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Non-conventional crude won’t be enough to meet rising world demand Director of International Energy Agency predicts reliance on OPEC will grow, not shrink over next 30 years as global consumption climbs by 44 million barrels per day Gary Park PNA Canadian Correspondent
For all of the soaring global investment in non-conventional oil development, it won’t be enough to offset rising world dependence on Middle East supplies, the executive director of the International Energy Agency told a Calgary conference Nov. 25-26.
Robert Priddle said world consumption, driven by demand from the developing world, is projected to grow on a daily basis to 120 million barrels from the current 76 million over the next 30 years, while non-conventional output is expected to contribute only an additional 7 million barrels.
As a result, the Paris-based IEA sees more, not less reliance on conventional oil from fewer countries in the Organization of Petroleum Exporting Countries.
“There is a certain discomfort about that,” Priddle said.
He said that as long as OPEC producers insist on tying oil prices to their national revenue requirements and not the cost of production, consumer concerns will remain legitimate.
No agreement on Kyoto In that environment, the OPEC system contains the seeds of its own destruction, by keeping prices relatively high in the $22-$28 per barrel range, thus encouraging the drive to develop alternative fuel sources, such as Alberta’s oil sands, Venezuela’s heavy oil and Australia’s shale.
But Priddle said OPEC is not unduly concerned about non-conventional oil, regarding non-OPEC production from countries such as Russia as a greater threat to the cartel. IEA chief economist Fatih Birol said global oil prices are the biggest factor in determining the pace of future non-conventional expansion.
He said the impact of the Kyoto Protocol on the Alberta oil sands will be determined by how the Canadian government decides it will meet its targets.
But David Knapp, senior editor at the New York-based Energy Intelligence Group, downplayed the Kyoto impact, suggesting that oil sands projects that have been delayed are more concerned about prices than the climate-change treaty.
That view was challenged by David Park, chief executive officer of TrueNorth Energy Inc., who said Kyoto has “helped to create a feeling of malaise in the investment community with respect to our sector.”
He said those concerns are making it harder for TrueNorth to find partner the C$3.5 billion Fort Hills project, without which the company will be forced to stall its plans to start work in 2003.
Kyoto has “added another risk and another cost, on top of an industry (the oil sands) which s already performing at the margin,” said Park. Using Morgan Stanley to help search for partners, he said talks with a handful of potential investors are moving more slowly than he would like, given that TrueNorth’s parent Koch Industries Inc. wants to lower its stake from 78 percent to between 25 and 50 percent.
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