SPECIAL TOPIC : Ask the Expert
And that will spur a lot of activity and investment .
The next piece will be what is going on in places such as Europe , whose offshore wind industry is massive , taking a bigger leap into the hydrogen space . They are now starting to figure out how to take offshore wind and convert that into hydrogen . There will be the development of what they call ‘ hydrogen valleys ’, and areas like this will become suppliers of hydrogen from offshore wind or other renewable sources , and then find offtakers of hydrogen . As a result of U . S . initiatives , many European companies are now wanting to step up their game even further , and support the hydrogen industry , to be more competitive .
Over the next two or three years , there will be a lot of announcements , and then a lot of steel in the ground by 2026-2028 , with real projects by 2030 , where we will probably see the first developments of these physical hydrogen hubs well underway . By then , a couple of them will have been established for a few years , and then we will know what the costs are , and how viable a full-blown hydrogen economy is .
Q : How will the future of hydrogen and renewables impact oil & gas ?
A : The goal , ultimately , is to push hydrocarbons out of the picture . Some gas companies are already threatened with the idea that we are going to use beneficial electrification , such as induction stoves instead of gas stoves , and heat pumps instead of gas heating , and they will lose several major end uses . The smart companies are saying , well , maybe we can take our pipelines and refit them for hydrogen blends , or otherwise figure out how to reposition themselves in that space .
The oil & gas companies , including upstream exploration and development , generally see hydrogen as something that is quite familiar to them . In the same way that some companies had historically begun developing offshore wind farms because they knew how to
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See what makes us more than just a PVF supplier at fergusonindustrial . com / past-performance build platforms , some of the more astute hydrocarbon companies are understanding that this energy transition is inevitable , and are positioning themselves based on the expertise they have to play in this game . And some of the will keep producing hydrocarbons , but try and offset that by doing tons of carbon capture and storage .
Most companies understand there is a transition afoot . They may drag their heels a bit , but they are beginning to position themselves for that inevitable energy transition , even though it is unclear how much hydrogen will be in the mix as an energy carrier , and how much of that will be in the form of ammonia , or methanol , etc .
But oil and gas will not go away immediately , or for a long time . In the more established economies , there is an inertia built into it . If we want to electrify the vehicle fleet , say in the U . S ., there are roughly 17 million electric vehicles sold every year , and the average car lasts 12 to 13 years . This year , around 5.8 % of U . S . automobile sales were electric vehicles . Even if this increases every year , there will still be a trailing effect , as 94 % of the cars sold this year were still gasoline . This trail will last quite some time , simply because of the inertia built into the age of these assets that we use all the time .
The real question for oil & gas companies is , how much will they invest in new resource development ? And , if they underinvest , what are the consequences ? Companies have a focus on providing returns for shareholders , which is what they are meant to do – they are not immoral , they are amoral . They are just meant to provide returns to shareholders in the most expeditious and efficient way possible . The role of government ,
ABOUT THE EXPERT then , is to provide incentives for these amoral actors to accelerate their behavior in one direction , and decelerate it away from another one . The role of government is to protect its populations from either foreign adversaries or other dangers , and climate change is one of them . So companies will move as fast or as slow as societies tell them to , provided the right incentives are put in place .
Q : What do you foresee for the future of the industry ?
A : People generally think , on a really cold day , that it may never be warm again , and vice versa . That is to say that generally , we underestimate how quickly the changes that are already around us are taking place . For example , in the solar industry in 2009 , there were 1,000 megawatts of solar units installed on U . S . rooftops and at utility scale . Now , there are well over 100,000 megawatts of rooftop solar and utility scales , in just 13 years . And solar will be the largest source of new generating capacity installed this year in the U . S .
Likely by 2025 , maybe a quarter of cars sold will be electric . As I noted , the inertia is built in , but the pace of change , the adoption curve of new technology , is steeper than it has ever been before . As communication is faster , and more people have the economic wherewithal to adopt new technologies , companies have to be a little bit more astute and proactive in anticipating change than they did 10 or 20 years ago . I think it will therefore be beneficial for individuals and corporate leaders to be informed by a healthy sense of optimism , co-mingled with paranoia ; this is how to be an effective business leader and position oneself for future success .
Peter Kelly-Detwiler works as a consultant , assisting companies in strategies related to the energy transition , including hydrogen electric vehicles , batteries , energy storage , and more . With a focus on the U . S ., he has been working in the power and energy market for over 30 years . He is also the author of “ The Energy Switch : How Companies and Customers Are Transforming the Electrical Grid and the Future of Power .”
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10 Valve World Americas | March 2023 • www . valve-world-americas . net