Posted December 13, 2013
There’s much to mine from ExxonMobil’s 2014 energy outlook, but here’s a quick analysis: In a world of increasing energy demand, the future looks brightest for countries that have significant energy reserves, modern industries that can find and produce from those reserves and policies that allow them to be major players in the global marketplace. For the United States that would be check, check and … check back later.
ExxonMobil’s William Colton and Kenneth Cohen highlighted the annual report that looks to global energy demand and supply out to the year 2040. Key projections and charts:
Demand – The world’s energy demand is expected to increase 35 percent over 2010 levels by 2040. Most of the demand growth will come from the developing world. ExxonMobil projects that developed nations will expand economically yet have flat energy demand because of technology and energy-use efficiencies.
“Our modern lifestyle would not be possible without all of this energy … GDP growth is not just about economic statistics. But to people in every country it’s about human standards of living. Growth in India and China, for example, means that huge numbers of people have been lifted out of poverty … This isn’t a complicated message. Everywhere in the world people want the same things.”
Oil and natural gas - Oil and natural gas will continue to meet about 60 percent of the world’s energy needs in 2040, chiefly because fuels derived from them are affordable, available, portable and high in energy density. Crude from deepwater, oil sands and tight rock formations (through hydraulic fracturing) will grow as sources for the world’s liquid fuel supply.
“Liquid fuels are prevalent because they concentrate so much energy in a convenient liquid form that makes it easier for transportation. ... If you consider the energy in just one gallon of gasoline, it's enough to power your smart phone for 3,000 days.”
Power generation – Natural gas is expected to be the fastest growing major fuel source, with demand increasing by about 65 percent. By 2040 global demand for electricity is expected to double, and ExxonMobil projects natural gas will surpass coal as the largest source of electricity.
"As you step back and consider again that (in 2040) the world needs almost twice as much electricity, consider your options. Coal is facing environmental constraints in just about all developed countries and even developing countries. Nuclear seems attractive, but faces serious constraints to expansion. Solar and wind are very popular in concept but they involve high cost and face practical issues associated with the fact that they produce power only intermittently. So with all these constraints, natural gas emerges as an easy practical choice.”
Trade - Traded volumes of natural gas in 2040 are expected to be more than twice the 2010 level, with most of the growth coming from liquefied natural gas. Colton:
“The safe and economic supply of gas from … unconventional resources is one of the most significant developments for our energy future – made possible by technical breakthroughs right here in the United States. These unconventional resources will account for 65 percent of the growth in global gas production, led by North America.”
Let’s focus on this last piece. Thanks to vast shale deposits, advances in hydraulic fracturing and horizontal drilling and a robust U.S. oil and natural gas industry, the United States is poised to become the world’s leading producer of oil and natural gas this year. But the U.S. is not yet a leader in the global market for liquefied natural gas (LNG). A big factor in changing that would be Energy Department approval of the LNG export projects now under consideration. The benefits of exporting U.S. LNG have been well established. Colton:
“All around the world … LNG projects are at various stages in planning. … These projects will bring jobs and economic opportunity to gas-rich regions while supplying much-needed cleaner energy to burgeoning cities and demand centers all around the world.”
“It’s very important that oil and gas trades freely across international markets. …. Our outlook shows that trade will become even more important in the future. … All regions stand to benefit in participating in trade opportunities, participating in the global market for energy. The great thing about trade is that in economics it’s the ultimate win-win. Both the importing country and the exporting country benefit from trade, as Adam Smith explained 200 years ago. … We believe that free trade is good.”
The United States has the energy reserves and a strong, modern oil and natural gas industry that fit well with the energy future recently forecast by ExxonMobil and the International Energy Agency. Needed are policies to sustain the ongoing U.S. energy revolution and those that allow U.S. energy commodities to compete in the global marketplace.
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.