The founder of the Engine No. 1 activist investor that challenged ExxonMobil's strategies and won seats on the supermajor's board last year, is calling for more oil supply from the Permian basin to reduce dependence on foreign suppliers.
The Permian and the U.S. shale patch as a whole are "arguably the most transition-aligned oil and gas production today" because of the quick-turnaround with high returns compared to long-duration capital-intensive projects, Christopher James, Founder and Executive Chairman at Engine No. 1 wrote in an opinion piece in The Wall Street Journal.
Engine No. 1 scored a huge victory for activist shareholders at Exxon's annual general meeting in 2021, winning three board seats despite the tiny stake that it holds in the oil supermajor.
Following the Russian invasion of Ukraine, and the U.S. ban on energy imports from Russia, officials, and politicians have changed the tune to the U.S. oil industry, saying that boosting supply from America is providing for its energy security. The U.S. oil and gas associations have been sending that message to the market and to policymakers for years.
In the opinion in the Journal, Engine No.1's James wrote:
"The first and most immediate step is to prioritize North American oil production over imports from less desirable suppliers. Permian Basin shale oil can be brought online quickly to substitute for the absence of Russian oil on global markets."
"Alongside the obvious security and economic benefits to the West, the oil-and-gas industry has the opportunity to ensure the Permian is the cleanest hydrocarbon source in the world. To do this, producers should set aggressive emission-reduction targets and drive methane emissions as close to zero as possible with measuring and monitoring verified by third parties," James added.
"The realization that dependence on oil threatens not only the environment but geopolitical stability should spur businesses and consumers to consider the full spectrum of energy sources without ideological bias," he notes.
ExxonMobil has said in the past months that it plans to achieve net-zero greenhouse gas emissions from operated assets in the Permian by 2030, and an ambition to achieve net-zero greenhouse gas emissions for operated assets by 2050.
By Charles Kennedy for Oilprice.com
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Comments
Unseating Putin, by stopping petroleum purchases from Russia, is Priority-1 right now.
Cleaning up our act in U.S. oil is still of high priority. Controlling methane leaks goes a long way toward reducing greenhouse gas.
We can achieve both goals. And just think, unseating Putin gets rid of a big denier of fossil fuel pollution who is, at the same time, almost single-handedly responsible for killing women and children in Ukraine.
Develop any and all energy sources that can deny Putin war-machine rubles. Continue the other good fight to guard planetary health. Today, I think we can agree that we have both geopolitical pollution and environmental pollution to fight.
Mr James seems to have changed his principles and environmental ethics overnight for the sake of US energy security. He also seems to believe that replacing an estimated of 600,000-700,000 barrels a day (b/d) of Russian oil exports to the US takes precedence over climate change and net-zero emissions. What a hypocrisy?
This is no different from the IEA’s net-zero emissions roadmap calling for the immediate halting of investments in oil and gas and then reversing course and calling on OPEC+ to raise production to help reduce oil prices, another example of hypocrisy and contradiction.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London