The energy industry is in transition, again. This year’s CERAWeek by IHS Markit, which took place Mar. 5-9 in Houston, was the most recent showcase of acknowledgement to that fact. Scratch that. An hour into this writing Statoil AS announced a proposal to remove “oil” from its name, but more on that later.
CERAWeek brings together myriad thought-leaders, and participants walk away with industry insights, plans, and possibilities. Presentations, panels, and sideline conversations at this year’s event, “Tipping Point: Strategies for a New Energy Future,” gave many the feeling that the oil and gas industry is “back” after a years-long downturn.
But “back” must be different.
Better, cleaner energy
“The world is growing fast, it’s changing even faster and it’s calling for more from us every day—not just more energy, but energy that’s better, cleaner, and helps towards the Paris goals,” BP Group CEO Bob Dudley said Mar. 6 as part of the conference lineup.
“Some might think there’s no way that can be done with oil and gas in the mix. They think our industry has had its day and now it’s time for different forms of energy to take over. I don’t think that’s the best answer. Our industry can and must be part of the solution,” Dudley said.
In this downturn, the industry has proven its adaptability, becoming more disciplined on costs and spurring dramatic efficiency improvements by way of digital and data, he noted. As a result, “we’re leaner, fitter, and better balanced at $60[/bbl] than we were at $100[/bbl]—and we’re a more modern, more agile industry.”
The transition is in progress, and the latest BP Energy Outlook says we could be heading for history’s most diverse fuel mix. At some point oil will stop growing, “but the pace of any subsequent decline is likely to be very slow, with the world needing a lot of oil for a long time to come,” Dudley said. And, the reduction in US emission levels resulting from gas replacing coal in power generation “shows what gas can do,” and should be applied more widely, he said.
Thwarting the idea that he’s “just an apologist for oil and gas,” Dudley acknowledged the growth of renewables as five times faster than any fuel in history. “Yet,” he said, “even in one of the most aggressive growth scenarios for renewables, a course consistent with meeting the Paris goals, the world could still be sourcing around 40% of its energy from oil and gas.”
BP’s approach is to lower carbon across the business and make alternative energy work. The company is a top generator of wind power in the US, and combined with its biofuels business in Brazil, is one of the largest operators of renewables among its peers.
One of those peers is Royal Dutch Shell PLC. Ben van Beurden, during his CERAWeek appearance, said the biggest question facing the industry is climate change. There is no other issue with such potential to disrupt the industry, and the industry must change, he said. While oil and gas will continue to be the core of Shell for many decades to come, he said, the company is currently working on wind, biofuels, and electric power.
Other majors also are engaging. Total SA is investing in solar, batteries, and electricity; ExxonMobil Corp. is pursuing algae and carbon capture; Eni SPA is working on solar and power; and Statoil is working with offshore wind and carbon capture.
What’s in a name
Circling back to Statoil’s news, the company has proposed changing its name to Equinor. The name is “a powerful expression of who we are, where we come from, and what we aspire to be,” said Pres. and CEO Eldar Saetre. “We are a values-based company, and equality describes how we want to approach people and the societies where we operate. The Norwegian continental shelf will remain the backbone of our company, and we will use our Norwegian heritage in our positioning as we continue growing internationally within both oil, gas and renewable energy.”
Statoil expects to invest 15-20% of total capital expenditures in new energy solutions by 2030 and will likely do so under a new name starting later this year.
Many eyes will be focused on the time in between.
