The head of one of the world’s biggest oil and gas producers has called for an industry crackdown on fugitive emissions, saying it doesn’t make sense for companies to let their product leak out.
Key points:
- BP chief executive Bernard Looney says leaking gas wells are a ‘huge’ environmental and economic problem
- Methane emissions account for around a quarter of the world’s annual greenhouse gas production
- BP boss says slowing global economic activity likely to weigh on high energy prices in coming months
Bernard Looney, the boss of oil and gas supermajor BP, said methane leaks from gas wells in Australia and around the world were a “huge problem” that needed to be addressed for economic and environmental reasons.
In a wide-ranging interview with the ABC, Mr Looney also said there should be investment in new oil and gas projects through 2050, even as global economies move towards carbon neutrality.
The 52-year-old said tackling what he described as the energy trilemma of emissions intensity, security and affordability was a complex task.
But he said the unprecedented energy crisis that unfolded in 2022 showed how high the stakes were and why governments and investors needed to be careful about how they handled the switch to renewable sources.
“What you’ll see over time is a reduction in demand for hydrocarbons, a reduction in investment in hydrocarbons,” Looney said.
“But it’s not the same as no investment.
“Oil and gas deposits are declining faster than the decline in societal demand will.
“And in this environment, you have to invest.
“You have to invest – otherwise you end up with the problem we have today, which is you don’t have enough supply, prices skyrocket and the consumer is affected and starts obviously to ask, ‘What are we trying to do here?
“The less you leak, the more you sell”
Upon assuming the top job at the world’s sixth largest oil and gas company in 2020, Mr Looney outlined ambitious plans to reduce the company’s carbon output.
A key element was tackling leaks from BP’s producing methane wells, a much more potent greenhouse gas than carbon.
Mr Looney noted that methane was natural gas and therefore made no environmental or economic sense to waste it.
“The less you leak, the more you sell, and there’s an economic benefit to that in itself,” said the Irish national.
“This is a top priority for our business.
“In many parts of the world, increasing methane regulation means there will be a cost in the regulatory system for 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 preventing methane emissions should not be underestimated.
“The reason methane is so important is that it literally accounts for a quarter of global greenhouse gas emissions every year,” Buckley said.
“Scientific convention is rated on a 100-year vision, but we have a climate emergency, which means we really should be talking about methane on a 20-30-year convention.
“Methane on this basis is 84 to 86 times worse than carbon dioxide.
“It’s the elephant in the room.”
Australia’s Green Opportunity
Another part of the upheaval under Mr Looney has been BP’s shift 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 proposition – the $52 billion Asian Renewable Energy Hub in the Pilbara region of Western Australia.
Mr Looney said the project was far from a final investment decision.
But he said it was the kind of business needed to make Australia a green energy superpower, especially given the country’s proximity to giant Asian markets.
“If I look at the history of the country … you are also endowed with extraordinary transitional resources,” he said.
“So this concept of Australia can become a renewable energy powerhouse is absolutely there.”
Amid this year’s turmoil, Mr Looney predicted some kind of respite for beleaguered consumers, saying slowing economic growth that could tip some developed countries into recession would weigh on oil and gas prices .
He noted that for every percentage point drop in global economic output, there was a drop in demand for oil of about half a million barrels a day.
“Does the destruction of economic growth translate into lower demand for the product, for the hydrocarbon product?” he said.
“I think the answer to that question is, basically, yes. Probably not on the scale you might think.
“Now in a system that’s only generating or requiring 100 million barrels today…you can see that’s a significant number.
“But it’s not incredibly material either.”
“A very difficult period for the company”
Energy markets have traded at record highs for much of the past 12 months, attracting the attention of governments worried about supply shortages and exorbitant prices for households and businesses.
These fears prompted the UK government in July to impose a one-off 25% tax on profits made by major energy companies such as BP.
Mr Looney declined to be drawn in by speculation that Australia might implement a similar measure.
It has been suggested that the Commonwealth could intervene in the energy market by imposing a tax on exports of liquefied natural gas (LNG) from the east coast.
BP has no investment in Australia’s east coast LNG industry, although it does own a sixth of the North West Shelf project off northern Western Australia.
Nonetheless, Mr Looney said he did not want to speculate on what measures the Commonwealth might put in place, saying these were matters for the government.
“It’s a very, very difficult time for society in general,” he said.
“Naturally, governments…are looking for ways to help society solve this problem.
“Different governments around the world are trying different things.
“And then, of course, governments have to look at how they can fund such an energy subsidy.”
Mr Buckley disagreed with Mr Looney’s suggestions that investment in new oil and gas projects would be needed for decades, arguing it would lead to catastrophic global warming.
As usual no option
The former investment banker said assumptions about the continued need for new oil and gas projects hinged on solutions such as carbon capture and storage to prevent carbon emissions.
But he argued carbon capture and storage had been a dismal failure and pointed to oil major Chevron’s problem-ridden efforts to bury emissions from the huge Gorgon project off WA.
“What Mr. Looney is painting is a picture that the world is going 2.5 degrees [of warming]or he hides in the sand – that 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 deserved credit for trying to steer BP towards cleaner operations.
“The reality is you have the Totals, the Shells, the Chevrons, the Exxons all watching what he does,” Buckley said.
“And the more he succeeds, the greater the speed [with which] they will try to replicate its success, and that is essential.
“We’re talking about some of the biggest companies in the world.
“We need their balance sheets – we need them to stop fighting solutions and start investing in solutions.”
#Plugging #methane #leaks #top #priority #reports #years #oil #gas #investment