After a year of endless disasters, distractions and sub-zero oil prices, it’s time to look back at the people and companies that defined the energy sector in 2020. You will find no Gretas or Elons in our inaugural Forbes Energy Awards, but if you read all the way to the end, you’ll learn what the oil price is going to be on December 31, 2021.
Best Product: Renewable natural gas from livestock
Dominion Energy, Smithfield Farms and others are perfecting methods to capture methane from manure lagoons and sell it as a (highly subsidized) “carbon negative” replacement for regular natural gas. The gaseous emissions from pigs and cows would otherwise waft into the atmosphere, and methane is a nasty greenhouse gas. “It’s a win-win-win,” says Dominion chief operating officer Diane Leopold. Green energy is about “how many boxes you can check,” she adds. “This one has an extra box.”
Most Intriguing Newcomer: Jagdeep Singh, CEO and cofounder of QuantumSpace
Singh’s newly public SPAC has raised $1 billion for the development of solid state lithium ion batteries that it says can charge to 80% in 15 minutes and work well in sub-zero temperatures, unlike traditional lithium power packs.
Disruptive Innovator: Data Gumbo
This Houston-based startup is putting the energy industry on the blockchain. Take Johan Sverdrup, the new 750,000-barrel-per-day North Sea megafield owned by Equinor. The Norwegian oil giant installed thousands of sensors that feed the equivalent of 15 high-def video streams into the blockchain-based data platform operated by Data Gumbo. The platform manages dozens of “smart contracts” and uses data from the field to determine contract completion—eliminating mountains of paperwork and potentially saving billions of dollars. “We use data from the field to confirm transactions, and we store that data in the chain,” says Data Gumbo CEO Andrew Bruce. “No party can change any part of the transaction that provides the trust; there’s not two versions of the truth.” Data Gumbo’s investor along with Equinor is the venture arm of Saudi Aramco.
Outstanding Firm: NextEra Energy
In October, the Florida-based electricity provider got headlines when its market cap surged to $150 billion, surpassing both Chevron and ExxonMobil and making it America’s most valuable energy company. NextEra, the parent of Florida Power & Light, has spent a decade under press-shy CEO Jim Robo growing the nation’s biggest fleet of wind turbines and solar panels—doubling down on renewables long before the Green New Deal was even a glimmer in AOC’s eye. Robo also heads NextEra Energy Partners, a master limited partnership with an annual distribution yield of 3.75%.
Annus Horriblis: Darren Woods, CEO of ExxonMobil
For years, it was almost boring to hear Exxon talk about the strength of its balance sheet, its economies of scale and its ability to withstand any price environment. Then came 2020. In a tacit admission that it is not actually the low-cost leader at all, Exxon in November wrote down the value of its oil and gas reserves by $30 billion—implicitly acknowledging that it has vast holdings that will not be worth drilling anytime soon, if ever. Meanwhile, Exxon’s debt has ballooned to $70 billion, and it may have to borrow more to pay dividends. Paul Sankey of Sankey Research explains that Exxon’s “original definitive strategy of being immune to market vagaries is dead.” After a “decade of strategic errors,” Exxon is “exactly where it never wanted to be: subject to oil markets and global GDP recovery.” Nor has Woods enunciated any kind of holistic strategy for navigating the carbon transition, short of daring lawmakers to impose a national carbon tax.
Forbes Forecast: Oil ends 2021 at $55 a barrel
A year ago, for an annual oil price prognostication survey on Twitter, I predicted that Brent crude oil would end 2020 at $48 per barrel. If I win this Price Is Right, it will be bittersweet. Nobody could have foreseen a global pandemic driving crude prices below zero. As of this writing, Brent has crawled to a nine-month high of $50.
There’s no reason for a prognosticator to quit while he’s ahead, so I hereby predict that although 2021 will bring a big rebound in post-Covid petroleum demand, virtually all of that will be met with new supplies from an aggressive Iran and a resumption of the battle for market share within OPEC+, which is currently keeping 7 million bpd off the market. Although oil will remain in glut, its price will rise because of the Federal Reserve’s incessant currency debasement. Oil will end 2021 at $55 a barrel, and America’s frackers will exit 2021 producing less oil than today’s 10.8 million barrels per day.
And drumroll, please …
The Forbes Person Of The Year In Energy: Scott Sheffield, CEO of Pioneer Natural Resources
For the no-fracking-way feat of buying his son’s company at the bottom of the oil cycle, the person of the year is Scott Sheffield, head of Irving, Texas-based Pioneer Natural Resources. In October, Pioneer acquired Parsley Energy—founded a decade ago by Sheffield’s son Bryan—for $4.5 billion in stock and the assumption of $3.1 billion in debt. The deal makes sense because of the two companies’ overlapping acreage holdings in the oil-rich Permian Basin, which stretches from West Texas into New Mexico. And it’s a fairytale ending for Bryan, a prince of the Permian we profiled back in 2014. The Sheffields thus consolidate their interests into a $500 million stake in Pioneer, a pre-eminent shale fracking champion, now producing some 550,000 barrels per day.
The 2020 Forbes Awards in Energy were awarded in consultation with Brian Murray, director of the Duke University Energy Initiative at the Nicholas Institute for Environmental Policy.