Introduction to the Energy Industry
There has been a remarkable expansion in the amount of thinking devoted to energy and energy policy in most of the major countries across the world, Israel included. In a matter of just a few years, the focus on energy issues has sharpened and the time politicians, officials, decision-makers, the business community, the media and of course the general public devote to them has grown exponentially. The reality is that energy is now bound inextricably to a range of government policies and public concerns: from environmental policy, foreign policy, domestic policy, financial policy, security policy and even social policy. All these need to be coherent and aligned to deliver a country's stated goals.
The main concerns of energy are:
- Security issues
Includes security of supply; diversity of suppliers and supplies; heightened risks of disruption whether due to terrorist threats or natural phenomena; threats to infrastructure and supply lines whether pipelines or shipping lines; issues regarding peak oil and tight markets; issues regarding the inter-dependence between oil & gas exporting and importing countries; issues of indigenous supplies and technological developments to extract hydrocarbons from unconventional accumulations; investments uncertainties in O&G exporting countries; cost increases with the escalation of EPC and drilling costs; delays; tight engineering markets and the growing propensity of producing countries to reserve a greater share of gas production for their own growing domestic markets, etc. All these issues continue to be major problems and thus constitute a threat to long-term security of supply. They add up to concerns in the developed world - whether real or exaggerated - that energy imports will increasingly be at the heart of security.
- Environmental, sustainability and social concerns
Issues concerning the implications of global warming and climate change; the type of fuel mix to be used (in countries where climate change is of the utmost importance, coal will increasingly be pushed out of the fuel mix to be replaced by cleaner sources such as natural gas and renewable energy); the amount of energy to be consumed; alternative and renewable energy; HSSE issues; conservation of energy; the advantages and risks of nuclear power; issues of fuel poverty and developing countries, etc. If security of supply issues inevitably affect energy policy, so the demands of environmental policy may have just as radical an impact on countries' decisions regarding their basket of fuel mix, whether in terms of power generation or for transportation.
- Affordability and economic concerns
Issues regarding the different costs involved in the types of fuel to be used (where security of supply and economic growth play a heightened role such as in the US, both nuclear and coal will probably continue to hold a pivotal share of the market's fuel basket); issues of petrodollars flowing each year from OECD countries to Russia and other petro-states (while Europe and the US face recession, OPEC members are estimated to have more than $500 billion in foreign exchange reserves stashed away); issues of the billions of dollars of investments needed to enhance oil and gas exploration, development and infrastructure in petroleum exporting countries, etc. These issues relate to the ability to reach the right balance between security of energy supply and the optimum fuel mix, whilst inflicting the least harm to our environment through concerns of sustainability and social awareness and all taking into consideration the economics involved.
As someone who has been involved vastly in Israel's natural gas economy, I believe natural gas to be the "fuel of choice" for Israel. Natural gas enjoys the benefits of being environmentally friendly having the lowest carbon content of all hydrocarbons (natural gas produces 22% less CO2 than oil and 40% less than coal), is relatively cheap and flexible to use (combined cycle gas turbine stations are amongst the cheapest form of power generation in so far as capital investment is concerned and can be amongst the cheapest to operate), enables the construction of small and medium size power plants both on the coast and in-land which can be constructed within the shortest time span, provides security of supply with currently known global reserves stated to be at least 100 years of global demand. Gina Cohen, Author