Exxon’s 2040 Outlook: Fossil Fuels Aren’t Going Anywhere
In this newsletter:
1) Fossil Fuels Will Provide Nearly 80% Of World’s Energy In 2040, Exxon Projects
Kallanish Energy news, 3 January 2016
2) Exxon’s 2040 Outlook: Fossil Fuels Aren’t Going Anywhere
OilPrice, 30 December 2016
3) U.S. Shale Could Break The OPEC Deal Within Months
OilPrice, 29 December 2016
4) Chinese Coal Industry Sees Earnings Explode In 2016
OilPrice, 28 December 2016
5) Britain’s Shale Industry Set To Take Off
The Times, 2 January 2017
6) UK Taxpayers Face £1 Billion Bill Over Green Subsidy Scandal
The Times, 3 January 2017
Kallanish Energy news, 3 January 2016
2) Exxon’s 2040 Outlook: Fossil Fuels Aren’t Going Anywhere
OilPrice, 30 December 2016
3) U.S. Shale Could Break The OPEC Deal Within Months
OilPrice, 29 December 2016
4) Chinese Coal Industry Sees Earnings Explode In 2016
OilPrice, 28 December 2016
5) Britain’s Shale Industry Set To Take Off
The Times, 2 January 2017
6) UK Taxpayers Face £1 Billion Bill Over Green Subsidy Scandal
The Times, 3 January 2017
Full details:
1) Fossil Fuels Will Provide Nearly 80% Of World’s Energy In 2040, Exxon Projects
Kallanish Energy news, 3 January 2016
While renewables get a great deal of attention – and for good reason — oil is expected to remain the world’s primary energy source through 2040, meeting roughly 33% of demand, according to ExxonMobil’s recently released 2017 Outlook for Energy: A View to 2040.
The use of oil will be driven by need for transportation fuel and feedstock for the chemical industry.
Natural gas is projected to grow the most of any energy type, accounting for 25% of all demand by 2040. Coal will remain important but will lose a significant amount of its share as the world transitions to cleaner energy, ExxonMobil (XOM) projects.
Nuclear energy and renewables will grow about 50% and be approaching a 25% share of the world’s energy mix, according to the Outlook.
“By 2040, world population is expected to reach 9.1 billion, up from 7.3 billion today,” the Outlook states. “Over that same period, global GDP will effectively double, with non-member countries of the Organization of Economic Cooperation and Development (OECD) seeing particularly high levels of economic growth. This means rising living standards in essentially every corner of the world, and billions of people joining the global middle class.”
Economic expansion, coupled with growing numbers of people, will help drive up global energy demand by about 25% by the year 2040, similar to adding another North America and Latin America to the world’s current energy demand, Kallanish Energy understands.
“The world will need to pursue all economic energy sources to keep up with this considerable demand growth,” the Outlook states.
Increasing electrification will drive the growth in global energy demand over the next 25 years, 55% of energy demand growth coming from power generation to support increasingly digital and plugged-in lifestyles, ExxonMobil’s Outlook projects.
Natural gas demand will increase significantly, with the fuel gaining share across all sectors due to its abundance and flexibility.
Evolving natural gas supply and demand will also cause gas trade balances to shift, with North America, Russia, and the Middle East being net gas exporters by 2040.
Asia-Pacific will continue to be the largest gas importer despite growing production, with regional gas demand doubling by 2040. Demand in Europe will also grow as regional gas production there declines. Unconventional gas is expected to account for 33% of total gas production by 2040.
2) Exxon’s 2040 Outlook: Fossil Fuels Aren’t Going Anywhere
OilPrice, 30 December 2016
The global energy mix will not look that much different for oil and gas in 2040, according to Exxon Mobil’s recently released 2017 Outlook for Energy: A View to 2040.
Source: Exxon 2017 Outlook for Energy
Both the middle class and world GDP is expected to double in the next 15 years, accelerating demand for air conditioned homes, cars, and appliances such as refrigerators, washing machines, and smart phones. Non-OECD nations, particularly China and India, will experience the most economic growth, driven by urbanization.
Oil is expected to remain the world’s primary energy source, driven by demand for transportation fuel and feedstock for the chemical industry. Plastics and other advanced materials provide advantages to manufacturers and consumers including energy efficiency gains.
Natural gas is projected to grow the most of any energy type, accounting for a quarter of all demand by 2040. Coal will remain important but will lose a significant amount of its share as the world transitions to cleaner energy.
The World Electrifies
Increasing electrification will drive the growth in global energy demand over the next 25 years, 55 percent of energy demand growth coming from power generation to support increasingly digital and plugged-in lifestyles and electricity will grow the most of any sector.
(Click to enlarge)
Source: Exxon 2017 Outlook for Energy
Natural gas demand will increase significantly, with the fuel gaining share across all sectors due to its abundance and flexibility. Different sectors will use different types of energy based on their economic supply options and suitability to different purposes.
A wide variety of energy types will support electricity generation, with gas, nuclear, and renewables all increasing their share in the mix to offset the decline of coal.
LNG Critical to Supplying Natural Gas Net Importers
Evolving natural gas supply and demand will also cause gas trade balances to shift, with North America, Russia, and the Middle East being net gas exporters by 2040.
Full post
3) U.S. Shale Could Break The OPEC Deal Within Months
OilPrice, 29 December 2016
The U.S. shale industry is ready to return with a bang.
OPEC is currently pumping crude at a record rate yet has managed to fool algos and “experts” into bidding up crude to multi-month highs on “promises” it will cut a little over 1 million bpd in output starting in 2017. Alongside this “agreement”, which Russia and other Non-OPEC nations may or may not join depending on whether OPEC states comply with the cuts (Russia has made it very clear it won’t start cutting for a while in the new year), a problem OPEC has long hoped to avoid mentioning, let alone addressing, has emerged. We are talking, of course, about U.S. shale, the biggest marginal swing producer in the world.
The problem, in a nutshell, is one of clean balance sheets (those companies which had to file bankruptcy, have done so by now, and as a result most now have a far lower All-In Production Cost, not to mention far less debt, and re-energized management teams) as well as one of rising efficiency due to drilling technological advances. Nowhere is this more evident than in this excerpt from Bloomberg:
[A]t 8.8 million barrels a day, the U.S. is already pumping almost as much crude as two years ago, with just a third of the rigs it operated at the peak, data from Baker Hughes Inc. and the Energy Information Administration show.
And while drillers have added about 200 rigs since May, taking advantage of rising prices as talk of an OPEC supply cut circulated, one wonders what will happens to U.S. oil production once the number of rigs returns to its recent historical levels between 1,800 and 2,000?
One thing we do know is that after two years of quietly avoiding the spotlight, the shale industry is ready to return with a bang, and according to Reuters, “U.S. shale drillers are set to ramp up spending on exploration and production next year as recovering oil prices prompt banks to extend credit lines for the first time in two years.”
The credit increase is small, but with major oil producers worldwide aiming to hold down production in 2017, U.S.-based shale drillers are looking to boost market share to take advantage of higher prices, and greater availability of capital will make that easier.
Full post
4) Chinese Coal Industry Sees Earnings Explode In 2016
OilPrice, 28 December 2016
Todd Royal
China recently reported rising coal industry earnings. The Chinese National Bureau of statistics mentioned a growth of “157 percent in the first 11 months of 2016”, while industries such as oil and gas drilling along with power supply saw profits decline in the subsequent period.
This continued use of coal mirrors the rise in coal-fired power plants under construction or completed by China and India, African nations, and many European countries (Germany and Britain are shockingly big users of coal) as well. According to the International Energy Agency (IEA), global coal demand growth is slowing, but at least growing until at least 2020, the equivalent of an increase of 3.8 million-barrels-oil per day. There are reasons why coal will continue to rise in use.
Earnings were so strong in China that factory inflation spiked to a five-year high because of coal, which allowed their manufacturers: “to cut debt, invest more, and delay efforts to reduce excess capacity.” Coal in China and elsewhere continues to make investors and governments money. Yet China has promised to stop increasing emissions by 2030, and attempt to get one-fifth of required electricity from renewables while continuing to rely on coal and other fossil fuels for the remainder of their growing energy needs.
Chinese, Indian, African and European nations will continue to use coal for a simple reason – it is inexpensive – compared to renewables, nuclear, or even natural gas. Very dirty, but very cheap, and that’s what is driving the Chinese and others to use so much coal.
Moreover, economics will drive the debate while mechanisms that were agreed on in the Paris Climate Agreement (PCA) prove to be expensive, hard to quantify, and difficult to pay for in the near and distant future. Leaders in Poland, Australia, South Korea and Japan now believe that new coal plants in the works can meet tough climate regulations through efficiency and new technology.
Full post
5) Britain’s Shale Industry Set To Take Off
The Times, 2 January 2017
Robin Pagnamenta
Three separate fracking projects could crank into action this year as Britain’s shale gas industry finally gets off the starting blocks after years of delay, according to industry chiefs.
Hydraulic fracturing at a site in Kirby Misperton, North Yorkshire, could start within weeks after a judge rejected a legal appeal by environmental campaigners and residents to halt the project, led by Third Energy, just before Christmas.
Activity at the site in the North York Moors could start within weeks. Two other operators — Cuadrilla Resources and iGas — hope that they will be able to start operations at sites in Lancashire and Nottinghamshire this year.
A proposal from Cuadrilla to drill four wells and frack for shale gas at a site near Blackpool in Lancashire is well advanced. Planning consent has already been granted and Cuadrilla hopes to finalise plans for the scheme by the end of this month, said the company’s spokeswoman Jacqui Reid. “We hope that we can finally get going,” she said, adding that she expected fracking to start this summer.
The industry is upbeat about its prospects despite a difficult few years. Hydraulic fracturing was last used in Britain in 2011, when a small earthquake was recorded at a separate Cuadrilla site in Lancashire. That led to a moratorium on fracking, which lasted until 2012, and increased protests about the possible environmental risks.
Ms Reid admitted that it had been a long haul persuading the public that fracking — in which underground rock formations containing gas are fractured using water, sand and chemicals — could be done safely. “Next year is pivotal for the industry,” she said. “We will show that it can be done safely and with little environmental impact. A lot of the myths about fracking can be dispelled.”
Opposition remains intense, with environmental groups fearing that the process could contaminate groundwater and that it is incompatible with fighting climate change. Lynne Featherstone, the Liberal Democrat climate change spokeswoman, said: “Fracking will not help our efforts to tackle climate change, it will do the opposite. The government is heading in completely the wrong direction. It must focus on renewables instead of new carbon-emitting energy sources.”
Claire James, of the Campaign Against Climate Change, rejected the industry’s fracking plans as “pie in the sky”. She said: “There is still a long way to go. There is major local opposition and a lot of reasons why people don’t want fracking in this country.”
Ms Reid said that support within Whitehall remained strong. “Central government remains very supportive of shale gas in the UK. The level of gas imports continues to increase and they feel we should make greater use of our own resources.”
Full story
6) UK Taxpayers Face £1 Billion Bill Over Green Subsidy Scandal
The Times, 3 January 2017
Sean O’Neill and Sean O’Driscoll
A botched green energy scheme that has ignited a political crisis is on course to cost taxpayers more than £1 billion.
The Treasury faces the bill after a massive overspend on subsidies encouraging farmers and businesses in Northern Ireland to run eco-friendly power schemes. The Renewable Heat Incentive (RHI) was supposed to cost £25 million in its first five years but the bill is likely to reach £1.15 billion over 20 years.
The Treasury can claw back £490 million from the block grant to Northern Ireland, leaving £660 million to be financed by taxpayers in England, Scotland and Wales. The scandal threatens the future of Northern Ireland’s first minister Arlene Foster, leader of the Democratic Unionist Party (DUP). She was the minister responsible when the scheme was set up in 2012. It was intended to boost renewable energy, but critics say Mrs Foster and her officials did not cap costs.
Businesses that signed up could receive £160 from the government for every £100 they spent on fuels, such as wood pellets, burnt in biomass boilers. As people spotted the gains to be made, there was a surge in applications and costs spiralled.
Flaws in the scheme were exposed by a whistleblower who said businesses were buying biomass boilers solely to collect the subsidy. The whistleblower alleged that one farmer expected to make £1 million over 20 years for using a biomass boiler to heat an empty shed, while heating a number of empty factories would net their owner £1.5 million.
Northern Ireland’s auditor-general, Kieran Donnelly, says the RHI had “serious systemic weaknesses from the start” because it did not have the built-in spending controls imposed on a similar scheme in Great Britain. He added that the scheme was vulnerable to abuse and possible fraud.
Mr Donnelly’s report calculated that a business in England could receive RHI subsidies of £192,000 over 20 years if it ran a boiler all year round while one in Northern Ireland might collect £860,000.
Mrs Foster survived a no-confidence vote in the Stormont assembly last month. But leaked letters have emerged showing that she encouraged senior bankers to view the RHI as “a real opportunity for consumers and investors” and urged the banks to “look favourably” on loan applications.
Full story
Kallanish Energy news, 3 January 2016
While renewables get a great deal of attention – and for good reason — oil is expected to remain the world’s primary energy source through 2040, meeting roughly 33% of demand, according to ExxonMobil’s recently released 2017 Outlook for Energy: A View to 2040.
The use of oil will be driven by need for transportation fuel and feedstock for the chemical industry.
Natural gas is projected to grow the most of any energy type, accounting for 25% of all demand by 2040. Coal will remain important but will lose a significant amount of its share as the world transitions to cleaner energy, ExxonMobil (XOM) projects.
Nuclear energy and renewables will grow about 50% and be approaching a 25% share of the world’s energy mix, according to the Outlook.
“By 2040, world population is expected to reach 9.1 billion, up from 7.3 billion today,” the Outlook states. “Over that same period, global GDP will effectively double, with non-member countries of the Organization of Economic Cooperation and Development (OECD) seeing particularly high levels of economic growth. This means rising living standards in essentially every corner of the world, and billions of people joining the global middle class.”
Economic expansion, coupled with growing numbers of people, will help drive up global energy demand by about 25% by the year 2040, similar to adding another North America and Latin America to the world’s current energy demand, Kallanish Energy understands.
“The world will need to pursue all economic energy sources to keep up with this considerable demand growth,” the Outlook states.
Increasing electrification will drive the growth in global energy demand over the next 25 years, 55% of energy demand growth coming from power generation to support increasingly digital and plugged-in lifestyles, ExxonMobil’s Outlook projects.
Natural gas demand will increase significantly, with the fuel gaining share across all sectors due to its abundance and flexibility.
Evolving natural gas supply and demand will also cause gas trade balances to shift, with North America, Russia, and the Middle East being net gas exporters by 2040.
Asia-Pacific will continue to be the largest gas importer despite growing production, with regional gas demand doubling by 2040. Demand in Europe will also grow as regional gas production there declines. Unconventional gas is expected to account for 33% of total gas production by 2040.
2) Exxon’s 2040 Outlook: Fossil Fuels Aren’t Going Anywhere
OilPrice, 30 December 2016
The global energy mix will not look that much different for oil and gas in 2040, according to Exxon Mobil’s recently released 2017 Outlook for Energy: A View to 2040.
Source: Exxon 2017 Outlook for Energy
Both the middle class and world GDP is expected to double in the next 15 years, accelerating demand for air conditioned homes, cars, and appliances such as refrigerators, washing machines, and smart phones. Non-OECD nations, particularly China and India, will experience the most economic growth, driven by urbanization.
Oil is expected to remain the world’s primary energy source, driven by demand for transportation fuel and feedstock for the chemical industry. Plastics and other advanced materials provide advantages to manufacturers and consumers including energy efficiency gains.
Natural gas is projected to grow the most of any energy type, accounting for a quarter of all demand by 2040. Coal will remain important but will lose a significant amount of its share as the world transitions to cleaner energy.
The World Electrifies
Increasing electrification will drive the growth in global energy demand over the next 25 years, 55 percent of energy demand growth coming from power generation to support increasingly digital and plugged-in lifestyles and electricity will grow the most of any sector.
(Click to enlarge)
Source: Exxon 2017 Outlook for Energy
Natural gas demand will increase significantly, with the fuel gaining share across all sectors due to its abundance and flexibility. Different sectors will use different types of energy based on their economic supply options and suitability to different purposes.
A wide variety of energy types will support electricity generation, with gas, nuclear, and renewables all increasing their share in the mix to offset the decline of coal.
LNG Critical to Supplying Natural Gas Net Importers
Evolving natural gas supply and demand will also cause gas trade balances to shift, with North America, Russia, and the Middle East being net gas exporters by 2040.
Full post
3) U.S. Shale Could Break The OPEC Deal Within Months
OilPrice, 29 December 2016
The U.S. shale industry is ready to return with a bang.
OPEC is currently pumping crude at a record rate yet has managed to fool algos and “experts” into bidding up crude to multi-month highs on “promises” it will cut a little over 1 million bpd in output starting in 2017. Alongside this “agreement”, which Russia and other Non-OPEC nations may or may not join depending on whether OPEC states comply with the cuts (Russia has made it very clear it won’t start cutting for a while in the new year), a problem OPEC has long hoped to avoid mentioning, let alone addressing, has emerged. We are talking, of course, about U.S. shale, the biggest marginal swing producer in the world.
The problem, in a nutshell, is one of clean balance sheets (those companies which had to file bankruptcy, have done so by now, and as a result most now have a far lower All-In Production Cost, not to mention far less debt, and re-energized management teams) as well as one of rising efficiency due to drilling technological advances. Nowhere is this more evident than in this excerpt from Bloomberg:
[A]t 8.8 million barrels a day, the U.S. is already pumping almost as much crude as two years ago, with just a third of the rigs it operated at the peak, data from Baker Hughes Inc. and the Energy Information Administration show.
And while drillers have added about 200 rigs since May, taking advantage of rising prices as talk of an OPEC supply cut circulated, one wonders what will happens to U.S. oil production once the number of rigs returns to its recent historical levels between 1,800 and 2,000?
One thing we do know is that after two years of quietly avoiding the spotlight, the shale industry is ready to return with a bang, and according to Reuters, “U.S. shale drillers are set to ramp up spending on exploration and production next year as recovering oil prices prompt banks to extend credit lines for the first time in two years.”
The credit increase is small, but with major oil producers worldwide aiming to hold down production in 2017, U.S.-based shale drillers are looking to boost market share to take advantage of higher prices, and greater availability of capital will make that easier.
Full post
4) Chinese Coal Industry Sees Earnings Explode In 2016
OilPrice, 28 December 2016
Todd Royal
China recently reported rising coal industry earnings. The Chinese National Bureau of statistics mentioned a growth of “157 percent in the first 11 months of 2016”, while industries such as oil and gas drilling along with power supply saw profits decline in the subsequent period.
This continued use of coal mirrors the rise in coal-fired power plants under construction or completed by China and India, African nations, and many European countries (Germany and Britain are shockingly big users of coal) as well. According to the International Energy Agency (IEA), global coal demand growth is slowing, but at least growing until at least 2020, the equivalent of an increase of 3.8 million-barrels-oil per day. There are reasons why coal will continue to rise in use.
Earnings were so strong in China that factory inflation spiked to a five-year high because of coal, which allowed their manufacturers: “to cut debt, invest more, and delay efforts to reduce excess capacity.” Coal in China and elsewhere continues to make investors and governments money. Yet China has promised to stop increasing emissions by 2030, and attempt to get one-fifth of required electricity from renewables while continuing to rely on coal and other fossil fuels for the remainder of their growing energy needs.
Chinese, Indian, African and European nations will continue to use coal for a simple reason – it is inexpensive – compared to renewables, nuclear, or even natural gas. Very dirty, but very cheap, and that’s what is driving the Chinese and others to use so much coal.
Moreover, economics will drive the debate while mechanisms that were agreed on in the Paris Climate Agreement (PCA) prove to be expensive, hard to quantify, and difficult to pay for in the near and distant future. Leaders in Poland, Australia, South Korea and Japan now believe that new coal plants in the works can meet tough climate regulations through efficiency and new technology.
Full post
5) Britain’s Shale Industry Set To Take Off
The Times, 2 January 2017
Robin Pagnamenta
Three separate fracking projects could crank into action this year as Britain’s shale gas industry finally gets off the starting blocks after years of delay, according to industry chiefs.
Hydraulic fracturing at a site in Kirby Misperton, North Yorkshire, could start within weeks after a judge rejected a legal appeal by environmental campaigners and residents to halt the project, led by Third Energy, just before Christmas.
Activity at the site in the North York Moors could start within weeks. Two other operators — Cuadrilla Resources and iGas — hope that they will be able to start operations at sites in Lancashire and Nottinghamshire this year.
A proposal from Cuadrilla to drill four wells and frack for shale gas at a site near Blackpool in Lancashire is well advanced. Planning consent has already been granted and Cuadrilla hopes to finalise plans for the scheme by the end of this month, said the company’s spokeswoman Jacqui Reid. “We hope that we can finally get going,” she said, adding that she expected fracking to start this summer.
The industry is upbeat about its prospects despite a difficult few years. Hydraulic fracturing was last used in Britain in 2011, when a small earthquake was recorded at a separate Cuadrilla site in Lancashire. That led to a moratorium on fracking, which lasted until 2012, and increased protests about the possible environmental risks.
Ms Reid admitted that it had been a long haul persuading the public that fracking — in which underground rock formations containing gas are fractured using water, sand and chemicals — could be done safely. “Next year is pivotal for the industry,” she said. “We will show that it can be done safely and with little environmental impact. A lot of the myths about fracking can be dispelled.”
Opposition remains intense, with environmental groups fearing that the process could contaminate groundwater and that it is incompatible with fighting climate change. Lynne Featherstone, the Liberal Democrat climate change spokeswoman, said: “Fracking will not help our efforts to tackle climate change, it will do the opposite. The government is heading in completely the wrong direction. It must focus on renewables instead of new carbon-emitting energy sources.”
Claire James, of the Campaign Against Climate Change, rejected the industry’s fracking plans as “pie in the sky”. She said: “There is still a long way to go. There is major local opposition and a lot of reasons why people don’t want fracking in this country.”
Ms Reid said that support within Whitehall remained strong. “Central government remains very supportive of shale gas in the UK. The level of gas imports continues to increase and they feel we should make greater use of our own resources.”
Full story
6) UK Taxpayers Face £1 Billion Bill Over Green Subsidy Scandal
The Times, 3 January 2017
Sean O’Neill and Sean O’Driscoll
A botched green energy scheme that has ignited a political crisis is on course to cost taxpayers more than £1 billion.
The Treasury faces the bill after a massive overspend on subsidies encouraging farmers and businesses in Northern Ireland to run eco-friendly power schemes. The Renewable Heat Incentive (RHI) was supposed to cost £25 million in its first five years but the bill is likely to reach £1.15 billion over 20 years.
The Treasury can claw back £490 million from the block grant to Northern Ireland, leaving £660 million to be financed by taxpayers in England, Scotland and Wales. The scandal threatens the future of Northern Ireland’s first minister Arlene Foster, leader of the Democratic Unionist Party (DUP). She was the minister responsible when the scheme was set up in 2012. It was intended to boost renewable energy, but critics say Mrs Foster and her officials did not cap costs.
Businesses that signed up could receive £160 from the government for every £100 they spent on fuels, such as wood pellets, burnt in biomass boilers. As people spotted the gains to be made, there was a surge in applications and costs spiralled.
Flaws in the scheme were exposed by a whistleblower who said businesses were buying biomass boilers solely to collect the subsidy. The whistleblower alleged that one farmer expected to make £1 million over 20 years for using a biomass boiler to heat an empty shed, while heating a number of empty factories would net their owner £1.5 million.
Northern Ireland’s auditor-general, Kieran Donnelly, says the RHI had “serious systemic weaknesses from the start” because it did not have the built-in spending controls imposed on a similar scheme in Great Britain. He added that the scheme was vulnerable to abuse and possible fraud.
Mr Donnelly’s report calculated that a business in England could receive RHI subsidies of £192,000 over 20 years if it ran a boiler all year round while one in Northern Ireland might collect £860,000.
Mrs Foster survived a no-confidence vote in the Stormont assembly last month. But leaked letters have emerged showing that she encouraged senior bankers to view the RHI as “a real opportunity for consumers and investors” and urged the banks to “look favourably” on loan applications.
Full story
The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.
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