The Energy Industry — An Introduction

The Energy Industry, often synonymous with the Oil & Gas industry is considered the backbone of industrialization in the world today. However, the Energy Industry is so much more than the Oil & Gas Industry alone. Simply, it includes all industries involved in the production and sale of all forms of energy all over the world. Generally, the Energy Industry is engaged in the production and sale of energy through extraction, refining, manufacturing, and distribution of energy resources. These industries include the fossil fuels industry, the electrical power industry, the nuclear power industry, and the renewable energy industry. These industries are crucial to humans for power generation (electricity) utilized for heating or cooling, agriculture, transportation, communication, information technology, manufacturing, waste, and environmental management which are all the backbone of developed societies of the world. All the Energy Industries and sub industries that operate within the sector to satisfy human needs are contained in an intricate mix of a complex system that supplies the world energy today, without which our lives on this earth would have been a different story entirely. These makes the Energy Industry the most important industry for the survival of human civilization. As human civilizations progresses and prosperity is becoming more widespread in the world, the demand for energy to run developed societies has rose significantly in the Industrial Age with population growth and low-income countries moving towards urbanization. This greatly impacted energy demand and the way the energy industries extract and harness energy for human utilization which have led to issues such as pollution and global warming that affect the environment and climate, thereby putting the world at risk.

Photo by Federico Beccari on Unsplash

Individuals in developed and developing countries rely on energy a great deal for their livelihoods and running their day-to-day activities. This energy provides heat, light, power, and mobility while powering economies. As individuals, our primary form of interaction with the energy industry is mostly primarily in the form of a light viscous fluid being pumped into the tank of our cars and maybe when we use some form of derivatives of the energy industry such as plastics, soaps, candles etc. We rarely think about the technology and cost involved in the production energy and its derivatives for our everyday use. We don’t see the extensive network of distribution pipelines, trains, ships, and lorries that deliver oil to our doorsteps. Before getting the oil and gas to the distribution network however, a sophisticated set of technologies and processes are involved in first identifying these hydrocarbons and bringing them to the surface safely. These involves many skilled workers working across different sectors of the energy industry value chain to get the hydrocarbons from the subsurface to our doorsteps.

So, what about the Energy Industry and us? — It is easy to take all the processes and efforts in getting energy to us for granted without having a picture of what is involved in its production, storage, and transportation. But somehow, the energy industry is very much involved in our daily lives and between the energy industry and the end-product, we are the common denominator — the end-users. Apart from gas, gasoline, diesel, and jet fuel produced by the energy industry you use every day, you are probably reading this on a smart phone or a computer which all have the input of the energy industry. It goes further from the soap you had shower with to the car your drove, the asphalt coating the road on which you drove on and so much more. From the Oil & Gas industry, a sub-sector of the energy industry, we not only get energy for heating & electricity but other products like fertilizers, ammonia, plastic, car tyres, perfumes and even bubble gums are all synthesized using petroleum products obtained during the crude oil refining process. This is to say that the energy industry is everywhere around us; and the most crucial arm of the energy industry linked to us is the Oil & Gas industry. For the Oil and Gas industry to search for, produce and ship hydrocarbons to us, it starts by asking three basic questions — is there hydrocarbons here? If yes, in what quantity? And if the quantity is found to be sufficient, it asks if the production of this hydrocarbons is economically and safely feasible.

To answer the first question, Geoscientists first create an image of the subsurface as these hydrocarbons are often found buried deep within the earth, several kilometers down. Geophysicists create an image of the earth’s subsurface by sending seismic waves through the earth’s layers which works like an X-ray or Ultrasound machine to generate the images of the earths subsurface. These images go through a lot of processing which takes an enormous amount of computing power using sophisticated and specialized modelling software to process and resolve the huge amount of data generated from these seismic waves. The second question is answered by Geologists who understand how the earth formed and can pinpoint to structures likely to host hydrocarbons in the subsurface by drawing from and integrating several types of data and information about the locality under study. Wells, which are either horizontal or vertical are drilled by Drillers and Petroleum Engineers into these spots identified deep in the earths subsurface to confirm the presence of hydrocarbons or otherwise. Petrophysicists acquire rock samples while drilling and a wide range of measurements by sending in sensors into the wells to acquire more information which helps in further understanding the earths subsurface. The third question is to a greater extent a function of technology and the market demand forecast and forces, which is why not all discovered hydrocarbon reserves have been produced today as some are in very-hard-to reach areas and or the market economics of the day do not Favour their production.

As mentioned in the opening part of this write-up, the energy industry is more than the Oil & Gas industry and today, due to the attendant nature and effects of producing these hydrocarbons and climate change, a lot of the super majors involved in the business of the search and production of oil are changing from International Oil Companies (IOCs) to International Energy Companies (IECs). This is significant for Energy Transition, as these allows for these companies to transition into cleaner alternative sources of energy such as blue and green hydrogen, solar energy, wind energy and nuclear energy. The alternative sources of energy will play a role in decarbonizing the energy mix and helping to slow down the effects of oil & gas production on the environment and the climate and this is a challenge currently faced by energy producers with increasing energy demand and the call for decreasing carbon emissions with a Net-Zero target for carbon emissions set for 2050 by the International Energy Agency (IEA), a multi-government think tank. The Energy Industry being at the forefront of innovation has been instrumental in driving economic growth and prosperity by connecting cities and individuals and improving living standards. No part of our daily lives is untouched by hydrocarbons as demonstrated above and yet, this same industry is transitioning, trying to adjust to the current reality of our time.

Things are changing fast for the Energy Industry and a great deal of challenges lay ahead for the energy sector in the present transition era and the next few decades — where the systems of the industry are digitized and digitalized, and the industry is grappling with the dual energy challenge — of increasing demand and reducing carbon emissions. But the Energy Industry has been at the forefront of innovation and disruption and right now, the industry is charting a new course by adapting to new ways of doing business and engaging with the environment. To achieve success in achieving any new outcomes for the Energy Industry, new ideas and creative thinking to hasten innovation and adapting to new technologies is crucial in the short term while adapting to new realities and new methods of doing business for players in the energy industry is paramount for long term sustainability of the industry.

Thinker. Listener. Writer. — Writing about Energy, Data and Development.