A great deal of headline-grabbing news was generated at the World Economic Forum 2009 last month, as the economic crisis and shifting energy landscape took centre stage in Davos, Switzerland.
Amidst the emerging shockwaves from the summit, it was claimed that the price of oil had to rise to between $60-80 per barrel to safeguard energy investments.
That was the point raised by the bosses of oil cartel Opec and top energy firms.
While this would probably be greeted with groans of dismay by the public and average consumer at the petrol pumps, it’s claimed that this would, however, protect investment in difficult oil exploration projects.
So how does this affect the industrial gases business, and what are the challenges ahead for the energy companies?Integral involvement
As gasworld has explored in the past, the industrial gases business is intrinsically linked to the oil & gas industry. Gases are fundamental throughout much of oil exploration and refining techniques, and oil & gas processing on the whole – key to optimising processes and maximising efficiencies.
Investment in further exploration projects could therefore sustain this perspective of gas growth drivers and represent a positive factor for our industry.
A drive for greater efficiency in operations is also likely to inspire further technology developments and examination of the way in which gases, equipment and related services can continue to aide this sector.
Continued exploration of natural gas processing sites could also provide the opportunity for further helium extraction and development projects.
In terms of the challenges facing the energy companies, there’s a shifting landscape ahead, as gas
world discovered when recently chatting with process manufacturing solutions company AspenTech.Implications, pressure, & challenges
Phillip Muller, Strategic Business Manager for Europe and Global Accounts for AspenTech, described how ongoing environmental concerns and the more immediate global economic crisis are shaping our energy future.
Muller explained, “The most urgent challenge facing oil companies is the need to deal with the implications of the current economic crisis and, in particular, to adjust working processes to cope with rapidly falling oil prices.”
“The recession has intensified the pressure on energy companies as they strive to get more out of existing reserves. In the past, they would rapidly shift operations from one oilfield to the next even if reserves remained unexploited. It was simply more profitable to move on quickly. This is no longer the case. Today, the economic environment dictates that companies focus on optimising all reserves.”
Indeed, the effects of the recession. After six successive months of economic contraction, the UK is now officially in recession, just as a number of other countries are around the world. This is undoubtedly taking its toll, yet environmental considerations are also playing their part in an evolving energy sphere.
Muller added, “Energy companies also face a growing number of ever more stringent environmental regulations. These include ensuring compliance with specifications relating to the level of environmental impurities in gas or diesel. They are also required to minimise emissions including those from CO2 across the production process.”Pinpointing optimisation
As the credit crunch bites and environmental concerns take precedence, the optimal design and efficiency of plants and processes takes on greater importance. Higher margins are still a fundamental too, however.
So how can energy costs and consumption be effectively reduced?
A change in approach is necessary, as Muller describes, “Overall costs incurred will be a function of how astute the oil company is in general and for example in integrating its plant from an energy perspective. Companies can enhance the efficiency of their approach to heat integration by reusing hot streams or heating up cold streams, in order to achieve optimum plant performance.”
“Companies need to use analytic tools to pinpoint where heat exchange processes should take place. The emergence of pinch technology helps engineers decide where it is appropriate to take action.”
“They can shuffle around heat exchangers,” Muller says, “up to the point of optimum integration - known as the ‘pinch’ point. By using hot streams to heat up cold streams and vice versa and by reusing heat in different parts of the plant, companies can significantly reduce energy consumption.”
AspenTech itself could have something of a solution for reducing energy consumption and in turn, costs.Return on investment
The company’s AspenONE software solution suite plays a key role in turning theory into practice, by sizing and dimensioning heat exchangers correctly, ensuring that they perform the heat exchange expected.
“Another key factor,” Muller explains, “is that heat exchangers are expensive, so companies that want to reduce heating costs must also ensure that they do not over-invest in equipment and that they can achieve a rapid return on investment.”
“AspenTech’s AspenONE solution enables organisations both to design and to estimate the cost of heat exchangers and, by so doing, to carry out the ROI calculation accurately.”
As we end our chat, the subject of emissions emerges and it’s clear that tightening legislation governing emissions will strongly influence the way in which our energy future plays out, perhaps at a significant competitive advantage.
Muller closes, “In the future, the energy industry will be driven by a greater sensitivity to emissions and environmental regulations, but its development will also be strongly linked to the overall geopolitical situation.”