From Oil and Gas Investor Editor-in-Chief: Visions of the Future

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Forty years of telling the stories of the oil and gas industry. Imagine the epic tales of bold entrepreneurs, the rise and fall and rise again of volatile commodities, capital raises and capital losses, huge mergers and innumerous small asset carve outs, the exuberant successes and those that failed. We’ve told them all.

Established 1981, Oil and Gas Investor was the industry’s first publication to target the oil and gas business executives and the capital providers funding them. We still do. This month we celebrate those 40 years of journalistic endeavor in a special anniversary issue.

And yet it’s not our intent to look back, but rather to look forward at the coming decades. When Investor launched in 1981, no one could have foretold the story that unfolded over the next 40 years, nor foresaw the landscape that exists today. And it would be foolish to think we know how the next four decades will play out. Remember the specter of peak oil? Now we are to fear peak demand.

But we must try, although it’s like peering into a dense fog. All good companies must predict and plan for a projected future.

Yet the outlook for the future of the industry at this juncture in time might be the most clouded view than ever in the past 40 years. Those that propose an energy transition away from carbon-based fuels would wish hydrocarbon producers away instantly if possible. And while thinking individuals know reality overrules rhetoric, it’s certain that business-as-usual is a model of the past.

Oil and gas strategies in 2050—a line of demarcation for when many governments and organizations would target global net-zero emissions—will be markedly different than now.

In 2050, Pioneer Natural Resources Co. CEO Scott Sheffield foresees global demand much lower than today. Speaking to members of the Houston Producers Forum, Independent Petroleum Association of America and Texas Independent Producers and Royalties Association members in Houston in August, he said, “We could easily lose 25 million barrels a day by 2050” if electric vehicles successfully supplant internal combustion engine cars by then and another 15 MMbbl/d if diesel vehicles are replaced.

That leaves world demand between 50 and 75 MMbbl/d. Of that, he predicts OPEC, other state-controlled oil companies and majors to supply the bulk, with free enterprise vying to supply some 20 MMbbl/d. “We’re all going to be fighting for those last barrels.”

Alternately, Cimarex Energy Co. CEO Tom Jorden, speaking to a NAPE audience a day later, sees a “healthy demand for our product for many decades to come” as long as free markets are allowed to play out. He added, however, “I never want to underestimate our ability to make terrible public policy.”

And while Jorden believes oil and gas companies must adamantly strive to eliminate Scope 1 emissions in the near years, the true future demand for our products is in raising the economic conditions of lives in developing countries. “It would be a crisis for them to not have access to energy,” he said.

For our anniversary issue, Investor reached out to a number of industry thought leaders for their future perspectives, and most agreed that the next decade would be economically profitable at least to the point where peak demand is predicted by pundits. But they also agreed that the industry must embrace a partnership with energy transition efforts rather than become pariahs.

Industry veteran and former Swift Energy Co. president Bruce Vincent is a calm voice in today’s uncertain environment. He said, “The oil and gas industry plays a fundamentally important role today in our domestic and world economies as well as providing energy and raw materials for people to live productive and meaningful lives with significantly improved living standards.

“Over the long run, this will continue to be true despite all the rhetoric regarding the elimination of fossil fuels. While the industry will continue to need to compete for capital and innovate technologically, I believe it can and should continue to play an important role in America and the world for decades to come.”

I believe this too. The fervor and capital intensity of the energy transition will likely settle in a decade or so, and oil and gas and non-fossil fuels will ultimately find their balance, with hydrocarbons surviving in some mix. And Oil and Gas Investor will be there analyzing the trends, talking to the players and telling the stories of the industry just as we have for the past 40 years.

Thank you for being a part of that tale.

The data don’t lie: Dealmaking is alive and well in 2021. Join us live and in person for the A&D Strategies and Opportunities Conference at the Fairmont Hotel Sept. 29 in Dallas. See you there. It’ll be a dealmaking good time.