© Reuters. FILE PHOTO: Signage for the CERAWeek energy conference is displayed at the entrance of the Hilton Americas-Houston, in Houston, Texas, U.S. March 9, 2022. REUTERS/Sabrina Valle/File Photo
By Liz Hampton
HOUSTON (Reuters) -Top energy executives and officials from around the world will descend on Houston next week just as the political fallout from Russia’s invasion of Ukraine a year ago continues to distort global oil supply lines and put long-term energy security front of mind for governments.
Oil company chiefs and ministers will make their case for investment in all forms of energy – fossil fuels and renewables – to meet rising demand and at the same time accelerate the move toward the low-carbon industry of the future.
A record 7,000 people have signed up for the week-long CERAWeek discussion of fossil fuels, clean energy, advanced energy storage.
The war in Ukraine sparked a rally in and fuel prices that led to record industry profits, prompting the U.S. government and others to accuse Big Oil of profiteering and for Britain and some other governments to impose windfall taxes on energy companies.
Big Oil executives and U.S. government officials will likely trade blows publicly again as they did at last year’s event. While the U.S. and many Western governments continue to call on oil firms to pump more, executives at top oil firms say they have a duty to their shareholders to maximize returns for staying invested in an industry which faces an uncertain long-term future.
This year’s presenters also reflect ongoing clashes over supply and demand between the Organization of the Petroleum Exporting Countries, Europe and the U.S. that have led to some visible vacancies.
Instead, Shell (LON:)’s newly-appointed Chief Executive Wael Sawan will join BP (NYSE:)’s Bernard Looney, Exxon Mobil Corp (NYSE:)’s Darren Woods, Chevron (NYSE:)’s Michael Wirth and TotalEnergies’ Patrick Pouyanne in prominent roles.
“We will get a sense of how companies’ strategies have been changed by the events of the last year,” said Dan Yergin, the Pulitzer Prize-winning author and vice chairman of conference organizer S&P Global (NYSE:), in an interview.
BP’s Looney will share the stage with Hertz car-rental CEO Stephen Scherr, whose firm has become an energy transition champion with plans to buy tens of thousands of electric vehicles from General Motors (NYSE:) , Polestar and Tesla (NASDAQ:) .
“The industry is on board with the energy transition, ESG and decarbonization, but there is a recognition that we are going to need hydrocarbons from an energy reliability and security standpoint,” Pat Jelinek, EY Americas oil and gas leader, said of the return to prominence of Big Oil executives.
WHERE’S OPEC AND SHALE?
Speakers include oil ministers from Africa and Asia, where balancing energy security and the threat of climate change are paramount. There are no officials from Russia, which in the past has sent its energy minister, and much fewer OPEC participants.
Noticeably absent from the agenda are oil ministers from Saudi Arabia, Iraq, Kuwait and the United Arab Emirates. OPEC’s output cut of 2 million barrels per day (bpd) last November led to a bitter row with the U.S., as President Joe Biden was fighting mid-term elections and high gasoline prices – issues that nearly cost him a majority in both houses.
Top shale executives also will get less of the limelight. U.S. shale also battled with the Biden administration over oil drilling restrictions and a lower investment in new output. Shale has become less of a factor in global markets, and tensions between OPEC and shale are less intense than they used to be.
Executives from shale bigs Hess Corp (NYSE:), EQT Corp (NYSE:) and Pioneer Natural Resources (NYSE:) last year dined with the late OPEC Secretary General Mohammad Barkindo. Barkindo received a gift bottle of “Genuine Barnett Shale,” the oilfield that launched the shale revolution.
U.S. shale also has been overshadowed by Big Oil as the companies grapple with slower gains and tight-fisted investors. Total U.S. oil production is forecast to rise modestly this year – less than 600,000 bpd – compared with a jump of about 2 million-bpd in 2018.
“U.S. exploration and production companies have moderated growth,” said Andy Hendricks, CEO of U.S. driller Patterson-UTI (NASDAQ:), leaving OPEC “in charge of oil prices.”
While geopolitical strife continues elsewhere, next week’s get-together will feature technological innovation in oil and liquefied (LNG) alongside, electric power, hydrogen and carbon capture.
“There’s never been such a focus on innovation of technologies across the energy industries,” said S&P’s Yergin.
Some 225 start-ups will participate, a 60% increase from a last year, many of which got a shot in the arm from Biden’s Inflation Reduction Act, which provides tax credits and incentives for low-carbon and clean energy technology.
U.S. Energy Secretary Jennifer Granholm and White House clean energy advisor John Podesta will lay out implementation of the Inflation Reduction Act, said S&P Global’s Yergin.
“The amount of renewables that we’re going to have to build over the next decade is enormous, and I don’t think everybody has really digested the scope of that,” said Andres Gluski, CEO of energy and utility giant AES (NYSE:) Corp.
French climate investments to drive up national debt burden – think-tank
© Reuters. FILE PHOTO: French President Emmanuel Macron visits Institut Curie laboratory ahead of announcements on biomedical research in Saint-Cloud, France, May 16, 2023. REUTERS/Benoit Tessier/Pool
PARIS (Reuters) – Investments that France needs to finance its transition to a low-carbon economy are set to add 25 percentage points to its debt burden by 2040, a report from the government-funded France Strategie think-tank said on Monday.
France will need to make additional annual investments of about 67 billion euros ($74 billion) – more than 2% of economic output – by 2030 to meet its objectives for reducing its dependence on fossil fuels, France Strategie calculated.
The think-tank, which is part of the prime minister’s office, said the financial effort would weigh heavily on public finances partly because the investments imply lower potential growth, which would cut tax revenues.
As a result, the debt burden would rise by 10 percentage points by 2030 and 25 percentage points by 2040, which France Strategie suggested might need to be financed in part by a temporary tax on wealthy households.
President Emmanuel Macron’s government has hoped to chip away in the coming years at France’s national debt, which currently stands at slightly more that 111% of gross domestic product after surging during the COVID crisis.
The report said the financial burden of investing in Europe’s energy transition also posed a risk in terms of international economic competition, as other major economies such as the United States and China were less concerned about budgetary constraints.
About 100 experts in French and European research groups as well as public French institutions participated in the report, which was led by economist Jean Pisani-Ferry, who previously helped Macron draft his economic programme.
($1 = 0.9084 euros)
Crude oil largely flat; Caution ahead of debt ceiling meeting
Investing.com — Oil prices traded largely unchanged Monday, with traders cautious ahead of the resumption of U.S. debt ceiling negotiations while supply concerns add support.
By 09:30 ET (13:30 GMT), futures traded 0.1% lower at $71.59 a barrel, while the contract fell 0.1% to $75.52 a barrel.
U.S. President Joe Biden and Republican House Speaker Kevin McCarthy are set to meet later this session to try and agree on a deal to raise the more than $31 trillion debt ceiling.
Concerns that a failure to come up with an acceptable compromise have weighed heavily on the market over the recent weeks, as this would result in the U.S. defaulting on its debt obligations, likely plunging the global economy into recession.
The U.S. Treasury has warned that the government could run out of money to pay its bills as soon as June 1.
That said, both crude benchmarks managed to post gains last week, ending four straight weeks of heavy declines, helped by the U.S. starting to refill its Strategic Petroleum Reserve as well as the supply disruptions in Canada, due to early wildfires in the crude-rich Alberta province.
Additionally, the latest data from showed the U.S. oil rig count fell by 11 over the last week, to its lowest count since June 2022.
“A slowdown in U.S. drilling activity is a concern for the oil market, which is expected to see a sizable deficit over the second half of the year,” said analysts at ING, in a note.
“Producers appear to be responding to the weaker price environment, rather than expectations for a tighter market later in the year.”
This brings the Organization of Petroleum Exporting Countries and allies, known as OPEC+, firmly into focus, with its next meeting in early July.
The cartel surprised the market with an output cut at the last meeting, which came into effect at the start of this month. However, this has done little to support crude prices, implying the members may be looking at a further reduction in production.
The fact U.S. producers are not increasing in number will be good news for OPEC+, ING added, “as it suggests that they will be able to continue supporting prices without the risk of losing market share to U.S. producers.”
California grid operator signs off on $7.3 billion of power lines
© Reuters. FILE PHOTO: A woman jogs by power lines, as California’s grid operator urged the state’s 40 million people to ratchet down the use of electricity in homes and businesses as a wave of extreme heat settled over much of the state, in Mountain View, Californi
(Reuters) – California’s electric grid operator has approved a plan expected to cost $7.3 billion for 45 new power transmission projects over the next decade and made it easier for new power plants in high-priority areas to connect to the grid.
The projects will support the development of more than 40 gigawatts (GW) of new generation resources, the California Independent System Operator (CAISO) said on Thursday.
“With electrification increasing in other sectors of the economy, most notably transportation and the building industry, even more new power will be required in the years ahead,” the CAISO said.
The vast majority of the transmission projects will be built in California, with some in neighboring Arizona, it said.
The power lines recommended by CAISO’s 2022-2023 Transmission Plan will allow the state’s grid to add more than 17 GW of solar resources, 8 GW of wind generation, 1 GW of geothermal development, and battery storage projects.
CAISO will prioritize connecting power plants to the grid in specific geographical zones identified by its plan where developing new power lines and plants “make the most economic and operational sense.”
The grid operator also approved proposed reforms to account for “increasing levels of net load forecast uncertainty between day-ahead and real-time markets … as the generation fleet evolves towards a cleaner, but more variable, resource mix.”
It projected that its transmission plan next year could include the need to add 70 GW of new power to the grid by 2033, rising to 120 GW as the state seeks to meet its goal of a carbon-free power system by 2045.
Power supply in the U.S. West is vulnerable to extreme heat as it relies on regional energy transfers to meet demand at peak or when solar output is diminished, the North American Electric Reliability Corp (NERC) said in its summer outlook on Wednesday.
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