As the 25th annual La Jolla Energy Conference approached, the landmark climate agreement reached in Paris dominated headlines and pervaded the energy world. The focus on decarbonization and emissions reduction, and particularly the role of technology in the global energy transition cut across the Conference’s panels and discussions on May 25-26, and clearly was on the minds of attendees.

But the need to manage expectations also emerged as a central theme, whether in terms of the Paris Accord, renewable energy, oil prices, Latin America’s upstream, Argentina, or the future of transportation. Thinking about energy, as State Department Deputy Assistant Secretary for Energy Diplomacy Robin Dunnigan noted, is critical and particularly so for managing expectations surrounding the intersection of national security and energy.

The Paris Agreement and nationally determined contributions, or NDC’s, have been roundly applauded for the bottom-up approach. The discussions at La Jolla concurred with the critical nature and great value in this element of the agreement.  But as Professor Tim Duane aptly noted, the Paris Agreement is like a plane where all the passengers have agreed it’s time to land, but the destination and at what pace demand determination. Managing expectations will be required.

State Department Deputy Assistant Secretary for Energy Diplomacy Robin Dunnigan and Roger Tissot, Research Fellow at the King Abdullah Petroleum Studies and Research Center (KAPSARC) discuss energy security and cooperation with Energy Program Director Jeremy Martin.State Department Deputy Assistant Secretary for Energy Diplomacy Robin Dunnigan and Roger Tissot, Research Fellow at the King Abdullah Petroleum Studies and Research Center (KAPSARC) discuss energy security and cooperation with Energy Program Director Jeremy Martin.The State Department’s Robin Dunnigan spoke in bold terms about the energy transformation occurring in the United States and its impact on foreign policy and diplomacy. As the US has reasserted itself as an energy super power, so has energy security grown in terms of impact and importance for foreign policy. The State Department, along with several other US government agencies, are working on myriad programs across the globe to boost energy security, access to energy, regional energy integration and the deployment of renewables and emissions reduction initiatives.

Volatility in commodity markets, and particularly oil prices, continues to cast a long shadow over the hemisphere and globe. But despite the continued commodity price downturn, Gil Amengualof Solar Turbines noted that mining economies in Latin America such as Chile, Peru and Colombia have demonstrated greater diversification than their oil exporting brethren, and thus a more positive economic growth outlook.

In their assessment of oil prices and markets, panelists asserted that OPEC still matters and, according to Pedro Haas of Hartree Partners, the cartel has proved itself extremely resilient. More broadly, oil markets are facing a question of peak demand now instead of peak production.

The need to manage expectations when it comes to the price of oil, and what it means for National Oil Companies and economies in Latin America is of utmost importance. Nowhere is this more evident than at Pemex. Gustavo Hernandez’s call for partners as Pemex develops opportunities in the new upstream environment in Mexico was emphatic and consistent throughout his remarks.

Gustavo Hernandez of Pemex highlights the importance of partnerships for the company during the question and answer session with Energy Program Director Jeremy MartinGustavo Hernandez of Pemex highlights the importance of partnerships for the company during the question and answer session with Energy Program Director Jeremy MartinBeyond the role of NOC’s, Latin America’s upstream continues to face challenges. Panelists agreed that given the price environment, and particularly when it comes to deepwater, the industry will become more selective. Expectations must be managed by companies and governments seeking to attract investment, such as Mexico’s Round One and efforts in Colombia, Peru and Argentina, given the constraints on capital to invest in exploration.

Argentina has emerged from more than a decade of a statist and interventionist energy model. Secretary of Strategic Energy Planning, Daniel Redondo, admitted that there may still be perceived risks when it comes to investing in Argentina but he emphasized that the new government was committed to a model of competitive markets, effective regulation, and with a focus on ramping up renewable energy. He asserted that waiting to invest might not guarantee opportunity and reminded attendees that investing early has significant upside.

At the same time, major advances in deployment of renewable energy and electric vehicles, and increasingly competitive costs for these technologies added to the narrative. Renewable energy has seen huge increases in investment despite the persistent downturn in the price of oil. Many speakers pointed to this as a paradigm shift. Similarly, while low oil prices may slow electric vehicle sales, it will not kill them.

Orlando Ribeiro of Petrobras responds to a question about Brazil’s upstream as BP’s Felipe Arbelaez, Berkeley Research Group’s Walter Pesenti and Energy Program Director Jeremy Martin look on. Orlando Ribeiro of Petrobras responds to a question about Brazil’s upstream as BP’s Felipe Arbelaez, Berkeley Research Group’s Walter Pesenti and Energy Program Director Jeremy Martin look on.Channeling the theme of managing expectations, Adrian Katzew of Zuma Energia, while touting the April power auction in Mexico and huge gains in cost reduction for renewables, underscored that to be competitive, prices must be at $40 per megawatt hour. He added that storage and intermittency, as well as a focus on enhancing electric grid infrastructure must be taken into account.

The Conference’s final session brought together a series of themes that had echoed throughout the panels and sidebar discussions: the role of technology, decarbonization and the future of energy. In particular, when it came to the element of managing expectations, Tom Doughty from California’s Independent System Operator (CAISO) spoke of CAISO’s efforts to balance peak demand and the so-called Duck Curve, that is the increased load from renewable energy and distributed generation being fed into the California system.

Panelists agreed that technology and data could also provide much of the solution to meeting these issues across the hemisphere. Indeed, energy storage remains one of the key pieces to managing expectations for renewable energy, but also the future of energy markets in the Americas and across the globe.

But CAISO’s Doughty emphasized that the most important expectation power systems and the energy sector across the Americas must manage is that of reliability. Consumers expect the lights to come on when they flip the switch. And all panelists agreed that consumers are more informed, discerning, and better able to manage their energy needs than any time in history.

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