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The Energy Industry at the Crossroads

energy sector

All industries experience transitions at various points: plenty of them minor, others major. In the past decade or so, more than a few of the energy sector's shifts and trends have been on the more substantial side. The changes have arguably been more significant than any other in recent history, especially the rising interest in efficient and, ideally, renewable energy production.  This affects all of the sector's major categories, including oil, gas, electric and alternative.

However, some segments such as oil and gas will have greater adjustment challenges than others. If firms within those markets are not prepared to do so, they could end up behind their competitors, though business-friendly regulations could mitigate this in some countries. It's also important to note that in all energy markets, efficiency doesn't solely relate to production; improving support services through technological innovation is also quite valuable.

Electricity embraces renewable methods with open arms

The use of renewable or more sustainable production methods is most common in electricity. This is due in no small part to the fairly wide availability of solar panels and, in recent years, their lower costs; Bloomberg noted in 2017 that prices associated with solar energy all over the world have dropped at least 62 percent since 2009. It's come to the point where solar power may become cheaper than coal at some point within the next decade, and in some countries this is already the case.

wind power

Wind power farms and the technology supporting them are also seeing their initial purchase and operating costs fall, including record-low costs at government-sponsored wind auctions, according to ING World Bank. In terms of overall investment in renewables, China holds the front-runner position in the solar market due to its sheer scope, and plans to have put more than $370 billion toward all renewable energy sources by 2020. Germany, meanwhile, stands out as one of the biggest renewable energy investors in the EU.

Complexities within the oil and gas markets

There are numerous issues facing businesses involved in the oil and natural gas markets that may make it more difficult to widely adopt more efficient strategies, far beyond the fact that these fuels are non-renewable. According to research from Deloitte's 2018 Oil and Gas Industry Outlook, 2017's reduced cost of shale oil extraction through hydraulic fracturing is likely to continue. Break-even expenses across the Marcellus, Haynesville and other major shale formations range between 30 and 50 percent below those seen as recently as 2015. Additionally, concerns about the long-term effects of the fracturing processes on the surrounding land and population aren't going away any time soon, if ever.

energy application

On the other hand, liquefied natural gas producers have seen the demand for their fuel increase significantly, to such a degree that major supply growth didn't significantly detract from it. Much of that uptick in supply originated with U.S. firms, a development that few in the industry expected given that America's interaction with the energy sector has mostly been as an importer rather than an exporter throughout recent history. This included limited crude oil exportation as well as LNG production.

Crude oil itself remains mired in a global downturn, which undoubtedly sours these oil producers' desires to focus on matters like becoming cleaner or more efficient as they watch price-per-barrel figures remain stagnant at best and fall in many cases. At a certain point, however, such a view may become unsustainable for the industry's long-term health.

AMETEK as a stalwart partner

These trends and issues are just a sample of the matters faced by players across the energy sector. But the world needs energy, so the industry remains vital and will evolve as needed, even if all producers don't adjust at the same pace. AMETEK ECP serves as a stable supporter of utility companies' operations by providing connectors, hermetic or glass-to-metal seals, thermoplastic items, feedthroughs and other vital components that help ensure producers' equipment regularly performs at peak capacity.

 

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