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

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

Two years later, the oil industry is recovering from the worst recession it has ever experienced after coronavirus containment measures halted the lives of billions of people and eliminated one-fifth of global fuel demand. The US fossil fuel industry is still booming after tens of thousands of jobs were lost.

The pandemic also accelerated the energy transition, interrupting a steady increase in fuel consumption, which otherwise could have continued for several years without interruption. Oil demand may never recover from this success. This year, the CERAWeek conference in Houston is entirely virtual and many 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 Amazon speakers and renewable fuel giant Iberdrola are among the main speakers.

“The tone is different: there is a 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 as the pandemic began to erupt and quickly made it impossible to gather thousands of people from 85 countries at the conference venues.

Since then, many of the world’s largest oil companies have set ambitious goals to shift new investment to technologies that will reduce carbon emissions to slow global warming. UK-based BP Plc has largely abandoned its oil exploration team; US car giant General Motors Co. has announced plans to stop manufacturing petrol and diesel vehicles in 15 years.

Certainly, the 2021 program includes oil leaders who usually appear at CERAWeek. Among them are Mohammed Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC) and 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 oil and gas recovery it will have as future demand is challenged. Boney from BP will join Andy Jassy, ​​who will become CEO of Amazon.com Inc. later this year, in a panel on energy reinvention. Western CEO Vicki Hollub and UAE Minister Ahmed Al Jaber are set to address reducing carbon emissions.

Oil companies have come under increasing pressure from shareholders, governments and activists to show how they are changing their business from fossil fuels to renewables and to accelerate this transition.

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

Yergin said Gates will discuss the difficulty of reducing emissions as the temperature rises slowly around the world. It is expected to focus on technologies that are missing but needed in the energy transition.

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

The reality, Gates said, is much harsher. Many heavy industries that use oil and gas are difficult to remove from these fuels and therefore new technologies are needed. Steel, for example, is still based on burners in metallurgical coal.

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

Although the common goal of carbon neutrality has now become widely accepted, finding the best way to achieve that goal is much more difficult, Yergin said.

“Previous energy transitions have taken place over the centuries. This is meant to take place in less than three decades – it’s a very difficult thing, “he said.