IEA believes oil will dominate 2030's energy picture

Dec 09, 2002 01:00 AM

It's going to be a "fossil fuel future" in the year 2030, with oil remaining the world's dominant fuel. But the security of oil supplies will be a major issue in the decades ahead. This is one of the conclusions of the International Energy Agency's World Energy Outlook 2002. Fatih Birol, chief economist for the IEA, was in Houston to give an overview of the long-range issues that will affect the energy industry in the coming decades.
"The Earth's energy resources are undoubtedly adequate to meet rising demand for at least the next three decades," according to the report. "But the projections in this outlook raise serious concerns about the security of energy supplies...." Major energy-consuming regions will see their imports grow substantially, with Asia experiencing the biggest increase in import dependence. Global oil demand is expected to rise by about 1.6 % per year, driven primarily by the transportation sector.

OPEC producers will satiate most of that demand as output from North America and the North Sea declines. With production increasingly concentrated in a small number of countries, the vulnerability of importers to supply disruptions will only intensify.
"Supply security has moved to the top of the energy policy agenda," the report states. "The governments of oil- and gas-importing countries will need to take a more proactive role in dealing with the energy security risks inherent in fossil-fuel trade. They will need to pay more attention to maintaining the security of international sea-lanes and pipelines. And they will look anew at ways of diversifying their fuels as well as the geographic sources of those fuels."

But as the US government debates ways to diversify fuel sources, the oil industry is busy figuring out how to extract the most oil and gas from the fields closest to home. Terry Koonce, president of ExxonMobil Production, spoke in Houston before the Texas Independent Producers & Royalty Owners Association about the pressing need to develop new technologies that will wring the most energy out of US fields.
With energy demand rising about 2 % a year, and depletion rates averaging 4- to 5 %, the US needs to grow its supplies by 7 % just to keep from losing ground, Koonce said. "You have to run fast just to stay in one place," he said.

What will it cost to get the needed 7 % increase in supplies? More than $ 1 t by 2010, or $ 100 bn a year, he said. Today, the industry is falling short, spending $ 50-$ 70 bn a year, he said. ExxonMobil spends about $ 600 mm a year on research and development efforts, and employs 1,900 research scientists and engineers.
Those dollars are being used to develop new seismic techniques, heavy oil projects, tight gas projects and deepwater developments, just to name a few. In one West Texas field, ExxonMobil used multiple fracs in a single horizontal wellbore to increase production six-fold since early 2000, he said.

Stories like these are refreshing to hear after the potential doom-and- gloom scenarios of the IEA. But in order to change the volatile, vulnerable energy future predicted for us, there will have to be a lot more successes to share.

Source: Petroleum Finance Week/PBI Media
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