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Hydrocarbon dependency - 31 January 2023


Colin Whyte gave us his Viewpoint tonight. He said, 

'As most of you know, I have been involved in the Energy Sector for the last 30 odd years and I have talked about this in previous viewpoints.

'There is no question that the shape of the Energy Industry is changing and has to change due to the Climate issues we are facing and the pressure that is coming on all businesses in the ESG (Environmental, Social and Governance) arena.

'Change, however, does take time and is dependent on the progress and success of R&D. There isn’t the technology commercially available today to turn the taps off on the existing hydrocarbon dependent forms of energy used around the world. There is a significant amount going on in the space of new technologies at present but getting through to commercialisation takes many years especially for the game changers.

'An example of the timelines it can take can be seen in a company by the name of Lanza Tech. The company was established in NZ in 2005. The aim was to commercialise some developing technology that takes industrial waste gases and Biomas gases to turn them into ethanol and other products. It proved the technology with some small-scale test bed production in NZ and in 2014 moved to the US taking the R&D Team and Lab Facilities from Auckland to Illinois USA where it was able to access greater funding, and has prospered. In 2017 it produced 1,500 gallons of jet fuel from Lanza produced ethanol and in 2018 its first Commercial Scale facility began operation in China, converting steel mill emissions to ethanol. This has been rapidly followed by a further two plants opening in China in 2021 and 2022 and it has developed plants in several other countries. The Chinese plants each take approximately 100,000 tonnes of CO2 out of emissions entering the atmosphere. 

'Jet Fuel blended with ethanol produced by the company was used by Virgin Airways to fuel a flight from Orlando, Florida to London Gatwick in 2018 with what Virgin called a Sustainable Aviation Fuel.

'So it took approximately 13 years to really get some full Commercial Plants and applications.

'However, all the latest projections for Global Energy Sources still show that Natural Gas in particular will be a significant Energy source for the world going beyond 2050.

'The current reliance on hydrocarbons can be seen at the present point in time.

'Last year was probably the most significant year in the global energy sector since the OPEC crisis in 1973. (Who can forget the resultant carless days etc?)

'The Russian conflict with the Ukraine, the climate transition, the upending of the oil & gas markets along with the explosions (attack) on the Nord Stream 2 gas pipeline have all caused supply issues for Energy hungry markets.

'Fortunately, so far, the European winter has been milder than normal and, until recently, China has been in lockdown depressing the demand for Energy.

'The impacts of sanctions on Russian crude are likely to be felt for some time. Whilst Russian exports of crude didn’t drop significantly in 2022, the price cap put on them has had a significant financial impact on Russia and the cost of shipping the product and the price of the insurance on the product still made it expensive for purchasers. Russia is getting less money for their oil at a time when the Ukrainian conflict is eating into their sovereign funds. 

'In NZ, I think we can expect to see the price we pay for oil to continue to be high and remember that we are benefitting from a temporary reduction in the tax we pay at the pump for petrol at present.

'So where to on the Renewables?

'The big issue is that they don’t all produce 24-hours a day – the wind doesn’t always blow, the sun has a sleep at night. Despite the current weather, we do have dry years that limit hydro production and the likes of tidal flow generation haven’t been developed. The other problem is we don’t yet have the technology for large scale battery storage to capture the energy when it isn’t being used.

'As part of my work, I do get to see numerous articles about emerging technologies and there are certainly some interesting things happening out there.

  • New batteries are being developed that are capable of storing more energy and aren’t so reliant on some metals that are becoming scarcer, like lithium.
  • Cars are being developed that are self-charging and have hundreds of small solar panels built into their panels (bonnets, roofs, doors and boot lids)
  • Electric engines are still by and large using technologies with some minor refinements that were developed back in the 1800s. However there are some new electric motors that radically change / add to the existing motors to provide more power and efficiency and whilst not yet to my knowledge deployed commercially into motor cars have been put into motorcycles and tested on some heavier vehicles.

'So my viewpoint is.

'The world is still very much dependent on hydrocarbons for its energy needs and is likely to be so for many years to come. However, new technologies are being developed and will start to have major impacts in the next 5-10 years. Don’t panic and exile the oil & gas producers. We need them for the time being and we need the money they are putting into R&D and the industries that they are providing energy to so those industries can invest into R&D.

'There is currently a place for all Energy sources with perhaps coal being the first energy source to be scaled right down. But even that source is critical to many developing countries and certainly to NZ to keep the lights on until new technologies become widely commercialised.'

Hydrocarbon dependency - 31 January 2023

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