1. It's basically the core competency argument. Which I mostly buy.
2. This isn't the first time oil companies have been told to be "energy companies". It was a thing in the 70s also. But they didn't do well at it.
3. Agreed on the culture issues. Big legacy companies are full of people slurping up to higher managers and singing the company song and building little pyramids under themselves. They lack guts and have too many brown nosers. Technical ability is not adequately appreciated either. (Yes, even and especially at the ones with old style CRD campuses.)
4. This is at least the second, maybe the third wave of EVs. It was a big push in the 70s and then died back with lower oil prices and a change in politics in the 80s. The Clinton administration tried pushing PGNV in the 90s, but it didn't go anywhere, because of low oil prices, in the end.
Sometimes these technology changes take a second or third try a few decades later. Look at the AI hype in the 1980s. Look at solar cells. Look at space travel, even. Maybe we will get solid oxide fuel cells. I remember working with them in the 90ss and reading something (even back then) that said every 20 years someone would rehype fuel cells. Doesn't mean they won't happen. Doesn't mean they will. But it is interesting how many of the "new" trends of now are things from the high oil price era of the 70s, tried again.
P.s. And I don't think flaring is that bad either. Way less damage than venting. And at least you get the oil out. The coastal liberals just get to purse clutching when they see those flames. But it is way less eggregious than "mining" bitcoin (a Ponzi scheme that also wastes energy!)
Re “big oil” being successful in alt energy. Learned a long time ago, the way to make money is “do stuff you know how to do”. Anyone else remember Exxon’s foray into office equipment around 1980? How well did that work out? SLB buying Fairchild semiconductor? List goes on and on.
Fantastic post, thank you for launching this Substack - it touches on topics very close to my own core areas of coverage. I'll be reading with interest!
One observation on this post: how would/should CEOs be compensated if their job is to wind down a company? Right now C-level remuneration is is starting to be tied to achievement of ESG metrics. If that's all thrown out the window in favour of managed decline, how does a board measure success?
Quick reply: I don't think one would "throw out" ESG metrics, which of course cover a broad spectrum of objectives, based on a company's growth/decline profile. I think your Q does highlight that "one size fits all" has never been and is unlikely to be the correct standard going forward in energy or I would guess any industry. Health, Safety, & Environment for example should be critically important to all energy companies irrespective of growth stage. Diversity/governance as well. Another example: I don't think a company should suddenly start flaring methane just because they are winding down an asset/company.
1. It's basically the core competency argument. Which I mostly buy.
2. This isn't the first time oil companies have been told to be "energy companies". It was a thing in the 70s also. But they didn't do well at it.
3. Agreed on the culture issues. Big legacy companies are full of people slurping up to higher managers and singing the company song and building little pyramids under themselves. They lack guts and have too many brown nosers. Technical ability is not adequately appreciated either. (Yes, even and especially at the ones with old style CRD campuses.)
4. This is at least the second, maybe the third wave of EVs. It was a big push in the 70s and then died back with lower oil prices and a change in politics in the 80s. The Clinton administration tried pushing PGNV in the 90s, but it didn't go anywhere, because of low oil prices, in the end.
Sometimes these technology changes take a second or third try a few decades later. Look at the AI hype in the 1980s. Look at solar cells. Look at space travel, even. Maybe we will get solid oxide fuel cells. I remember working with them in the 90ss and reading something (even back then) that said every 20 years someone would rehype fuel cells. Doesn't mean they won't happen. Doesn't mean they will. But it is interesting how many of the "new" trends of now are things from the high oil price era of the 70s, tried again.
P.s. And I don't think flaring is that bad either. Way less damage than venting. And at least you get the oil out. The coastal liberals just get to purse clutching when they see those flames. But it is way less eggregious than "mining" bitcoin (a Ponzi scheme that also wastes energy!)
Re “big oil” being successful in alt energy. Learned a long time ago, the way to make money is “do stuff you know how to do”. Anyone else remember Exxon’s foray into office equipment around 1980? How well did that work out? SLB buying Fairchild semiconductor? List goes on and on.
100%!
great piece Arjun! I look forward to reading future ones.
thanks so much Paul! great to see some familiar faces here.
Thanks Arjun - always interesting to hear your thoughts!
Henry, awesome to see you here. Hope you are well...and would certainly welcome your perspectives in the Comments section.
Fantastic post, thank you for launching this Substack - it touches on topics very close to my own core areas of coverage. I'll be reading with interest!
Thank you very much Seb. I really appreciate your kind words and your encouragement.
One observation on this post: how would/should CEOs be compensated if their job is to wind down a company? Right now C-level remuneration is is starting to be tied to achievement of ESG metrics. If that's all thrown out the window in favour of managed decline, how does a board measure success?
Quick reply: I don't think one would "throw out" ESG metrics, which of course cover a broad spectrum of objectives, based on a company's growth/decline profile. I think your Q does highlight that "one size fits all" has never been and is unlikely to be the correct standard going forward in energy or I would guess any industry. Health, Safety, & Environment for example should be critically important to all energy companies irrespective of growth stage. Diversity/governance as well. Another example: I don't think a company should suddenly start flaring methane just because they are winding down an asset/company.
Absolutely, quite the opposite.
FYI, I featured this post at the end of my newsletter, Energy Flux. It’s paywalled but you can see it listed in the contents: https://www.energyflux.news/p/greedy-us-natural-gas-producers-face
Happy to send you a copy if you want to see it
Much obliged. Would love to see a copy if you don't mind...thanks so much.