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Is This The Beginning Of The End Of Oil & Gas Exploration?

Is This The Beginning Of The End Of Oil & Gas Exploration?

Booms and bust cycles are very much a part of investing in the fossil fuel sector. In previous energy downturns, prices frequently experienced serious slumps, but oil and gas companies mostly kept faith in their biggest asset: Oil and gas reserves buried deep in the groundBut things are markedly different this time around. 

Faced with pandemic-driven demand destruction and a relentless call for climate-conscious and ethical investing, oil executives are resigning themselves to the uncomfortable fact that a significant amount of their vast oil and gas reserves will end up totally worthless.

So much so, that’s it may hardly be worth it to entertain new exploration at this point. And “discovery” news these days doesn’t tempt investors like it once did. 

You know things have truly gone to the dogs when the likes of BP Plc.(NYSE:BP)– a company that doubled down on its aggressive drilling right after the historic 2015 UN Climate Change Agreement–finally gave in saying “..concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world’s reserves of oil will ever be exhausted.” BP has announced one of the largest asset writedowns of any oil major this year after slashing up to $17.5 billion off the value of its assets and conceded that it “expects the pandemic to hasten the shift away from fossil fuels.”

BP owns a series of high-risk prospects including deepwater discoveries off Brazil, Angola and in the Gulf of Mexico. Its Sunrise deposit jointly owned with Canada’s Husky Energy Inc., has an abundant supply of bitumen estimated at 3.7 billion barrels but requiring a complicated extraction process.

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Source: Oilprice

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