Saturday, December 9, 2023

Chevron grappling with a new oil reality

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Among the companies most affected by pandemic, Chevron is near the top. Oil price fell earlier this year after it became clear that the global economy – all the travel, trucking and shipping that powers it – would be stuck.

To make matters worse, the energy the industry had experienced an expansion of hydraulic fracturing for two decades. It didn’t matter that many experts predicted that the world had reached or was on the verge of reaching “peak oil,” the point at which global oil consumption would begin to decline due to a shift to energy sources. more durable.

Interviewed on Fortune Leadership Next podcast, Michael Wirth, CEO of Chevron, acknowledged the current difficulties in the oilfield. But he argued that oil would play a major role in the global economy for the foreseeable future.

“Oil is a huge part of the energy economy today and will remain so for a very long time to come,” said Wirth.

Yet Chevron, which pumps oil all over Texas to Nigeria to Kazakhstan, has attempted to weather the current crisis by cutting thousands of jobs and cutting planned spending by billions of dollars over the next few years. Over the past 12 months, the company has reduced the value of its energy fields by nearly $ 16 billion, an admission that there will be no quick turnaround.

The complexity of Chevron’s situation and that of its rivals is compounded by a global recognition of climate change. Nearly 190 countries have signed the Paris Climate Agreement, a plan to reduce carbon emissions. Meanwhile, the United Nations is pushing countries to reach net zero carbon emissions by 2050. Both plans would force countries to radically switch to renewables and forgo oil and natural gas.

Wirth said Chevron and the rest of the energy industry can still play an important role in focusing more on green energy. He pointed to an existing Chevron project in Australia that involves taking carbon dioxide emissions and storing them underground, and another that turns methane from dairy cow manure into natural gas.

But achieving a significant reduction in carbon emissions will require additional tools, and Chevron, Wirth said, is investing in several carbon-free technologies, including nuclear fusion and hydrogen. Yet even if countries meet their carbon targets, he added, fossil fuels will still be part of the energy mix.

“I think we’re going to need a lot of technologies and solutions that don’t exist today to take carbon out of the atmosphere and achieve net zero,” Wirth said. “Because the reality is that there will always be carbon emissions in the system as we approach 2050, regardless of the scenario.”

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