Although the North American oil and gas industry currently is “flourishing” while on “the right track” for the type of rapid and safe resource development that is emulated and envied by the rest of the world, industry players should not become complacent and “sit still.”
This was one of the many takeaway messages from one of the keynote speakers at IHS CERAWeek’s 32nd annual executive energy conference Mar. 5 in Houston.
“Even if you’re on the right track, you run the risk of being hit if you just sit there,” Khalid Al-Falih, Saudi Aramco president and chief executive officer, told the large group of IHS CERAWeek conference attendees.
Al-Falih said as industry looks at the future of energy, it must simultaneously satisfy three major imperatives, which he refers to as “the Triple-A triangle,” namely: adequacy, affordability, and acceptability. “Those three requirements must be met,” he said, “if we are to successfully fulfill our responsibilities and obligations as an industry and a global community.”
By “adequacy,” Al-Falih said he means industry must “ensure adequate and reliable supplies of energy to meet the growing needs of the global population.”
The second “A”—affordability—is important due to the fact that energy is “an essential input to almost every type of economic activity, and underpins our contemporary way of life.”
Al-Falih said, “Should the energy of the future prove to be prohibitively expensive, we may jeopardize global economic stability and growth, and risk tipping the world into a ‘have and have-not’ scenario, which carries with it serious financial, political, and social ramifications.”
The third “A” side of the triangle—acceptability—is in reference to production of energy resources while protecting and preserving the world’s natural ecosystems.
“Our consumers will not feel secure unless and until they know that we are doing our utmost to provide energy in a manner that is environmentally responsible. For that reason, I believe stewardship of the environment is not only a moral duty for energy providers, but also a sound economic choice, and good business,” he said.
Uncertain times ahead
Al-Falih noted that while satisfying these three key components is vital, there remains some uncertainty about the future of energy, in general, and of petroleum, in particular. “In fact,” he said, “it worries me that there seems to be an assumption taking root in some quarters that we are going to somehow fundamentally transform the face of energy overnight. Such an assumption ignores the thorny issues of how—and how quickly—we are going to get from here to there, with what impact on the world’s economy and its natural environment, how much this sweeping transformation will cost, and who will pay for it.”
He noted that although continuing to develop alternative sources of energy such as solar, wind, and wave power will remain important, the “hard fact of the matter is that hydrocarbons will remain the dominant energy sources for our world for the foreseeable future—and by that I mean for many decades to come.” Even with all the advances made between now and 20 years from now, he believes fossil fuels will continue to satisfy about 80% of the world’s total energy appetite.
Al-Falih said while these pronouncements were nothing radically new, industry still should heed four strategies to ensure that the “Triple-A” imperatives are met. These are:
• Adoption of a pragmatic, progressive attitude to energy issues, working from established facts and wishful thinking.
• Encouragement of wise and timely investments in petroleum.
• Conduct concurrent investments in conventional and alternative energy sources.
• Consideration of the issue of environmental protection and sustainability.
Contact Steven Poruban at [email protected].
