING OF POWER
How Competitive Are You?
I
spent the week before this issue went
to press at IHS Energy's CERAWeek in
Houston, listening and talking to many
of the attendees representing 55 countries
during the annual event that examines
strategic issues facing the global energy
industry. Though several themes were addressed,
I want to focus on one in this
column: competitiveness.
Cost competitiveness is probably what
comes to mind first, and that did get its
due attention, including from U.S. Department
of Energy Secretary Ernest Moniz,
who said that it's really important to reduce
the costs of low-carbon technologies.
As the week progressed, several other dimensions
of competitiveness emerged.
How competitive are you and your company
along each of them?
Supply Competitiveness
Though there was consensus about the
continued bright outlook for shale oil and
gas in North America, several speakers acknowledged
that shale resources aren't a
solution everywhere. Fuel competitiveness
involves cost and availability but also
surety of supply.
In developing nations, natural gas is
not cost-competitive with other options,
including renewables. As a representative
of China's state grid noted, if China can
get gas from the U.S. and Russia, and if
it can develop its own shale gas, then
gas may be the best option, especially for
coastal areas. Until then, China sees wind
power as a good long-term option, nuclear
as a good mid- and long-term option, with
continued use of coal, though at a lower
percentage of the total mix.
Meanwhile, as Black & Veatch (B&V)
Chairman, President, and CEO Steven
Edwards commented, growth in the U.S.
is mostly around renewables, driven " by
the competitiveness of renewables in
the marketplace. "
By now, readers of POWER and our GAS
POWER Direct eletter are familiar with the
mismatch between natural gas and electricity
markets, but there's an even bigger
challenge. In fact, Spectra Energy President
and CEO Gregory Ebel argued that
8
gas/electric trading day coordination is a
red herring and that fundamentally, what
we have is a capacity problem. That capacity
problem translates into supply security
challenges. Reliability of supply as
an element of national security was a refrain
at the event because Russian troops
had recently entered Crimea, but U.S. gas
delivery was also top of mind.
The competition for natural gas this winter
shone a light on the problem. I even
heard one CEO explain that his generating
company has been in the position of having
the independent system operator tell a
plant to run, while his gas supplier said it
couldn't deliver the gas. Neither side could
believe the problem was real until the CEO
got them conferenced together by phone.
Workforce Competitiveness
Several speakers, including Diane McQueen,
Alberta's energy minister, bemoaned
the difficulty of staffing energy
projects. As IHS Vice President John Larson
noted, though U.S. unemployment figures
suggest there are workers to fill the
labor shortages across the energy sector,
there's a " skills mismatch. " Diversifying
the workforce was one solution that Secretary
Moniz mentioned. Workforce diversity
was also the focus of a reception hosted
by the American Petroleum Institute for
women in the energy industry.
Ecosystem Competitiveness
The relevant competitive dimensions depend
on your business ecosystem, and
cultural values are an increasingly important
dimension.
As Spectra's Ebel observed, public
opinion is " never right or wrong-it is
what it is. " And Harald Schwager, member
of the Board of Executive Directors
for Germany's BASF SE, the world's largest
chemical company, noted that Europeans
differ from the rest of the world
in believing that " energy is only good
energy if it's expensive, " because only
then, they believe, will people not waste
energy. Everywhere else, the belief is that
only cheap energy is good energy.
In a Thursday plenary, B&V's Edwards
www.powermag.com
noted that the Chinese Premier Li Keqiang
had the previous day declared war on pollution.
In China, said Carlos Pascual, special
envoy for international energy affairs
at the U.S. Department of State, addressing
pollution-especially along the coast-is
an even higher priority than cost containment
(gas is twice as expensive as coal) or
climate change.
Global Competitiveness
In his opening address to Wednesday's gas
sessions, President and CEO of Siemens
AG Joe Kaeser argued that the U.S. has
a once-in-a-lifetime chance to develop an
industrial manufacturing sector because
energy is so cheap and stable, " and people
in this country know how to handle
it. " That's why global companies like his
continue to invest in the U.S. " Today, " he
said, " it's all about going west. The U.S. is
once again the place to be. "
That theme was carried forward by
BASF's Schwager, who noted that Germany's
BASF has started to shift investment
to the U.S., including new plants. Investment
in Germany is down from 60% of total
investment to less than 50% for basic
chemicals, although the total amount of
investment is up. That doesn't mean the
advantage is solely America's; Europe isn't
doing too badly, he argued, especially
given its strong infrastructure.
Power Plant Competitiveness
As Robbie Diamond, president and CEO of
Securing America's Future Energy, noted,
we can control our domestic energy policy
but we can't control the global market.
That attitude should also apply to generating
companies: You can't control the
market, but you can control your own
operations by ensuring that they are as
competitive as new technologies, smarter
practices, and energy-efficient operations
can make them. Nearly every article in this
issue relates in some way to the issue of
competitiveness. How will you become
more competitive? ■
-Gail Reitenbach, PhD is POWER's
editor. Follow her @GailReit and the
POWER team @POWERmagazine.
POWER | April 2014
http://www.powermag.com
POWER April 2014

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