According to Ryan Lance, chairman and CEO of ConocoPhillips, the oil and gas industry has identified a new threat that seeks to end the industry as we know it.
That threat is called a "cliff transition" in which renewable and alternative fuels would replace all fossil fuels.
Ryan Lance, chairman and CEO, ConocoPhillips.
"There's nothing just about a cliff transition," Lance said. "I think there's a large part of the world, the community and many governments that obviously want to drive fossil fuels to zero as quickly as possible. The energy system is so complex and the energy is so dense from here that it's not a just transition."
Lance said he believes there is a better way to manage an energy transition that not only accomplishes energy security for people and the corresponding U.S. national security, but also adequately takes care of the climate.
"A cliff transition is not going to do either of those," he said.
Discussing the future of the oil and gas industry at CERAWeek by S&P Global, Lance explained that the cliff transition is Ryan Lance, chairman and CEO, ConocoPhillips. an existential threat to the oil and gas business that seems like it's "right around the corner."
"They want [oil and gas] to go away immediately in a pivot to renewables and do that over the next five to 10 years," he said. "That's not going to happen. It [would] create economic hardship. It [would] create higher prices. The system needs to be done in a more managed pathway."
Offering his view of what would constitute a more managed, orderly transition, Lance pointed to "a triple mandate" adopted by ConocoPhillips.
"We say that, first and foremost, you've got to meet the transition pathway and demand," he said. "We don't know yet what the slope of that curve is going to look like, but we need to ... make it affordable for consumers."
Secondly, he observed, any business is about attracting investors and getting returns on its capital.
"At the end of the day, shareholders own the company, and you have to have an adequate return on the business," Lance said.
Finally, according to Lance, the energy transition must be executed sustainably.
"You have to manage your Scope 1 and Scope 2 emissions. You have to do that sustainably, and you have to have a path to net-zero by 2050," he said. "That's the responsible thing you have to do as a company."
Ultimately, Lance emphasized that industry leaders must meet the "pathway of demand that's coming this way."
"There probably is a balanced solution that does that," he said. "There's a piece for renewables, nuclear and natural gas. There are nature-based solutions that make sense, and there's oil that's going to be rewired to meet that pathway."
This balanced solution is the very essence of an "all-of-the-above" approach to an energy transition, Lance said.
A low-carbon team
ConocoPhillips has recently introduced and enabled a proactive working group - a low-carbon team - that focuses on exactly what its name implies. The team is looking at how ConocoPhillips can participate in reducing the carbon dioxide that's in the atmosphere.
"We have a small team that we've charged to look at some of the new technologies that are coming; how we can accelerate carbon capture, utilization and storage; and how we can take care of the issues that are important to our industry," Lance said. "We've got to take care of methane, and we've got to take care of flaring. We know we've got to make gas more than just a bridge fuel, but a fuel that will be used long into the future."
