The contradiction between the message in favor of the greenhouse gas emissions reduction which would go through the diminution of the use of fossil energies and the exceptional prosperity of their producers never has been so strong as in the start of this 2024 year; that situation makes us to think to the declarations of the Engie group executives which has born from the merger between Suez and Gaz de France. They have announced that the company would go out from fossil energies. But it had kept its name. Yet ENGIE, for an English-speaking native is nothing else than the oral expression of an abbreviation, NG, which means natural gas.
The five major oil companies have published their 2023 financial results. They are edifying. The sum of their profits has reached 114 billion dollars with Exxon at the top (36 billion) followed by Total and Chevron with each of them 21 billion. These enterprises have started to diversify their activities through investing in power and renewables but most of their sales and of their profits is generated by the exploration and the production of oil and natural gas. After the fall observed in 2020 and 2021 due to the Covid-19 pandemic, these enterprises have recovered a production level high enough to satisfy demand. All in all, the total has increased by 10% during these last ten years. We so have not seen neither a penury as it had been frequently forecasted nor a reduction of the demand to the contrary of the targets inscribed in the several declarations about the fight against the climate warming.
That situation regarding the supply side results from two major innovations, the new technics which have allowed to extracting shale oil and gas and the natural gas liquefaction which has allowed to carrying it from one continent to another one. The United States so became the 1st oil producer with more than 13 mb/j and the top natural gas exporter with more than 100 bnm3 little overpassing Qatar and Australia. These innovations have contributed to slow coal consumption but with high differences between countries.
The coal consumption fall has been spectacular in the U.S. where it has been divided by two in ten years, power plants using more and more natural gas, which has also contributed to reduce the greenhouse gas emissions. European countries and especially Germany (-50%) and Poland (-30%) have also reduced the use of coal thanks to the development of renewables and China has successfully slowed to 10% its consumption growth on 10 years. But India and Indonesia with increases near 50% have not yet followed this way.
The recourse to LNG, made possible by the existence of tankers able to transport it has also contributed to offset the consequences of the sanctions adopted against Russia and it is which explains the very strong growth of American exports toward Europe. The threats on the safety of the ship going through the Red Sea have amplified this trend. But the very sharp increase of the production and liquefaction capacities in the U.S. has provoked worries about environment in Texas and in Louisiana. The Biden administration has announced that several new projects will be stopped.
The sector nonetheless remains in strong expansion in this country and we see a list of mergers and acquisitions between operators for six months which will again strengthen this activity already highly profitable. Exxon has announced the acquisition for 60 billion dollars of one of the leaders of the shale oil production, Pioneer. Diamondback has taken the control of Endeavour for 26 billion dollars and Chesapeake, one of the pioneers of this new industry, of Southwestern for an amount of 7.4 billion which will allows it to becoming one of the LNG top producers. These mergers will favor the investments projects of the whole natural gas sector, which are estimated at near 50 billion dollars per year during the next five years.
The energy crisis in Europe provoked by the invasion of Ukraine by Russia has put forward two political requirements, the supply safety and the essential role of electricity, which are not fully in contradiction with the objectives regarding environment. The strategies put into operation in Europe but also in China to fight against climate warming lead to a strong growth of the power demand as a consequence of the electric mobility generalization and of the home layouts. But renewables do not offer an availability guarantee. They do not produce when it is needed and especially where these needs must be satisfied. In the lack of progress regarding stocking at a determined horizon, the States must have operators able to provide at any time the power enterprises and household need.
Two solutions exist: nuclear and fossil fuels as in the past. Few States are able in reasonable timings to get enough nuclear power capacities when these ones are welcomed by populations, which is rarely the case.The only available solution, if we want to meet in the same time the climate objectives and the supply safety, is so to strongly reduce the use of coal in the power plants to the profit of natural gas. It is what happened in the U.S. and the result regarding CO2 emissions has been significant.
Natural gas can play this role because the resource is abundant and significant progresses have been accomplished in the reduction of the methane emissions, which heavily contributes to the climate warming, both at the production level and during its transportation in pipelines and in methane tankers. Regarding energy consumption reductions, it is conceivable in the developed countries where an indisputable wasting exists and must be eliminated, but not in emerging countries where energy is impossible to dissociate from industrialization and from the increase of the life level. It is what has been observed in China during thirty years and what is starting in India.
The frequently heard message in Europe, with especially the “Green Deal” project which makes the end of the fossil energies the main remedy to the climate warming, is not only very unpopular, as testify of it the many social movements but it is not credible. Atop of it, the necessary financial supports which are necessary to favor the use of electric cars and the installation of solar panels, weight on already indebted States and profit to countries, like China, which produce equipment. They are the main emitters of greenhouse gas in the planet but these countries do not adopt such restrictive policies regarding the production and the consumption of fossil energies.
A denial does not contribute to make good decisions taken and even less to make them accepted when they are unpopular. Oil and natural gas will remain during a long time necessary to the enterprise activities and to the household consumption and it exists enough resources to satisfy the demand. France has at its disposal enterprises with a world size able to provide an answer to these needs because they master the production, transportation and distribution technics which is not the case in all its industrial activities. It would so be better to congratulate ourself about that instead of criticizing them.