One thing to start: digitalisation and technology advances mean many of the oil jobs lost during this downturn in the us are not coming back, a new deloitte study shows.
On to our first item. with less than a month to the election, we take another look at what a biden win could mean. the oil sector may need to get used to tighter rules on pollution and ecological impact again. resisting such changes would be a bad look in an era when investors are increasingly focused on environment and social impact. (see our friends at moral money for more on this. sign up to the twice environmental, social and corporate governance newsletter here.)
Our second is an interview with david crane, who was ousted five years ago from nrg energy for seeking to green the power producer and now heads a new vehicle to invest in clean-energy projects.
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Next year could be a big one for the dunes sagebrush lizard if joe biden wins the us presidency in a few weeks, that is.
The sceloporus arenicolus has the misfortune of sharing a habitat with drillers and frackers in the worlds most prolific oilfield, the permian, including in some of new mexicos most prized acreage in eddy and lea counties. but, over the coming months, the us fish and wildlife service will decide whether to protect the lizard and its habitat under the endangered species act. listing the species could make killing the lizard or disturbing its habitat a crime unless a permit allowing incidental take is issued. (its all explained here.)
Where does mr biden come in? if hes elected, the next head of the fws would be his to appoint. she or he would have influence not just over the dunes sagebrush lizards fate, but that of scores of other species whose threatened status will also be assessed in the coming years.
Despite the trump campaigns claims, mr biden will not ban fracking, but a halt on new federal leasing by drillers the other big worry for big oil is possible and would be more significant, analysts at wood mackenzie and s&p global platts have noted. however, it is not yet clear what form it would take, or even if such a ban would happen.
Instead, washington analysts and some of the hedge fund traders they advise think it will be personnel and small rule changes that have the biggest impact.
When it comes to federal policies for oil and gas, a biden administration would lead to a dramatic shift in tone and oversight, said whitney stanco, senior energy analyst at washington analysis. there will be big policy announcements and goals, but small regulatory tweaks can also add up to meaningful change.
If mr bidens democrats also win the senate and eliminate the filibuster, the oil-sector hit would be large, said bob mcnally, an adviser to the george w bush white house and now head of rapidan energy group:
Existing legislation offers much scope to crack down on industry pollution. clauses in the clean air act could allow for more policing of methane emissions from oil and gas wells, for example, said kevin book of clearview energy partners. the defense production act, the national emergencies act and international emergency economic powers act could be used in executive orders affecting production, he added. provisions in the clean water act, safe drinking water act or resource conservation and recovery act could also be deployed to limit the oil industrys ecological impact, suggested ms stanco.
Moves to end the bonfire of regulations started by president trump and begin advancing a $2tn clean energy plan would happen fast, say washington insiders, who assume mr biden will only seek to govern for one term.
A biden administration may only have something like 18 months the interval between inauguration and the run-up to midterm congressional elections to implement policies that could radically transform the us energy mix over the next 30 years, noted mr book.
The oil industry may resist all this. the question is whether, in an era when esg-focused investors are already eschewing fossil fuels, drillers want to be seen lobbying for their right to keep polluting or to destroy the permians dunes sagebrush lizard. (derek brower)
Nrg energy ousted david crane as chief executive in 2015 after investors lost patience with his efforts to turn the fossil fuel-fired power producer green.
He has now returned as head of a blank-cheque company with a mandate to acquire climate-friendly businesses. climate real impact solutions, which raised $230m in an initial public offering last week, is the latest special purpose acquisition company (spac) with a green tinge.
When mr crane spoke with es, what stood out was how quickly the electricity system has changed course since his forced exit from new york-listed nrg.
In 2015, the energy information administration forecast that coal would account for two-fifths of us electricity generation in 2020. renewables mainly hydro, wind and solar would provide 16 per cent, the government agency said.
Fast forward and eia now believes that coal plants would supply just a fifth of the nations electricity this year less than renewables. the shift comes as cheap natural gas crowds out coal in baseload power, while plunging costs and state mandates for wind and solar draw utilities and corporate customers to renewable technologies.
Mr crane had spent nrgs capital on solar power businesses, some of which the company later sold to form clearway energy. he also oversaw the $1.7bn acquisition of genon energy, a fossil-fuel generator that later was reorganised in bankruptcy court.
While long bullish on solar, he said he was surprised by the pace of its spread.
If you had told me by the second half of this decade, from 2, for four to five years in a row, solar and wind would be the first and second largest sources of new generation capacity in the united states, i would have said youre out of your mind, he said.
One lesson he learnt is that transforming a big energy company in the glare of public markets was almost impossible. he pointed to royal dutch shell, the anglo-dutch oil major which has suspended share buybacks, curtailed spending and cut its dividend as it aims to pivot towards low-carbon technologies.
Spacs face their own flavour of scepticism from investors, heightened by claims by a short-seller that electric truckmaker nikola which listed via a combination with a spac was a fraud.
Climate real impact solutions potential targets include companies in distributed energy generation, electric vehicle infrastructure and agriculture. we plan to thoroughly vet any companies we choose to combine with, mr crane said. (gregory meyer)
These were supposed to be years of revival for the us coal industry. these charts, from the energy information administrations most recent quarterly coal report, show american coals relentless decline of production and exports. a dirty fuel is losing its place in the worlds biggest economy.
Last week nextera overtook exxonmobil in market capitalisation, signalling a changing of the guard as big solar eclipsed at least in investors eyes big oil.
Across the atlantic, another milestone went under the radar. orsted, the worlds biggest offshore wind developer (and the first company to jettison its fossil fuel business in favour of renewables) on thursday overtook bps market capitalisation having already left two other european oil majors in its wake this year.
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