I have spent a lifetime watching new market segments emerge, mature, get disrupted, morph and consolidate. The energy sector is going through a massive disruption and renewal. If I were building a 'magic quadrant" I would factor wind, solar, tidal, nuclear fusion, oil and gas, hydroelectric, biomass, geothermal and other alternative energy sources. My view is we need all of the above so we don’t have to become dependent on tyrant politicians or businesses. I wrote recently energy independence is as important as a focus on emissions.
And as I have in many tech sectors, I would be listening to pitches and doing a lot of research around each. And sure enough there would be bad-mouthing, with players calling the other evil and worse. My job is to ignore that noise.
I have been talking to a number of oil industry executives and listened to a couple of interviews Darren Woods, Chairman and CEO of Exxon Mobil has done recently including one below. It is one of the largest publicly traded international oil and gas companies.
Here are some of his remarks (slightly edited) about his company, his competition and his thoughts on public policy. He is feisty at points, but generally, comes across as a geek and an economist, something I like when I listen to vendor pitches.
- We've been doing this for 100 years. When we first started out, we were basically making kerosene for lighting. When the electric light came on, we were moving into gasoline. We've moved into chemicals. And so, this industry and our company have been evolving since its inception.
- We are a company that knows how to manage and manipulate hydrocarbon molecules. What we're trying to manage with the energy transition, it's essentially a hydrocarbon, CO2 carbon management challenge. And that's right up our alley.
- The more folks we engage trying to solve this (transition to low-carbon) problem, I think the better off the world is going to be. I've seen a big difference just in the last several years with the number of different companies, big thinkers, focused in this space.... I mean, two years ago, it was wind and solar, period. Today, it's wind and solar, and you got carbon capture and hydrogen and biofuels and ammonia. (Btw, he did not touch on the potential of many other sources I made above. As a CEO, he sees the competitive landscape differently than I do as an analyst)
- Ultimately, I think, by 2040, every vehicle in the world could be electric. And so, you would not have gasoline sales. Oil demand would (still) be what it was back in 2013/2014 time frame. We were pretty successful business in 2013/2014 . So, our view (is EVs are) not going to make or break this business or this industry.
- What's driving growth in demand for oil is chemical products, which play a really important role in people's lives today. The other big driver is industrial fuels, transportation fuels, and so heavy duty.
- Europeans are making a strong case for green hydrogen which is made through electrolysis. Blue hydrogen is developed primarily through methane, and then capturing the CO2 that comes out. The US has abundant methane, we've got abundant places to store CO2. And so, the answer for hydrogen in the US I think, is going to be blue hydrogen. In Europe, they don't have the same abundance of methane, they don't have the same co2 capture capacity. So, electrolysis and green hydrogen makes more sense for them. And so rather than coming out with a dictate that says it's got to be green hydrogen versus blue hydrogen is let the market figure it out. What we will find as you go around the world, that the natural endowments, the advantages that you see, the technology progress, you see is going to manifest itself differently.
- I think political leaders ought to be focusing on how we get to a solution and working collaboratively. Not only with NGOs, but with businesses that have the experiences and the skills and the understanding to figure out solutions that help meet all of society's needs, not just one aspect.
- Don't incentivize one technology because you think that's a better answer than the other. Put incentives out there for all technologies and let the productive capacity of the market work, let the technologies of companies go to work to solve those problems. We are an advocate for a uniform price on carbon across the economy is because it incentivizes every individual player, irrespective of the industry or in respect of the technology that you support. You put your effort into finding a solution to capture that value, and reduce CO2. It's too complicated, it's too difficult to predict exactly what the solution is going to look like. Instead, we should put the incentives out there and let the market do what the market does.
- We've been doing this for 100 years. In the technology space, people recognize that we're serious, we have capabilities, and we're at the table, trying to bring solutions to that. We have a reputation for doing big projects, at scale, convening industries, bringing together different parts of governments, other commercial enterprises to come up with big picture solutions.
- We could spend forever debating what was said 30 years ago or we can focus on what are we doing today to try to make progress in this very complex space. I'm very proud of what we're doing today. And I think we will make a big difference; we will be an important part of the solution.
Recent Comments