From US domination to the energy transition, two years that changed oil

NEW YORK (Reuters) – Former US Secretary of State Mike Pompeo took the stage at the world’s largest energy conference in 2019 to declare an era of American rule after a decade of rapid shale development converted The United States is the world’s leading producer of oil and gas.

FILE PHOTO: Attendees of the IHS Markit CERAWeek conference view then-US Secretary of State Mike Pompeo’s keynote address from the George Brown Convention Center in Houston, Texas, USA on 12 December. March 2019. Picture taken on March 12, 2019. REUTERS / David Gaffen / File photo

Two years later, the oil industry is recovering from the worst recession it has ever experienced after measures to contain the coronavirus prevented billions of people from traveling and wiped out a fifth of global demand for fuel. The US fossil fuel industry is still reeling after tens of thousands of jobs were lost.

The pandemic has also accelerated the energy transition, interrupting a steady increase in fuel consumption that might otherwise have continued for several more years unabated. Oil demand may never recover from that hit. This year, the CERAWeek conference in Houston is completely virtual and numerous panels are dedicated to the transition to the low-carbon economy of the future, hydrogen technologies and climate change.

Microsoft Corp co-founder Bill Gates, US climate envoy John Kerry, and speakers from Amazon and renewable fuels giant Iberdrola are among the keynote speakers.

“The tone is different: there is one theme that permeates the entire conference and that is the energy transition,” said CERAWeek founder Dan Yergin, vice president of IHSMarkit.

Last year’s conference was one of the first major global events to be canceled when the pandemic began to rage and quickly made it unfeasible to gather thousands of people from 85 countries at the conference venues.

Since then, many of the world’s leading oil companies have set ambitious goals for shifting new investments into technologies that will reduce carbon emissions to slow global warming. UK-based BP Plc has largely abandoned its oil exploration team; US auto giant General Motors Co announced plans to stop making gasoline and diesel vehicles in 15 years.

To be sure, the 2021 program includes oil leaders who often appear on CERAWeek. Among them are Mohammed Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), and the executive directors of Exxon Mobil, Total, Chevron and Occidental Petroleum.

But they will participate in panels focused on the energy transition. Barkindo will discuss what kind of recovery oil and gas will have as future demand is challenged. BP’s Looney will join Andy Jassy, ​​who will become Inc CEO later this year, in a panel on reinventing energy. Occidental’s Executive Director Vicki Hollub and Ahmed Al Jaber, the UAE Minister of State, are scheduled to tackle reducing carbon emissions.

Oil companies have come under increasing pressure from shareholders, governments and activists to show how they are shifting their businesses from fossil fuels to renewable energy and to accelerate that transition.

“This year’s program reflects the reality of the transition to a zero net future,” said Julien Pérez, vice president of strategy and policy for the Oil and Gas Climate Initiative, a consortium of major oil companies.

Yergin said Gates will discuss the difficulty of reducing emissions to reduce temperature rise around the world. It is expected to focus on technologies that are missing, but needed, from the energy transition.

“You often go to conferences where people say, ‘Hey, let’s get companies to report their emissions and somehow magically make emissions disappear, or we’ll just divest the stock,'” Gates told Reuters in an interview prior to this month.

The reality, Gates said, is much harsher. Many heavy industries that use oil and gas find it difficult to move away from those fuels, and that is where new technologies are needed. Steel, for example, still relies on furnaces that run on metallurgical coal.

“If you are a steel company, you are going to report a very large number (of emissions). People still need a basic shelter and it is unlikely that we will stop building buildings. “

While the shared goal of carbon neutrality has now been widely accepted, finding the best way to achieve that goal is much more difficult, Yergin said.

“Previous energy transitions unfolded over centuries. This is destined to unfold in less than three decades, that’s a great effort, ”he said.

Reporting by Jessica Resnick-Ault; additional reporting by Katy Daigle; edited by David Gaffen, Simon Webb and Nick Zieminski


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