The day before Organization of Petroleum Exporting Countries ministers meet to—in all likelihood—roll over another production accord seemed an appropriate time to muse on the really long-term outlook for oil and gas markets.
Well, that and a press release from Peter O'Dell, touting his new book, Why Carbon Fuels Will Dominate the 21st Century's Global Energy Economy, to be published next month by UK-based Multi-Science Publishers.
Plus, thinking about the long-term outlook for oil and gas has been pretty much unavoidable of late for this author, having spent several months researching, interviewing for, and writing a six-part series of special reports on the peak-oil debate that appeared in Oil & Gas Journal last summer (OGJ, July 13-Aug. 18, 2003). The response to that series has helped fuel an ongoing—and occasionally cranky—series of exchanges between the issue's warring sides on OGJ Online's General Interest Forum.
And on the Feb. 6 deadline, this author turned in his invited paper for a special session on the peak-oil debate at the Offshore Technology Conference May 3-6 in Houston. So another long-term prognostication about oil and gas markets understandably piques one's interest. O'Dell, who formerly worked in Shell International's economics division and is now a professor emeritus of international energy studies at Erasmus University's Netherlands School of Economics, is sure to raise some eyebrows just with the book's title, which may challenge the conventional wisdom of many of his colleagues. Preeminent among those colleagues is another Multi-Science Publishers author (The Coming Oil Crisis, 2003), Colin Campbell, currently one of the leading proponents of the idea that a global peak and a subsequent steep decline in oil production are imminent.
Predictions
O'Dell predicts that global energy demand will continue to grow slowly, even without actions to limit or reduce carbon dioxide emissions over global warming fears. "Nevertheless, increasing energy use is required to eliminate energy poverty, not only for the 2-3 billion of the world's present population that suffer from the condition but also for the net additional 3 billion inhabitants of planet Earth by 2050," he said. "Sustainability for a more populous 21st Century world depends on this development."
He sees coal's market share shrinking as hydrocarbons continue to command over 50% of global energy use until after 2070. Of that hydrocarbons market, natural gas use will grow almost sixfold over the century, ultimately accounting for a 57% share. Gas will overtake coal in market share by 2010 and oil by 2040, O'Dell predicts. He also sees conventional and nonconventional gas resources as large enough to support industry growth until after 2090, even without help from gas hydrates and geopressured gas.
Controversy
Likely to stir up the most controversy is O'Dell's estimate of the world's 3 trillion bbl of recoverable conventional oil resources sustaining over 50% of oil demand to 2060. Some in the peak-oil camp contend that the world's entire endowment of conventional recoverable oil resources totals only 2 trillion bbl—and half of that has been produced. It won't be until 2060 when nonconventional oil takes a leading role in oil markets, says O'Dell, itself peaking in the last decade but still only half-depleted by 2100. At the same time, however, O'Dell contends that the oil industry's geopolitical significance will diminish over the next 2 decades, as its market share shrinks and as its production becomes more dispersed geographically. If oil devolves into just another source of energy in a competitive market, as O'Dell sees it, then it is unlikely that serious medium to long-term upward pressure on oil and gas prices will materialize. "Higher finding/exploitation costs will be offset by technologically derived savings," O'Dell said. "Modest real price increases from post-1986 levels (of 10-20% by 2020 and 20-30% by 2040) will subsequently be constrained by lower-cost renewable energy supplies."
Not content to stir up things in merely one of the oil and gas industry's fierce debates, O'Dell also cites some researchers' claims supporting the possibility of abiogenic generation of oil and gas: "Enormous implications follow from oil and gas being renewable resources. All concerns for 'scarcity' would be undermined, and future oil gas supplies at stable or falling costs could be guaranteed."
Could the Hydrocarbon Age last another full century? Stay tuned.
(Online Feb. 9, 2004; author's e-mail: [email protected])
