CERAWeek Diary: Key takeaways from euphoric ‘Super Bowl’ of energy industry

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Fri, 2019-03-15 23:19

It’s time to doff the Stetson, unhitch the boot spurs and
stable the quarter horse for another year. CERAWeek by IHS Markit,
the annual “Super Bowl” of the energy industry held in cowboy
country in Houston, Texas, is over.
Houston is the capital of the US oil industry, and with US crude
exports booming at all-time record levels, the mood was exuberant,
even on occasion euphoric, at the five-day energy extravaganza. The
number of attendees, at 5,300, was also a record for what has been
called the “oil man’s Davos.” Here are some key
takeaways.
1. The dynamic of the global oil industry has changed dramatically,
even in the past 12 months. The renaissance of the US oil industry
has made the country the biggest producer, and set it on course to
rival Saudi Arabia as the biggest exporter. OPEC, led by the
Kingdom, will have to rethink its long-term position, and maybe
further institutionalize the relationship with Russia and other
non-OPEC producers to counterbalance American dominance in oil.
2. The crisis in Venezuela has the potential to bring about fresh
turbulence in oil. One of the most enthusiastic rounds of applause
of the week came when energy experts from there — opponents of
the Maduro regime — called for change and investment in the
country’s energy industry, which is in chaotic condition.
Venezuela has the biggest reserves in the world, and if it were to
get back “online” it could add a new element to the global
picture.
3. The US shale industry, centered around the Permian Basin, goes
from strength to strength. Shale executives in Houston were in
back-slapping, yee-hawing mood as they celebrated the success of
their businesses. One panel was asked to consider what might go
wrong for US shale, and was in unanimity that — barring a major
disaster — the future was assured, at least for the next five
years, thanks to the unique combination of technology, finance and
“great rock.”
4. The threat of peak oil — supply and demand — has been shown
to be a myth. The world is producing and consuming more oil than
at any time in history, and that trend will continue despite the
move toward electric vehicles. One statistic stood out: Only 18
percent of the world’s population has traveled in an airplane.
The growing prosperity of Asia’s populations will change that. It
is hard to imagine electric planes taking over the skies anytime
soon.
5. Global demand for liquified natural gas is also booming. Some
experts talked of a “surge” in LNG production — with the US
shale industry again playing a major part — and demand in Asia is
growing fast. Twenty years ago there were fewer than 10 LNG
importers in the world. Today there are 49.
6. Pressure on the energy business to be more sustainable is
formidable, and will increase. Virtually nobody at CERAWeek was a
climate-change denier. Many sessions were devoted to renewable
technology, with the increasing efficiency and affordability of
solar power the favored path for many executives. The Middle East
has obvious advantages in this respect and was frequently mentioned
as a future leader of the solar industry — with the right
strategy.
7. Mobility in all its forms is taking up an increasing amount of
energy executives’ time. Electric vehicles, self-drive cars,
ride-hailing IPOs are examples of the corporate frenzy surrounding
mobility, and have obvious implications for the oil producers and
urban developers. Even more of CERAWeek time was devoted to these
issues this year.
8. Technology and energy are more intertwined than ever. CERAWeek
expanded this year with the Innovation Agora, and it was an
eye-catching exhibition of how high-tech can revolutionize energy
production and usage. Saudi Aramco — at the cutting edge of many
of the new-wave developments, was prominently on show.
9. Houston is a great place to stage an event. The city is
manageable, the hotels are plentiful and affordable, the
restaurants are fantastic — especially for any kind of beef dish
— and the air connections to the rest of the US and the world are
excellent. Davos, Switzerland, please take note.

  • Frank Kane is an award-winning business journalist based in
    Dubai. Twitter: @frankkanedubai
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Source: FS – All-News-Economy
CERAWeek Diary: Key takeaways from euphoric ‘Super Bowl’ of energy industry