OPINION: Tesla chief executive Elon Musk’s comments to the ONS event in Norway about the world needing “more oil and gas, not less” must have felt like a much-needed respite for many in the oil and gas industry.
As Europe faces the prospect of a stark winter amid a full-blown energy crisis, the Tesla celebrity’s words sounded like vindication, in line with what some industry hawks had been saying all along.
Are you short of gas and staring down the barrel of rocketing energy bills?
Never fear, let producers do what they do best: explore, drill and produce. Drop the red tape, license like there was no tomorrow and move ahead with projects such as Arctic drilling and European fracking.
Newly appointed UK Prime Minister Liz Truss has said she would support issuing many licenses for new drilling in the North Sea, in her quest towards energy security.
JP Morgan chief executive Jamie Dimon wrote back in April that the US needed “immediate approval” for additional oil and gas leases.
Drill baby drill
While the original shale boom cry of "Drill Baby Drill" still seems out of place in the middle of a climate emergency, Musk’s words might sound like encouragement.
Such an approach would be ill-conceived as a solution to the energy crisis and, to be fair, was not what Musk said when he called for a pragmatic but determined path to cleaner energy.
The energy crisis that Europe is facing is an immediate one, which will not be addressed by setting in motion fossil fuel investments that will not produce for years to come, and are likely to be much more expensive than renewable technologies can offer.
On top of that, critics are right when they say new projects would lock economies into new cycles of fossil fuel consumption and emissions, when the world needs to drastically cut demand and transition to a low-carbon future.
One may also argue, as the International Energy Agency's executive director Fatih Birol did recently, that over-dependence on fossil fuels is what brought about today’s crisis in the first place, allowing Russia to weaponise its gas exports.
Had Western economies spent the past two decades investing in diversification of supply and renewable sources, today’s outlook would have been different, he points out.
At the same time, Musk’s man-of-the-mountain quips are also an acknowledgement that the industry holds sway in securing access to energy and has the technological and financial means to achieve the transition to a low-carbon economic model.
In the shorter term, known reserves represent a vast source of energy that can be tapped to help smooth the bumpy road to energy transition, without the need for a new drilling boom.
How can this be done without undermining those zero-emission targets?
Oil and gas operators have so far had a tough job selling the idea of applying carbon capture to curb emissions or for natural gas to be employed in blue hydrogen production, storing carbon in the process.
This is the time to put skin in the game if players are serious about their will to decarbonise and adapt to today’s challenges.
Proving the industry’s decarbonisation credentials requires a coordinated push to make carbon capture and storage work at scale, establishing a viable roadmap for blue hydrogen, and ultimately showing these things can make an impact towards transitioning and can be a real alternative.
The industry should keep its eyes peeled to the direction of travel, which does not involve perpetuating cycles of consumption through new exploration and production assets, but rather putting real money behind the technologies that can set transition and diversification into motion.
(This is an Upstream opinion article.)
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