"Demand for energy just keeps growing, and there's no decline forecasted," says Mark Routt, chief economist for the Americas at KBC, a Yokogawa company. "Digitalization for both energy supply and demand will be critical to solving the world's energy balance."
Just as engineers prefer stable energy sources and processes that run as expected, economists and businesses favor predictable financial streams. Fortunately, both can take advantage of the ongoing emergence of digital technologies, such as software, cloud-computing services and the Industrial Internet of Things (IIoT). This is good news because humanity's ever-increasing need for power means it must also produce and use it in the most efficient ways possible.
"Demand for energy just keeps growing, and there's no decline forecasted," says Mark Routt, chief economist for the Americas at KBC, a Yokogawa company. "Digitalization for both energy supply and demand will be critical to solving the world's energy balance." Routt presented "Digitalization Critical for Future Global Energy Needs" at the Yokogawa Users Conference this week in Orlando.
Power hungry world
Routt based his assertions on research and results by the International Energy Agency (IEA), including its 2017 World Energy Outlook (WEO) and supply and demand forecasts. These include scenarios based on: current national policies already in place; new polices that combine the current ones and others that are announced but not yet enacted; and sustainable development benchmarks such as the United Nations’ targets on climate change and other aspirational goals.
"This third path has a 50% chance of limiting global temperatures by 2 °C, but even if this sustainable path is followed, global energy demand will flatline but not decrease," explained Routt. "Plus, fossil fuels aren't going away either because about 80% of global energy still comes from oil, natural gas and coal. It may go down slightly from past levels of 87% to about 79% in coming years, but there's no meaningful way to replace fossil fuels now or in the future. One reason for this is that 50% of energy consumption went to transportation and power generation in the 2000s, but that percentage is expected to increase to 60% by about 2040. It's important to remember that electric vehicles are fueled by power generated by natural gas."
Digitalization aids everyone
To maximize how much power reaches consumers, all extractors, generators, distributors and producers know they must use all their traditional skills to be as efficient as possible, which also helps increase their historically slim profit margins. And, just like every other industry and human endeavor, digitalization is promising to play a role is these efforts.
"Directional drilling has grown oil supplies by liberating shale oil, while more cost-effective solar panels have reduced overall energy demand," said Routt. "Meanwhile, engine innovations like Mazda's Sky Active-X compression ignition gasoline engine (CIGE) promise to increase efficiency by 30%, while electric engines, battery storage and vehicle sharing look to do the same. In the near future, DC electrical systems promise to reduce losses, while driverless cars are expected to reduce vehicle ownership and overall energy demand.
In addition, Routt added that digitalization can help in several industries on both the supply and demand side:
- Coal—mining, road and rail transport can use digitalization solutions for better supply chain planning;
- Oil—upstream production, refining, marine shipping, pipeline operations and other applications can take advantage of digitalized optimization and supply chain planning; and,
- Gas—upstream production, separation, liquefaction, marine shipping, regasification and supply chains can benefit from software-based optimization and other tools.
Specifically, Routt reported on several present uses of digitalization in the oil sector:
- Marathon Petroleum is using meteorologists and real-time weather prediction for precise locations to help decide on slowing or stopping production;
- Ergon relies on OSI PI software to power analytics for emissions monitoring, supply chain optimization, energy monitoring and forensic operations;
- Australia-based Woodside uses IBM Watson for knowledge retention and transfer, reportedly saving $10 million annually by not having to search for data;
- Total reported that it's investing in energy efficiency and digitalization to reduce costs and make existing assets more resilient; and,
- MOL's digitalization efforts increased product yield by 2.5%, operational availability by 1%, and saved $1 billion over five years.
"Digitalization enables all these and other solutions, which makes it critical to the future global energy balance,” added Routt. ”Plus, digitalization technologies are also mostly reusable, which helps even more."