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Exxon’s 30-year view Natural gas to star as global energy demand expected to surge 30% by 2040 Wesley Loy For Petroleum News
Natural gas will be the world’s fastest-growing major fuel over the coming three decades, with demand expected to rise by more than 60 percent.
In fact, by 2025 gas will overtake coal as the second most popular fuel, after oil.
These intriguing predictions, and many others, are contained in ExxonMobil’s new report, “The Outlook for Energy: A View to 2040.”
It’s the first time ExxonMobil’s annual long-term energy forecast has extended out to the year 2040. A team of experts within the company developed the outlook using a combination of public and proprietary sources.
ExxonMobil says it uses the outlook to guide its investment decisions.
“Our decision over a decade ago to invest with Qatar Petroleum to develop their natural gas reserves was grounded in our view that global demand for gas would rise significantly, as was our $41 billion purchase of XTO Energy in 2010,” the report says.
“In addition to our continued investments in conventional oil and gas production, ExxonMobil also is making significant investments in oil sands, deepwater and Arctic production, and the oil and natural gas supplies found in shale and other rock formations.”
The big picture Global energy demand will be about 30 percent higher in 2040 compared to 2010 as economic output more than doubles and living standards improve in a world population growing to nearly 9 billion people, the outlook says.
In developed counties such as those in North America and Europe, “we see energy use remaining essentially flat, even as these countries achieve economic growth and even higher living standards,” ExxonMobil says.
In lesser developed countries, including China, energy demand will grow by close to 60 percent, the outlook says.
The world’s energy mix has shown extraordinary change over the past century, and technology advances promise further change in the coming decades, ExxonMobil says.
“Considering that 100 years ago, most of the world’s energy came from wood and coal, it is clear that energy supplies can change dramatically over time,” the outlook says.
One extraordinary change concerns coal. ExxonMobil predicts demand will peak around 2025 and then retreat, marking “the first long-term decline in global coal usage since the start of the Industrial Revolution.”
The gas outlook Much of the expected growth in natural gas demand will come from electric utilities and other consumers shifting away from coal as a way to reduce carbon dioxide emissions, the outlook says.
Growth for gas is expected to be especially strong in the Asia Pacific region, where demand is expected to triple over the next 30 years.
Unconventional gas, such as that produced from shale formations with the aid of hydraulic fracturing and other technologies, will become a much larger part of the production picture.
“By 2040, unconventional gas will account for 30 percent of global production, up from 10 percent in 2010,” the outlook says. “The application of existing technologies to these unconventional supplies has helped unlock up to 250 years of global gas supply at current demand levels.”
The oil outlook Oil and other liquid fuels will remain the world’s largest energy source in 2040, meeting about a third of demand, ExxonMobil predicts.
“As conventional crude oil production holds relatively flat through 2040, demand growth will be met by newer sources,” the outlook says. “The biggest gains will come from global deepwater production, which more than doubles through 2040. This growth illustrates the power of new technologies. Deepwater production was in its infancy just 10 years ago; by 2025, it will provide 10 percent of global liquid fuels supplies.
“In addition to deepwater, there also will be tremendous growth in production from oil sands, in both Canada and Venezuela. By 2040, oil sands will account for 25 percent of total liquids supply in North and South America.
“Tight oil and natural gas liquids (NGLs) also will see significant growth through 2040. Each of these fuels is benefiting from new application of established techniques that have enabled the extraction of oil and gas from shale and other challenging rock formations.”
One very interesting observation in the outlook is that more than 95 percent of today’s crude oil production was discovered before the year 2000, and about 75 percent was discovered before 1980.
ExxonMobil expects biofuels will rise to about 5 percent of total liquids supply.
Cars, cars, cars “The cars on the world’s roads in 2040 will be a very different mix than what we have today,” ExxonMobil says. “To a large extent, these changes will be driven by government policies that will mandate the fuel economy of personal vehicles.”
The company predicts that over the next 30 years, hybrid vehicles will “move from the margins to the mainstream.”
“ExxonMobil expects that by 2040, hybrids and other advanced vehicles will account for nearly 50 percent of all light duty vehicles on the road, compared to only about 1 percent today.”
The vast majority of hybrids will use mainly gasoline plus a small amount of battery power, the outlook says.
“By 2030, ExxonMobil expects that, on average, hybrid vehicles (like the Toyota Prius) will cost about $1,500 more than a similar-sized conventional vehicle, whereas a compressed-natural-gas (CNG) vehicle will be nearly $4,000 more, and an electric vehicle (like Nissan’s Leaf) will be $12,000 more. In the case of the electric vehicle, consumers would not recoup that higher purchase cost within five years unless gasoline prices were more than $10 a gallon; with gasoline at $4 a gallon, it would take more than 15 years to recoup those upfront purchase costs.”
Some other predictions Electricity will enjoy growing favor globally, with demand rising by more than 80 percent from 2010 to 2040. But due to efficiency improvements, demand for fuels to make that power will rise by only 45 percent, the outlook says.
In developed countries, electricity is mostly displacing oil as consumers switch from fuels such as liquefied petroleum gas, kerosene or distillate for their heating and cooking needs. In developing countries, electricity is replacing traditional biomass fuels such as wood and dung.
ExxonMobil sees global nuclear capacity growing by more than 80 percent through 2040, but the growth would be greater were it not for Japan’s Fukushima disaster.
Global energy-related CO2 emissions “will grow slowly, then level off around 2030,” the company predicts.
The outlook report is posted at www.exxonmobil.com.
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