While natural gas and renewables are surging, oil will remain the globe’s No. 1 fuel for the foreseeable future. And the world still has a treasure trove of oil to extract, ExxonMobil says in its latest “Outlook for Energy” report.
The annual report makes predictions out nearly three decades, to the year 2040.
“Even by 2040, ExxonMobil estimates that less than half of the world’s recoverable crude and condensate will have been produced,” the report says. “Even with production, the resource base continues to grow due to the ability of the industry to find and develop new types of resources through improved science and technical innovations.”
The report, released on Dec. 11, is a sweeping overview of the world energy mix, with observations on population and development trends, electricity generation, energy trading, energy efficiency and air pollution.
“Overall, global energy demand will grow 35 percent, even with significant efficiency gains, as the world’s population expands from about 7 billion people today to nearly 9 billion people by 2040, led by growth in Africa and India,” the report says.
Liquids outlook
The energy outlook details the changing character of petroleum liquids production.
“ExxonMobil projects total liquids demand to rise to 113 million barrels per day of oil equivalent in 2040, a 30 percent increase from 2010,” the report says. “About 70 percent of this increase is tied to the transportation sector.”
Conventional crude production will decline slightly over time, but rising production from deepwater, oil sands and tight oil resources will more than compensate.
“The successes of deepwater and oil sands developments are examples of how new technologies are key to delivering additional sources of liquid supplies to meet rising demand,” the report says. “Ten years ago, these supplies were barely on the radar screen. The same is true for tight oil, which is growing as a result of recent advances in technology that have enabled the energy industry to unlock the oil found in ‘tight’ rock formations. The advances are very similar to the ones that have enabled the growth in ‘unconventional’ production of natural gas, which is also producing a rise in natural gas liquids (NGLs).”
By 2040, only about 55 percent of the world’s liquid supply will come from conventional crude oil production.
“The rest will be provided by deepwater, tight oil and NGLs, as well as oil sands and biofuels,” the report says.
Horizontal drilling, hydraulic fracturing and other technologies have spurred major new oil production in places such as the Bakken region in North Dakota. As a result, U.S. crude production is increasing for the first time since the mid-1980s.
Around 2030, the nations of North America likely will go from a net importer to a net exporter of oil, ExxonMobil says. The Paris-based International Energy Agency, or IEA, made the same prediction in November.
Natural gas outlook
Natural gas will grow faster than any other major fuel source, with global supply to increase about 65 percent by 2040, ExxonMobil says.
In last year’s energy outlook, the company predicted gas would overtake coal by 2025 to become the second most consumed fuel, after oil. The new outlook repeats that prediction.
In North America, unconventional gas production is increasing rapidly, putting the continent in position to become a potential gas exporter by about 2020.
“Shale gas comprises the largest component of unconventional resources, but it also includes coal bed methane and tight gas,” the report says.
ExxonMobil notes that the IEA estimates the world has about 28,000 trillion cubic feet of remaining gas resources, enough to meet current demand for more than 200 years.
“Globally, unconventional gas makes up about 40 percent of the estimated remaining resource,” the report says. “In North America, unconventional gas has a higher share — accounting for about two-thirds.”
Through 2040, electricity generation will account for more than half of the increase in global energy demand. And gas is primed to be a fuel of choice for making power.
Today, coal is a very competitive option for generating electricity. But natural gas becomes increasingly attractive as it emits up to 60 percent less carbon dioxide gas than coal, ExxonMobil says.
“Coal faces a significant challenge from policies to reduce greenhouse gas emissions; wind and solar face challenges related to economics and reliability considerations; and nuclear faces unique considerations regarding public perceptions of safety,” the energy outlook says. “At the same time, new gas-fired generating units use very efficient technologies and are easy to build at a reasonable cost, flexible to operate and supported by abundant gas supplies. As a result, gas is increasingly viewed as the most economical fuel choice for electricity generation for the United States.”
By 2040, wind energy will grow by seven times and solar power will increase by more than 20 times. But these will account for, respectively, only 7 percent and 2 percent of global electricity supply.
47 mpg by 2040
Energy demand for transportation will increase by more than 40 percent from 2010 to 2040, ExxonMobil says.
Nearly all of that growth will come from commercial transportation, rather than cars.
“In contrast to the growth in commercial transportation, fuel demand for personal vehicles — cars, SUVs and small pickup trucks — actually plateaus fairly soon and begins a gradual decline as consumers turn to smaller, lighter vehicles and technologies improve fuel efficiency,” the outlook report says.
Oil is forecast to remain the predominant fuel source for transportation through 2040.
“Oil products benefit not only from the widespread availability of supplies, but also significant economic and practical advantages over alternatives,” the report says. “Technological advancements are continuing to improve the fuel economy of conventional vehicles every day. In order to make a significant impact in the marketplace, alternatives like plug-in hybrids or electric cars will need to make substantial progress to overcome hurdles, including a $10,000 to $15,000 higher upfront cost plus range and functional limitations for drivers. For example, the higher energy density of oil products is such that 100 pounds of gasoline can enable a car to travel 350 miles, compared to a 100-pound battery that will power a car for only about 15 miles and can take hours to recharge.”
New cars will become much more fuel efficient, averaging around 47 miles per gallon by 2040 compared to about 27 mpg today.
The outlook report is posted at www.exxonmobil.com.
