Comments: The Energy Outlook
Authors: Donnelly John 
Published: February 2015

Editor's column

Global demand shows no signs of slowing, increasing another 2 million B/D in 2011. Both international and national oil companies are anticipating continued strong energy demand and sustained reliance on fossil fuels as the energy product of choice.

Two new long-term outlooks agree that global population growth and rising incomes will propel energy demand, primarily in developing countries. The most significant shift in the energy mix going forward is increasing reliance on natural gas and a decline in coal use for electricity.

BP’s Energy Outlook 2030 predicts that world energy consumptions will grow 1.6% a year from 2010 to 2030, although energy efficiency will improve sharply, restraining overall growth in energy consumption. Almost all of the growth will come from non-OECD countries. Use of natural gas and nonfossil fuels will gain at the expense of coal, with gas expected to meet 31% of the growth in global consumption. Although heavy reliance on fossil fuels will continue, gas consumption also will take market share away from oil.

The report forecasts that oil demand growth will come largely from China, India, and the Middle East. Supply for meeting that expected growth in demand will come primarily from OPEC countries, with production increases in natural gas liquids and conventional crude from Saudi Arabia and Iraq.

ExxonMobil recently extended its long-term energy forecast to 2040 for the first time. The Outlook for Energy: A View to 2040 predicts that global demand will be about 30% higher in 2040 compared with today, with demand in developing countries rising about 60%. “Less carbon-intensive fuels, particularly natural gas, gain market share, while coal peaks and begins a decline for the first time in modern history,” the report says. The shale revolution continues, as the report predicts that natural gas from shale and similar sources will make up roughly a third of total global gas production by 2040.

Executives speaking at last month’s International Petroleum Technology Conference in Bangkok, Thailand, generally agree with these assessments. Fossil fuels will remain the dominant fuel choice for years to come, but their development will require increased technical capability and efficiency to meet global demand, panelists at the conference executive plenary session concluded. The future will demand a “higher intensity” of E&P efforts, said Nasser Al-Jaidah, chief executive officer of Qatar Petroleum. The industry must give assurances that it can develop resources to meet world demand and must make a commitment to introducing new technologies that increase recovery factors. Additionally, the industry must confirm that it can operate in more efficient ways to mitigate greenhouse gas emissions.

Several game-changing technical opportunities exist, said Dato Wee Yiaw Hin, executive vice president of E&P at Petronas, among them increasing recovery factors through enhanced oil recovery, carbon capture and sequestration, Arctic exploration, and the development of biofuels.

Speakers at the conference agreed that the growth in shale supplies is promising, but the sector will not develop as quickly as it did in the US. The main hurdle for shale is acceptability, both from governments and the public.