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IEA’s World Energy Report 2008 – executive summary (PDF)
International Energy Agency via ASPO-Australia
The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially. But that can — and must — be altered; there’s still time to change the road we’re on.
It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution. This World Energy Outlook demonstrates how that might be achieved through decisive policy action and at what cost. It also describes the consequences of failure.
… The surge in prices in recent years culminating in the price spike of 2008, coupled with much greater short-term price volatility, have highlighted just how sensitive prices are to short-term market imbalances. They have also alerted people to the ultimately finite nature of oil (and natural gas) resources. In fact, the immediate risk to supply is not one of a lack of global resources, but rather a lack of investment where it is needed. Upstream investment has been rising rapidly in nominal terms, but much of the increase is due to surging costs and the need to combat rising decline rates — especially in higher-cost provinces outside of OPEC. Today, most capital goes to exploring for and developing high-cost reserves, partly because of limitations on international oil company access to the cheapest resources. Expanding production in the lowest-cost countries will be central to meeting the world’s needs at reasonable cost in the face of dwindling resources in most parts of the world and accelerating decline rates everywhere.
… Securing energy supplies and speeding up the transition to a low-carbon energy system both call for radical action by governments — at national and local levels, and through participation in co-ordinated international mechanisms.
Households, businesses and motorists will have to change the way they use energy, while energy suppliers will need to invest in developing and commercialising low-carbon technologies. To make this happen, governments have to put in place appropriate financial incentives and regulatory frameworks that support both energy-security and climate-policy goals in an integrated way. Removing subsidies on energy consumption, which amounted to a staggering $310 billion in the 20 largest non-OECD countries in 2007, could make a major contribution to curbing demand and emissions growth. High international oil prices, by deterring consumption and encouraging more efficient demand-side technologies, push in the same direction, but only at the expense of economic growth and of living standards in consuming countries, both rich and poor.
And some of the alternatives to conventional oil that high prices encourage are even more carbon-intensive. Many countries have made progress in crafting national responses, but much more needs to be done. A new international climate agreement is but a first essential step on the road towards a sustainable energy system; effective implementation is just as crucial. Delay in doing either would increase the eventual cost of meeting any given global climate target.
… The world is not running short of oil or gas just yet
The world’s total endowment of oil is large enough to support the projected rise in production beyond 2030 in the Reference Scenario. Estimates of remaining proven reserves of oil and NGLs range from about 1.2 to 1.3 trillion barrels (including about 0.2 trillion barrels of non-conventional oil). They have almost doubled since 1980. This is enough to supply the world with oil for over 40 years at current rates of consumption.Though most of the increase in reserves has come from revisions made in the 1980s in OPEC countries rather than from new discoveries, modest increases have continued since 1990, despite rising consumption. The volume of oil discovered each year on average has been higher since 2000 than in the 1990s, thanks to increased exploration activity and improvements in technology, though production continues to outstrip discoveries (despite some big recent finds, such as in deepwater offshore Brazil).
… Globally, natural gas resources are large, but, like oil, are highly concentrated in a small number of countries and fields.
… But field-by-field declines in oil production are accelerating…
Globally, oil resources might be plentiful, but there can be no guarantee that they will be exploited quickly enough to meet the level of demand projected in our Reference Scenario. One major uncertainty concerns the rate at which output from producing oilfields declines as they mature.
… We estimate that the average production-weighted observed decline rate worldwide is currently 6.7% for fields that have passed their production peak. In our Reference Scenario, this rate increases to 8.6% in 2030. The current figure is derived from our analysis of production at 800 fields, including all 54 super-giants (holding more than 5 billion barrels) in production today. For this sample, the observed post-peak decline rate averaged across all fields, weighted by their production over their whole lives, was found to be 5.1%. Decline rates are lowest for the biggest fields: they average 3.4% for super-giant fields, 6.5% for giant fields and 10.4% for large fields. Observed decline rates vary markedly by region; they are lowest in the Middle East and highest in the North Sea. This reflects, to a large extent, differences in the average size of fields, which in turn is related to the extent to which overall reserves are depleted and whether they are located onshore or offshore. Adjusting for the higher decline rates of smaller fields explains the higher estimated decline rate for the world, compared with that based on our dataset.
… …and barriers to upstream investment could constrain global oil supply
… Stronger oil company partnerships could bring mutual benefits
… How the structure of the global oil and gas industry evolves in the coming decades will have important implications for investment, production capacity and prices. The increasing dominance of national companies may make it less certain that the investment projected in this Outlook will actually be made. The long-term policies of some major resource-rich countries in support of national goals may lead to slower depletion of their resources.
Oil-rich African countries have no excuse for their citizens’ energy poverty
… The consequences for the global climate of policy inaction are shocking
… The energy future will be very different
For all the uncertainties highlighted in this report, we can be certain that the
energy world will look a lot different in 2030 than it does today. The world energy system will be transformed, but not necessarily in the way we would like to see. We can be confident of some of the trends highlighted in this report: the growing weight of China, India, the Middle East and other non-OECD regions in energy markets and in CO2 emissions; the rapidly increasing dominance of national oil companies; and the emergence of low-carbon energy technologies. And while market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over. But many of the key policy drivers (not to mention other, external factors) remain in doubt. It is within the power of all governments, of producing and consuming countries alike, acting alone or together, to steer the world towards a cleaner, cleverer and more competitive energy system. Time is running out and the time to act is now.
(6 November 2008)
This executive summary of the coming IEA report was released Thursday November 6. The full report is due to be released next week. According to the World Energy Outlook website, the full report is priced at over 100 Euros. -BA
UPDATE (Nov 10, 2008)
At the request of the IEA, ASPO-Australia has removed the executive summary from its website, so the link above won’t work. -BA
UDPATE (Nov 12, 2008)
The executive summary is now available at the IEA website:
Fact sheets, slides and other material are also available at the IEA site
Oil Supplies Will Tighten And Prices Jump, IEA Warns
Neil King Jr. and Spencer Swartz, Wall Street Journal
The world faces mounting uncertainty and escalating costs on the energy front in the years ahead, as companies scramble to find new pockets of oil and squeeze more production from aging fields, the International Energy Agency says in a largely gloomy annual report.
The agency says the recent slump in oil prices won’t last and “current global trends in energy supply and consumption are patently unsustainable.”
The report comes as the global economic downturn continues to shove down oil prices, which hit a high of $147 in July. On Thursday on the New York Mercantile Exchange, U.S. benchmark crude closed down $4.53, or 6.9%, at $60.77 — its lowest close since March 2007.
In its report, the Paris-based agency looks beyond the current economic slump to predict that oil supplies will grow tight again as soon as world energy demand picks back up. Oil prices could top $200 a barrel by 2030, the agency concludes. The IEA represents the interests of consuming nations and often paints a relatively bearish picture of supply.
(7 November 2008)
Agency Predicts a Return of Triple-Digit Oil Prices
Jad Mouawad, New York Times
The global economic slump that has curbed energy demand and pushed oil prices down in recent months may provide only a short-lived respite for consumers, according to the world’s top energy forecaster.
The International Energy Agency, which advises industrialized nations on energy policy, warned on Thursday that the supply shortfalls that pushed oil prices into triple-digit territory this year are far from resolved, and could lead to a new period of high prices.
Oil has plummeted from its summer peak in recent weeks as the financial and economic slowdown reduced consumption. But many analysts believe oil could bounce back quickly once economic growth resumes.
… The findings are part of the agency’s annual World Energy Outlook, which is scheduled to be released next week in full. An 18-page executive summary was made public on Thursday.
… “Globally, oil resources are plentiful, but there can be no guarantee that they will be exploited quickly enough” to meet the expected consumption growth, the agency said.
… The energy agency’s experts have become increasingly alarmed in recent years at the slow pace of development of oil resources. The agency’s report includes an extensive analysis of the world’s 800 biggest oil fields. It found that producers would face a steep path just to keep production from declining.
Part of the problem, the report found, was that decline rates at existing fields were accelerating, meaning that more oil needs to be found and produced to keep global production from falling.
… “The future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply,” the report said.
(6 November 2008)