National

As Trump considers Paris withdrawal, oil and gas industry divided

The much-heralded 2015 Paris climate accord was an attempt by 195 countries to address the threats posed by climate change, but if reports that the Trump administration will withdraw from the pact are true, it’s virtually certain that the agreement’s goals will be left unfulfilled and the U.S. will be deprived of a voice in important future discussions of clean energy and technology.

The Paris agreement attempts to lay down new rules to make sure all countries calculate and publicly report their emissions reductions in the same way after 2020, making it possible to keep track of global progress. But developing countries are still new to international reporting on climate policies, and the United Nations still has some work to do to make sure the right information is tracked.

The oil and gas industry is divided over whether we should or shouldn’t withdraw. James Osborne penned an article on this subject and details the different perspectives presented by major oil corporations who want to stay and those coming from the smaller independents, who believe staying in will impose huge costs.

The United States’ future as a leader in international efforts to slow climate change teetered on the edge Wednesday, as reports emerged from the White House that President Donald Trump was preparing to announce he would withdraw the country from the Paris accord.

The development fanned a debate within the U.S. oil and gas industry over whether the country was unwisely sacrificing its leadership role on a global pact that threatens to reduce the consumption of fossil fuels for decades to come in favor of less carbon-intensive forms of energy. The debate has largely pitted major oil companies that do business around the world against smaller firms already struggling with low oil and gas prices and increased regulations – a split so sharp that the American Petroleum Institute, which represents a wide range of oil and gas companies, has not taken a position on the pact.

“It means a lot to BP and Exxon and Shell, but the mid-majors, large independents that aren’t involved internationally, don’t care a whole lot about Paris,” said Charles McConnell, a former top official in the Energy Department during the Obama administration and now executive director of Rice University’s Energy and Environment Initiative. “Their concern is, what does it do to the U.S., and do people pay more or less for gasoline?”

The timing of the president’s announcement remained in play, with some media outlets reporting that the decision was not yet final. The president – some of whose closest advisers, including daughter Ivanka, are urging him to stay in – could still change his mind.

Trump spent months during the campaign railing against the pact as a “bad deal” for the U.S., promising to withdraw the country if elected. Since taking office, he has rescinded a number of the Obama administration’s climate change policies and initiated reviews on many more, earning cheers in Texas’ oil and gas fields, which faced an uncertain future in a low-carbon economy.

“Given his campaign rhetoric and all the other stuff he’s doing, I think withdrawing from Paris is the only logical thing he can do,” said Stephen Brown, a lobbyist for the San Antonio refiner Tesoro.” If you’re walking away from (U.S. climate change policies), how do you stay in?”

Trump added to the uncertainty Wednesday, telling reporters during a meeting at the White House with Vietnamese Prime Minister Nguyen Xuan Phuc that he would announce his decision on Paris “very soon.”

The Paris agreement was signed by the leaders of close to 200 countries in late 2015, to work together in reducing greenhouse gas emissions with the aim of stopping the Earth’s temperature from rising more than 2 degrees Celsius. That followed increasingly dire signs of climate change, from melting ice caps and rising sea levels to the mass bleaching of coral reefs in Australia, forcing an unprecedented pact that has even been embraced by China after years of resistance.

The potential for a U.S. withdrawal from the Paris agreement had set off a furious lobbying effort by many of the country’s largest corporations in recent months. Among them were U.S. oil and gas majors Exxon Mobil and Chevron, who joined with the likes of Microsoft, Apple, Starbucks, Gap, Nike and Google in urging Trump to stay in.

Exxon Mobil CEO Darren Woods, echoing the position of his predecessor, Secretary of State Rex Tillerson, wrote a letter to Trump last week imploring him to “maintain a seat at the negotiating table.”

“The United States is well positioned to compete within the framework of the Paris agreement with abundant low-carbon resources such as natural gas, as well as innovative private industries including the oil, gas and petrochemical sectors,” Woods wrote.

But outside the largest oil and gas companies, support for Paris within the industry is hard to find. Bill Stevens, chief lobbyist of the Texas Alliance of Energy Producers, an oil and gas trade group, said climate change regulations driven by Paris threatened to impose huge costs on his more than 3,000 member companies.

“We have a lot of respect for Exxon, but our primary membership is smaller independents,” he said. “They’ve been struggling for the last two to three years with oil prices, trying not to go into bankruptcy.”

Stevens said he thought climate change was “a non-issue for them, and they’d as soon be out of Paris.”

With the prospect of U.S. withdrawal, questions arose Wednesday whether the world would be able to avoid an environmental crisis that scientists predict could inundate the world’s coastlines and cause an increase in violent weather events.

Even if the U.S. stayed in the Paris agreement, it was far from certain the goal of slowing the rise of global temperatures would be achieved, and the effects of a withdrawal would be hard to predict, said Katherine Hayhoe, a climate scientist at Texas Tech University.

“Even under Barack Obama, who did everything he could on climate, 80 percent of the positive forward momentum did not happen at the federal level,” she said. “It happened at the level of cities, states and industry.”

China, Germany and others are signaling they will remain committed to the deal regardless of whether the U.S. departs. That could leave companies like Exxon Mobil, which operate around the globe, in the tricky position of operating with one carbon strategy in the U.S. and another for the rest of the world.

What many within the fossil fuel industry had hoped to see was a renegotiated Paris accord, one that would put more emphasis on developing carbon capture systems for fossil fuels and less on wind turbines and solar panels, which, with the help of government subsidies, have significantly lowered production costs and compete with fossil fuels in some markets.

During an appearance on CNN Wednesday, Stephen Moore, a top economic adviser to the Trump campaign, suggested that might still be a possibility.

“If we’re going to have a climate change deal,” he said, “it should be negotiated by this president.”

But among the oil and gas pump jacks that dot the Texas landscape, a place where Trump carried the vote overwhelmingly, the appetite for another climate change deal appears low.

“I think it’s a waste of our time. There’s other things that we should be doing,” Stevens said.

Source: James Osborne – Houston Chronicle May 31, 2017

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About Oklahoma Minerals Founder GIB KNIGHT

Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.

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