Interview with MCF’s CEO: In hot pursuit of gas as embodiment of low-carbon energy and stepping stone to green future

With energy security taking the reins on the global stage while sustainability concerns, exacerbated by climate change challenges, push the world away from traditional fossil fuels and straight into the arms of low-carbon and green energy, natural gas is at the center of this whirlwind of activity in the energy sector, as it is perceived to be the perfect candidate to bridge the supply gap in the transition from emission-intensive fossil fuels to renewables on the road to net-zero. This was hammered home during our interview with James Hill, an energy industry veteran with 45 years in the game, who sees gas as a bridge fuel to a carbon-free world.

The transition to clean energy is certainly making inroads, however, there is still a considerable amount of division and debate over its pace, as many pieces are still missing or not easy to fit into the net-zero energy puzzle. While the consensus about renewables being our future remains unshakable amongst most global players, the road towards achieving this sustainable future is paved with many different challenges, out of which some are general in nature while others are region-specific. This, in turn, has given rise to many trends. However, the one where gas is becoming entrenched as the energy king is the most prominent one when observed through the lens of recent developments in the sector.

This is illustrated by Shell’s plans to boost its Integrated Gas and Upstream businesses during the decade while pursuing liquefied natural gas (LNG) growth. With around $13 billion per year expected to be spent on Integrated Gas and Upstream businesses during the decade and taking into consideration the oil major’s announcement about $40 billion being allocated to this segment while $10-15 billion spending from 2023 to 2025 is expected to support the development of low-carbon energy solutions, this adds up to a total of potentially over $100 billion in investments by the end of 2030. 

In addition, the shift towards gas as a stepping stone to net zero in the energy transition journey is further demonstrated by Eni, which has decided to enlarge its business by adding Neptune’s portfolio of gas-oriented assets and operations in Western Europe, North Africa, Indonesia, and Australia, which the Italian giant considers to be competitive in terms of cost and low operational emissions. The G7 also emphasized the role of gas, especially LNG, in propelling the transition to clean energy forward while underlining that ramping up renewable deployment is a key tool in this quest for a sustainable and low-carbon energy future.  

While things were far from ideal before the Ukraine crisis due to the COVID-19 pandemic, once the Russia-Ukraine situation went from bad to worse, the global energy landscape found itself embroidered in increasingly greater turmoil, with energy security concerns shooting straight to the top of the priority list while the stronger wind was put in clean energy’s sails. According to the International Energy Agency’s recent report, about $2.8 trillion is set to be invested globally in energy by year-end with the global investment in clean energy technologies on course to rise to $1.7 trillion in 2023.

With solar set to eclipse oil production for the first time while slightly more than $1 trillion is expected to go to coal, gas, and oil, the IEA believes that the world’s demand for oil is set to slow almost to a halt in the coming years, with the high prices and security of supply concerns hastening the shift towards cleaner energy technologies and enabling peak oil demand to come into view.

As global upstream investments in oil and gas exploration, extraction and production are on their way to reaching the highest levels since 2015, growing to $528 billion this year, the IEA claims that this level of investment – if sustained – will exceed the amount needed in a world that gets on track for net-zero emissions. In line with renewables being seen as the answer to the climate change concerns plaguing the world at large, many studies have found that wind and solar are the cheapest way to cut emissions that are heating the planet. 

While switching to renewable energy is perceived to be our future, this cannot happen without the proper energy infrastructure in place, money, and alignment from local communities. As an example, let’s take a look at the United States. The American electrical grid is currently designed for gas and coal and the nation needs to build wind turbines, but the best spots for sun and wind are far from cities.

While transmission capacity would need to double to reach Biden’s 2035 goal for 100% clean electricity, there is no single entity in charge of organizing the grid at this point while the broken permitting process is halting U.S. energy development. All these issues seem to paint an uncertain environment filled with murky waters as we embark on the unchartered path toward a low-carbon and clean energy future.

In a bid to glean more insight into some of the nuances the world is tangled up in and get a clear picture of the situation to put the right safeguards in place to ensure energy security while taking steps to bring the net-zero vision to life, Offshore Energy obtained views from James Hill, CEO of MCF Energy, a gas and oil exploration company. Hill, who specializes in exploration projects across Europe and North America, is a geologist by trade, with a Master’s of Science in Geology from California State University. He holds a P.Geo designation and is a Chartered Member of the London Geological Society.

With a strong track record in European exploration, Hill also served as the President of Professional Affairs for the American Association of Petroleum Geologists (AAPG). Prior to joining MCF Energy as President and CEO in December 2022, he was VP of Exploration for both BNK Petroleum and Bankers Petroleum.

Hill is working to drive change and through MCF Energy, he is dedicated to strengthening Europe’s energy security in light of the Russia-Ukraine war. MCF, which is working to develop Europe’s internal resources and infrastructure, currently has two exploration projects underway in Austria and Germany.

With natural gas being considered as the safest, cheapest, and most sustainable option in the energy transition era, Hill is adamant that the world needs to use a stepping-stone approach for this transition story. During the interview, he offers a deep dive into reasons why natural gas is the appropriate bridge fuel to aid the energy transition efforts while highlighting that it will take decades for the world to complete its journey to net zero and usher in a carbon-neutral future. Without further ado, the interview questions and Hill’s detailed answers about the ins and outs and nooks and crannies of the current energy landscape are available in full below.

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• Can you tell me more about the current prevailing concerns you see in the energy landscape? 

James Hill: The current energy picture, especially in Europe, is complicated by the war in Ukraine and the instability now being seen in Russia. Europe survived the reduction in energy from Russia due mainly to the mild winter and the additional LNG cargos that were available from the U.S. and Qatar. Those cargos of LNG will now be diverted to China as that country recovers from the COVID lockdown.

If next year brings a normal cold winter, Europe could be short over 20 billion cubic meters of natural gas. Even if the war were to hypothetically end tomorrow, the destruction of the North Stream pipelines would restrict gas coming into Europe. This is concerning for obvious reasons, but especially given Europe’s largest single supplier of natural gas, based in Norway, is experiencing prolonged outages and production challenges.

Last year, the European population was met with an unexpected and sudden energy deficit, which forced many into a state of energy poverty. With both the economy and population finally shifting into the early stages of recovery, Europe must avoid, at all possible costs, heading back into an energy poverty situation, given the long-term societal and economic effects could be detrimental.

• Is there a quick fix for our energy woes? 

James Hill: Even with massive government subsidies, the transition from fossil fuels to renewable energy has not gone smoothly or effectively to date. Unfortunately, there is no quick fix to this problem, and there is little hope that things will improve much as countries come out of pandemic lockdowns and populations continue to grow and demand more energy. Take, for example, the European Union. Europe’s pledge to become climate-neutral by 2050 is not going as planned.

In recent days, it has recognized there needs to be a significant transition period where natural gas will provide a bridge to a more carbon-free world. Despite gas shortages originally accelerating the green transition, European governments abruptly faced two major challenges: increasing their investment and meeting energy quotas. These issues have led the EU to rethink its strategy, and as a result, they recently declared natural gas a critical, green transition fuel. The U.S. is also facing complex challenges.

Take the legacy electricity grid that spans the nation. It’s built to supply regional energy in the form of coal and gas, not wind and solar energy. If the country were to rapidly switch to wind and solar, wind turbines would need to be built. New infrastructure along a new ‘grid line’ in sunnier areas, further away from cities, would also be needed – but first, we would need to determine who is going to pay for all of this.

Surprisingly, no single entity is responsible for paying for, and developing, energy infrastructure. Each region has different policies that underscore energy implementation. Therefore, this would take community support, regional support, money, and, most importantly – time. The energy transition has just begun, and we are decades away from the true implementation of a world fueled solely by wind and solar. Until we get there, using the cleanest source of fuel, which is natural gas, is our best option.

• How do we tackle these issues in the short term, and what can we do to get rid of them for good?

James Hill: We are facing a myriad of complex challenges that span global economies. It’s not a one-size-fits-all solution, given each country has a unique set of problems and issues surrounding the topic of energy consumption. With varying future needs, population sizes, and useable infrastructure, each country needs different solutions. One solution we can work to collectively tackle is to eliminate the use of coal and remove coal-burning power plants.

India rebooted coal burning earlier this year to meet energy demands, and China recently announced plans for approximately 100 new coal-fired power plants. The negative impact of coal on our environment is well-known and unnecessary, given a better alternative exists and is abundant in supply. Natural gas is the cleanest burning fuel we have, and switching from coal to gas will yield major reductions in carbon emissions. The need for clean-burning fossil fuels will continue for decades to come.

• Is there no way to put oil and gas aside right now and shift exclusively toward renewables? 

James Hill: The answer is no, but to paint a clear picture, let’s consider a scenario where, if we took this route, what our world would look like. Taking away oil and gas as energy sources in Europe would put the entire continent in a state of energy poverty. Stripping families of this resource would mean little to no heat, which means washing clothes, cooking food, electricity, and air conditioning would become obsolete. Many parts of Europe, in addition to developing countries, already experience high levels of this daily.

Additionally, the majority of countries around the world do not have infrastructure that can be easily retrofitted for renewables. This needs to be built from scratch. To further this, building infrastructure for renewables actually requires the support of energy from gas to aid in the development – whether through lighting, heat, supply development, etc. Moscow is stuck with a glut of natural gas, which is struggling to get to market.

Economic activity in China is beginning to resume, requiring a higher usage of energy. China, especially, cannot hold off on rebuilding its economy, given the devastation it has experienced over the past three years. All in all, we would likely experience a global economic collapse if we were to make an immediate shift away from oil and gas. The world economies are currently based on energy generated from fossil fuels and nuclear. It cannot happen overnight, nor should it.

• How long do you think the world will continue to burn oil and gas?

James Hill: A breakthrough in energy storage technology would help accelerate the transition away from fossil fuels. The good news is with so many countries working to achieve aggressive climate goals which are set to be met within the next five to ten years; the world is on an accelerated path toward renewable energy.

• Why is natural gas the best asset in the energy arsenal to propel the energy transition forward? 

James Hill: Natural gas has the lowest carbon footprint of any hydrocarbon fuel. When natural gas burns, it produces mostly carbon dioxide and water vapor and has the lowest carbon footprint of all fossil fuels. These gasses are the same elements we breathe. Additionally, the use of advanced technology, such as artificial intelligence and machine learning, in the drilling process allows for enhanced precision and accuracy, which translates to minimal environmental harm and improved safety.

The change from burning coal to natural gas resulted in a huge reduction in carbon emissions in the United States. The same result can be achieved in the rest of the world by changing from coal to natural gas as the primary energy source.

• Can renewables, primarily wind and solar, ever fully replace fossil fuels, such as gas? 

James Hill: Currently, electric energy is sourced from burning fossil fuels and nuclear. Replacing those sources will take decades. Even then, a reliable energy network will have to be supplemented by energy from fossil fuels when wind and solar cannot provide enough energy. 

Complicating the issue is the life span of both wind generators and solar panels, about 20 to 25 years, and the materials needed to construct them. Also, the impact of having to dispose of worn-out panels and turbines. By the time the transition is complete, many of the turbines and solar panels will need replacement.

• What do we need to do to usher in the much-anticipated low-carbon and green energy future?          

James Hill: To truly move forward, there needs to be collective action around what the next steps are. On the global frontier, we need to determine how we can appropriately acclimate each country to renewable energy, which means every country’s individual needs must be taken into account. On a more micro level, each country needs to assess the best method of implementation, specifically around the build-out and development of infrastructure fit for supplying renewable energy en masse.

The current divide in which we are experiencing stems from a lack of awareness around the challenges we are met with when trying to move to a renewable-centric world too quickly. It must be realized that world energy sources can’t change overnight and that current energy supplies are provided by thousands of people employed by the energy industry. 

The transition to renewable energy will take decades but can be achieved if technological advances are made in storing energy. Reduction in carbon emissions can be achieved quickly by changing from coal to clean-burning natural gas. Technology can also help in using underground carbon storage and increase the use of nuclear energy.

• Is there anything you would like to add?

James Hill: The world demand for energy will continue to increase as the population grows and economies recover from the pandemic lockdowns. Also, the development of third-world countries will accelerate this demand. These energy requirements will not be met by renewable technologies for many decades and the demand for clean natural gas will continue.

MCF Energy, by exploring for and producing more clean-burning natural gas, will contribute to major reductions in carbon emissions by replacing coal and oil that are currently being used to generate power.

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Even though renewable energy is gaining ground by leaps and bounds, it is believed that this is not enough to sustain the world, if fossil fuels are discarded, thus, multiple energy players, organizations, and politicians point out that oil and gas will remain important players on the energy stage to enable global energy security in the foreseeable future. In the wake of this, the reign of the black goal seems far from over since oil still has skin in the game despite the pivot towards gas, which is hailed as the backbone of the future energy mix.

Therefore, turning our backs on coal while finding ways to lower the carbon footprint of the oil and gas industry by burning cleaner and less-carbon-intensive fossil fuels is becoming a prerogative for energy players worldwide, as security of supply and decarbonization keep vying for attention. Natural gas, primarily LNG, appears to be poised to take the lead on this, contributing to low-carbon efforts and opening the doors for the transition tale to usher in a green energy world.

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