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REPORT
2024 Energy Sector Overview: Navigating Transformations and Trialling Trilemmas
Written by Tazmyn Gounden, Head of Investor Research, Energy Council
Published 26th November 2024
HOUSTON – As we approach the close of 2024, the energy industry finds itself navigating a year defined by dramatic transformations, both in market dynamics and regulatory landscapes. Global energy demand has risen sharply, influenced by ongoing population growth, increased industrialization in emerging economies, and a robust recovery in economic activities post-pandemic. Investments in energy infrastructure and clean technologies have expanded significantly, with the North American market alone directing substantial capital towards renewable energy projects, hydrogen development, and natural gas initiatives in response to evolving policies and geopolitical pressures.
A critical theme of 2024 has been the “energy trilemma” — balancing energy security, economic stability, and environmental responsibility amid rising pressures to decarbonize. This year, the United States has continued to prioritize energy independence, with major investments into LNG and hydrogen infrastructure to support both domestic and international needs, particularly in Europe and Asia. However, the industry faces increasing regulatory hurdles as new policies in North America and the European Union impose stricter emissions limits and incentivize methane reduction technologies.
This report draws from discussions at the North American Energy Capital Assembly, offering a comprehensive overview of capital allocation trends, regulatory impacts, and technological advancements shaping the energy sector. In 2024, the industry is poised to see annual energy investments surpass $3 trillion, fuelled by both traditional and renewable energy sources, creating significant growth opportunities across a variety of energy assets.
However, the current pace of technological breakthroughs and policy adaptations may not suffice to meet ambitious global climate commitments. A more likely scenario points toward a temperature increase between 2.5 to 2.7 degrees Celsius. Data from the International Energy Agency (IEA) highlight this concerning trend, projecting that existing policies and technologies would lead to a global temperature rise of 2.7 degrees Celsius by 2100, well beyond the thresholds set by the Paris Agreement.
Amidst the broader transformations within the energy sector, 2024 has also been marked by a notable wave of consolidation in the oil and gas industry. This trend, driven by the necessity to enhance scale and efficiency, has seen a strategic shift towards merging assets and capabilities to better withstand the volatility of energy markets and the increasing pressure from environmental regulations. Major oil firms and independent operators alike have pursued mergers and acquisitions to streamline operations and bolster financial resilience, focusing on optimizing their asset portfolios amidst fluctuating oil prices and shifting investor sentiments.
Overall, this year’s assembly offers a timely reflection on 2024’s energy landscape, underscoring the importance of adaptive strategies, technological innovation, and regulatory alignment as the industry.
M&A & Consolidation
Redefining The O&G Industry Amidst A Record-Breaking M&A Spree: The Drive For Consolidation In Order To Enhance Scale & Efficiency In The US Oil Sector
Speakers:
- Danny Brown, President & CEO, Chord Energy
- P. Hanson, Managing Director, Global Head of Oil & Gas, Houlihan Lokey
- Leslie Armentrout, President, Co-Founder & Chief Executive Officer, Silver Cross Energy Partners
- Matt Parsons, Principal, Sixth Street
- Chris Bennett, Partner, Weil
- Michael McKissack, Partner, Boston Consulting Group (moderator)
Key Takeaways:
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M&A Boom: Over the past few quarters, the oil and gas industry has witnessed a significant transformation, with a shift from the usual high volume of asset-level (A&D) deals to larger corporate M&A transactions involving major companies like Exxon, Chevron, and ConocoPhillips.
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Strategic Divestitures and Asset Management Post-Consolidation: Following large M&A activities, companies are reassessing and rationalizing their portfolios, leading to the divestiture of non-core and less strategic assets, including A&D focused properties, PDP, minerals, royalties, and midstream assets.
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Market Outlook for Mid to Small Caps: As the market stabilizes from the flurry of high-value transactions, there's an expected increase in mid to small cap deals, including bolt-on acquisitions of smaller, private equity-backed companies.
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Global Activity by NOCs: National Oil Companies (NOCs) are increasingly participating in large-scale M&A, particularly in regions like Africa and Southeast Asia.
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Future Deal Expectations: The industry anticipates robust deal flow, focusing on acquiring inventory for long-term value and divesting non-core assets to streamline operations and capitalize on market stabilization.
Opening Panel
As The U.S. O&G Industry Readies Itself For Regulatory Shifts & Demanding Climate Policies; What Can We Expect?
Speakers:
- Bobby Tudor, CEO, Artemis Energy Partners
- Nate Gorence, Chief Business Officer, Bridger Photonics Inc.
- Emily Rodgers, Managing Director & Director, ESG, EIG Global Energy Partners
- Sunaina Ocalan, Senior Director, Corporate Strategy & Climate Change, Hess Corporation
- Renee Klimczak, Managing Director, Alvarez & Marsal (moderator)
Key Takeaways:
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Regulatory Impact on Industry: Election outcomes could lead to different regulatory scenarios for the U.S. oil and gas industry. Continued current administration policies may enhance environmental regulations like methane emission controls, whereas a new administration could lean towards deregulation.
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Strategic Adaptation and Technology Integration: Industry leaders stress the importance of proactive strategies and investment in cleaner, more efficient operations for compliance and efficiency – regardless of regulatory changes. Advancements in technologies such as LIDAR and continuous methane monitoring are essential for meeting regulatory demands and improving safety.
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Economic and Operational Strategies: Discussions highlighted the dual impact of market forces and technological advancements on production capabilities, underscoring that while policy is influential, market dynamics and technological innovations often play a more decisive role in shaping the industry.
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Capital Availability: The industry is transitioning from an influx of private capital to increased reliance on public funds and traditional bank financing, mirroring shifts in investor preferences and market dynamics.
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Capital Reallocation and Sector-Specific Investments: Investment sentiments have shifted slightly, with some capital moving back from renewable energies to more traditional energy sectors. Institutional investors continue to support traditional energy, but there is a noticeable trend towards more specific investments, like gas infrastructure, rather than broad traditional energy commitments.
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Balancing Economic Returns with Sustainability Goals: There is an ongoing challenge for companies to align the high returns from traditional fossil fuel projects with the lower returns typically associated with renewable projects and new technologies. Companies are exploring different strategies to balance economic benefits with sustainability commitments, including investing in carbon markets and R&D for future technologies.
LNG Panel
How Best To Optimize Costs, Contracts & Sustainability To Drive Investor Confidence In LNG Projects
Speakers:
- Roberto Vara, Vice President, Projects & LNG Technology, Freeport LNG
- Patrick Hughes, SVP Government & External Affairs, Mexico Pacific
- Dumi Dediu, Partner, McKinsey & Co. (moderator)
Key Takeaways:
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Regulatory Impact and Project Structuring: Changes in government can pause LNG project approvals, but demand for natural gas remains strong. Projects that effectively address environmental and community impacts are crucial for securing approvals and financing. The panel emphasized the importance of designing well-constructed projects that meet stringent regulatory standards to ensure smooth progression and financial viability.
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Financing and Market Dynamics: Securing project financing is closely tied to long-term contracts with investment-grade off-takers, with portfolio players playing a key role in filling shorter contract gaps. The discussion highlighted that LNG projects must align with global market demands and maintain cost-effectiveness to attract investment.
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Sustainability and Technological Innovations: There is an increasing focus on sustainability within the LNG sector, driven by customer demands and regulatory scrutiny, especially in Europe. Reliable and environmentally conscious supply chains are becoming critical. Modularization and floating LNG solutions were discussed as innovative strategies to enhance project flexibility, reduce environmental impact, and improve competitiveness.
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Infrastructure Challenges and Scaling Efficiency: Addressing infrastructure challenges is vital for maintaining project competitiveness. Large-scale trains offer economic advantages, and technologies like modularization enable scalability and risk management. The panel also noted the strategic importance of geographical location and infrastructure in sustaining a competitive edge in the global LNG market.
Hydrogen Spotlight
Overcoming Technical Hurdles & Addressing the Practicality Of Government Incentives: What Does The Future Of This Developing Market Look Like?
Speakers:
- Stuart Page, Senior Consultant, Loans Programs Office, Department of Energy
- Neal Dikeman, Partner, Energy Transition Ventures
- Mike Eickhoff, Managing Principal, Credits & Incentives, Grant Thornton
- David Katz, New Energy Manager, GaffneyCline, Energy Advisory, Baker Hughes (moderator)
Key Takeaways:
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Market Shift: The hydrogen market is moving from an initial phase of high enthusiasm to a more practical phase, focusing on feasible business models and market entry strategies. The discussion highlighted how the evolution from concept to practical implementation mirrors the early days of the solar industry, suggesting a potential roadmap for hydrogen's future.
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Critical Role of Government Incentives: Panelists emphasized the necessity of government support, including tax credits and incentives, to navigate the early financial and technological barriers to hydrogen development. The incentives are seen as essential to bridge the gap between pilot projects and commercial-scale operations.
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Focus on Scalable Solutions and Commercial Viability: There's a significant focus on making hydrogen projects scalable and financially viable. Blue hydrogen, utilizing carbon capture, is considered a more immediately achievable goal than green hydrogen, which still faces cost and technological challenges despite its environmental benefits.
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Challenges in Hydrogen Storage and Distribution: The panel discussed substantial technical challenges in storing and transporting hydrogen, which are crucial hurdles to overcome for establishing a reliable supply chain. Innovative solutions and significant investment in infrastructure are needed to address these issues.
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Opportunity for International Collaboration and Competition: The global dynamics of the hydrogen market were highlighted, with different regions like the US, Middle East, and North Africa being identified as key players due to their renewable energy resources and economic conditions. This international aspect underlines both the competitive and collaborative opportunities in the hydrogen sector.
North America Energy Capital Assembly
October 2025 | Houston
The most senior & influential finance and investment meeting for the North American E&P sector.