When Two Worlds Collide - Top 10 RBN Blogs of 2021: Energy Transition Slams into Energy Reality

How do you sum up a year like 2021? It was good times for the economic health of producers and midstreamers alike. Prices were up, as were production and flows. But 2021 also brought along more than its share of chaos, including disruptive market events like Winter Storm Uri’s deep freeze and Europe’s natural gas crisis, along with general perplexity around all things clean, green, renewable, and certified. At RBN we take a different approach to assessing common industry themes. Namely, we examine the events and trends that the market considers the most important — crowd-sourced market intelligence, if you will. We can do that because every weekday we post a blog covering a single topic and blast it to almost 35,000 people, and we scrupulously monitor the website hit rate to see which blogs garner the most interest. Then, at the end of the year, we look back to see which topics rank at the top of the hit parade. That score reveals a lot about major market trends. So today we dive into our Top 10 blogs based on the number of rbnenergy.com website hits over the past year to see what we can learn about where things stand today and what’s up next.

So what was the #1 theme for 2021? Well, the title of today’s blog has already given away the answer. The most prevalent issue resulting in high hit rates across the 255 blogs we posted this year was the collision of the energy transition into energy reality — the challenge of moving toward decarbonization and at the same time making sure markets have enough energy to survive the transition. It’s the energy markets conundrum of the 2020s and beyond. We must live, work, and produce hydrocarbon-based products the way the world works today, while at the same time preparing for and investing in the world to which we’re headed. A world that a lot of folks believe means net-zero greenhouse gas emissions and no more hydrocarbons. It’s like a mild case of schizophrenia; we live in one reality, but we must think in terms of an entirely different future reality. Already we’ve seen evidence of the implications: very messy energy markets. Given this as our theme, let’s see what the top blogs of 2021 can tell us about what we’ve observed so far and what we might expect in the coming year. Just like any year-end Top 10 list, we’ll start with #10 and work our way up to #1.

Here are the Top 10 blogs of 2021 (in reverse order, by number of hits):

#10 – 9/21/2021 – Financial: Where Has All the Capex Gone? E&P Investment Down Despite Rising Prices and Cash Flows

In this blog we looked at E&P financial results and plans through the first six months of the year, revealing that even though prices were up 80% for natural gas and 70% for crude oil between the last half of 2020 and the third quarter of 2021, and cash flows were higher proportionally, investment by publicly traded E&Ps was down, with the 38 companies we track budgeting capital spend at only $35.4 billion in 2021, or 3% below the 2020 level and 2% below initial guidance. So oil and gas producers planned to spend just $0.27 in 2021 for every $1.00 in investment they made in 2014, when oil was $100/bbl, and $0.58 for every $1.00 in investment in 2018, when oil averaged $65/bbl. It was clear evidence that E&Ps have tossed out their old mantra of boosting their capital spending when commodity prices are high to a laser-focus on capital discipline to boost free cash flow, pay down debt, and reward shareholders via stock buybacks and dividends. Spending to produce organic growth in hydrocarbon production is no longer what many investors want to see out of public companies. Instead, much of the focus is on programs and projects to advance ESG (environmental, social, governance) initiatives.