A suggestion to big oil
Posted on March 27, 2020 | Atlantic Business Magazine | 0 Comments
With my most recent two columns having been about climate change, I hadn’t intended to continue to expand on the subject in this issue. But I changed my mind after reading a media report on the objections being raised to the latest environmental report on the offshore oil sector. This report, on the issues around exploratory drilling off Newfoundland and Labrador, was prepared by the Impact Assessment Agency of Canada. As you might imagine, its conclusions—largely favorable to and supportive of future drilling—were vigorously objected to by the usual environmental activist groups. I was very upset by the substance of these objections and did not feel as if I should let them go unchallenged.
First, the Nalcor 2019 assessment suggests potential reserves of 52 billion barrels. There’s a world of difference between potential and reality but wouldn’t it be wonderful if that were really the amount of recoverable reserves? It would totally transform the economy of the province. And you know what? I don’t think it would add a single ton of GHG emissions to whatever the world is going to produce/consume over the relevant period. In fact, given the strict environmental standards currently in place for offshore Canada, one could legitimately argue it might actually reduce such emissions given that offshore Canadian oil would simply replace production elsewhere, in jurisdictions where such controls are not as robust. My point is that going apoplectic over the prospect that Newfoundland and Labrador might actually produce such a quantity is ridiculous.
The other fact, conveniently ignored by such scare-mongers, is that the offshore sector in Atlantic Canada has had a remarkable environmental record over the past 30 years of exploration and production. Yes, there have been spills but they have been small and contained and there is no evidence suggesting any material damage resulted. Now, it would be wrong to say this without admitting that seabirds have been affected but wind farms kill birds and no one is suggesting we should stop their construction. Moreover I am confident in adding, based on historical evidence, that the energy industry continuously improves and learns from its mistakes—which strongly suggests the environmental record will only get better.
While I am critical of the folks who dream we can actually transition from a hydrocarbon-based economy to one built on renewables within some ridiculously short time frame, it would be similarly irresponsible to suggest we (all of us) are taking the responsibility of environmental stewardship sufficiently seriously. We are not. Not individually, nor as a society, nor corporately. I am hoping that is about to change. Whether it was the topic of conversation at the World Economic Forum just recently or resident in the pronouncements by Larry Fink, CEO of Blackrock—the world largest money manager—the corporate world is concentrated on the concept of responsible investing. Responsible investing ranks social and environmental goals as important as profit motives.
I am reminded of a recent conversation I had with a young representative of one of the Big Three companies in the world today (Google, Amazon, Apple). His particular responsibility was to ensure his employer invested in any promising technology related to voice recognition. His company was in a race with the other two firms for leadership in this space. What impressed me was the authority bestowed on him. He could, on the spot, commit up to $1 million USD to any venture whose team and/or technology suitably impressed him. He moved around the globe on the hunt for such opportunities and had made, in three years, over a hundred such investments. He explained to me that the other two were essentially doing the same thing. Think about that: perhaps over 300 companies being financially and otherwise supported by big brothers who want them to succeed. No wonder these corporate powerhouses have enjoyed such rapid success.
As the oil majors think about how they can regain the social license they once enjoyed, it occurs to me they should each have teams doing the same thing. As I have suggested in an earlier column, I think a huge part of the solution to reducing our environmental footprint is resident in technology. And whilst every large company likes to think of themselves as innovative and enterprising, the truth of the matter is that a large component of new solutions comes from young companies who have incorporated around solving a very particular problem. The pharmaceutical community largely depends on new drug solutions by investing in and acquiring small bio-tech companies. The amazing strides made in voice recognition have no doubt occurred in part by the tale above.
Thinking outside the box is very difficult for any large organization. It’s just not what they are structured to do. The tech giants have recognized how they can help progress technologies of interest to them. Let’s hope the oil majors might think of doing the same. •
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