How A Digital Asset Is A Solution The Energy Problem: Part One
The What, The Why, And The How
The Brief
The current state of North American energy production is a complete and utter farce when compared to what it could be, what it should be. Making the current state of energy markets, and particularly energy shortages, a scenario that could’ve been readily avoidable. While this makes today’s environment unfortunate, I am afraid that many North Americans (yes, I am including our neighbors in Canada and Mexico in this discussion) are radically ignorant to how the developments in Europe and the United Kingdom could potentially affect inflation measures here on our side of the pond. But, that is a conversation for another day. For now, let’s stick to where we are, and cap it all of with a solution that has reach.
First order of business would be in the regulatory world. Our industry is incapable of expanding operations, not due to lack of access; we know where to go. But due to bureaucracy. In particular; games in politik and narrative. These games have taken to a focus on methane emissions in recent years – one dynamic that has proven very effective in restricting capability to produce. And it is massive in impact. Consider; if you want to limit how much energy is being produced (extracted), but you can’t legally prevent operators from being capable of acquiring the resources or permits for too long without raising eyebrows, you need a boogeyman. A reason beyond economics and physics that can justify spitting in the face of reality to prevent cheap and reliable energy access in the modern era.
Funnily enough the answer for American energy, and abroad, is found within an asset (and industry) that has been out of favor since its conception. If the problem is excessive emission yield thanks to associated natural gas production, the obvious answer should be to find a use for this valuable waste product – it is still a reliable form of energy after all.
This essay serves as an exploration, and situation report, of the current environment on the North American content with focus on the United States of America. Firstly, a very brief elaboration on the differences between ‘energy’ and ‘electricity.’ Second order of business will be to tackle recent history, so as to understand why we are where we are. Finally, the third section that follows will be the most effective answer the energy industry has to the multi-frontal battle being fought.
Energy vs Electricity
It’s very important that the reader come to terms with the fact that much of what we know about the sciences (or think we know) is on the proverbial ‘chopping block.’ At all times. Science is ever-evolving; ergo our understanding of the operations of the universe, as well as our place within it. From microbiology, to physics, to biomechanics, to physiology & nutrition; science is not a clear-cut doctrine or dogma. Meaning that the lens’ with which we observe our world need to remain as adaptive as our understanding.
The terms “energy” and “electricity” tend be used interchangeably by many (and for a very long time, by myself). But, that does not mean that we should continue to do so. There is an important difference between the two. Energy is the broad umbrella term that encompasses a wide range of sources that allow work to be done, including; electric, thermal (heat), kinetic, potential and nuclear to name a few. Electricity however is a form of energy that, according to Britannica, is “the accumulation or motion of numbers of electrons.”
We as a people have improved our understanding of how electrons behave, and the relationships that particular materials have with electricity (like conductors vs insulators). We’ve hence improved our understanding of ways we can manipulate electricity. This allows us to steer the flow of electrons to-, and from-, particular goals & interests – like producing light by passing a current through a tungsten filament, or sending electrical power across a geographic distance via transmission lines to charge your phone.
Learning how to manipulate electricity has also allowed us to learn more ways to be able to produce electricity. For example, take an induction motor, which involves wrapping a copper wire around an iron core and then spinning a magnet around the copper wire.
Now, to wrap up this brief as we get into the real point of why you’re here today, it’s also worth noting that we can utilize varying forms of energy production to produce electricity. Especially when we combine multiple different forms of energy together within a single system. For example, take a nuclear power plant. While the plant itself is large, looks very complex, and daunting, the process(es) by which it produces electricity is actually quite simple. We take a radioactive substance which yields heat energy via radiation, and we use that heat to produce steam. We then utilize that steam to produce pressure, and direct that flow of steam pressure (as pressure naturally diffuses from high pressure environments to low pressure environments) via piping, that directs flow to turn a turbine (aka a “fan”). Which said turbine turns an induction motor, and electricity is yielded out the other end.
This is utilizing heat energy via radiation to produce steam; a transfer of thermal energy to produce pressure which is then turned into mechanical energy (via the turbine) by manipulating the flow of steam pressure. Then that mechanical energy is turned into electricity via an induction motor. And thus we have the utilization of multiple forms of energy in order to produce electricity in a single system.
The Energy Industry
Now that we have the foundations covered, let’s get into it. The US Energy Industry has been consolidating for the last few decades. We’ve gained greater insight into not only how to produce more energy, but to do so with less effort, while aiming at producing less waste along the way. What has resulted is a reshuffling of the country’s energy mixture with regards to production of electricity. Where we had relied on coal quite heavily 20 years ago we now rely on the fuel much less, as we’ve distributed the production to other, “cleaner” means. (Not to be confused with recent developments in the world, due to our precarious energy supply problem.)
Below, in Figure 1, you will find a chart from Our World in Data that plots the electricity demand of the United States of America. I have included screenshots of the breakdown of this demand from a few points over the last few decades, which were taken from the Production By Source chart which can be found here (Figure 2). The red lines in Figure 1 are intended to mark the point along the line chart coinciding with the timeline to make reference easy. What you will find with this data is that overall production in terawatt-hours (TWh), marked with the orange arrows, has not increased by “much” over the last 20 years. Which is intended to simply corroborate the consolidation of total demand & production. It’s also worth noting that the increases will seem marginal due to the law of diminishing returns; as greater amounts of energy generation are achieved as a whole, increases will appear less impactful to the sum, which is not suggesting that 240 TWh is some sort of easily accomplished task.
If you would be so kind as to direct your attention to the three screen-grabs that are hosting said arrows, dated 1997, 2007, and 2021, and see how the distribution of the means of electricity production has aggressively shifted.
The production increases in Solar & Wind, as well as the near doubling of production from Gas, is where we want to focus.
While trying to pin down a single cause for this is a bit of a fool’s errand, one major contributing factor will have been that as Federal and State governments have worked to provide incentives for building out renewable energy infrastructure (via subsidies), these projects still require a baseload backstop due to their intermittency & dilution in production. What this means is that because some days the sun does not shine as bright (or as consistently) as others, and wind does not always blow with equal consistency (or power), grids require the support provided by natural gas (“natgas” for short) plants (as well as coal, biomass, or nuclear plants) to be capable of serving grid demand when these intermittent, unreliable sources fail to produce. What will also be contributing to this relationship will be how the economics of the intermittent energy sources compare against those that provide more reliable and consistent approaches.
Why Oil AND Gas?
Now let’s have a discussion around sourcing of natgas (albeit a brief discussion), and how it coincides with the oil industry – and why the two are commonly referred to hand-in-hand.
Natural gas can be sourced on its own as conventional gas, but it is also a common compound that accompanies oil as it gets pumped from its resting place within the Earth’s crust, referred to as associated natural gas. We aren’t necessarily interested in conventional natgas sourcing; we are more interested in the question of why the two products, oil & gas, tend to come together.
The Shale Revolution allowed for greater access & capture of not only oil but also the associated & dissolved natural gas that commonly makes berth in the same environments as ‘black gold.’ Making for greater capturing of the yield of identified reservoirs. Horizontal, hydraulic fracturing (aka “fracking”) allowed for a method of access to these carbon resources that unlocked a serious amount of potential for America’s energy generation capabilities.
Why Oil?
Why do we still use oil? Surely it’s an antiquated product that we can, and should, be well beyond relying on, right?
Excuse me while I clean my spit-take off my screen & keyboard.
Wrong.
So incredibly wrong.
Oil is involved in everything you’re doing. When I say this, this is one time where I’m actually not speaking in hyperbole. From the flight you’re boarding, to the hunger you’re satiating, to the thirst you’re quenching, to the very clothes you squeezed into at the start of your day. And of course: the device with which you are reading this. Oil is everywhere. For a glimpse into just how involved oil is in your life, below is an infographic produced by the International Association of Oil and Gas Producers (IOGP). Please allow some time to take this image in, and conceptualize just how much you rely on oil, quite literally, on a minute-by-minute basis.
This infographic still fails to accurately depict oil’s wide range of utility as there’s much to expound upon within: agriculture, fertilizers, ranching & livestock, food processing, pharmaceuticals, health & medical industries, “renewable” energy generation, aviation, maritime transportation, or the scale of maintaining metropolitan infrastructure. Let alone the oil demand from sectors like the US military branches.
We need oil. Lots of oil.
And the world as a whole is going to need more if we are to bring the rest of the planet’s populations into higher standards of living to enjoy the benefits of modernity – let alone continuing to improve upon those within the U.S. These benefits include, but are not limited to: cleaner air & water, quality live-in structures, and quality food (not the over-processed garbage that the US likes to gorge on). What this requires is integration with modern technology and methodologies that produce great returns with less waste & pollution along the way. These inputs require energy & electricity; from production, to implementation, to supplementation, to heating & cooling, and maintenance. Which means that, at our current juncture, we need more oil production so that we can achieve these higher tiers of civilization.
So if we’re going to continue to need more oil…we’re going to need to produce more oil (pretty obvious rationale). Which, as of right now, is awfully easy for the United States – we sit on a number of hefty basins. What won’t be easy is the time that it will take to get to the point of utilizing this valuable resource. What this also means is that we will also (most likely) result in more associated natural gas as an accompanying product to the displacement of said oil.
What does this imply?
Part Two can be found here.
Part Three can be found here.
Great work! Looking forward to Parts 2 & 3.