The head of one of the world’s largest oil and gas producers has called for an industry crackdown on fugitive emissions, saying it makes no sense for companies to let their product escape.
Core items:
- BP boss Bernard Looney says leaking gas wells are a “huge” environmental and economic problem
- Methane emissions account for about a quarter of the world’s annual greenhouse gas production
- The BP chief says the slowdown in global economic activity is likely to weigh on high energy prices in the coming months
Bernard Looney, chief executive of oil and gas group BP, said methane leaks from gas wells in Australia and around the world are a “huge problem” that needs to be addressed for economic and environmental reasons.
In an in-depth interview with the ABC, Mr. Looney also said that investments in new oil and gas projects would need to be made by 2050, even as the global economy moves towards carbon neutrality.
The 52-year-old said wrestling with what he called the energy trilemma of emissions intensity, safety and affordability was a complex task.
But he said the unprecedented energy crisis unfolding in 2022 shows how high the stakes are and why governments and investors need to be careful about how they manage the switch to renewable sources.
“What you’re going to see over time is the reduction in demand for hydrocarbons and the reduction in investment in hydrocarbons,” Mr. Looney said.
“But that is not the same as not investing.
“Oil and gas fields are declining faster than societal demand will be declining.
“And you have to invest in this middle.
“You have to invest – otherwise you have the problem we have today, where you don’t have enough supply, prices are going through the roof and the consumer is affected and obviously they’re like, ‘What are we trying? here?'”
“The less you lick, the more you sell”
As he rose to the top spot of the world’s sixth largest oil and gas company in 2020, Mr. Looney outlined ambitious plans to reduce the company’s carbon footprint.
A key element has been addressing the release of methane from BP’s production wells, a greenhouse gas far more potent than carbon.
Mr. Looney noted that methane is natural gas and therefore it makes no ecological or economic sense to waste it.
“The less you lick, the more you sell and that in itself has an economic advantage,” said the Irishman.
“This is an absolute priority for our company.
“In many parts of the world, increasing regulation of methane means there will be costs to the regulatory system from methane leaks.”
Clean Energy Finance director Tim Buckley, a prominent renewable energy advocate, said BP’s efforts to limit its methane emissions seemed genuine.
Mr Buckley said the importance of avoiding methane emissions should not be underestimated.
“The reason methane is so important is that it accounts for literally a quarter of the world’s greenhouse gas emissions each year,” Buckley said.
“Scientific meetings are judged on a 100-year perspective, but we have a climate emergency, which means we really should be talking about methane at a 20-30 year meeting.
“Methane is 84 to 86 times worse than carbon dioxide on that basis.
“It’s the elephant in the room.”
Australia’s Green Opportunity
Another part of the restructuring under Mr. Looney was BP’s move to cleaner technologies such as wind, hydrogen, biogas and electric vehicle charging infrastructure.
Earlier this year, the British company bought a majority stake in the world’s largest green energy proposal – the $52 billion Asian renewable energy hub in the Pilbara region of Western Australia.
Mr Looney said the project is still a long way from a final investment decision.
But he said it’s the kind of endeavor needed to transform Australia into a green energy superpower, especially given the country’s proximity to vast Asian markets.
“If I look at the history of the country … you are also blessed with exceptional transitional resources,” he said.
“So this concept of making Australia a renewable energy powerhouse is absolutely there.”
Amid this year’s turmoil, Mr Looney predicted something of a respite for struggling consumers, saying slowing economic growth that could plunge some developed nations into recession would weigh on oil and gas prices.
He found that for every percentage point drop in global economic output, there was a drop in oil demand of about half a million barrels a day.
“Can the destruction of economic growth be reflected in less demand for the product, for the hydrocarbon product?” he said.
“I think the answer to that is broadly yes. Probably not to the extent that you might think.
“Well, in a system that’s only producing or demanding 100 million barrels today… you can see that’s a significant number.
“But it’s also not incredibly material.”
“Very difficult time for society”
Energy markets have traded at record highs for most of the last 12 months, drawing the attention of governments worried about supply shortages and sky-high prices for households and businesses.
These fears prompted the UK government in July to impose a 25 percent windfall tax on the profits of big energy companies like BP.
Mr Looney declined to enter into speculation that Australia could implement a similar measure.
There have been suggestions that the Commonwealth could intervene in the energy market by imposing a levy on East Coast liquefied natural gas (LNG) exports.
BP has no investments in the LNG industry on Australia’s east coast, although it owns one-sixth of the North West Shelf project off northern Washington.
Despite this, Mr Looney said he did not want to speculate on what action the Commonwealth might take, saying these were government matters.
“This is a very, very difficult time for society in general,” he said.
“Understandably, governments are … looking for ways to help society with this problem.
“Different governments around the world are trying different things.
“And then, of course, the governments have to think about how they can finance such subsidies for energy.”
Mr Buckley disagreed with Mr Looney’s suggestions that investment in new oil and gas projects would take decades, arguing it would lead to catastrophic global warming.
Business as usual not an option
The former investment banker speculated about the continuing need for new oil and gas projects related to solutions such as carbon capture and storage to avoid carbon emissions.
But he argued that carbon capture and storage had been a miserable failure, pointing to oil major Chevron’s troubled efforts to bury emissions from the giant Gorgon project off WA.
“What Mr. Looney is painting is a picture that the world will go up to 2.5 degrees [of warming]or he’ll stick his head in the sand – he won’t be his problem because he won’t be CEO in five years,” Buckley said.
“He will have retired with his millions.”
Despite the comments, Mr Buckley said Mr Looney deserves credit for trying to steer BP towards cleaner operations.
“The reality is the Totals, the Shells, the Chevrons and the Exxons are all watching what he’s doing,” Mr. Buckley said.
“And the more successful he is, the greater the speed [with which] They will try to replicate his success and that is crucial.
“We’re talking about some of the biggest companies in the world.
“We need their balance sheets – we need them to stop fighting the solutions and start investing in the solutions.”
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