Continued worldwide economic growth has made the US government’s leading energy analysts revise their international forecast through 2030 to reflect significantly higher oil prices and a much larger contribution from unconventional sources.
“Very robust worldwide energy demand growth is projected over the next 25 years,” said Guy Caruso, administrator of the US Energy Information Administration. EIA released its 2006 international energy outlook on June 20.
The forecast calls for worldwide energy consumption to grow by 71% from 421 quadrillion btu (quads) in 2003 to 722 quads in 2030, with most of the increase occurring in developing nations, particularly Asia, Caruso said during a briefing at the Center for Strategic and International Studies in Washington, DC.
In the forecast’s reference case, EIA expects worldwide oil demand to increase from 80 million b/d in 2003 to 98 million b/d in 2015 and to 118 million b/d in 2030.
“We think ultimately recoverable reserves are adequate under the right incentives to meet the 188 million b/d of oil demand we project for 2030,” Caruso said.
EIA’s oil demand projection for 2025 of 111 million b/d is 8 million b/d less than the 2005 forecast’s estimate. Caruso said this reflects the impact of a reference case price estimate for 2025 that rose 35% from last year’s forecast.
The latest forecast’s reference case calls for crude oil prices, expressed in 2004 dollars, to climb from $31/bbl in 2003 to $57/bbl in 2030 (or about $107/bbl in 2006 dollars), Caruso said.
“We think the current $70/bbl price for West Texas Intermediate crude will come down, but not to the $35-40 range many of us expected to persist until recently,” he said.
Investment obstacles
Caruso said investment in additional production capacity is impeded by the reluctance of member nations of the Organization of Petroleum Exporting Countries, barriers to investment outside OPEC, an increasing push to nationalize oil and gas resources, and rising costs for services, supplies, and employees.
“The need to facilitate investment is the most important question for government policymakers,” Caruso said. “With the global oil industry operating at 98% of total capacity, there’s a real potential for volatile prices. This increases the need for cooperation.”
He added, “We think one reason there hasn’t been robust investment is the memory of low crude oil prices in the 1970s, ‘80s, and as recently as in 1998. This also poses a risk in consumer behavior.”
Unconventional sources
EIA also predicted that crude prices will be high enough to increase the share of production from unconventional sources-which includes oil sands, bitumen, biofuels, and gas-to-liquids-to 25% of the projected increase in worldwide petroleum liquids supplies.
Its 2006 forecast does not anticipate a meaningful contribution from oil shale because production by mining raises significant emissions and reclamation questions and requires a $70-75/bbl crude oil price to be economical, Caruso said. The outlook would change dramatically if an efficient in-situ process is perfected.
EIA expects worldwide production from oil sands, primarily in Alberta, to rise to 3.5 million b/d in 2030 from 1.6 million b/d in 2005. Its estimate is similar to one released earlier this month by Canada’s National Energy Board, Caruso said.
The new forecast calls for worldwide natural gas consumption to rise at an average 2.4%/year to 182 tcf in 2030 from 95 tcf in 2003.
“A robust LNG trade could lead to a global gas market,” Caruso said. “However, we expect gas prices to stay well below oil prices on a btu-basis, resulting in more gas-on-gas competition, such as between pipelines and LNG.”
