Matthew Rigdon, Executive VP and COO

The oil and gas industry is evolving into the energy industry as renewable energy sources become more widely available across developed countries. However, as G. Allen Brooks points out in his December edition of “Musings from the Oil Patch,” the dependability of renewables is proving to be quite problematic. In Western Europe in particular, this time of year means dreary, cloud-filled days with not much wind. He goes onto state that “the goal of decarbonizing our economies and running them totally on electricity struggles with the reality that wind and solar are intermittent power sources.” This has meant that coal and hydrocarbon fired power plants have had to be brought online when not anticipated.

This industry evolution has also been the catalyst for net-zero carbon emissions targets by energy companies. However, this is a bit of a chicken-and-egg scenario where emissions targets may actually be what’s influencing change. Setting ambitious targets by as early as 2050, they are heavily reliant on increased and improved renewable energy sources. The challenges detailed in Western Europe will, I believe, mean a greater reliance on carbon offset spending to reach net-zero emissions within that 2050 timeframe. This is partly supported by the significant investment in carbon offsets as well as direct investment in carbon offset enterprises by energy companies. I believe this signals that the rate of displacement of hydrocarbons by renewables has been overstated by such entities as the International Energy Agency. As a result, future demand estimates for oil gas have been underestimated and there will be a sustained uptick in oil and gas exploration and production.

U.S. oil and gas companies will look to take advantage of the next sustained exploration and production trend as the deepwater Gulf of Mexico will remain one of the most logical areas to replenish and produce proven reserves.