North American producers have reached their peak in unit deliverability for natural gas, and as production continues to decline, the United States will gradually slip into becoming import dependent, the CEO of Exxon Mobil Corp. warned Tuesday. With a time frame of 15-20 years “the United States will get in gas in the same position as oil,” said Lee R. Raymond.

Raymond, keynote speaker for CERAWeek 2003 in Houston, said his comments “shouldn’t come as a great shock to anybody. We’ re already starting to see a growing international trade in gas, largely in the form of LNG [liquefied natural gas] and remote pipelines. We haven’t had any kind of success going across the ocean with pipelines,” he added. LNG’s efficient deliverability will “happen in the United States. It’s already happening in Europe.” Raymond said that in 15-20 years, the United Kingdom “will be getting all of its gas imported…it’s not unique to North America.”

However, the Exxon chairman noted that in the years to come, he believes the United States still will see “periods of surplus and periods of tightness” for natural gas. LNG will require “enormous facilities and locations” to succeed in the United States. But, “those with the best reserves will have the best opportunities.”

Exxon, which does business in nearly 200 countries and territories on six continents, remains headquartered in Houston but sees its exploration and production future elsewhere. Raymond noted that despite the “significant geopolitical turmoil” in the region, “the center of the industry is inexorably moving to the Mideast.”

In his keynote address, Raymond noted that recent global developments have “vividly demonstrated” that “we are living in a period of unprecedented challenge and opportunity. Today, the only constant is change. And for the energy business in particular, the changes have been profound. ”

Raymond said it is “abundantly clear that economic growth will remain the primary driver of energy demand. The global economy has grown at an average rate of about 3% per year since 1970. We expect growth to continue at that pace over the next two decades, with reduced rates of population growth offset by increases in per capita productivity. We expect energy demand growth to be at a somewhat lower rate, reflecting significant, but yet-to-be-achieved advances in energy technology and efficiency. We project that the world’s demand for energy will reach close to 290 MMboe/d by 2020 – or about 40% more than today.

While conventional fuels “will remain the dominant energy source at least through the mid-century,” Exxon believes that “wind and solar energy will continue to grow rapidly, but only due to government policies and incentives, not market economics. To put this in perspective, solar power can cost somewhere between $100-250/boe. The intermittent nature of solar energy can bring on additional costs. Starting from such a low base today, wind and solar are unlikely to exceed a 1% share of the world’s energy needs by 2020, even with double-digit growth rates. Thus, oil and gas…representing 60% of the energy supplies today…will remain the dominant energy source until at least the middle of this century.”

Raymond noted that for “some time,” Exxon believes that the energy industry will have to add nearly 80 MMboe/d over the next 10 years to meet projected demand, which is equivalent to about two-thirds of current production levels. In mature market areas, including the United States and the North Sea, there will be a “struggle to keep pace with demand…As supplies from local production decline, the industry must bring on a substantial number of new and remote developments to fill the gap.”

Exxon’s experts believe increased volumes will be coming from “West Africa, Russia, the Caspian and the Middle East. Given the variation in demand growth rates and shifting supply sources, we also see increasing interdependency between importing and exporting countries.

Natural gas worldwide consumption now represents about 20% of total energy demand, said Raymond. “We think natural gas will capture about one third of all incremental energy growth between now and 2020 and will supply about one-quarter of global energy needs — second only to oil — at about 35 to 40%. This level of growth will require significant transportation and infrastructure investment. We expect LNG supplies to grow fourfold by 2020. Such growth is possible because of technology that allows us to connect more remote gas resources to markets.”

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