Wall Street is betting the under on new oil and gas supply, and U.S. and other prospectors need to step up again and confound the odds by delivering the over.

Arjun Murti, a partner in investment and advisory firm Veriten, called attendees to action during a lunchtime address at NAPE Summit on Feb. 7.

The International Energy Agency projects oil demand will peak in 2028. Meanwhile, “almost every single big oil company has oil demand peaking in 2035,” Murti noted. The dates differ, but the sentiment is the same.

“If you are an investor and the message is the business is going away at some point, no one is going to invest in an ex-growth business,” he said.

It’s up to the oil and gas industry members—the prospectors who’ve reinvented the business again and again over the past 165 years—to reinvent it again, he said.

“Who believes in their own industry? Who believes in their company? I think that question is not answered yet.

“There is a need for new ideas. Where are they?” More than 90% of global oil supply growth has come from U.S. shale. “That is a credit to most of you in this room.”

Many Wall Street generalist investors, fund managers and advisers “are still pretty pessimistic about the oil and gas business. I view it as a positive in the sense that there are things to do and there are deals to be done before people get excited [again].”

Peak demand? Maybe not

Meanwhile, “peak demand” forecasts may be wrong again, he said. Currently, 7 billion people consume 59% of daily oil supply or 0.0084 bbl/d per person; the other 1 billion people, 41% or 0.042 bbl/d. Together, that’s about 100 MMbbl/d.

Developed countries’ oil consumption is expected to plateau, but developing countries’ consumption could grow.

If the per capita consumption wealth in less economically advanced countries neared that of the developed world, global demand would be 250 MMbbl/d, he said.

But, he noted, “it’s not a projection we have. … Unfortunately, some of these places are going to stay poor.” Among them, he isn’t hopeful for Venezuela.

China’s oil-consumption growth is a tiger—unless there is intervention. To head that off, the government is making advancements in replacing gasoline-fired engines with electric vehicles, Murti said.

It’s importing 11 MMbbl/d now and “you’ve got to try everything in your power to avoid that 4 bbl/d per 1,000 capita going to 20 or 25 or 30. Where’s all that going to come from?

“And if you're China, you would rather have a coal-fired EV—it’s not even a close call—than a Saudi-, Russia- or U.S. shale-fired electric vehicle.”

As for LNG, Murti doesn’t expect it to displace as much coal as generalists think. Coal “is at record highs. Why? Because it's available, it's domestic, it's inexpensive, it's jobs, it's taxes,” he said.

“So what this means to me is ‘How do we think about LNG?’ So I'll push back that LNG is a displacement fuel for coal. I'm not sure there's evidence of that. … You need it all. LNG is not a transition fuel; it's a fuel. Full stop. Right?”

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