A look at whether the world is now in a new era of oil abundance | Global energy demand will grow continuously and it is expected to increase by one-third from 2014 to 2034. The rate of demographic changes is directly related to energy consumption. The world population was six billion in 2000 and today the figure is touching seven billion and by the end of the year 2025 the population will be about eight billion. This indicates that the demand grows for all forms of energy but the share of fossil fuels in the world’s energy mix falls from 80% to 70% after twenty years.
Energy demand is stated to grow in Asia in this decade mainly because of China but it also looks like the attention would shift towards India. Southeast Asia too is expected to become predominant after ten years. The Middle East emerges as a major energy consumer, with its gas demand growing continuously, and will possibly be the second-largest oil consumer within the next five years. China is becoming the largest oil-importing country where as United States is only going for the oil and gas production to meet all of its domestic energy needs.
The transportation sector accounts for more than half of the oil used worldwide and energy demand in the transportation sector is continuously increasing. Oil products can meet maximum 75% of the demand for the transportation sector. Liquid synfuels produced from gas and coal account for about 20% and biofuels may contribute only for 4% to 5%. It is predicted that major growth will occur in the transportation sector, which has already started taking place in India and China. Decarbonising in the transport sector is also one of the major challenges today.
Oil use is increasingly concentrated in petrochemicals, aluminum, cement, iron and steel and pulp and paper along with glass and glass products etc. The latest estimates show 2670 billion barrels of conventional oil (including NGLs), 345 billion barrels of light tight oil, 1880 billion barrels of extra-heavy oil and bitumen and 1070 billion barrels of Kerogen oil – cumulatively, 5965 billion barrels of oil from remaining recoverable resources need to be produced in total to meet the demand in future.
Technological developments makes possible to discover new types of oil resources and improves recovery rates in existing fields, pushing up estimates of the amount of oil that remains to be produced. But this does not mean that the world is now in a new era of oil abundance. However, there are developments of these new resources. Further technological growth is expected from air travel, road freight and light duty vehicles. Use of hydrogen and fuel cell will replace oil in the transportation sector in near future. The natural gas gradually becomes a popular fuel globally with LNG suppliers creating new linkages for their regional gas markets.
Since, oil demand is directly related to economic development, there will be wide variation of oil prices in future due to uncertainties on the availability and unsteady production of oil and the supply of non-conventional liquids such as oil shale, tar sands, synfuel from coal and biofuels. Tar sands and oil shale are already in production. Biofuels are also in production but it is costlier than oil price today but the gap will be negative in the near future.
Gautam Das
Engineering Consultant
LNG, oil & gas, nuclear & thermal power plants,
steel plants, offshore platforms