This is fair warning. The revolution in energy isn’t over - far from it. Although hydraulic fracturing and improved extraction of oil and gas from shale formations - the Shale Revolution - continues, there’s another revolution, and it could be even more transformative.
That’s the gist of an important new essay in Foreign Affairs magazine, titled “The Next Energy Revolution.”
Technology is upending our world, as industry after industry is disrupted. Energy is next, say authors David G. Victor and Kassia Yanosek>
Over the past decade, innovation has upended the energy industry,” they write. “First came the shale revolution. Starting around 2005, companies began to unlock massive new supplies of natural gas, and then oil, from shale basins, thanks to two new technologies: horizontal drilling and hydraulic fracturing (or fracking).”
The result was a drop in oil prices from a high of $145 per barrel to less than one-third of that today.
“That was just the beginning,” Victor and Yanosek write. “Today, smarter management of complex systems, data analytics, and automation are remaking the industry once again, boosting the productivity and flexibility of energy companies. These changes have begun to transform not only the industries that produce commodities such as oil and gas but also the ways in which companies generate and deliver electric power. A new electricity industry is emerging - one that is more decentralized and consumer-friendly, and able to integrate many different sources of power into highly reliable power grids.”
But no revolution is painless.
“It could destabilize countries whose economies depend on revenue from traditional energy sources, such as Russia, the big producers of the Persian Gulf, and Venezuela,” Victor and Yanosek say. “It could hurt lower-skilled workers, whose jobs are vulnerable to automation.”
The authors go on to make the case that cheaper fossil fuels will make it harder to force cuts to limit climate change. Let’s set that aside for now, because our focus for this editorial is on changes to an industry deep in the heart of East Texas.
One thing to watch is data analytics, the authors say.
“Oil companies, for example, have begun to use complex algorithms to analyze massive amounts of data, making it easier for them to find oil and gas and to manage production,” Victor and Yanosek write. “In April 2017, for example, bp announced that, using these methods, it had identified another 200 million barrels of oil in an existing field in the Gulf of Mexico. According to bp, data crunching that used to take a year now takes just a few weeks. And cloud processing makes it possible to generate millions of scenarios for developing an oil field.”
And then there’s automation.
“Soon, intelligent automated systems will enable remote drilling, controlled almost entirely by a handful of high-tech workers in onshore data rooms hundreds of miles away,” they write. “And companies are developing robots that can live on the ocean floor and inspect offshore pipe lines and underwater equipment.”
Change is coming - or rather, change will continue, and at a breakneck pace. We’d better be ready for it.