FILE PHOTO - A combination of file photos shows the logos of five of the largest publicly traded oil companies; BP, Chevron, Exxon Mobil, Royal Dutch Shell, and Total. REUTERS/File Photo By David Gaffen and Jennifer Hiller (Reuters) - The oil industry converges this week on Houston at CERAWeek, the largest gathering of top energy executives in the Americas, with oil majors showing a bigger presence as the United States has taken the crown as the largest crude producer in the world. After a year that saw international crude oil prices surge to more than $87 a barrel in the fall then tumble, the market has been calmer of late, even with production limitations imposed by a combination of OPEC's output cuts and large-scale sanctions placed on Iran and Venezuela by the United States. U.S. crude output has rocketed to more than 12 million barrels a day, surpassing former leaders Russia and Saudi Arabia, but that success comes as independent U.S. shale companies are reducing drilling under pressure from investors demanding improved returns. Even with prices at relatively stable levels, U.S. sanctions on Iran and Venezuela could disrupt the current calm. It remains unclear whether the United States will continue to offer some Iranian oil buyers purchase waivers, and whether Venezuela's President Nicolas Maduro will face additional sanctions. Both U.S. Secretary of State Mike Pompeo and Energy Secretary Rick Perry will speak at the conference. The larger presence of the majors, including U.S. companies Exxon Mobil and Chevron, comes as those firms are shifting investments to shale in west Texas and New Mexico, and connecting those oil fields to their coastal refineries and chemical plants. "It's a little bit different than what's been seen historically," said Staale Gjervik, president of Exxon's shale business. Its shale deliberations now including asking, "What does that mean for the folks downstream and on the Gulf Coast and vice versa?" Gjervik said. Shale wells are cheaper to drill and faster to start production, offsetting the majors' past focus on giant fields whose payoff can be decades into the future. In addition to bringing new wells into production, Royal Dutch Shell PLC is building an inventory of shale wells it can tap on a flexible schedule, said Amir Gerges, head of Shell's Permian operations. "If we find surplus cash at the end of the year, or if oil prices respond quickly in a certain year, we can easily reinvest that for near term cash flow," Gerges said. Story continues Shale has sent U.S. exports ballooning to more than 3 million barrels of crude a day, upending global supply. "It reflects the rebalancing that has gone on in world oil," said Daniel Yergin, vice chairman of organizer IHS Markit. "This is the first CERAWeek ever where the world's largest producer is the country where we are holding the conference, which is the United States." Chevron CEO Michael Wirth is scheduled to speak, along with several Exxon executives and BP Plc Chief Executive Bob Dudley. Saudi Arabia is notable for its diminished presence this year. Saudi Aramco, the state-run oil company, is holding its annual board meeting this week, and Saudi officials noted they were prominently featured at London's recent International Petroleum Week conference. However, CERAWeek also follow a period where the Kingdom has faced more U.S. pressure to keep oil prices low, threats of antitrust legislation currently moving through Congress, and anger at the killing of journalist Jamal Khashoggi last year. Saudi Arabia is the leading producer among the Organization of the Petroleum Exporting Countries, whose Secretary General, Mohammad Barkindo, is attending the conference, along with representatives from the United Arab Emirates. In recent years OPEC representatives have held meetings with executives from U.S. shale companies, in an effort to better understand shale and as the rhetoric from state-run producers has shifted from its adversarial approach in the past. However, shale execs in the past have shied away from publicity surrounding such get-togethers, including a dinner at one of Houston's fanciest restaurants last year. Those execs are wary of being viewed in collaboration with OPEC, and this year's conference features fewer presentations from shale companies as well. OPEC officials have said they do plan on meeting with shale executives at this year's conference. Both U.S. industry groups and OPEC nations oppose the 'NOPEC' legislation, which has passed committees in both U.S. houses of Congress, seeing it as a threat to production that could cause prices to rise. "I don't think they can work together," Yergin said. "But without some stabilizing mechanisms in the oil market you'd have a lot more volatility, and if you had a lot more volatility you'd have a lot less investment." (Reporting By Jennifer Hiller in Houston, Ron Bousso in London, Rania El Gamal in Dubai and David Gaffen in New York; Editing by Diane Craft)<doc-sep>New York Rep. Alexandria Ocasio-Cortez addresses a rally in New York in January 2019. Ira L. Black - Corbis | Getty Images One of the threads running through a major energy conference in Houston is how oil and gas companies can cut their carbon footprint and prevent the worst impacts of climate change. Just don't ask about New York Rep. Alexandria Ocasio-Cortez's Green New Deal. The freshman Congress member's sweeping proposal to overhaul the U.S. economy and transition to clean energy is predictably unpopular among energy executives. But even beyond the C-suite, energy thought leaders assembling at CERAWeek by IHS Markit in Houston are largely dismissing the Green New Deal as unrealistic, unworkable and politically divisive. Instead, the climate talks at CERAWeek have largely focused on the kind of bottom-up, market-oriented solutions that Ocasio-Cortez dismisses as too conservative. Those conversations have largely overshadowed the Green New Deal, which calls for generating 100 percent of the nation's electric power from renewable sources and largely phasing oil out of the transportation sector in just 10 years. "I think one of the reasons why you're not hearing a lot about it is because it's so unrealistic," said Mike Sommers, president of the American Petroleum Institute, the industry's biggest trade group. "When talking about the Green New Deal, I think for most of our members, yes, they take it seriously from a public relations perspective, but you look at what it actually means, and more than anything, it's a plan to have a plan right now." Yet the oil and gas industry is not the only part of the energy world casting doubt on the Green New Deal in Houston this week. Beyond 'magical thinking' Former Energy Department officials Ernest Moniz and Andy Karsner penned an op-ed for CNBC on Monday arguing for a "Green Real Deal." They warned that the "magical thinking" inherent in both climate change denial and "demonstrably impractical, short-term, feel-good solutions" threaten to derail climate progress. They argue for low-carbon solutions that Ocasio-Cortez dismisses or marginalizes, like pairing natural gas-fired power with wind and solar farms, deploying advanced nuclear reactors and advancing technology to capture and store carbon emissions. The biggest problem with the Green New Deal is that it puts Washington D.C. is at the center of greening the economy, said Karsner, the assistant secretary for energy efficiency and renewable energy under George W. Bush. In his view, that sort of top-down approach threatens to dilute the momentum that's already under way in pockets of the U.S., where people are creating solutions that address the specific ways climate change affects them. "I would say Washington is an indispensable player, but it's not the main player," said Karsner, now a managing director at Emerson Collective. "This is going to come from an enormity of innovation across all of our different bubbles of the economy, whether that's in the natural resource sector based here in Houston, or the mercantile trade in Chicago, or the finance sector in New York, or the innovation epicenter of Silicon Valley." Unlike Ocasio-Cortez, Karsner believes the market is best suited to direct the trillions of dollars in capital necessary to transition to a clean energy future. The federal government can catalyze that investment by creating a national strategy that induces the market to respond to the challenge of climate change, he said. That strategy must be pragmatic, durable and cross party lines. Moniz, who served as Barack Obama's second Energy Secretary, says he appreciates the attention the Green New Deal has brought to climate change. But if U.S. leaders don't get better at forging political coalitions to move the ball forward on climate goals, the U.S. is not going to achieve them, he said during a panel discussion at CERAWeek. "That means, in my view, putting forward pragmatic, practical solutions that fold all of these factors together," he said. "Some would argue that, well, that won't get us there as fast as we need to go. I would argue that that would get us there as fast as we can go." Democrats and Republicans appear headed for a showdown over the plan. Senate Majority Leader Mitch McConnell intends to hold a vote on Ocasio-Cortez's Green New Deal resolution to highlight divisions among Democrats on the issue. Meanwhile Minority Leader Chuck Schumer is putting forward a joint resolution calling for Congress to take action on climate change, which could put climate denial among some GOP lawmakers in focus. Alaska Republican Sen. Lisa Murkowski, chair of the Senate Energy Committee, said both votes would dial up the rhetoric over climate change, but neither will advance a serious discussion on solutions. "If I'm a person in Shishmaref, Alaska whose village is threatened by coastal erosion, I don't give a rip about the fact that I am on record as being in support or in opposition to" the Green New Deal, Murkowski said. "I want to know, so what is the plan? What is the proposal? How are we going to get there to a point where my community is not in peril?" What Congress should be doing is compromising to create a bipartisan proposal built on initiatives that Democrats and Republicans agree on, and that will be good for the U.S. economy, she told CNBC on the sidelines of CERAWeek. The ranking Democrat on the committee, West Virginia Sen. Joe Manchin, said it's unbelievable that McConnell's Green New Deal measure would get a vote on the Senate floor but long-stalled bipartisan energy reform cannot. Industry highlights progress In the absence of clear government signals, some of the oil and gas industry's biggest players sought to highlight how they're doing their part to cut down emissions and nudge Congress towards creating rules of the road. I think one of the reasons why you're not hearing a lot about it [Green New Deal] is because it's so unrealistic. Mike Sommers President, American Petroleum Institute<doc-sep>
HOUSTON — A huge gathering of oil industry titans underscores the gulf between their blueprint for the transition to cleaner energy sources and the demands of activists wielding new influence in Democratic politics and European debates. Where it stands: Major executives at the big CERAWeek by IHS Markit conference here acknowledge the industry has to change with the times. Executives are talking up their investments in carbon-capture tech, renewables, and steps to cut methane leakage. Yes, but: Alternative energy remains a very small part of their business. What they're saying: Equinor CEO Eldar Saetre said in a speech that the sector is facing a "crisis of confidence" and a "lack of trust" that will "increasingly reduce our ability to influence and shape our own future." "It is, in fact, a real threat to our license to operate, unless we proactively and collectively address it," he added. said in a speech that the sector is facing a "crisis of confidence" and a "lack of trust" that will "increasingly reduce our ability to influence and shape our own future." "It is, in fact, a real threat to our license to operate, unless we proactively and collectively address it," he added. BP CEO Bob Dudley is expected to give a speech tonight that will "call for the industry to do more to respond to new demands for climate action, even as energy use continues to rise," per the Wall Street Journal. The other side: The sentiment here is a sharp contrast to the activism that's on display from youth-led movements in Europe to the Democratic primaries in the U.S. Motivated by scientific reports showing the urgency of steep emissions cuts to avoid runaway warming, they argue the time for incrementalism has long passed. In the U.S., that's evident in the prominence of the Green New Deal on the left, which has attracted support from several major Democratic presidential candidates. It's all very different from the gestalt in Houston, where discussion centers on the evolution of business models that still rely on huge investments in oil and gas for decades. The intrigue: Several moments captured the divide between the conference and where the energy is on the left. For instance, Sen. Joe Manchin of West Virginia was the Democratic lawmaker who addressed the conference. He's a coal advocate and one of his party's most conservative members. I chatted with Maarten Wetselaar, a senior Shell exec, about whether they will increase the $1 billion to $2 billion per year they're investing until 2020 in low-carbon efforts. Shell's out front among majors, but it was a reminder that the industry sees the transition happening on their terms. "We're hoping to increase it. That is the base plan. But we need to prove to ourselves and to our shareholders that it is commercially attractive enough to do it," he said. The bottom line: I asked former Energy Secretary Ernest Moniz about the tenor of the conference compared to where things stand on the left. "One discussion does not have the urgency attached that it needs to have to the carbon transition. On the other side, sometimes there are solutions offered that ... are impractical, and in my view that does not help advance the conversation," Moniz said. My thought bubble: Despite the chasm between activists and the industry, both groups stand well apart from President Trump on climate change. A tweet this morning displayed, again, Trump's rejection of the scientific consensus on human-caused warming. Go deeper: Geopolitics, oil collide at energy confab