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Key Takeaways | The Growth of Early Stage Technology Company Investment and Development in Energy and Oil and Gas

How is technology affecting the energy industry? In the latest webinar in the Energy Transition series, McDermott Will & Emery Partner Parker A. Lee hosted Shawn Helms, co-head of McDermott’s Technology and Outsourcing Practice Group, Nadine Herrwerth, managing director at TWTG, and BJ Walker, managing director at Tudor, Pickering, Holt & Co for a 30-minute discussion where they opined on the current and future impact technology plays on conventional and renewable energy companies.

Below are key takeaways from the webinar:

1. Industrial Internet of Things (I-IOT). I-IOT products and services can be used to improve site safety and efficiency. I-IOT products have the capability to monitor equipment, such as valves and temperature sensors on machinery, and record data on external dashboards for analysis and alerting. Through the use of data analysis, data gathered by I-IOT products can identify trends, build models and detect future equipment failure. As a result, I-IOT products and services can increase the efficiency, reliability and safety of equipment.

Though the application of I-IOT devices is relatively new to the industry, these products are capable of being retrofitted to established and already operational sites.

2. Technology Companies and Energy. While technology companies are large consumers of energy output, they can also provide significant insights and intelligence in regard to energy use and production. Synergies between technology and energy industries are continuously evolving and providing improvements in energy investments, efficiencies and reliability. For example, drones are capable of leveraging artificial intelligence to increase efficiency and consistency of equipment monitoring and inspections, particularly equipment that is located in remote areas (such as offshore).

3. Investor Focus on the Energy Space. An important theme in the oil and gas industry is the recent focus on transforming the industry to a generator of cashflow. In attracting new investors to the energy industry, particularly as new technologies are introduced, investors should know there is typically a longer wait period to receive a return on investment than what a general investor would commonly expect. In addition to general investors, technology companies are investing in renewable energy sources for purposes of environmental responsibility and in order to power their own enterprise. It is expected that this trend will continue to grow in energy intensive areas, such as the cryptocurrency space.

4. Technology in Traditional Oil and Gas. Although not widely appreciated, the oil and gas industry has always been heavily reliant on technology and an area where revolutionary technologies are developed—and that is certainly the case today. Because oil and gas professionals are proficient with, and conversant in, the application of new technologies, look to those professionals to be industry leaders in the energy transition as new businesses and products are developed.

To access past webinars in this series and to begin receiving Energy updates, including invitations to the webinar series, please click here.




Biden Administration Issues National Security Memorandum Shortly after the House Passes Three Bills Aimed at Cybersecurity in the Energy Industry

The federal government is seeking to increase cybersecurity in critical infrastructure industries through the implementation of a voluntary Industrial Control Systems Cybersecurity Initiative (Initiative), while the US House of Representatives (House) concurrently focuses on the same goal by passing three bills aimed at enhancing cybersecurity. While it’s currently voluntary, it’s likely the Initiative—along with its performance goals issued in conjunction— may become mandatory for companies that own or operate critical infrastructure facilities.

In order to focus on strengthening the nation’s cybersecurity within the energy industry, the House recently passed the Energy Emergency Leadership Act (HR 3119), the Enhancing Grid Security through Public-Private Partnerships Act (HR 2931) and the Cyber Sense Act (HR 2928).

On July 28, 2021, shortly after the House passed the above three bills, the Biden Administration released a National Security Memorandum on Improving Cybersecurity for Critical Infrastructure Control Systems (Memorandum). The Memorandum affirmatively recognized the “[p]rotection of our Nation’s critical infrastructure is a responsibility at the Federal, State, local, Tribal and territorial levels and of the owners and operators of that infrastructure.” In order to protect such infrastructure, the administration provides that it is their policy “to safeguard the critical infrastructure of the Nation, with a particular focus on the cybersecurity and resilience of systems supporting National Critical Functions…”

As a result, the administration established the voluntary Initiative between the federal government and the critical infrastructure community with the primary objective of defending the United States’ critical infrastructure through facilitating the deployment of technologies and systems that will increase cybersecurity. The Memorandum further instructs the US Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) and the US Department of Commerce’s National Institute of Standards and Technology (NIST) to develop cybersecurity performance goals for critical infrastructure. The US Secretary of Homeland Security will issue initial goals for control systems no later than September 22, 2021, with cross-sector and sector-specific goals to be issued within a year of the Memorandum.

On May 7, 2021, just before 5 am, an employee in the Colonial Pipeline Co.’s control room found a ransom note sent by hackers demanding cryptocurrency. In response, Colonial Pipeline Co. Chief Executive Officer Joseph Blount shut down the entire pipeline by 6:10 am. This marked the first time in its 57-year history that Colonial Pipeline Co. shut down its entire gasoline pipeline system. Colonial Pipeline Co. paid the hackers, who were an affiliate of a Russia-linked cybercrime group known as DarkSide, a $4.4 million ransom shortly after the hack. However, the US Department of Justice announced it recovered $2.3 million of the ransom in June.

Only mere months after this significant breach of cybersecurity, the House approved HR 3119, which was introduced by US Representatives Bobby Rush (D-IL) and Tim Walberg (R-MI) to increase energy emergency and cybersecurity responsibilities as a core function for the US Department of Energy (DOE) and create a new assistant secretary position to specifically focus on these issues. In a statement released [...]

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