The world is not running out of energy resources, but it’s unlikely that traditional oil and natural gas resources will be sufficient to meet the growing global demand for energy through 2030, the National Petroleum Council (NPC) says in a draft report.

“It is a hard truth that the global supply of oil and natural gas from conventional sources relied upon historically is unlikely” to meet the projected 50-60% growth in demand over the next 25 years, said the NPC in a report titled “Facing the Hard Truths About Energy,” which is expected to be approved Wednesday and forwarded to Energy Secretary Samuel Bodman.

The United States, once the largest oil producer in the world, is now ranked behind Russia and Saudi Arabia. Domestic oil production has fallen steadily over the past 35 years, while U.S. natural gas production has been more stable. Meanwhile, the demand for both resources has risen significantly, creating a gap that is being filled by imports, the study noted. Many forecasts believe the gap will only widen over the next 25 years.

The NPC is a 175-member oil and natural gas advisory group that reports to Bodman. The study on the ability of the global oil and natural gas supply to keep pace with world demand through 2030 was requested by Bodman in October 2005.

To address the supply-demand gap for conventional resources, the United States and other countries must look to other energy resources, including nuclear, biomass, renewables and unconventional oil and gas, wrote the NPC, which is chaired by retired ExxonMobil CEO Lee Raymond. It also cited the need for increased efficiency in the transportation (fuel economy), residential, commercial and industrial sectors. This marked the first time that the NPC has conceded that alternative fuels and efficiency measures will play an important role in meeting future energy demand.

Still, the NPC stressed that oil, natural gas and coal will remain “indispensable” in supplying world energy demand. These three fuels are expected to dominate at least through 2030. The group cited the “vast potential” of unconventional oil and gas resources. It noted that unconventional resources currently account for 20-25% of domestic gas production.

NPC study participants, which include Chevron, ConocoPhillips, BP America and other major producers, called on the U.S. to step up leasing and development of unconventional resources, and to accelerate domestic oil shale and oil sands research and development and leasing. This, they estimate, could double U.S unconventional gas production to more than 10 Bcf/d, increasing total U.S. gas production by about 10%.

The study also said that if the U.S. would provide producers with greater access to federal lands, it could result in additional gas production of 250 Tcf within five to 10 years with current technology, and increase oil production by 40 billion bbl.

These actions would help to “slow the inevitable decline” in domestic oil and gas production, but it isn’t likely to reverse it, according to the NPC report. The gap between U.S. supply and demand will continue to widen, particularly for oil, it said.

The NPC report expects alternative fuels to play a bigger role in future years, but they will first have to overcome a number of challenges. Biomass currently is the largest nonfossil energy source, but it still only contributes about 1% of the energy provided by oil. Before biofuels production can achieve significant volumes, it will have to increase rail, waterway and pipeline transport capacity, the report noted.

The NPC believes that expanded development of biomass energy resources at large commercial scale could add up to four million bbl/d of oil equivalent liquids.

Wind and solar energy also have grown rapidly and are now contributing about 1% of the world’s energy mix, according to the draft NPC report. Wind and solar energy are expected to continue their expansion, but they face several hurdles, such as interconnecting with the power grid.

Hydroelectric power, which now supplies about 2% of energy, is not likely to grow significantly except in developing Asia-Pacific regions. Nuclear power contributes an estimated 6% of the world’s energy, and its use is expected to increase outside the U.S., the NPC study said.

Coal currently supplies the second-largest share of global energy after oil, the report noted. In forecasts where carbon dioxide emissions are not constrained, coal is projected to increase its market share over the next 25 years. According to the NPC, remaining coal resources are far larger than for oil and natural gas; at current consumption rates, the U.S. has economically recoverable resources for at least another 100 years.

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