Liquefied natural gas (LNG) by 2040 may replace coal as the second largest global energy source, ExxonMobil Corp. CEO Rex Tillerson said in Qatar this week.
Tillerson, who joined many of his colleagues in addressing plenary sessions at the World Petroleum Congress, told the nearly 12,000 delegates that LNG demand will continue to increase because global energy consumption is on track to jump by more than 30% between 2010 and 2040. Natural gas will be an increasingly bigger player in world energy markets because new power plant construction — primarily gas-fired facilities — likely will double, said the ExxonMobil CEO. And higher global energy demand also will require bigger investments.
“The energy and economic challenges the world will face in the decades to come require a business and policy climate that enables investment, innovation and international cooperation,” said Tillerson. “Sound policies and government leadership are critical. When governments perform their roles effectively, the results are extraordinary — bringing enormous benefits in terms of investment, enterprise, economic growth and job creation.”
The key to unlocking new economic growth is for “industry, governments and society” to focus on their respective roles and responsibilities.
“Government has a responsibility to provide a stable and fair legal, tax and regulatory framework; industry needs to invest with discipline to develop energy in a safe and environmentally responsible way; and the public also has a role to play,” Tillerson said.
“Citizens and consumers need to understand the importance of energy, the vital role it plays in economic and social development, and how sound policy supports responsible energy development and use. The debates and discussions in society at large need to be informed by the facts and fundamental realities of the challenges before us.”
The current economic challenges won’t last forever, said the ExxonMobil CEO.
“We must engage in long-term planning, undeterred by the episodic ups and downs of regional and global economic performance.”
BP plc Group CEO Bob Dudley told delegates that increasing world energy demand requires new technologies to recover needed resources from old fields, as well as in helping to unlock discoveries in the most remote corners of the globe.
“The numbers are stark,” said Dudley of future energy demands. Providing enough energy in the next 30 years “is the equivalent of adding another China and another United States to demand. And our latest data show that demand profile is holding up even at this time of economic uncertainty.”
Like ExxonMobil, BP is predicting that oil will lose market share in the coming years to natural gas. However, oil demand still is forecast to rise to more than 100 million b/d by 2030 from roughly 85 million b/d today.
“Since existing fields are declining and will only yield just over 50 million bbl by 2030, our industry needs to add roughly a Saudi Arabia’s worth of extra production capacity every five years,” he said.
Peter Voser, CEO of Royal Dutch Shell plc, said world energy demand may be three times that of 2000. Energy efficiency gains are likely to moderate some demand by about 20% over that time period while expected supply side production gains would average around 50%, said the Shell chief.
“Yet this would be still leave an enormous gap between supply and demand, more or less equivalent in size to the global energy industry as it stood in the year 2000.”
In the next few decades the shortfall between efficiency gains and new supplies would require another 65-70 million b/d of oil to bridge the gap.
“That’s equivalent to nearly two OPECs of additional supply, not to mention the additional capacity we need to bring on stream to absorb the underlying production decline,” Voser said.
The Fukushima nuclear disaster in Japan earlier this year, combined with instability in North Africa and the Middle East, have pressured producers to find new resources and led to concerns about the future of oil prices, said Voser.
“We don’t yet know whether the recent developments in some countries in the Middle East and North Africa region will impact the longer-term picture for OPEC supplies,” he said.
In a veiled reference to the United States, ConocoPhillips CEO Jim Mulva warned that opposition to producing fossil fuels in developed countries and tax burdens may deter industry investment.
“Too many governments are deep in debt,” he told delegates. “And they regard our industry as ‘deep pockets’ to target for new taxes…This despite the fact that our industry’s effective global tax rates already far exceed those of other industries.”
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