Varcoe: International oil leaders warn of conflict between rising oil demand and 'wishful pondering' on vitality transition

‘Will probably be a transition. There appears to be . . . wishful pondering that we’ll flip the change, and we’ll go from the place we’re at in the present day to the place we can be tomorrow’

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The worldwide oil and fuel sector is on board for the vitality transition, however its leaders are additionally warning of “wishful pondering” about how simple it will likely be to make the shift.

On the opening day of the World Petroleum Congress in Calgary, leaders with among the world’s largest oil and fuel producers cautioned in regards to the threat of underestimating how difficult it will likely be to rework current world vitality methods, as governments and the general public demand harder local weather motion.

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Some on the vitality summit additionally rejected projections from varied corners, together with the Worldwide Vitality Company (IEA), that the world will see oil demand attain its peak later this decade.

The daunting challenges of how one can meet rising vitality demand whereas additionally decarbonizing oil and fuel manufacturing dominated a lot of the controversy through the convention’s opening classes.

“It’s troublesome to interchange in the present day’s vitality system, partly due to the utility of in the present day’s vitality system. Oil and fuel is extensively obtainable, simply transportable,” Exxon Mobil CEO Darren Woods advised the group on Monday.

“Will probably be a transition. There appears to be . . . wishful pondering that we’re going to flip the change, and we’ll go from the place we’re at in the present day to the place we can be tomorrow.”

The congress, which is predicted to draw greater than 4,000 delegates from around the globe, known as the Olympics of the oil and fuel trade and attracts among the most influential leaders within the sector to debate the important thing vitality problems with the day.

The world is consuming a file 102 million barrels of oil per day (bpd) this yr and demand is projected to develop by one other a million barrels per day subsequent yr, in line with the IEA.

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Public anger has grown over rising vitality prices through the previous 18 months, with oil topping $100 a barrel after Russia’s invasion of Ukraine final yr.

Members of the OPEC+ group — together with Saudi Arabia and Russia — have prolonged their very own manufacturing cuts till the top of the yr. On Monday, costs for West Texas Intermediate (WTI) crude hovered close to US$91 a barrel.

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Considerations in regards to the results of local weather change are additionally on the fore of the controversy, together with stricter authorities coverage designed to scale back emissions.

Greater than 80 nations have adopted a net-zero goal by 2050, together with Canada, which is the fourth-largest oil producer on the planet, behind the U.S., Saudi Arabia and Russia.

The chief govt of the world’s largest vitality firm, Amin Nasser of Saudi Aramco, advised the viewers the vitality transition is like an epic voyage throughout an ocean — not a fast or simple path to achieve world local weather targets.

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“We all know the vacation spot and the entire world has already left port. However the fleet is scattered and drifting,” he mentioned.

Many shortcomings across the vitality transition have led to unrealistic situations and timelines, mentioned Nasser.

As effectively, points reminiscent of preserving vitality reasonably priced and safe, and addressing vitality poverty the world over, can’t be neglected.

The transition is a “full transformation of a $100-trillion world financial system in the present day,” he famous.

However the trade is underneath fierce strain to take extra motion on local weather considerations.

Thousands came out to the 24th World Petroleum Congress in Calgary on Monday, September 18, 2023.
1000’s got here out to the twenty fourth World Petroleum Congress in Calgary on Monday, September 18, 2023. Picture by Darren Makowichuk /Postmedia

In Canada, the federal authorities has launched a value on carbon and a brand new clear gasoline commonplace. Additionally it is set to launch draft rules later this yr that can place a cap on emissions coming from the nation’s oil and fuel trade, placing it at loggerheads with the Alberta authorities.

“Nobody is saying we’re going to flip a change and alter the system tomorrow,” mentioned Greenpeace Canada’s Keith Stewart. “The one factor that’s costlier than getting off of fossil fuels is staying on fossil fuels.”

The CEOs additionally mentioned their investments in creating know-how, reminiscent of carbon seize and storage (CCS) and new low-carbon fuels.

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Woods famous the vitality transition would require loads of funding, coverage certainty and a regulatory system that enables new tasks to be constructed to satisfy rising vitality demand.

Final week, the Worldwide Vitality Company’s govt director mentioned that its new world outlook tasks demand for oil, fuel and coal will peak later this decade.

Thousands came out to the 24th World Petroleum Congress in Calgary on Monday, September 18, 2023.
1000’s got here out to the twenty fourth World Petroleum Congress in Calgary on Monday, September 18, 2023. Picture by Darren Makowichuk /Postmedia

Throughout a panel dialogue, Nasser famous that when he began at Aramco in 1982, the discuss within the trade was about reaching peak oil provide. Nonetheless, that ignored the truth that bettering economics would supply incentives for corporations to search out new methods to find and produce oil.

“Now, everyone is speaking about peak demand. And the identical individuals speaking about peak demand, by the way in which, are forecasting within the second half of this yr, a 103 to 104 million barrels a day (market) — and that is in the midst of an financial downturn,” he added.

“Demand will proceed to develop as a result of, additionally, we’re making loads of progress when it comes to lowering emissions (from) standard vitality, and as you scale back these emissions the demand for this product will enhance as you decarbonize.”

Chatting with reporters on Monday, Alberta Premier Danielle Smith expressed comparable skepticism with projections that oil consumption will quickly hit a plateau, calling the IEA more and more “a political activist group.”

“I appreciated what . . . the Saudi vitality minister needed to say this morning — you’ve acquired to stay in the actual world, not on pc fashions,” she mentioned.

“We’ve acquired to reply to the world as it’s.”

Chris Varcoe is a Calgary Herald columnist.

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Premier Danielle Smith gets a tour of the Saudi Arabia display during the 24th World Petroleum Congress in Calgary on Sunday, September 17, 2023.
Premier Danielle Smith will get a tour of the Saudi Arabia show through the twenty fourth World Petroleum Congress in Calgary on Sunday, September 17, 2023. Picture by Darren Makowichuk /Postmedia

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