A Subject Matter Expert in Subsea Engineering and Director at National Oilwell Varco based in Houston, Texas, Dr. Babajide Agunbiade, has said that clean energy innovation and pursuit of zero-emission is expected to form the pivot of the incoming US government’s energy policy.
Dr Agunbiade made the disclosure while responding to a question of what will be the future of the United States Oil and Gas Industry with president-elect Joe Biden at the helm of affairs.
Agunbiade noted that there is likely going to be three agenda which will drive Joe Biden’s energy policy and these, he noted, are first, an irreversible path to achieve economy-wide net-zero emissions by 2050; secondly, a drive towards a historic investment in clean energy and innovation; and, finally, requiring aggressive methane pollution limits for new and existing oil and gas operations.
He argues that part of the broad agenda will include developing rigorous new fuel economy standards aimed at ensuring 100% of new sales for vehicles which will be zero-emissions; protecting America’s natural treasures by permanently protecting the Arctic National Wildlife Refuge and other areas impacted by President Trump’s policy on federal lands and waters including also the banning of new oil and gas leasing on public lands and waters.
Agunbiade said: “While Trump had sought to maximise domestic oil and gas production within the United States, Biden will ban the issuance of new drilling permits on federal lands and waters to fight global climate change.”
He noted further that, according to data from the Interior Department, the US produced nearly three million barrels of crude oil per day from federal lands and waters in 2019, along with 13.2 billion cubic feet per day of natural gas, saying “that amounts is about a quarter of total domestic oil output and more than an eighth of total US production of gas. A federal ban on new permits would mean those numbers trend toward zero over a matter of years.
“I foresee that without the political sheltering by Trump’s leadership in Washington, U.S. majors like ExxonMobil and Chevron that have remained focused mainly on the traditional energy business will begin implementing strategies for a global energy transition more like European oil and gas companies like BP and Royal Dutch Shell.
“The implication for Sub-Saharan Oil and Gas production is that with renewable energy taking the more central stage during the Biden administration, fossil fuel demand will continue to decline, leading to reduced drilling, production, and exploratory activities.
Agunbiade stressed that there would be an impact on global and US public revenues as oil and gas production generated about $12 billion in public revenue in 2019, divided between the US Treasury, states and counties, tribes, and cleanup funds.
Citing Wood Mackenzie, 2020, Agunbiade posited that there are potential legal Implications as upstream producers have already invested billions of dollars into exploration and development projects.
He said: “In US GoM (Gulf of Mexico) alone, companies have invested over $180 billion since 2005 in drilling and exploratory activities on the land the Biden government is looking to ban. There would be removing subsidies for fossil fuels, which, some environmentalists say, inject roughly $20 billion into the industry annually.”
With an optimistic view on the future of renewable energy, the global expert on energy noted that there would be an emphasis on low or zero-carbon energy production, green industry manufacturing, and more climate-friendly regulations. Also highlighting that there will be generous government research grants to renewable energy start-ups.
“The solar and wind producers will enjoy munificent tariffs, and, hopefully, the nuclear industry and fusion pioneers. Potential job loss may occur in areas that traditionally rely on oil and gas employment. However, this could be balanced out by Biden’s plan that would create millions of new jobs.
“There is a further decrease in global demand for hydrocarbons due to renewable Energy options coming to play, which will impact the already volatile oil prices.”
In concluding Agunbiade emphasised that it will be imperative for the incoming federal government, led by Joe Biden, to maintain a balanced curve in passing relevant energy legislation. He posted that the oil and gas industry still maintains a reliable place in annual revenue generated and that Biden’s proposals could bring about some of the most substantial deviations that the US offshore industry has ever seen.
He pointed out that careful thoughts need to be made, saying: “After all, not every President has fully stuck with their pre-election promises. The fact that Biden mentioned that he wouldn’t end fracking could be a good omen and some light at the end of the tunnel for the USA oil and gas industry.”
By Victor Ikem
