Facing The Hard Truths About Energy A Comprehensive View To 2030 Of Global Oil And Natural Gas

Global Oil and Gas StudyNPC

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Facing The Hard Truths About EnergyFacing The Hard Truths About Energy

A Comprehensive View To 2030A Comprehensive View To 2030Of Global Oil And Natural GasOf Global Oil And Natural Gas

IPAA IPAA

Rod NelsonRod Nelson

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Global Oil and Gas Study

NPC

Today’s DiscussionToday’s Discussion

● Study Approach Study Approach

● What We Learned : The Hard TruthsWhat We Learned : The Hard Truths

● Recommended Strategies For The U.S. Recommended Strategies For The U.S.

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● What does the future hold for global oil and natural What does the future hold for global oil and natural gas supply ?gas supply ?

● Can incremental oil and gas supplies be brought Can incremental oil and gas supplies be brought on-line, on time, and at a reasonable price to meet on-line, on time, and at a reasonable price to meet future demand without jeopardizing economic future demand without jeopardizing economic growth ?growth ?

● What oil and gas supply and / or demand-side What oil and gas supply and / or demand-side strategies does the Council recommend the U.S. strategies does the Council recommend the U.S. pursue to ensure greater economic stability and pursue to ensure greater economic stability and prosperity ?prosperity ?

The Secretary’s Suggested Questions The Secretary’s Suggested Questions

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Dimensions of the StudyDimensions of the Study

AlternativeEnergies

Technology

Supply

EnvironmentEnergySecurity

Demand

Economics

Findings and

Strategies

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How This Study Is Different How This Study Is Different

Integrated, In-Depth Analysis

Diversity of Expertise

TechnologyAssessment

• Over 100 studies incorporated to include both Over 100 studies incorporated to include both public and aggregated proprietary outlookspublic and aggregated proprietary outlooks

• Not another forecast of supply, demand or priceNot another forecast of supply, demand or price

• 350 participants with backgrounds 350 participants with backgrounds in all aspects of energy including efficiency,in all aspects of energy including efficiency, economics, geopolitics, environment economics, geopolitics, environment

• Identified achievable opportunities and Identified achievable opportunities and likely deployment timinglikely deployment timing

• Looked across the energy spectrum, includingLooked across the energy spectrum, including both supply and demandboth supply and demand

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Technology Assessment Depth Technology Assessment Depth

• Technology DevelopmentTechnology Development

• Personnel Issues: The Big Crew ChangePersonnel Issues: The Big Crew Change

• Carbon ManagementCarbon Management

• Conventional Resources (includes EOR and Arctic)Conventional Resources (includes EOR and Arctic)

• Exploration TechnologyExploration Technology

• Deepwater TechnologyDeepwater Technology

• Unconventional Gas (including Coal and Shale gas)Unconventional Gas (including Coal and Shale gas)

• Heavy Oil and BitumenHeavy Oil and Bitumen

• Oil ShaleOil Shale

• Gas HydratesGas Hydrates

• Coal to Liquids and GasCoal to Liquids and Gas

• Biomass fuelsBiomass fuels

• Nuclear Outlook and impact on Oil and Gas demandNuclear Outlook and impact on Oil and Gas demand

• Transportation EfficiencyTransportation Efficiency

• Other Renewables Other Renewables

Time horizonsTime horizons Research budgets Research budgets Human resourcesHuman resources Deployment Deployment

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Technology Pipeline is Robust Technology Pipeline is Robust

• Industry spends $6B+ on Oil and Gas related R&D Industry spends $6B+ on Oil and Gas related R&D

• Achieved many dramatic technology advances Achieved many dramatic technology advances

• Much more to come from “Technology Pipeline”Much more to come from “Technology Pipeline”

– Improved exploration toolsImproved exploration tools

– Increased recovery methodsIncreased recovery methods

• Alternative energy R&D investment increased to $3BAlternative energy R&D investment increased to $3B

DRAFTDo Not Cite or Quote

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There Is No Single Easy SolutionThere Is No Single Easy Solution

• Technology “Concept-to-widespread-adoption” Technology “Concept-to-widespread-adoption”

is ~16 yearsis ~16 years

• When Government enables development, When Government enables development,

technology follows technology follows

• DOE oil and gas related technology spend decreasingDOE oil and gas related technology spend decreasing

• Impacting U.S. lower 48 and universitiesImpacting U.S. lower 48 and universities

DRAFTDo Not Cite or Quote


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What We Learned: What We Learned:

The Hard TruthsThe Hard Truths

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The Hard Truth: Demand

Coal, oil, and natural gas will remain indispensable Coal, oil, and natural gas will remain indispensable

to meeting total projected energy demand growth.to meeting total projected energy demand growth.

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Coal, Oil, and Natural Gas Will Remain IndispensableCoal, Oil, and Natural Gas Will Remain Indispensable

Source: IEA REFERENCE CASE

1980 2004 2030

288 QUADRILLION BTU 445 QUADRILLION BTU

BIOMASSNUCLEAR

WIND / SOLAR / GEOTHERMAL

678 QUADRILLION BTU

HYDRO

OIL

NATURAL GAS

COAL

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The Hard Truth: Supply

The world is not running out of energy resources, but The world is not running out of energy resources, but

there are accumulating risks to continuing expansion of oil there are accumulating risks to continuing expansion of oil

and natural gas production from the conventional sources and natural gas production from the conventional sources

relied upon historically. These risks create significant relied upon historically. These risks create significant

challenges to meeting projected total energy demand.challenges to meeting projected total energy demand.

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0

1

2

3

4

5

1984 1987 1991 1994 2000

TR

ILLI

ON

BA

RR

ELS

- O

IL

Source: USGS

6UNCONVENTIONAL

CONVENTIONAL

ULTIMATE RECOVERABLE RESOURCE (MEAN)ULTIMATE RECOVERABLE RESOURCE (MEAN)

Large Oil Resource Base Large Oil Resource Base

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Risks Reflected in Range of Production Projections Risks Reflected in Range of Production Projections

* Source: NPC Data Warehouse.

0

20

40

60

80

100

120

140

2000 2010 2020 2030

Association for Study of Peak Oil (ASPO)

MIL

LIO

N B

AR

RE

LS

PE

R D

AY

– O

IL

MIL

LIO

N B

AR

RE

LS

PE

R D

AY

– O

IL

IOC – averageIOC – average

EIA Ref Case

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The Hard Truth: Energy Sources

To mitigate these risks, expansion of all economic energy To mitigate these risks, expansion of all economic energy

sources will be required, including coal, nuclear, biomass, sources will be required, including coal, nuclear, biomass,

other renewables, and unconventional oil and natural gas. other renewables, and unconventional oil and natural gas.

Each of these sources faces significant challenges Each of these sources faces significant challenges

including safety, environmental, political, or economic including safety, environmental, political, or economic

hurdles, and imposes infrastructure requirements for hurdles, and imposes infrastructure requirements for

development and delivery.development and delivery.

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Massive Infrastructure Investments RequiredMassive Infrastructure Investments Required

Supply Demand

REFININGOTHERMFG.

BL

EN

DIN

G

CTL

COAL

GAS

COAL

CONV.OIL

DISTRIBUTION

STORAGE

GASPROCESSING

REGAS

GTL

LNG

RENEWABLES

MFG

BIOMASS

UPGRADINGUNCONV.OIL

NUCLEARNUCLEAR POWERGEN.

NATURAL GAS

LIQUID FUEL

●

REFININGOTHERMFG.

BL

EN

DIN

G

CTL

COAL

GAS

COAL

CONV.OIL

DISTRIBUTION

STORAGE

GASPROCESSING

REGAS

GTL

LNG

RENEWABLES

MFG

BIOMASS

UPGRADINGUNCONV.OIL

NUCLEARNUCLEAR POWERGEN.

NATURAL GAS

LIQUID FUEL

●

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The Hard Truth: Energy Security"Energy Independence" should not be confused with "Energy Independence" should not be confused with

strengthening energy security. The concept of energy strengthening energy security. The concept of energy

independence is not realistic in the foreseeable future, independence is not realistic in the foreseeable future,

whereas U.S. energy security can be enhanced by whereas U.S. energy security can be enhanced by

moderating demand, expanding and diversifying domestic moderating demand, expanding and diversifying domestic

energy supplies, and strengthening global energy trade energy supplies, and strengthening global energy trade

and investment. There can be no U.S. energy security and investment. There can be no U.S. energy security

without global energy security. without global energy security.

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Global Oil Trade Global Oil Trade

2000 2030

EXPANDING FLOW TRENDS

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U.S. Historical Supply and Demand TrendsU.S. Historical Supply and Demand Trends

0

15

30

1973 1980 1985 1990 1995 2000 2005

U.S. FUELS DEMAND

U.S. FUEL SUPPLIES MIL

IION

BA

RR

LES

PE

R D

AY

GLOBAL TRADE (NET IMPORTS)

Source: EIA Reference Case / NPC Global Oil and Gas study survey.

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The Hard Truth: Workforce

A majority of the U.S. energy sector workforce, including A majority of the U.S. energy sector workforce, including

skilled scientists and engineers, is eligible to retire within skilled scientists and engineers, is eligible to retire within

the next decade. The workforce must be replenished the next decade. The workforce must be replenished

and trained. and trained.

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U.S. Human Resources ChallengeU.S. Human Resources Challenge%

OF

U.S

. W

OR

KF

OR

CE

AGE DISTRIBUTION

Source: U.S. Dept of Labor.

0

5

10

15

20

25

20 25 30 35 40 45 50 55 60 65 70

OVER HALF OF THE WORKFORCE ELIGIBLE TO RETIRE IN NEXT 10 YEARS

AGE

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The Hard Truth: Carbon Emissions

Policies aimed at curbing carbon dioxide emissions will Policies aimed at curbing carbon dioxide emissions will

alter the energy mix, increase energy-related costs, and alter the energy mix, increase energy-related costs, and

require reductions in demand growth.require reductions in demand growth.

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Growing concern that climate is warming and CO2

concentrations in the atmosphere play a role.

The challenge of significantly reducing CO2 emissions is unprecedented and will require:

• Global, broad actions on multiple fronts

• Long time horizons

• Major additional investments

CO2 Emission Limits Will Alter Energy Strategies


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Five Core U.S. Strategies Five Core U.S. Strategies

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The Five Core U.S. StrategiesThe Five Core U.S. Strategies

• Moderate Demand By Increasing Energy Efficiency Moderate Demand By Increasing Energy Efficiency

• Expand And Diversify U.S. Energy SupplyExpand And Diversify U.S. Energy Supply

• Strengthen Global And U.S. Energy SecurityStrengthen Global And U.S. Energy Security

• Reinforce Capabilities To Meet New Challenges Reinforce Capabilities To Meet New Challenges

• Address Carbon Constraints Address Carbon Constraints

There Is No Single, Easy Solution

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There Is No Single, Easy Solution

• All Five Strategies Must Be Addressed TogetherAll Five Strategies Must Be Addressed Together

• Global Cooperation Required Global Cooperation Required

• Begin Now And Plan For Sustained CommitmentBegin Now And Plan For Sustained Commitment

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All Strategies Are Essential All Strategies Are Essential

2000 2010 2020 2030

MIL

LIO

N B

AR

RE

LS P

ER

DA

Y

30

Source: EIA Reference Case / NPC Global Oil and Gas study survey.

Illustrative View

15EXPAND & DIVERSIFY

MODERATE

YEAR

U.S. LIQUID FUELS DEMAND

U.S. LIQUID FUELS

GLOBAL TRADE (NET IMPORTS)


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Thank You Thank You


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Thank you for listening to this presentation of the Thank you for listening to this presentation of the

NPC Report: NPC Report:

“Facing the Hard Truths About Energy”“Facing the Hard Truths About Energy”

For information, please refer to the NPC Website For information, please refer to the NPC Website

for a complete list of available resources:for a complete list of available resources:

http:www.npc.orghttp:www.npc.org

Facing The Hard Truths About Energy A Comprehensive View To 2030 Of Global Oil And Natural Gas

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