All forms of energy will be needed over the next 25 years to meet a huge increase in global demand, but nothing will top the allure or the benefits of natural gas as it overtakes coal as the largest source of electricity, ExxonMobil Corp. executives said Thursday.
Natural gas will continue to be the fastest-growing major fuel source worldwide as population growth lifts demand by about two-thirds from 2010 to 2040, corporate strategy chief Bill Colton said during a webcast. Colton unveiled the well-regarded “Outlook for Energy: A View to 2040” with Ken Cohen, who heads public and government affairs.
ExxonMobil has for the past several years predicted the ascendency of natural gas. Last year its economists forecast that gas would overtake coal as the No. 2 fuel by 2025 (see Daily GPI, Dec. 12, 2012). That view hasn’t changed.
“The great thing about natural gas is that it sells itself,” said Colton. “It’s a very practical fuel” that already has begun reducing worldwide carbon dioxide (CO2) emissions. “It’s a very convenient fuel for people to use.”
The annual long-term global view of energy demand and supply helps guide investments that underpin ExxonMobil’s business strategy. The outlook examines energy supply and demand trends in more than 100 countries and 15 demand sectors, such as transportation, industrial and power generation. Twenty different types of energy that will be available to future consumers are evaluated while taking into account assessments of future technologies, government policies and cross-border trade flows.
ExxonMobil is the largest natural gas producer in the United States, and while critics may claim its bent to gas demand is slanted, Colton said that is far from the case.
“We’re not forecasting gas is growing because that’s what we want to sell. It’s because that’s what makes sense for consumers…And by the way, we’re not the only forecasters who are saying this,” he said, noting that the International Energy Agency (IEA) also said in November that gas demand is trumping coal (see Daily GPI, Nov. 12). The IEA “is another independent, credible body forecasting what makes sense for future consumers, balancing all these considerations.”
Asked at what price natural gas would have to be to remain in the winning spot, Colton said he couldn’t say “for obvious reasons.” However, gas use is rising because it’s an easier and less carbon-intensive fuel. It’s that simple, he said.
The oil major’s global energy outlook this year “has never been so positive,” said Colton. “We live in a world with vast resources, not just geologically, but more importantly, in terms of human potential, in innovation through technology.
“In the world of energy, new technologies have unlocked new resources, allowing us to produce more energy in new ways, and this fundamentally underpins our standards of living. And more important, it allows people around the world to improve their standards of living. That’s a key theme in our outlook.”
Those innovations have allowed explorers to more than double resource estimates for global gas, said Cohen. All of the positives began in the United States through good old fashioned innovation and free markets, he added.
Oil and natural gas should continue to meet almost 60% of worldwide energy needs to 2040. Liquid fuels — gasoline, diesel, jet fuel and fuel oil — would remain the energy of choice for most types of transportation, and oil demand is seen increasing by about one-quarter. Commercial transportation activity shows the biggest gains, with fuel needs met by technology advances that enable increased deepwater, oilsands and tight oil development.
Coal won’t be out of favor in some parts of the world, but many corners of the world will be less dependent, said Colton. “We’re not the first forecasters to say that coal may be becoming less important. We don’t show coal going away. A lot of coal is going to be used in the world by 2040.”
Key expectations to 2040 include:
ExxonMobil and some other top U.S. majors are already pricing CO2 emissions into their operations as governments worldwide regulation carbon (see Daily GPI, Dec. 5). ExxonMobil uses an internal price of $60/metric ton on the assumption that carbon is or will be regulated.
Future energy needs are going to be supported by more efficient energy-saving practices and technologies, increased use of less-carbon-intensive fuels such as gas, nuclear and renewables, and more technology advances to develop new resources. Without gains in efficiency, global energy demand could increase by more than 100%, economists estimated.
Driving increased energy demand is an anticipated growth in population that should reach almost 9 billion in 2040 from 7 billion today, as well as a projected doubling of the global economy at an annual growth rate of almost 3%. Most of the growth is forecast to be in the developing world, particularly the Asia Pacific countries, where rising standards will lift millions out of poverty.
Renewable energy supplies are seen growing the most over the next two-plus decades, up nearly 60%, but wind, solar and biofuels likely will make up only about 4% of energy supplies, up from 1% in 2010.
Energy used for power generation are going to be the largest component of global demand, with natural gas the best performing fuel source, according to ExxonMobil. Global power generation is seen growing by more than half to 2040 as more areas urbanize and incomes rise. The growth reflects an expected 90% uptick in electricity use, led by developing countries where 1.3 billion people are currently without access to electricity.
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