What an eye-grabber! “ExxonMobil: Green Company of Year.” I mean, who woulda thunk it?
Too bad the provocative headline of Forbes’s current cover story is little more than cheap window dressing. Worse still, its unnecessary hyperbole detracts from what could have been an interesting piece about the oil giant’s high-risk, high-reward bets on natural gas. The article, by Christopher Helman, reasons that power plants will burn Exxon’s gas in the place of comparatively dirty coal, thereby offsetting tens of millions of tons of carbon-dioxide emissions each year.
That’s a reasonable expectation. The federal Energy Information Administration projects that most new power plants in the United States will burn natural gas, which releases around 25 to 50 percent fewer greenhouse-gas emissions than coal, depending on how you count. So Helman is right. Burning more gas in place of coal is, without a doubt, better for the planet. But it is not good for the planet. And ExxonMobil is certainly not a “green” company.
Natural gas is currently responsible for about 20 percent of U.S. carbon-dioxide emissions. As such, energy experts often describe it as a “bridge” to renewable energy sources like wind and solar, but no lasting solution to the threat of global warming. Helman’s piece misses the nuances of this concept. Instead of analyzing natural gas’s role in the pantheon of energy options, the article blindly declares that “the engineering solution to the matter of carbon in the atmosphere [is to] drill for natural gas.” That overzealous proclamation smacks of the naïve, silver-bullet reporting that has often plagued energy coverage. A recent study by Carnegie Mellon projected that replacing all coal burning with natural gas would significantly reduce greenhouse-gas emissions, but not enough to meet scientifically recommended targets for mitigating climate change. Moreover, it’s fairly ridiculous to suggest, as Helman does in the beginning of his piece, that natural gas will replace all coal burning any time in the near future.
One might still argue that ExxonMobil stands to reduce greenhouse-gas emissions more than any other single entity. But bear in mind that its gas hasn’t accomplished much of anything yet. Helman’s article—which is actually a piece about ExxonMobil’s involvement in a massive liquefied natural gas (LNG) project in Qatar, and not the company’s “greenness”—fails to make this explicit. Only one of its four plants in Qatar is currently up and running—and even when the other three come on line early next year, there is no certainty about how robust the market for LNG will be.
Natural gas prices “plummeted” to a seven-year low on Friday, according to an article in The New York Times. The reason is abundant supply and low demand. In June, the paper reported that, due to new and advanced drilling technologies, estimated domestic reserves are now 35 percent higher than before. The low cost of gas makes Exxon’s projects in Qatar, where the gas has to be liquefied and shipped to consumers, as well as Alaska, which lacks a pipeline to bring the gas to the lower U.S., much less cost-effective, if at all.
Helman’s article does a great job of fleshing out this point. High in the piece, he notes that “natural gas looks like a terrible business” right now and later questions whether “ExxonMobil will be able to recoup its Qatar costs.” He also acknowledges “ExxonMobil isn’t going after gas out of a pure love for the environment. It’s doing so because it’s running out of oil. The company’s production of crude is down 12% in the past three years to 2.3 million barrels a day.”
Unfortunately, rather going any deeper into the inherent limitations of an energy supply based on fossil fuels, Helman concludes that “Windmills and solar panels might make us feel good, but a better solution might be to give bad ol’ Big Oil the chance to develop our own bountiful supplies of natural gas.” The much, much stronger conclusion about the importance of natural gas as a bridge to windmills and solar panels flew straight over his head.