…Dispels 2040 peak oil fears
Eminent geologist and petroleum industry investor, Mr. Autin Avuru, has dispelled fears among industry players over the hyped peak oil by 2040, saying rising global urbanization and associated economic growth would continue to generate ample demand for petroleum fuel beyond 2040.
He told excited audience who were expecting an alarm bell over imminent demand gloom in the industry that evolution of alternative energy and emerging energy transition to accommodate renewable sources must be seen as positive intervention of technology to save global economy from inevitable oil drought.
With annual three percent in energy demand, he argued, the world would have been plunged into economic catastrophe if technology had not unlocked shale oil and renewable energy options.
He explained that technology developers and industrial innovators still have great business in finding replacement for finite petroleum resources which, according to him, would inevitably run out in the in the long term.
Mr. Avuru’s position rhymes with declarations in the world energy outlook by British Petroleum (BP) which described 2040 as the onset of plateau oil instead of peak oil. The BP report stressed that even in the event of switch to electric cars, other industrial and transportation application for petroleum fuel would continue to propel demand.
The Oracle Today reports that conversations and policy debates over peak oil heightened with recent pan-European policy commitment to deemphasize fuel burning automobiles for electric cars by 2040. Industry pundits note that effective implementation of the plan by industrialized economies would slash demand for petroleum liquids and neutralize that value of the commodity.
According to the Energy Information Administration (EIA) of the United States, demand for transportation fuel account for the bulk of global demand for oil; and environmental activists contend that transportation fuels also carry proportionate liability for global green house gas emissions.
Energy policy shifts among the Organization of Economic Cooperation and Development (OECD) countries in favour of renewable and sundry environment friendly options have since them sparked and stoked fears over the future of the highly profitable petroleum industry after a tentative 2040 deadline for energy switch.
Also, huge investments in new manufacturing lines by automobile companies, innovations in automobile battery quality and rising development of installations for car charging all sound the alarm that the glory of petroleum fuel is waning.
But Mr. Avuru insists that bipolar analysis of medium-to-long term energy demand outlook presents a clearer picture of an evolving demand pattern that simply accommodates various energy options in an expanding demand scenario.
He said fossil fuel would still account for 53 per cent of the world energy demand even up to 2040, pointing at the global energy transformation and demand distribution that currently define the world economies.
Mr. Avuru who spoke at a panel session at the 2019 Offshore Technology Conference (OTC) in Houston Texas, United States declared: ‘’Even up to 2040, fossil fuel will account for 53 per cent of the world energy demand. So what we are seeing today is a gradual decline in the total contribution of fossil fuel to the energy mix over time. It is not an overnight elimination of fossil fuel.
‘’As we move beyond 2030, 2040 and 2050, the energy mix will continue to be guided by availability, commercial consideration; which means, even for fossil fuel, countries will pay attention to cost because fossil fuel will have to be able to compete the same way renewable will have to be able to compete.”
He explained that fossil fuel was always known to be a finite resource which means that the world, even over the past 100 years, have anticipated a decline in the supply of fossil fuel as energy source.
“Those days in the 70s, there was a prediction by the International Energy Agency (IEA) that between 2012 and 2015 we would get to peak oil. Peak oil means that beyond that point, we will begin to see a decline in the world production. Thanks to technology. That date has been shifted forward. Peak oil will come. We have only shifted it forward because of technology,” he explained.
‘’Today technology has enabled us to get crude oil and natural gas out of shale. Those of us who are geologists have always known that there was crude oil in shale but shale didn’t have the permeability to release it. What technology has done through tracking is to induce that permeability to release the crude oil and natural gas from shale. Thanks to technology because we have seen additional sources of crude oil and natural gas that moved backwards the date for peak oil.”
‘’So what we are seeing today is a very sensible scientific move by the world and by the advanced technologies of the world to start developing that alternative to fossil fuel because the day will come when there will be no fossil fuel,” he added.
Avuru indicated that fossil fuel which is coal, natural gas and crude oil which accounted for total energy needs twenty years ago has now declined to a level where renewable now accounts for 20 percent of our energy needs.
He stressed that energy needs keep increasing by three percent on a yearly basis, adding that the demand for crude oil and natural gas would have driven the cost of crude oil to about $200 per barrel if renewable energy were not there today.
He said: “Invariably, what we are seeing is a gradual transformation that should not be seen as a curse but as a solution that is being provided to the world that by the time we get to the point of decline in the supply of fossil fuel, there will be alternatives to fill the vacuum.
‘’When we see the demand for energy versus the supply, if we do nothing about oil and gas, we will see that the gap over a 20-year period will lead to a catastrophe. So, the point I am making and the point to take home is that there is no gang up by the world to make fossil fuel irrelevant. What the world is doing is to start in a timely fashion to develop the alternatives that must come when fossil fuel delivery in the world energy mix starts to decline.”
Sharing a similar position with Mr. Avuru, the Chief Economist at BP, Mr. Spencer Dale, stated in a publication that “oil and gas will still play a major role under each of the forecast’s scenarios,” despite surprisingly strong growth in electric vehicle sales.
Mr. Dale said “crude oil products will continue to dominate global energy demand for transportation through 2040.”
“We expect total global energy demand to grow by about a third between now and 2040, under the energy transition,” he said in the publication; adding that crude accounts for 85% of total transport fuel demand in 2040, down from 94% currently.
Natural gas, electricity, and other fuels are each projected to account for 5% of transportation fuel’s total, he said.
He made it clear that non-combusted use of fuels as feedstocks for petrochemicals, lubricants, and bitumen will become an increasingly important component of overall industrial demand for oil after 2030, reflecting more limited potential efficiency gains relative to transportation.
“Think plateau, not peak, when considering future oil demand,” Mr. Dale suggested in the publication, saying “it still will be needed, but demand won’t grow as quickly. That means the world will have to continue investing in development and production.”
He made it clear that the world would still need investments in oil but in an increasingly competitive manner to emphasize cost efficiency and infrastructure asset optimization.