New EIA international outlook sees more use of unconventional sources

Unconventional sources including biofuels could provide nearly half the growth in global liquid fuel supplies from 2006 to 2030, the US Energy Information Administration said in its latest International Energy Outlook.

Unconventional sources including biofuels could provide nearly half the growth in global liquid fuel supplies from 2006 to 2030, the US Energy Information Administration said in its latest International Energy Outlook.

The forecast's base reference case, which does not assume any changes from current policies, said that worldwide demand for liquids and other forms of petroleum could grow from 85 million bbl a day in 2006 to 91 million b/d in 2015 and 107 million b/d in 2030.

"Only in the transportation sector are liquids relatively unaffected by the projected high world oil prices," it continued. "Although world oil prices in 2030 in the IEO 2009 reference case [$130/bbl] are 80% higher than projected in IEO 2008, liquids consumption in the world transportation sector is only 9% lower in this year's outlook."

The forecast's base reference case expects unconventional resources (including oil sands, extra heavy oil, biofuels, coal-to-liquids and gas-to-liquids fuels) to become increasingly competitive. Their global production, which was only 3.1 million b/d in 2006, increases to 13.4 million b/d in 2030 and accounts for 13% of the world's total liquids supply.

"The increase in production from unconventional resources is almost as large as the increase for conventional supplies," Acting EIA Administrator Howard K. Gruenspecht said during a presentation of the forecast at the Center for Strategic and International Studies. Liquids production from conventional resources climbs 22 million b/d from 84.6 million b/d in 2006 to 106.6 million b/d in 2030 under the forecast's base case.

Variety of forces

Gruenspecht repeatedly emphasized that the actual changes in demand and prices can be influenced by a wide range of forces including changes in governmental policies. "Even over the long term, it's important to remember that prices can vary dramatically because of a wide variety of factors," he said. The latest IEO also uses cases where oil prices reach $200/bbl and $50/bbl in 2030. It also includes two economic growth scenarios, one where global gross domestic product increases 2.4-2.5% annually and another with less yearly economic growth.

Biofuels and Canadian oil sands accounted for 78% of the increase in total unconventional liquids production in the base case. Biofuels production jumps from 800,000 b/d in 2006 to 5.8 million b/d in 2030. Oil sands-bitumen production climbs from 1.2 million b/d to 4.2 million b/d during the same period, while extra heavy oil production grows from 600,000 b/d to 1.2 million b/d and coal-to-liquids production increase from 200,000 b/d to 1.2 million b/d.

"Recent analyses suggest that the recovery act legislation early this year, which was not included in our forecast model, will increase the use of renewable energy sources in the US. Wind power could almost double. We certainly don't believe that fossil fuels are done, but renewables are the fastest growing segment," said Gruenspecht.

The forecast's base case predicted a 49 trillion cubic feet increase in worldwide natural gas consumption from 104 Tcf in 2006 to 153 Tcf in 2030. "To meet the projected growth in demand for gas, the world's producers will need to increase annual production in 2030 to a level that is 49 Tcf higher than the 2006 level," it said. Much of the additional production could come from countries outside the Organization for Economic Cooperation and Development, it added.

Within the OECD, where IEA expects gas production to climb 7.8 Tcf from 2006 to 2030, the largest increase in a single country, 5.3 Tcf, is predicted for the United States. "Unconventional natural gas production is the largest contributor to growth in US production, as rising prices and improvements in drilling technology provide the economic incentives necessary for exploitation of more costly resources," the forecast said.

Hydraulic fracturing

Unconventional gas production from both tight sand and shale formations could increase from 47% of the US total in 2006 to 56% in 2030, it continued. "There's no question that the gas growth we see in the US from tight sands and shale depends on hydraulic fracturing. If that's taken off the table, the impact would be profound," Gruenspecht said.

The forecast also projected that carbon dioxide emissions worldwide could climb 39% to 40.4 million metric tons in 2030 from 29 million metric tons in 2006. "With strong economic growth and continued heavy reliance on fossil fuels expected for most of the non-OECD economies, most of the increase in [CO2] emissions is projected to occur among the developing, non-OECD nations," it said.

Gruenspecht said that while government actions to address global climate change could significantly affect prices and production, it's far from certain that India and China, where some of the biggest increases in demand are expected, would be willing to adopt policies which have been proposed in the US.

"The large expected productivity gains in China and India are good news for the people living in those countries. They also pose implications for world markets," he indicated.

"Key energy market uncertainties as well as policy decisions can influence demand. That's why it's important not to base policies on a single reference case," said Gruenspecht.

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