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A Look into the Crystal Ball? ExxonMobil representative details energy outlook for the next quarter-century
by Christopher Clukey

Energy cost and availability is a critical concern for everyone in the agriculture sector, where fuel costs have such a direct effect on the price of products and the products themselves may be the answer to many energy challenges. For this reason, ExxonMobil’s Manager of Midwest Public Affairs, J. Patrick McGinn, presented a report on the energy outlook through 2030 to the Grain and Feed Association of Illinois at their recent convention. Below is a summary of the trends ExxonMobil is seeing on the world markets.

Strong growth will continue, especially in Asia

According to projections presented by McGinn, America’s GDP will reach $22 trillion in 2030 and the combined GDP of nations in the Asia-Pacific region will be at the same level. Not surprisingly, China is projected to become the largest Asian economy with a GDP of $7.4 trillion and rising at 6.3%.

Economic growth translates to a dramatic growth in energy demand

Demand is projected to increase at a rate of 1.7 percent per year over the next quarter century. Current energy demand amounts to 220 Millions of Barrels per Day of Oil Equivalent (MBDOE); ExxonMobil estimates that it will reach 335 MBDOE by 2030, a total increase of 52.3 percent.

There will be modest changes in the energy mix

Most of the energy mix (about 60 percent) will still be oil and gas. Natural gas is the fastest growing segment of the traditional fossil fuels, and McGinn predicts that it will supply about one quarter of world energy demand by 2030. The increased use of clean coal technology will keep coal demand growing at a rate of around 1.7 percent.

Non-fossil power will continue to grow, but relatively slowly

Turning to non-fossil fuels, McGinn noted that wind and solar power are growing at about ten percent each, but that growth is an increase in a very small amount of use. Barring a dramatic change in technology, they will continue to account for a tiny sliver of the energy supply (approximately 1 percent) even in 2030. Hydroelectric power will continue to grow at about 2 percent, nuclear at less than one percent, and biomass (including municipal waste burned for power) at about 1.2 percent.

Carbon emissions will see colossal growth

Due to the high proportion of fossil fuels in the energy mix, carbon emissions will increase dramatically, reaching around 11 billion tons per year by 2030 with about half of the increase resulting from greater electrical power production. Almost all of this carbon increase will come from developing Asia. “In fact,” McGinn noted, “growth in emissions from developing Asia-Pacific’s power generation sector alone is roughly the same as total emissions growth from all sectors of the developed countries.”

Western oil demand peaks, Eastern demand soars

Another comparison between the developing and developed countries showed that oil demand will actually peak in the developed world around the year 2020, with a gradual decline from then until 2030. In the developing countries, oil demand will continue to accelerate steeply, with a huge increase in road use as a larger middle class emerges in these countries. Non-transport uses (heating, power generation, etc.) will also rise dramatically.

Oil demand in transportation may spark innovation elsewhere

As of 1970 the transportation sector percentage share of oil use was in the mid-40s; currently it accounts for 68 percent. This demand tends to “to push non-transportation end uses to alternative energy sources. A more accelerated shift away from oil in the non-transportation sectors could be expected to help ease future oil supply/demand pressure.”

Developing nations acquire millions of vehicles

McGinn said that “developing economies will account for all growth in both light duty fuel demand and emissions.” In 2003, Asia had 55 million cars; in 2030 there will be 420 million cars in Asia, Due to congestion and less efficient vehicles than those in Europe and North America, Asia will outpace the West in carbon emissions and experience a drastic climb in fuel use, from 1.8 to 7.9 MBDOE.

ExxonMobil is betting on hybrids

Moving to the specifics of vehicle types, the ExxonMobil projections indicate that at least through 2030 the best prospects for fuel efficiency lie with hybrids. Using Honda’s Prius II as an example hybrid, all other vehicle types had a greater fuel cost per mile, and only a theoretical hydrogen car developed well into the future had lower emissions. The figures took emissions generated during gasoline refining and the generation of hydrogen fuel into account. McGinn predicted that hybrids would top out at over 80 miles per gallon if the most advanced internal combustion engines were adapted to hybrid use. “Specifically,” he said, “we expect, that HCCI or Homogeneous Charge Compression Ignition, a technology designed to offer the fuel economy of a diesel engine with the lower emissions of gasoline, will ultimately replace the conventional internal combustion engine in hybrids.” For this reason and the relatively high cost of manufacturing hydrogen for fuel, hydrogen cars don’t figure significantly in ExxonMobil’s 2030 outlook.

Natural gas is the fastest growing energy source

Natural gas demand will grow at over two percent per year between now and 2030. Again, the Asia-Pacific region will be a source of heavy demand, and they will have to import most of their natural gas. About 75% of the increase in demand will come from developing countries, and McGinn noted “it’s also expected to greatly increase its share in energy trade as "globalization" of the gas markets occurs.”

Currently known oil supplies are several times larger than what has already been tapped.

According to ExxonMobil figures, the oil produced so far adds up to about one trillion barrels. It’s estimated that there are six to eight trillion barrels of conventional crude and three trillion barrels of shale oil available. There is also enough extra heavy oil and oil sands to yield about one trillion barrels.

Technology advancement will be critical to meeting demand and reducing emissions

As demand increases, ability to drill for oil and natural gas is expected to keep pace. When offshore drilling began, a rig drilling through 50 feet of water was considered a great technological accomplishment. Today, drilling in water well over 4,000 feet deep is commonplace and some rigs have gone past 10,000 feet. On land, a single rig can drill multiple wells and reach horizontally through the earth to tap oil reserves up to six miles away. Energy experts are hopeful that new and developing technologies will make resources easier to find and easier to exploit.

ExxonMobil has also worked at reducing greenhouse gas emissions by partnering with Toyota, General Electric and the energy company Schlumberger to fund the Global Climate and Energy Project (GCEP) at Stanford University. GCEP is an effort to find technologies that can greatly reduce greenhouse emissions while being commercially viable and useful to the developing world as well as the industrialized nations.

In summarizing the conclusions, McGinn added, “In the long term, the energy mix will evolve with opportunities increasing for scalable and viable options, such as coal, nuclear and biofuels.”

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