Global Energy experts comment on why the pace of transformation in the fuel and energy complex is causing more and more discussions and what conditions are truly important for a successful energy transition.
The global energy transition, which was announced as a priority of international climate policy in the middle of the previous decade, remains one of the most ambitious and complex challenges faced by humanity. In recent years, governments have assumed unprecedented international obligations, created conditions for the inflow of investments into renewable energy and launched large-scale programs to decarbonize traditional sectors, from coal, oil and gas production to industrial production and transportation. The objectives of modernizing infrastructure and digitalizing all production chains, including the implementation of artificial intelligence technologies, are still on the agenda.
However, it becomes increasingly clear as the process develops that the drive towards the maximum acceleration of transformation carries major risks. This is evidenced in particular by a study carried out by a team of researchers from the University of South Australia, who had simulated future scenarios for the global energy industry, coming to the conclusion that the pace of implementation of renewable energy sources is lagging considerably behind the pace required to replace fossil fuels. Simply put, the economy cannot handle the burden placed on it by excessively high decarbonization goals.
Similar problems were analyzed in a study by researchers from the University of California, Santa Barbara and the University of California, Los Angeles, who evaluated the effectiveness of energy reforms in 21 major oil- and gas-producing countries. Their conclusion was clear: societies, especially in developing countries, are not yet ready to pay for the environmental transformation with rising prices, less affordable energy and risks of unstable energy supplies.
This means that the pace of the energy transition is becoming not only a subject of scientific modeling, but also a matter of intense social and political struggle. The green agenda, or rather its most radical and uncontested interpretation, is increasingly being, if not openly criticized, reconsidered by the academic community, government bodies, businesses and the general public. It is not the overall trajectory that provokes doubt, but the methods, timing and versatility of the approaches used, which gives rise to a number of questions: can the world abandon fossil fuels without jeopardizing energy security? are there enough technological capabilities for such a rapid and large-scale transition? how to avoid social upheaval in countries whose economies are based on hydrocarbon production? how reliable and safe are digital solutions, including artificial intelligence technologies, for the future of humanity in the energy industry?
Global Energy posed these questions to its experts: Sergey Filatov, Director of the Department of Subsoil Use and Natural Resources of the Khanty-Mansi Autonomous Area – Yugra, and Gennady Shmal, President of the Union of Oil and Gas Industrialists of Russia.
What do you think of the relevance of the green agenda in the context of the oil-and-gas industry?
Sergey Filatov: The green agenda remains extremely relevant to the oil-and-gas industry from the viewpoint of implementing environmentally friendly technologies directly in the production process. This refers to, among other things, solutions like pitless drilling, sludge disposal and efficient use of associated petroleum gas. All this can be called a green focus area within the industry. If we consider the green agenda as a complete replacement of fossil fuels with renewable sources, this scenario will most likely be possible no earlier than within several decades. Even with a gradually diminishing role of oil and gas, these fuels will remain important to the global energy balance.
Needless to say, oil and gas cannot be completely harmless when it comes to zero emissions. What is fundamentally important here is how exactly they are extracted and processed: the progress over the past 40–60 years has been enormous. In the oil sector, every day sees new opportunities for the beneficial use of byproducts, many of which were considered dangerous and pollutive not long ago. Say, associated petroleum gas dissolved in oil used to be simply burned and released into the atmosphere. Today, the level of its use can reach 99.9% in some cases! Or we could take bottom water which is formed during extraction. We use it in the technological cycle and look for useful components. This is to say that zero-waste production depends on the technological approach and the ability to find value even in byproducts.
Gennady Shmal: When the hype surrounding the so-called green agenda was just starting to grow around the world, I was already saying, including at high-level meetings, that it was too early to talk about the end of the oil era. Oil, gas and, to a certain extent, coal will remain the backbone of the global energy industry until the end of this century. We can already see excessive zeal for green slogans being replaced by a more sober, pragmatic approach. Naturally, this doesn’t mean that we shouldn’t develop alternative energy sources – we should! Expecting that solar and wind will quickly solve all energy problems, however… Back in the Soviet era, Energy Minister Anatoly Mayorets said at a government meeting: “Those who think that all energy problems can be solved through wind have wind blowing in their heads.” These words ring especially true today. Firstly, renewable energy sources are still expensive, and secondly, what can we do if there is no wind or sun? There will be no TV, no refrigerators or air conditioning. We need to have a comprehensive reserve; otherwise, we will see cases similar to what happened a couple of years ago in Texas, when power supply was paralyzed by abnormal weather.
What technologies will define the development of the industry in the coming years?
SF: The most effective technologies in the next ten years will continue to include multi-stage hydraulic fracturing and tertiary methods of increasing oil recovery, including gas, steam and thermal gas ones, which are especially useful with Bazhenov formations (deep-lying formations with large but hard-to-recover oil reserves – ed. note).
Speaking of methods for increasing the oil recovery rate, a key role in this regard is played by innovative technologies, the so-called tertiary methods of oil recovery, or tertiary EOR. These are the most advanced solutions that make it possible to extract residual oil that cannot be obtained by conventional methods, including the injection of chemical reagents, carbon dioxide, polymers and steam, as well as the use of microbiological compounds.
These approaches are meant to not just accelerate production, but also to make available the reserves that are currently considered hard-to-recover. This is a path towards a rational and technologically advanced subsoil use.
As for Russian technologies, they cannot evolve without the provision of support to scientific schools and the training of qualified personnel. It is also important not to be afraid to borrow effective solutions from abroad. It’s completely normal and never one-sided. Take the example of hydraulic fracturing: the technique was initially developed in Russia, and was then successfully mastered and adapted abroad. Incidentally, it offers clear proof that we can come up with technological innovations on our own.
GS: As an example, let’s look at gas, which happens to be considered the most environmentally-friendly energy source. Our objective today is to learn how to use it more efficiently. And this is where new combustion technologies, next-generation burners and increased equipment efficiency come in. The prospects of gas are huge! It plays a key role not only in the energy sector, where about 70% of electricity is generated via gas, but also as a raw material for the chemical industry. It was not for nothing that the great Mendeleev once said, “Oil is not fuel, you can heat with banknotes, too”. He meant to say that oil is primarily a chemical raw material from which we can produce everything, including food. In Soviet times, even black caviar was made synthetically from hydrocarbons. At the moment, the Baibakov Foundation is, for instance, working on obtaining artificial protein for animal feed from gas. We have enough gas: according to estimates, we’ll have enough for at least 70 years, so we have to use it to produce high-tech products.
As for oil production, Russia has unique solutions and extensive practical experience here. Suffice to say that technologies like hydraulic fracturing, horizontal drilling and rotary drills were originally developed here. Many solutions developed back in the Soviet era were later borrowed and adapted by foreign countries. Despite the setbacks, our country has continued the strong engineering and scientific traditions that need to be restored and developed.
How do you assess the potential of AI in transforming the oil-and-gas industry?
SF: AI is already partially replacing humans. For instance, most companies have production control centers where digital systems analyze datasets and take part in selecting optimal operating modes for wells and fields. Despite all these technological advancements, the main role here is still played by humans: they train algorithms, create databases and make final decisions.
This is a good prompt to dispel some fears. For example, you can often hear that the era of pioneers is over and that geologists will soon be replaced by machines. This is not true: geology continues to be a science with a human face. It’s just that a modern geologist is no longer a bearded guy with a backpack but a highly qualified specialist who works closely with his colleagues: drillers, miners, geophysicists and specialists in magnetic and gravitational exploration.
Mineral development requires a comprehensive approach, and AI will not be able to replace humans for a long time. But it can relieve people of substantial amounts of routine work and open up space for new professional qualifications. For instance, the development of drone aircraft and autonomous transport at oil and gas fields necessitates the use of operators than can manage these systems. This means that digitalization does not eliminate the human element: on the contrary, it requires even smarter, more flexible and better trained personnel. The most important thing we should continue to focus on is that technologies exist to serve humans, and not vice versa.
GS: AI is already being used in the industry. However, it is important to remember that no machine can plow the land, bake bread or drill wells by itself. Indeed, although one can use digital technology to make the drilling process more efficient, all decisions will be based on human intelligence. Because it is human beings who set the algorithms and control the results.
