POWER April 2016 - 6

SPEAKING OF POWER
When Technology Tails Wag
Power Dogs
W
hen you hear " drone, " do you think,
toy, military craft, dangerous device,
or useful tool? Depending on
the type of unmanned aircraft system (aka,
drone) we're talking about, any of those
descriptors (or multiple ones) could be appropriate.
Drones were a hit under Christmas
trees last December, they're a now-common
weapon delivery system, and they also-as
you'll see in this issue's cover stories-are
beginning to play useful roles in industry.
Technology's Role in Energy
Transitions
We usually think of novel technologies
as introducing " solutions, " but many also
introduce fresh challenges, like new privacy
and safety issues raised by the increasing
recreational and commercial use
of drones.
At IHS CERAWeek in late February, when
Exelon CEO Chris Crane was asked what
energy industry leaders would be talking
about at CERAWeek 2020, he responded
that discussions would be about the surprising
technology that has transformed
the industry. Of course, technology has
already transformed the energy industry
a few times. Nuclear power, with which
Crane is very familiar, was the biggest
new technology transformation for the
power industry in the last century. We're
currently in the midst of another transformation,
this one involving wind and solar
power plus new forms of energy storage.
And then there's hydraulic fracturing,
which has transformed global oil and gas
markets-an issue that was the pervasive
theme of this year's CERAWeek.
The conference's official theme was
" Energy Transitions, " but a more apt one
would have been " How Fracking Flipped
Winners and Losers. "
CERAWeek attracts headliners from
around the world, and this year, regardless
of which continent the speakers hailed
from, it was clear that the balance of power
in the energy sector has shifted. Though
shale resources have been a topic of conversation
for the past few years at " the Davos
of energy, " in 2016 it was clear that we're
actually beyond the transition stage; the
dynamics have changed. Though still important,
OPEC no longer holds all the cards.
6
Fracked natural gas and oil have upended
global commodity prices and supply chains,
as was demonstrated-with serendipitous
timing-when the first tanker carrying liquefied
natural gas left a U.S. port, headed
for Brazil, on " gas day " at the event.
Fracking technology has been a boon
for the U.S. economy and consumers, but,
as several speakers pointed out, there are
negative consequences of unanticipated
supply shifts. Among them is the fact that
global oversupply of oil and gas has led to
reductions of as much as a third in research
and development (R&D) as well as in developing
new plays. Sooner or later, the multimillionaire
experts agreed, the cycle will
turn, prices will spike, and the resources
may not be there as quickly as required.
Of Climate Change and Fossil Fuels
Another discussion thread at CERAWeek
concerned responses to climate change in
light of what most participants saw as a
positive outcome from the Paris talks in
December. Natural gas, thanks to fracking,
is seen as the near-term " transition path "
to a lower-carbon energy system. Whether
in reference to oil, natural gas, or coal,
every speaker who addressed the issue
explicitly or implicitly said that leaving
remaining fossil fuels in the ground (as
some Paris participants had suggested) is
not an option-no surprise, as CERAWeek
focuses almost exclusively on fossil fuels.
At the same time, there were no climate
change deniers at the event. So if there's
agreement that the world needs fossil
fuels but also needs to counteract their
greenhouse gas (GHG) effects, is carbon
capture and sequestration (CCS) the technology
we've all been waiting for?
CCS: Magic Bullet or Blank?
In contrast to virtual consensus about
the effects of fracking on global markets,
opinions about the viability of CCS varied
substantially. Here's a sampling of the energy
experts' comments:
■ International Energy Agency (IEA) Executive
Director Fatih Birol: CCS " can be
a very important asset-protection strategy, "
yet the " appetite " for CCS is not
as strong as it should be.
www.powermag.com
■ General Electric Chairman and CEO Jeffrey
Immelt: " It's going to be a struggle. "
■ Minister of Petroleum & Mineral Resources
(for Saudi Arabia) Ali Al-Naimi:
" For the record, we recognize the threat
posed by climate change " and are investing
in CCS and renewables.
■ Centrica (UK) CEO Iain Conn: " I'm quite
sure that clean coal is a miss. "
From where I sit (in the cheap seats),
CCS has been a case of the tail wagging
the dog. The only time post-combustion
carbon capture from power plants is even
being looked at (outside of governmentsponsored
pilots) is when there's a plan to
partially offset capture costs through sales
of compressed carbon dioxide (CO2
) for enhanced
oil recovery (EOR). Not surprisingly,
the oil and gas industry is a much bigger
fan of CCS than power generators are. Until
more economic and varied uses can be
found for CO2
captured from power plants
(see this month's Commentary for one effort
to encourage such development), CCS
increases hydrocarbon extraction efficiency
at the cost of power generation efficiency.
Faith Must Lead to Action
So, can technology-a better type of CCS
and/or new forms of energy conversion and
storage-save the world from unmanagable
climate change while ensuring energy access
and economic prosperity for all? By 2020?
The IEA's Birol said he has " faith in the
power of technology " to solve the fossil
fuel/climate change conundrum. I'd like
to believe we can develop technology
solutions to our energy and climate challenges,
but today it seems that certain end
users (fossil power generators) are paying
a higher price for participating in the fossil
fuel economy than market participants
further upstream.
While commodity prices are low, oil and
gas and coal mining companies could be
diversifying through R&D of carbon-mitigation
technologies. It's long past time
for upstream energy companies to demonstrate
substantive commitment to climate
change solutions-other than CCS-toEOR-that
reduce the carbon footprint
across the energy sector. ■
-Gail Reitenbach, PhD is editor of POWER.
POWER | April 2016
http://www.powermag.com
POWER April 2016

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