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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