World Petroleum Council President Eivald M.Q. Røren is a firm believer that oil and gas will play a central role in our energy future. teXt > Harald Bråthen PHOTO > Nina Eirin Rangøy
"The world needs more and more energy and we will produce it," is the optimistic message from Eivald M.Q. Røren. Hardly anyone has a better overview of the energy situation and energy developments in the world today than the resigning president of the World Petroleum Council and former Senior Executive Vice President of DNV.
"We are facing major challenges and threats which must be dealt with. Four billion people currently survive on less than USD 2 per day. In addition, the world population will probably increase from around 6.5 billion today to just over 8 billion in 2030, i.e. by around 1 percent per year in OECD countries by around 0.4 percent per year and in developing countries by around 1.2 percent.
Based on this scenario, the developed countries must considerably enhance their energy efficiency. With the global economy growing at the rate of just over 3 percent per year, we can assume that the world's primary energy needs will rise from around 11 000 million ton oil equivalents (Mtoe) today to just over 16 000 Mtoe in 2030, representing a growth rate of 1.7 percent per year. This is greater than the increase in population, but less than the rate of growth in the economy. However, it is a total growth of 45 percent, and oil and gas will be central for many years," says Røren.
The impossible will become possible "The world has sufficient fossil resources to manage this," he claims. These developments will require an oil production of around 120 million barrels of oil a day in 2030, compared to 84 million barrels a day at present. Environment-related issues may alter these developments in the direction of much greater transport efficiency, not least in the USA, and the widespread introduction of new fuels, such as hydrogen, which must also to a large extent come from natural gas."
Røren is in no doubt that technology will play a central role in our energy future. The impossible will become possible, it only takes time.
"Just over USD 200 billion will be invested each year in the oil and gas industry until 2030. Around 70 percent of this will be spent on exploration and development, while at least 5 percent will be spent on pipelines and ships. LNG transport will increase tremendously."
Increased utilisation level The oil and gas industry has supplied energy and products to help society develop for many years. Technological developments will be crucial to finding new reserves and utilising these in an increasingly better way. Not only must the production volume increase. The volumes produced by existing fields, equivalent to that produced in the North Sea each year, must be replaced.
"Will the global society manage this?"
"The impossible will continue to be made possible, both in upstream and downstream operations," says Røren. "Upstream, this will take place by increasing the recovery rate, thus improving the use made of resources originally in place. It is not unrealistic to count on the recovery rate being increased from 30 percent (typical 25 years ago) to 60 percent. Better methods for mapping and drilling will be used. This will help to extend the period during which we can find and develop oil and gas."
Maritime transport even more important In the downstream sector, cleaner products and combustion will be high on the agenda. The gathering and storage of CO2 will be a key issue. A lot is to be gained from getting more mileage out of the fuel being used.
Very much will depend on safe logistics. Increasing amounts of the oil and gas produced are being transported on ships. This also means that some places, such as the Straits of Hormuz (currently 15 million barrels/day) and Malacca, are becoming very busy. Currently 45 percent of all the oil transported by sea passes through the Straits of Hormuz. In 2030, this figure will have increased to 66 percent. The tanker fleet will have to be increased considerably by 2030. This makes great demands on the recruitment and training of new seafarers. Waters will also be monitored far more strictly than they are at present. This is necessary to ensure safe transport.
Gas is increasing the most "To how large an extent will new fuels take over?" "The total for fossil energy will increase from just over 80 percent to 82 percent, with gas increasing the most during this period. Nuclear power will increase slightly.
Regionally, it is the developing countries that will increase the most in total consumption, from 38 percent to 48 percent. It is worth noting that it is the transport sector that uses most of the oil supply, and its share will increase from around 50 percent at present to 60 percent in 2030."
China fastest growing consumption
China is the country with the fastest growing consumption of oil and gas. Up to 2030, 21 percent of the increase in world energy will be used to supply China. Coal will still be the dominant energy carrier, but oil, gas and nuclear power will all increase. China will increasingly be a net importer of oil. It currently produces around 3.5 million barrels a day and imports around 2.5 million barrels a day. In 2030, it will import around 10 million barrels a day, like the US does at present.
"We should expect the Chinese economy to be around the size of the North American economy in 2030," says Røren.
"The Chinese transport sector will be particularly in focus. There are currently around 22 cars per 1,000 inhabitants in China. This figure is expected to quadruple by 2030, representing 130 million vehicles compared to 220 million in the USA today. This density will thus still be far less than in Europe and the USA at present. The demand for gas and nuclear power will be particularly strong in the years to come. China is currently the second-largest contributor of energy-related CO2 emissions after the USA. The country will contribute 26 percent of the increase in CO2 emissions by 2030. This is a worrying development for the environment. We have learned that the Earth's atmosphere is not an infinite space where we can throw all our "rubbish". If we are not to choke our own planet, we must start using stronger means including finding better ways of dealing with CO2."
Always political conflicts "How may the world situation affect developments and the stability of the energy supply?"
"Oil has always involved political conflicts. We are mutually dependent, which is why it's important to balance the interests of producers and consumers. The national oil companies will gradually become managers of large resources. The international oil companies will have to strive to gain access to reserves. They may have to make an increased commitment to alternative energy forms, as several majors have done. This is a question of time anyway.
Two-thirds of the world's oil resources are located in OPEC countries, especially around the Persian Gulf. For gas, the picture is rather different, with Russia having the largest reserves, followed by Iran. Russia is an important oil producer, producing around 8 million barrels of oil a day (the second-largest net exporter in the world). This production volume can probably be increased to 11 million barrels a day in a few years' time. However, Russia is even more important as a gas producer. It has around 32 percent of the world's proven reserves, while the Middle East has 40 percent. Russia mainly exports gas to Europe, the USA, China, Japan and Korea. This will increase considerably in the future.
Nuclear power poses a special challenge. A few countries are continuing to expand their nuclear power operations, such as France, Finland, Russia, Japan and China, while many others are reducing theirs. In time, fusion energy may make an impression, but that is a long way into the future. However, I believe that nuclear power may experience a renaissance once it is recognised that other environmental issues are more of a problem."
The oil price an incentive for investments When we ask Røren to predict how the oil price will develop, he is not as certain as he is about production developments.
"Most people is predictions about the oil price will be wrong," he says. "I think it's important to note that the spare capacity in OPEC's production has shrunk considerably over the past few years. It's probably only Saudi Arabia that has any significant amount, around 1.5 million barrels a day, which can probably be increased to 2.0 million barrels a day by the end of 2005. However, we must remember that the increase in annual consumption is almost 2 million barrels a day. Any failure in production somewhere in the world immediately results in a very difficult situation. Uncertainty regarding reserves results in higher prices, as does political unrest as we have seen in Iraq. The global balance is tight, and is reflected in price.
"A common code for classifying reserves is necessary (United Nations Framework Classification of Petroleum Resources), as is transparent and consistent reporting. The Norwegian reporting model is a good example of this," says Røren.
"Most of the oil that is to be produced over the next 20 years will come from non-OPEC countries. This oil must be found and produced in increasingly difficult areas. That costs money, which is why the oil price must also provide incentives for investments in exploration and development and in extra capacity. I believe that OPEC has demonstrated responsibility and carried out a good job of balancing the supply and demand situation. Nonetheless, all the indications are that we will have to relate to continued high oil and energy prices."
Eivald Røren is about to resign as the 11th President of the WPC. Now this 70-year-old bundle of energy who loves skiing and being outdoors is looking forward to spending his days with his family and friends. He is retiring after many years of having the energy world at his feet.