While large-scale energy projects seem inconsequential to local family businesses, the unpredictability of a volatile energy market can financially squeeze these vital contributors to our economy. Yesterday, President Trump spoke to a crowd at the Rivertown Marina in Cincinnati, Ohio about his long-awaited infrastructure plan, providing a broad outline of his priorities. In addition to reducing permitting time for projects from 10 years to 2 years and “slashing regulations to speed up the decision-making process,” Trump has made overtures to enhance infrastructure in the energy sector. While specifics have remained scarce, the president has made clear his commitment to eliminating burdensome rules hindering oil and gas exploration.
The Rivertown comments come after Trump’s nominations of Robert Powelson, and Neil Chatterjee to FERC in May. Progress on several natural gas pipeline projects was stalled by the lack of a quorum, causing a number of energy groups to prod the President to fill the positions at FERC. Now, the commission has $50 billion in energy projects to address and is working through proposals to reform wholesale power market structures. Another large component of President Trump’s $1 Trillion plan is the completion of the Keystone XL and Dakota Access pipelines, which he cited as examples of his administration’s commitment to strengthen America’s energy infrastructure. “Nobody thought any politician would have the guts to approve that final leg,” Trump said. The White House statement indicated that Trump will dedicate $200 billion in his budget this year to energy infrastructure. The completion of these energy pipeline projects will bring welcome relief to small, family-owned businesses.
Improving America’s energy infrastructure can help to reduce energy costs for family businesses by making it easier for energy resources to come to market. Transporting crude oil via pipeline reduces the cost of transportation by 50-60 percent compared to rail transport. In addition to energy transportation infrastructure, the development of more energy efficient electrical grids will also reduce the cost of energy for family businesses across the country. As we begin to overhaul and expand our energy infrastructure it is important that we do so in a way that helps reduce energy costs prepares us for the future ways we will use energy.
When your business is subject to the whims of boom-and-bust cycles the way the oil industry is, making money with less effort is very appealing. With that in mind, oil companies are using technology to cut costs while still turning a profit in the downturn.
“This is about reshaping the industry,” said Muqsit Ashraf, energy strategy consultant with the firm Accenture. He points out tech advances can keep workers safe.
But technology changes will also affect the workforce itself.
“The profile of the employees will change,” he said. “There would be a shift in terms of head count on the field to head count that might be sitting in remote operations centers making decisions.”
Technology is replacing energy workers. For example, oilfield services company Schlumberger has estimated one of its newer, more automated drilling rigs could cut the number of work hours needed to finish a well by more than 30 percent. But in the long term, the effect on jobs is hard to predict, according to Rice University’s Mark Agerton.
“It really depends on whether the technology is going to lower the cost of extraction and make us extract more oil and gas, and hire more people to do that, or if the technology is going to allow us to replace people with machines,” he said.
A more digitized industry also means companies will need more educated, higher-skilled workers to operate new technologies.
These advances are helping drillers in Texas make money even with low oil prices. But another boom could slow the innovation. If prices shoot back up, companies might decide to revert back to more time-tested ways of moving oil.