One private-equity executive who spoke at the opening of the 2023 Unconventional Resources
Technology Conference (URTeC) on June 13 in Denver, Colorado, said the oil and gas industry must view ESG measures as business opportunities, not challenges, to reach net-zero by 2050.
Reaching net zero will require more than just energy industry-academia-government coordination. According to Kimmeridge Energy managing partner Neil McMahon, more capital and ESG acceptance are needed to get those monies.
MacMahon warned delegates that the world will require unconventional energy and renewables for 20–30 years.
But in a low-carbon society governed by government or market forces. We think customers want low-cost, low-carbon supplies.”
McMahon said direct air capture, sequestration, and nature-based solutions might compete with renewable power and power storage.
Make unconventional resources investable in a low-carbon world.”
“But the price of carbon and the price of storage will be critical in this balance that will evolve over the next decade,” he said, adding that the flow of capital into alternative energy is substantial and the sluggish flow into traditional energy assets is concerning.
Due to increased investment in new sources, this reduced flow might provide great returns. ESG and investors not investing have affected that.”
McMahon observed that private-equity funds spent $40 billion in upstream oil and gas in 2019, but just $4 billion in 2022, illustrating the need for greater investment.
“We all know what happens in this industry when there’s a lack of investment that leads to curtailed supply and higher prices,” he added.
According to McMahon’s slide, alternative energy businesses are repeating the mistakes of the unconventional shale boom by prioritizing volume expansion above profitability.
McMahon seeks to “make unconventional resources investable in a low-carbon world” by promoting ESG goals.
In this context, we must regard ESG as a commercial opportunity, not an issue. He claimed ESG makes our assets more sellable.
Kimmeridge, an activist investor, expects industry transformation from inside.
He claimed that via peer pressure and activism, planting trees and producing emission offsets may advance the sector until hydrocarbons are no longer needed.
We think we can lead corporations into this area and planet. Global energy needs requires unconventional resources. They must be investable and current.”
