CERA: ExxonMobil's Raymond sees oil, gas as dominant energy sources through mid-century
Steven Poruban
Senior Staff Writer
HOUSTON, Feb. 12 -- The oil and natural gas industry will have a bright future in the coming decades, but that bright outlook may not include as much attention to the development of renewable forms of energy by major oil and gas companies as once anticipated.
That was one of the sentiments gleaned from a speech given Tuesday by Lee R. Raymond, ExxonMobil Corp. chairman and CEO, at the opening of Cambridge Energy Research Associates' annual week-long energy conference in Houston.
Energy demand, Raymond said, will continue to be driven primarily by economic growth. "We project that the world's demand for energy will reach close to 290 million (boe/d by 2020—or about 40% more than today," Raymond stated.
"We expect conventional fuels will remain the dominant energy sources, at least through the midcentury," Raymond said. "I would note that we project wind and solar energy will continue to grow rapidly, but only due to government policies and incentives, not market economics."
Raymond put this scenario into perspective for the CERA conference attendees by explaining that solar power can cost as much as $100-250/boe to develop, adding, "The intermittent nature of solar energy can bring on additional costs."
He said, "Starting from such a low base today, wind and solar (power) are unlikely to exceed a 1% share of the world's energy needs by 2020, even with double-digit growth rates. Thus, oil and gas—representing 60% of energy supplies today—will remain the dominant energy source until at least the middle of this century."
Long-term technology research
ExxonMobil is continuing to research long-term technologies, however, including "advanced vehicles and fuels, improved internal combustion engines, CO2 separation and storage, and other technologies," Raymond noted. "And we are also evaluating the use of hydrogen as an energy source," a topic that "has been getting more attention recently
Raymond noted, "There is understandably a great deal of interest in this subject. On the positive side, hydrogen is abundant, and once delivered to the vehicle, can be used emissions-free. However, it does not exist independently of other elements, meaning that significant energy and costs are required to liberate and distribute it for use in fuel-cell vehicles.
"When considering any fuel, the entire system of production, distribution, and consumption must be analyzed to assess overall efficiency and emissions. . .On this basis, internal combustion engine technology remains the standard against which all alternatives must be measured." Raymond said.
Oil, gas to remain energy backbone
"Oil and gas will remain essential to economic growth—not only in the industrialized world, but also in developing nations seeking to raise their standards of living," Raymond said.
As demand increases and oil and gas production declines, Raymond said, "we come squarely to the magnitude of the task before us. About half the oil and gas volume needed to meet demand 10 years from now is not in production today.
"As we have been saying publicly for some time, industry may need to add some 80 million (boe/d of oil and gas production capacity) over the next decade to meet projected demand—an amount equivalent to two thirds of today's production levels.
Contact Steven Poruban at [email protected].