Rice U. energy expert: Oil and gas industry’s ‘defensive’ history influences approach to climate change

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Jeff Falk
713-348-6775
jfalk@rice.edu

Rice U. energy expert: Oil and gas industry’s ‘defensive’ history influences approach to climate change

HOUSTON – (Feb. 28, 2020) – As the climate debate heats up ahead of the 2020 elections, the country’s oil and gas companies want to get in front of the curve. But they may be hampered by a longstanding culture of playing defense, according to an energy industry expert at Rice University’s Jones Graduate School of Business.

Credit: 123RF.com/Rice University

Bill Arnold, professor in the practice of energy management at Rice Business and a former energy industry executive, is available to comment on the issues at play at the intersection of corporate interests and culture and public policy.

“The oil and gas companies want to get ahead of the curve but want to avoid claims of greenwashing, so their investments in renewables, both research and operations, are more bite-sized,” Arnold said. “Of course, that generates criticism by contrasting tens of millions of dollars of investments for renewables against hundreds of millions and billions for oil and gas. The majors have a record of falling into defensive mode when criticized, and it’s built into the DNA of many older executives. But this is being challenged by their own younger employees as well as activists.”

The European majors came under pressure from ethical investors and environmentalists earlier than their U.S. counterparts and should be positioned better to deal with environmental challenges, Arnold said.

“A number of majors, European and U.S., made big commitments in research — Exxon Mobil with algae in the hundreds of millions of dollars — or operations — Shell in wind energy in West Virginia — without being able to commercialize or generate adequate returns,” Arnold said. “Carbon capture and storage is a silver bullet that’s still far from commercial at scale.”

Arnold added that the skill sets of Big Oil are in geosciences and mechanical engineering, not so much electrical engineering. “The most adaptable skill is project management, where the majors routinely have made multibillion-dollar commitments,” he said. “This could lend itself to large offshore wind projects that can build on offshore exploration.”

Arnold stressed, “There’s a huge gap in what is believed to be feasible over a 20-year period. The majors lay out their view of energy transitions in their scenarios and forecasts. They see continuing rapid decline of coal and, in the U.S., nuclear power. They accept that oil is likely to plateau in a couple of decades, but that natural gas plays a critical role in the transition. The great pressure on that comes from methane emissions, which is a complex issue.”

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To schedule an interview with Arnold, contact Jeff Falk, director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

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Related materials:

Arnold bio: http://business.rice.edu/person/william-m-arnold

Jones Graduate School of Business: http://business.rice.edu