Houston expert: Where is tech going? And can the energy industry keep up?

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Scott Nyquist on the future of technology and how they affect the energy industry. Photo via Getty Images

When smart people come together to consider the future, it’s worth listening to them.

Not long ago, McKinsey brought together more than 60 experts, and asked them to name the most important technology trends for business. They started from the premise that the next 10 years will see more technological progress than in the previous 100 years—and that this will up-end companies and industries everywhere.

“We believe the technology disruption over the next few years will be equal to the industrial revolution,” says Nicolaus Henke, a McKinsey alum who participated in this Tech Trends Index, which will be updated annually.

Here are some of the specific predictions. More than three-quarters of enterprise-generated data will be processed by edge or cloud computing by 2025. Ten percent of global GDP could be associated with blockchain by 2027. Renewables will produce 75 percent of global energy by 2050. 5G could reach 80 percent of the world’s population by 2030.

Time will tell if any or all of these are right; personally, I think renewables will have to wait a little longer for that kind of dominance. But by and large, I found the list, and the underlying thinking, compelling. And given my background in oil-and-gas, I thought it was striking that parts of the energy industry are working on just about every single one of them. Here is the list:

Next-level process automation and visualization.
Future of connectivity.
Distributed infrastructure.
Next-generation computing.
Applied artificial intelligence (AI).
Future of programming.
Trust architecture.
Bio revolution.
Next-generation materials.
Future of clean technologies.

Specifically, the first half-dozen items are all connected to digitization, and while the energy industry may not be at the cutting edge of development, it has a long track record of integrating these technologies and safely deploying them in order to deliver low-cost and reliable supply.

For example, the oil and gas industry has used AI for years to evaluate reservoirs and to plan drilling—one of many improvements over the traditional “one rock, two geologists, three opinions" way of doing things. And advanced materials, such as composites, engineered polymers, and low-density/high-strength metals and alloys are commonly used to lower costs and improve performance, for example in deep water oil and gas production and rotating equipment. As for connectivity, there is no shortage of commitment, but I think it is fair to say that the full potential has not been tapped.

McKinsey has estimated that making use of advanced connectivity alone—to optimize drilling and production, as well as to improve maintenance and field operations—could translate into $250 billion in value by 2030. That is something that the industry could really use, given recent price fluctuations. Taken as a whole, while the industry is nowhere near completing a full digital transformation, it is certainly well on its way.

As for the item most clearly connected to the industry — No. 10, clean technologies — at first glance, this might seem like bad news for traditional energy players. Not so fast. There are clear opportunities in areas such as clean coal, carbon capture, and energy storage. Moreover, other kinds of clean technologies can help the industry decarbonize its operations—something that will become more important as carbon regulation gets more stringent.

As I see it, then, while parts of the industry may seem old-school, it is actually heavily engaged in almost everything on the list. That should come as no surprise. From the first time oil was pumped in Pennsylvania in 1859, it has innovated and adapted to integrate technologies that improved productivity, safety, and environmental performance. In fact, it could it could even be said that the sector is part of what is often known as the Fourth Industrial Revolution—the convergence and interaction of physical, digital, and biological technologies.

I, and many others in the industry, believe that the ongoing energy transition will likely suppress demand for fossil fuels in the long term. But while the items on the Tech Trends Index, together and separately, will be disruptive, requiring big changes in business models and day-to-day operations, they could also help the industry to adapt.

———

Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally ran on LinkedIn on October 4, 2021.

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Supreme Court declines to hear from oil and gas companies trying to block climate change lawsuits

The Supreme Court said Monday, January 13, it won’t hear an appeal from oil and gas companies trying to block lawsuits seeking to hold the industry liable for billions of dollars in damage linked to climate change.

The order allows the city of Honolulu's lawsuit against oil and gas companies to proceed. The city's chief resilience officer, Ben Sullivan, said it's a significant decision that will protect "taxpayers and communities from the immense costs and consequences of the climate crisis caused by the defendants’ misconduct.”

The industry has faced a series of cases alleging it deceived the public about how fossil fuels contribute to climate change. Governments in states including California, Colorado and New Jersey are seeking billions of dollars in damages from things like wildfires, rising sea levels and severe storms. The lawsuits come during a wave of legal actions in the U.S. and worldwide seeking to leverage action on climate change through the courts.

The oil and gas companies appealed to the Supreme Court after Hawaii's highest court allowed the lawsuit to proceed. The companies include Sunoco, Shell, Chevron, Exxon Mobil and BP, many of which are headquartered in Texas.

The companies argued emissions are a national issue that should instead be fought over in federal court, where they've successfully had suits tossed out.

“The stakes in this case could not be higher," attorneys wrote in court documents. The lawsuits “present a serious threat to one of the nation’s most vital industries.”

The American Enterprise Institute, a conservative think tank, said declining to hear the Honolulu case now means the companies could face more lawsuits from activists trying to “make themselves the nation's energy regulators.”

“I hope that the Court will hear the issue someday, for the sake of constitutional accountability and the public interest,” said Adam White, a senior fellow at the institute.

The Democratic Biden administration had weighed in at the justices' request and urged them to reject the case, saying it's fair to keep it in state court at this point — though the administration acknowledged that the companies could eventually prevail.

The incoming Republican Trump administration is expected to take a sharply different view of environmental law and energy production.

Honolulu argued it's made a strong case under state laws against deceptive marketing and it should be allowed to play out there. “Deceptive commercial practices fall squarely within the core interests and historic powers of the states,” attorneings wrote.

Environmental regulations, meanwhile, have not always fared well overall before the conservative-majority court. In 2022, the justices limited the Environmental Protection Agency’s authority to regulate carbon dioxide emissions from power plants. In June, the court halted the agency’s air-pollution-fighting “good neighbor” rule.

Justice Samuel Alito recused himself from consideration of the appeal. He did not specify a reason, but he owns stock in companies affected by the lawsuits, according to his most recent financial disclosure.

Houston manufacturer announces North Carolina as the location for its $193.7M facility

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Houston-based manufacturer of high-temperature superconducting wires MetOx International Inc. will build a major production facility in Chatham County, North Carolina, which is expected to create 333 jobs, and invest $193.7 million in the state.

MetOx is a leader in High Temperature Superconducting technology (HTS), which is an advanced power delivery technology that is capable of transmitting extremely high power at low voltage with zero heat generation or energy loss. The technology is assisting in the energy sectors like power transmission, distribution, and grid expansion.

“Establishing our new large-scale manufacturing facility in Chatham County is a pivotal step toward securing a reliable, domestic supply of HTS wire for the development of critical infrastructure in the United States,” Bud Vos, CEO of MetOx, says in a news release. “This facility will not only deliver transformative energy technologies that strengthen our grid and reduce carbon emissions but also create high-paying manufacturing jobs in a community eager to lead in innovation. We are proud to partner with North Carolina to drive forward a resilient energy future built on cutting-edge science and strong local collaboration.”

The new facility is funded in part by an $80 million investment from the United States Department of Energy, which the company announced in October. In September, the company closed $25 million in a series B extension round.

MetOx also announced last month that received an undisclosed investment from Hawaii-based Elemental Impact, which is a leading climate-focused investment platform. As a national implementation partner for the EPA's $27 billion Greenhouse Gas Reduction Fund, Elemental Impact has received $100 million to deploy later-stage commercialized technologies according to the company.

The funding is expected to advance the expansion of MetOx’s Houston production line and the deployment of its HTS wire, which can make transmission cables up to ten times more efficient than traditional copper cables and will be used at the North Carolina facility.

“Building domestic manufacturing capacity for critical grid technologies is essential for America’s energy future," Danya Hakeem, vice president of Portfolio at Elemental Impact, says in a news release. “MetOx’s expansion in Houston demonstrates how we can simultaneously advance grid modernization and create quality manufacturing jobs. Their technology represents exactly the kind of innovation needed to unlock the next wave of clean energy deployment.”

The project in North Carolina will be facilitated with a Job Development Investment Grant formally awarded to a new company being created by MetOx. In the 12-year term of the grant, economists in the Department of Commerce estimated the project will grow North Carolina’s economy by $987.8 million.

US opens new Tesla probe focused on remote driving technology

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U.S. regulators have opened an investigation into 2.6 million Teslas after reports of crashes involving the use of company technology that allows drivers to remotely command their vehicle to return to them, or move to another location, using a phone app.

The National Highway Traffic Safety Administration also said Tuesday that Tesla did not report any of the accidents. Tesla is under order to report crashes on “publicly accessible roads” involving vehicles being operated through its autonomous driving technology.

The new investigation follows another probe launched in October looking into the company's “Full Self-Driving” system after getting reports of crashes in low-visibility conditions, including one that killed a pedestrian. That investigation covers 2.4 million Teslas from the 2016 through 2024 model years.

Tesla did not respond to a request for comment from The Associated Press on Tuesday.

One driver filed a complaint after a crash while using Tesla's “Actually Smart Summon” technology and NHTSA is looking into another three similar incidents based on media reports, the NHTSA said. The agency is looking into 12 total incidents reported by users of the technology.

Each of the vehicles failed to detect posts and other parked vehicles, according to the NHTSA.

Regulators say the vehicles struck objects because the users had "too little reaction time to avoid a crash, either with the available line of sight or releasing the phone app button, which stops the vehicle’s movement.”

Shares of Tesla Inc., based in Austin, Texas, slid more than 4% in late afternoon trading Tuesday.

Musk has complained that U.S. regulations are too onerous and are holding back the development of self-driving cars. Ethics experts are worried that once President-elect Donald Trump takes office, Musk will push him to ease oversight of Tesla, which just suffered its first decline in annual sales in more than a decade.

Musk donated an estimated $250 million to Trump's presidential campaign and is a frequent guest at Trump's Mar-a-Lago, vetting cabinet nominees and meeting with foreign heads of state. Trump has put Musk in charge of an advisory group, the Department of Government Efficiency, that will recommend where to cut government expenses and staff at federal agencies and reduce regulation.

The NHTSA said Tuesday it will look into the top speed that Teslas can reach when users deploy its “summons” technology, as well as restrictions on public roads and line of sights requirements. It also said it expects to check for any “connectivity delays" with the app that could result in increased stopping distance.

Tesla’s Model 3 owner’s manual says that its “summons” feature is designed for use only in parking lots and driveways on private property and is disabled on public roads.

The new probe covers 2016-2025 Model S and X vehicles, 2017-2025 Model 3, 2020-2025 Model Y equipped with Tesla's Full Self-Driving driver assistance system.

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