Chevron CEO: Still Hard to Find a Big Threat to Oil
Date: January 14th 2021
Author: Tanja Srnovršnik
“It is still fairly hard to find a big threat to oil,” said Michael Wirth, the Chief Executive Officer of Chevron, in an interview during the Reuters Next virtual summit. Wirth is of the opinion that growing energy demand will leave the share of oil intact.“The fundamental drivers for demand really are largely unchanged. There are 7.5 billion people on the planet today, and by 2040 that number will grow to 9 billion or more. We have an emerging middle class in much of the world who are aspiring to a higher quality of life, which means more consumption of all types of products, including energy,” said Wirth.
“While there will no doubt be some changes in the markets as we go forward, some of the underlying fundamentals have not really changed and look like they will drive up demand for energy over time,” noted Wirth.
Therefore, the percentage supplied by the oil industry “is likely to remain somewhat similar to what it has been historically,” thinks Wirth.
Big potential for hydrogen and nuclear
When asked if he can name the promising technologies that could be a big threat to oil, Wirth said that “it is still fairly hard to find a big threat to oil.”
“There are things that are pushing oil demand out. Electric vehicles, for example, hold the prospect to change light duty transportation,” said Wirth. However, there are other sectors that are much harder to decarbonise, such as heavy-duty transportation, industrial uses, shipping, aviation, etc. These will remain big markets for oil and gas, added Wirth.
In the longer term, hydrogen and nuclear hold the prospect to play significant roles in the global energy mix, said Wirth.
Chevron’s strategy different than its European peers
However, while faced with the COVID-19-induced collapse in oil demand and increasing investor activism, exploration and production (E&P) majors, such as BP, Shell and Total, have accelerated their plans for renewable capacity generation and set their corporate decarbonisation goals, Wirth, however, did not mention whether or not Chevron is poised to follow the same lead.
“We support the Paris agreement and aspirations for a lower carbon society, and we are working in that direction,” said Wirth.
He mentioned three primary areas in which Chevron is working. The first is reducing the carbon intensity of Chevron’s current business. “The world uses a lot of oil and gas today and it cannot transition away from oil and gas overnight. So, we should work to reduce the carbon intensity of today’s energy system. We have very specific targets to achieve that, which are tied to compensation for myself and virtually every employee in our company,” explained Wirth.
The second area that Chevron is working on “is to integrate renewables and offsets into our business in a way that further reduces the carbon impact of energy. We are doing that through wind and solar, which is replacing fossil power generation. We are producing renewable natural gas by capturing methane from dairy farms and processing it to displace fossil natural gas. We are providing renewable diesel and investing in more manufacturing of renewable diesel, etc.”
The third area Wirth mentioned is investing “in technologies to enable new commercial and scalable contributions to the energy system.” To this end, Wirth mentioned carbon capture and storage, and hydrogen. “We are particularly investing through our venture capital arm in start-ups that have interesting new novel technologies and ideas for ways to create these lower/no carbon energy systems of the future,” he added.
This article is available also in Slovene.
20.01.2021 - IEA Revises Down Global Oil Demand Forecast For 2021
12.02.2021 - IEA Forecasts Stronger Oil Demand Growth in H2 2021