A mini-series on the future of energy
By Dave Wilkin, P. Eng., M.Eng. and Tim Lutton, BSc., MBA
In this second article in our series, we layout the energy big picture. Energy firm British Petroleum (BP) has one of the most comprehensive, widely available and referenced energy data sets publicly available. It’s reasonably consistent with Exxon-Mobil’s, International Energy Agency’s and US EIA’s data, so we based most of our analysis on BP’s data.
First, BP’s global energy consumption graph shows their most likely Evolving Transition (ET) scenario energy-mix from 2000 projected out to 2040. It has future solar and wind energy share growing to 14 per cent, and carbon-based energy share declining from 85 per cent to 75 per cent. BP’s Rapid Transition scenario (not shown) has aggressive green-energy policy actions coupled with technology advances, driving solar/wind energy share to roughly 25 per cent, while achieving a 15 per cent carbon-energy share reduction (we believe this to be BP’s least likely scenario). Some predict faster global economic growth, driven largely by Asia-Pacific, and under BP’s More Energy scenario (see graph red-wedge and corresponding non-OECD energy share) global energy demand rises another 25 per cnet (energy source shares remaining consistent with the ET scenario).
Next, the table shows oil and gas reserves and their expected lifespans for consumption (R/C) where exports/imports are excluded. It is important to know the three types of carbon-energy reserve classifications, based on commercial extraction success probability and utilizing known technologies: proven (>90%); probable (50%); and possible (<10%). 3P reserves includes all three types, whereas 2P is proved and probable only. It’s complex and engineering measurements vary, particularly in non-transparent countries. BP forecasts are mostly 2P reserve based. Rystad (an independent energy research firm) forecasts here are 3P reserves, and include much more shale/tight oil and oil-sands formations reserves (reserves to production ratio shown). It’s also important to know that new discoveries have added to reserves (about 1%/year to global 2P reserves since 2010) but they have slowed significantly in the last few years. With over 150 years of global coal reserves, we excluded it, and renewable biofuels share remains too insignificant to breakout.
Here are the key messages to take away from this big picture:
- Carbon-based energy dominates global energy for the next 20 years, and likely much longer under all future scenarios.
- Developing countries economic and population growth is the key driver of all future energy demand growth.
- Fifty to 60 years of global oil and gas reserves remain, given current demand. If demand grows faster than the new discoveries, reserves will begin to decline.
- Both Europe and Asia are very carbon-energy insecure, requiring significant imports to meet their energy demands.
- North American oil reserves are in better shape, but declining reserves loom well before 2050, even with our vast oil sands reserves included. Gas reserves are most concerning.
- Globally, just 15 per cent of oil reserves and 10 per cent of gas reserves exist in stable democratic countries – Canada and the US represent the vast majority of it.
When reserves begin declining, exploration in more challenging and environmentally sensitive areas such as the Arctic or deep-ocean will grow, resulting in much higher energy costs, and significantly increased environmental risks. It will also likely spark an increase in much cheaper coal consumption. Canadian government energy policy seems completely blind to these realities.
This nicely sets up our next article, understanding the dynamics of growth. Watch for it!
Dave Wilkin is a Professional Engineer who lives in Huntsville. He is an electrical engineer with a career spanning 35 years in IT, banking and consulting.
Tim Lutton worked in the natural gas and LNG industry for 32 years; with Imperial Oil in Canada, and ExxonMobil in the USA, Australia and Qatar and now lives in Huntsville.
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My understanding is that China is (and has been) consuming coal at an unsustainable rate. With their exponential growth in both population and industry; 150 years of reserves (based on what?) will not last nearly that long. Ignoring this fact on your graph, reminds me of university physics: “considering the mass of the elephant to be negligible”. Just saying…
John, we can always debate the exact details of timing etc., but I think the key points of the article are valid.
• We need to shift the global energy mix from 80% fossil energy to 80% clean energy ASAP in order to minimize climate change and before we run out of finite oil and gas reserves.
• 30 years of climate change indifference and denial has made this a classic dilemma. Shutting down the old energy before the new is in place will produce a global energy crisis on top of a climate crisis.
• Canada will soon be the only stable democracy that can produce oil for as long as it is likely to be needed. That means we must be prudent and not deplete that resource at an irresponsible rate as the US is now doing.
• There is no perfect solution. Every clean energy source has its benefits and its limitations. We need them all.
Thanks for your input John. I read the publications you referenced. This is a very contrarian view from a researcher who is advocating for renewable energy. His analysis is on the fringe, very complex, and most of it doesn’t make sense to me ( and I have a Masters in Engineering, and still couldn’t follow much of it). So, I don’t buy his core argument. A future article in our series will dig into the myth of wind/solar displacing most/all carbon-based energy. You might want to read it too.
The effort that went into this analysis must be applauded. Unfortunately, since it’s based on data that is reasonably consistent with the International Energy Agency WEO and the US EIA, it’s fatally flawed. The IEA explains, “This misrepresents point of WEO scenarios. They don’t forecast future, but provide yearly picture of what will happen if nothing changes.” They would be more useful if things weren’t changing.
This in nicely shown in the graph at https://steinbuch.wordpress.com/2017/06/12/photovoltaic-growth-reality-versus-projections-of-the-international-energy-agency/. It plots the IEA’s forecast of solar growth each year against the actual growth. Year after year, the IEA predicts that growth will not increase. Year after year, growth is exponential. The renewable component will be far, far larger in 2040 under any reasonable scenario.
There’s an additional factor-of-three error in the calculation of the solar and wind contribution. Fossil fuels are measured by the heat they produce. Renewables are measured by the electricity coming out of the farm. Most fossil fuel energy is wasted as heat instead of doing useful work. Put differently, one solar tonne of oil equivalent as measured by the IEA displaces three tonnes of actual oil. See https://energiogklima.no/kommentar/iea-counts-fossil-fuels-threefold-versus-wind-and-solar/ for a full explanation.
Put those together and 2P versus 3P reserves are a moot point. That’s not the critical issue, though; renewables aren’t coming soon enough today to prevent catastophic levels of global warming.
Good analysis, except for one thing. You are wrong when you write, “Canadian government energy policy seems completely blind to these realities”. Here is the reality.
• We are learning that the best way to succeed is to genuinely listen to and address the concerns of all constituencies, even though it takes a great deal of time, effort and patience. After 15 years of trying everything else, we finally have 1.53 million barrels per day of new pipeline capacity underway. That boosts our total oil pipeline capacity to 4 million barrels per day. Add in the 0.9 million barrels of new rail-car capacity for a grand total of 4.9 million barrels per day which is close the production rate that would balance short-term and long-term economic and energy security considerations. The government has also made several moves to support new developments in next-generation nuclear energy. That will put Canada and Canadian companies on the leading edge for the nuclear energy that will have to fill the “More Energy” space on your chart.
• The 980-kilometer Trans-Mountain pipeline is an expansion on a short existing route. As such, it posed the least risk and cost of ail pipeline alternatives. Even so, it was strongly opposed by activists. It is now approved by the Federal Court and the NEB, and construction started on August 3, 2019.
• The replacement/expansion of the Enbridge Line 3 pipeline to Superior Wisconsin and Sarnia is approved and underway. The 1,070-kilometer portion in Canada is finished. After some late objections, construction of the 590-kilometer US portion is expected to be finished by end of 2019.
• The 3,456 -kilometer Keystone XL pipeline was proposed in 2008 but remained stalled until the Nevada State Supreme Court approved the alternate route on August 23, 2019. Even President Trump struggled to move it forward. Trump may be thinking he doesn’t need more oil from Canada during his regime, while he “fracks the hell out of the USA”. But at current production rates, proven and even probable US reserves could be gone in 15 to 20 years. Trump wants to buy Greenland. The waters off north-east Greenland are estimated to contain up to 110 billion barrels of oil, but accessing arctic oil is much more problematic and costly than accessing Alberta’s oil sands.