Guest “I couldn’t make this sort of schist up if I was trying” by David Middleton
‘Constraining oil supply is key to cutting demand’
INTERVIEW: Follow This founder Mark van Baal talks exclusively to 💥Energy Flux💥
Oil prices might be riding high on robust post-Covid demand, but don’t expect supply-side pressures to relent. Follow This, the Dutch pressure group whose climate resolutions are winning over investors, is redoubling its campaign to force international oil companies to slash Scope 3 emissions this decade. Outspoken founder Mark van Baal believes this won’t happen unless shareholders oblige IOCs to halt exploration and invest in renewables. He told Energy Flux that the onus is on Western IOCs to lead the oil industry into a post-crude future – and ignore short-term market signals along the way.
Oil is the new tobacco. ESG investing is all the rage on Wall Street. Even providing IOCs with services such as underwriting or advanced computing is becoming frowned upon – let alone financing their exploration and production activities.
Combined with insatiable demand for commodities to fuel the global economic recovery, these factors are conspiring to keep oil prices high. Yet IOC shareholders are increasingly voting to tie the hands of Big Oil bosses, who hope to secure bumper profits during a period of structural market tightness.
Amsterdam-based pressure group Follow This has been instrumental in energising this movement by tapping into shareholder appetite for change. The organisation won notable victories this year at the AGMs of Chevron and ConocoPhillips, and support for its climate resolutions is rising among shareholders at BP and Shell.
Mark van Baal is adamant that stoking the fires of discontent among typically conservative institutional shareholders is the only viable route to emissions reductions.
Translation: “Mark van Baal is adamant that stoking the fires of discontent among typically conservative institutional shareholders is the only viable route to” free unicorn ponies for everyone.
Mark Van Baal, you’ve earned a Billy Madison Lifetime Achievement Award with a Ron White Oak Leaf Cluster Frack!
Guess what happens to divested assets…
A $140 Billion Asset Sale: Investors Cashing in on Big Oil’s Push to Net Zero
The pressure on listed oil majors could have unintended consequences if production passes to private or state-owned companies.
Anjli Raval, Financial Times
Thu, 07/08/2021 – 03:00 AM
One company’s transition away from fossil fuels is another’s opportunity to double down.
Under intense pressure from investors and activists to take more action on climate change, some of the world’s biggest oil and gas companies are putting billions of dollars’ worth of assets up for sale.
Watching from a distance are people like Brian Gilvary, the head of Ineos Energy, an arm of the private UK chemicals company. As many energy companies try to shift from oil to gas and lower-carbon technologies, Ineos is buying up unwanted fossil fuel assets.
[…]Hart Energy (subscription required to read full article) Link to original Financial Times article
Smaller, more aggressive companies will snap those assets up.
To make matters even more hilarious…
Jul 8, 2021,08:45am EDT
Can One Man’s Vision Lead The Shale Industry Out Of The ESG Desert?
David Blackmon Senior Contributor Energy
As the consolidation of the upstream, E&P sector of the U.S. shale business continues to heat up, there is debate over whether it is taking place too slowly, just fast enough, or too quickly for the good of the industry. Based on what he told me in a recent interview, you can put Ben Dell, Chairman of the Board at DJ Basin producer Civitas and Managing Partner at the Kimmeridge Energy Management private equity company, down on the side of “too slowly.”
“That’s all coincided with this ESG narrative,” Dell continued, “and you can debate which one came first, but it’s been accelerated in my view by COVID. But you’re finally at a turning point in the industry where you are beginning to see what I call the three pillars of reform to actually make the sector investible again. This is important because this sector has got a long way to run. It’s not going to be done in 10 years – probably won’t be done in 50 years if we’re brutally honest about it – and there’s a lot of profitability still to be generated.”
Dell’s three pillars include:
1) Establishing a profitable business model that creates a return above the cost of capital and returns free cash flow to investors;
2) Establishing a corporate governance model that is aligned with the goals of investors and which bases executive compensation on metrics aligned with those goals; and
3) Getting to net-zero on emissions.
Regarding that third point, Dell asks, “One of the things I ask people is, if all the E&Ps were net zero and have no carbon footprint, or if you could sequester carbon for a dollar, would you change any of the energy infrastructure you have today? And most people say ‘no,’” he said. “Because, why would you change it? It works well, it’s very functional. Why would you invest trillions of dollars in something else if what you already have works?” Good question.
“For the E&Ps, the question right now is do they have a license to operate?” Dell continued. “My view is, if you are net-zero, you are earning your license to operate. If the entire E&P space is net-zero, why wouldn’t you have it? What is the argument at that point? Then it’s just politics, and some people will say, well, I just don’t like it. Some people just hate the industry, and you can’t really address that. But that’s not really a strong, sticking argument over time. So, my goal is to be net-zero.”
Dell believes that the entire E&P industry, and ultimately every step in the oil and gas supply chain, is going to have to get to net zero in order to retain its license to operate in the United States. “We saw Devon come out with a commitment by 2050, Diamondback has done it, everyone’s ultimately going to follow suit. It’s an inevitability,” he said.
“We want to be at the forefront of that movement. We want to set the standard. And if you can, you want to attract capital, to get a lower cost of capital, because if you can trade at a premium, it can only help you accelerate consolidation by taking out the poor performers in the basin.”
Most oil & gas companies could get to net-zero Scope 1 & 2 emissions by injecting a modest volume of CO2 into depleted reservoirs and/or saline aquifers or through enhanced oil recovery operations. Some oil companies, like Denbury are already on the path to Scope 3 net-zero, if not “carbon negative” oil production. See Energy Transition: Blue Oil Edition.
If Little Oil was able to snap up Big Oil’s assets and then achieve something close to net-zero CO2 emissions, the war on fossil fuels would be laid bare for what it is: A bunch of whiny Enviromarxist greentards demanding free free unicorn ponies for everyone.