Daniel Yergin, author, speaker, energy expert and economic historian, joined other industry leaders for International Liquid Terminals Association’s (ILTA) annual International Operating Conference and Trade Show in Houston.
Praising the industry, Yergin said U.S. LNG came to the rescue in Europe following Russia’s invasion of Ukraine and is now seen as one of the foundations of Europe’s energy security. U.S. LNG has played a major role in replacing Russian gas; the U.S. is now the largest exporter of LNG in the world.
Yergin mentioned three key challenges that lay ahead for the global energy industry: the impact of politics on O&G, the ongoing energy transition and globalization.
Regarding the first challenge, a fundamental problem of underinvestment in the O&G industry may lead to political agitation around the issue, which Yergin said is a concern. "Everybody, including you, is navigating a more complicated political world, but with additional barriers and costs," Yergin told the audience. "That is the kind of change that’s ahead."
Yergin applauds liquid industry, addresses future challenges
Daniel Yergin. Photo courtesy CERAWeek by S&P Global
The challenge surrounding the ongoing energy transition, he said, is that "it’s not going to go in a straight line. It’s going to be more complicated, and there are going to be a lot of bumps in the road." He said that the energy transition will obviously affect demand for oil products, and it is accelerating the introduction of new products.
The third challenge to the energy industry "is that this era of globalization that we’ve all known for 30 years is over. The rules are less clear in terms of what’s going to happen. And for you all and the companies you work with, it’s going to be a more complicated world in which to operate. So all of this will affect the flow of investment and the flow of liquids," Yergin told the delegates.
The war between Russia and Ukraine is playing a vital role in disrupting global markets, Yergin said. "We’ve had this opening up of the world economy and the supply chains in ways that people don’t understand," he said. "But this era of open markets, which was so beneficial for the world economy, is coming to an end — in this new era of what people call great power competition, which is China and the United States."
Yergin said the role China plays cannot be understated. "China has tied up supplies around the world. Ninety percent of lithium-ion batteries come from China, and about 80% of solar panels come from China. Half of the world’s copper is refined and processed in China — you can go down the list."
Yergin said "2050 will be a very important part of the economy, and it is expanding the energy density. And I think that the rapid movement toward electric cars that is taking place is going to run into some real constraints."
Yergin spoke onstage with Kathryn Clay, president of ILTA, after his conference keynote address. Clay asked Yergin about the role of hydrogen in energy transition. Yergin said hydrogen right now is "hot" in the global market. "When you think about the energy transition, and you think about hydrogen and the investment that was going on just four years ago, and now there’s this incredible interest and resurgence," Yergin said. "Even if you look at the net-zero scenarios for 2050, you see that oil and gas are still a pretty significant part of it."
The key challenges Yergin talked about will affect the flow of investment — the flow of liquids. "But I think it also underscores the importance of what you all do. It may not be recognized by the public, but you really are the ones who ensure the flows of product that move the world economy; you also create higher standards of living for the American people."
