The global oil and natural gas industry is beginning its long-awaited recovery, but crude oil prices likely will remain in the “$50 orbit” during the third quarter, energy expert Daniel Yergin said Monday.

The IHS Inc. vice chairman who often hobnobs with world energy leaders, shared the stage with Canada Natural Resources Minister Jim Carr at the Canada 2020 event in Ottawa.

“Our view is that the recovery has begun in the oil markets,” Yergin said of IHS research. The past two years proved that “price is really powerful. It has lowered the amount of supply coming in and increased demand.” If a minimum $50/bbl price is sustained until September, it would signal “kind of in the beginning of a recovery” after falling from highs near $100/bbl in the second half of 2014.

Yergin said the world’s energy powers view oil and gas differently than only a few years ago. He recently returned from a trip to the Middle East, including Saudi Arabia, which is undergoing an evolution toward less dependence on oil. The meeting earlier this month of members of the Organization of the Petroleum Exporting Countries (OPEC) was not an “obit for OPEC,” rather it “restored the credibility” as a new secretary general took over (see Shale Daily, May 9). OPEC is continuing to let the markets balance prices.

“What is striking is the change in thinking in the region,” Yergin said. “It’s reflected in this vast reform program in Saudi Arabia,” led by the 30-year-old crown prince. He saw it in other Middle Eastern countries as well, many of which are moving to diversify their economies beyond dependence on oil and gas sales.

“Now the grandchildren are in charge, and they want to monetize the oil, diversify it,” he said. “Partly it’s a question about more competition, but the other thing is what happens when you budget at $100/bbl and it’s $40 or $50 and you’ve got all these commitments. They were making their economies more resilient, more diversified..mixing of the old and the new.”

For example, he noted that Saudi Arabia’s Public Investment Fund recently invested in U.S.-based Uber, the car-booking app to generate growth and aid transportation sectors, which in turn would help the oil-dependent economy.

Geopolitically, the Middle East remains “quite turbulent,” which is not reflected in the oil price because of the abundant supplies. However, global markets are becoming more competitive, and it’s not only the oil producers competing with each other “but it’s natural gas, electricity, renewables, electric cars…they all are competing in each other’s territory.”

North America’s supple oil and gas resources are a “really important development,” which has strengthen the United States, Canada and Mexico.

“Although there have been some glitches in the U.S.-Canadian energy relationship in recent years, overall it’s been quite positive,” Yergin said.

“In general, it’s quite remarkable…That’s important…What I’m struck by is how integrated the economies are…” For instance, U.S. gas exports to Mexico have given the country “less expensive energy…As integration proceeds, it is very beneficial…”

IHS scenarios for North America oil and gas are divided into rivalries between the United States and Canada continuing, an “intensification” of the competition, as it is today, or autonomy. In the autonomy scenario, IHS foresees “a lot more distributed energy,” and by 2040, 25% of the automobile market is electric.

Wind and solar energy “were born in the 1970s,” but only in the last few years have they become more competitive with oil and gas, he said. Shale gas “began in the early 1980s,” and by 2004, there were substantial breakthroughs. Are there more to come?

“I’m pretty sure there are people working on things today that we don’t see, that will be a surprise.” One possibility is carbon capture and storage, still in early stages, expensive and complex. The issue is, how to get it to scale?

“We need a new industry called ‘big carbon,'” Yergin said. “We are really getting good at some of the things we are working on and other ways to capture carbon,” noting that ExxonMobil Corp. recently announced it is working with Fuel Cell Energy Inc. to link carbon capture at power plants to fuel cells (see Daily GPI, May 6).

In all things energy-related, the most important breakthroughs are related to lower costs, Yergin said. Companies now have “cheap oil,” but they “still talk about lower costs. That’s much more of a fundamental focus…They used to chase barrels. Now they chase efficiency.”