Oil, coal, natural gas seen as fuels of the future

  • 16-Nov-2008 05:41 EST
aei-future0energy.jpg

ExxonMobil estimate of world energy consumption through to 2030 (graph at right) shows oil maintaining approximately a one-third share, and with coal and natural gas an 80% share of 330 MBDOE (millions of barrels daily, oil equivalent). Transportation and electrical power generation (graph at left) are expected to account for larger shares of worldwide consumption.

Although there will be some­ growth in alternatives, 80% of world energy needs will continue to be supplied by oil, natural gas, and coal as far ahead as 2030, according to projections by ExxonMobil. A recent spike to over $140 per barrel of crude was unsustainable, an ExxonMobil executive told a joint meeting of SAE Met Section and the New York City chapter of NAFA Fleet Management Association. The speaker, Timothy Devens, National Accounts Manager/ automotive lubricants, said even $80 per barrel is at the high en­d of the company's estimated long-term average.

The company believes much of the world's alternative energy growth will not be from "renewables" such as wind, solar, and biofuels. Rather, he said, it will be nuclear, primarily from plants that will be built in China plus some in Europe, likely not the U.S.­

"We don't like to make decisions based on bad data," Devens said. Renewable alternatives will continue to cost more than oil, he added; therefore, any increase in their use would depend on the amount of government subsidies.

ExxonMobil expresses energy consumption from all sources in terms of MBDOE (millions of barrels daily, oil equivalent). Devens said the company believes MBDOE will rise from 220 in 2005 to about 330 MBDOE by 2030, with 80% of the increase coming from developing countries. He added that Asia-Pacific would be the largest growth area and that U.S. consumption would be relatively flat, largely because of improved efficiency from technology.

The U.S. uses about 20.7 million barrels of petroleum products daily, which includes liquid natural gas (LNG), according to the Energy Information Administration/Department of Energy (EIA/DOE). Although still a large crude oil producer (5.1 MBD), the U.S. imports over 10 MBD of crude and 3.4 MBD of refined petroleum products. Canada is the U.S.'s largest individual crude supplier (1.9 MBD) and Mexico is second (1.7 MBD), but the OPEC countries (including Venezuela and Nigeria) cumulatively account for 6.0 MBD. 

The U.S. derives a lot of energy from coal, using much of its 1.1 million short tons (1.0 million t) annual production to generate 50% of its electricity; natural gas provides 20%, nuclear 19%, and hydropower 7%.  

Although improved efficiency, projected by ExxonMobil, is to lead to reduced U.S. consumption of electricity, plug-in hybrids could change that assessment. If they become a significant factor, grid capacity might have to be increased. The global warming impact of coal is somewhat higher than oil and much higher than natural gas, with the percentages determined by the methodology. Renewables and nuclear have minimal warming effect.

If an increase in grid capacity were made with domestic natural gas, nuclear, and possibly wind and solar, and natural gas added market share for heat and transportation, U.S. consumption of oil could decrease. However, ExxonMobil and EIA/DOE project small increases in oil consumption based on increased population.

EIA/DOE estimates that enhanced recovery will boost domestic crude production gradually from 5.1 to 6.8 MBD by 2018, reducing dependence on foreign oil. From 2018 onward, EIA/DOE sees a decline in U.S. crude production.

ExxonMobil’s Devens pointed out that his company is drilling in more than 20 countries, and that multiple sources also provide overall energy security. He conceded that the U.S. desire to minimize imports has led the company to increase yields from U.S. oil fields it otherwise would have left to future consideration by others. At one time, Devens said, ExxonMobil would draw perhaps 25% from a field. Now it draws at least 40% and is using sophisticated imaging tools to better understand oil flow in reservoirs to further enhance recovery.

The U.S. is the only major producer of crude that has drawn over 50% of its in-ground supply, Devens said, adding that "since the inception of time, the world has pulled out perhaps 25%." He told the meeting there are at least 3.2 trillion barrels of oil available, more with enhanced recovery. "If you ask me in 10 years, that number could be up to 4.2 trillion." He said he wasn't including such potentially large but problematic supplies as shale oil and extra-heavy crude.

Because of its lower global-warming impact, world natural gas production is poised to increase at a rate 40% greater than oil, Devens said. He noted that ExxonMobil was collaborating with Qatar Petroleum to bring on stream next year a mammoth gas field in the Mideast nation. LNG would be exported in what ExxonMobil called the world's largest carriers to the U.S., England, and Italy. 

The U.S. imports of 3.4 MBD of refined petroleum products are the result of legal roadblocks that prevent domestic refinery construction, Devens explained. Although no new refineries have been built since the early 1970s, he added, ExxonMobil had increased the capacity of existing refineries by 50% in the last five years.

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