Hurricanes, global warming and all that… (September 2005)

When world events impact the oil and gas consumers that we all are, I get a lot of interest in my position as editor of ‘the Oil Newsletter’ from friends and acquaintances. Folks seem to expect me to have the answers as to where the oil price is going next, how Katrina, and now Rita will affect us, are such catastrophes due to global warming, and so on. Of course I don’t have a clue myself, but I do hear and read a lot of industry leaders pontificate on such matters and feel obligated to try and give a kind of resume as to what folks are thinking. This is no easy matter.

Katrina

Already before Katrina, opinions were divergent on the oil price. As we have noted before, even within what is now an extended IHS Energy, the IHS camp was telling us that discoveries are not replacing production and that ‘peak’ is likely just around the corner, while the CERA-side argument underlines the fact that there are a lot of mega projects—notably LPG—that are set to turn things around and rectify a tight situation over the next few years. Both views can of course coexist. In fact the situation today may be unusual in that we have some visibility of the next cycle and a half or so—with a $70 boom to be replaced in the mid term with something of a bust. Or maybe not…

Rose

On the global warming issue, opinions are likewise divided along what might be called, party lines. It was interesting to see the new AAPG president, Peter Rose tending towards the warming ‘denial’ camp. Rose, writing before Katrina in the July 2005 issue of the AAPG Explorer magazine, recommended Bjorn Lomborg’s 1998 book, ‘The Skeptical Environmentalist*’ as a ‘thoroughly documented, well-informed and remarkably objective and insightful look at the environment.’ According to Rose, Lomborg’s ‘overpowering’ conclusion is that, ‘Things are not getting worse, they’re getting better.’

Objective?

Like I said earlier, I’m no expert on these matters, but a quick google on Lomborg reveals that a large number of specialists in the environment field do not consider him to be ‘objective.’ Lomborg is not exactly a neutral citation. His position is not so much ‘skeptical’ as firmly in the denial camp.

 Washington

At the Paris AAPG international meet, Rose didn’t get into climate change—but he was enthusiastic about the AAPG’s initiative to have a Washington-based lobbyist. It wasn’t clear what the AAPG’s Washington lobbyists will be lobbying for. But, chatting to a couple of AAPG folks, I believe that this lobbying will be along the ‘denial’ lines—and will no doubt emphasize Lomborgian arguments. As a ‘don’t know’ I am not sure I agree with this position. Firstly, it assumes that the oil industry as a whole is in the ‘denial’ camp—which is not the case for BP, Chevron and Shell (despite their enthusiasm for Formula One motor racing—see this month’s lead) and I am not sure that the rank and file AAPG membership shares Lomborg’s view. My second objection is more of a strategic nature. Many (probably most) people outside of the oil industry regard it as the latter-day equivalent of Blake’s ‘dark satanic mills.’ Lomborg’s ‘things are getting better’ is caricature of what people expect a ‘big bad oil’ exec to say. About as objective as a turkey’s opinion on the merits of Christmas.

Hiring boom

You may think this topic is kind of wandering away from oil and gas information technology. Bear with me. Another theme of the AAPG Paris session is the dearth of personnel. The industry is seeing a hiring boom the like of which has not been seen since, well since the last one in about 1981, when oil was topping $80 per barrel in today’s dollars. The demand side of the boom is fuelled by $70 oil. But the problem is exacerbated by a couple of decades of low intake into the industry. While this is in part due to youngsters not wanting to train for a boom and bust industry in ‘bust’ mode, it is also due to the bad press the oil and gas business has got on the environment. Pretty well all the young graduates I know have great misgivings about the oil industry—for many to the extent that they would rather go into environmental geology, water resources or even wash dishes than explore for or produce oil and gas!

Credible?

I know there are plenty of arguments that can be used to counter such anti-industry sentiment. I like to ask, ‘How did you get here? Oh you drove here in an automobile…’ whereupon I rest my case. Except that such an argument does nothing to change sentiment. And neither do pointers to ‘proofs’ of the denialist viewpoint from folks like Lomborg. What I am saying is that the oil industry, to counter the prevailing skepticism as to its motives, does not really have the option of denial. It is not a credible witness.

Options

Industry has other options though, some of which were in evidence at the Calgary AAPG (see last month). The Environmental—Kyoto session was a good example of what oil company engineers can do to redress perceptions. These involve making the process of exploration and production as clean, energy efficient and un-intrusive as possible. 

Diamond

My own ‘environmental contribution’ this month is another book recommendation, Jared Diamond’s ‘Collapse**,’ a book, not by an environmentalist or forecaster, but by a historical geographer and anthropologist. Diamond does not really get into the warming debate, instead focuses on mankind’s past inability to cooperate when communities are faced with dwindling resources and the catastrophic results.�

* ‘The Skeptical Environmentalist’, Bjorn Lomborg, 1998.

** ‘Collapse’, Jared Diamond, 2004.

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