With all the talk about ‘getting out of fossil fuels’, you can get the impression that the oil and gas industry is expected to wind down, with no further investment needed. However, oil and gas will remain essential to your energy future for decades to come with significant investments needed to meet this demand.
And here is one reason why: between now and 2040, existing oil and gas fields will deplete by three to six per cent per year. Without continuous investment to make the most out of these fields and find new ones, the world risks facing a drastic energy shortfall.
That was one of the messages I heard from Eirik Waerness, Statoil’s chief economist. He was presenting the company’s Energy Perspectives 2016. You can see his presentation here. The chart below struck me most.
Statoil has three scenarios covering future global energy demand:
- Its Reform scenario is based on the assumption that nations signing up to the climate targets of the Paris agreement (COP21) will reduce their carbon emissions but fall short of their targets.
- Statoil’s Renewal scenario assumes that the world will achieve its most ambitious energy and climate goals.
- The Rivalry scenario includes geopolitical conflicts, with developing countries emitting more carbon in their determination to improve their standards of living.
The chart shows that even in the most stringent Renewal scenario, demand for oil and gas in 2040 remains so high – the growth of renewables notwithstanding –the world will need the equivalent of more than 15 Norways – Europe’s largest producer of oil and gas – to compensate for the declining production.
About Olaf Martins
Olaf is IOGP’s global engagement manager. He has over 25 years’ experience in the industry. Before joining IOGP Olaf was with ExxonMobil, where he held a number of senior public affairs roles, including most recently his position as ExxonMobil Central Europe Holding’s manager of government relations and media. Olaf’s educational background is in economics.