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Page added on June 23, 2020

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What’s Next For Big Oil?

Business

Something unthinkable is happening in Big Oil, and it’s not the demand slump or the spending cuts or the layoffs. With the exception of the demand slump, we’ve seen all this before–more than once, in fact.  No, what’s unthinkable is that Big Oil appears to be planning to stop being Big Oil.

It’s not a joke. Three of the world’s biggest oil and gas companies are planning to become net-zero carbon emitters by 2050. And, as Energy Intelligence noted recently in an industry analysis, there are only two ways to attain the net-zero state: reduce the production of oil and gas, and capture the already emitted carbon dioxide.

The three top performers in the field seem to be focusing on the first way. Shell, BP, and Total—along with Italy’s Eni and Spain’s Repsol—all plan to boost their output of renewable energy at the expense of oil significantly over the next few decades. And the U.S. supermajors, as reluctant as they have been to join the green wave in energy, might at some point simply be forced to do it by their shareholders and by the new, post-coronavirus world order.

It would be an understatement to say that the pandemic had some role to play in the transformation looming over the energy industry as we know it. The pandemic, and the oil demand slump it brought on the industry, had a significant role to play in that transformation. The extent and speed of this demand slump were literally unprecedented, but now that the precedent has been set, Big Oil is preparing for the future.

The industry, Energy Intelligence wrote recently, is facing a major disruption that will change business models that have been used for decades. But there is no way around it. According to Energy Intelligence analysts, the traditional integrated business model is on its way out because this latest crisis has revealed it as wanting in many respects. Restructuring is also in order and already underway to boost the companies’ resilience to future crises. But the main thread running through this disruption is diversification into alternative energy sources.

“The world’s carbon budget is finite and running out fast; we need a rapid transition to net-zero,” BP’s Bernard Looney said at the launch of the company’s net-zero program, announced in February before Covid-19 really struck.

“We all want energy that is reliable and affordable, but that is no longer enough. It must also be cleaner. To deliver that, trillions of dollars will need to be invested in replumbing and rewiring the world’s energy system. It will require nothing short of reimagining energy as we know it.”

Reimagining may indeed be the most accurate way of putting it, but it’s only the start. The oil and gas industry will need to transform into something else. And it will be neither easy nor, unfortunately, quick. “Keep it in the ground” is much easier said than done.

“We’re seeing that if you want to somehow cut out 25% energy use or hydrocarbon-based energy use, you need draconian measures to get to that reduction,” Shell’s Ben van Beurden recently told Bloomberg in an interview.

“You need to lock down people. You need to shut down the economy. It shows the magnitude of the challenge, how complicated it is, and what the consequences would be if you really wanted to have a very simplistic approach to getting rid of oil and gas.”

What the industry is therefore planning on using—and already using in some cases—is a more intricate approach. One aspect of this approach is the restructuring of the business into entirely new divisions, dispensing with the traditional upstream/downstream division, and organizing its priorities around the new divisions. Another is the much bigger focus on every other business except oil and gas. Power generation and distribution, biofuels, hydrogen, EV charging, they are all there.

A third aspect of the transition looming over oil and gas is technology. Tech will not only help Big Oil become more efficient–it may turn out to be instrumental for their net-zero ambitions, as Energy Intelligence points out in its analysis.

So, a change is underway, and while it may not be the change that the most radical environmentalists want to see, such as the instant suspension of all oil and gas production, which is an impossibility, it is a change for the better. And the important thing is that Big Oil has the perfect incentive to pursue this change. Not out of altruism, of course. For-profit.

The thing is that the transition to clean energy is not just a challenge. It is a huge business opportunity as BP’s CEO recently told IHS Markit’s Daniel Yergin. It is an opportunity for Big Oil because only companies of this size have the means and resources to be reliable, clean energy providers to equally large companies such as the tech giants.

This is not the most pleasant truth, but it is a truth nevertheless. If Google wants clean energy for its data centers, Looney said, it will want a reliable energy provider, and this will most likely mean a large provider, with the capacity and backup capabilities to fulfill the tech giant’s requirements.

So Big Oil may well stop being Big Oil and become Big Energy over the next few decades. Even the U.S. supermajors will likely be swept into the wave when they figure out exactly how profitable the alternatives of oil and gas can be. All European majors can’t be wrong, after all, can they?

By Irina Slav for Oilprice.com

 



9 Comments on "What’s Next For Big Oil?"

  1. Abraham van Helsing on Tue, 23rd Jun 2020 12:10 pm 

    Big Black Dongs never quit, renewable energy at it’s finest.

  2. Duncan Idaho on Tue, 23rd Jun 2020 12:21 pm 

    Repugs gerrymandering in 2010-
    The Dims aren’t that much better
    (The Repugs can work without holding their nose, while Dime often need to)

    https://i2.wp.com/digbysblog.net/wp-content/uploads/2020/06/G5AQAZNCGQZGHPF5RZDPXRFGQE.png?resize=1536%2C606&ssl=1

  3. zero juan on Tue, 23rd Jun 2020 12:21 pm 

    The multiple personality lunatic juanPee morning:

    Abraham van Helsing said Big Black Dongs never quit, renewable energy at it…

    ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway said if i have more title i would give to supertard pre…

    ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway said america is #10 ranking below many countries with #…

    FamousDrScanlon said Christianity and colonialism “Christianity a…

    SocialRevolutionComing said Russian authorities wage war on ‘fake news&#…

    SocialRevolutionComing said COVID-19: South Korea confirms second wave of infe…

    ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway said MLM

    ANAL REAPER said That’s like asking why there are several rig…

    ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes i know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeed giveaway said UK: Brother of Libyan migrant “muzz” m…

    ZOMFG you guyes MUZZ-19 is codename for psyop Operation CONVICT-19 you guyes said Nine fugitive ISIS muzz are blown up in airstrikes…

  4. zero juan on Tue, 23rd Jun 2020 12:22 pm 

    fuck juanPee and the whore that bore him and sleeps with him

  5. JuanP on Tue, 23rd Jun 2020 12:28 pm 

    China does not know how to be a good neighbor:

    China lays claim to Galwan Valley, blames India for border clash
    “Commenting on China’s claim to the Galwan Valley, India’s foreign ministry spokesman Anurag Srivastava said on Saturday “attempts by the Chinese side to now advance exaggerated and untenable” claims over the LAC are “not acceptable”. “They are not in accordance with China’s own position in the past,” he said in a statement, adding that Indian troops did not cross the LAC and had been patrolling the area “for a long time”. Srivastava accused China of hindering India’s “normal, traditional patrolling pattern” in the area, which resulted in a “face-off”.”
    https://www.aljazeera.com/news/2020/06/china-lays-claim-galwan-valley-blames-india-border-clash-200620072540762.html

  6. JuanP on Tue, 23rd Jun 2020 12:31 pm 

    I am in the video:
    Hundreds march in peaceful protests from Miami to SoBe against police brutality
    A weekend commemorating Juneteenth — June 19, 1865 — when Black people in Texas became the last slaves to receive word they were free, inspired a Saturday of peaceful protests against police brutality and racial injustice from Miami to Miami Beach.
    https://www.miamiherald.com/news/local/community/miami-dade/article243669977.html

  7. JuanP on Tue, 23rd Jun 2020 12:37 pm 

    My city sucks:
    Future Facing Climate Change
    This drives home a few points: South Florida’s environmental problems aren’t limited to sea-level rise — although the rising water could make much of it worse. The draining of swamps, altering of water courses and brazen development have taken a mighty ecological toll. The Everglades are dying, and restoration efforts are painfully slow. The Miami River is choked by nutrient pollution — from leaking septic systems and fertilizer runoff — that’s killing seagrasses, a keystone species of shallow marine ecosystems, and an important buffer against storms. Environmental collapse is just part of the problem, though. There’s also economic distress. “If you expect to survive into the middle of the 21st century, you might just get to watch Miami die,” Ariza wrote. “But not before the changing climate stretches the city’s already yawning gap between rich and poor past its breaking point.” Miami-Dade is a majority-minority county with half its residents foreign-born. It also has an enormous wealth gap, with 6 in 10 residents spending more than one-third of their income on housing. And most of those who are struggling to make ends meet are black and Hispanic service-sector workers, Ariza explains. It’s precisely those communities with the fewest resources that will be hardest hit by stronger storms, hotter temperatures and rising tides. These inequities “are as dangerous as the city’s low-lying topography and porous geology,” he wrote. Already a kind of climate gentrification is underway.
    https://www.ecowatch.com/miami-climate-change-2646218815.html?rebelltitem=4#rebelltitem4

  8. JuanP on Tue, 23rd Jun 2020 12:42 pm 

    Stinking liberal news media are liars and hypocrites:

    CNN, MSNBC primetime ignore Seattle’s plans to dismantle ‘CHOP’ zone after shootings
    Seattle Mayor Jenny Durkan announced Monday that officials would end the police-free zone known as the “Capitol Hill Organized Protest,” or “CHOP,” after two recent shootings, one of which was deadly – but CNN and MSNBC didn’t feel it was particularly newsworthy. News broke during the 7 p.m. ET hour on Monday that Seattle’s mayor said the violence was distracting from changes sought by thousands of protesters seeking to address racial inequity and police brutality – but CNN’s 7 p.m. program, “Erin Burnett Outfront” did not mention the news as it unfolded. SEATTLE WILL MOVE TO DISMANTLE ‘CHOP’ ZONE AFTER SHOOTINGS, MAYOR SAYS CNN continued to ignore the news during its primetime programming, as there was no coverage on back-to-back editions of “Anderson Cooper 360” from 8-10 p.m. ET or during Don Lemon’s “CNN Tonight,” which aired from 10-midnight ET. “Most mainstream media outlets have bent over backwards to portray the civil unrest as peaceful actions supporting the general aims of justice. That narrative gets largely disrupted if those news organizations now focus on the chaos in places like Seattle,” DePauw University professor and media critic Jeffrey McCall told Fox News.
    https://www.foxnews.com/media/cnn-msnbc-primetime-ignore-seattles-plans-to-dismantle-chop-zone-after-shootings

  9. More from Davy the Lunatic on Tue, 23rd Jun 2020 3:24 pm 

    zero juan on Tue, 23rd Jun 2020 12:21 pm

    zero juan on Tue, 23rd Jun 2020 12:22 pm

    JuanP on Tue, 23rd Jun 2020 12:28 pm

    JuanP on Tue, 23rd Jun 2020 12:31 pm

    JuanP on Tue, 23rd Jun 2020 12:37 pm

    JuanP on Tue, 23rd Jun 2020 12:42 pm

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