I thought it would be interesting to share the view point of the CEO of one of the worlds largest oil companies on the future of energy. On 27 February 2006, Lord Browne, BP's Group Chief Executive, delivered a speech "The changing energy market." The following are a few brief excerpts from the speech. It is suggested that you read the whole speech to totally understand his perspective.
.... So let me offer you four facts, and one conclusion.
The first and most fundamental fact is that the demand for energy continues to increase, driven by population growth and by the gradual spread of prosperity.
Over the last twenty four hours, the world’s population has risen by almost a quarter of million – as it does every day, week in, week out. 10,000 new citizens every hour. ....
The second fact is that the United States, Europe, Japan and now China and India, are all significant importers - of both oil and natural gas.
And in each case the requirement for imports is likely to grow.
The forecast for ten years from now is that, worldwide, 70 per cent of total oil consumption and 40 per cent of all natural gas demand will be supplied through trade.
The third fact is that on the other side of that trading relationship are a very limited number of suppliers.
There’s no physical shortage of the necessary resources. There are many decades worth of available supplies of both oil and gas.
But the resources are concentrated in a very limited number of places.
Within ten years, if nothing changes eighty per cent of all traded oil will come from just three areas of the world – West Africa, Russia and the Middle East and, in particular, from Saudi Arabia, Iran and Iraq.
The Saudis will remain the key swing producers, but by then they will have to be exporting around 15 million barrels a day, and even that figure assumes that both Iran and Iraq are producing and exporting at full capacity. ....
And then there is a fourth fact which represents another longer term reason for insecurity.
That is the fact that the emissions of carbon into the atmosphere are growing by 1.5 to 2 per cent a year.
The science of climate change is incomplete, but the evidence is mounting.
The concentration of carbon in the atmosphere is rising, and moving steadily towards the level at which, on the basis of the best scientific analysis, the balance and sustainability of the climate is at risk. ....
What then is the practical answer?
I think it’s the same as that expressed by a young British government minister 101 years ago. Winston Churchill, an Elder Brother of this organization, said that the key to security of energy supply lay in diversity.
By diversity the only thing Lord Browne really mentioned was more natural gas. He dismissed renewables as being unable to contribute significantly and said that energy independence was not really possible because so much of our economy depended on imports of products derived from fossil fuels. He claims their are no shortage of suppliers, but it is troubling, to say the least, for him to remind us that the world will have to depend on some of the most unstable parts of the world, West Africa, Russia, Saudi Arabia, Iran and Iraq for the majority of its imports. In the US we also depend on Venezuela as a major supplier. But we are fortunate to have reliable supplies from Canada and Mexico. "no shortage of suppliers" seems to mean that he doesn't buy in to the peak oil concept. I also think we have large untapped supplies that will become available as the price of oil increases to the $100/bbl price. The oilsands of Canada are now competitive as should be heavy oil in Venezuela and Russia. By the time oil reaches $100/bbl shale oil should be competitively priced. But what environmental price are we willing to pay for these resources? I believe we will favor oil over the environment, as our standard of living will dictate our choice. I certainly hope that we will impose greater environmental standards than we have imposed on coal mining.
Resource: "The Changing Energy Market", Speech by Lord Browne, BP Group Chief Executive, Trinity House, London, Feb. 27, 2006