By Paul Homewood
h/t Ian Magness
AEP see the light!
Climate Remain chose the wrong target in defaming BP. It is a futile mistake to smear every oil and gas company with the same brush.
Bernard Looney’s BP is doing its part to decarbonize the world in a way that doesn’t cause energy turmoil in the process and doesn’t provoke political backlash. The same is true of all European “specialties” to varying degrees.
Contrary to media headlines and harsh criticism from Greenpeace, Friends of the Earth and the Liberal Democrats – who should have known better – BP is not retreating from renewable or clean energy. The company is harnessing its booming oil and gas profits to make green hydrogen a commercial reality in this country rather than a pious dream.
At the same time, they are investing an additional £1 billion annually in oil and gas, focusing on “short cycle payback” wells to exploit rising prices and respond to the impending supply crunch in the coming weeks. mid-2020s
Yes, it is also paying off debt and paying dividends to pension funds and retirees struggling to deal with fuel bills. It is taking the necessary steps to maintain a viable commercial company that can resist takeovers by powerful rivals with very different climate ideologies.
Green realists should recognize the tactical wisdom of BP’s plan to slow fossil escape this decade. Its upstream spending will focus on boosting pipelines from existing rigs capable of producing within one to three years. These include small “joint” projects such as Seagull and Merlach in the North Sea for crude oil; or Cypre and Mento in Trinidad for gas.
This is not unlike BP’s retreat from renewables after Lord Browne’s tenure, when the company went green too soon and lost money as it became (for a short time) the world’s leading company. world of solar energy.
BP Energy Outlook This month is in many ways an extraordinary document. It concluded that global demand for oil and fossil fuels peaked in 2019, even China is about to roll. It rang the toll bell for Big Oil.
That is not to say that this vast and complex system cannot be moved to net zero emissions by 2050. The International Monetary Fund and the International Energy Agency say the alternative technology is already so cheap that decarbonization can be done at a negative net cost – that is, with an economic benefit.
But it cannot be done by cutting off supplies or by Puritan mantras of “degradation”. People will not be willing to suffer economic downturns and food distribution.
Vladimir Putin’s energy war has shown us how quickly societies will fight climate goals if the transition becomes disorderly and threatening. We lost only 120 billion cubic meters (BCM) of Russian gas supplies from the global market of 4,100 BCM. That was enough to shake our democracies.
There will always be an energy crisis this decade – regardless of Ukraine – because the world faces a structural supply deficit. Rystad Energy says upstream investment in oil and gas reached more than $800 billion a year at the beginning of the commodity supercycle in 2014. It has reached nearly $400 billion in recent years.
Daniel Yergin, energy expert at S&P Global, calls it “under-investment”. Cycle has played its part, but so has a net zero signal, with concerns about trapped assets and long-term risks from climate litigation.
Old fields are running out. Some new projects coming soon. Shale drills have mined the best seams in the Permian. The “expected final rebound” of wells has fallen this year for the first time since the fracking boom began.
Investments in nuclear, renewable energy and electrification have not paid off. It needs to grow 2.4 times this decade to close the gap.
“The world is underinvesting in all forms of energy,” said Jason Bordoff of Columbia University.
The danger of a failed transition is now all too clear, as is the risk of an early and misplaced divestment campaign from the well-run large Western oil companies, which companies have much lower methane emissions than bad actors, and help enhance the energy security of our democracies.
https://www.telegraph.co.uk/business/2023/02/14/climate-activists-would-applaud-bp-had-profit-sense/
Not long ago, of course, the AEP ruined the fossil fuel industry, emphasizing that its days are over and warning about stranded assets:
And it is the naive assumption that renewables will replace fossil fuels overnight that has led to overinvestment in fossil fuel projects.
As the IEA projections above make clear, we may still need roughly the same amount of oil in 2050.
It’s a pity that AEP didn’t wake up to the real world a few years ago.
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