Wednesday, November 5, 2008

Highlights of the IEA report

Next week, the IEA is releasing their new World Energy Outlook. There have been rumors that the IEA was going to break loose of US political pressure and finally be honest about the energy situation. Some of the media seem to have gotten early copies of the report, among them the Financial Times. They published three articles about the report today. I'm posting them in three separate posts. The first is this overview:

Highlights of the IEA report

In a flagship report due to be published next week by the International Energy Agency, the developed world’s energy watchdog doubles its forecast the price for oil will reach by 2030 and predicts the era of cheap oil is over. Below are the report’s highlights.

The Challenge:
“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.”

The Oil Price:
“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over.”

Supply and Investment:
“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.”

“Production continues to outstrip discoveries (despite some big recent finds, such as in deepwater offshore Brazil).”

“Observed decline rates vary markedly by region; they are lowest in the Middle East and highest in the North Sea.”

“Investment in 1m b/d of additional capacity – equal to the entire capacity of Algeria today – is needed each year by the end of the projection period just to offset the projected acceleration in the natural decline rate.”

International versus National Oil Companies:
“The opportunities for international companies to invest in non-Opec regions will diminish as the resource base contracts, eventually leaving the countries holding the bulk of the world’s remaining oil and gas reserves to take on a larger burden of investment.”

“The increasing dominance of national companies may make it less certain that the investment projected in this Outlook will actually be made.”

Emissions and Renewable Energy:

“The projected rise in emissions of greenhouse gases in the Reference Scenario puts us on a course of doubling the concentration of those gases in the atmosphere by the end of this century.”

“Modern renewable technologies grow most rapidly, overtaking gas to become the second-largest source of electricity, behind coal, soon after 2010.”

There was also this sidebar:

The Report in Numbers

On Cost

● $26,000bn – total energy investment needed 2007-2030

● $200 – Nominal oil price in 2030

● 5-7% – percentage of income consumers will spend on oil

● $2,000bn – Opec’s oil and gas export income in 2030, three times as much as in 2006

● $310bn – total amount the 20 largest developing countries spent on fuel subsidies in 2007

On Oil Barrels

● 106m b/d - total oil demand by 2030, up 25 per cent from 2007

● 9% – the natural decline rate of oil fields

● 80% – national oil companies’ share in providing incremental production 2007-2030

On Emissions

● 6°C – global average temperature increase if prevailing emission trends continue

● 75% – China, India and the Middle East’s combined share of incremental carbon dioxide emissions increase to 2030

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