URTeC panelists mix optimism with practicality in plenary session
During last week, the 2023 edition of the Unconventional Resources Technology Conference (URTeC) got underway in Denver with a spirited plenary panel discussion. The four panelists shared insights on how unconventional resources and technology will play a key role in the transition to a low-carbon world, balancing oil and gas with renewables, along with serving customers, policymakers and investors.
The Devon perspective. Expressing the operator viewpoint, Devon Energy Executive Vice President and COO Clay Gaspar said the watchword of today is “innovation, how we work together. The only thing smarter than any single one of us is a collection of us. The only thing smarter than a collection of us is a diverse collection of us. And so, as we come together to really tackle these problems, big challenges ahead, every day, this job gets tougher and tougher, and the challenges that we face are tougher and tougher. We continue to innovate and overcome. That's the nature of our industry.”
Gaspar said that a successful company in 2023 needs a solid portfolio of productive assets that are developed in a sustainable manner. “So, how do we hold on to that productivity,” mused Gaspar. “We do it the way we’ve done it over the last 10 years, and that is through technology.” Reflecting on the role played in the upstream sector by the digital transformation, Gaspar remarked, “I’m a huge, huge fan of data. Efficiency is our friend.” At the same time, operators need to function in an environmentally responsible manner, he said. “How do we flare less? How do we drive down our ESGs?”
According to Gaspar, one of the quandaries facing operators is whether to look for new reserves or try to get more out of existing fields. “For us to find the next Permian basin is rather challenging,” he opined. “But what we can do is reinvigorate our really good, developed fields.” In that regard he added, “there is so much momentum building around refracs.” But at the end of the day, he said, “the demand for energy, along with population growth, is up and to the right. This is a fundamental piece of business that runs everything else.”
Hess approach to challenges. Preceding Gaspar in prepared remarks was Hess Corporation CTO Robert “Rob” Fast. Speaking to the need for developing more resources while doing it in a sustainable, responsible manner, Fast noted, “We have a very serious and noble challenge.” Yet, he lamented, the industry has a history of slow adoption of new methods. “As an industry, we learn slowly,” declared Fast. “The first frac was in 1947, at the Hugoton field in Kansas. But it wasn’t until 1966 that fracing was the [primary] way to develop Hugoton field.”
Taking that history of slow adoption of new methods, and then relating it to today’s challenges, Fast said, “My action today is to say, I think this is the area where we continue to gather. So, what are the collaboration opportunities?... there's really three kinds of people out there. There's those that won't even talk about it. There are those that talk about it, and then there's those that do it. And I want to try to encourage you all to be more in a category of, and more in common with others that are pushing it (technology adoption and low-carbon operation) and being an advocate, because I think we can make a lot more progress together faster.”
Energy asset management viewpoint. One of three managing partners at energy asset management firm Kimmeridge Energy, Neil McMahon said that he would like to “make unconventional resources investable in a low-carbon world.” He said that there needs to be continued collaboration between energy firms, governmental agencies and bodies, and academia, if the goal of reaching net zero will be attained. And that, he declared, will require more capital funding and adherence to ESG measures.
“The world will continue to need unconventional energy for a long period, alongside renewables over the next 20 to 30 years, said McMahon. “It must be done in a low-carbon [environment] influenced by regulation or market forces…..what consumers want, at the end of the day, is low-cost supply and a low-carbon footprint.”
Other topics. During the Q&A period after the panelists’ formal remarks, moderator Doug Valleau, who is chairman of World Oil’s Editorial Advisory Board, asked the group whether the industry is replacing reserves. “Will the financial community hammer us for not replacing reserves, even with fiscal discipline?”
Amy Henry, who had started off the plenary session, and who is CEO of Eunike Ventures, a firm that specializes in technology acceleration & adoption, did not hesitate in saying, “I do think institutional investors are going to come down hard.” Yet, on the other side of the philosophical fence, Devon’s Gaspar was equally adamant in saying, “We absolutely should be living within our cashflow.” Kimmeridge’s McMahon was a bastion of bleakness, stating that “the market fundamentally thinks this industry is going away in 10 years. The industry has done an awful, awful job of P.R.” Looking to inject some balance into the discussion, Hess’ Fast said, “This (replacement of reserves in a sustainable manner) is not a short game or a long game. There are going to be more [technical] breakthroughs,” which he believes will improve the outlook.
On the question posed by Valleau about how to bring more new talent into the industry, Henry was again forthright in her view. “Frankly, you’re going to lose more talent,” she said. “Companies need to have a solid value proposition for younger workers.” McMahon was again the champion of bleakness, declaring that the talent situation in oil and gas is “a disaster. About 90% of young workers are not going to work in energy.”
Fast and Gaspar were quick to take issue with Henry and McMahon, helping to close the plenary session with some optimism. “I’d like to offer some hope,” said Fast. “It’s up to all of us to pull together, and I think we can do it.” Gaspar added, “I agree completely. I’ve been to the [Texas] A&M and OU (Oklahoma University) campuses, etcetera, and I’ve seen good interest in
what we’re doing. If there’s one thing this industry has always done well, it is solving challenges.”
