Oil companies in the United States need to diversify or risk falling behind during the energy transition, Energy Secretary Jennifer Granholm said during a virtual event organized by Politico.
"The bottom line is you have got to move," Granholm said, as quoted by Argus. "You cannot hang on and be the Kodak or the Blockbuster Video of the energy world. You have got to diversify."
Kodak and Blockbuster Video are perhaps the most notorious instances of companies that did not sense which way the wind was blowing and fell off the race track. According to the Energy Secretary, U.S. oil businesses risk the same if they continue doing their usual business.
Granholm acknowledged that some companies are reorienting themselves in the right direction, however. She noted that "Some of the oil companies have decided that they are going to diversify and become diversified energy companies. The proof will be in the pudding. You do not want to just assume that somebody is greenwashing."
Big Oil has certainly started to diversify, with each and every one of the supermajors—including Exxon—crafting a strategy to shift to lower-carbon business operations. For the European supermajors, it is mostly a move to power generation and a boost of natural gas production. For Exxon, it's a plan to build a huge carbon capture project in Texas.
This is by far not the first time the new Energy Secretary has urged the oil industry to stop being an oil industry. In fact, she used her first speech after her appointment to warn oil companies they could either join the green transition or be left behind.
"I'm not going to sugarcoat how hard transitions are," she said at IHS Markit's annual CERAWeek conference in March. "The bottom line is this particular growth of clean energy and reduction of carbon provides a huge opportunity and I'm extending a hand of partnership."
"The market is raising its hand and saying we are heading in a direction you better come along or you are going to be left behind," she added. "Maybe we should listen to some of those signals and it's an opportunity for those who work in these sectors to work with us to diversify into clean energy solutions."
By Charles Kennedy for Oilprice.com
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