By Tood Petersen for EnergiesNet
Day 1 – Geopolitics
6 March 2023
Its March in Houston and that means a change in the weather, the Rodeo and CERAWeek by S&P Global. The event was held again at the Hiton of the Americas downtown Houston. CERAWeek is back after several years of either being shut down or reduced attendance because of travel restrictions. This is a very high-level executive oil and gas conference. It should set a record for attendance with over 8,000 participants.
Monday is a day of looking at the world from 35,000 feet. Lots of high-level analysis, opinions and recommendations about world supply, demand, climate policy, renewables. There were lots of government officials, investors, consultants, bureaucrats, and media. The participants were divided between the pro-oil and gas and the pro renewables groups. It made for a nice contrast. All the events were overflow in attendance.
Not to be overlooked is Agora Innovation which was nicknamed The Purple Giant and was held next door in the George R Brown Convention Center. It is like a CERA within a CERA with a twist. The focus here is new businesses, some conventional and others that are like out of a Star Trek movie. Companies such as Ocean Sun, Electrified Thermal Solutions, GHGSat, ElectricFish to name few.
After opening remarks by Daniel Yergin, Vice Chairman of S&P Global, Mike Wirth, CEO of Chevron Corporation spoke about “New Perspectives, New Strategies” and his company. While the company feels that oil and gas will continue to power the world several more decades the move toward net zero will still take place and Chevron will be a part of this transition. A similar sentiment is held by the next panel with the CEO’S of Linde, Baker Hughes, and Petronas.
These sessions were followed by a talk about trading in energy and the challenges in a volatile market. The situation between Russia and Ukraine will keep energy prices volatile. In the middle of all this uncertainty is the push to move forward to cleaner energy sources. This is being advanced mostly by governments backing the COP. The next meeting of COP is 2028 in Dubai, UAE and is headed by H.E. Dr. Sultan Ahmed Al Jaber.
There were several more sessions about financing clean energy, the shortage of rare minerals, hydrogen in all its colors, leadership, and diversity. Diversity, leadership and inclusion would be a very popular theme throughout the conference.
The conference then shifted to geopolitics with conversations with politicians. One was the Hon. Dr. Bharrat Jagdeo, Vice President, Co-operative Republic of Guyana. It has been widely known that this part of the world had potential oil and gas reserves as it borders Trinidad and Venezuela. Venezuela has the largest oil reserves in the world. It wasn’t until recently when ExxonMobil made a major discovery that put Guyana got on O&G map. It is one of the hottest plays in several years. This discovery also intensifies the dispute with Venezuela which claims this territory for the last 120 years.
Daniel Yergin then moved to a conversation with Alaska Senator Dan Sullivan. We heard about the challenges faced with getting approvals for projects in his home state. He started his talk with a graph that showed that the USA is by far the leading country in the world in lowering emissions and that China and India are the leaders in increasing green house gases. He then stated that the thing Putin of Russia and XI f China fear the most is US energy independence and the ability to export. The Senator pointed out how the Biden Administration only likes renewable energy projects and tries to block traditional oil and gas projects that are good for Alaska and the USA. Alaska resources would help the U.S in attaining energy independence and not have to buy oil from governments that don’t like the USA like Russia, Venezuela, and Iran. The Willow Project which is being developed by ConocoPhillips on the north slope is on Federal lands. One of Biden campaign promises was to oppose all Trump policies including drilling on Federal Lands. While the Biden Administration has opposed the Willow project it has wide bipartisan support in Alaska including the local native population. Locals call opposition to the Willow project eco-colonization. The Senator said it is one of the most ecofriendly projects around. A final decision has not been made yet, but it is expected soon. Other Alaska projects being held up by this Administration are to develop strategic rare earth minerals. The Amber Rd project which would build a road to reach large strategic minerals reserves has been held up for 7 years. No end in sight for approval.
Next, we heard from Hon. John Kerry, Special Presidential Envoy for Climate, United States Department of State and ex-Sec of State under Obama. The Chair was Carlos Pascual of S&P Global. Mr. Kerry told him that he was there to have an honest conversation with no preconditions. He started with pointing out that there is a story to tell about climate change and what is happening to the planet. Mr. Kerry travels the world telling this story. The story is that burning fossils fuels changes the chemistry of the oceans which causes all kinds of bad things to happen like rising sea levels, more hurricanes, more severe storms, crop failures, etc. Mr. Kerry thinks the most immediate goal should be to meet the COP goals set in Paris. When asked if this was possible with out China and India doing their part, Mr. Kerry said that we must work hard to work things out with them. To save the planet, governments need to manage supply and demand. Government should set the amount of energy we use and what kind. India and China have to turn away from coal to renewables. While CO2 is a threat our current biggest concern should be methane. The good thing is there are many ways to manage methane. Governments can manage CO2 and methane through regulations basically by eliminating the use of fossil fuels. Mr. Kerry thinks that one of the alternatives to reduce CO2 and methane is the use of small modular reactors (SMRs). This technology has been around for a while but its nuclear. Nuclear still has a stigma against it. The Climate Envoy also stressed that Davos money needs to focus on developing green projects. The oil and gas companies also need to put more money into green projects because of the huge profits they make. He finished by stressing teaming up with government, business and academia to promote the Energy Transportation Initiative (ETI).
For the Luncheon & Plenary Daniel Yergin interviewed Mr. John Podesta, Senior Advisor for Clean Energy Innovation and Chair of the National Climate Task Force, The White House. Mr. Podesta also worked in the Obama Administration. The auditorium was packed. We heard about the strategies of the Biden Administration to electrify transportation and everything else. Mr. Podesta gave thanks to Senator Manchin that helped pass through the Inflation Reduction Act (IRA). Mr. Podesta and all the other administration officials at the conference said the main goal of the bill is to decarbonize the economy and eliminate the use of fossil fuels. The current Administration in Washington D.C. thinks that the environment cannot take much more without the immediate reduction of carbon in the atmosphere or face the threat of catastrophe. Another goal of the IRA is to reduce and simplify permitting regulations for clean energy projects. Regulations for oil and gas projects will increase and be more stringent. The carrot and the stick approach.
In the afternoon there were Plenaries covering Accelerating Energy Transition, with speakers from Bahrain, SLB, and the American Gas Association. Another one of the Plenaries covered “Energy Access and Economic Growth”. On the panel were Lord John Browne of Madingley, MD of BeyondNetZero and ex CEO of bp LLC, joined by Allan Schwartz, Chairman, Guggenheim Partners. In addition, Mr. Charif Souki, Chairman of Tellurian participated. The Chair of the Panel was Bob Dudley current Chair of Oil and Gas Climate Initiative, OGCI, and ex-CEO of bp LLC. Lots of Chairmans and CEO’s this day.
They all talked about moving forward through inclusion and diversity but Mr. Sharif added the importance of merit. That companies should stick to doing what they do best and not trying to social engineer things they are not good at. If you know how to find oil and gas do the best you can to find oil and gas. If you are a good refiner do the best you can. If you are good at LNG concentrate on that. If you ask companies to do to many other things you will distract them from what they do best. Quality goes down for everybody and cost will go up.
Day 2 Oil
Tuesday 7 March 2023
There is a focus on Oil this day as can be seen by the speakers list. It began with Darren Woods, CEO of ExxonMobil (XOM). Followed by Claudio Descalzi, CEO of ENI, then Anders Opedal the CEO of Equinor and Nawaf Al-Sabah the CEO of Kuwait Petroleum Company (KPC). For a contrast David Rubenstein the Co-Founder of The Carlyle Group gave comments on the macro situation from the point of view of a private equity firm.
Mr. Woods of XOM addressed the problem of carbon capture, CCS, and how his company is tackling the issue. ExxonMobil does believe and is investing heavily in carbon capture to reduce CO2 emissions. He went on to say that today the company is much more than just an oil and gas company. They manage energy including hydrogen and other renewables. It is important to note that while the trend is toward renewables that oil and gas will be around for a long time. Additional investments are still needed in oil and gas to keep supplies abundant and affordable.
The following speakers, who headed oil and gas companies including NOC’s, shared similar sentiments.
David Rubenstein of The Carlyle Group, one of the largest Private Equity (PE) firms, gave his perspective on current economic situation. He believes we are already in a recession mainly caused by the pandemic and inflation. Mr. Rubenstein also thinks that current inflation levels are going to be around for a while. That inflation will be difficult to pay for and our children and grandchildren will be stuck with the bill. He also feels that as we go back to work things will be very different. Less travel, fewer workers will be needed in the office and more work will be done from home. Investments in green energy will have to show better returns to compete with other types of projects. PE firms and regular investors are looking for companies to make a profit and give a better rate of return. Capital will always look for the best ROI.
During the mid-day session the audience heard from Bernard Looney, CEO of bp p.l.c. and Stephen Scherr, CEO of the Hertz Corporation. An interesting combination that was not readily apparent but quickly explained. The two companies had recently formed a joint venture to work together developing electric vehicle infrastructure. Hertz will continue to build its fleet of EV’s while bp will build charging stations to support the Hertz fleet nationwide. This is like last year’s announcement of PGE and Ford working together in California. Hertz has a huge fleet of automobiles and plans on going mostly electric. bp has been building charging stations in Europe and is planning similar projects in USA called giga hubs. After their presentation they were both going to meet Mayor Turner at Hobby airport to dedicate the opening of the first of these projects. Mr. Looney also made a point that when people start buying electric F-150’s the world is going EV. While Mr. Scherr made the point that it is cheaper to maintain an EV than gas or diesel autos.
The day finished with Dinner & Dialogue and was focused on ”Geopolitics: Reshaping the world”. Carlos Pascual of S&P Global was the moderator. There were speakers from the Brookings Institute, Suzanne Maloney, VP of the Foreign Policy program, Kori Schake the Director of Foreign and Defense Policy at the American Enterprise Institute. They were joined by Susan L. Shirk Founding Chair 21st Century China Center and Angela Stent, author of ”Putin’s World: Russia Against the West and the Rest”, and Professor Emerita at Georgetown University. The time was spent evaluating the terrible Ukraine/ Russia conflict and its implication regionally and around the world. Their conclusion was there was no end in sight and it could get worse especially if the Chinese got more involved.
Day 3 – Natural Gas and It was International Women’s Day
Wednesday 8 March 2023
The day started with Daniel Yergin introducing Patrick Pouyanné, CEO of TotalEnergies. This is one of the largest energy companies producing and shipping LNG in the world. They are also in many other energy related businesses. As the focus was gas Mr. Pouyanné spoke about recent events and how the reliance between Europe and the USA has grown especially when it comes to LNG. Since the invasion of Ukraine by Russia the Europeans have had to find alternatives to Russian natural gas especially since the NORD Stream pipeline was put out of commission. The reason for this is still under investigation and there is a lot of speculation to the root cause. Mr. Pouyanné said natural gas has a place in the transition to a cleaner planet as it is much more environmentally friendly than coal and other fuels and should be promoted and not burdened by overregulating. He suggested that the EU should follow the example of the IRA recently passed in the USA. Regulations need to be simplified to promote natural gas and attract investments. TotalEnergies is committed to natural gas and LNG and invests billions every year in all parts of the world.
In the morning the Agora Hydrogen Hub had several sessions. One about Ammonia: An accelerator for low-carbon hydrogen. Ammonia is a very good source of hydrogen and ammonia is made from natural gas which is abundant. The other session was about financing hydrogen projects. As hydrogen becomes more excepted as a fuel it will certainly attract larger investments and costs should go down.
In the transition to electrifying the economy batteries and rare earth minerals play a key role. On top of that is the logistics involved and the whole supply chain. Most of the raw mineral’s needed are in just a few places in the world so politics can be more important than economics. This was highlighted in a session with speakers representing mining like Rio Tinto and Freeport-McMoRan, the US State Department and Trafigura a large trading company.
The lunch speaker was the Sec. Of Energy the Hon. Jennifer M. Granholm. Her main message was that a large investment is needed to transition away from fossil fuels. Not billions but Trillions. One of the major steps forward took place when President Biden recently signed the Inflation Reduction Act (IRA). She did not mention much about the oil and gas investments need. The Administration is still evaluating the Willow project and a decision should come soon. On a separate subject the Secretary did remind the audience of the work being done by the National Labs which are under her Department.
There was a separate session in The Agora Studios dedicated to the Latest Innovations and Breakthroughs from the U.S. National Labs. Speakers came from National Renewable Energy Laboratory (NREL), Pacific Northwest National Laboratory (PNNL), Idaho National Laboratory (INL), and National Energy Technology Laboratory (NETL).
The evening session was dedicated to Women in Energy. Tze San Koh and Peter Clarke from ExxonMobil gave an introduction followed by dinner and talks by women from different fields in energy. Speaking was Enoh Ebong Director, U.S. Trade and Development Agency and Rebecca Kujawa President, NextEra Energy and Proscovia Nabbanja the CEO of Uganda National Oil Company Ltd. They all spoke about the challenges they faced growing and advancing in a male dominated field. With hard work and dedication they have made it to the top and broken the glass ceiling. Women are still in the minority in energy but if attendance at CERAWeek is any indication they are rapidly growing in numbers.
Day 4 – Power
Thursday 9 March 2023
One of the largest polluters in the world is power generation. The big question is how to balance growth and reduce emissions in emerging markets. There are still many parts of the world that need new sources of energy to grow and the cheapest way to accomplish this is to use coal.
To electrify the economy and go green, Shell CEO, Wael Sawan made the comparison of the USA approach and Europe. The carrot and the stick. This has been mentioned by other speakers. The USA is using the carrot with the Inflation Reduction Act (IRA) that promotes long term investments in renewables as opposed to the European approach that punishes investments in the short term with heavy regulations. Because of that, Shell is investing more heavily in the U.S. than the EU. Shell like most companies deploys capital to where its stakeholders can get the best return.
Back in the Agora Studios there was a meeting in the afternoon talking about the Expansion of Quantum Technology in the Energy Ecosystem. Quantum computing, quantum mechanics, quantum physics, quantum trading, and the list goes on. Quantum basically means a major leap forward in a particular field. Bob Parney of IBM did put it in perspective for the audience by stating that it will be a while before we see a quantum laptop. Quantum is used for solving massive problems and requires massive power supply. Quantum computers are huge. They are used for all kinds of things. An example is managing the security of the grid. Another example is calculating the amount of corrosion over the life of an airplane or building the next best battery. There is so much unknown space were Quantum computing can be used like going to Mars. The interesting thing is that you don’t need to be a quantum scientist to work in the field. Inputs are needed for all kinds of fields like business and finance. The latest thing one should learn in the quantum world is what is a Qubit?
There were numerous presentations and talks about electrifying the economy, from NextGen to NetZero. Diversity, Equity, and Inclusion were always mentioned in the sessions. But one of the most concerning matters was cyber security.
The last session of the day covered ”Securing Infrastructure: Cyber and other threats”. The speakers were Jen Easterly, Director of the Cybersecurity and Infrastructure Security Agency (CISA). Joining the discussion was Pedro Pizarro the CEO of Edison International a large utility. It is a new world were governments, companies and everyone is vulnerable to attack from hackers that can now use even more threating tools like Artificial Intelligence. AI currently is not regulated so there is no compliance and nothing to enforce. The safety implications are huge. So much needs to be done in this area to prepare for the upcoming threats. AI is now being used in identity theft and is a huge criminal enterprise.
Day -5 Closing Day
Friday 10 March 2023
It’s just a half day but still very busy. The Mayor of Houston, Sylvester Turner was there and asked for CERAWeek to be extended for one more week because it was so successful and good for the city’s economy. He offered free T-bone steaks. The mayor also reminded that Houston is still the energy capital of the world and does not demonize energy development. An example is the Climate Action Plan the city has with Shell. Houston also hosts to the largest rodeo in the world with over 1 million attendees. The city also has great shopping, restaurants, music and theater. It is the most diverse city in America. Mayor Turner declared this the best CERAWeek ever and he has been to many.
Besides the Mayor, we heard from the Hon. Lisa Murkowski, Senator from Alaska and Hon. Joe Manchin, Senator from West Virginia and Chairman of the U.S. Senate Energy and Natural Resources Committee.
Sen. Manchin said that one reason he voted to pass the Inflation Reduction Act was (IRA) that it would help clean the environment. In addition, it would help push through the Mountain Valley Pipeline project, a vital infrastructure project that would help build American energy security and independence. Sen Manchin also pointed out that transporting hydrocarbons via pipelines is safer than by rail or truck.
Sen Murkowski talked about how much Alaska could help in American energy security by approving the Willow project. This project has been waiting for permitting from Washington for over 20 years. Also, that besides oil and gas, Alaska holds some of the largest rare earth mineral deposits like graphite that are needed to electrify the economy. The Senator feels we are our own worst enemy in developing domestic resources by overregulating and permitting delays.
China was mentioned often during the conference especially their dominance in the chip war. The U.S. imports most of the chips that are used today to run almost everything from appliances to cars to computers.
In the closing comments, the audience was reminded that energy markets are constantly changing and that CERAWeek will be back next year 18-22 March 2024.
EnergiesNet.com 03 27 2023