By Mike Witte, Co-Founder and CEO
There are few bigger or more important challenges than the global shift to a sustainable energy future. It’s almost too enormous to fathom, with an estimated $275T price tag and just about everything we value most — the health of the planet and well-being of future generations — at stake. Even in a polarized society like ours, this is one thing nearly everyone can agree on.
Yet many Americans see conventional energy as the enemy of renewable energy, and believe progress for one must mean failure for the other. Nothing could be further from the truth. But without a fundamental understanding of the energy industry, it’s all too easy to ignore data, logic, and common sense and instead take sides based on distorted caricatures, binary beliefs, and political rhetoric.
I’ve spent my professional life in energy, from my work as a petroleum engineer straight out of college to my years at Workrise getting to know the complexities of the broader ecosystem. As a leading provider of solutions and support for the energy companies that power our world, we partner with nearly two thirds of the top US Oil & Gas companies and also are active in the renewable energy space, including sectors like Wind, Solar, and Geothermal. All of this has afforded me an undistorted 360-degree view of this industry and what’s needed on the ground to get things done.
Oil & Gas has been cast as the bad guy in the public debate about climate change and the energy transition. But from where I sit, it’s clear that these conventional energy companies, who are so often pegged as villains, are actually the ones who will lead the line in the decades-long journey to the sustainable future we all seek.
Let’s forget the tired ‘renewables vs traditional energy’ debate for a minute. We’ve shared our belief that diversified energy production is the only way to ensure that reliable, cost-effective energy will be available to meet the demands of the planet while we transition to a sustainable future. From a macroeconomics perspective, we’ve made the case that Oil & Gas companies are best positioned to deliver for the planet at the scale required. Instead of asking how Oil & Gas could possibly be the ones to guide us through this crucial next stage of energy production and delivery, I look at the scale of the challenge ahead and the history of this industry, and I challenge you to ask a different question: Why wouldn’t they?
A History of Innovation
Oil & Gas companies are often dismissed as dinosaurs, unable to adapt and headed for extinction. In truth, they’ve been adapting ever since the first commercial oil well was drilled by Edwin Drake in 1859 at a rate of 3 feet per day. We’ve come a long way since then. Today these companies can drill 3 feet in less than 45 seconds and extract 10,000 barrels a day (660x more than Drake’s first-generation wells could produce).
Objectively speaking, Oil & Gas companies have been at the forefront of technological innovation for over 150 years.
How many times has peak oil been predicted over the years? Each of those declarations has proved premature thanks to better surveying techniques and new ways to efficiently unlock the next barrel of reserves. Winning in the energy transition space starts with the ability to innovate and adapt, and Oil & Gas companies possess this in spades. They have constantly had to figure out new and complex ways to extract a finite resource from beneath the earth’s surface.
Take horizontal drilling. Until the 1950s, the convention was to drill down, vertically, to access oil reserves. Advancements in horizontal drilling, when combined with hydraulic fracturing, have unlocked the production of natural gas from previously inaccessible sources. Rock units that were unproductive when drilled vertically have become copious producers of oil or natural gas (examples: the Marcellus Shale and the Bakken Formation).
Another example of a pivotal innovation: 3-D and 4-D seismic imaging. It’s been half a century since 3-D imaging changed everything, using sound waves to form three-dimensional images of geologic formations and find oil and gas deposits. Over the last few decades, 4-D seismic imaging has led to even more precise subsurface imaging, improved physical understanding, increased efficiency of existing wells, and decreased need for additional wells and drilling.
This ability and willingness to constantly adapt and find new ways to access the oil and gas we needed to power our world is part of what makes these companies the natural fit to lead the energy transition.
Deploying Capital at Scale
The types of projects required to accomplish the net-zero transition — which is projected to cost an estimated $275 trillion by 2050 — are massive in scale and require years to bring online. Conventional Oil & Gas companies already are built to deploy $200M - $1B+ on a given project, and they are prepared to make these kinds of bets over the long term. These are 5-, 8-, sometimes 10+-year bets on assets that will deliver returns for decades.
These bets also require policy and regulatory understanding, and the seamless coordination of huge numbers of vendors and workers to execute. Right now, only conventional Oil & Gas companies have the capital and project management expertise required to deliver on a scale that moves the needle for the planet.
Speaking of capital, Oil & Gas companies have got it — but they aren’t going to invest it in the service of charity or virtue signaling. These companies will invest massive sums if they believe it will deliver meaningful, lasting returns for shareholders. This wave is already building momentum. Shell recently spent $2B to acquire Nature Energy, the largest renewable natural gas producer in Europe. BP will be the largest wind producer in the US in a few years. What will become clear in every boardroom — if it hasn’t already — is that it’s in the best interest of these companies and their shareholders to become the world’s energy solution not just for today, but for the future.
While many see conventional and renewable energy as worlds apart, there is virtually no difference in the underlying economic model. The same fundamentals apply in terms of up-front investment for longer-term returns. And the demand for energy is only going to keep rising as the population and its needs grow. Why wouldn’t they want to unlock opportunities for growth and lasting returns? The energy companies that invest in these new capabilities, and adapt the best, will be the energy companies of tomorrow.
Looking to the Future
It wasn't that long ago that horizontal drilling and multistage completions were wildly risky operations. These processes are now driving more sustainable domestic fossil fuel production. This industry has been declared on the brink of dying every decade or two, but here it is, continuing to do the heavy lifting of heating our homes, powering our ships, and enabling the global economy to function.
These companies have the means to innovate and solve for what’s needed. That includes land, technical acumen; capabilities to put projects together at massive scale; robust supply chain expertise; and experience taking chances on solutions that may not work the first time but hold huge promise for the future. To successfully lead the energy transition — to become the energy companies of the future — they need to do three things:
- Leverage their in-house technical expertise to deliver on high-quality projects
- Leverage balance sheets to maximize shareholder returns
- Keep on innovating
In other words, they need to keep up what they’re already doing day in and day out.
Today these companies are leveraging offshore assets to develop green hydrogen, and building solar farms on underutilized land. They have the playbook and they’re doing the work. I hope the tired stereotypes painting them as villains at worst, or dinosaurs at best, will fall away so we can all look toward the future with clarity, confidence, and unity. Let’s take a leap of faith together and watch as these companies adapt, as they always have, to become the energy companies the world needs them to be.
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