02.17.2021
- Calls for Climate and Energy Literacy to Support Sustainable Economic Development
- Outlines Key Challenges of Climate Change and Energy Transition
- Says Oil Industry is a Strategic Engine of U.S. Economy
John Hess, CEO of Hess Corporation (NYSE: HES), shares his perspective on a range of energy issues in the latest edition of the CERAWeek Conversations series. In a discussion with IHS Markit Vice Chairman Daniel Yergin, Hess describes the need for climate and energy literacy in order to tackle the critical challenge of climate change, the vital importance of the oil and gas industry to the U.S. economy, and the company’s strategic focus. The video is available here.
Selected excerpts (edited for brevity):
- On climate change: “There is no doubt climate change is real and the greatest scientific undertaking of the 21st century. People tend to oversimplify the challenge of getting to net zero carbon emissions while at the same time needing more energy. In the International Energy Agency’s rigorous Sustainable Development Scenario, which assumes that even if all the pledges of the Paris Climate Accord are met, oil and gas will still be 46% of the supply mix of energy in 2040. So it is not just about climate literacy, it is also about energy literacy. We need both for sustainable development.”
- On the energy transition: “The energy transition comes down to two big challenges. How do you decarbonize liquid fuel, and how do you make the electric grid reliable and resilient using intermittent sources of energy such as wind and solar that are only available 30% of the time? The takeaway is the energy transition is going to take a long time, cost a lot of money and need technologies that do not exist today.”
- On the oil market outlook: “We see a V-shaped recovery for oil demand. As vaccines roll out and people are flying again, we think we will get to pre-COVID demand levels by the beginning of next year. Supply, on the other hand, we see as a U-shaped recovery. There were 1.1 billion barrels of excess oil supply in April; that number is about 550 million barrels now. So we think we will see pre-COVID inventory levels by the fall if not sooner.”
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On the role of oil and gas in the U.S. economy: “Oil and gas are a strategic engine for the U.S. economy, accounting for 12 million direct and indirect jobs – more than manufacturing, aviation or automotive. U.S. electricity costs are half what they are in Europe mainly because of shale gas. Also, the U.S. is the world’s largest oil and gas producer, which enhances our national security.”
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On Hess Corporation’s strategy: “We have three strategic objectives: grow our oil resources, have a low cost of supply, and sustain cash flow growth so we can have durable cash flow growing over the next 10 years. It requires a differentiated portfolio of short cycle as well as long cycle projects – the best rocks for the best returns.”
- On Hess’ position offshore Guyana: “This is one of the biggest petroleum provinces found in the last 20 years. Hess has a 30% interest with ExxonMobil as operator, and in 2015 we discovered oil there. Since then, we have had 18 discoveries finding over 9 billion barrels of oil equivalent, and we see multibillion barrels of exploration potential remaining. We have one ship producing 120,000 barrels a day, we have five ships planned to get to over 750,000 barrels a day by 2026, and we have line of sight to 10 floating production, storage, and offloading vessels for this decade.”
Hess Corporation is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas. More information is available at www.hess.com.
CERAWeek Conversations features original interviews and discussion with energy industry leaders, government officials and policymakers. The series is produced by the team responsible for the world’s preeminent energy conference, CERAWeek by IHS Markit.
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As and when made, we believe that our forward-looking statements are reasonable. However, given these risks and uncertainties, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur and actual results may differ materially from those contained in any forward-looking statement we make. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.
We use certain terms in this release relating to resources other than proved reserves, such as unproved reserves or resources. Investors are urged to consider closely the oil and gas disclosures in Hess Corporation’s Form 10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com. You can also obtain this form from the SEC on the EDGAR system.
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