U.N. Climate Meetings Begin With Message of Urgency
This year’s annual U.N. Climate Change Conference, known as COP25, begins today in Madrid, where 29,000 visitors are expected over the next two weeks, including 50 heads of state. Ahead of the conference, U.N. Secretary-General António Guterres underlined the meeting’s urgency, saying that the climate crisis could soon reach the “point of no return.” “What is still lacking is political will,” Guterres said on Sunday. “[T]he world’s largest emitters are not pulling their weight.”
At COP25, delegates from nearly 200 countries are expected to nail down some details left open by the 2015 Paris climate accord, including how carbon-trading systems and compensation for poor countries with rising sea levels will work. The conference was originally scheduled to be held in Brazil and then Chile, but the election of President Jair Bolsonaro and the protests in Santiago changed those plans. Spain agreed to host last month.
Europe leads the way. The European Union’s new team of leaders began their terms on Sunday, emphasizing climate change policy as a key priority for the bloc. European Commission President Ursula von der Leyen, the first woman in the position, arrives in Madrid today. It was also announced Sunday that Mark Carney, currently the governor of the Bank of England, will become the U.N. envoy on climate finance in January.
Who is the U.S. sending? Senior members from the Trump administration will be notably absent from COP25, though U.S. House speaker Nancy Pelosi is bringing a 15-member congressional delegation to Madrid. Last month, the United States began the yearlong process to withdraw from the Paris agreement—the only country to do so.
HOUSTON — The flood of crude will arrive even as concerns about climate change are growing and worldwide oil demand is slowing. And it is not coming from the usual producers, but from Brazil, Canada, Norway and Guyana — countries that are either not known for oil or whose production has been lackluster in recent years.
This looming new supply may be a key reason Saudi Arabia’s giant oil producer, Aramco, pushed ahead on Sunday with plans for what could be the world’s largest initial stock offering ever.
Together, the four countries stand to add nearly a million barrels a day to the market in 2020 and nearly a million more in 2021, on top of the current world crude output of 80 million barrels a day. That boost in production, along with global efforts to lower emissions, will almost certainly push oil prices down.
Lower prices could prove damaging for Aramco and many other oil companies, reducing profits and limiting new exploration and drilling, while also reshaping the politics of the nations that rely on oil income.
The new rise in production is likely to bring economic relief to consumers at the gas pump and to importing nations like China, India and Japan. But cheaper oil may complicate efforts to combat global warming and wean consumers and industries off their dependence on fossil fuels, because lower gasoline prices could, for example, slow the adoption of electric vehicles.
Canada, Norway, Brazil and Guyana are all relatively stable at a time of turbulence for traditional producers like Venezuela and Libya and tensions between Saudi Arabia and Iran. Their oil riches should undercut efforts by the Organization of the Petroleum Exporting Countries and Russia to support prices with cuts in production and give American and other Western policymakers an added cushion in case there are renewed attacks on oil tankers or processing facilities in the Persian Gulf.
Driving New Production
Daniel Yergin, the energy historian who wrote “The Prize: The Epic Quest for Oil, Power and Money,” compared the impact of the new production to the advent of the shale oil boom in Texas and North Dakota a decade ago.
“Since all four of these countries are largely insulated from traditional geopolitical turmoil, they will add to global energy security,” Mr. Yergin said. But he also predicted that as with shale, the incremental supply gain, combined with a sluggish world economy, could drive prices lower.
There is already a glut on the world market, even with exports from Venezuela and Iran sharply curtailed by American sanctions. Should their production come back, that glut would only expand.
Years of moderate gasoline prices have already increased the popularity of bigger cars and sports utility vehicles in the United States, and the probability of more oil on the market is bound to weigh on prices at the pump over the next few years.
The oil-supply outlook is a sharp departure from the early 2000s, when prices soared as producers strained to keep up with ballooning demand in China and some analysts warned that the world was running out of oil.
Then came the rise of hydraulic fracturing and drilling through tight shale fields, which converted the United States from a needy importer into a powerful exporter. The increase in American production, along with a choppy global economy, shaved oil prices from well over $100 a barrel before the 2007-9 recession to about $56 on Friday for the American benchmark crude.
Those low prices have forced OPEC and Russia to lower production in recent years, and this year many financially struggling American oil companies have slashed their exploration and production investments to pay down their debts and protect their dividends.
An Era of Cheaper Oil
The new oil will accelerate those trends, energy experts say, even if only for a few years as production declines in older fields in other places.
“This could spell disaster for every producer and producing country,” said Raoul LeBlanc, a vice president at IHS Markit, an energy consultancy, especially if the United States and Iran come to some sort of nuclear deal.
Like the shale boom, the coming supply surge is a sudden change in dynamics. Guyana currently produces no oil at all. Norwegian and Brazilian production has long been in decline. And in Canada, concerns about climate change, resistance to new pipelines and high production costs have curtailed investments in oil-sands fields for five consecutive years.
Production of more oil comes at a time when there is growing acknowledgment by governments and energy investors that not all the hydrocarbons in the ground can be tapped if climate change is to be controlled. But exploration decisions, made years ago, have a momentum that can be hard to stop.
“Legacy decisions keep going,” said John Browne, BP’s former chief executive. “Things happen in different directions because decisions are made at different times.”
The added production in Norway comes despite the country’s embrace of the 2016 Paris climate agreement, which committed nations to cut greenhouse-gas emissions. Its sovereign wealth fund has cut investments in some oil companies, and its national oil company, Equinor, has pledged to increase its investments in wind power.
Equinor, which recently changed its name from Statoil to emphasize its partial pivot to renewable energy, nevertheless defends the new field on its company website, asserting, “The Paris Agreement is quite clear that there will still be a need for oil.”
Norway’s rebound from 19 years of decline began a few weeks ago as Equinor began production in its Johan Sverdrup deepwater field. The field will eventually produce 440,000 barrels a day, increasing the country’s output from 1.3 million barrels a day to 1.6 million next year and 1.8 million in 2021.
In Brazil, after years of scandal and delays, new offshore production platforms are coming online. Production has climbed over the last year by 300,000 barrels a day, and the country is expected to add as much as 460,000 more barrels a day by the end of 2021. In the coming days, Brazil is scheduled to hold a major auction in which some of the largest oil companies will bid for drilling rights in offshore areas with as much as 15 billion barrels of reserves.
In Canada, the 1,000-mile Line 3 pipeline that will take oil from the Alberta fields to Wisconsin, is near completion and awaiting final permitting. Energy experts say that could increase Canadian production by a half million barrels a day, or about 10 percent.
And the most striking change will be in Guyana, a tiny South American country where Exxon Mobil has made a string of major discoveries over the last four years. Production will reach 120,000 barrels a day early next year, rising to at least 750,000 barrels by 2025, and more is expected after that.
Guyana potentially has the most complicated future of the four countries. Its ethnically divided politics are sometimes turbulent, and Venezuela claims a large portion of its territory. But with the oil fields miles offshore, drilling is largely protected. In addition, Venezuela is mired in a political and economic crisis and unlikely to challenge a Chinese state company which has an oil investment in Guyana, along with Exxon Mobil and Hess.
Energy experts say the new production from the four nations will more than satisfy all the growth in global demand expected over the next two years, which is well below the growth rates of recent years before economic expansion in China, Europe and Latin America slowed.
At the same time, new pipelines in Texas are expected to increase United States exports to 3.3 million barrels a day next year, from the current 2.8 million.
That adds up to a vast surplus unless there is a resurgence of global economic growth to stimulate demand, or a prolonged conflict in the Middle East or other disruption to supply.
“To support prices, OPEC is going to have to extend and probably deepen their production cuts for a while,” said David L. Goldwyn, a top State Department energy diplomat during the Obama administration. “Getting the prices up to the point where Aramco can launch its I.P.O. is a big Saudi priority.”
The new barrels on the world market will also put pressure on companies producing in the United States, where profit margins for shale production are slim at current price levels and stock prices are falling.
“If I was in the business I would be scared to death,” said Philip K. Verleger, an energy economist who has served in both Democratic and Republican administrations. “The industry is going to face capital starvation.”
American oil executives express concern that drilling will fade in North Dakota, Oklahoma, Louisiana and Colorado as oil prices drop to as low as $50 a barrel in the next few years. Small companies are expected to merge, while others go bankrupt.
Scott D. Sheffield, chief executive of the Texas-based producer Pioneer Natural Resources, said he expected the growth of United States oil production to ease from 1.2 million barrels a day this year to 500,000 barrels next year and perhaps 400,000 barrels in 2021. Those increases are modest compared with the average increase of a million barrels a day every year from 2010 to 2018.
But Mr. Sheffield said he was optimistic, in part because new supplies coming to market could be offset by production declines in older fields in Mexico and elsewhere after 2021.
“There are no more big, giant new projects except Guyana,” he said. “We just have to be patient for a couple of more years.”
A version of this article appears in print on , Section A, Page 1 of the New York edition with the headline: Needed or Not, Oil Production Is Set to Surge.
The Trump administration’s move to relax an Obama-era chemical safety regulation put in place after an explosion at a fertilizer plant is the latest example of the White House easing rules established in the wake of disasters.
Trump’s professed goal of rolling back “job-killing” regulations has led to weakening mandates proposed or enacted after three of the worst industrial accidents of the last decade: The 2010 Deepwater Horizon oil spill in the Gulf of Mexico, the 2011 Fukushima nuclear plant meltdown in Japan and 2013 derailment and explosion of an oil train in Canada.
“There is a clear pattern of the Trump administration targeting rules that were put in place in response to massive public health, safety, and environmental disasters,” said Amit Narang, a regulatory policy expert with the watchdog group Public Citizen. “The public expects our government to respond to these types of public disasters with regulations that protect them.”
Backers of Trump’s drive to repeal rules say that there is a natural rush to regulate after a high-profile disaster that can go too far.
“Some of these rollbacks come with the wisdom of time to say ‘we went further then we needed to go now that we have more information,’” said Dan Bosch, director of regulatory policy for the American Action Forum, a Republican-aligned think tank.
Representatives of the White House reject the notion the rollbacks risk safety.
“Those trying to connect any health and safety risks across the country” to those efforts “are dangerously wrong — there is no evidence to support such ridiculous claims,” said Chase Jennings, a spokesman for the White House Office of Management and Budget. “The administration is focused on relieving undue burdens and protecting public health and safety.”
Still, the changes have set off alarm bells with public safety advocates.
“They have picked out some of the most important safety regulations,” said Fred Millar, an independent rail consultant. “The Trump deregulation bank has a withdrawal window that’s wide open and industry is taking advantage.”
In 2015, the U.S. Transportation Department imposed regulations meant to address a series of fiery crude-train derailments, most notably the one that killed 47 people in Lac-Megantic, Quebec. Canadian officials determined that a crew member’s failure to appropriately secure the train was one of nearly 20 causes of the derailment.
U.S. regulators mandated, over the objections of the industry, electronically controlled pnuematic brakes to shorten stopping distances. But that measure was rescinded by the Trump administration, which cited a lack of research showing the brakes were better and questions over whether the benefits were justified by the costs.
In some cases, the Obama rules have been left intact while some key provisions have been eased. That opens the administration to complaints it is rolling back safeguards even when it keeps many pieces untouched.
For example, the Environmental Protection Agency’s decision to rescind portions of a risk management law following the 2013 fertilizer explosion that killed 15 people in West, Texas, retained provisions cheered by safety advocates such mandating coordination with first responders and emergency exercise requirements.
But it axed mandates that required more public disclosure about what chemicals are stored at industrial sites, automatic third-party audits after accidents and a rule that companies assess safer technology options as a way of reducing risk.
That was also the case with the White House’s decision to relax some of the mandates imposed by the Obama administration in response to the Deepwater Horizon disaster that killed 11 workers and unleashed the worst oil spill in U.S. history.
In May, the Interior Department rewrote about a fifth of that 2016 Obama rule, easing mandates for real-time monitoring of offshore operations and third-party certifications of emergency equipment.
But the department rebuffed oil industry pressure to lift a specific requirement for how much pressure must be maintained inside wells to keep them in check. Instead, companies now can apply for exceptions to that “safe drilling margin” requirement earlier in the permitting process.
The Nuclear Regulatory Commission, with three of its five members Trump appointees, voted 3-2 in January to strip down a rule requiring nuclear plants to upgrade their protection against flooding and earthquakes that was meant to prevent a Fukushima-style meltdown from occurring in the U.S.
The nuclear industry argues that rather than redesign facilities to address increased flood risks, it’s enough to focus on storing emergency generators, pumps, and other equipment in concrete bunkers.
Edwin Lyman, acting director of the Nuclear Safety Project at the Union of Concerned Scientists, disagrees.
“It’s just bad science and bad policy because of the philosophy that we are not going to impose any new regulations,” Lyman said. “It’s dismissing science, it’s not taking into account the impact of climate change that could lead to more severe flooding events.”