Energy Word Alerts - June 15, 2021 PREVIEW
Maybe the Greenies should take the opportunity to work with big oil, instead of fighting with them
I know, I know – you want trades. I’ve got ONE for you this week, and it’s a golden one.
But first…...the (energy) story. It’s like the cookie you get after g’ma tells a tale – you gotta wait until the stories are told. And you learned that the stories were worth the cookie, right? Sometimes worth more.
One quickie then that sets the tone for where we are in the energy story (writ large). Today’s Bloomberg Green daily newsletter told a tale about the reactions that ‘Big Oil’ were making to the immense pressures they’re getting from environmentalists and ‘conscious’ shareholders. in this article, they focused on Shell.
I’ve seen other stories this week that Shell is looking to peddle their Permian shale assets and are searching for an appropriate buyer – and price. This is of course in response to the negative ruling they received from a Dutch court on emission targets they’ve set for 2030.
But the markets for oil assets aren’t like they were 18 months ago when shale assets were often sold for pennies on the dollar. No – with oil above $70, those Shell Permian acres are filet mignon assets and worth plenty. From my perch, I’m thinking this could turn out to be a wild PR chase, as Shell makes the motions to sell very valuable land, but won’t (sadly?) find the right price – sort of like the husband who promises the wife to sell the fishing boat, but prices it for $50k more than it’s worth –
“Sure, honey, I put the boat up for sale today” he says – and prays no one will call.
The other (but somehow same) side of this story is Ben van Beurden's LinkedIn post about the realities of what environmental pressures on Big Oil are really doing – he says a lot of nothing (or perhaps, even having negative environmental effects):
“Imagine Shell decided to stop selling petrol and diesel today. This would certainly cut Shell’s carbon emissions,” Chief Executive Officer Ben van Beurden wrote on LinkedIn last week. “But it would not help the world one bit. Demand for fuel would not change. People will fill up their cars and delivery trucks at other service stations.”
Bloomberg goes on to posit that van Beurden probably has a point – and I’ll go further in saying that – from an environmentalist’s point of view looking to change behaviors towards renewables in the oil patch -- you’d damn well better take the big opportunity a (semi-) sincere van Beurden is giving you to try and do it with big integrated oil companies like Shell. That’s because the small independents (ie the companies that are going to bid on the Shell Permian assets) aren’t capable – like Shell is – of changing their production portfolio one iota and never will be.
They ONLY will make and sell oil, for now and forever more (or until they sail shipwrecked on those unavoidable (?) rocky renewable shoals…..)
So, the bottom line of this piece I’m reading is the forehead-slapping green revelation that if you’re going to make really practical progress in moving the global energy portfolio towards sustainable energy sources, your best chance by far is by making it worthwhile for the big integrateds to be a very, very important and large part of that transition, and the future that results. This is what Van Beurden says as well:
“We need to work together, with society, governments and our customers to achieve real, meaningful change in the worldwide energy system,” van Beurden wrote. “And this change must address the demand for carbon-based energy, not just its supply.”
Translation: Don’t fight with us, work with us to help move towards sustainable energy.
Hmmmm…….somebody wrote a whole book trying to promote this thesis as the most efficient path towards renewables. Who was that?
And now, the trade:
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