U.S. Energy Secretary Urges Companies To Boost Oil, Gas Output

Any oil and gas company that can increase supply should do so quickly due to the growing energy crisis following Russia's invasion of Ukraine, U.S. Energy Secretary Jennifer Granholm said on Wednesday.

Russia exports roughly 4 million to 5 million barrels of crude a day, more than any other nation other than Saudi Arabia. With global demand exceeding pre-pandemic levels, markets were already tight before the Feb. 24 invasion and since then, prices have soared with global benchmark Brent crude this week touching $139 a barrel, its highest since 2008. [O/R]

"In this moment of crisis we need more supply," Granholm told attendees at the CERAWeek energy conference in Houston. "Right now we need oil and gas production to rise to meet current demand."

Granholm said the Biden administration has been reaching out to partners around the world to try to encourage additional output.

On Wednesday, the United Arab Emirates, one of the most influential members of the Organization of the Petroleum Exporting Countries, said it would consider raising output.

"We favor production increases and will be encouraging OPEC to consider higher production levels," Ambassador Yousuf Al Otaiba said in a statement tweeted by the UAE Embassy in Washington. Later in the day, however, UAE energy minister Suhail al-Mazrouei, said the country is committed to the OPEC+ agreement and its existing monthly production adjustment mechanism.

OPEC and its allies has been slowly restoring 5.8 million barrels per day of crude supply cuts due to the pandemic at a rate of 400,000 bpd every month, but has so far resisted calls to raise that output, citing limited spare capacity.

Granholm said President Joe Biden's administration wants to act as a partner with the energy industry, which has complained about the White House's push to hasten the transition to a lower-carbon economy.

On Tuesday, Biden banned Russian oil imports, a move that received some praise from several energy executives at CERAWeek in Houston. The White House had already imposed a series of sanctions on Russia that were affecting its vast oil and gas industry since it invaded Ukraine.

Granholm acknowledged that it was hard to balance the need for more oil and gas with the importance of transitioning to renewable energy to fight global warming.

"We have to still reckon with the impact of climate change," said Granholm, who previously was the governor of Michigan. "We can walk and chew gum at the same time."

The two largest U.S. oil producers welcomed the secretary's comments.

The industry is focused on "providing affordable, reliable and ever cleaner energy to enable human progress," said the Chevron vice president of Lower Carbon Energies, Jeff Gustavson. "Very happy to hear her say that. It is going to take time."

In recent days, Granholm and other U.S. officials have been more vocal about addressing the supply concerns as the administration has come under fire for rising fuel prices.

"We have to responsibly increase short-term supply where we can now to stabilize the market," Granholm said.

Both Granholm and the head of the International Energy Agency, Fatih Birol, said major consumers could take more barrels from strategic reserves after that group agreed to release 60 million barrels last week.

"A reserve release may have to happen again," Granholm said.

NEW ENERGY

Granholm said she expects the clean energy economy will be worth $23 trillion by the end of the decade and that 70% of voting Americans support the transition to renewable energy.

"I believe the industry will rise to the occasion and I think the secretary has talked about that," said Joe Blommaert, president of Exxon's Low Carbon Solutions. "It requires industry and government collaboration," he said.

The secretary mentioned geothermal lithium brine projects in California as one method that could help the United States produce enough of the white metal for electric vehicle batteries.

Like oil and gas companies, though, miners have also complained about permitting delays. Granholm vowed to streamline permitting, eliciting a large applause from the audience.

"We need to do a whole of government approach to collapse the bureaucracy associated with getting new kinds of" projects approved, Granholm said.