US Energy Refocus?
The UN Climate Change Conference (UNFCCC-COP26) will be hosted in the UK later this year and will bring together heads of state, climate experts and campaigners to agree coordinated action to tackle climate change. In our cover story we examine the issue of gas flaring, its prevalence, how this gas might be captured and utilized and the lack of progress on this problem since COP21. The statistics suggest that rather than mitigating this wasteful practice, gas flaring from 11 countries that specifically identified flaring as a significant component of their COP21 Nationally Determined Commitments, showed an increase of 6%, rather than an expected decrease.
President Biden’s new administration has a very different view of climate change from the Trump Government. Early indicators are that there will be a significant focus on renewables. The US offshore wind industry has trailed development in Europe, and behind the country’s onshore industry. The new administration’s goal of 30 GW of offshore wind capacity by 2030 looks achievable with capital spending of $12 billion per year on projects to reach that milestone. For European oil companies diversifying into renewable energy and seeing a chance to transfer their capabilities in offshore operations to a new sector, the opportunities in the US look attractive and companies such as BP and Equinor have formed a strategic partnership for US offshore wind and are jointly developing the Empire Wind 1 and 2 and Beacon Wind 1 projects, which have a combined capacity of 3.3 GW. All these developments will weigh heavily in the minds of oil industry professionals, as illustrated in our article on the outlook for Alaska.
Keeping the lights on and homes heated for the foreseeable future relies heavily on hydrocarbons and particularly natural gas. Iman Hill, the recently appointed Executive Director of the International Association of Oil & Gas Producers (IOGP) points out in our Q&A that over the next 20 years the global energy demand will rise by around 20%, mainly in non-OECD countries. This in the context of global oil and gas production declining by an average of 8% per year. So, investment in both existing and new fields seems inevitable. The transition to cleaner energy is a journey we are already on, but like it or not, it is probably going to take a few decades before we can wave goodbye to an energy source that has lifted hundreds of millions of people out of energy poverty.