With the energy transition stretching beyond previously plotted-out timelines, the world will require oil and gas to fuel the energy mix for many more years.
With this view in mind, oil and gas companies are continuing to invest in hydrocarbons while simultaneously working to reach sustainability goals. At the same time, countries are approaching the energy transition and energy security in different ways.
Speaking during the “What’s Next for Global Upstream?” strategic dialogue and breakfast on 11 March at CERAWeek by S&P Global, oil executives agreed oil and gas would likely remain a part of the energy landscape for many years.
Philippe Mathieu, Equinor’s executive vice president for exploration and production international, noted the transition will have to be balanced against affordability and security.
“The transition is going to take more time to be fully implemented,” he said. “We are going to need more oil and gas for longer.”
That will affect how the Norway-based operator identifies its investment opportunities. For example, Equinor is working to develop carbon capture and sequestration (CCS) as a business while it continues to invest in its oil and gas portfolio and in decarbonizing its operations.
“There is always a way to decarbonize in bigger or smaller ways,” Mathieu said.
Toshiaki Takimoto, head of net zero business at Inpex Corp., said energy security is more important in Japan than sustainability. Even so, he added, Inpex is working to find a balance between the importance of supplying oil and gas and reaching sustainability ambitions.
While Inpex is progressing its Abadi project offshore Indonesia, the company is also seeking a partner to assist in a carbon dioxide transport project, he said.
Dong Sub Kim, president and CEO at Korea National Oil Corp. (KNOC), said Korea’s number one priority is energy security.
KNOC is diversifying into offshore wind and CCS. When it comes to CCS, mindset matters. For a CCS project, there shouldn’t be an expectation of achieving profit within 5 years, he said.
“You see it as an investment. You have to have deep pockets,” he added.
KNOC has also identified seven deepwater prospects that could bring much-needed hydrocarbons into the country’s energy supply.
“The best way to be independent on geopolitical issues is to produce oil and gas in your own country. That is the biggest dream we have,” he said. The national oil company is seeking partners for the deepwater frontier exploration activities off the peninsula.
Sam Algar, chief of exploration for Cairn Oil & Gas, Vedanta Ltd., said Cairn is also seeking partnership. “We all have strengths and gaps in our skill sets.”
A gap at Cairn Vedanta is in shale operations. While Algar said he has worked in shale plays in the US, the company itself is “relatively inexperienced” when it comes to shale.
“The resource is enormous,” he said, and the company is “keen to talk to people and not trip over our feet too much. There are a lot of stories about wasting money in shale plays.”
In addition to looking for companies “willing to explore one of the really underexplored places in the world,” Cairn plans to drill exploratory deepwater wells offshore India and is already carrying out development concept engineering, he said.
“Once we have success,” he said, the aim is to begin production as quickly as possible. The company aims to grow from its current 100,000 BOPD to 500,000 BOPD, he said.
“We recognize we need JV (joint venture) partnerships and skill sets from contractors that have the ability to get things done quickly and efficiently.”
Global Energy
ConocoPhillips CEO Ryan Lance believes the current energy leadership in the US understands the business and recognizes the resources within the country.
“It’s rebalancing the system a little bit, recognizing the resources that we have here in the United States, the gas portion of that, and oil portion of that, how we can use that to export to our partners, our friends, our allies around the world, but also reestablish the energy system so that we have more balance,” he said during the “What's Ahead for Global Energy?” plenary session on 11 March.
He said one of the main things that the US needs to do is streamline its energy-related processes.
“We have to fix the system we have here in the US. It’s probably the biggest impediment to growing the energy system,” he said.
And he wasn’t just talking about permitting for oil and gas.
“It’s transmission, roads, bridges, ports,” noting it can take multiple decades to get infrastructure built in some cases. “We’ve gotta streamline it.”
Lance is bullish on LNG. While there may be some oversupply in the market later, he expects the market to reach equilibrium.
TotalEnergies CEO Patrick Pouyanné said during the same session the company sees the importance of investing in LNG.
“We love the US. You have the cheapest gas on the planet. You could even give it to me for free,” he joked.
He acknowledged the world’s need for “more gas, more energy, more electricity” and said that long-term commitments are critical for affordable LNG.
Pouyanné also said TotalEnergies intends to return to exploration in the Gulf of America.
Lance said there is an expectation that US oil production will plateau later this decade but that the country still has enormous reserves and technological know-how to produce it.
“There’s a ton of resource sitting in the US,” he said. “I’d never bet against this industry in terms of technology because we’ll always figure out a way to get the resource out of the rock.”
