Climate activists have usurped green as the color of their world energy plan. Green, as in the color of money, is what the offshore drilling industry is looking at. The greens will clash in meeting the world’s future energy needs. 

Early last week, Diamond Offshore Drilling Co. reported its 2024 first-quarter earnings. The company’s financial results improved significantly from 2023’s fourth quarter. reported the quarter’s results outperformed Wall Street analysts’ projections for revenues, net income, and earnings per share. 

The public offshore drilling companies’ financial results reflect continued market improvement as activity and day rates trend higher. With crude oil prices elevated, although volatile, the incentives for oil companies to seek new offshore reserves and sustain existing production remain in place. The elevated oil prices provide the green necessary for the oil companies to continue drilling. 

The general investor presentation on Diamond Offshore’s website is interesting. Of the 21 slides with data, tables, and charts, 10 were devoted to the outlook for energy markets and offshore drilling. The first chart was titled “Fossil Fuels Predicted to Grow and Remain Primary Source of Energy Through 2050.” The chart utilized the Energy Information Administration’s International Energy Outlook 2023 data. 

The chart shows the reference case forecast for fossil fuel and renewable energy consumption from 2022 to 2050. It also displayed forecasts around the reference case. The EIA reference case is modified to reflect the impact of high and low oil prices, high and low economic growth, and high and low net-zero technology cases. Examining the data behind the chart showed that the variation extremes around the reference case came from the high and low economic growth scenarios and not those of high and low oil prices or high and low net-zero technology cases.  The reference case data showed total energy consumption grew between 2022 and 2050 by 1.05%. Fossil fuels increased by 0.6%, while renewables grew by 2.8% annually. Fossil fuel’s share of global energy in 2050 will decline from 84.2% to 74.4%. Renewable energy’s share increases to 25.6% from 15.8% in 2022. The high and low economic growth scenarios show that the shares of fossil fuels and renewables changed by only a couple of tenths of a percentage point. 

The message from the chart and the underlying data is that energy consumption will grow over the next 28 years. Renewable energy will grow faster than fossil fuels. However, more of both energy sources are necessary to meet demand.

Renewable energy’s 10 percentage point market share gain does not result in the demise of oil and gas. The world needs more fossil fuels to meet future energy demand and to offset production declines. The offshore drilling industry will be a key player in helping the petroleum industry meet the challenge of delivering energy when the world’s population needs it. 



G. Allen Brooks is an energy analyst. In his over 50-year career in energy and investment, he has served as an energy security analyst, oil service company manager, and a member of the board of directors for several oilfield service companies.

Small Featured Spot