Debates about the “end of oil” and on limiting greenhouse gas emissions tend to “bury” fossil fuels (coal, gas and oil) a little too quickly. Although they are growing scarcer and more expensive, and will contribute enormously to global warming, fossil fuels are still irreplaceable and will remain the lifeblood of the economy for decades. A glance at the different forecasts for the global energy mix shows that they tend to agree that in 2050, coal will represent 34% of primary energy and oil 27% (against 38% today). This is simply because energy needs will double during this period, driven by demand from emerging countries.
Natural gas will play a growing role in electricity production at 28% and coal will remain at least at 50%. Oil will no longer be used for power plants, but will continue to fuel transport. Unless of course manufacturers have by then invented a revolutionary battery – powerful, lightweight and inexpensive – to power electric cars.
The evidence speaks volumes. Private and national enterprises continue to invest heavily in the exploration and production of oil and gas, and will spend a total of $600B a year by 2020. Total alone will spend $20B every year. A barrel at probably an average price of over $110 during the decade will ensure that the increasingly difficult and costly production process stays profitable. It is hardly surprising that banks lend to the Oil & Gas sector, whereas they are becoming far more cautious about financing major nuclear projects.
However, the oil era is drawing to an end. As with nuclear power, security costs will rise
for a number of reasons. On the one hand, the public has rightly lobbied for stronger security to avoid another disaster like the BP oil spill in the Gulf of Mexico in 2010. On the
other, because oil production has to exploit new deposits, it requires more and more high-tech equipment (seismic 3D, high pressure- and high heat-resistant materials etc.) as well as gigantic platforms (FPSO, FLNG).
The oil industry now has to explore resources 3,000 to 7,000 meters underwater, or extract the oil from wells that must be upgraded, or be able to treat Canadian oil sands and the heavy oils of Venezuela. The presence of these “unconventional” types of oil has tripled the size of proven reserves to 3,000B barrels. New oil countries are emerging, especially in East Africa. The oil peak that we thought would be reached in 2015-2020 has now been postponed to a later date.
We cannot talk about the future of the gas industry without mentioning the potential of shale gas. Wherever this technology has been developed, it has profoundly reshaped the industrial future of the country in question. In the United States, for example, by providing industrial access to a highly competitive source of gas, it helped redevelop the petrochemical industry and created new jobs. If properly managed, shale gas offers a tremendous opportunity for the countries that can develop it. France, with one of the largest gas reserves, could find that using its gas deposits is an effective way to reduce a trade deficit that is severely weighed down by oil imports. Engineering is ready and willing to join in discussions and experiments that could kick-start environmentally-responsible operations, whether in managing water resources, for example, or in preventing groundwater pollution.
For industry, then, this is a considerable challenge. It means continuing to exploit natural resources by investing heavily in technologies that will allow us to respect the environment more effectively, while preparing for the future by developing renewable energy to support growing global energy requirements.