Tata Steel: solving Europe's energy trilemma
Barry Rust, Marketing Manager for Energy & Sustainability at Tata Steel, explains the issues facing the European energy sector and how these might be resolved.
Recent events in the UK and Europe have highlighted important questions surrounding the provision and types of energy that will be required to fuel our future needs.
Suggestions that Russia could turn off its gas to the UK, alongside debates over the price we pay for our energy, the potential of our shale gas industry and impressive forecasts from BP for the growth of renewables all reinforce the idea that we are experiencing an energy trilemma centred on security of supply, costs and sustainability.
What do we, as producers, suppliers and consumers, want our future energy landscape to look like? At what point do the fluctuating costs of oil, gas and coal compromise our ambitions to increase our uptake of greener transport and power sources?
Tata Steel has been a key contributor to the UK energy industries for over 25 years. We’ve supplied more than 1mn tonnes of pipeline for oil and gas projects in the North Sea, including in excess of 4mn metres of welded pipelines, 500,000 meters of reel installed pipe and more than £250mn
invested in UK subcontracts for North Sea projects. Today, we continue to service the UK oil and gas industry, but of course this relies on an oil and gas supply.
Security of supply
Let’s look at security of supply, where recent issues around our gas supplies provide a good example of the problem. The importance of gas in the foreseeable future cannot be overestimated. Regarded as the most ‘green’ of the hydrocarbon energy sources such as coal and oil, it will be the fuel to transition world markets from high carbon to low and ultimately no carbon or renewable energy.
Russia has cut off gas to the Ukraine on at least three occasions since 2005, but any withdrawal of Russian piped gas would not bring the UK to a standstill. The UK government estimated in 2016 that gas from Russia, piped from Europe, accounted for just 1% of our total gas imports. However, in mainland Europe, where 35% of gas comes from Russia, it’s a different story.
Furthermore, half of LNG imports to the UK this year (or three out of six shipments) have come from Russia. And while LNG makes up a relatively small amount of the UK’s gas, cold weather spikes like the Beast from the East, which hit the UK and Europe in February and March, or pipeline outages mean that such ‘quick fix’ imports could increase. In the UK, this concern has been heightened following the closure of the country’s main gas storage facility at Rough off the Yorkshire coast.
Looking at energy costs as the second component of the energy trilemma, the focus becomes more elastic as supply and availability increase, and less so as they decrease. The actual costs of oil and gas production have dropped considerably in recent years, with Oil & Gas UK revealing that unit operating costs in the North Sea in 2017 had almost halved over the previous two years.
Nevertheless, the UK government has forecast that two-thirds of the country’s energy mix will still come from oil and gas by 2035, and with a North Sea production decline estimated post 2020, this could create commodity cost pressures which may be alleviated by the UK’s nascent shale gas industry.
With an estimated need for £2.3bn worth of steel, the U.K. shale industry would certainly represent a significant opportunity for the steel industry, but its development will require not only technical confirmation of commercial reserves but a step change in the public perception of shale and a clear public licence to operate.
The third element in the energy trilemma is sustainability. BP’s recently published Energy Outlook 2018 stated that renewable energy is the fastest-growing energy source and suggested that it could account for 40% of the increase in primary energy by 2040. However, this rapid rise has to be put into context: BP estimates in the same timeframe that wind and solar power will still only meet around 14% of the world’s primary energy consumption. While there continue to be significant technical advances in all sectors of renewables, they will only become truly disruptive when they are able to generate clear commercial efficiencies.
Alongside the growth of renewables is an increasing drive towards energy efficiency which will be required to achieve a low or zero carbon economy. Energy efficient homes and workplaces have an enormous contribution to make to the energy trilemma. Large energy consumers such as Tata Steel have a role to play with significant investment in energy efficiency in plant and investment in low carbon production processes. The durability of steel in this increasingly efficient context delivers extremely sustainable products over the whole lifecycle which can be reused or recycled.
But the forecasts for renewable energy consumption make two things abundantly clear: firstly, the transition to a low or no carbon economy will be a long-term process; and secondly, they reinforce the view that oil and gas will continue to be our prime sources of energy for many years to come.
The three elements of the energy trilemma are interconnected and influence each other: for example, oil and gas supply shortages will impact on consumer costs and focus attention on alternative and more sustainable energy sources. Our future energy requirements will continue to be met by a portfolio of sources, each dependant on steel to provide the necessary assets and infrastructure.
5 Mins With ... Travis Parigi, CEO of LiquidFrameworks
ServiceMax, a leader in asset-centric field service management, has bought LiquidFrameworks, the mobile field operations management solutions company, specialising in the energy industry, from Luminate Capital Partners, a private equity firm. The acquisition enables ServiceMax to expand its field service management solutions to meet the unique challenges of the energy sector. Travis Parigi, CEO of LiquidFrameworks, reflects on the mutual benefits from the deal and how oilfield service providers can transform their legacy field operations management processes to digital systems
Briefly outline how the LiquidFrameworks acquisition benefits both companies?
Both companies are focused on providing solutions to a common business problem, field service management for enterprise organisations, using a common technology platform, Salesforce. There are rich opportunities across both companies to leverage people, knowledge and many years of domain and technical expertise that will undoubtedly benefit the combined product suite.
LiquidFrameworks will continue to support its customers through this combination with ServiceMax, further extending its competitive differentiation across the field service management landscape. On the other hand, this acquisition will better position ServiceMax to meet the demand for digital service execution in this industry while expanding its product portfolio and go-to-market channels.
How can oilfield service providers transform their legacy field operations management processes to digital systems?
Moving from legacy, paper-based systems often siloed in various departments to a digital process can be done in phases across one or more product lines on a location-by-location basis. We find that companies achieve the best results by leveraging the FieldFX product suite as the platform to deliver the most domain-specific functionality to their user base as quickly as possible yielding high ROI through increased cash flow, revenue recapture, invoice accuracy and labor reduction.
Companies often start by modeling the complexities and mechanics of their global price books and customer-specific price books using the FieldFX CPQ engine. As the foundation for all transactions the Price Books are used throughout the logical next steps of rolling out digital processes for Quoting, Scheduling, Ticketing, Timecards and Invoicing. Asset Management plays an important role as a common thread found throughout all of the modules and processes.
Field Technicians are responsible for delivering service to the customer along with operating new digital systems - anything more specific, which systems or new technologies (eg AI/ML) should they be targeting?
In the oil and gas industry the field technician or field engineer is responsible for leading the crew that delivers the service such as an open hole wireline job or a casing job or a pressure pumping service performed on location for the customer at the well site in the case of the upstream oil and gas industry.
In the case of the downstream industry, the service might be a hydro-blasting job to clean a heat exchanger at a refinery.
In either case, the field engineer must safely and effectively complete the complex and often times dangerous service for the customer during which time they must also complete various business process to track the work being executed in order that the back office can accurately invoice for the service. The FieldFX Mobile product from LiquidFrameworks enables the field engineer to track the required information for both operational data and financial data in a manner that is fast, effective and easy.
Does the post-COVID landscape provide a new start for digital field service management? What should be companies' immediate priorities?
With the recent layoffs and the workforce getting younger, the oil and gas industry is at the cusp of transformation. The oil and gas industry has been slowly digitising for many years now, but with the pandemic, this push has accelerated a pivot and implemented new ways of working.
When it comes implementing digital field service management, companies need to have a vision of totality across the organisation but be nimble and agile about taking bite-size chunks to effect change – take the highest return on investment items and divide them up and down into the service line and geography level – for the highest probability of success.