It’s the first day of CERAWeek by S&P Global in Houston, one of the biggest events on the calendar for the energy industry, with over 1,000 CEOs, policymakers and financiers due to speak.
This year’s event is framed around the so-called trilemma facing global energy: ensuring security of supply amid war and geopolitical tensions, while also transitioning toward a zero-carbon system and keeping energy affordable.
All time stamps are Houston.
Baker Hughes CEO Planning for Multiple Years of Oil, Gas Growth (4:55 p.m.)
Baker Hughes Co., the world’s No. 3 oil field-services provider, is gearing up for years of expansion to make up for underinvestment from clients.
“We do see a hunger and a need for more oil,” Chief Executive Officer Lorenzo Simonelli said in a Bloombert TV interview. He added that while growth is leveling off in North America, it’s a different story overseas, where demand is outstripping supply.
Kerry Calls for Larger-Scale Climate Reform (4:47 p.m.)
Multibillion-dollar deals to advance clean energy deployment and shift away from coal-fired power in individual countries — like those announced in South Africa, Vietnam and Indonesia — are progre
“We just don’t have time to go around and cobble together a couple hundred bespoke deals,” Kerry said. Instead, he said, there’s a need for multilateral development bank reform and even a new model for carbon offsets that can help unlock finance for clean energy in developing nations.
Biden Decision on Willow Project Coming Soon, Podesta Says (4:40 p.m.)
John Podesta, the White House’s top clean energy adviser, brushed aside oil-industry suggestions that the Biden administration’s decision on ConocoPhillips’ proposed Willow project in Alaska is a litmus test of its willingness to support substantial oil and gas development in the US.
“I understand why they say this is a symbolic issue,” he told reporters on the sidelines of CERAWeek events. But it’s really “an issue for ConocoPhillips, which has a lease on the property, and whether we’re going to permit the lease.”
The administration is dealing with “a specific project and the question of whether it will be permitted, which rests with the secretary of interior,” Podesta said. A decision will come “pretty soon,” with issues around conservation top of mind, he said.
President Joe Biden has implored oil companies to pump more crude, and the proposed Willow development presents a test of that commitment, Senator Dan Sullivan, a Republican from Alaska, said during a panel discussion.
“This is a signal, I think, of how serious they are on these issues,” Sullivan said. He added that any move by the Biden administration to reduce the size of the project will effectively be a rejection, as Willow will no longer be economically viable.
Trafigura Puts Russian Shadow Fleet at 600 to 650 Ships (4:29 p.m.)
The shadow fleet of tankers hauling Russian oil and fuels has grown to as many as 650 vessels as the Putin regime contends with strict international sanctions, according to commodities giant Trafigura Group.
That figure from Trafigura’s Co-Head of Oil Trading Ben Luckock was significantly higher than rival trading house Gunvor Group Ltd.’s 300- to 400-vessel estimate provided earlier Monday.
Meanwhile, weaker-than-expected oil output from US fields is reason for some concern, he said.
“We’ve been underwhelmed by incremental production from the US,” Luckock said. “There’s under investment that’s gonna bite us going forward.”
Guyana to Demand Tougher Terms on Oil Deals (4:04 p.m.)
Guyana’s new oil production sharing contract will have a “greater take” for the government than the deal agreed to with Exxon Mobil Corp., the country’s vice president said.
The new terms will apply to the 14 exploration blocks being sold to international oil companies later this year, Vice President Bharrat Jagdeo said. They will balance more revenue for the Guyanese people with the stability needed for companies to make long-term investments, he said.
NGOs and Guyana’s own politicians have criticized the deal with Exxon, signed before it discovered oil in 2015, for being too generous to the Texas oil major.
In the auction, any one company will only be allowed a maximum of three blocks to allow “multiple” companies to explore at the same time, Jagdeo said. Guyana wants to develop its resources as quickly as possible in case oil demand begins to wane over the coming decades.
Occidental CEO Looks to Expand Growth Beyond Oil (4 p.m.)
Occidental Petroleum Corp. Chief Executive Officer Vicki Hollub sees the drilling giant she runs as more of an energy company than one focused strictly on petroleum. Far more solar and industrial batteries are needed to push electrification in the oil patch, but new technologies are needed to make that happen, she said in a discussion about innovation.
Oxy could be an investor in some of the new technologies and had looked at nuclear power options, including modular reactors. The company is also looking at extracting lithium from brine, for example, she said.
NET Power, which is building power generation for Oxy using carbon dioxide captured from natural gas, “will transform the industry” because power supply can be set up anywhere gas is, she said.
Shale Financier Bobby Tudor Launches New Firm (3:21 p.m.)
Bobby Tudor, the Texas banker who helped finance the US shale revolution, has opened a new firm to invest in energy and provide advisory services in the mergers-and-acquisitions space.
After departing one of the marquee investment banks for shale entrepreneurs — Tudor, Pickering, Holt & Co. — and taking 2022 off, Tudor inaugurated Artemis Energy Partners earlier this year. In an interview Monday, he said he needed a new name for his latest venture.
“I couldn’t use my name because I sold that,” Tudor said.
Lack of US Investment in Gas Pipelines is ‘Scary,’ Cheniere Says (2:30 p.m.)
US development of natural gas pipelines is lagging as demand for the power plant and heating fuel increases, said Jack Fusco, chief executive officer of Cheniere Energy Inc. “Last year was the lowest year since 1995 that the US built pipeline infrastructure,” Fusco said. “It’s scary, that lack of investment.”
Southwest Louisiana used to be the “easy button” for building pipelines, but infrastructure there and in the US broadly isn’t keeping up with the fact that the country’s pace of gas exports is rapidly accelerating, said Anatol Feygin, Cheniere’s chief commercial officer.
Pioneer CEO Sees Looming Peak in Permian Oil Output (2:03 p.m.)
Production of oil in the Permian Basin will peak in five to six years as the best acreage for drilling and fracking is used up, according to the head of Pioneer Natural Resources Co., one of the biggest operators in the region.
Companies with a strong inventory are “not being rewarded at all” right now by investors, Chief Executive Officer Scott Sheffield said. The oil sector has an ongoing issue with finding new investors, and crude prices will need to be stable for a long period before any new shareholders support additional production, he said.
White House Wants to Speed Up Permitting, Podesta Says (1:54 p.m.)
President Joe Biden’s clean-energy czar said the administration is looking for ways to cut through “delays and bottlenecks” ensnaring energy projects, including a buildout of high-voltage, high-performance transmission lines to carry clean energy around the country.
“It’s time to get back to work and pass permitting reform legislation,” John Podesta said at a luncheon. The White House will work with Senator Joe Manchin, the Democrat from West Virginia, and members of both parties to reach a “pragmatic, bipartisan solution” on power line permitting, Podesta said, while adding that support is not without limits.
A previous Manchin permitting proposal was “a solid bill” and “something we can build on,” he said. In the meantime, the administration is moving to use existing authorities under federal law to expedite project authorizations, Podesta said.
Repsol CEO Plans Billions in North American Investment (1:10 p.m.)
Spain’s Repsol SA is planning to invest close to $1.5 billion in 2023 in exploration and production in North America and is planning to invest about $1 billion in renewable sector in the US, CEO Josu Jon Imaz said in an interview.
“We are fully committed to the Iberian peninsula but on top of that, the United States and its open policies provide a good opportunity to grow,” Imaz said.
Speaking earlier Monday, Imaz called on European banks to finance natural gas projects to help the continent meet its emissions goals and stop burning coal. Financiers and politicians moved too quickly to encourage the move away from gas, meaning that Europe was forced to burn more coal to meet its immediate power needs after Russia invaded Ukraine last year, he said.
IRA Support for Hydrogen ‘Astronomical,’ Plug Power CEO Says (12:51 p.m.)
The US Inflation Reduction Act is giving the hydrogen industry everything it could ask for to be competitive, said Andy Marsh, the CEO of hydrogen and fuel-cell maker Plug Power Inc.
“If we are not going to be successful this time, we are never going to be successful,” Marshall said on a panel discussing the future of hydrogen as an energy source. “The level of support is astronomical.”
The three most attractive markets are the US, Europe and the Middle East, which is moving aggressively with hydrogen, while India is becoming more interesting, he said.
Cheniere Says China May Take Gas Flows Away From Europe (12 p.m.)
Cheniere Energy Inc. says China will no longer act as “relief valve” by supplying liquefied natural gas to Europe like it did during last year’s energy crisis, and may instead take flows away from the continent to serve its own growing economy.
“That’s a very large risk,” Anatol Feygin, chief commercial officer for the world’s biggest liquefied natural gas provider, said in an interview. “China has contracted for a lot of volume, and how China recovers — both Covid and this 5% GDP growth commitment — has the ability to really impact Europe’s ability to attract those marginal volumes.”
IRA Raises Risks of Clashing Approaches, Climate Expert Says (11:55 a.m.)
More than $360 billion in support for clean energy under the US Inflation Reduction has already provoked a competitive response from countries around the world with the promise of unleashing critical technologies for decarbonization — but there’s also a real risk of clashing, inefficient development, said Joseph Majkut, director of the Energy Security and Climate Change Program at the Center for Strategic and International Studies.
As countries race to make investments in the same technologies, including hydrogen, solar and electric vehicles, “we don’t want to create a world that’s entirely fractured,” because that could mean diminished cost reductions and undermine a truly global response to climate change, Majkut said.
Tellurian’s Souki Says He Isn’t Speaking to Chinese LNG Buyers (11:37 a.m.)
The chairman of Tellurian Inc. said he isn’t negotiating with Chinese buyers, despite the reopening of the country’s economy post-Covid.
Instead of inking long-term contracts, as is common in the global LNG market, Chinese companies will have to buy gas on the open market and compete with European countries for the fuel, Charif Souki said Monday in an interview with Bloomberg TV.
“I didn’t like the experience I had with them when I was at Cheniere,” said Souki, who was previously CEO of US LNG exporter of Cheniere Inc. before co-founding Tellurian. Tellurian is looking to raise about $3 billion in financing for its Driftwood LNG project.
UAE Minister Calls for More Aggressive Decarbonization (11:01 a.m.)
Sultan Al Jaber, the head of Adnoc and the president of this year’s UN climate summit, called on oil and gas executives to move more aggressively, insisting the industry needs to “rapidly decarbonize its own operations” and should play a “vital role” in decarbonizing its customers, too.
Al Jaber, who has faced questions as an oil company executive leading the global climate negotiations in Dubai, insisted that the United Arab Emirates has diversified its energy mix and is “embracing” the energy transition.
Adnoc is aiming for a 25% reduction in its carbon intensity by the end of the decade, but is also seeking to boost crude production by 1 million barrels a day by 2025 — a dynamic that means the company’s total greenhouse gas emissions are expected to increase in the coming years.
China to Drive Worldwide Oil Demand Growth, Gunvor CEO Says (10:41 a.m.)
About 75% of global oil-demand growth will come from China this year, according to the CEO of commodity trader Gunvor Group Ltd.
The so-called ghost fleet of tankers seeking to move Russian oil despite international sanctions includes 300 to 400 vessels, Chief Executive Officer Torbjorn Tornqvist said during a presentation.
In other markets, Tornqvist foresees competition for liquefied natural gas cargoes intensifying between Asia and Europe as soon as this summer.
Cenovus CEO Says Canada Needs Its Own IRA (9:45 a.m.)
One of Canada’s biggest oil sands producers said the country’s government needs to enact a law similar to the US’s Inflation Reduction Act if it wants to meet its climate goals and remain competitive.
An investment tax credit in last year’s Canadian budget is welcome but would only cover about 15% of the oil industry’s carbon capture costs to 2050, Alex Pourbaix, chief executive officer of Cenovus Energy, said in an interview. By contrast, the IRA would cover two-thirds of costs, he said.
The IRA is “refreshingly simple,” he said. Pourbaix warned that if Canada failed to step up its fiscal help for industry, it would lose competitiveness to its southern neighbor.
“If we don’t, we’re just going to see that capital flee the country and go to the US where they have such an attractive process and mechanism for companies to reduce their emissions.”
Banks Setting Too High a Bar on Green Loans in Asia: Petronas CEO (9:40 a.m.)
Lenders are making it too expensive for Asian governments and companies to finance energy-transition ventures and creating conditions that will delay moves to forestall climate change, said Petronas CEO Tengku Muhammad Taufik.
“As you go into Asia, credit committees layer on a huge risk premium,” Taufik said during a panel discussion Monday. “You are dangling the carrot of financing but making it inaccessible.”
Petroliam Nasional Bhd, as Malaysia’s state oil company is formally known, has set aside 20% of its capital spending to so-called green projects over the next half decade.
SLB Sees Middle East as Biggest Area for Global Crude Growth (9:30 a.m.)
SLB, the world’s largest oil services company, says some of the biggest greatest growth in oil activity this year from the Middle East, where record spending from customers there is expected to address global supply needs.
“There is an uptick that has materialized in the last six months in Middle East that is here to stay, and that will support the new engine of growth in the industry,” Chief Executive Officer Olivier Le Peuch said Monday in a Bloomberg TV interview.
The company, which is not investing ahead of the current growth cycle, is seeing delays of as much as a year around the world, Le Peuch said. Prices charged for its work in international markets are expected to be up by double digits this year, he said.
Chevron Eyes Mediterranean as New Gas Source for Europe (9:15 a.m.)
Chevron will spend the rest of this year working through options to export natural gas to Europe from its Leviathan field off the coast of Israel, Chief Executive Officer Mike Wirth said.
The US oil giant is evaluating three options: a multibillion-dollar pipeline, exporting via existing facilities in nearby Egypt and floating liquefied natural gas. The latter is the simplest because it doesn’t rely on multiple governments but will take more time and money before an final investment decision is reached, Wirth said.
Gas markets have “structurally changed” since the Ukraine war, meaning Europe will need non-Russian sources for the long term, Wirth said.
BP Says it Verified the Intensity of its Methane Emissions (9:07 a.m.)
Nonprofit global methane certifier MiQ said it audited and certified BP Plc as the first oil major in the US to verify the intensity of methane emissions from its US onshore natural gas portfolio.
Dave Lawler, who heads BP’s US operation, told reporters the MiQ certification shows how BP is in the process of further eliminating methane from the Permian Basin, making it a leader in offering a lower-carbon barrel of oil.