IOCs committed to helping drive energy transition; gas has key role: industry

Oil and gas majors are committed to helping drive the energy transition, with gas in particular set to play a critical role in helping to meet climate change goals, senior industry officials said Sept. 7.

Speaking at the Gastech Virtual Summit, executives from France's Total and the US' ExxonMobil said the financial strength and technological capabilities of IOCs would help in both developing new clean energy projects and ensuring future gas supply.

Total has been one of the front-runners in Europe in terms of focusing more on cleaner energies.

The company's senior vice president for gas, Laurent Vivier, said IOCs are increasingly incorporating renewables in their activities, and that majors had a number of certain advantages that can be used to help drive the energy transition.

"[At Total] we have a capital might, a solid balance sheet, which allows us to lower the cost, which is important for products to be competitive," Vivier said.

Vivier said Total also had experience in managing risk, which it can put to good use in the development of new renewable projects such as offshore wind.

"The future of renewables cannot rest entirely on governments taking on the burden of long-term commitments," he said, citing the example of long-term power purchase agreements and feed-in tariffs.

"There will need to be a different way to allocate risk. And we know how to do this. We know how to have a long-term view, we know how to measure risk, we know how markets function and we are able to go through [commodity] cycles," Vivier said.

ExxonMobil's Vice President, International Gas, Alex Volkov, agreed that IOCs have a lot to offer, also citing their strong balance sheets and technical capabilities.

"The energy transition is not 100% wind and solar -- it is a complex problem and process," he said.

He pointed to areas such as trucking, marine transport and air travel where wind and solar cannot provide solutions, with advanced biofuels able to play a role instead.

Gas fundamentals

Volkov also said being able to offer gas and LNG as a product would be key to helping the energy transition, and that gas should not be seen as a "bridge" fuel to a low-carbon future, but as a destination fuel.

"There are multiple views on energy transition, its pace and path," Volkov said. "But natural gas is expected to play key role in the future to meet climate targets."

"Gas can support the greater penetration of renewables and when combined with CCS [carbon capture and storage] can provide a cost-effective way to produce hydrogen, in the near future, not in 2025+," he said.

Vivier agreed that gas had a key role to play, but that the industry should be more aggressive in ensuring its long-term competitiveness.

He also said the debate had shifted over the past two years, where gas is increasingly seen as a "problem," not a solution in the energy transition.

"Energy transition is a complicated message -- and it is not happening overnight," he said, pointing to the likely growth in gas consumption over the next 20 years.

"And investment in gas requires a long-term view," he said, stressing the need for gas to remain affordable.

Co-CEO of US LNG developer Venture Global LNG, Mike Sabel, said he saw the coronavirus pandemic as possibly leading to a slowing of major new investments in renewables.

"In the short term, I would be pessimistic about seeing massive new investments in wind and solar than maybe we were expecting," Sabel said.

He added that the record low gas prices globally earlier this year would also be positive for the industry. "The lower cost of the commodity is going to encourage more countries to choose gas over coal," he said.

Methane emissions

Also speaking on the Gastech panel, the executive committee chair of the Oil and Gas Climate Initiative, Jerome Schmitt, said the group's member companies remained as committed to solving the challenges of climate change as they were pre-pandemic.

"They are not diminished by the crisis -- member companies are still very much as committed as they were," he said.

On the issue of methane emissions, Schmitt said coordinated action by producers was needed.

"We have to act collectively. It's only if we all engage, if we have the same drum beat, we speak with the same voice that we will be heard and we will be trusted," he said.

Schmitt said it was important for the OGCI and its members to show that gas would be key in helping solve the climate challenge.

Sabel, though, warned against any tax on methane emissions as that could lead to a pick-up in coal use.