“Hydrocarbons are still a growth business.” — George Yates, CEO of HEYCO Energy Group
Dallas business leaders—astute, seasoned or young—are leaning into a cresting wave of opportunity in energy. Their visions include the hunt for good rock with the right gamma-ray signature, hyperscale computational power and a Starlink connection, and everything in between. The prize could be big on two fronts: emerging world hydrocarbon demand and tech’s endless thirst for power. Things have gone from what essentially has been flat-lined electricity growth in the U.S. to the potential of 100 “peak-capacity” gigawatts (GW) being added by 2030, Goldman Sachs reports. Last year, peak demand was 740 GW, with Texas accounting for more than 10 percent.
Playing into the perfect storm, large U.S. regional grid operators report a mismatch between decommissioning power generation and a lack of new generation coming online between now and the end of the decade. These reliability reports were like siren calls, says Danny Rice, chief executive of NET Power, which transforms natural gas into clean energy through an oxy-combustion process. “We don’t have time,” he says of the widening gap between supply and demand. “It’s easier to add new load growth, especially from AI and data centers, than it is to add new generation capacity from, say, nuclear. That leaves natural gas to meet the demand.”
Seemingly strange bedfellows are jockeying to procure energy. In this new era, firms can’t do it alone. They’re merging, consolidating, fortifying, and developing new partnerships across the hydrocarbon, electron, and even cryptocurrency aisles. Add to that, “We’re in a technological arms race,” notes Andrew Power, CEO of Digital Realty, a publicly traded data center pioneer. Energy underlies its success. The runway for oil and gas looks long.
Hydrocarbons are “still a growth industry”
Last year, energy M&A deals topped $234 billion as oil and gas companies fortify and retool for the future. Dallas’ Pioneer Natural Resources was the bellwether independent shale producer, an epic oil success story, and now a subsidiary of super-major ExxonMobil, which acquired it for $63 billion. In the first quarter of this year alone, energy M&A deals were valued at $73 billion, with global major Chevron packing up and moving to Texas from California. For the most part, cash and size are king.
But global market competition, disruptive technology, and entrepreneurial vision play a role, too. Demand for oil and gas is not abating, despite a decarbonization drive. Fourth-generation oilman and Heyco Energy CEO George Yates, with his hindsight, notes “hydrocarbons are still a growth business.”
Peak global projections range from 106 million barrels per day (mbd) through 2029, according to the International Energy Agency, and 116 in 2045 by OPEC. But it could go higher yet by transforming globally abundant gas into liquids. With U.S. oil production hovering around 13 mbd, we could see 14, but 15 or 16 is a stretch, according to Yates, given the depletable nature of oil.
Consolidations have occurred as long as the industry has existed. This time around, Yates says, “I think it’s different in degrees, though not completely. Consolidations are typically the product of the majors or large companies using one of their big strategic advantages, which is capital.”