Big Oil (Probably) Isn't Going Away Anytime Soon. But It's Definitely Changing

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June 09, 2021

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by Camila Domonoske (NPR) ... European companies – such as French multinational Total and British-based BP – are staking big bets on a pivot from oil to renewable power.

Meanwhile, American giants are staking smaller sums of money on more nascent technologies, such as carbon capture, without plans to shift away from crude.

Yet regardless of the amount committed to green energy most oil companies are still directing far more money toward oil- and gas-based investments, a sign they're not expecting an overnight revolution.

Here are three takeaways on the oil industry's potential transformation:

Europeans are betting on a transition to renewables

...

Wind turbines and solar panels get a lot of attention, but they aren't the only options for a post-oil future. Shell has invested in electric vehicle charging stations, for instance. Many companies are also banking on hydrogen or biofuels.

Then there's carbon capture, technology that can prevent carbon dioxide from being released or even pull it out of the atmosphere – which is key to understanding the other half of the European-American divide.

U.S. companies are going another way

While the Europeans are promising a strategic pivot that would upend their core business model, the Americans are placing bets on the power of technology to preserve their current business model — heavily emphasizing carbon capture in their future plans.

This carbon capture path calls for oil production to continue, with carbon capture "balancing out" the new emissions, marking a contrast to the way some European companies are preparing for their oil production to drop over time.

In fact, captured carbon can be injected underground to help extract even more crude oil in a process called enhanced oil recovery.

Occidental Petroleum, an American oil company, has made this technology the core component of its plan to hit net-zero emissions by 2050.

Exxon has also announced $3 billion in carbon capture investments over the next five years.

...

Muqsit Ashraf is the head of global energy at the consulting firm Accenture, which recently surveyed 179 oil and gas companies — of all sizes — to check in on whether they planned to change how they do business in preparation for a transition away from oil and gas.

Ashraf notes that oil and gas companies are talking about cutting carbon like never before, with sustainability "front and center" in boardrooms, C suites and dialogues with investors.

But when it comes to transforming the underlying business model?

"Only a very small fraction of companies are truly thinking of a radical reinvention," Ashraf says. READ MORE

‘Oil & Gas Execs Could Lose Their Jobs,’ and Other Dire Warnings from S&P Global Ratings (Environment + Energy Leader)

Exxon Prepares to Cull U.S. White-Collar Ranks by as Much as 10% (Bloomberg/Yahoo!News)

BP to stick with oil and gas for decades, CEO Looney says (Financial Post/Reuters)

Three Exxon refineries top the list of U.S. polluters (Reuters)

Big Oil’s Green-Spending Boost Isn’t Enough, IEA Says (Bloomberg/Yahoo)

Why has Andy Karsner frightened the mighty ExxonMobil? The oil giant spent millions of dollars to keep Karsner, a Republican who favors renewable energy, off the company’s board of directors. It failed. (Washington Post)

Revealed: ExxonMobil’s lobbying war on climate change legislation: A senior ExxonMobil lobbyist has been captured on camera revealing how the oil giant is using its power and influence to water down US climate legislation. (Channel 4 News)

Big oil and gas kept a dirty secret for decades. Now they may pay the price (The Guardian)

Shell shelves Norway (blue) hydrogen project due to lack of demand (Reuters)

Excerpt from Financial Post/Reuters: BP will continue producing hydrocarbons for decades to come and will benefit from rising oil prices even as it reduces output as part of its shift to low-carbon energy, Chief Executive Bernard Looney told Reuters on Tuesday.

The recent rally in crude prices, which climbed on Tuesday to a more than two-year high above $75 a barrel, is likely to continue, Looney said in an interview at the Reuters Events: Global Energy Transition conference.

“There’s a very strong possibility that these prices will sustain over the coming years, and if they do, that’s very good for our strategy.”

Higher oil prices mean BP will be able to raise more cash from selling assets that will go towards building its renewables and low-carbon business, as well as returning money to shareholders via share buybacks, he said.

The 50-year old Irishman brushed aside investor concerns that BP might miss out on the rally because of its plan to slash oil output by 40% and grow its renewables output 20 fold by 2030 as part of its energy transition.

“As people understand we’re going to be in the hydrocarbons business for decades to come, that concern has gone away a little bit,” Looney said.

“We want to run the best hydrocarbons business possible. We don’t want to run the biggest hydrocarbons business possible.” READ MORE

Excerpt from Washington Post: As (President George W.) Bush’s assistant secretary of energy efficiency and renewable energy, Karsner supported legislation on biofuels, appliance efficiency and LED lightbulbs. He has played a role in back channel, or track 2, dialogues with India about climate agreements. For his quest bolstering renewables, he was dubbed a Swedish knight.

Now he is a senior strategist and “Space Cowboy” at X, the self-described “moonshot factory” at Google parent company Alphabet that tries to generate new ideas for old problems. He favors a carbon tax-and-dividend plan that would put a price on carbon and give the revenue back to households to spend as they like. He has backed the need for “natural capital” to correct market failures. “Today, we don’t have a ‘Nasdaq for Nature’ or a ‘Dow Jones for Deforestation’ — but in the future, we must,” he said in congressional testimony in October 2019.

By contrast, ExxonMobil, a corporate descendant from the Standard Oil Co. monopoly founded in 1870, has been a laggard in the new ideas business, forecasting that there would be ample demand for oil and natural gas well into the future.

So when Engine No. 1 came looking for four people to run for ExxonMobil board seats, Karsner — dubbed The Great Karsini by the actor and conservationist Edward Norton — was “proud” to sign up, saying that as long as ExxonMobil lacked an effective climate policy it would not have a financial strategy for the “inevitable energy transition over coming decades.”

In one of its Securities and Exchange Commission filings, however, ExxonMobil said that it “found that none of the Engine director candidates meet the standards or needs of the Company’s Board,” even though they included former senior executives of wind turbine, oil refining and biofuel companies. READ MORE