Petroleum++: The Expanded Scope of the Industry and Our Role in It

Abstract

The expanded scope of our industry as it evolves means that members of the petroleum engineering profession will enjoy a long, rewarding career. At the same time, we need to continue developing our competencies to enable expected contributions in producing new forms of energy resources and mitigating climate change concerns, as well as the constant changes and advancements in our traditional role of producing oil and natural gas. Based on the projections of multiple groups including the US Energy Information Administration (EIA), the International Energy Agency (IEA), and several international and national oil companies, it is clear the world energy demand will continue to grow into the 2040s. Lower-carbon sources will be the fastest-growing among the various sources of energy, demand for oil will continue to increase at least into the 2030s, and demand for natural gas will continue to grow into the 2040s. The latest projection from IEA (October 2022) illustrates these points. For example, as I am writing this column, Norway approved more than $18 billion investments to develop 19 oil and gas fields. Consensus also appears to indicate that policy will influence the speed of change of the energy landscape, that energy transition will vary by region, and that the pace of the energy transition will depend on costs, infrastructure, project execution, and geopolitics. This indicates that multiple solutions are needed to satisfy energy demand, oil and gas will remain essential for decades, and technological developments will continue to be needed in all sources of energy and may end up changing the mix of energy sources in the future. Data and projections also show two important points. The required levels of investment to provide the world with its energy needs are lagging, and there will be a shift in the regional demand of energy. Needed investment in oil and gas should be about $900 billion annually. Following the COVID-19 pandemic, when investment dipped to $600 billion, investments have gradually increased but are not yet to the desired levels. For the new energy sources to reach the level needed for IEA’s Net Zero 2050 target, annual investment in the range of $2,600 billion is needed. Right now, this investment is around $1,700 billion. Projections for the regional share of the world economy indicates that Asia will have about 43% of the world economy by the year 2040 (currently at 35%) followed by North America at about 24% (currently at 26%) and the EU and the UK at about 17% (currently at 20%). Shares of Latin America and the Middle East will stay around the current levels of 7% and 4%, respectively, while Africa’s share will increase from about 4 to 5%. The tables show the changes in global primary energy demand as well as the changes in different regions. I obtained the information from the sources cited earlier. However, I converted the values from exajoules (1e18 joule, a measurement unit I cannot relate to) to BOE using a conversion factor of 1 exajoule = 163.45e6 BOE.