Anders Opedal [00:00:05] Unfortunately, the war has kind of made more people realizing that we need oil and gas for longer. In India, transition is important to to ensure that we have enough energy in the world while transitioning. We see that clearly that EU wants to work very closely with Norway. So Norway can be a long, long term provider of oil and gas. At the same time, also provide, you know, electricity and and low carbon solutions to Europe.
Jason Bordoff [00:00:36] The past year has been one of energy scarcity and high prices in Europe with Russian oil and gas deliveries are a fraction of what they were before the war in Ukraine. One country has emerged as a key source of energy. Norway has expanded its oil and gas production to fill the gap left by Russia and Equinor. Its state owned energy company, has played a central role in this response. Meanwhile, the urgency of acting on climate change continues to grow, raising questions about how to meet today’s energy needs while also accelerating tomorrow’s clean energy future. In the wake of Russia’s invasion. European governments and others are strengthening their renewable energy targets and other climate actions in a bid to tackle climate change and enhance their energy security. Ecuador, with a strong renewables business as well, wants to be a leader in the energy transition. What does the road ahead look like for a company like Equinor? And what does that tell us about where Europe is headed? This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs. I’m Jason Bordoff. Today on the show, Anders Opedal. Anders is president and CEO of Equinor, the energy company whose primary shareholders, the Norwegian government, is responsible for 70% of oil and gas production in Norway and was instrumental in Norway becoming Europe’s largest source of natural gas. Anders began his career as a petroleum engineer in the late nineties and has worked his way up through Equinor’s hierarchy over the course of two decades. He took over as CEO and president in August 2020. Since assuming leadership, he’s overseeing the company’s approach to the COVID 19 pandemic, its announcement of a net zero by 2050 target and his response to the war in Ukraine and the subsequent European energy crisis. I spoke with Anders about these major events and what it was like to guide Equinor through this tumultuous period. We also discussed the company’s renewable projects and the outlook for the energy transition over the coming decades. I hope you enjoy the conversation. Anders Opedal. Thank you so much for making time to join us here in New York on Columbia Energy Exchange. It’s good to see you again.
Anders Opedal [00:02:55] Thank you. Thank you for having me.
Jason Bordoff [00:02:58] You lead Equinor, one of the most important energy companies in the world, headquartered in Norway, of course, a major energy producer to the world and increasingly now one of the most important, maybe the most important energy provider to Europe. After Russia’s weaponization of its dominant gas position, after its invasion of Ukraine. But for those who aren’t really familiar with Equinor, just give our listeners an overview of the company, the scale of operations and what they should know about it.
Anders Opedal [00:03:27] Well, you know, we are a broad energy company headquartered in Norway. As you know, 50 years actually now started off as a as an oil and gas company, state owned and in the beginning now listed even on the New York Stock Exchange, producing around 2.1 million barrels of oil and gas equivalent every day. You know, we are a broad energy company, meaning that we also are building renewables, particularly offshore wind. And we are also working on hydrogen and carbon capture and storage. So really kind of we are, you know, we believe in a balanced energy transition. So we we are working on being an energy company that we are really going to continue with. Oil and gas went as long as it’s needed. But at the same time, building off the new basis for renewable energy and and also low carbon solution that, you know, we definitely need in the world if we’re going to reach net net zero.
Jason Bordoff [00:04:30] And with a global footprint, obviously a lot of activity in the North Sea. But but also you’re operating all over the world.
Anders Opedal [00:04:36] Yeah, we we started, of course, in the North Sea on the Norwegian continental shelf. Is this still the backbone of the company? But we have expanded internationally both in oil and gas, but also renewables and trading activities all around the world. So we are kind of a true global company with our strong, strong base on the Norwegian Continental shelf.
Jason Bordoff [00:04:58] Yeah. What’s the outlook for the Norwegian Continental Shelf? Is that an area of growth of decline? And that’s also an area with a lot of other players, private equity backed companies and other things that are operating there as well.
Anders Opedal [00:05:07] It is now a kind of as an oil and gas province, as a mature area, we still continue to discover new resources. There are equinor. We do drill around 25 to 30 exploration wells a year, mostly exploration wells close to existing infrastructure and, you know, oil and gas platforms, meaning that we can bring them fairly quick into production and also with low break even low carbon footprint and so on. But at the same time, we have developed something we call the Norwegian Energy hub, where we kind of we want to move the Norwegian continental shelf from an oil and gas province to an energy province, you know, where we’re working together with going to working on developing this for offshore wind. We already this last year, in 2022, I started the the largest floating offshore wind park, the Hive in Tampa, which will provide us the bag in the Snorri field with electric electricity. We see that this use potential for storage of CO2 on the Norwegian continental shelf. And this is really where we can take all the the competence from the oil and gas and move it into to the CO2 storage business. And we have developed this now together with Shell and Total on the northern Light together with the Norwegian government. So those are really, I think the Norwegian continental shelf, you know, will move from an oil and gas province to an energy province and actually, you know, be instrument. For Europe to decarbonize.
Jason Bordoff [00:06:54] Is to reflect on. I’m curious, as the leader of a large company like that, I mean, the last couple of years you’ve had to navigate through major global shocks, a pandemic and then Russia’s invasion of Ukraine. And we’ll talk about what that me has meant. But but, but, but what have been the most significant challenges and how have those two major shocks kind of impacted the company?
Anders Opedal [00:07:23] Yeah, I started as CEO November 2020 in the middle of the COVID, and of course then as a new CEO, not be able to travel meeting employees are not able to meet the competitors and to pair some down and politicians, you only get to know people through two teams. So I was a little bit kind of a a personal challenge, of course, but the kind of the most important thing during COVID was about keeping people safe. We were able to keep up the production both for oil and gas and renewables. And we we never lost a barrel of oil, actually because of because of COVID. It was all about, you know, making sure that we could progress also under on the project execution. And because new new projects when we needed to keep up the production. So that was really the the, the challenge during during the COVID. And I think the organization made a tremendous effort to to actually have safe operations during a pandemic. And this is where we had to learn from day to day and in the beginning and the organization got really, really good at running a big energy company during during a pandemic. And then as we gradually moved out of.
Jason Bordoff [00:08:47] An a huge energy price shock, of course, also during the pandemic.
Anders Opedal [00:08:51] Definitely it was kind of we saw gas prices really plummeted. Oil price was actually at one point negative. So it was a financial, you know, a challenge. But we decided to to keep the activity level. And this was also helped by the Norwegian government that actually saw the challenge and introduced the tax package to to keep the momentum up on the Norwegian continental shelf. So together with the suppliers, we were able to to navigate through the COVID period. And I know as we transition out of the COVID, you know, we we saw that the gas prices starting to really increase due to kind of long term under-investment in in energy and by Russia. You know, later again, we found out, you know, holding back some some some gas production. And later, of course, the tragic war in and in Ukraine that really, you know, we saw a huge need for more energy and particularly gas then to to to to Europe. So, you know, the challenge was really to kind of show how how can we help, how can we provide more gas to Europe. So this was going to we already produced at really, really high level and but then then the organization mobilized again. So we turned every stone at every offshore platform, at every onshore facility where we we, you know, have compressors to to pump the gas to to to Europe looking for, you know, how can we maybe stop injecting gas to keep up the pressure in, maybe export the gas instead? How can we spike the gas, you know, the LPG that we used to take out of of of of the gas and sell to all of the markets, you know, could be used as a part of the natural gas to to to Europe. So I think the organization made a fantastic effort to to ensure that we could have safe and efficient operations actually increasing the production of gas by 8% to to Europe. And and this was a little help to mitigate the the the kind of the lack of gas coming from from from from Russia on and to me it was really important to to ensure that Norway and Equinor could be seen as a reliable provider of gas also in difficult times because energy is so soul needed. So that was really something that I think we have achieved during those those two shocks.
Jason Bordoff [00:11:47] And of course, some people criticized that by saying gas prices were high. And look at Norway and Equinor were were profiting from this catastrophic event in Europe. I mean, how did you respond to that?
Anders Opedal [00:12:00] No, it’s no doubt that the high prices has given us very, very good financial results for for 2022. Know, the taxes in Norway is quite high, is 78%. So. So we have paid our taxes and never paid more taxes than we have paid in 2022. I think it’s all newspaper put us on there at the least number two in our historical perspectives as the biggest taxpayer in the world, you know, only beaten by Saudi Aramco, obviously. And I’m very happy now to see that the Norwegian government really stepped up on to support to Ukraine and using more of the the sovereign fund to to to help Ukraine. We have also helped Ukraine with some some some gas because that is also needed. Energy is needed when you when when you fight the war. So so we have been quite humble, you know, and and and kind of focused on what we can focus on. And we couldn’t do anything with the war. But, you know, what we could do is to to at least mitigate some of the impact and increase the production. And this was actually going to a whole organization mobilizing. So I’m a little I’m quite proud of that, actually.
Jason Bordoff [00:13:26] And when you you, as you said, the industry as a whole, you know, had had huge profits because energy prices were high. And then it’s a boom and bust industry. Sometimes they’re high, sometimes they’re low or maybe even negative in a pandemic. When you see an extraordinary circumstance like high energy prices in the midst of a conflict, worst the worst conflict since World War Two in Europe, what’s your reaction to calls for a windfall taxes on the industry?
Anders Opedal [00:13:54] You know, you know, generally speaking, you know, I, I think is really the government’s duty to redistribute wealth. And, you know, taxes are probably the best way to to redistribute wealth. And then we actually said, you know, this is a dilemma. We clearly see the need for governments to support the citizen. You know, when energy prices are so high and, you know, taxes are probably the best way to to to do that. At the same time, you know, new taxes and kind of taxes coming a little bit out of the blue and then taxes being changed again, you know, create an kind of uncertain investor environment. So this is the kind of the balancing act between kind of supporting the citizens with with higher taxes from the energy company, at the same time creating a stable investment framework for for for, you know, energy companies. Because remember, the fundamental problem is lack of energy. You know, we need more energy, We need more clean energy. So we need kind of to invest more in this type of of energy. So. So it’s kind of it’s pros and cons there. And we see both sides of of of of this. Definitely.
Jason Bordoff [00:15:18] How does it just help people understand how the role of policy works in Norway? As you said, it’s a traded company now, a public listed company. But but still major government ownership. So changes in political party changes in policy. Does it have a bigger impact on Equinor than it does maybe in other countries? Or how do government shifts affect you?
Anders Opedal [00:15:37] We’ve been listed since 2001 and I think the government has been really, really professional professional owner all the way since 2001. Even with changing government and and changing politicians, you know, being responsible for the ownership. So so we we don’t see any difference between, you know, our kind of a private investor and and and the state in terms of how they interact with with with with us. They are very, very professional. You know, they very have a clear division of, you know, when they are an owner and when there are regulated regulator. So we talk with the government, you know, with regulations kind of the normal way as all other companies. And then we have very, very separate meetings where they are acting us and investors. Like I’m I’m here in New York now meeting investors there. And it’s very similar meetings we have with the government. And when when we’re talking to the owner, what are you.
Jason Bordoff [00:16:41] Hearing in those investor meetings in New York and how has that changed as a result of the energy crisis we’re in, as well as the climate crisis now?
Anders Opedal [00:16:49] You know, our strategy is can really a kind of a. Balanced energy transition. You know, we are investing in optimizing our oil and gas portfolio. We are investing in renewables and we are also in investing in low carbon solutions. I think generally speaking, you know, we’ve been able to have high returns and that’s what we’re saying, that, you know, we believe that to provide high returns through the energy transition. I think that’s that’s welcomed. At the same time, you know, there are questions about are we able to invest more in oil and gas? You know, are you able to move CapEx from from renewables to oil and gas? But, you know, we have kind of found a very good balance where we we be investing, you know, eight and a half to 9 billion USD every year into oil and gas. And we will do that for the next ten years. That means that production of oil and gas will be increasing slightly up to 2026. But then, you know, at the same level as today, around 2030. In the meantime, we are investing in in renewables. And for us, particularly offshore wind, where we have competencies from the offshore, you know, born and raised in the Norwegian continental shelf and and, you know, obviously very, very used to harsh environment.
Jason Bordoff [00:18:08] Including here right off the coast of New York right now. Major wind project.
Anders Opedal [00:18:12] Exactly. You know, so we have, you know, taken both our competencies on on oil and gas and, you know, our presence in the Gulf of Mexico and the the expertise of offshore wind. We have taken that with us and investing here in in New York with Empire Win one and two, and also the Beacon one, one and two. So you’re kind of very excited about it. And then we also want to like, lease in in California with floating offshore wind because we are one of the leading companies in terms of floating offshore wind.
Jason Bordoff [00:18:45] You know, a lot of those offshore wind leases here in the Eastern seaboard, for example, you see many of those companies starting to seem a little nervous about whether they’ll be able to get the returns they thought. And some questions from the states here in New York, New Jersey, Massachusetts, about whether people are going to look to renegotiate some of those leases. I mean, it’s interesting, you made a comment a moment ago. You’re talking to investors here in New York and at least some I don’t want to paint with the broad brush, you know, some sentiment of, well, maybe a little less renewable, a little more oil and gas as a as a function of the market. And we saw BP recently announce a shift in its strategy, scaled down investment in oil and gas a little more slowly, and the market rewarded them for that. So when you say you’re staying the course and sticking with your strategy, how do you respond to some of those shifts we’re seeing with companies like BP and Shell, which I think are seem to be responding to market pressure, to maybe take advantage of how much money they can be making in oil and gas right now. What does that mean for where we are in the transition and and for a company like Equinor? Well.
Anders Opedal [00:19:48] As I said, you know, we have a tough offer of a firm strategy. And I think I think, you know, unfortunately, the war has kind of made more people realizing that we need oil and gas for longer in the transition is important to to ensure that we have enough energy in the world while transitioning. And I see kind of more and more, you know, are responding to that. You know, in the politicians, you know, we see that clearly that EU wants to work very closely with Norway. So Norway can be a long, long term provider of oil and gas. At the same time, also provide, you know, electricity and and low carbon solutions to Europe. So I think, you know, you know, independent of the different sentiments, you know, the climate change will not go away and the kind of it’s also we need to kind of that’s why we we stay a little bit steady here because we always said, you know, we need oil and gas, we need to scale up in renewables. And we think that still it’s the right because that is what, you know, all the credible scenario shows us that, you know, over time we need more and more decarbonized energy. So and I feel that that’s that’s well understood, you know, by by all investors and, you know, the banks I meet and so on. So but it’s kind of always a little bit, you know, how do you how do you put your portfolio together at any point in time and what kind of opportunities are you are you creating? That’s always kind of a debate. We we we have. And and for us, it’s really important to make sure that we we have a as why CFO calls it investor friendly energy transition. You know, where you are able to make money and returns to to an investor while you also are you know able to transform the company as the world. Also changing.
Jason Bordoff [00:21:52] It’s well understood. I think that, you know, we’ll be using oil and gas for a long time to come. If if, of course, if we were on track to meet any of the climate goals, people have like net zero by 2050 or 1.5 degrees or even well below two degrees by by 2050. Oil and gas demand would be declining, not growing, and maybe declining quickly. And yet there is a reality of today, which is we’re not on track for those goals. And energy prices are high and demand’s going up every year, not down. And and that’s part of the reason you see the market sort of rewarding continued investment in oil and gas. So some people hear what you said. We’re investing in oil and gas and we’re investing in clean energy and renewables and see inconsistency. See hypocrisy there. You can’t do both. How do you how do you answer that?
Anders Opedal [00:22:41] Yeah, it’s now it’s is back a little bit. What I said, you know, you know, the climate crisis is there is we are, you know, a long term investor. You know, we we invest in and in energy. We know the future will be different. We know that over time, don’t the demand for oil will go down. You know how fast? I don’t know. But and we see that that will happen a little bit later with with with gas, you know, is all it’s about preparing for the future. You know, it’s we are a 50 year old company and, you know, we we don’t want to kind of be born as an oil and gas company and die as an oil and gas company. We want to to to really kind of, you know, produce the energy that is relevant for for the world in in in the future. And, you know, these are long term investments. You know, it’s kind of just to give you an example, we will in 2023 this year, start production of electricity from the world’s largest offshore wind park, you know, Dogger Bank, outside UK. The lease we got in 2011, it took us eight years to come to FID, you know, with all the the kind of the, the, the regulatory framework, you know, regulatory approvals that what’s needed kind of grid connection contract for difference that needed to be in place. And it takes four years to build the wind park so you know you need to kind of be here in the in in the long run and that means that you know preparing for 2030 towards 2040 the those time well of investments decision you make now actually.
Jason Bordoff [00:24:24] Yeah. Well I’m interested in those you know when when you’re looking at clean energy projects which we need to build so much faster and we need to put so much steel in the ground for all of offshore wind, onshore solar, hydrogen, carbon capture, all the rest. What do you see as the barriers to moving faster as someone trying to build these projects? You mentioned permitting, you mentioned grid interconnections where the U.S. Inflation Reduction Act is put a lot of money to work but is sparking a backlash from Europe over trade issues. What do you see as the things that are preventing us from moving faster?
Anders Opedal [00:24:58] Well, actually, when you look at it is a lot of barriers. And, you know, I think, you know, if as long as we put all those barriers on the table and start working on them, I think we as a society, we’ve been quite a lot of focused over the last five or six years, you know, putting ambitions out there. But, you know, what does that mean in terms of actions? What does it mean for a government in terms of the regulatory framework? What does it mean for the supply chain? You know, what does it mean for mining kind of putting new materials out there? I think we haven’t really solved that. You know, grid grid connection takes a long time. Is the grid ready for taking older or older renewables? And I’m an engineer and a kind of industrial leader and I see the kind of the massive amount of industrial development that the world when we need it to to to to be done of over the next year. So this is a massive undertaking not to that the world is is doing and then all the technology development and so on. So if you look at kind of all the kind of both the dilemmas and the and the kind of the the hurdles there, you can go to say, okay, you know, let’s not do it because it’s too difficult. But I think we just need to kind of crack on in in a good way and be able to discuss all this. And that’s why, you know, you know, the industry of the offshore wind industry. You’ve been so vocal about this kind of regulatory framework, the time it takes and so on. I think politicians have really adapted to it working, working its its way. But then also we need as an industry, both oil and gas, renewables and even low carbon solution, we need to work with societies. You know, it’s not in my backyard. It’s kind of the what, what, what, what we see quite a lot, you know, so you can have. Even for a renewable project to have even more resistance. Generally gas projects, actually. So how do we create also that kind of accept acceptance for what is really needs to be done? You know, that is also, you know, one of those obstacles that we see.
Jason Bordoff [00:27:09] So these projects take a long time and we got to make them move faster. For clean energy, I’m wondering what that means for oil and gas. It was interesting earlier in the conversation, you said, you know, the company really rallied and really mobilized to do what it could for Europe and increased gas production 8%. And that’s a huge achievement. And I think some people listening may say, wait, only 8% because it takes time. It takes time to build new projects and build new infrastructure and bring new supply on line. It doesn’t happen quickly. And what the world is coping with now is an energy crisis where they need more energy supply, particularly in Europe, to cope with without Russia. But we don’t want to be necessarily doing things that will give us supply ten years from now because we hope we can move clean energy faster. So there’s a challenge with the timeframes. There is a reality to today’s energy system and how to meet today’s energy demand. And there is a reality to how long it takes to bring new oil and gas resources to market. And then there’s a reality that we need to move faster on clean energy. How do you how do you think about that now?
Anders Opedal [00:28:07] Yeah, you’re putting your finger right in the in the big dilemma because, you know, we need, you know, more energy now. And, you know, that will be of both oil and gas and and renewables in particular I think Norwegian continental shelf back to to that one, you know, where we can play a role both providing, you know, more oil and gas rapid to the market. We are doing exploration around existing platforms that is shorter. The time for from exploration to to to to market, you know, continue exploring on the Norwegian continental shelf such that we are able to to to bring oil and gas you know, within this decade and early next decade when is still still needed taking out a full potential, you know, as early as possible. I think that’s really important to to make sure that the world and Europe, you know, do have an off hour and energy. And then for us as well, you know, we also went into some solar because this is where we see that is more rapid building up of of renewable. You know, it’s needed. And, you know, as a big company like us with a quite a strong balance sheet, you know, we are also able to take merchant risk and and we don’t have to rely on on contracts for different, you know, contracts with governments to to provide more energy. So. So that’s why we also investing more in this, you know, buying on some platforms. Companies in Poland and Denmark and so on that can help us with this one. This is how we trying to to to kind of respond to this challenge, bringing more and both renewable energy quicker to the market, but also bring more oil and gas quicker to the market as well when is still needed.
Jason Bordoff [00:30:03] As you said, Equinor is a global company operating everywhere. You’re quite active, for example, in Tanzania with potential oil and gas development there. I’m curious from your perspective how the conversation we’re having is different in the parts of the world that are not responsible for most of the emissions that haven’t yet develop their own hydrocarbon resources. Questions about time frames, Questions about long term climate goals. Do those How did you talk about those with government leaders in Tanzania, or is the I don’t mean Tanzania in particular. I just mean more broadly when you’re looking at emerging and developing economies. Or is the conversation really we want to develop the resources, we want the wealth. You have the chance to do that in Norway or in Texas, and now it’s our turn.
Anders Opedal [00:30:46] Exactly. And, you know, and that’s why it’s so important that, you know, like you take Tanzania, you know, that they work very closely, for instance, with EU, you know, this is our this is another way for them for EU to have diversity of of where energy coming coming from, you know, and you know, we have encouraged EU and Tanzania to work to work to work together on that, you know, maybe providing some kind of long term agreements with energy between Tanzania and EU and then, you know, that can that can kind of enable the the large gas discoveries there to to be developed. I think it’s important that we are able to develop the resources found in Africa. There has been a lot of people talking about, you know, they shouldn’t you know, but I definitely think so. And and I think this is and is a golden opportunity for for for for for Europe, for instance to and other countries to to ensure kind of. Long term contracts and an agreement about, you know, and energy flow to diversify. Where energy is coming from is something we have learned, you know, in 2022 is about, you know, diversity of energy. You know, energy security is really important.
Jason Bordoff [00:32:07] Yeah. And then, of course, important to make sure the resources developed in those countries is not only benefiting Europe, but benefiting those countries do by making sure they can consume more energy, have access to energy.
Anders Opedal [00:32:19] And that’s you know, and then also, you know, we have the technology now to, you know, really make those new developments, low carbon. You know, we’ve been using, you know, electricity instead of gas via turbines and so on to produce electricity when we’re producing. So so, you know, we have a lot of experience from that on the on the Norwegian Continental Shelf and elsewhere. So so we kind of we can have, you know, much more, you know, sustainable development of oil and gas, you know, in a country like Tanzania. And, you know, as you said, this would definitely benefit both job creation, but also that the energy can be used in Tanzania such that going to continue to develop the country.
Jason Bordoff [00:33:06] How do you see the global gas market situation now, and particularly the European situation? Europe has pretty healthy inventories, as is Europe. Fine, the crisis is behind us or is Europe still have cause for concern in the coming several winters? And what does that mean for the broader global gas market in the years ahead?
Anders Opedal [00:33:25] I think Europe going to responded, you know, in a in a very good way when the crisis came, you know, by really focusing on filling the the gas storage. We did our utmost to help to help with that. And, you know, the really mild winter in Europe has also been helpful for for Europe in terms of not using too much of the inventories during the winter and actually been able to to to fill something during the winter as well. So Europe will come out of this this wind this winter and in in our in a better place and really and you know be able to not having a crisis during the winter as many many were afraid of. You know when we kind of when we looked at the situation in in August and and September of last year. But at the same time, you know, then the refilling starts again, you know, and to ensure that is enough for next winter and, you know, then it’s again back to the weather, you know, what will the weather be in Europe? What will the weather be in in in Asia? LNG demand in Asia, economic recovery in China. So many, many factors now that are are you know, folk are kind of affecting the the gas market. So so we kind of preparing for volatility. We preparing that the gas prices will be quite volatile and and done. You know the only flexibility that for instance Europe do have is LNG import. So that’s the kind of the the main contributor to to keep the the the level of of gas at the right place in in Europe. But at the same time we also see in quite a lot of demand reduction in Europe involved industries and and consumers. So kind of interesting to see also how that will develop going forward if the demand will will will come back. You probably if the gas prices go at a lower prices.
Jason Bordoff [00:35:37] Now, politicians tend not to like volatility, so sometimes intervene to mitigate that either by subsidizing energy prices, capping energy prices, gas, gas price cap in Europe. What are your thoughts on those kinds of policies? Do they help or hurt?
Anders Opedal [00:35:53] Well, you know, first of all, I think that the root cause is really kind of lack of not enough energy. I think that is really what needs to be attacked, you know, more more renewables, you know, continue investing in or in energy, also in oil and gas. I think that’s the best way to to ensure that, you know, that is less volatility. But but but going to when when renewables are built up in Europe, more and more kind of intermediate power will come to the grid. You know, then you need more kind of stabilizing factors and and and gas power will be one of those. That means that the the gas price will be volatile also in that respect, not only the weather and so on. So I think, you know, price caps, you know, there are kind of things that politicians put in place, but, you know, only for very high. Crisis. And when the market is not liquid, but, you know, the fundamentals is about investing in energy. Investing. Investing in the future.
Jason Bordoff [00:37:00] When you when you were asked by some investors, you know, whether it is possible to shift some investment from renewables to oil and gas. What did you say? And did you say yes or did you say no? We’re not changing at all?
Anders Opedal [00:37:11] No, it’s kind of you know, it’s you know, you know, we’re trying to build as a strong portfolio as possible both in oil and gas and renewables. And, you know, it’s mainly manufacturers to decide a portfolio. You know, obviously, the opportunities that the number of projects you have, how many these well, that you know, how many exploration, well, you actually discover new resources. So that will also define it. You know, we decided that, you know, bolt on kind of internal capacity, the supplier capacity, you know, the the number of projects we had on our portfolio instead of kind of moving the CapEx for oil and gas up and down, we wanted to really, you know, making the stable, you know, giving the supplier industry more predictability and so on. So basically, we have said, you know, we will keep the the oil and gas investment stable going around eight and a half to 9 billion US dollar every year for the next next ten years. And, you know, that gives longevity, but it also gives transparency to what we are going to do. And it’s really based on the opportunity set we do have out at the moment. And then we are able to to keep the the production level at the same level as we have today in 2030 as as well. And so this is this is really because, you know, if you’re moving a lot of new CapEx into one segment where there is not capacity in the supply chain, you know, we will probably go back to what we saw in 2014, you know, where where, you know, nobody made modify their supplier or the oil and gas companies really because the margin get got really, really thin. So it’s this is really a balancing act. And I think we found a quite a good balance at the moment. But then, you know, we are exploring 35 exploration wells this year. Some of them will be discovery and that will also kind of create future opportunities. We will always chase, you know, always the best opportunities both in oil and gas, renewables and also in low carbon solution, but always with the mindset that the world is transitioning and we need to transition with with it.
Jason Bordoff [00:39:32] As you said, the reality today is still need for oil and gas. And you want to make sure, I assume, that we’re developing that as best as we can, as cleanly as we can. So the International Energy Agency just came out with an important report showing on methane emissions industry as a whole. And any one company as a whole is not doing as a great job. What do you attribute that to? Why can’t we get a handle on that? You often hear the industry say, this is the low hanging fruit. Of course we should be able to, you know, ban, ban, ban routine flaring and minimize methane methane emissions, but it doesn’t seem to be happening.
Anders Opedal [00:40:09] Well, it needs to be happening. And kind of as you said, you know, the way we produce oil and gas do matters both on the CO2 emission but also on the methane emission. And this is where we have, you know, used our experience on Norwegian Continental Shelf quite a lot. And we using that worldwide, we have paid carbon tax since the 1990s, meaning that we constantly look for opportunity to reduce the tax, the carbon tax, you know, stopped reducing routine flaring. We always looking for opportunity to reduce the CO2 emission using power from shore hydropower to to to offshore to to to so so we have kind of more more than less than half of the industry average under CO2 emission and basically methane as should be seen as a safety hazard if it’s it’s emitted. And that’s what how we how we do it in our in our business. We said all the gas needs to be contained inside the pipes and not outside. And and that means that we have I think our emission is 1/10 of the industry average is 0.02% of of you know our our production is very, very, very low. But this is also comes with with regulatory that you know this is a safety hazard. It should not you know we have to report every methane leakage that we that we have. And and that’s why, you know, we have focused quite a lot. Of reducing it. And I think that’s that’s something that, you know, when I go to to Ceraweek next week, you know, the OPEC group will meet and this will be high on the agenda. You know, how we as companies can can contribute to that at all. Oil and gas companies are really focusing on reducing their methane emission because that that is something that can really turn to needle.
Jason Bordoff [00:42:16] Yeah, no, it’s certainly something that should be done. And I think we’ve been involved in that effort here, studying the problem, working with companies on on solutions. And and I think yeah, I think you know that the expectations from stakeholders are growing that like it’s it’s we need to see more action for for the industry as a whole as as you said. Adams I’m agreeing with you.
Anders Opedal [00:42:36] And actually now with new technologies you know, it’s is will be much more transparent, you know, with the flyovers and, you know, satellites and so on. You can really see the plumes, you know, you know, dedicated to certain facilities and certain part of facilities and so on. So it’s a lot of help out there. Now, actually, for for companies that want to reduce the methane and, you know, or JCI is also with them the climate investments, you know, has invested in companies that are really able to to give insight into this. So it this is where also new technology can help.
Jason Bordoff [00:43:15] You talked about renewables like offshore wind in your clean energy strategy. Equinor is also working on carbon capture or working on hydrogen. I’m just curious where you see those technologies going. Are you optimistic in terms of what you’re seeing within the company or totally cost ineffective and doesn’t work?
Anders Opedal [00:43:32] Well, you know, the kind of the basis that, you know, there I think there is no way the world can come to net zero without kind of hydrogen. And and and and CCS at scale, you know, will be implemented. And we see quite a lot of interested on it, you know, both in U.S. and but particularly in Europe. And and in many ways it’s about, you know, how do you achieve climate targets and at the same time, keep the industry in your country. I think that is a quite a lot of on top of the mind for for many, many politicians. So clearly hydrogen and CCS will will be tools that will be needed. You know, you know, we know the Norwegian Continental Shelf is our backyard. We have tons of data or or actually the petabytes of of of data about the Norwegian continental shelf. So we we know exactly where we’re going to where we can store CO2. We have 27 years of experience from it, both in in Sleipner and actually in the snow with field. So we know how the CO2 develop, you know, over and over time and how we can monitor it so we know it’s safe. We know that when we put the CO2 in the ground, it stays there. So we have a kind of a, you know, quite a lot of storage capacity. And then we have the competence. You know, when you when you do these type of projects, you you need facility engineers, you need drilling engineers, completion engineers, reservoir engineers, geologists, geophysicist. You know, that’s exactly what we do have in the in the in the company. And now we actually have the first commercial deal in place where from, you know, from Holland, our company called our fertilizer fertilizer facility they’re owned by Johan. We will take their CO2 and bring it to Norway and store it safely on the Norwegian continental shelf. So that’s kind of the first proof point that this this technology actually, you know, we can create a value chain. We don’t that, as I mentioned earlier with the Norwegian government, Shell and Total. And you know, as a company we have now secured capacity to store more than 30 million tonnes of CO2 per year. And now it’s really about focusing on on anchor customers that see their the benefit of storing CO2 instead of emitting it and pay to the carbon tax. I think this is a market that will develop over the the the the next year in the air. Yes. And regarding hydrogen in a lot of particularly Europe, a lot of focus on green hydrogen, but it’s a huge amount of electricity that is needed. And I think that electricity should be used for for, you know, EVs and, you know, all the easy, easy stuff to electrify. And and hydrogen will play a role. And and then the blue hydrogen will probably be the front runner, too, to be able to create enough volume. For industrial users.
Jason Bordoff [00:46:53] The benefit for people listening so bright blue hydrogen gas with carbon capture and green hydrogen with renewable energy.
Anders Opedal [00:47:02] Take take it for granted sometimes.
Jason Bordoff [00:47:03] Do you see those that outlook shifting at all as kind of the projections for green hydrogen costs come down? I think there was a view that, you know, the and the IEA included that blue hydrogen would be the way to go, at least for the near to medium term and over time would be green hydrogen. Do you see that outlook kind of changing?
Anders Opedal [00:47:21] That outlook is. Yeah, kind of. I think kind of green hydrogen seems a little bit kind of further out, you know, based on the reality that, you know, energy prices are, you know, higher and and that kind of it’s needed to decarbonize although all the parts of the of the CO2 chain, of.
Jason Bordoff [00:47:42] Of course, gas prices are pretty high, too.
Anders Opedal [00:47:44] They are. Yeah. So so that you know to this is a little bit not not for the short term but you know a little bit. So we are in in the future but but I think still we see that the cost of hydrogen will be lower in the beginning. And we had blue hydrogen and the volumes you’re able to bring to the market will be higher as well. And with higher volumes, you know, bigger industrial companies can actually start using it as a as a as a way to decarbonize. And also this can enable infrastructure or hydrogen infrastructure. And that’s extremely important to build because when you when you are able to build that infrastructure based on blue hydrogen, then you can add green hydrogen into that pipeline. You know, as green hydrogen becomes more and more available. And and, you know, you would probably, you know, see green hydrogen increasing. I don’t think any green hydrogen projects are able to kind of bear some of the cost of developing the green infrastructure. So so I think blue and and green hydrogen both will play a major role in in the future.
Jason Bordoff [00:48:59] Mm hmm. How do you see the outlook for some of those clean energy technologies being affected by, you know, the Inflation Reduction Act fit for 55 Repower EU, the response to the policy response to this crisis? Is it changing your plans as a company?
Anders Opedal [00:49:14] Well, it’s not necessarily changing the plans, but it is definitely helpful because, you know, we do see that, you know, using carbon capture and storage and and hydrogen will need support from governments. And and you know, there are a if you know, EU fit for a 55 year old mechanism that can help and supporting you know industry to to change fuel will be will actually be needed and it can also trigger you know technology development. What we need is really scale, scale to bring down the cost. And so this is where governments and industry really need to work together and it needs a lot of collaborate collaboration actually, and also across the different countries and technology sharing and and so on to make sure that we are able to scale this up so fast that this is actually can, can, can, you know, be at the cost level that people can afford.
Jason Bordoff [00:50:21] And in terms of this energy crisis, shock caused or exacerbated by Russia’s invasion of Ukraine and you know what it did with its gas supply. Do you use I think you said earlier in the conversation, you know, it helped provide a little bit of a a a realism about where we are in the transition. Oil and gas is still needed. At the same time, there are many who kind of including the head of the International Energy Agency, have said this is this is going to accelerate the transition. Yes, there’s some more LNG projects in Germany right now and maybe a little more coal here and there. But but really what this is doing is making it everyone move faster to clean energy. I’m curious which which of those views you hold and what does it mean for the strategy of Equinor? Does it change at all?
Anders Opedal [00:51:02] Well, you know, it kind of has always different views out there, you know, and we are using scenarios to really stress test, you know, all our decisions and so on. But, you know, it’s back to my previous points about this is, you know, big industrial changes. You know, we need to build a supply chain. We need to have the kind of all the regulatory framework in place and, you know, approvals and so on. So it’s kind of yes, you know, generally speaking, I think the the kind of the development of renewables will increase based on this energy crisis, but it should because actually the investment in renewables is only one third of what we did. So it’s good, it’s accelerating, but it is is this is it accelerating it enough to actually come to net zero? That’s the big question. And are everyone understanding, you know, how big task this actually is? And now we are we all kind of doing enough, you know, and that’s how we’ve been thinking in Akron or, you know what, what can we do? So we can provide oil and gas with low emission. We can, you know, you know, really build on the, ah, offshore competence to develop offshore renewable. And then, you know, based on our competence from oil and gas also do CCS and hydrogen. And that’s kind of the contribution we can do.
Jason Bordoff [00:52:23] Yeah. Just in closing, I’m curious because we have a lot of students who listen to this. You’ve worked in this industry for a long time starting, and I think it was services companies like Baker Hughes and.
Anders Opedal [00:52:33] 92.
Jason Bordoff [00:52:33] Schlumberger, now SLB. You keep working for companies that change their name.
Anders Opedal [00:52:37] Exactly.
Jason Bordoff [00:52:38] And then for a long time for what is now equinor. So for people interested in going into the energy sector, I’m kind of curious, you know, if you were starting out again, what, what, what you would focus on, what you would do, what advice you have for people who are interested in entering the energy industry now.
Anders Opedal [00:52:56] You know, entering the energy industry now as a student, you know, your first job, you can really make a change, you know, And, you know, even in, you know, working for oil and gas and oil and gas projects, you know, everyone in our company is working. How we can reduce the methane, how can we reduce the CO2 emission? You know, how can we produce this in a in a in a better way? All the skills that is learned in oil and gas projects and oil and gas operations are directly transferable to to renewables business. You know, we need a lot of technology development in oil and gas. We need a lot of technology development in in renewables and so on. So and we need geologists, you know, and geophysicists and petro physicists that used to discover oil. And now we need to find them to find the places where we can store CO2, you know, So to all the skill set, you know, that we used to need in, in oil and gas and, and the energy in the past, you know, we still need in the in in the future. And you know it’s it’s really an opportunity now for for everyone joining our energy company to to to really make to make to make a difference. And so and you know whatever you study you know you you we need you out so that as I kind of if you’re studying mechanical engineering or you’re studying electronics or you’re studying, you know, you know, at finance or whatever, you know, it’s is we all need that type of competence in the future. Energy companies, you know, you know, even even producing oil and gas, but also renewables.
Jason Bordoff [00:54:40] Yeah, I think we have students interested in studying all of those things and all disciplines here, including the first school of mining in the country here at Columbia, which a lot of people don’t know. Anders Opedal thinks it’s a challenging time to be leading a company like Ecuador in this time of turbulence and transition and geopolitical turmoil. So best of luck to you and all your employees and hope you all stay safe. And thank you for spending time to share your insights with us today.
Anders Opedal [00:55:08] Thank you.
Jason Bordoff [00:55:13] Thank you again, Anders Opedal. And thank you for listening to this week’s episode of Columbia Energy Exchange. The show is brought to you by the Center on Global Energy Policy at Columbia School of International and Public Affairs. The show is hosted by me, Jason Bordoff, and by Bill Loveless. The show is produced by Stephen Lacy and Aaron Hartig from Post-Script Media. Additional support from Abby Rajendran, Arabella, Obie, Lilly, Lee, Daniel Prop, Natalie Volk and Kyu Lee. Roy Campanella engineered the show. For more information about the podcast or the Center on Global Energy Policy, please visit us online at Energy Policy, Columbia dot edu or follow us on social media at Columbia U Energy and please, if you feel inclined, give us a rating on Apple Podcasts. It really helps us out. Thanks again for listening. We’ll see you next week.
