Guest “divestment my @$$!” by David Middleton
Jude Clemente rocks!
Sep 29, 2019
The U.S. Department Of Energy Says More Oil, More Natural Gas
Jude Clemente Contributor
I cover oil, gas, power, LNG markets, linking to human development.
Numerous energy headlines from this past week alone caught my attention. They perfectly illustrate the massive scale of investment plans for oil and gas projects around the world. Here are just a few:
*”Japan to invest $10 billion in global LNG infrastructure projects.”
*”Tellurian Signs $7.5 Billion LNG Pact With India’s Petronet.”
*”LNG investments hit record of $50 billion in 2019.”
*”Brazil’s Huge $25 Billion Oil Auction Clear Very Important Hurdle.”
As fate would have it, on Tuesday, a day after my birthday (I turned 25 again), the U.S. Department of Energy’s EIA released its International Energy Outlook 2019. It’s a glorious read, and one that I deem mandatory for all Americans, and even those globally interested in energy. We should all take advantage of the fact that we have such government information freely available to us open-source online.
You should know that the vast majority of countries have no such access to their own governments. Again, this is the official modeling from the U.S. Department of Energy and its National Energy Modeling System. This is not from ExxonMobil, the Sierra Club, or the American Wind Energy Association trying to sell you something or make you think a certain way. This is the outlook of the U.S. Department of Energy.
What’s past is prologue: more oil, more natural gas. No kidding. These two essential fuels supply nearly 65% of the energy used in the U.S. and global economies. Global annual oil demand has been surging ~1.4 million b/d since 2000 alone, with gas usage up 8 Bcf/d per year.
The simple reason why we see such huge investments in oil and gas as seen in the above headlines is because we know that the world will need even more of them. In particular, the still developing world is looking at the oil and gas consuming West to see how affordable and reliable energy can grow economies and improve human development.
The main reason for the following graphic is that oil is the world’s most vital fuel and has no significant substitute whatsoever. Oil is the basis of globalization, utilized in practically everything that we do, and the most internationally traded commodity in the world. Oil’s value is so immense that too high of a price can cause a global economic recession.
Next comes the world’s go-to fuel: natural gas.
Just last year alone, global gas demand jumped over 5% to a staggering 137 trillion cubic feet.
That’s a Marcellus’ shale worth of production devoured every three weeks.
Mr. Clemente’s graphs…
Looks like Peak Oil won’t be getting here before 2050…
•In the Reference case, world production of crude oil and lease condensate increases from about 80 million barrels per day (b/d) in 2018 to 107 million b/d in 2050. Total liquids production increases from 100 million b/d in 2018 to 127 million b/d in 2050.
•Liquid fuels consumption increases 45% in non-OECD countries and falls 4% in OECD countries.
•In the High Oil Price case, world liquid fuels consumption in 2050 is 4 million b/d higher than in the Reference case. Primarily, emerging, non-OECD nations drive faster economic growth, which contributes to higher energy demand. In the High Oil Price case, proportionally higher amounts of crude oil are supplied by countries that are not part of the Organization of the Petroleum Exporting Countries (OPEC).
•In the Low Oil Price case, world liquids consumption in 2050 is 1 million b/d higher than in the Reference case. Slower non-OECD economic growth assumptions lead to lower energy demand, but the lower prices mean that consumers use more liquid fuels. Low-cost producers located in OPEC countries supply more crude oil and condensate to the global marketplace.US Energy Information Administration
Too fracking funny for words…
•End-use fuels include those fuels consumed in the industrial, transportation, and buildings sectors and exclude fuels used for electric power generation.
•Liquid fuels, because of energy density, cost, and chemical properties, continue to be the predominant transportation fuel and an important industrial feedstock.
•Electricity use in the residential and commercial building sectors increases rapidly because of growing income, a growing population, and increased access to electricity in non-OECD regions.
•Electricity use in the industrial sector and transportation sector also grows, respectively, as a result of increasing product demand and increasing use of electric vehicles.
•Coal continues to be an important end-use fuel in industrial processes, including the production of cement and steel.US Energy Information Administration
Here’s the really funny bit…
•Use of all primary energy sources grows throughout the Reference case. Although renewable energy is the world’s fastest growing form of energy, fossil fuels to continue to meet much of the world’s energy demand.
•Driven by electricity demand growth and economic and policy drivers, worldwide renewable energy consumption increases by 3% per year between 2018 and 2050. Nuclear consumption increases by 1% per year.
•As a share of primary energy consumption, petroleum and other liquids declines from 32% in 2018 to 27% in 2050. On an absolute basis, liquids consumption increases in the industrial, commercial, and transportation sectors and declines in the residential and electric power sectors.
•Natural gas is the world’s fastest growing fossil fuel, increasing by 1.1% per year, compared with liquids’ 0.6% per year growth and coal’s 0.4% per year growth.
•Coal use is projected to decline until the 2030s as regions replace coal with natural gas and renewables in electricity generation as a result of both cost and policy drivers. In the 2040s, coal use increases as a result of increased industrial usage and rising use in electric power generation in non-OECD Asia excluding China.US Energy Information Administration
While EIA forecasts an explosive growth in renewable energy, it doesn’t replace fossil fuels. It just get piled on top of the energy mix… Just like fossil fuels and nuclear were piled on top of biomass.
More good news…
While they forecast that renewable energy sources will account for nearly half of global electricity generation by 2050, total demand more than doubles. The growth in renewable energy barely keeps up with total demand growth.
Did I mention that Peak Oil has been postponed… Again?
Even better news…
•Non-OPEC crude oil and lease condensate production grows 23% between 2018 and 2050, reaching 59 million b/d in 2050. These increases are driven by growth in Russia (22%), the United States (11%), Canada (126%), and Brazil (59%).
•United States crude oil and lease condensate production increases from 11 million b/d in 2018 to approximately 14 million b/d from 2025 to 2040, driven by hydraulic fracturing of tight resources in the U.S. Southwest. Subsequent production falls to 12.2 million b/d by 2050, as development moves into less productive areas and well productivity declines. Nevertheless, 2050 production increases 11% from 2018 levels.
•Russia’s 2.3 million b/d increase in production by 2050 comes mainly from non-tight resources, but the country also sees accelerated growth in tight oil production after 2030.
•Canada’s 5.4 million b/d increase in production by 2050 is a result of oil sands development, particularly toward the end of the projection period, as easily accessible global resources are increasingly depleted and global oil prices gradually increase.
•Brazil’s 1.5 million b/d increase in production by 2050 results from continued development of offshore pre-salt oil resources.US Energy Information Administration
More offshore drilling and oil sands development! Too fracking cool.
The US will continue to kick @$$ when it comes to natural gas…
And now for the pièce de résistance…
Could the EIA Projections Be Wrong?
Sure they could. EIA totally missed the shale revolution.