In late August, I took part in Hart Energy’s Carbon & ESG Strategies conference in Houston, where I chaired a panel on responsibly sourced natural gas.
During the two-day event, I was struck by the massive amount of activity currently underway in the oil and gas industry to decarbonize and meet net-zero goals. Panelists focused on topics such as methane and carbon emissions management, carbon capture and storage, hydrogen, carbon credits and trading and carbon utilization. It was clear from the discussion, and from recently announced projects and investments, that the traditional energy sector is undergoing enormous investment, commitment and change.
It is almost impossible to truly understand the significance of your place in history in the moment. You need the luxury of hindsight to truly know the significance of a given time. But it sure feels like we are living in an extraordinary time of enormous opportunity for the oil and gas industry.
Bolstered by billions in federal loans, grants and tax incentives, investments are being made in energy transition projects, as well as traditional oil and gas projects because demand for U.S. oil and gas resources is strong and commodity prices are rising.
Globally, nations are trying to secure future supplies of U.S. oil, natural gas and NGLs. This does not at all sound like an industry in its twilight years. On the contrary, it sounds like an industry that is refocusing, reorganizing and reinvesting in efficient, sustainable and vigorous production to meet robust demand.
Despite many efforts to label oil and gas as “dying,” the reality is that, after a multi-year hiatus, investment capital is coming back to the sector for the following reasons: global demand is strong; commodity prices are high; and limited alternatives exist.
Another proof point is the increase in the number of M&A announced in recent weeks, representing a strong sign that the oil and gas industry is growing and preparing itself for a future in which it meets global energy needs and reduces greenhouse gas emissions.
Additionally, public policies designed to drive down oil and gas development have had limited success, because societies ultimately rediscover that they need those commodities. Public policies aimed at widescale decarbonization are also driving investment capital into the sector. Additionally, the industry has been displaying years of fiscal discipline and is now undergoing a massive effort to decarbonize and meet global climate goals.
All of these dynamics constitute a recipe for sustainable growth. Indicators over the past several weeks—such as record domestic oil and gas production volumes and record exports of LNG and crude oil—support assumptions about strong growth in the sector.
Unfortunately, these developments and realities are largely lost on some policymakers. As we approach the upcoming COP 28 UN Climate Change conference in Dubai, widespread criticism is being fanned about the event being held in the United Arab Emirates (UAE), a global oil and gas production leader and member of OPEC, with former U.S. Vice President Al Gore calling it “a blatant conflict of interest” and a “capture” of the COP process. Gore used the term “capture” to mock carbon capture, which he describes as “unproven.”
UN Secretary-General Antonio Guterres is also an avid basher of the oil and gas industry, taking every opportunity to accuse the industry of “greed” and “planet wrecking.” Less cynical is U.S. Presidential Climate Envoy John Kerry, who touts the U.S. relationship with the UAE, and is calling on the oil industry to “come to the table” and show its commitment at COP 28.
Given the enormous commitments the industry is making, that sounds like a more enlightened idea. No industry in the world is doing more to address greenhouse-gas emissions than the energy sector, with oil and gas taking the lead. What I saw during the Hart Energy conference in August was not only commitment, but tangible and quantifiable actions. This is precisely what the industry should demonstrate to the delegates at COP 28.
As we move into the U.S. presidential election season, we can expect to hear a lot of back and forth debate over climate change and greenhouse gas emissions. There will be a lot of rhetoric, demagoguery and blaming. We can only hope that, somehow, a sensible discussion will ensue that highlights the need for sound public policies that support continued growth for the domestic energy industry. Doing so would help enable the economic growth, energy security, and innovative and sustainable investments that are needed to sustain our way of life and reduce greenhouse-gas emissions.
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