Costs, energy needs discredit ‘keep it in the ground’ agenda

Jan. 18, 2019
Preemptive opposition to oil and gas projects by “keep it in the ground” activists promises needless hardship in two broad areas.  

Preemptive opposition to oil and gas projects by “keep it in the ground” activists promises needless hardship in two broad areas.

Project cancellations and delays cost money and jobs, argues a new study by the US Chamber of Commerce’s Global Energy Institute.

In the US, the study says, projects stalled or killed by lawsuits and other tactics represent losses of at least $91.9 billion in economic activity and nearly 730,000 jobs.

Yet pressure groups increasingly resist pipeline construction and other essential work, insisting that mitigation of climate change requires a prompt halt to production and use of fossil energy.

The agenda not only costs money and jobs but also conflicts with energy-supply imperatives.

In its World Energy Outlook 2018, the International Energy Agency says new oil and gas projects continue to be needed worldwide. This is so even if governments impose the transformational regulations needed to meet ambitious targets for globally averaged temperature in the 2015 Paris Climate Agreement.

A scenario IEA calls Sustainable Development encompasses those goals along with United Nations targets for air quality and universal access to energy.

Illustrating the regulatory stringency of its assumptions, the Sustainable Development Scenario projects a peaking in global emissions of carbon dioxide and in oil demand in or soon after 2020.

With demand fading, worldwide oil production in 2040 under this scenario is 27% below its 2017 rate.

Nevertheless, new oil projects will be necessary because production will decline naturally faster than demand.

“By the 2030s, global oil consumption declines at roughly 1.7%/year,” IEA explains in notes with its outlook. “Total production from already-producing fields declines by around 4%/year at this time, creating a continued need for new projects to fill this gap.”

New gas projects are needed, too, IEA says, “not only to compensate for declines at existing fields but also because gas consumption in 2040 is higher than today.”

Given the high costs and continuing energy needs, reflexive opposition by activists to oil and gas projects is altogether mindless.

(From the subscription area of www.ogj.com, posted Jan. 18, 2019. To comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)