CCBJ: What should our audience know about the energy sector and what to expect coming down the pipe in 2023?
The current economic environment in general, as well as some recent banking failures, could potentially have an impact in the energy sector in a couple of different areas during the remainder of 2023. In the emerging energy technology area, the loss of access to capital by virtue of certain bank collapses, as well as rising interest rates, may negatively impact companies attempting to get financing. In the oil and gas sector, if you have a recession this year, as some expect will occur, that may push crude prices down and negatively impact the earnings of energy companies operating in the upstream. Conversely, for companies that store petroleum products, a recession would likely cause an increase in storage rates and drive earnings up for companies operating storage terminals We saw this during the pandemic and could see something like that on a smaller scale in the latter part of 2023 if interest rates continue to rise and the economy slips into recession.
Long termer, I believe we will continue seeing the energy industry move towards decarbonization, even within the oil and gas sector itself. For example, my company, Ocean Point Terminals, stores hydrocarbons, including crude oil, jet fuel, gasoline, and other similar products, but we are currently working on projects to utilize solar power and other clean fuels to generate the energy that powers our operations. We are adopting these alternative fuel sources to reduce costs and improve our emissions profile. No matter your industry, everyone is looking to create the ideal energy portfolio.
How important is it for companies to have a strong ESG score?
It’s very important for a couple of reasons. At its most basic level, a high ESG score indicates that you’re doing the right thing in terms of addressing your company’s environmental, social and governance responsibilities in an effective and responsible way, and that you’re conducting your business with consideration given to the effects your company has on the communities in which it operates. A strong ESG score is also critical in terms of ensuring a company’s access to capital. You are starting to see financial institutions focusing on ESG scores because they want to invest in a way that makes sense for them, not only financially, but socially as well. So, if you, as a company, are not doing everything you can to ensure you are operating in an environmentally responsible way, contributing to the communities in which it operates, and appropriately governing your business, you’re doing a disservice to, not only those around you, but to yourself by potentially shutting off access to certain capital markets.
All the companies I’ve worked with spend a significant amount of time and effort evaluating their ESG performance and exploring ways to continuously improve. Given the state of the world, I only foresee ESG scores becoming more and more important over time.
Why do you believe the average consumer is still hesitant when it comes to renewable energy?
People gravitate to the familiar and are creatures of habit. So, as the world changes, many people tend to go with what they know rather than consider alternative sources of energy, whether renewables, biofuels, liquified natural gas, wind, solar or others. Secondarily, I believe there is also some level of hesitation with respect to cost and investment. For example, if you want solar panels in your home, you may be looking at a cost of between $30,000 and $70,000 for panels and installation, depending on your home’s square footage, the amount of shade you get, the roof’s age, and other factors. Whether you’re a company or a consumer, you have to make the choice to accept that initial cost before you can realize the benefits.
Having a balanced portfolio of energy sources at your disposal, however, makes sense from an environmental and cost perspective. As a result, as time goes on you will see more and more fuel sources in the market. And, as they become more present in the market, people will more readily adopt these solutions and move us towards a more balanced energy portfolio. It’s just going to take a little bit of time.
What verticals (e.g., retail, banking, marketing, etc.) do you see being targeted in the energy sector right now?
Whether to be vertically integrated or specialized in one sector is always going to be a company-by-company answer that is driven by each entity’s own unique strategic vision. I’ve worked with several energy companies, and each has approached integration differently. Some, are very integrated, having assets in all sectors of the energy industry, as well as supporting marketing groups and perhaps even captive insurance companies within its organizational structure. This level of integration provides a natural hedge because when one sector is under performing, some of those losses may be offset by other units within the organization. Other companies, however, prefer to maximize profits in one area and may spin off their midstream or downstream assets, as an example, depending on how they want to unlock the value of their enterprise. So, in short, I don’t think there’s any one answer to your question. It just ends up being a strategic call based on how each company evaluates market conditions in its sector and thinks it can best take advantage of them.
You served with the US Army. How do you believe your military experience better prepared you for your current role?
Serving in the United States Army was an invaluable experience, and I really can’t thank the Army enough for the training they provided—the technical skills training, the organizational training, and the social training. The U.S. military offers the entire package, and it has had a significant impact on the way my career has gone.
When I entered the military, it was primarily to help pay for school. It was not something that I had previously given much thought to. But once I began serving, I began to appreciate the experience and understand that the skills I was gaining would benefit me for the entirety of my life. I was surrounded by an extraordinarily diverse set of soldiers representing all nationalities, all parts of the United States, all ages, different backgrounds and a multitude of life experiences. The Army taught us that, regardless of our differences, we could become an effective and cohesive team. Through that experience, I have gained invaluable communication skills. I have worked all over the world and the skills I gained in the military are a key reason why I have been successful in those endeavors.
Then there are my organizational skills. I always have a plan and do my best to get things done as quickly and efficiently as possible for my clients. As a soldier, you are taught how to approach your mission and how to adjust your plan to continually changing circumstances. Those skills apply equally to my work as an attorney and I approach the practice of law in the exact same way. In sum, the Army gifted me with a variety of positive character traits that I still carry with me and, knowing what I know now, I would have enlisted even if I had enough money to complete my education—that’s how valuable it was in molding me as a person.
What is your advice to others looking to advance within profession?
You need to have a plan for where you want to go and have a roadmap laid out in your mind. Sometimes life will introduce detours, but to be successful, you need to have a clear picture of where you want to end up. Without that focus, it becomes very difficult to maneuver through your career. And maneuver you must because, even with the best laid plan, life will inevitably throw a variety of obstacles at you, and you will have to recalibrate and adjust your plan to reach your goal. So, whether it’s something as simple as deciding whether you’re going to take this opportunity or that one, move to this geography or that one, you always need to analyze each decision and ask yourself, “How is this going to get me closer to my goal?”
At least that’s how I’ve approached my career. If we went through my resume, I could tell you exactly why I chose each position at that point in my life and tell you how that decision moved me closer to my end goal. And at the end of the day, all those decisions have led me to where I am now—general counsel of a world-class organization—which is where I’ve always wanted to be.
Published May 2, 2023.