The energy industry is at an inflection point and a moment of resiliency as it experiences a rebound in pricing and recovers from the impact of the global pandemic.

In this IndustryVoice video, Babst Calland attorneys Joe Reinhart, Co-Chair of the firm’s Energy and Natural Resources team; and Jim Curry, Managing Shareholder of its office in Washington, D.C., discuss a range of topics examined in the report with Hart Energy Senior Editor Joe Markman.

Ajay Bakshani, co-author of East Daley’s annual Dirty Little Secrets midstream outlook, discusses the expectations for $90 billion in free cash flow and why ‘midstream can really do it all in the next few years.’ 

Ajay Bakshani, capital markets analyst for East Daley and a co-author of the report, said the sector was primed to generate about $90 billion in cash over the next four years, based on research on the 25 companies the firm actively follows. The question for the East Daley team became: with fewer projects, how will that money be used?

With 2021 soon coming to a close and commodity prices having stabilized, the theme of the oil and gas industry can be described as cautious optimism.

Shareholder focus, new investment options as well as the experience with the last downturn has given U.S. shale producers a different perspective this time around, according to Amy Chronis, vice chair, U.S. oil, gas and chemicals leader, Deloitte.

“They are now pivoting toward a new math, maximizing free cash flows from hydrocarbons, investing in the decarbonization of hydrocarbons, new energies and certainly very aware of all the stakeholder pressure,” Chronis said.

Joined by Kate Hardin, executive director for the Deloitte Research Center for Energy & Industrials, Chronis recently spoke with Hart Energy’s Brian Walzel about Deloitte’s 2022 outlook for the oil and gas industry including the five key trends that the firm believes will likely influence the industry over the next 12 months.

The new world order of the oil and gas industry surrounds a low-carbon and/or new energy focused business model. And, as capital allocation for these projects grew significantly in 2021, this implies favorable economics for low-carbon producers in 2022.

Nicholas Fulford, the senior director of energy transition for petroleum consulting firm GaffneyCline, said net-zero commitments from all supermajors and most NOCs paired the introduction of new tax credit incentives indicates a new horizon for oil and gas portfolios going into 2022.

“We’ve seen carbon capture and CCUS projects come to age and there is a real following now within the investment community and a real belief in that technology going forward,” Fulford said.

Even though oil and gas companies are increasingly focusing on reducing the environmental impact of their operations with aggressive efforts centered on the narrative of energy transition, they aren’t going to move away from fossil fuels, at least over the next few decades, according to Dr. Jerry Bailey, director of Petroteq Energy and former president of Exxon Arabian Gulf.

“Oil companies are not going to move from oil, that’s what got them where they are,” Bailey said in a recent interview with Hart Energy’s Faiza Rizvi.

“Oil companies have an important and lucrative niche in this regard. There is no reason to transition away from that. There are enough companies working in the other arenas that can cover those types of things,” he said, referring to renewable energy.

After spending decades focused on production growth, oil and gas companies transitioned to a free cash flow model in recent years to boost their financial performance and now it appears investor demands are changing again.

“Firms representing over $100 trillion of assets under management have signed up for responsible investments, stating they will consider ESG when allocating capital,” said Manuj Nikhanj, president of global energy data analytics and SaaS technology company Enverus.

With increasing pressure to fight climate change, scientists and leaders agree that carbon capture, use and storage (CCUS) is a cost-effective solution to meet emissions goals made under the Paris Agreement.

Although aggressive efforts are needed to meet the net-zero goal, oil and gas companies are making significant progress in deploying CCUS projects at scale, according to JP Brisson, partner at Latham & Watkins’ law firm.

“More than 30 [CCUS] projects are in operation globally with more than 40 under development,” Brisson said in a video interview with Hart Energy’s Faiza Rizvi, adding that U.S. oil and gas companies are well-positioned to make progress in the area.

“There are several reasons for this,” he said. “First of all, U.S. is a leader in CO2 injection and sequestration. Companies in the U.S. have been injecting CO2 since the 1970s, which builds credible extensive capability.”

As the Biden administration in the U.S. and governments throughout the world decarbonization push has spurred a renewable boom, which has created both obstacles and opportunities for the oil and gas space.

With a large amount of capital flowing into the renewables space, the energy industry has responded in a number of different ways, according to Cliff Vrielink, partner in Sidley Austin’s energy practice group.

“Of course, some of the larger supermajors have developed other strategies and are also investing in the renewables space but for the most part I think the industry has been focused on trying to reduce their carbon footprint,” Vrielink told Hart Energy’s Emily Patsy.

Chris Romer describes himself as not only head of an ESG data company that he helped launch but also the leader of a broader movement across the oil and gas industry as well.

“The movement of Project Canary because we are a project and we welcome you to join us in giving the emissions ‘the bird,’” Romer, co-founder and CEO of Project Canary, recently told Hart Energy.

The company, Project Canary, is a Denver-based start-up at the heart of the responsibly sourced natural gas (RSG) push with a growing number of partnerships with companies across the upstream, midstream and utilities space to provide continuous emissions monitoring and independent RSG certification.

If there is one person who has played a significant role in expanding Baker Hughes’ sustainability performance and ESG reporting, it’s the company’s vice president of energy transition Allyson Anderson Book, who also chairs the ESG steering team at Baker Hughes.

Book was recently named ESG Champion at Hart Energy’s ESG Top Performers Awards program for her outstanding contribution toward broadening Baker Hughes’ sustainability reporting frameworks and her active involvement in the creation of the company’s net-zero roadmap.