Tinker_edit.qxp 24/10/08 11:33 Page 18
Building Energy, Economy and Environmental Bridges
Industry Outlook
a report by
Scott W Tinker
President, American Association of Petroleum Geologists (AAPG)
The Olympics just wrapped up and I am exhausted – not so much Today, all geopolitical regions satisfy their energy demands using a
because of the late hours, which I tend to keep anyway, but more the significant component (87% average) of fossil fuels. Can fossil fuels rise
emotional ride of watching young people striving to excel, nations to the global demand challenge? In terms of oil, there are concerns about
coming together in peaceful competition and the stress that judging the the limits of global oil reserves. Most natural resource experts recognise
events puts on the body and mind. What was that judge thinking? She that production of conventional oil is reaching a plateau and that global
deserved a much higher score. Yes, we are all now experts on the finer demand pressure, which is straining conventional oil production capacity,
aspects of the parallel bars, vault, beam, etc. I am reminded somewhat combined with speculation and hedging, is driving the oil price up.
of energy policy. Have you noticed how many ‘energy experts’ are Historically, increased price dampens demand and allows new technology
weighing in on topics such as gasoline prices, offshore drilling, clean coal, to be deployed that leads to the development of additional conventional
carbon sequestration and electricity markets? Even Paris Hilton is (and now unconventional) oil reserves. This economic–industrial cycle is
speaking out on energy. common, predictable and active today. Thus, ‘peak oil’ is less about oil
resource limits and more about ever-stronger demand growth,
To be sure, nothing captures the public’s attention like high energy prices. compounded in some regions by moratoria on drilling and restricted
Opinion polls were ‘against’ offshore drilling and ‘for’ environmental access to known resources.
regulation until the public realised that alternative energies with reduced
CO
2
emissions will cost significantly more. Higher energy prices are not all Natural gas resources are abundant, but have lacked an extensive
bad. Oil consumption is down as a function of various conservation and global delivery system; this is now being developed in the form of a global
efficiency measures, including more efficient cars and less driving. As a liquefied natural gas (LNG) shipping network. Global demand for natural
result, we are emitting less CO
2
. Cleaner-burning natural gas production gas is keeping prices high and is causing an imbalance in LNG deliverability
is up as the result of price and technology, causing prices to stabilise and between the eastern and western hemispheres. Likewise, coal is
even drop. Indeed, market forces drive behaviour and public opinion, abundant, but, like oil and natural gas, is not found everywhere and is
which in turn pressures elected officials to ‘do something’. heavy on an energy-per-ton basis, and therefore is expensive to move
around the globe.
I am glad to see the pubic get on board the energy train and begin to get
educated. Even the media are becoming more balanced in their energy Demand for energy as China, India and other heavily populated nations
reporting, although they still feel a need to create either/or conflicts industrialise is stretching global energy supply capacity. Fossil fuels
between fossil fuels and alternative energy and between energy and the account for 87% of global energy supply, down only 4% from 25 years
environment. However, these are red herrings: energy, environment, ago, with coal and natural gas representing a greater proportion of the
the economy and policy are not mutually exclusive – quite the opposite. mix relative to oil. As we move forwards, global demand for energy will
Let us first set the global energy stage and then examine the bridges that continue to increase, but perhaps by as little as 1.25% per year if certain
link energy, the economy and the environment. efficiency measures are deployed. The percentage accounted for by oil
is likely to continue to decrease, and natural gas and coal will retain
The current industrialised global energy landscape comprises the stable percentage positions, with all fossil fuels combined likely
transportation sector, representing approximately 30% of energy demand continuing to represent around 80% of the total mix in 2030. As global
and dominated by oil, the heating sector, representing approximately demand will rise, actual barrels of oil must – and for a few decades
30% of energy demand and dominated by oil and natural gas, and the can – remain at or near today’s production levels, and natural gas and
electricity sector, representing approximately 40% of energy demand (and coal, along with other non-fossil sources, will continue to rise in terms
growing), with a diverse portfolio of fuel options but dominated by coal, of produced units.
natural gas and nuclear.
Superimposed on the enduring demand for fossil fuels is pressure to
slow the growth of CO
Scott W Tinker is Director of the Bureau of Economic
2
being released into the atmosphere by
Geology, the Stage Geologist of Texas, Director of the
industrialised and industrialising nations. Reduction of anthropogenic
Advanced Energy Consortium and a Professor at
CO
2
requires some combination of capture and storage (sequestration
the University of Texas. He is President of the American
in oil fields through enhanced oil recovery, as well as in brine reservoirs),
Association of Petroleum Geologists (AAPG) and Past
President of the Association of American State increased energy efficiency or non-fossil energy alternatives. Increased
Geologists (AASG). Mr Tinker holds appointments in
efficiencies can come from improvements in lighting and appliances,
the US on the National Petroleum Council (NPC)
and the National Research Council (NRC) Board of
vehicle mileage, insulation, energy awareness and beyond. Of course,
Energy and Environmental Systems. He holds degrees from the University of Colorado, nothing dampens demand – and thus output of CO
2
– more effectively
the University of Michigan and Trinity University.
than increased price.
18
© TOUCH BRIEFINGS 2008
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