Bud's Offshore Energy (BOE)

Washington Post article (mainly commentary) on the Hess acquisition. Excerpts:

WP: “Chevron is acquiring oil driller Hess in a $53 billion all-stock deal announced Monday, bringing the energy giant deeper into the fossil fuel business at a time when policymakers are pressing for a broader transition to renewables.”

Comment: Many who live and work outside of the Post’s policy bubble differ on the urgency and practicality of the transition. Their primary concerns are reliable, secure, and affordable energy. Many elected representatives agree, which is why there is little national support for legislation restricting fossil fuels and imposing rigid transition timelines. Administrative actions, like the 5 year leasing plan, that handicap US offshore production are also being questioned.

And what are we transitioning to? Wind and solar are intermittent energy sources that can complement fossil fuel power generation, but not replace it. Nuclear energy has strong proponents, but faces stiff opposition, much of which is from the same groups that oppose fossil fuels. Other energy alternatives like ultradeep geothermal are very promising but are still years away.

WP: “The investments run counter to U.S. and global climate policies, which aim to rapidly phase out the internal combustion engine and shift power grids to zero emissions energy. The International Energy Agency reported last month that demand for oil, gas and coal will peak by 2030 before going into a steady decline, leading its executive director, Fatih Birol, to warn oil company executives that decisions to double down on fossil fuel infrastructure could prove misguided.“

Comment: Fortunately, IEA does not dictate corporate investment decisions. Perhaps IEA should look more closely at their own forecasts which show essentially no decline in oil or gas demand through 2050. Their assertion that demand for all fossil fuels will peak by 2030 is based on their speculative forecast calling for a sharp decline in coal demand, even though coal consumption is currently at record levels. IEA’s forecasts are also dependent on questionable assumptions such as this: “50% of new US car registrations will be electric in 2030.”

S&P Global sees oil demand rising by about 7 million b/d to 109.3 million b/d in 2030, before a gentle decline in the latter half of the 2030s, with oil falling to 100.8 million b/d in 2050. OPEC expects global oil demand to rise to 110 million barrels per day (bpd) and overall energy demand to rise 23% by 2045.

WP: “Still, the massive acquisitions from both Chevron and Exxon indicate their executives believe fossil fuels will continue to drive their business well into the future. Emphasizing affordability, company executives have said they see oil and gas alongside renewables.”

Comment: Spot-on. The WP could have shortened their commentary to these 2 sentences.

WP: Alex Witt, senior adviser for oil and gas at the advocacy group Climate Power, said the Hess acquisition shows the company’s true priorities. “Today’s news proves what we already knew — Chevron executives only care about the short-term, putting potential profits over the lives of families and the future of our planet,” Witt said in a statement Monday.

Comment: Or perhaps both Chevron and the lives of families will benefit, as they have in the past.

Read Full Post »