Professional Documents
Culture Documents
roughly translates to the destruction of about one quarter of today’s oil demand.Related:
Permian Beats Own Record In Oil Production
That sounds pretty bad for an oil company, but there are still a lot of barrels that would
need to be produced to meet market demand, which is why Pioneer says its low breakeven
costs ensures that it will be one of the suppliers sticking around for the long haul.
At the same time, Pioneer is thinking about some creative alternatives as the transition to
cleaner energy unfolds. It is exploring leasing some of its acreage to wind companies while
also producing oil and gas from the same land, according to Axios.
Leaving Pioneer aside, many oil companies will need to think of similar ways to
diversify themselves to guard against an abrupt decline in shareholder value. Royal Dutch
Shell, for example, purchased Europe’s largest developer of electric vehicle recharging
stations a few months ago, and more recently, it acquired a UK-based utility. Big Oil is
becoming Big Utility in this case.
The other oil majors are trying different variations of this. Total SA owns a solar panel
manufacturer, BP just announced a $200 million investment in a solar company, and just
about all of the oil majors are increasing their investments in natural gas, which they view as
a much safer investment over the long-term.
But as Pioneer argues, while oil demand could fall, the world will probably still be
consuming a lot of oil for a long time. As demand declines and prices fall with it, the companies
with the highest breakeven prices will succumb to this new world order first. Pioneer and its
peers at the lower end of that cost structure do not plan on going anywhere anytime soon.
(By Nick Cunningham of Oilprice.com)
Focused Group Discussion:
1) How does Oil Company exploration and Exploitation affect climate change or the
environment?
2) What should Oil Companies do to preserve environment sustainability? How about
the cost?
3) What kind of regulation needs to be done in order to balance exploitation of fossil
fuels with sustainability