US energy, interior secretaries meet executives amid market turmoil

By Arathy Somasekhar and Georgina McCartney

HOUSTON, March 22 (Reuters) - U.S. Energy Secretary Chris Wright and Interior Secretary Doug Burgum discussed everything from raising domestic oil output to opportunities in Venezuela with energy executives in Houston on Sunday amid the world's worst supply disruption, due to the U.S.-Israeli war on Iran.

The meeting took place over dinner on the eve of the annual CERAWeek energy conference, where executives of major energy companies, oil ministers and members of the Organization of the Petroleum Exporting Countries are gathering to discuss the state of the industry.

Oil prices have soared to multi-year highs above $100 a barrel after Iran effectively shut down the Strait of Hormuz, the key trade route for roughly 20% of the world's oil and gas flows.

Attacks on energy infrastructure in the region have caused long-term damage that means even if the strait reopens, it will be years before supplies return to pre-war levels.

"We discussed the oil and gas markets and there was speculation on how long the strait could be closed. There was no consensus on how long this could be. Everyone realizes this is the most disruptive and most unusual time in energy markets than there's ever been before. And everyone has to adjust," said Bob Dudley, former CEO of BP and chairman of the Oil and Gas Climate Initiative.

The two U.S. officials were "basically trying to make their case: 'This is why we need your support, and this and this and this from Venezuela to Iran,'" Dudley said. "But the U.S. is absolutely committed to doing what needs to be done: open the straits, with or without European help."

Secretary Wright, when exiting, told reporters energy was discussed, but declined to elaborate further. A senior administration official, who declined to comment on the record, said the possibility of raising U.S. oil production was also discussed.

Sunday's dinner at The Grove restaurant in downtown Houston has become a tradition of the conference, convening the key leaders in the oil industry, which in the past have included energy ministers from OPEC and shale executives.

This year's gathering was not confined to oil industry leaders, with a more expansive list of attendees that included coal and power executives, underscoring the growing importance of power generation as demand from data centers explodes.

Toby Neugebauer, co-founder and CEO of power company Fermi America FRMI.O, Ernie Thrasher, CEO of Xcoal, and Lorenzo Simonelli, CEO of oilfield services firm Baker Hughes BKR.O were among those who attended.

The war with Iran has shown no signs of letting up, even after U.S. President Donald Trump on Friday said he was considering winding down operations. Trump said on Saturday the U.S. would attack Iranian power plants if the Strait did not open in 48 hours.

Iran said it would respond to any such action with attacks on Gulf energy systems and water treatment facilities.

U.S. gasoline prices have jumped nearly 30% since the war started at the end of February and are nearing $4 a gallon, creating a potential problem for Trump ahead of the mid-term elections in November. Average diesel prices have climbed to over $5 a gallon.

"I think there is a great effort being put forward to minimize destruction to the infrastructure, but no one knows what the end result will be," Thrasher, of Xcoal, said after the dinner.

"My big takeaway is we’re in a very volatile time, a lot of uncertainty, but a strong belief that there is a pathway through the challenges to supply the energy the world needs - but there is no quick fix."