Our energy future is complicated (and exciting!) - Enverus EVOLVE
I want to share some takeaways from the recent two-day Enverus EVOLVE digital conference.
The EVOLVE conference isn’t an oil and gas conference. It’s a true energy conference–That was obvious this year, as there was as much talk about renewable and nuclear energy as there was oil and gas.
Our energy needs are complicated, and so will be our energy future. But, as some conference speakers pointed out, challenges bring opportunity. And so, our energy future is also exciting.
Necessity is the mother of invention. History has shown that people as a whole get awfully innovative when they have no other choice. And we may have reached that point due to dwindling oil supply, pressure from investors and stakeholders, and government regulations, among other factors.
Over the last few years, we’ve seen major players in the oil and gas industry moving away from petroleum and instead leaning into energy, as evidenced by some notable name changes:
- Statoil changed its name to Equinor.
- British Petroleum changed its name to BP.
- Laredo Petroleum changed its name to Vital Energy.
- And let’s not forget about Enverus, formerly known as DrillingInfo.
The message is clear: Oil and gas no longer exists on its own island, in its own vacuum. It’s simply a part of the whole.
With that said, let’s take a high-level view of what’s likely ahead for the future of energy.
Oil and gas
- Production is expected to peak by 2030.
- We are entering the twilight of the Permian Basin, as well degradation is increasing and initial production rates are decreasing. The play’s top-tier acreage will soon be drilled up.
- Fossil fuels are expected to become a smaller part of our energy portfolio.
Oil and gas isn’t going away. But its market share will most likely fall.
Even if we could replace immediate energy needs with wind and solar, we would still need oil and gas for at least a couple reasons:
- We haven’t yet figured out how to store wind and solar efficiently at scale, so we’ll still need oil and gas in reserve (unless we replace oil and gas with nuclear energy).
- We rely on oil and gas for so many byproducts, including plastics and fertilizer. We may be able to rely on nuclear energy instead, but until we’ve built the infrastructure to do it at scale, we’ll likely still need oil and gas.
Something to keep in mind: Past reports of oil’s death were greatly exaggerated. When we acknowledge that necessity is the mother of innovation, we have to accept that we may see innovation in oil and gas. Could something as revolutionary as fracking be waiting around the corner? Who knows. But desperation was the leading motivator in the discovery of fracking. So it’s always possible.
- We should expect a bigger push into renewables, as they are getting cheaper and more efficient.
- Renewable energy is expected to become a bigger part of our energy portfolio.
- Renewables cannot be our primary energy source so long as storage is an issue.
- Increasing renewable energy will require significant increase in the mining of precious metals, many of which will come from governments with questionable practices.
A lot of money and effort will be spent to make renewable energy work. The support is there. But what about the business case?
Renewable energy isn’t as capable as some would like it to be. Storing renewable energy at scale is a challenge. And renewable energy requires a lot of space–It’s not energy dense, compared to oil and gas and nuclear energy.
While these limitations are true today, that doesn’t mean they’ll be true tomorrow. And as we progress in these areas, maybe renewable energy will become an even better option.
- Significant growth is not expected.
- But the tide may be changing, as more people are warming up to the idea of nuclear energy.
We are doing a great disservice by neglecting nuclear energy.
Nuclear is clean, efficient, and far safer than the public gives credit.
No energy option is perfect. We must be honest and pragmatic about the costs of the energy we use.
“There are no solutions, only tradeoffs.” But nuclear’s tradeoffs are, like the death of oil, greatly exaggerated.
If we’re serious about reducing carbon emissions without damning the world to low energy usage, nuclear must be part of the conversation.
But most speakers were looking through the lens of 2030, when oil production is expected to peak. Even if we started moving today, nuclear won’t be ready to make much of a difference by the end of this decade.
I appreciated the opportunity to get insight into where the energy industry is headed as I’m leaning back into my oil and gas experience.
Going forward, I expect the landscape to be less oil and gas vs. renewables and nuclear, and more oil and gas plus renewables and nuclear. If we really believe that our energy and climate challenges are so important, then we owe it to the world to use all the tools and solutions at our disposal.
Energy affects every part of our lives. So let’s get it right.
Thank you to Enverus for putting on the EVOLVE conference.
An environmental apocalypse of our own making
The more I learn about nuclear, the more I become convinced it’s the key to solving our energy woes. And Michael Shellenberger’s Apocalypse Never may have pushed me over the edge.
Cover of Michael Shellenberger’s Apocalypse Never
Photo credit: Amazon
Why are environmentalists so strongly opposed to nuclear energy? Nuclear is abundant, clean, and energy dense. Yet so-called environmentalists (or, perhaps more appropriately, environmental alarmists) keep pushing for solar and wind, which are proven to be inefficient and terrible for the environment in their own ways.
The dangers of environmental alarmism
Apocalypse Never is not a book about climate change denialism. Shellenberger believes in climate change and also believes humans play a role.
But he argues climate change is not the same as climate catastrophe, and environmental alarmism does more harm than good.
Shellenberger’s case has merit when you look into some details of environmental alarmism.
For one, enviornmental alarmists don’t look at how we can adapt to climate change. They instead repeat the narrative that it’s too late and that climate change can’t be stopped. While climate change may unstoppable, it’s not necessarily catastrophic. And if it’s inevitable, then we should learn to live with the coming changes, which is far more productive than waving our hands in the air and declaring the end. Humans are adaptive and resilient. The sooner we start changing with the times, the better.
Another aspect to consider is the hypocrisy of developed nations pushing developing nations to “leapfrog” straight to renewable energy while bypassing fossil fuels. Never mind the fact that sources of renewable energy such as solar and wind are expensive and not as efficient as fossil fuels.
Rather than focus on holding back the developing nations, those already developed should consider how to responsibly help them progress. Developed nations should lean into alternative fuels where it makes sense, while helping developing nations improve their infrastructure with fossil fuels and then accelerate into alternative fuels. Restricting developing nations from improving their own infrastructure hurts the citizens of those nations. It’s easy for the developed nations to push this agenda when they themselves are not affected by the policies they promote.
The public narrative suggests that fans of renewable energy see the agents of fossil fuels as their enemy. But Shellenberger raises the possibility that these two industries instead have a shared enemy in nuclear energy.
Shellenberger shows example after example of environmental groups and individual advocates (such as Sierra Club and Al Gore) accepting money from fossil fuel companies, which feels like a stark contradiction to their ideology.
But, when you look for the similarities between fossil fuel companies and renewable energy companies, you find a shared hatred of nuclear energy.
Shellenberger then asks the logical question: “[H]ow long, exactly, have oil and gas interests been funding environmental groups to shut down nuclear plants?”
If nuclear is as good as advertised, then how much need would there be for other forms of energy?
Much of the opposition to nuclear energy is simply out of line.
Some point to Chernobyl as a warning. But Chernobyl was more an issue of Soviet neglect than an issue of nuclear power.
But what about Fukushima? Turns out neglect was an issue there as well:
The tsunami countermeasures taken when Fukushima Daiichi was designed and sited in the 1960s were considered acceptable in relation to the scientific knowledge then, with low recorded run-up heights for that particular coastline. But some 18 years before the 2011 disaster, new scientific knowledge had emerged about the likelihood of a large earthquake and resulting major tsunami of some 15.7 metres at the Daiichi site. However, this had not yet led to any major action by either the plant operator, Tepco, or government regulators, notably the Nuclear & Industrial Safety Agency (NISA). Discussion was ongoing, but action minimal.
This negligence rhymes a bit with the Hurricane Katrina disaster in New Orleans, which we now know was made worse by faulty levees neglected despite warnings they were inadequate for a major storm.
In each of these cases, humans could have done more to lessen the damage of these disasters. But many choose to scapegoat the disasters themselves rather than look at what we could have done better. Such negligence will only be perpetuated by the narrative that it’s too late and that there’s nothing we can do about our impending doom.
Shellnberger argues that ideology is to blame and calls environmental alarmism the new secular religion.
Many have already accepted our climate apocalypse, so they look only for validation while rejecting the idea of improving our situation. Religious zealots often quote their religious tomes when referencing modern events as proof of the coming Armageddon. Environmental alarmists do much the same, except they quote choice books of science.
When you’ve accepted an outcome, you default to validating it, rather than remaining open to the possibility you may be wrong. So the enviromental alarmists reject any data contradicting their gloomy predictions.
How green is renewable energy really?
When you scratch beneath the surface, you start to see issues with the renewable energy narrative:
- How green are electric vehicles (EVs) if they’re getting electricity from fossil fuels?
- How are the materials used for EVs, solar panels, and windmills mined, manufactured, and installed? (Most likely with the aid of fossil fuels and at great damage to their enviornments.)
- How can we say energy sources such as solar and wind are environmentally friendly when they’re far less energy dense than fossil fuels and require much more land surface area? (Also, windmills are loud and disrupt bird habitats.)
- How can we call solar and wind green when recycling solar panels and windmills is an absolute nightmare? (We don’t have the ability or capacity to recycle these parts, so they create more waste when they’re retired.)
To be clear, these points do not suggest that fossil fuels are a net zero fuel source. But they do suggest that “green” energy may not be too much better in comparison when considering the whole picture.
Why nuclear is the answer
As the Office of Nuclear Energy points outs, there are three reasons nuclear energy is the way to go:
- Nuclear is a zero-emission clean energy source.
- Nuclear energy produces more electricity on less land than any other clean-air source. (It’s energy dense.)
- Nuclear energy produces minimal waste.
Other forms of renewable energy such as solar and wind likely have a place in the world’s future energy portfolio. But they don’t deserve to be the star of the show. That honor belongs to nuclear.
But even if we universally agreed to adopt more nuclear energy, we can’t just flick a switch and make it happen.
Bringing a new nuclear facility online takes years, sometimes nearly a decade. So we can’t solve our energy woes in the 2020s.
But you know the old saying: The best time to plant a tree was 20 years ago. The second best time is today.
The delayed payoff is no reason to abandon building new nuclear plants. Investing in nuclear is an investment in our energy future.
In the meantime, we should continue relying on fossil fuels to keep the world moving until we can hand the torch to nuclear.