According to Robert Dudley, group chief executive for BP plc, there are several reasons the oil and gas industry is currently "in better shape than it has been in a long time."
The transformational impact of digitalization and "big data," the industry's significant improvement in finding resources and producing them by implementing previously unimagined processes, and "doing it all faster and safer than ever" have contributed to industry robustness, Dudley said.
"We have also developed a level of discipline on costs and capital that I think is here to stay," he said. "It is helping drive improving returns and is reassuring shareholders."
In an address at CERAWeek by IHS Markit, held recently in Houston, Dudley also recognized that demand for the industry's products is growing.
"On current trends, the world's need for energy is set to rise over one-third over the next two decades," he said. "So in many respects, the industry is in a stronger position today than it has been in years."
Bright as the future may seem, however, Dudley warned the industry is not currently operating on a sustainable path.
"How we respond will define our future," Dudley said. "We may be on track to meet the world's growing demand for energy, but greenhouse gases are expected to rise by about 10 percent over the next two decades when they need to be falling dramatically. The world is a long way off on emissions unless there is a step-change to correct our course."
Dudley pointed out that rising concerns about climate change are being expressed around the world, often led by students and younger people.
"These are young people on the cusp of being able to vote," Dudley said. "They are tomorrow's legislators, regulators, jurists and consumers."
Contributing to a low-carbon future
Dudley cited the introduction of the Green New Deal by policymakers in the U.S., a proposal that would have required 100 percent of power demand be met by renewables and zero-emissions sources in just 10 years' time.
Shareholders are also increasingly asking how the industry's strategies relate to the Paris Accord's climate goals, Dudley said.
"There's a rising tide of concern on many fronts about the lack of progress on climate issues and, I would say, not just concern, but anger," he said. "We can all understand those frustrations. It may not always come across as clearly as we would like, but we also want the world on a more sustainable path. Where we may differ is on the ways and the means to get there."
Renewables have a huge role to play in meeting global energy demand, Dudley said.
"Renewables are growing faster than any fuel in history. In fact, they could account for almost half of the growth of global energy supplies over the next two decades," he said. "That's why many of our companies are investing in wind, solar, biofuels and low-carbon energy sources."
Gas will also be an important component in the energy mix due to its abundance, affordability, cleaner-burning properties and compatibility with renewables.
In order to play its part in developing more sustainable energy sources for growing global demand, Dudley said the industry must have the trust of society and the confidence of shareholders.
"That means engaging more young people and improving the dialogue we have with policymakers around the world, including those behind the Green New Deal. And it means being part of a conversation much wider than one just among [industry leaders], showing that we are not only hearing but listening," Dudley said. "We are part of the solution, not the problem. We need to demonstrate that we share the common goal of a low-carbon future and that we are in action toward it. I think the stakes are too high not to do that."
