Pittance Raised At Alaskan Drilling Rights Auction Is A Sign Of Downshift In Oil And Gas Production

The industry is shifting away from production because there’s simply too much oil and gas to burn without overheating the planet.

By Michael Marks & Caroline CovingtonJanuary 21, 2021 7:22 am,

We burn about 70% of the oil and gas we produce, says Houston Chronicle columnist Chris Tomlinson. But the days of unfettered oil production and consumption are dwindling, he says. And that shift has been marked by big changes in corporate behavior.

Most recently, what was supposed to be a money-raising auction for drilling rights at the Arctic National Wildlife Refuge only raised $14 million from what Tomlinson calls “minor players” and and economic development corporation. The refuge was opened up by the Trump administration to raise money to pay for its 2017 tax cuts.

Oil and gas companies are acknowledging the threat of climate change and adjusting their long-term plans. Tomlinson says what can look like efforts to boost public relations – like BP, for a time, rebranding itself with the tagline “beyond petroleum” – is more than that. These changes are acts of survival.

“Every corporation wants to survive, make money and return cash to their shareholders,” Tomlinson told Texas Standard. “And the executives of the oil and gas companies are scrambling to figure out how to do that with their existing business.”

As they scramble, they’re leaving a surplus of product on the table. Tomlinson says between fracking, deepwater wells and other means of extraction, companies have produced too much oil and gas that can never be burned without warming the planet to untenable temperatures.

In the short term, those in the industry have job security. After all, oil and gas are needed for the production of many products like pharmaceuticals and plastics. But it’s the burning of fossil fuels for transportation that is going to stop soon, and that means the younger generation of oil and gas workers will need to be strategic about their careers, Tomlinson says. This advice will hit home especially in Texas, where he says oil and gas production peaked two years ago and will likely never reach that level of production again.

“You really should be thinking about what you want to be doing in 20 years,” he said. “The industry is changing and we’re going to need a lot fewer wells.”

If you found the reporting above valuable, please consider making a donation to support it here. Your gift helps pay for everything you find on texasstandard.org and KUT.org. Thanks for donating today.