After accurately predicting the prolonged length of the recent oil bust, BP Chief Executive Bob Dudley now sees a healthy “fairway” with oil prices remaining above $50 a barrel but below $70.
That’s actually a better situation long term for an energy sector that tended to go overboard with oil production and ignore efficiencies when oil was hovering above $100 a barrel for a while until late 2014, he said.
“We’re leaner, we’re fitter and we’re better balanced at $60 than $100,” Dudley said, while speaking Tuesday at the CERAWeek by IHS Markit conference in Houston.
The days of “lower for longer” as Dudley previously termed it are over. U.S. oil prices bottomed out in February 2016 below $27 a barrel.
“It feels like we’re in a $50 to $60 world now for a number of years,” Dudley said Tuesday. “Now we’re in a fairway I think.”
The surging U.S shale sector, which can relatively quickly ramp up or down production, is now the swing producer helping balance the market, he said. International investments are only slowly rebounding so that excess U.S. oil is needed for now to fuel global crude demand growth.
BP said in February that oil demand globally could peak in the late 2030s, but Dudley emphasized oil demand won’t fall much for many years. It’ll just plateau. Oil will lose market share to renewable energy and cleaner-burning natural gas, but growing energy demand will still require nearly as much crude.
The focus instead needs to be on making oil, gas and coal cleaner, not eliminating them. That means fewer methane emission leaks and more carbon-capture technology at power plants, he said.
Electric vehicles and renewables will keep growing, but renewables still won’t even equal a quarter of the global energy mix in 2040 even in a best-case scenario, he said.
That’s why a major focus must be on reducing emissions at power plants. That will make the electricity cleaner for electric vehicles as well, he said.
“EVs are not the silver bullet,” Dudley said. There is no single silver bullet.
“We need to be agnostic about fuels and focus on a race to lower emissions,” he said.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.
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