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Forecast sees major growth in LNG trade ExxonMobil assesses world energy supply and demand in annual outlook, notes competition to capture Asia Pacific gas market Wesley Loy For Petroleum News
International trade of natural gas in 2040 is expected to be 2½ times the 2010 level, and most of the growth will take the form of liquefied natural gas or LNG, a new forecast from ExxonMobil says.
The Asia Pacific region will be the hot market for LNG, the report says.
The percentage of natural gas demand met by imports from outside the region is expected to rise from 15 percent today to 35 percent by 2040.
“By 2040, about 40 percent of Asia Pacific’s natural gas demand will be satisfied by LNG,” the report says.
The projections are part of ExxonMobil’s 2014 Outlook for Energy, a sweeping survey of global energy supply and demand. The annual report looks at sources of energy from oil and gas to coal to nuclear to renewables, and includes analysis on population growth, urbanization, automobile trends and greenhouse gas emissions.
ExxonMobil says the outlook helps guide its own long-term investments.
The 56-page report is posted on ExxonMobil’s website.
The LNG race The LNG picture is of particular interest in Alaska, where ExxonMobil and partners BP and ConocoPhillips are mulling a megaproject to develop the vast stranded gas resource on the remote North Slope.
The project would involve construction of a trans-Alaska pipeline to carry the gas to a liquefaction plant and tanker terminal sited somewhere along the state’s southern coast.
This project, an old and previously rejected concept that’s come back to life, is seriously challenged due to the need for the multibillion-dollar pipeline. Shipping LNG directly off the North Slope isn’t practical due to Arctic Ocean ice.
The ExxonMobil report is encouraging in terms of the projected LNG demand, and the growing environmental preference for gas over coal to generate electricity. But the report also makes clear that Alaska’s LNG dream has major competition.
“All around the world — from the highlands of Papua New Guinea, to the deep water off east Africa, to frigid far east Russia, to the U.S. Gulf Coast — LNG projects are in various stages of planning and development to produce gas destined for faraway ports,” the study says.
Crude oil outlook Looking out to 2040, ExxonMobil says oil is expected to remain the top global energy source and the fuel of choice for transportation.
And the world still has a great deal of oil available.
“Ongoing advances in exploration and production technology continue to expand the size of the world’s recoverable crude and condensate resources,” the study says. “Despite rising liquids production, we estimate that by 2040, about 65 percent of the world’s recoverable crude and condensate resource base will have yet to be produced.”
Conventional crude oil production likely will decline slightly by 2040, but this decline will be more than offset by emerging sources including tight oil, deepwater oil and oil sands, ExxonMobil says.
North American liquids production is expected to rise by more than 40 percent from 2010 to 2040, boosted by gains in oil sands, tight oil and natural gas liquids or NGLs, the study says.
NGLs include ethane, propane and butane, and are expected to approach 15 percent of global liquids supply in 2040.
The Organization of Petroleum Exporting Countries will gain influence, with about 45 percent of the world’s liquids supply coming from OPEC countries by 2040 compared to 40 percent in 2010.
“North America is expected to shift from a significant crude oil importer to a fairly balanced position by 2030,” the outlook says.
The report calls the Arctic “the world’s largest remaining frontier of undiscovered oil and gas resources.”
Technology wonders The report spotlights some amazing industry feats.
At the Gorgon Jansz development offshore northwest Australia, wells will deliver natural gas at rates in excess of 300 million cubic feet per day.
“Just one of these wells could meet the residential gas demand of more than 40 million households in China every day,” the report says.
At the Sakhalin 1 project in eastern Russia, fields far offshore are being developed with the enormous Yastreb land-based rig.
“Since 2007, ExxonMobil has drilled 19 of the world’s 30 longest extended-reach wells, including the Z-44 well drilled at the Chayvo field,” the report says. “This well extended for a total length of 12,376 meters (40,604 feet) — more than 7 miles.”
ExxonMobil also notes incredible advances in well completions, described as “the final step of the drilling process, where the connection to hydrocarbon-bearing rock is established.”
These advances are making it possible to recover more oil and gas from the length of each well.
“Companies are pushing completions in excess of 3,000 meters (9,842 feet) in length, compared to a typical completion of 30 meters a couple of decades ago,” the report says.
People, power and cars From 2010 to 2040, the world’s population is projected to rise from 7 billion to nearly 9 billion people.
“Over that same period, global energy demand is likely to rise by about 35 percent,” ExxonMobil says.
In developed nations including the United States, overall energy demand will stay essentially flat through 2040, due to improved efficiency and slower population growth.
China and India, the world’s most populous countries, together account for half the projected growth in global energy demand.
Developing economies crave two energy-intensive luxuries — electricity and automobiles.
Power generation will propel natural gas as the fastest-growing major fuel through 2040. But ExxonMobil sees only limited growth in natural gas as a fuel for cars.
“We expect global demand for gasoline (including ethanol) to be relatively flat from 2010 to 2040, largely because cars and other light-duty vehicles will become much more efficient,” the report says. “On the other hand, demand for diesel (including biodiesel) will grow sharply — by about 75 percent — to power the rise in activity in trucks and other commercial transportation.”
The average efficiency of the world’s vehicle fleet is projected to reach 46 miles per gallon, compared to 24 mpg in 2010.
This reflects an expected surge in hybrid vehicles, which combine an internal combustion engine and an electric motor.
“By 2040, hybrids are expected to account for about 35 percent of the global light-duty vehicle fleet, up from less than 1 percent in 2010,” the study says.
Plug-in cars, more expensive due to battery costs, are expected to comprise less than 5 percent.
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