The UAE is at the forefront of innovation in the oil and gas industry, according to Fred Kempe, President and Chief Executive Officer of the US-based Atlantic Council.
Speaking ahead of the Global Energy Forum, Kempe told WAM, that: “There are so many exciting new digital innovations making in the oil sector, from ‘digital twins’ of oil infrastructure that can help predict maintenance needs, to artificial intelligence and machine learning.”
He mentioned, in particular, the Port of Fujairah, the world’s second-largest oil bunkering centre, which is now using blockchain technology to track oil storage data. This is “an exciting project in the UAE,” he said.
The Global Energy Forum, which runs till January 13, is being organised by the Atlantic Council and is being held under the patronage of His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, as part of Abu Dhabi Sustainability Week. It is being held in partnership with the Ministry of Energy of the UAE, ADNOC, and Mubadala.
The forum, a top international gathering of government, industry, and thought leaders seeks to set the global energy agenda for the year and to anticipate and respond to the dramatic changes in the world of energy.
Kempe spoke about the ‘digital twins’ of oil infrastructure and the concept of “Oil and Gas 4.0.”
A digital twin, as explained by Gulf Energy Information’s ‘World Oil’ weekly, is a complete 360-degree digital replica of a physical asset such as a pump, compressor or entire plant that enables analysis of data and monitoring of systems to identify problems before failures occur, preventing downtime and developing new opportunities for business improvement.
Global energy demand is rising extremely quickly, Kempe said, driven mostly by emerging markets such as China and India. At the same time, he added, renewable energy sources are seeing dramatic growth, primarily working to meet that new energy demand as well as displacing coal in some markets, including the United States.
This still allows, he said, for significant gas demand growth globally, as renewables are not currently being deployed fast enough to meet all energy needs. Demand growth, he added, was being driven by two forces: the transport sector, especially trucks, ships, and aviation, and the petrochemicals sector, which continues to expand rapidly.
Asked about the role of advanced technology in increasing the efficiency of traditional oil production, Kempe noted: “You are right here [in the UAE] to recognise that the same technologies that have helped advance shale oil and gas, or even technologies that have helped advance renewables, also have the potential to increase the efficiency of tradition oil production.”
Asked about his view on the energy sector in the context of geopolitical changes, Kempe said that: “This is an energy sector at an inflexion point. We are, of course, in the very early stages of a transformation to a lower-carbon energy system, one that is necessary if the world is to avoid dangerous levels of climate change.”
He added, however, that other factors also needed to be taken into account, noting that the United States is now a net natural gas exporter, and briefly became a net oil exporter at the end of this year. “Only a decade ago, this would have been considered unimaginable,” he said.
Trade policy was also he noted, an increasingly important factor in energy markets, suggesting that arguably the largest single factor behind the recent drop in oil prices was anxiety over the US-China trade negotiations standoff.
Turning to the growth in US production, Kempe added: “The growth in US shale oil production has been continually doubted, yet shows few signs of abating in the near future. Regardless of whether the US adds 4 million, 3 million, or 2 million barrels per day of production over the next two years, it will be the largest oil producer in the world. Moreover, because shale oil production is fundamentally different from other oil production, and operates on relatively short investment cycles, it is reshaping the way that the oil market works.”
“It looks increasingly likely,” said, “ that shale will help to keep oil prices in a band between US $40 per barrel and US $70 per barrel, as it can quickly drop from the market when prices get too low, and can quickly come back online when prices spike.”
“The current reality,” he concluded, “is that a handful of producers increasingly determine the fate of the oil market. What sets the United States apart, however, is that its production is determined not by any government decision, but by the decision-making of hundreds of individual, profit-seeking firms.”