2022: Recovery With a New Trajectory?
While uncertainties remain for the coming year, there is also optimism for the upstream industry, a welcome prospect following two sharp downcycles in less than 6 years.
It’s January, and the JPT issue has a new look and a new digital edition. I would like to take the opportunity to thank the JPT staff, led by Pam Boschee and Glenda Smith, along with the JPT Editorial Review Committee, for producing exciting articles and technology news every month. For some, the move to a digital-only issue of JPT has disrupted reading and sharing habits. While I know that many of you miss having a print version, the SPE Board believes that remaining digital is the right decision as we look to the future. We’ve changed the digital edition this month. Your feedback on how we can make the digital version match your expectations is very important.
I want to take the opportunity to wish you, your family, and those who matter to you an excellent year following the roller coaster we experienced in 2021. Last year started with the hope that the rapid development of vaccines soon would be providing us protection against the COVID-19 virus. However, the numerous waves of infection (we are now in the fifth in many countries) and the various mutations of the virus have kept health authorities and governments in a reactive mode. With the number of COVID-19-related fatalities worldwide above 5 million at the end of 2021, nearly all of us had family or friends who were affected.
For the economy in general and our industry in particular, 2022 will bring a bag of uncertainties. Mohamed El-Erian, a recognized economic expert, said at 2021 ADIPEC, “The recovery from the pandemic crisis can be characterized by the U’s: uneven, unusual, uncertain.” The December 2021 OECD Economic Outlook mentions, “The rebound is losing some momentum as the surge in demand for goods has met bottlenecks in production chains. Inflation pressures have emerged in all economies.”
Among the risks associated with the large stimulus packages are bottlenecks in production chains, disruptions in commodities and energy supply, high inflation rates (which developed economies had not seen for the past 2 decades), and the loss of momentum in the economic rebound.
In terms of the upstream activity outlook, James West, senior managing director at Evercore, in an optimistic outlook recently said, “The spending cycle begins anew: 2021 was the beginning,” adding that “2022 is acceleration.” For our industry, this is great news following two sharp downcycles in less than 6 years.
The year 2021 ended on a high note. 2021 ADIPEC in Abu Dhabi was a great success from organizational, technical, and attendance standpoints. In addition to the excellent papers and panels, the exhibition attracted large numbers of visitors (in line with 2019 ADIPEC). I was impressed by the eagerness of participants to meet. The exhibition booths were busy with members that wanted to discuss innovation until the last hours of the fourth day of the conference. Great attention was given to ensure the health and safety of the participants.
I had the pleasure to attend the SPE Abu Dhabi Section dinner, and I was pleased to see how much progress has been made in diversity and inclusion.
I also had the pleasure to participate in the Eastern Europe Subsurface Conference in Kyiv, Ukraine, which was co‑organized by AAPG, AGPU, SEG, Ukrainian Geological Survey, the newly created SPE Kyiv Section, and which received great support from Naftogaz. Conference rooms were full within the limits imposed by the health restrictions.
The COP26 conference in Glasgow ended with a wide range of opinions about the success of the conference. For me, it achieved remarkable results with 197 countries agreeing to a new deal, called the Glasgow Climate Pact, with an ambition to limit temperature rise to less than 1.5°C. The 140 countries, representing 90% of the world’s GDP, pledged to reach net-zero emissions around the middle of the century, and 40% of the countries also pledged to move away from coal. More than 80 countries agreed to a Global Methane Pledge, with the aim to cut 30% of the emissions by 2030.
There was also progress on an agreement related to Article 6 of the Paris Accord, which would allow an international carbon market. Finally, leaders of more than 100 countries, with more than 85% of the world’s forests, agreed to end deforestation by 2030. Based on all those pledges, the International Energy Agency provided a preliminary analysis showing that with the combined pledges, the world would be on a trajectory of 1.8°C, which would be the first time we are below the 2°C trajectory.
SPE has been very active in many of the critical elements of a sustainable energy transition. Following the creation of the CCUS Technical Section, the Sustainable Development Technical Section, and the Gaia sustainability framework, we are pleased to announce the creation of the SPE Geothermal Technical Section.
The objective is to support the development at scale of geothermal resources with technologies that the oil and gas industry uses commonly.
The Gaia initiative is also getting large traction with its many facets, including the “Measuring What Matters” task force which focuses on measuring the environmental footprint, especially with regards to methane emissions. I consider the reduction in methane emissions as one of the low-hanging fruits for the decarbonization of our sector, with existing technologies enabling the reduction of 70% of those emissions; 45% of the total could be avoided at zero net cost.
A second Gaia project is TREE (Together Reforest for Energy and Ecology), which has gathered several SPE volunteers and will focus on themes related to biodiversity and reforestation. Gaia will be organizing a March 2022 summit to be held in Muscat, Oman, with an excellent line-up of speakers.
One area of technology that is important for the energy transition is hydrogen, and it is receiving increased attention in SPE events. Noé van Hulst, chair of the International Partnership for Hydrogen and Fuel Cells in the Economy, international hydrogen advisor at Gasunie, and hydrogen advisor at the International Energy Agency, said,“ For the natural gas industry, hydrogen is the chance to become part of the energy transition.”
While the CCUS Technical Section is actively engaged in hydrogen, it could be an opportunity to create a standalone technical group within SPE.
Please do not hesitate to contact me at President@spe.org should you have any query, suggestion, or volunteering proposal.