The Energy Transition

windmill energy on green grass field

In our opinion, we are in the midst of a transition from a fossil fuel-dominated energy regime to a more sustainable lower-carbon one in which natural gas will serve as a bridge fuel.  While everyone is looking intently at crude oil, we believe that much of the upside in the energy space will come from natural gas over the next 5-10 yrs. Why? Well, the demand for electricity as a source for transportation will only increase, and clearly, renewables cannot catch up and fill that gap for some time.

“Since natural gas provides about one half of the carbon footprint of crude oil, it makes sense that it is the logical source to bridge into a transition to renewable energy.

Let me be clear, we are not against renewables and bio-fuels and believe we should utilize and increase those resources, but not at the expense of the oil and gas industry. The global economy depends on that and the global energy system is 85% dependent on fossil fuels.  

The Everyday Role Oil and Gas Plays

Those that have proclaimed the imminent death of the oil and gas industry typically are looking at the industry through a very narrow lens. Many think of crude oil as only a source of transportation fuel, but it is much more. Think fuel, plastics, and pharmaceuticals to name a few.

Cheap, clean and abundant energy is by definition necessary for a highly efficient and productive global economy. Since natural gas provides about one half of the carbon footprint of crude oil, it makes sense that it is the logical source to bridge into a transition to renewable energy. Natural gas is plentiful, it is cheap and burns much cleaner than coal and crude oil/fuel oils. 

In The Long Term

The share of fossil fuels in the U.S. has not changed very much over time; coal decreased from 23.5% to 18.5% while oil and natural gas increased from 44.4% to 44.5% and from 32% to 37%, respectively, from 1965 to 2016. We expect the U.S. to continue with a diversified energy mix by using science and technology for the development of its fossil fuel resources as well as increasing market share for renewables and bio-fuels. In our view, we think the global economy is unlikely to leave fossil fuels as the dominant energy source and their demand will continue to grow for several decades, even if their market share decreases relative to renewables.  

The energy transition from fossil fuels to renewables is one that will be disruptive and at times chaotic. That said, sustainability of clean and abundant energy is critical and long term, renewables are the answer.”

It is also obvious that the transition to a low carbon economy will only be possible through decarbonization, which may be made possible by two ways: (1) increasing the share of low-carbon intensity natural gas and, (2) increasing the market share of renewables. The energy transition from fossil fuels to renewables is one that will be disruptive and at times chaotic. That said, sustainability of clean and abundant energy is critical and long term, renewables are the answer. In the meantime, oil and natural gas are not going away anytime soon. This play will take several decades to play out. 


Don Culpepper
Don Culpepper

Mr. G. Don Culpepper, Jr is the Founder, President & CEO of GDC Consulting, LLC. Founded in 2014, GDC Consulting, LLC provides executive advisement, operations, and management consulting to the Oil & Gas industry.


References in article:

https://www.forbes.com/sites/rrapier/2020/05/31/renewables-overtake-coal-but-lag-far-behind-oil-and-natural-gas/?sh=54a02aa23ffd

https://www.eia.gov/energyexplained/electricity/how-electricity-is-generated.php


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