A 60-year fossil veteran raised pointed concerns about his industry’s future last November at what should have been one of his crowning career moments, when he addressed the Canadian Petroleum Hall of Fame after receiving its lifetime achievement award.
Faced with radical innovations from electric vehicles to graphene, “I cannot stand here and tell you that, in my opinion, the present circumstances in our industry are temporary, that all will be okay, that all we need is a bit of patience and it will return to normal—by ‘normal,’ I mean substantially higher wellhead prices for oil and natural gas,” said Jim Gray, former CEO of Canadian Hunter.
“I can’t say that because I don’t believe it.”
Gray warned that the years of high double- and triple-digit oil prices set back a necessary process of adaptation to the technological and environmental forces now facing the industry. “In the context of innovation and change, $100 crude was the worst thing that happened to our industry and province. Alternately, $30 crude was the best,” he said. Now, “we must stay engaged and monitor technical change throughout the world. We must be part of the action.”
Gray’s quotes appear at the end of a JWN Energy post by Hall of Famer and ex-Oilweek editor Gordon Jaremko, who opens with an historical parallel between the 19th-century whale oil industry and the transition in which today’s fossil industry finds itself. (h/t to Jaremko for giving us a once-in-forever opportunity to write about the 19th-century whale oil industry.)
“The discovery of petroleum in 1859 marked the end of New England whaling, although it was some time before this was evident,” wrote Clifford Ashley, an artist who went on a late-19th-century hunt under sail and wrote what Jaremko calls “a vivid eyewitness account of energy transition.”
In Massachusetts, Ashley recalled, “New Bedford merchants at first laughed at the bare idea that such a sorry product as coal-oil could seriously threaten the supremacy of sperm.” But as Jaremko recounts, “whale oil prices tanked as the competition gushed. By Alberta’s birth in 1905 as the Canadian province world-renowned for having ‘all hell for a basement’ full of fossil fuels, the transition was done.”
After reading the most recent report of Bank of England Governor Mark Carney’s Financial Stability Board, Jaremko asks the existential question: “Has the petroleum industry’s turn come to sink?”
Gray’s and Jaremko’s jitters are echoed in a separate JWN post, in which Bloomberg cites a Calgary-based investment firm that has brought past foreign investments to the Alberta tar sands/oil sands.
“I’m worried about the future of the industry in general,” said Geeta Sankappanavar, president and chief operating officer of Grafton Asset Management Inc. “It’s going to be a great business for a period of time, but I do look at it as a sunsetting business—one where we’ll see competition and disruption from outside our industry.”
With about C$1 billion under management, $900 million of it currently in fossil projects, Sankappanavar “is looking at financing more environmentally friendly and renewable power projects across Canada, including natural gas plants and biomass facilities,” Bloomberg notes. “The company plans to attract capital from global investors to diversify its asset base. A majority of Grafton’s capital comes from the Middle East, Europe, and the U.S.”