A new comparison of 20 different outlook scenarios for world energy demand shows that oil and gas will continue to be needed long into the future.
Meanwhile, energy analysts are warning that spending on oil and gas production needs to increase to avoid energy shortages as the world works to reduce emissions.
“The world is far from the end of the hydrocarbon era,” wrote Andrew Latham, vice-president of energy research at consultancy Wood Mackenzie.
“As recent supply interruptions serve to remind us, we neglect the upstream at our peril. Both oil and, in particular, gas will continue to need huge and sustained investment.”
Investment in oil and gas production needs to increase from $499 billion in 2022 to more than $600 billion per year on average through 2030 to ensure adequate world energy supplies, according to a February joint report by S&P Global Commodity Insights and the International Energy Forum (IEF).
The IEF represents energy ministers from 70 producing and consuming nations including Canada, the United States, China, India, Norway and Saudi Arabia.
Its new Outlooks Comparison Report analyzes 20 different future world scenarios ranging from the International Energy Agency (IEA), OPEC and the International Renewable Energy Agency (IRENA) to BP and Equinor.
“The wide range in scenarios underscores the uncertainty in future energy demand, the wide-ranging potential impact of policies, and the immense challenge ahead,” the IEF said.
Two-thirds of the scenarios IEF reviewed show fossil fuels accounting for more than 50 per cent of total world energy demand in 2045, versus 80 per cent in 2021. Coal demand falls in all scenarios, indicating the importance of oil and gas long into the future.
Natural gas can displace coal-fired power, reducing emissions while providing reliable energy supply.
Notably, 75 per cent of the scenarios IEF analyzed see higher demand for oil in the petrochemical sector in 2045 compared to 2021.
“Petrochemicals are used for plastics, fertilizers, clothing, tires, and many other things used in modern society,” IEF said.
“Petrochemical demand is set to continue to be a significant portion of future oil demand and demand growth.”
World petroleum liquids demand is projected to remain above 100 million barrels per day through 2050 in the “reference case” scenarios by all three of the IEA, OPEC and IRENA, IEF reported.
Wood Mackenzie’s base case sees oil demand at 94 million barrels a day in 2050, compared to about 100 million barrels per day today. Meanwhile, it sees world natural gas demand in 2050 at 88 million barrels of oil equivalent per day, a 12 per cent increase from today.
In Wood Mackenzie’s scenario that aligns with the target of reaching a 1.5 degree drop in world temperatures, natural gas demand in 2050 will still be 59 million barrels of oil equivalent per day.
“Either forecast or scenario will require huge and sustained upstream gas investment,” Latham wrote.
by Deborah Jaremko