Op-ed: ESG is Energy Security

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Maybe Scott Sheffield wasn’t the first person to say out loud the thing that lots of folks feared when he told an energy conference crowd in May that the Russian invasion of Ukraine had made at least one fundamental shift in the world: Security had trumped ESG in energy.

“Nobody’s going to drop ESG, but energy security has become 10 times more important than ESG,” the maverick CEO of Pioneer Natural Resources told our own Len Vermillion during Hart Energy’s DUG Permian Basin and Eagle Ford conference.

Russia’s invasion of Ukraine flipped the narrative in February, and insiders have been wringing their hands during the time since.

Part of the fallout is a continent plunged into fuel and power uncertainty, propelling energy security fears above ESG matters in the view of investors and shareholders, Sheffield said.

The idea reiterated the reality that the industry, the world—and all of its residents—are connected.

It has lingered since. If someone I’m interviewing doesn’t bring it up first, I’ve posed the question during interview after interview: Is Sheffield right? Did Russia’s aggression put ESG on the backburner?

I’ve yet to find someone—whether in the C-suite or a Permian Basin rig—who wants to challenge Sheffield on the record.

The CEO of one of the largest natural gas producers in the U.S. told me the war had brought security back to the forefront of industry concerns—but that there was plenty of space to worry about ESG issues, too.

The top executive of a global investment firm said indeed that it was now more evident than ever that satisfying global energy needs is a multifaceted problem.

And a couple of guys who work in the Permian oil fields said security is always on their minds. In recent years, ESG matters are also a constant concern.

The consensus of the moment appears to be that the global nature of the industry is inherent, that means its challenges are tangled together now, too.