U.S. regulatory and fiscal certainty is crucial for oil and gas companies to develop long-term strategies, whether they’re based in Oklahoma City, Tokyo or Perth, Australia.

Takayuki Ueda, CEO of Japan’s Inpex Corp., said stable and pragmatic policy from the U.S. is “very important” because Asian and European countries “will actually follow the U.S. policy.”

Speaking during the “Oil and Gas: Playing the Long Game” panel at CERAWeek by S&P Global on March 7, CEOs at some of the biggest upstream E&Ps said less regulatory uncertainty is on their wish list as they plan long-term investments. 

Beyond that, they aim to understand projected future demand while maintaining traditional oil and gas operations and intensifying their efforts in renewables and decarbonization. 

Devon Energy Corp. CEO Rick Muncrief said the political, regulatory and judicial aspects of a “well thought-out” policy are all important. He said he hopes the U.S. will “enact good public policy,” although he acknowledged that will be a “heavy lift.”

Policy that lasts beyond the next election

Similarly, Meg O’Neill, CEO of Australia-based Woodside Energy Ltd., which operates U.S. assets, would like to see more fiscal and regulatory certainty because the oil and gas industry has always played the long game.

“We need to have certainty that lasts beyond one election cycle so that we can make our investments that pay back over 20 or 30 years with confidence that the framework is consistent, that the approach to climate change is consistent,” she said. “We've got to be able to get things permitted. And that's a global challenge.” 

Because some oil and gas investments, particularly offshore projects, pay out over decades, energy companies forecast what the likely demand outlook will be over time.

“What's going to happen with the fundamentals, population growth, economic development, and what does that mean for energy demand?” O’Neill asked. “The reality is the decisions that we're making today” will affect the company for decades to come.

“So the long game is something that lives in our memory and it's how we think about the business every single day,” she said.

With that in mind, Woodside will continue to invest in oil and gas, but it also plans to proportionally invest in new energy projects like hydrogen and ammonia between now and 2030, she said. 

Rick Muncrief
“We joke about the fact that there's been some huge gas fields found while looking for oil, but most of the time you don't find oil looking for gas, and that's just been a reality for a hundred years,” said Devon Energy CEO Rick Muncrief. (Source: Jennifer Pallanich)

Hybrid oil, gas, carbon companies

Traditional oil and gas companies are also increasingly focusing on carbon capture and sequestration (CCS).

“CCS is obviously a core technology and I'm sure we can talk about great experiences in the U.S. with CCS,” O’Neill said. “How do you do something constructive with CO2 other than just stuff it in the ground? That said, stuffing it in the ground is going to be important, and it's a tool that we're going to have to all pursue.”

Nicolas Terraz, TotalEnergies’ president for exploration and production, said the company is evolving into a multi-energy company.

“We're still going to produce oil [and] gas because there is a demand for oil and gas. We've never said we would walk away from oil and gas,” he said. 

By 2030, the company plans to increase gas production — and by extension LNG— by 40% through 2030 because the company sees it as an important fuel for the energy transition. 

TotalEnergies seeks out short-cycle oil and gas projects that can come online quickly with existing facilities. 

Operators have learned that profitability and low emissions “frequently go well together,” Terraz  said. A resource-rich field with high well productivity generally means low costs and low emissions. 

At the same time, the company is investing heavily in renewables, he said.

“To be successful over the long term, I think it's important to try to understand how the energy demand and supply mix may evolve,” he said. 

Muncrief said Devon has evolved quite a bit over its 50-year history as well.

“We’ve been in a lot of places around the world,” he said. “We’ve exited a lot of the offshore, exited international. We’ve exited Canada.”

Instead, the operator is focusing on five onshore resource plays in the U.S.: the Eagle Ford Shale and the Delaware, Powder River, Anadarko and Williston basins.

“Gas, I think, has got a tremendous future. The one thing about gas is that it's plentiful. It's all over the world, and it could play a huge role in lowering our emissions worldwide,” Muncrief said, noting crude oil has always been harder to find than gas. “We joke about the fact that there's been some huge gas fields found while looking for oil, but most of the time you don't find oil looking for gas, and that's just been a reality for a hundred years.”

As such, Devon’s initial strategy will be to “stay as oily as we can for as long as we can,” he said. “We know that we'll transition over time next 10, 15, 20, 30 years and to have more of a gassy mix in our portfolio.”

Devon is focused on four strategic objectives: resources, technology, infrastructure and inspired people. In terms of resources, Devon has a deep, ready-to-drill inventory.

“We think we can keep the train running for quite some time. But even on top of that, we're continuing to explore our existing acreage base,” Muncrief said.

The company has also used technology to right-size assets and personnel, he said. As a result, “we had some of the best years in our history the last couple of years.”