Myth Busters: Five myths about the energy sector

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Tarek El Sayed is part of a team of consultants who contributed to a new book, Energy Shift. He spoke to UME about predictions for the changing energy landscape

The last decade has seen a change in the public perception of energy and greater awareness of its sources. There’s no doubt that more change is ahead for the regional energy industry. Those with a good view of what’s ahead will be in the best position to act accordingly.

In an effort to shed light on the future of the energy industry, Booz & Co, a consultancy, has developed a series of myth busting opinions outlining what it sees ahead. While these changes are set on a world stage, the Gulf states are at the centre and contractors working in the region need to be alert to  opportunities before they happen.

“Basically, the main idea is that the world is going through an energy shift,” said Tarek El Sayed, a senior associate in the Energy, Chemicals and Utilities Practice. “The structure of the energy business that has been in world for last 100 years is changing. Now, of course it has been the same structure for more than 100 years, trillions have been invested in infrastructure, which will not disappear tomorrow. Whatever shift we talk about will take decades to happen.”

The myth busting breaks down ideas that have currency, but the consultancy claims are without foundation in the current
energy market.

“Understanding how the myths are not correct, helps us get a better understanding of how the shift will happen.”

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The deconstruction of these myths raises important questions for the structure and strategy of the regional energy industry.

“The GCC countries have been using oil and gas as fuels of choice, to ensure security of supply and optimise costs,” said El Sayed. “[They have been] paying limited attention to load tailoring. One of the main challenges is meeting the explicit demand, but also more and more there is a need to meet the increased demand as efficiently as possible. This means also tailoring the source of generation to the type of demand you have; using different sources for base load to semi-base, to peak.”

“This is something that has not been done in the region up to now. Countries also need to try to free up as much oil and gas as possible for two things: export; and also the development of the economy in terms of petrochemical sector.”

Freeing feedstock for the petrochemical sector is a driver behind diversification in power generation. The importance is reflected in moves by some countries to restrict the use of such feedstock in
power generation.

The climate is also on the agenda and rising awareness levels – as well as being a heavily polluted and polluting region – are compelling providers to take this into consideration as they plan future capacity. This in turn lends itself to a regional opportunity, represented by the development of clean and renewable energy supplies.

“This is a very important point about the energy shift in this region,” said El Sayed. “Renewable energy is a sector where leadership has not already been taken. There is an opportunity for GCC countries to position themselves correctly and early enough to take a leading position in this sector and foster the development of the knowledge-based economy in this region.”

El Sayed cites Masdar as the leading example of this approach in practice, describing it as the result of clear awareness of the coming energy shift and a decision to implement developments for the future. Also adding to the UAE’s energy diversification efforts is the official approach to the start of a civil nuclear programme.

“It is an area that is very knowledge based. We believe that it is going to happen at a certain pace, driven by the technological difficulties of starting from nothing. Building [the programme] is not going to be easy, but I believe that it
will happen.”

Although nuclear energy is on the up in terms of public perception, even in these times of economic turmoil, people with the right expertise are in steep demand. According to El Sayed more than 200 nuclear plants are being planned around the globe today and these developments are putting pressure on skilled human resources.

One of the strong arguments likely to ensure nuclear energy’s eventual emergence in the region, focuses on assigning the best technology to the different load requirements. Nuclear would be a good, scaleable, emission-friendly option to take care of the base load requirements of the UAE; semi-base could be taken care of by gas-fired plants and renewable could fill a role providing peak power.