With global oil demand continuing to increase, the US will replace Saudi Arabia as the world’s largest oil producer about 2020, and North America will become a net oil exporter by 2030, according to the International Energy Agency.
China, India, and the Middle East will account for 60% of a 30% increase in global energy demand between now and 2035, IEA projects in its World Energy Outlook 2012. By 2035, almost 90% of Middle Eastern oil flows to Asia in IEA’s projection.
“The global energy map is changing, with potentially far-reaching consequences for energy markets and trade,” IEA says.
The outlook projects an increase in worldwide oil demand to 99.7 million b/d in 2035 from 87.4 million b/d in 2011, driven by a doubling in the number of passenger cars to 1.7 billion and a rapid increase in demand for road freight.
In IEA’s new forecast, oil production from outside the Organization of Petroleum Exporting Countries rises to a plateau above 53 million b/d after 2015 from less than 49 million b/d in 2011 then begins in the mid-2020s to ease back to 50 million b/d by 2035.
The non-OPEC increase comes from “a surge in unconventional supplies” in the US and Canada and deepwater production offshore Brazil. OPEC production increases, especially after 2020, pushing the exporter group’s share of global oil production toward 50% by 2035 from 42% at present.
“The net increase in global oil production is driven entirely by unconventional oil, including a contribution from light tight oil that exceeds 4 million b/d for much of the 2020s, and by natural gas liquids,” IEA says.
The agency says almost 30% of the $15 trillion in upstream oil and gas investment needed through 2035 will be in North America.
Iraq makes the largest single contribution to global oil supply growth in IEA’s forecast with production exceeding 6 million b/d in 2020 and 8 million b/d in 2035. In the absence of this production growth, the price of imported oil would be $15/bbl higher than the $125/bbl (2011 dollars) in IEA’s base-case projection for 2035.
Demand for natural gas varies by region, increasing by 50% worldwide to 5 trillion cu m in 2035, according to IEA. Nearly half the required production increase comes from unconventional resources, especially in the US, Australia, and China. In the US, abundance and low prices help gas overtake oil to claim the largest share of the energy mix about 2030.
Renewable energy in IEA’s base-case projection accounts for almost one third of global electricity output by 2035, with solar growing fastest. The increase in renewable energy is stimulated by falling technology costs, rising fossil-fuel prices, carbon pricing, and continued subsidization. IEA expects global subsidies of renewable energy to rise from $88 billion in 2011 to $240 billion in 2035.
The outlook for coal depends greatly on the strength of policy measures favoring lower-emissions energy sources, deployment of high-efficiency coal-burning technologies, and development of carbon capture and sequestration.
IEA says it has lowered its expectations for growth in nuclear power as national governments review policies in the wake of the Fukushima Daiichi accident in Japan in 2011. It projects growth in installed nuclear power capacity but a slight decline in the nuclear share of total energy use.
Water and emissions
Water needs for energy production will grow at twice the rate of energy demand, IEA says. The agency estimates water withdrawals for energy production in 2010 at 583 billion cu m, of which 66 billion cu m represented consumption, or water withdrawn but not returned to its source.
IEA projects an increase in energy-related water consumption of 85% through 2035, reflecting more water-intensive power generation and expanding output of biofuels.
Under IEA’s assumptions, emissions of greenhouse gases in the base-case scenario correspond to a long-term average global temperature of 3.6º C., IEA says.