Download National Petroleum Council 2006

Facing The Hard Truths About Energy
A Comprehensive View To 2030
Of Global Oil And Natural Gas
New York Energy Forum
August 28, 2007
NPC
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Today’s Discussion
● Study Approach
● What We Learned : The Hard Truths
● Recommended Strategies For The U.S.
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The Secretary’s Suggested Questions
● What does the future hold for global oil and natural
gas supply ?
● Can incremental oil and gas supplies be brought
on-line, on time, and at a reasonable price to meet
future demand without jeopardizing economic
growth ?
● What oil and gas supply and / or demand-side
strategies does the Council recommend the U.S.
pursue to ensure greater economic stability and
prosperity ?
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Dimensions of the Study
Economics
Supply
Alternative
Energies
Demand
Findings
and
Strategies
Technology
Energy
Security
Environment
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How This Study Is Different
Integrated,
In-Depth Analysis
Diversity of
Expertise
Technology
Assessment
• Over 100 studies incorporated to include both
public and aggregated proprietary outlooks
• Not another forecast of supply, demand or price
• 350 participants with backgrounds
in all aspects of energy including efficiency,
economics, geopolitics, environment
• Identified achievable opportunities and
likely deployment timing
• Looked across the energy spectrum, including
both supply and demand
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Technology Assessment Depth
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Technology Development
Personnel Issues: The Big Crew Change
Carbon Management
Conventional Resources (includes EOR and Arctic)
Exploration Technology
Deepwater Technology
Unconventional Gas (including Coal and Shale gas)
Heavy Oil and Bitumen
Oil Shale
Gas Hydrates
Coal to Liquids and Gas
Biomass fuels
Nuclear Outlook and impact on Oil and Gas demand
Transportation Efficiency
Other Renewables
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Time horizons
Research budgets
Human resources
Deployment
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Study Presented to Secretary Bodman
NPC membership approved study July 18, 2007,
including a press conference ......
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Press Headlines
“Drip Feed - why high oil prices threaten to linger”
“Oil and gas industry Back Efficiency ”
“Oil Execs Sound Alarm about Fuel Use”
“Study Offers Grim World Energy Outlook”
"Big Oil Signals Need for Alternative Fuels, Carbon Capture"
"NPC Report Comes Up a Dry Hole"
"Oil Supplies Won't Meet Demand"
"Oil Shale Funding Promoted"
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Press Headlines
“Oil Study Pushes Investment in Infrastructure, Technology”
“NPC Report: All energy options should be pursued”
“Oil Indus Urges Efficiency, New Fuels, CO2 Cost "
“Broad effort needed to satiate energy demand "
“Major new energy report advocates stronger
fuel standards for vehicles”
“National Petroleum Council Stresses Urgency”
“NPC Offers Sweeping Energy Outlook”
“Oil Industry Offers sobering
outlook on energy supply “
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Massive Interest in Report Findings
NPC Website download statistics:
• Full draft
517,900
• Excerpts of draft
163,400
• Exec. Summary alone
118,700
• Slide Presentation
• Total Downloads
52,300
852,300
July 18 viewing statistics:
• 300 viewers of presentation/slide show
• 673 watched press conference
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What We Learned:
The Hard Truths
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The Hard Truth: Demand
Coal, oil, and natural gas will remain indispensable
to meeting total projected energy demand growth.
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Coal, Oil, and Natural Gas Will Remain Indispensable
1980
2004
288 QUADRILLION BTU
445 QUADRILLION BTU
2030
678 QUADRILLION BTU
NATURAL
GAS
OIL
COAL
WIND / SOLAR / GEOTHERMAL
HYDRO
NUCLEAR
BIOMASS
Source: IEA REFERENCE CASE
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The Hard Truth: Supply
The world is not running out of energy resources, but
there are accumulating risks to continuing expansion of oil
and natural gas production from the conventional sources
relied upon historically. These risks create significant
challenges to meeting projected total energy demand.
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Large Oil Resource Base
6
UNCONVENTIONAL
TRILLION BARRELS - OIL
5
CONVENTIONAL
4
ULTIMATE RECOVERABLE RESOURCE (MEAN)
3
2
1
0
1984
1987
1991
1994
2000
Source: USGS
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Risks Reflected in Range of Production Projections
MILLION BARRELS PER DAY – OIL
140
IEA Medium–Term Outlook
120
EIA Ref Case
IOC – average
100
Association for
Study of Peak Oil
(ASPO)
80
60
40
20
0
2000
2010
2020
* Source: NPC Data Warehouse.
2030
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The Hard Truth: Energy Sources
To mitigate these risks, expansion of all economic energy
sources will be required, including coal, nuclear, biomass,
other renewables, and unconventional oil and natural gas.
Each of these sources faces significant challenges
including safety, environmental, political, or economic
hurdles, and imposes infrastructure requirements for
development and delivery.
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Contribution of Unconventional Liquids
15
MILLION BARRELS PER DAY
Global Production
12
9
6
Oil Sands / Bitumen
3
Biofuels
0
2005
2010
2015
2020
2025
2030
Source: Data From EIA 2007 Reference.
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Massive Infrastructure Investments Required
CTL
COAL
UPGRADING
REFINING
CONV.
OIL
●
BLENDING
UNCONV.
OIL
OTHER
MFG.
LIQUID
FUEL
MFG
BIOMASS
Supply
GTL
NUCLEAR
LNG
Demand
RENEWABLES
REGAS
STORAGE
POWER
GEN.
COAL
GAS
NATURAL
GAS
GAS
PROCESSING
DISTRIBUTION
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The Hard Truth: Energy Security
"Energy Independence" should not be confused with
strengthening energy security. The concept of energy
independence is not realistic in the foreseeable future,
whereas U.S. energy security can be enhanced by
moderating demand, expanding and diversifying domestic
energy supplies, and strengthening global energy trade
and investment. There can be no U.S. energy security
without global energy security.
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Global Oil Trade
2000
2030
EXPANDING FLOW TRENDS
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Global LNG Trade
2000
2030
EXPANDING FLOW TRENDS
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U.S. Historical Supply and Demand Trends
MILIION BARRLES PER DAY
30
U.S. FUELS DEMAND
GLOBAL TRADE
(NET IMPORTS)
15
U.S. FUEL SUPPLIES
0
1973
1980
1985
1990
Source: EIA Reference Case / NPC Global Oil and Gas study survey.
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1995
2000
2005
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The Hard Truth: Workforce
A majority of the U.S. energy sector workforce, including
skilled scientists and engineers, is eligible to retire within
the next decade. The workforce must be replenished
and trained.
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U.S. Human Resources Challenge
OVER HALF OF THE WORKFORCE ELIGIBLE
TO RETIRE IN NEXT 10 YEARS
% OF U.S. WORKFORCE
25
AGE DISTRIBUTION
20
15
10
5
0
20
25
30
35
40
45
50
55
60
65
70
AGE
Source: U.S. Dept of Labor.
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The Hard Truth: Carbon Emissions
Policies aimed at curbing carbon dioxide emissions will
alter the energy mix, increase energy-related costs, and
require reductions in demand growth.
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CO2 Emission Limits Will Alter Energy Strategies
Growing concern that climate is warming and CO2
concentrations in the atmosphere play a role.
The challenge of significantly reducing CO2 emissions
is unprecedented and will require:
• Global, broad actions on multiple fronts
• Long time horizons
• Major additional investments
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Technology
NPC
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DRAFT
Do Not Cite or Quote
Technology Pipeline is Robust
• Industry spends $6B+ on Oil and Gas related R&D
• Achieved many dramatic technology advances
• Much more to come from “Technology Pipeline”
– Improved exploration tools
– Increased recovery methods
• Alternative energy R&D investment increased to $3B
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There Is No Single Easy Solution
DRAFT
Do Not Cite or Quote
• Technology “Concept-to-widespread-adoption”
is ~16 years
• When Government enables development,
technology follows
• DOE oil and gas related technology spend decreasing
• Impacting U.S. lower 48 and universities
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Efficiency Technology Opportunities
DRAFT
Do Not Cite or Quote
• Efficiency significant in supply and demand balance
• Continued role for government standards
– e.g., refrigeration efficiency
• Transportation fuel forecasts do not capture cross sector
efficiency gains
• e.g., light duty vehicle to rail shift
• Additional auto efficiency improvements possible
• Implementation depends upon consumer and
government actions
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Efficiency Technology Historic Trends
DRAFT
Do Not Cite or Quote
30
U.S. NEW VEHICLE MPG
CAR
25
COMBINED
20
TRUCK
15
10
1970
1980
1990
2000
2010
MODEL YEAR
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Efficiency Gains Eroded by Weight and Horsepower
DRAFT
Do Not Cite or Quote
200
4,000
150
HORSEPOWER
WEIGHT
3,000
100
2,000
50
1970
1980
1990
2000
U.S. NEW CAR HORSEPOWER
U.S. NEW CAR WEIGHT, LBS.
5,000
2010
MODEL YEAR
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Parallel Studies
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DRAFT
Do Not Cite or Quote
Parallel Studies
• Most studies address one or two of key oil and natural gas concerns
ECONOMY
ENVIRONMENT
SECURITY
• Balanced energy strategies found at intersection of three circles.
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General Agreement on Policy Objectives
DRAFT
Do Not Cite or Quote
• Encourage Market Solutions
• Increase Energy Efficiency
• Ensure Access to Supplies
• Encourage Fuel Diversity
• Reduce Price and Supply Volatility
• Strengthen Energy Infrastructure
• Develop New Energy Technologies
• Protect the Environment
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Five Core U.S. Strategies
NPC
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The Five Core U.S. Strategies
• Moderate Demand By Increasing Energy Efficiency
• Expand And Diversify U.S. Energy Supply
• Strengthen Global And U.S. Energy Security
• Reinforce Capabilities To Meet New Challenges
• Address Carbon Constraints
There Is No Single, Easy Solution
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Moderate Demand Growth
Improve U.S. car and light truck fuel economy
standards at the maximum rate possible by applying
economic, available technology.
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Expand and Diversify Supply
Reduce declines in U.S. conventional oil and natural
gas production.
Increase access for new energy development.
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Expand and Diversify Supply
Diversify long-term energy production
• Accelerate development of energy from biomass
• Enable the long-term environmental viability of
coal for power, fuel, and feedstock
• Expand domestic nuclear capability
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Promote Global and U.S. Energy Security
Integrate energy policy into trade, economic,
environmental, security, and foreign policies.
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Promote Global and U.S. Energy Security
Continue to develop the international energy
marketplace by expanding the energy dialog with
major producing and consuming nations.
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Promote Global and U.S. Energy Security
Promote an effective global energy marketplace by
sustaining and intensifying efforts to encourage
global adoption of transparent, market-based
approaches.
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Promote Global and U.S. Energy Security
Assist and encourage global adoption of energy
efficiency technologies through technology transfer
programs.
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Reinforce Capabilities to Meet New Challenges
Rebuild U.S. science and engineering capabilities.
Create research and development opportunities.
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Reinforce Capabilities to Meet New Challenges
Improve the quality of energy data and information.
Develop a comprehensive forecast of U.S.
infrastructure requirements.
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Actions to Address Carbon Constraints
Develop legal and regulatory framework to enable
carbon capture and sequestration.
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Actions to Address Carbon Constraints
As options are considered to reduce CO2
emissions:
• Provide effective global framework for carbon
management
• Establish transparent, predictable, economywide cost for CO2 emissions
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Summary
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There Is No Single, Easy Solution
• All Five Strategies Must Be Addressed Together
• Global Cooperation Required
• Begin Now And Plan For Sustained Commitment
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All Strategies Are Essential
MILLION BARRELS PER DAY
30
U.S. LIQUID FUELS DEMAND
MODERATE
GLOBAL TRADE
(NET IMPORTS)
15
EXPAND & DIVERSIFY
U.S. LIQUID FUELS
2000
2010
YEAR
2020
2030
Source: EIA Reference Case / NPC Global Oil and Gas study survey.
Illustrative View
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Thank you for listening to this presentation of the
NPC Report:
“Facing the Hard Truths About Energy”
For information, please refer to the NPC Website
for a complete list of available resources:
www.npc.org
NPC
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Most Studies Provide Data or Recommendations
 National Commission on Energy Policy
 American Enterprise Institute
 Energy Security Leadership Council

Intergovernmental Panel on Climate Change
 Business Roundtable Energy Task Force

Stern Review Report
 National Association of Manufacturers

Global Roundtable on Climate Change
 Council on Foreign Relations

World Energy Technology Outlook – 2050

2000-2050 North American Transportation
Energy Futures
 Alliance for Energy and Economic Growth

UN Foundation (Scientific Expert Group)
 World Energy Council / US Energy
Association
 CNA – National Security and the Threat of
Climate Change
 IEA World Energy Outlook 2006
 MIT – The Future of Coal in a CarbonConstrained World
 US Commerce Department
 US DOE/EIA International Energy Annual 2006
 EPRINC – Ethanol and US Energy Security
 ExxonMobil Outlook for Energy
 U.S. Climate Action Partnership
 NETL Oil Peaking Study
 Energy Charter – Oil & Gas Pricing Study
 US Government Accountability Office
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