Electricity will gain ground globally on oil and natural gas by 2050 as its use in vehicles continues to rise and power distribution systems are built in developing countries, an inaugural forecast by DNV GL AS, Oslo, said. But natural gas will be the single biggest energy source by mid-century, despite its supplies peaking in 2035 after surpassing crude oil a year earlier, where supplies will fall in 2028, it added.
“Energy demand is flattening. We’re using more electricity, and its generation is more efficient than other forms of energy. Investors are increasingly optimistic that wind and solar power cost reductions can continue to be achieved,” said Elisabeth Torstad, chief executive of the independent risk management and quality assurance advisory firm’s oil and gas division.
Oil and gas will remain crucial energy components as their share of the total global mix falls from 53% now to 43% in 2050, Torstad said during a presentation at the National Press Club sponsored by the US Energy Association. “We’ve assumed a generally steady change toward 2050, with less crude oil production but more natural gas and electricity, where solar and wind power will grow because of cost reductions,” she said.
Investments will be needed to add production capacity and to operate existing assets safely and sustainably, DNV said in a separate forecast. “The stage is set for gas to become the world’s primary energy source toward 2050, and the last of the fossil fuels to experience peak demand, which will occur in 2035 according to our model,” it said. “Gas can play a central role in supporting energy security alongside variable renewables during the transition.”
Torstad noted that more than a year ago, DNV decided to develop the forecast because every other oil and gas outlook seemed to reach at least one conclusion which did not reflect what the firm was seeing now.
“We see a world where demand will be more scarce than supplies, largely because of increase efficiency,” Torstad said. “In transportation, the biggest change is the uptick in electrical vehicles. China and India recently announced more aggressive steps. Railroads also could use electricity more. The vehicles themselves also could provide storage, which we believe is a very compelling story. Natural gas pipelines also could provide efficient storage.”
DNV’s oil and gas forecast showed conventional oil production continuing to play an import role. Onshore conventional production was expected to decline an average 1.4%/year through 2050, but still account for more than half of total global oil production by mid-century.
Unconventional onshore oil production will roughly double to around 22 million b/d by 2035, when it will have nearly a 30% share of all global crude production, the forecast said. “We expect unconventional oil and gas to represent a growing part of total North and Latin American production,” Torstad said.
Contact Nick Snow at [email protected].