Oil, gas to remain heavy hitters in the energy mix for 50 years: OTC speakers

05 02, 2012 by Platts

The global energy industry will have to continue to find ever cheaper energy supplies faster than ever before to keep up with rising energy demand amid a continued dependence on oil and natural gas, speakers at the Offshore Technology Conference in Houston said Tuesday.

Even as global energy demand is set to increase some 50% until 2030 from present levels, the share of oil and gas in the energy mix is expected to change little over this period.

"Demand for oil and gas will undoubtedly grow," said Ali Mosheri, president of Latin America and Africa for Chevron. "There is no substitute for it right now, not for the next 50 years." Newer, complementary energy sources will not be adequate to meet rising demand, he reasoned.

Speakers said that commercial primary energy demand worldwide is estimated to increase some 51% during the 2010-2035 period. The share of fossil fuels in the global energy mix is set to slip only to 82% from 87%. Oil is forecast to retain the largest share at 28% in the year 2030, lower than 34% presently. The share of gas is expected to increase to 25% from 23% over this period.

Meanwhile, annual energy production worldwide is expected to rise to 16 billion to 18 billion tons of oil equivalent by the year 2030 from an expected 12.5 btoe this year. In 2030, oil and gas would contribute some 47% and coal 34% to the overall energy mix.

Increased energy demand would require some 30 million b/d of additional oil production capacity to come onstream by the year 2020. The following decade, at least another 25 million b/d of oil production capacity would have to be commissioned to offset declining output as well as meet rising demand, Mosheri estimated.

"The industry is faced with great challenges," said Farouk Hussain Al Zanki, chief executive officer of Kuwait Petroleum Corporation. "There are uncertainties over future demand levels and the industry needs to guarantee energy supply at levels that match demand," he said.

Al Zanki expected to see a shift in fuel usage in the transportation sector. For instance, increased fuel efficiency would flatten any rise in fuel demand from the growing number of passenger vehicles. But demand from commercial vehicles would continue to rise, he forecast.

According to Carlos Morales Gil, director general of Pemex Exploration and Production, operators are increasingly going to have to work with national governments as partners in the oil business. About 81% of the world's oil reserves are owned by various state-owned oil companies, he noted.

"Government policies may not necessarily help but could hinder," said Matthias Bichsel, director of projects and technology with Shell. He stressed on the need for the industry to work with various national governments to help shape their energy policies.

The need for technological advances was another factor that speakers stressed Tuesday. "This is the end of easy technology, the end of easy oil," said Derek Mathieson, president Western Hemisphere, Baker Hughes. "This is the period of greatest turmoil ... We need to recover more and leave less footprint on the environment."