Thread by @davidgaffen

Afternoon folks. Hard to tweet while putting out headlines on the wire itself, editing articles and running from spot to spot here. Were I not an editor! But still, a long thread on #CERAWeek

We’re in a growing energy crisis that seems like it’s going to get worse – I’ll get to that later. The tenor of the conference here has been a combo of some dread – the reality of the surge in oil prices, emerging shortages in fuel and unfinished oils, and rising natgas prices.

The original plan was to do a lot of talk of renewables and transition – even though the usual first couple days would have been dominated by oil. But that’s not how it turned out, of course, and the conference organizers recognized that shift. #OOTT
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Still, in the first two days there was clearly a lot of spiking the ball from oil companies doing the “we told you so” bit – leaving aside that they decided to reduce their output due to the pandemic, investor pressures and using up a lot of the best drilling locales in the US.

(Yes, there are international oil companies talking too – but they’ve been less consequential, for reasons I’ll explain later.) #OOTT #CERAWeek

But there’s also a little bit more in the way of a rah-rah attitude among some of the US producers – John Hess and Scott Sheffield in particular. #OOTT #shale

From the big US officials, meanwhile – Kerry, Granholm, and State Dept official Amos Hochstein – the tone seemed like it had shifted a bit, even though there has still been a lot of “it’s your fault” stuff coming from both the WH and energy companies.
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Kerry noted that natural gas has to be part of the transition, so there’s that. Granholm said that in the short term there needs to be a surge in oil-and-gas supply.

And Michael Regan of the EPA said the same. And when the EPA admin is saying we need more nat gas, well....

And there was some qualified praise from the likes of Sheffield and Nick Dell’Osso of Chesapeake, and the biggest support – not necessarily for the WH, but for US oil and gas, came out of Hess, who said:
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“We are energy secure and we export 12 mln bcf a day of natural gas and 3 million bpd of crude oil. It’s very important for the US to stand tall here and insure the energy security for the country and the world." #shale #OOTT #EFT #CERAWeek

Hess, however, also noted that the reality is that shale is now a “mature business,” and there’s “only about a 10-year inventory of drilling locations left, maybe 15.”

Others said similar things – as we wrote today – about shale, as well, that includes Vicki Hollub of Occidental, who said oil and gas companies have been limiting costs and spending to return more cash to shareholders. #OOTT #CERAWeek

"Capital discipline today for oil companies is basically no (production) growth," Hollub said.

For Jesse Prentice-Dunn, policy director for the Center for Western Priorities, it means the oil industry is dragging its feet. "The constraint is not access to public lands, it's that oil companies are prioritizing shareholders over consumers," he said. #OOTT #CERAWeek

And look – maybe conferences like this are the place where you get a lot of happy talk before people run back to their respective corners.
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One notable shift is the way in which natural gas has emerged as the "less bad" fossil fuel, which is of course the industry's line, but now people just accepting the reality that it's less carbon intense - even as it is a fossil fuel - than coal and oil.
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And that comes from numerous corners – emerging nations in Africa and Asia who are telling people that they need more reliable energy in the first place, more ways to have electricity, and the like, and then from more developed countries.
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"We are still in transition from firewood to gas," Nigeria's oil Minister Timipre Marlin Sylva said. "Please allow us to continue with our own transition." #OOTT #EFT #CERAWeek

And here’s something to consider out of this. The 38 OECD countries (most of the world’s richest nations), plus Russia, China and India use about 70% of the world’s oil.

The rest – all of Africa, a good chunk of SE Asia and LatAm – use 30%. The 70% = 4.3 bln people. The other 30% = 3.6 billion. #OOTT

The reality of climate change intruded on this discussion as well on Monday, with worsening climate outcomes at the same time as many people not having access to reliable energy.

"Every emerging economy has to have the right to access reliable, safe energy," said Tengku Muhammad Taufik, president and CEO of Malaysia's state-owned Petronas. #OOTT #CERAWeek

And that’s where you get into the issues involving Europe, where you have the big, big dependence on Russian nat gas, and that cannot be easily obviated.

So there’s a lot of talk now about surging natural gas supply – but it just isn’t easy. We have a certain capacity for LNG export – roughly 12.6 bcf per day, enough for about 60 million households. But Europe uses several times that – and our LNG exports go there *and* to Asia.

So that’s where Michael Smith of Freeport came in, talking – in his unmistakable Bronx accent, a welcome respite down here in Houston (I kid, I kid).

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“There’s just no additional #LNG that’s coming on-line to bridge the gap for the gas that’s going to be needed by Europe next year; and it’s cold in Asia, and asia has no other alternative; both continents won’t have an alternative.” #OOTT

The best summary quote came out of Meghan O’Sullivan from Harvard. #OOTT

Thursday, EPA Admin Michael Regan made it even more clear during his presser: "If we are going to continue to rely on natural gas to supplement renewable energy in the future, we want the technology to ensure that gas is as clean as possible," said Regan on Thursday.

And as we see, of course, US oil production remains below its peak from 2019. The White House isn’t wrong to note that there are a ton of permits not being used, and the reality of supply chain issues, shortages and high prices mean oil companies have pulled in on their spending.

That won’t stop people of trying to accuse the admin of all sorts of stuff, and there’s been that drumbeat, too, about “shutting down” the US oil and gas industry. But the production figures don’t show that. #OOTT #EFT #climate

And there were plenty of other accusations, too, most of which boil down to, “let us do whatever we want,” which is naturally a completely untenable position. #OOTT

There’s also been a lot of talk – from both Granholm and the US oil execs – on not getting so much oil from unfriendly sources. And well, it always has been thus!

Scott Sheffield of Pioneer did have a menu he wanted to see for the Biden Admin, mostly in the realm of speeding up permitting, speeding up approval of LNG terminals, et al. #OOTT

Oddly enough, the table-pounding on the cancelled #KeystoneXL pipeline was pretty limited – basically just Alberta Premier Jason Kenney and Cenovus CEO Alex Pourbaix, who noted that US imports from Russia/Saudi are about as much as what the pipeline would have carried.

Granholm made an oblique reference to it as well, talking about "lobbyists and politicians" who were going on and on about a pipeline that isn't happening that wouldn't have been done now anyway (that latter part is true). #OOTT

#Aramco CEO Amin Nasser was probably the most strident voice, amping up the wounded act regarding attacks on the oil industry, and suggesting that the transition doesn’t have any plan at all. “They say they want to do this thing by this day and this year,” he said. #OOTT #NFT

(Not that he's not part of some multinational organization that can do some kind of planning of some kind, but, well, never you mind.) #OOTT

Richard Glick of FERC is speaking now. Expresses frustration with the idea that they have an anti-oil-and-gas agenda, noting the previous administration "couldn't get their reviews together" on pipelines.

Mentions the cancelled Atlantic Coast Pipeline and the long-delayed Mountain Valley pipeline.

On that point? He's dead-on. We analyzed this in 2019 - and found that legal strategies finding fault with review processes failed consistently under Obama - but succeeded under Trump.

That story is here. Lawsuits alleging regulatory lapses were unsuccessful during Obama's admin, with plaintiffs losing five separate lawsuits alleging regulatory failures during Obama. #OOTT
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Under Trump? Keystone lawsuits upheld to the point where nothing got done, pipeline cancelled.

Atlantic Coast? Cancelled.
Mountain Valley? Delayed dramatically. #OOTT

Lastly, but not least, the team here has been killing it @mariannaparraga @LizHampton1986 @sabrinavalle @ronbousso1 @davidj_french @MarcydeLuna @ArathySom @ErnestScheyder @e3seba @CarMcWilliams @reutersSimonW #Reuters