Oil & Gas Industry aims to make global warming even warmer

Photo of oil well pumps
Oil well pumps. Image credit: CBC

There’s a growing mass mobilisation of world opinion against oil, which is “beginning to … dictate policies and corporate decisions, including investment in the industry” Mohammed Barkindo, the secretary general of OPEC said. Climate activists are “perhaps the greatest threat to our industry going forward”, he also said.
— from The Guardian and other press reports, July 5, 2019.

Mr. Barkindo is like the arsonist who sets fires for money and then complains that fire engines are threatening his business. He should know that ‘climate activists’ are not the only people delivering unwanted messages to the Oil & Gas Industry about global warming. Similar (although milder) messages are originating from within the industry’s own ranks. The problem is that, as yet, most of the industry’s bosses refuse to listen.

The International Energy Agency (IEA) is an intergovernmental body established in 1974 following the 1973 oil crisis. The agency’s purpose at the time was to respond to disruption in the supply of oil. Its mandate has since expanded and the agency now acts to provide member states, as well as as Russia, China, and India, with information and policy advice on energy security, economic development, and Environmental Protection.

The following chart in the IEA’s World Energy Outlook, shows the Agency’s estimate of total world energy demand to 2040 under what it calls its New Policies Scenario (NPS). The NPS, the report says, “Incorporates existing energy policies as well as an assessment of the results likely to stem from the implementation of announced policy intentions.” In other words, the chart represents the IEA’s business-as-usual prediction. The chart shows demand for fossil fuels (Natural Gas + Coal + Oil) steadily rising beyond 2020.

Estimated World energy demand by IEA
Estimated world energy demand to 2040 – business as usual. Image: International Energy Administration (IEA)

The next chart is from the same page of the same IEA report. It shows the Agency’s estimate of total world energy demand to 2040 under what it calls its Sustainable Development Scenario (SDS). The SDS, the report says, represents “an integrated approach to achieving internationally agreed objectives on climate change, air quality and universal access to modern energy.” In other words, the chart shows what the IEA estimates will happen to world energy demand, should the signatories to the Paris Accord follow up on on their commitments. Result: fossil fuel production falls.

The IEA’s estimated world energy demand to 2040 - Sustainable Developmemt Scenario. Image: IEA
The IEA’s estimated world energy demand to 2040 – Sustainable Development Scenario. Image: IEA

In what way is the Oil & Gas Industry reacting to this obvious policy message from a respected industry policy advisor? (1) It tries to ignore it. (2) It works to undermine the message in any way It can. One way it works to undermine the message is to produce estimates of its own showing that the world needs more fossil fuels, not less.

The following bar chart from BP’s ‘2018 Energy Outlook’ shows estimates of GROWTH in total worldwide energy consumption to 2040 according to nine different fossil-fuel focused organizations. All of them predict growth in the consumption of fossil fuels ranging from 0.3% to 0.9% per year. Note that BP has included an IEA estimate (4th from left), but one that is based on the Agency’s business as usual scenario, not on its Sustainable Development Scenario.

Bar chart showing growth to 2040 in worldwide energy consumption according to various organizations
Estimates of GROWTH to 2040 in total worldwide energy consumption according to various fossil-fuel-focused organizations. Image: from BP 2018 Energy Outlook

BP =   BP plc (formally British Petroleum)
CNPC = China National Petroleum Corporation
EIA = U.S. Energy Information Administration
IEA = International Energy Agency (OECD)
IEEJ = Institute of Energy Economics (Japan)
IHS = IHS Inc (a London based ‘Information Handling Services’ Company)
OPEC = Organization of Petroleum Exporting Countries
Statoil = Statoil ASA (Norwegian state oil co. now called Equinor)
XOM = ExxonMobil Corporation

Here’s what  BP says about its prediction labeled ‘BP ET scenario’ (first bar in the chart): Our report’s “Evolving Transition scenario suggests that a continuation of the recent progress and momentum in policies and technologies is likely to cause the growth in carbon emissions to slow markedly relative to the past. But this slowing falls well short of the sharp drop in carbon emissions thought necessary to achieve the Paris climate goals. We need a far more decisive break from the past .” (my underlining)

In other words, BP’s prediction assumes ‘business as usual’ as do all the other predictions shown in the chart. BP tries to distance itself from the implications of its own report by stating that the scenarios in its report “are not predictions of what is likely to happen or what BP would like to happen.” Nevertheless, its business as usual ‘scenario’ is taken by other Oil & Gas Industry heavyweights as a valid prediction that supports the industry’s business as usual behaviour.

For example, while ExxonMobil’s report titled ‘2019 Energy and Carbon Summery’ is peppered with references to emissions reduction and the goals of the 2015 Paris Accord, the company’s true position is exposed by two statements on page 9: “Natural gas will expand its role, led by growth in electricity generation and industrial output” and  “Rising oil demand will be driven by commercial transportation and the chemical industry.” See last bar in the chart.

BP’s ‘2018 Energy Outlook’ contains a surprisingly frank statement (underlined above) concerning the Paris Accord and how to achieve its goals. “We need a far more decisive break from the past” the writer of the report states.  Very true. Thing is, the decisive break from the past is going to hit the industry whether it likes it or not. More storms, more droughts, more floods, and more climate activists will see to that.

In the mean time, there’s only one way to meet the Paris climate goals and that is to cut fossil fuel production. Taxing carbon emissions will not do the trick; that’s just a silly game and the fossil fuel pushers know it. Taxing fossil fuels at the well or mine head and/or at ports of entry will work. Better still, mandate the elimination of fossil fuels as some jurisdiction are already beginning to do. One thing for sure: don’t expect help from the fossil fuel crowd. They are not part of the solution, they are the problem.

ExxonMobil: savvy company or a dinosaur with climate-killing instincts?

Photo of ExxonMobil sign

Interviewed on TV March 7, Darren Woods, CEO of ExxonMobiI, was asked how politics and the Green New Deal could affect his approach to running the company. His responses reveal plenty about the vulnerability of his company; more than speeches by industry executives typically deliver.

ExxonMobil is the largest publicly traded oil and gas company in the world. Its operations generate correspondingly large volumes of carbon dioxide, the cause of our global warming crisis. The company’s operations affect every living thing on the planet. That’s why the people who direct those operations must be watched closely. To make Mr. Woods interview responses easier to follow, they’ve been transcribed from spoken to written form and presented within quote marks below. The underlining is mine. Mr. Woods first tackles the part of the interviewer’s question that he’s most comfortable with, the political part:

“Energy is such an important part of people’s daily lives and their standard of living that as you think about these big ideas and as you translate them down to the smaller practical steps you take, people become very cognizant of what the impacts are for individuals, and as that starts to happen, people’s views change as to how far they can go and how quickly they can go.”

See how easily Mr. Woods brushes aside “these big ideas” i.e. the Green New Deal. The Green New Deal is a political idea and Mr. Woods is no stranger to politics. However, the Green New Deal is based on the availability of actual machines that can be seen today producing electricity at lower cost than electricity from fossil fuels. That’s the crux of the matter. Unlike ideas, machines that people can see and touch are impossible to brush aside. Watch as Mr. Woods struggles with that reality in the following paragraph:

Our approach to that is to try to be part of the solution and engage with that. We have a long long history in this industry and a really good perspective on the global energy system, and we’re a company that’s grounded in science and technology, and if you look at the risk of climate change and what people and society are focused on in terms of lower emission energy systems, we’re going to need some technology breakthroughs. The conventional technology set doesn’t address the gaps that are out there today. We think we can play a role in that. In fact that’s where we’re investing some of our technology and our RD dollars to help fill some of those gaps.”

There you have it. As soon as Mr. Woods gets close to the crux of the matter, he backs away. Apparently unwilling to even mention the existence of green technologies, he implies that they don’t exist. Then he asks us to imagine gaps that need filling with “breakthrough technologies.” What Mr. Woods is saying is that the fossil fuel industry Is not equipped to deal with the climate problems it has created. Prompted by the interviewer, Mr. Woods now goes on to tell us how his company is working hard to invent the “lower emission energy systems” that the world needs.

Well, there are lots of different ideas out there. The way we look at it is that its got be be scaleable, it’s got to work at scale, and ultimately it’s got to be economic so that people can afford it, and it’s got to be reliableSo one of the things that we’ve been working on for many years is algae, biodiesel from algaeand the reason for that today is that we don’t have a good solution set for commercial transportation and emissions from commercial transportation, and algae and biodiesel could do that. Carbon capture and storage is another area that has potential but today the economics are very challenging, so finding more economical methods for capturing carbon is another exciting area. We’re looking at how you utilize the carbon you capture; what do you do with it? You can store it underground and you can also turn it into other products. So we’ve got a lot of research in terms of how you might use carbon and turn it into another product that society could use. So there’s a lot of exciting stuff happening in this space and we’re participating pretty broadly in that technology space. We’ve got relationships with eighty universities around the world. We’re working with the National Lab. We’re working with  governments around the world. So we’re trying to stay plugged in to make sure that we’re contributing as we can.

That’s it. The world is threatened by climactic Armageddon and the best ExxonMobil can come with by way of potential fixes are biodiesel and carbon capture. Biodiesel is not a global warming fix; nor is carbon capture. Carbon capture is an economic loser. A fossil fueled machine that’s already economically challenged will become even more uneconomical after another machine is attached to its smokey ass. An eight year old could tell them as much. So what’s going on? Is the idea’s primary purpose to calm the nerves of skittish investors — a line of bull to make the company’s prospects look sound? I suspect it is. ExxonMobil is not a savvy company.

As Mr. Woods correctly points out, energy technologies must work economically and reliably when scaled up to commercial size. That’s exactly what green technologies — photovoltaics, wind turbines, battery storage systems — are doing right now. That’s why Mr. Woods doesn’t mention them; they are an existential threat to the fossil fuel industry and are taken seriously by that industry.

The Green New Deal, however, is not taken seriously by its detractors. Why? Because it’s not a real thing, it’s an abstraction. That’s what makes it difficult to promote successfully. Advice to the Democrats: promote the work the green technologies are doing right now; win the next election; then introduce the Green New Deal.

The following YouTube video shows Mr. Wood’s TV interview of March 7, 2019.  The first two and a half minutes is the part of the video discussed in this post.