A number of daunting challenges face the oil, gas and petrochemical industry, not the least of which are energy transition and climate change.
While the industry is proactively responding to these challenges, Mike Sommers, president and CEO of API, said he believes there is "a right way and a wrong way" to approach these challenges.
"I do think that the policies matter," Sommers said. "The policies we have seen over the course of the past few months are contributing to these concerns."
Speaking at the 23rd World Petroleum Congress, Sommers categorized the climate challenge as "huge."
API has acknowledged the vastness of the challenge with its Climate Action Framework, available at www.API.org/climate.
"This is API's plan for how to deal with the climate challenge, and it recognizes those right way and wrong way approaches," Sommers said. "Specifically, we endorse policies that we think the government should pursue, including putting a price on carbon."
Many people, Sommers admitted, might be surprised that API endorsed a federal price on carbon - one that also ensures that duplicative regulations be simultaneously eliminated.
"We think that is the benchmark we should be pursuing to ensure we are addressing the climate challenge," Sommers said. "We also endorse the federal regulation of methane. We're working with the EPA now to make sure that regulation makes sense for the oil and gas industry."
The framework itself, Sommers said, also addresses things the industry is committed to doing, like reducing carbon footprint.
Sommers emphasized he believes the Biden administration is approaching these challenges "in the wrong way," but added there is still time for it to go "the right way."
"The right way is to continue to invest in oil and gas while also ensuring that more of our fuel is low-carbon going forward," Sommers said.
"I'm going to resist the temptation to say [President Biden] should reverse all the things he's put in place that affect the oil and gas industry because I know he's never going to do that," Sommers continued. "But I do [encourage] recognition of how important, from an environmental perspective, the U.S.'s energy revolution has been and that we need to continue to promote oil and gas throughout the world as an environmental solution."
John Hess, CEO of Hess Corp., said he agrees with Sommers, particularly in the realm of investments.
"Investments are one of the greatest challenges the industry faces today, and they are two-fold," Hess said. "One is 'how do we grow world energy supply 20 percent for the next 20 years and get to net-zero by 2050 at the same time?'"
The IEA's World Energy Outlook recently indicated that "oil and gas will have a smaller percent of the energy pie," Hess said. "It's still going to be a very big number, and the investment the world needs going forward each and every year is about $450 billion annually."
In 2020, the industry made approximately $300 billion in investments.
"In 2021, it was about $340 billion, so we're well short of where we need to be," Hess added.
It's integral to educate policy, business and academic leaders about the need for investment, Hess stated, but it's even more important to educate the public about the role of oil and gas, which is going to be needed for at least the next 10 to 20 years.
"We need to invest exponentially more in clean energies - right now I think that number is about $1 trillion - but it needs to be $3 trillion every year, and oil and gas [investment] also needs to go up," Hess said. "It's not 'either/or.' It's 'and.'
"The real takeaway is the energy transition is going to take a long time and cost a lot of money."
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