by Todd Peterson
CERAWeek by IHS Markit
The New Map: Energy, Climate, and Charting the Future
Gas day started with a look at Latin America and the question, can it achieve its gas potential. In particular Argentina and Brazil. Marcos Bulgheroni of Pan American Energy based in Buenos Aires was asked about the Vaca Muerta (dead cow) area in southern Argentina. This field was originally discovered in 1918 and has produced conventional oil until now. They knew that there was shale potential but its only recently that the reserve potential has come to the fore front. The reserves are huge, and Pan American has large reserves there along with YPF and others. The challenge, Mr. Bulgheroni pointed out is that the local market is small and a long distance away from Vaca Muerta. Even if you include Chile and Brazil as customers the investment needed is so massive that the economics currently do not work. Even exporting to the Far East does not work because you have to compete with Henry Hub and US LNG exports.
Phillippe Blanchard, President of Total Brazil, commented on the offshore pre-salt reserves they are developing. Decio Oddone, CEO of Enatura SA from Brazil is also in the offshore and commented on the local market. Both held similar opinions about the potential. The cost of development is around $4.50/MMBtu to bring the gas to shore. Petrobras has controlled the local market for many years even though there have been attempts to deregulate. Both feel the government must do better to open up the market to private investment.
We next got to hear from Jennifer Granholm the recently appointed Secretary of Energy. Mr. Yergin, who is moderating, wanted to know what the DOE plans were for the future and the Biden goal of net zero by 2050. The Secretary arrived full of energy for this session. She made several references to keeping the eye on the puck, Wayne Gretsky and where the puck was heading. She described the new Biden Administration and their plan to save the plan with an emphasis on racial justice and creating millions of good paying union jobs. The strategy to get to net zero carbon emissions by 2050 is to build a clean energy economy. Very few details were given. One area that DOE will focus on is geothermal. This will also help in the transition for those that lose their job in fossil fuels. The administration feels that there are huge opportunities in building the clean economy. They think that people who are displaced from oil and gas will easily find new jobs by building solar panels. Another area of opportunity for new union jobs is in critical metals mining. This would also help cut USA dependence on China and several other countries that are not exactly friends of the USA.
Secretary Granholm was asked about the recent Texas freeze that knocked out power and what could be done. She said because of the Texas ethos of going it alone the state will continue to have problems. The only solution is to connect to the national grid and be regulated from Washington DC.
Her final words were about EV's. She personally is driving her 4 th EV. That EV's are here to stay. Hydrogen will find its way into long-haul trucking and most importantly is to keep watching where the puck is going.
From South America to the USA and now Europe. There was an interesting discussion between Patrick Pouyanne, CEO, TOTAL (France), and Ignacio Galan CEO of Iberdrola (Spain). Both companies are headquartered in Europe but have large oversea activities. Iberdrola has a large present in the Americas and Europe and Total has a large global footprint. Both are working together on several wind farm projects. Mr. Galan feels that wind farms, especially offshore, will help replace coal fired plants as a base load.
Mr. Pouyanne also believes in offshore wind farms but thinks we need a combination of all technologies in wind, solar, hydrogen and yes oil and gas. But to electrify the economy we need better batteries. Hydrogen is where LNG was 40 years ago. Total is trying to minimize carbon emissions from a pilot plant it is building in Oman with carbon neutral LNG. Pouyanne went on to say that in the up coming meeting in Glasgow there should be a push to stop funding new coal plants.
Iberdrola has a project building green hydrogen power plants in Spain coming from ammonia and renewables. Galan says we can't say no to any technology that will help decarbonize the economy.
There was a session between Israel, the United Arab Emirates and Egypt. Carlos Pascual of IHS Markit was the moderator of The New Map of The Middle East. An amazing thing to see. While Israel and Egypt have had diplomatic relation for years, it is only recently under the Trump administration that 4 Arab countries have signed treaties with Israel under the Abraham Accord. Among other things this has allowed these countries to start working together on energy cooperation and rewriting the map.
The Minister of Energy from Egypt, H.E. Eng. Tarek El Molla sees his country as a hub for the region including Europe. Because of their location they could be a transit way for gas from the ME to Europe. Egypt is also a large consumer and is coming back as a producer of gas.
Israel is a country with few natural resources but is highly advanced technologically. H.E. Dr. Yuval Steinitz, Minister of Energy explained how his country must import most of its energy. Coal has been a major portion of their imports but not for long. By 2025 they want to be 100% natural gas and solar. No more coal. They have no renewables such as wind or hydro. The goal is to be 30% solar by 2030. They are also working on carbon capture before it becomes CO2. To separate carbon from hydrogen before it becomes a fuel. Israel is also proposing only LNG vessels in the Med to prevent further pollution.
H.E. Suhail Mohamed Al Mazrouei, Minister of Energy for the United Arab Emirates wants to be the cleanest producer in the world. If the UAE interconnects with all its neighbors in the region it will create prosperity and PEACE.
By Todd Peterson for Petroleumworld / March 3, 2021
Todd Peterson was born and raised in Venezuela and has a family tradition of working in the
oil and gas industry. He has worked in E&P, refining, natural gas marketing, shipping and LNG