I went to a talk years ago by a speaker who was introduced as a “futurist” for his ability to predict. I’ve always wanted the title of “futurist,” but I’ve not earned it. I’ve been reading a lot of predictions for 2021 from various magazines, papers and blogs. Now I’m as close to a futurist as I will ever get, so here are a few predictions from the experts (I agree with) and how they may impact AAPG.
COVID-19 Virus
The pandemic has had a devastating effect on the world. Our thoughts and prayers are continually with those who are sick and especially with those who have lost loved ones. Right now there seems to be some optimism tied to coronavirus vaccines and herd immunity. I heard on the news that there are a total 45 different vaccines in development around the world. Of course, distribution of the vaccines is a key concern. AAPG leadership and staff are paying particular attention to vaccine distribution plus state and city COVID-19 rules as we prepare for a face-to-face AAPG Annual Convention and Exhibition in Denver, May 23-26, 2021. We are continuing to evaluate the situation day-by-day. Keep tuned.
Economics
Most likely, the world will have a mixed economic recovery in 2021. World economics are tied closely to the success of vaccines, so it will vary from country to country. Governments will pivot from helping workers who have lost their jobs to keeping companies from failing. Inflation will increase as much as 2 percent (or more) from all the money governments are printing for protection programs. Nevertheless, there is a sense that economies are recovering. China is experiencing a stronger than expected recovery and this impacts world economics. If the COVID-19 virus is finally brought under control, some economists expect global GDP to grow as much as 5+ percent.
AAPG has made major spending cuts to respond to the loss of its economic engine – that being face-to-face meetings – and the consolidation of the oil and gas industry. We are getting closer to balancing the budget, but we are on a knife’s edge, economically. Several of our major non-operated revenue sources, such as NAPE and OTC, were moved to the summer of 2021, so we are looking forward to an improving financial situation in the last half of this year.
Oil and Gas
The oil and gas industry will continue to be in a state of consolidation and evolution. Focus will be on innovation, best practices, well efficiency and cutting costs. Oil markets in 2021 will be dominated by demand recovery and by OPEC decisions on supply plus the recovery of U.S. production. Capital will be tight and companies will continue to keep CAPEX low. The mergers and acquisitions market is not expected to recover significantly. One obstacle to expect is a regulatory onslaught from frac’ing bans to new taxes for carbon and methane. The midstream sector will have difficulty building new pipelines.
What does all of this do to oil and gas productions and prices?
In the United States, most likely, oil imports will increase and gas exports will increase. As I am writing this column, oil prices are over $50 per barrel, but how long will that last?
So how does this impact AAPG?
There is a lot of uncertainty, which is not good. Our hope is that companies will recover in 2021 although they may be fundamentally different. AAPG relies on sponsorship support from companies and we look forward to their success in this new environment.
Sustainability
As I mentioned in my January column, with all of the corporate 2050 zero-emission goals, it very clear that companies are changing their culture to emphasize the sustainable development of petroleum resources and other forms of energy. For companies this is a critical step for social license, continued investment and to attract quality talent. The world needs oil and gas well into the future, but it must be incorporated and enhanced with sustainable development and alternate energy. AAPG will change its culture to fit more closely to industry, but oil and gas will still be our primary focus. In addition, AAPG will focus on alternate energy through our Energy Minerals Division and the Sustainable Development Committee.
Environment and Emissions
Companies will increase focus on the impact of climate change to energy needs. Environmental, social and corporate governance factors will reach a tipping point and will be critical in obtaining capital. Banks and private equities will continue to expand investment into decarbonization. Carbon capture, utilization and storage will develop very slowly until there are more abundant, continuous sources of CO2 and sites for storage. CO2 utilization will attract a lot of investment into enhanced oil recovery projects. AAPG is actively developing and supporting the science and is holding its first major CCUS conference on March 23-25, 2021. There are a lot of jobs in environmental geology and the Division of Environmental Geoscience will play an increasing role in supporting this science.
Hybrid Work Model
Office life is changed forever. Virtual work from home will become a standard both for convenience and cost savings. We already see Zoom and similar programs evolving, and I predict there will be new software innovations in 2021 to make it even easier to communicate and work online. AAPG staff has worked virtually since March 2020 and they have not missed a step in providing services to members. One of the biggest questions facing the AAPG at the start of last year was whether or not to move its office to Houston. That seems a remote need at the moment as AAPG staff conduct work from all over the world.
Branding and Re-branding
Brands must be authentic, and value-driven. This is very important for AAPG as we figure out what our members need and want. Hopefully, we will get back to face-to-face meetings like geoscience technology workshops and the annual conferences, but we will continue to provide virtual programs. We need to be highly selective to provide value to members and non-members worldwide. Some companies will take this time to re-brand. AAPG is in the process of trying to understand what new products we need to provide to members, such as sustainable development and emissions science. We also are working to provide more opportunities through diversity, equality and inclusion programs. There is some call to change AAPG’s name to reflect a broader energy science. You will have a voice in this as we survey members this spring.
That’s enough on the future. I’ve run out of room. One thing I promise is that AAPG will not abandon its roots in the future. Oil and gas will be needed for decades to come. Just look at the amount of hydrocarbon-based energy it is taking to develop, test, re-test and distribute the vaccines. Transportation alone requires a huge fleet of planes, trains and trucks to distribute, not to mention the tons of dry ice required.
My primary hope for 2021 is that things get better and safer with more job opportunities. A good friend reminded me that Abraham Lincoln said, “The best way to predict the future is to create it!”
Here we go!
Rick Fritz, Futurist