Don’t Blame the ‘Energy Transition’ for the Damage Being Caused by the ‘Energy Transition’…

Guest “Don’t blame green schist for the energy crisis it is causing” by David Middleton

Alessandro Blasi is a geophysicist and Special Advisor to the IEA Executive Director, International Energy Agency. His LinkedIn posts are always informative and well-founded… Well… Almost always…

This bit is priceless…

The 1st is to make diagnosis properly and not take the shortcut of just pointing the finger towards the clean transition as the main cause of current energy crisis.

Mr. Blasi urges people not to blame the “transition” to clean energy sources for the current “energy crisis.” Larry the Cable Guy would say, “I don’t care who you are, that’s funny right there!”

The reason why we are in this energy crisis is a lack of investment in fossil fuel resources due to the fake “transition” to clean energy sources. The totally fake transition from fossil fuels to Unicorn dust has caused the greatest misallocation of capital since alchemy was considered a science.

Mr. Blassi’s LinkedIn post included a link to this Economist article:

Natural-gas shortages threaten governments’ green goals

Why do we suddenly have looming natural gas shortages?

The world was warned about this last year…

COAL | NATURAL GAS | OIL 10 Dec 2020

Looming supply gap requires trillions of dollars in investment by ailing oil and gas industry, IEF warns

Author Herman Wang
Editor Alisdair Bowles
Commodity Coal , Natural Gas, Oil

London — The oil and gas industry will have to overcome its pandemic-induced retrenchment and boost investment by at least 25% annually over the next three years to prevent a severe supply crunch that could send prices skyrocketing and tip the global economy back into crisis, according to an intergovernmental agency.

Even with the possibility of peak demand nearing, the world will lack enough production capacity to meet its projected needs if oil companies do not urgently replace depleted reserves and develop new fields, the International Energy Forum said in a Dec. 10 report.

“Without sufficient investment, a reduced supply of oil and gas could lead to greater market volatility and higher prices, slowing the global economic recovery and jeopardizing energy security and international goals,” said the IEF, which collaborated with Boston Consulting Group on the study.

Warnings of a looming supply gap are not new, and indeed, both producing and consuming countries are largely united on the issue. Dating back to the oil price slump that began in 2014, the International Energy Agency and OPEC have both sounded the alarm that upstream capex in the industry was insufficient to meet future demand.

There has never been an energy transition. We just add more sources of energy to the mix, to feed an ever-growing demand for energy.


S&P Global Platts

Why aren’t oil & gas companies ratcheting up CapEx as quickly as the world allegedly needs us to?

  1. Wall Street is demanding that we exercise capital discipline and focus on shareholder return instead of growth… And most of us are fine with that because we remember 2014.
  2. The Climatariat/energy transition/fossil fuel divestment “axis of doofuses” is working 24/7/365 to limit our access to capital.

Unless we pledge allegiance to the ESG (Environmental, Social, Governance) Agenda…

Feb, 2020

S&P sees tight access to capital for energy companies not addressing ESG

Author Jodi Shafto
Theme Energy

Access to capital may become increasingly more difficult for oil and gas companies failing to meet environmental goals, S&P Global Ratings said.

Even as the world moves toward cleaner energy options, the demand for fossil fuels will continue to grow. Still, investors are growing reluctant to fund companies that fail to address the environmental impacts of fossil fuel exploration and production, Ratings said during a Feb. 5 webinar.

S&P Global Ratings manager Luke Shane said this issue has already moved to the forefront and will continue to grow in importance. Some smaller banks, mostly in Europe, are dropping out of some of the revolver and credit syndications — loans offered by a group of lenders who work together to provide credit to a large borrower — looking to reduce exposure to companies that are heavy polluters, he said.

Further, hundreds of international investors have joined an initiative backed by the United Nations that aims to integrate environmental, social and governance standards into investment practice.

Principles for Responsible Investment asks signatories to publicly commit to consider ESG issues in investment analysis and decision-making processes, be active owners, and incorporate ESG issues into their ownership policies and practices. Signatories also agree to seek appropriate disclosure on ESG issues by the entities in which they invest, promote acceptance and implementation of the principles within the investment industry, work together to enhance effectiveness in implementing the principles and report on their activities and progress toward implementing the principles, according to the group’s website.

Shane said the initiative requires that signatories have ESG criteria integrated for 50% of the assets under their management. “This is clearly going to have an impact on capital access going forward,” he said. Noncompliance or failure to sign the agreement could result in the delisting of asset managers — “clearly something they don’t want,” Shane said.

As access to capital tightens, companies may need to explore mergers and acquisitions, shrinking the number of exploration and production companies working to meet the demand for oil and natural gas that is still expected to grow despite the push toward cleaner energy.

Most forecasts for oil demand project continued growth underpinned by energy demand, S&P Global Ratings senior director Simon Redmond said during the webinar. The world has a choice between using less energy or finding a better way of dealing with the pollution that arises from using fossil fuels, he said.

Fossil fuels, however, are used to meet 75% of global energy demand, and it will take a long time for non-fossil fuels to make up any significant proportion of that energy demand, Redmond said. If only for that reason, the demand for fossil fuels will grow for at least 10 years for oil and longer for natural gas.


S&P Global Market Intelligence

We can find and produce the oil & gas that the global economy depends upon… We can even do this while building out carbon capture utilization and storage (CCUS) operations… However, the more effort we have to expend on appeasing activists like Blackrock’s Larry Fink, the less effort we can devote to finding at producing the oil & natural gas quickly enough to avoid near-term supply shortages.

Until Wall Street, governments and idealistic fools comprehend the fact that there has never been an energy transition… Nor will there ever be an energy transition, the grotesque misallocation of capital will continue to worsen this self-inflicted “energy crisis.”

This is from the Energy Information Administration’s 2020 International Energy Outlook, published in October 2020:

Figure 1. Primary energy consumption, line chart, as it appears in IEO2020, plus 2014 & 2048 annotations added by this author.

It’s important to note that the EIA lumps hydroelectric in with renewables. If I was putting the chart together, I would have segregated them. I would have also not included biofuels with petroleum liquids… But you couldn’t see their contribution to the chart even if you segregated them.

While the original title highlights the projected increase in renewable energy, note that no other energy sources significantly decline over the full projection period, not even coal, which was then projected to top its 2014 peak by 2048.

If I plot the exact same data as a stacked area chart (like I would plot production data from an oil field), I get a totally different headline.

Figure 2. Primary energy consumption, stacked area chart. EIA chart modified by this author.

We’ve never transitioned from one form of energy to another; we just pile new sources on top of the old sources and use them more efficiently, with less impact on the environment. We burn almost as much biomass now as we did when we started burning coal; we just no longer rely on whale oil as a major component of that biomass.

Figure 3. Bjorn Lomborg, LinkedIn

About the Author

For those possibly unfamiliar with me, I have been a geologist/geophysicist in the US oil & gas industry since May 1981… Working for companies most of you have never heard of.

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via Watts Up With That?

September 27, 2021 at 08:33AM

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