Why Innovation, Not Diversification, Is Key To The Oil And Gas Industry’s Survival
/Yesterday I wrote about some tone-deaf advice provided by Energy Secretary Jennifer Granholm to the oil and gas industry. Granholm advised oil and natural gas companies they must diversify if they want to survive. The Secretary would have been more on-point had she advised them to innovate, because that’s what is inevitably going to happen. History tells us that that is what this industry always does to survive and thrive in a constantly changing world.
The elephant in the living room, of course, is emissions. The industry has been pressured by regulators and activists for decades now to clean up its emissions, and more recently has found itself under increasing pressure from investors and banking institutions to not only cut its methane and carbon emissions, but to be able to publicly document the progress. That pressure has now been extended down the chain to the international end users of the big volumes of U.S. production that is exported each day.
This is where Project Canary, a public benefit B-corp., comes in. As Chris Romer, CEO of Canary told me this week, “Even the oil companies agree that the ESG movement is a 100-ft. tsunami that is only 10 feet out of the water. It’s becoming table stakes now, and in the near future, not only their investors, but the banks are going to insist that the “E” in ESG has to be data-driven. That’s the entire hypothesis of Project Canary.” Basically, Romer believes that companies in the oil industry will no longer be able to satisfy ESG-concerned investors that they’re taking the “E” in ESG seriously by making a pledge to become net-zero by some year out in the future without being able to demonstrate real, annual progress.