20 years of experience in Supply Chain, Management and IT, working for multinational oil and gas companies in Latin America: Colombia, Argentina and Mexico.
The future of energy is uncertain. Last week, at the COP26 conference in Glasgow, over 20 countries signed an agreement stating that they would no longer support investment in conventional fossil fuel projects (coal, oil and natural gas). Understanding why this is happening and what it may do to our world is going to be the key to determining what role, if any, fossil fuels hold for our future.
This is the first time the world has lived through a global pandemic, where most of us have been sitting at home for 18 months fully connected and sharing the experience. One of the things that has happened is the growing understanding that we can’t continue to dump as much contamination into our air, water, and land without having serious and potentially permanent repercussions for humanity.
It is time to accelerate the process of transition to sustainable sources of energy. The challenge is getting from where we are today to where we would like the world to go. In 2019, the U.S. Energy Information Administration (EIA) reported that 84.5% of all energy consumed in the world came from coal, oil and natural gas. Wind power accounted for only 2% and solar for even less, at only 1%. Even if we assume that we can accelerate the pace of investment in wind, solar, geothermal and hydroelectric power, it will still be many years, if not decades until the majority of the world’s energy demand is met by these sources of power. And that leaves aside the even larger challenges to replace the use of oil and natural gas for the creation of fertilizers, crucial chemicals and consumer goods.
There is a risk of accelerating the energy transition too much. If we don’t find a way to give the world time — time to improve technology, solve supply issues, solve grid-level storage solutions and perhaps most importantly, time to figure out how to do all of this in a socially just manner — the costs will be enormous and the ability to apply solutions will be limited to wealthier countries. The potential for massive social injustice is high but, perhaps even more importantly, climate change is a global phenomenon and reducing contamination in one place to only have it increase in another is no solution at all.
We are living through a period of price shocks in the petroleum sector. Underinvestment in oil and gas projects and, at times, unilateral decisions to stop projects before replacements are available have led to massive disruptions in the pricing and supply of oil and natural gas around the world. Prices for gas in Northern Europe and Japan spiked over US$25/mmbtu when only 18 months ago, gas was worth less than $2 in the many global markets. This has led to supply interruptions, the failure of many small and large-scale consumers of gas and a fundamental geopolitical shift in the power that countries that have gas, such as Russia, can exert over those that do not. But what is overshadowed is the fact that the countries that can afford these energy prices are limited to the most developed in Europe, Asia, and North America. Most countries in the remainder of the world cannot compete and have been forced to rely on domestic supply or, failing that, to look at reactive supplies of power that are far more contaminating than natural gas.
But there is hope. Time is needed for the ingenuity of humans to overcome these problems and for systems and economies to adjust to the new reality. While we are investing in these changes, the most cost-effective and least contaminating fossil fuel is the best bridge we have to get from where we are today to where we need to be. Natural gas is not only the cleanest of the main fossil fuels; it also holds the most promise for an equitable and socially just transition to a greener, more sustainable world.
Some environmentalists would argue that this is not enough. That we shouldn’t accept the use of any fossil fuels. But what if natural gas can be produced without making a negative impact on the environment? There is no silver bullet. The concept of Responsibly Sourced Gas in the United States has come on the scene over the last couple of years. This is a process whereby natural gas production is independently certified to be in the lowest percentage of emissions and, therefore, less harmful for the environment. This is a positive step, as you are constantly being graded against the industry average and as averages improve over time, the bar gets higher and higher and performance should continuously improve.
In our case, JAGUAR is going one step further. We are making sure that for whatever emissions we cannot yet remove, there is committed social investment in environmental remediation projects that absorb CO2 emissions faster than any last emissions that come from our operations. We are doing this with water and land impact as well. Making sure that we are leaving the world a better place every day than the one we found it. And we are learning with our communities and our people how to do this in a way that the benefit is real and tangible for everyone involved.
The concept of Carbon Positive Gas has come to Mexico. The concept is so new that people are still trying to figure out how to measure this and what it means. We are part of this process and actors in a world where we can imagine the production of natural gas continuing to make the world a better place to be in