9 February 2004 – ExxonMobil has issued a new report projecting that global energy demand will climb 40 per cent by 2020 but arguing that fossil fuels currently remain the best way to meet the increased demand.
But the combination of increased demand and no significant change in the sources of energy indicates the likelihood of a marked increase in the global production of carbon emissions or “greenhouse gases,” according to the report. Because 80 per cent of the increase in energy use will occur in the developing world, as living standards in those regions improve, ExxonMobil argues that the need for “actions to reduce carbon emissions must include consideration of the world as a whole.”
“Developing reliable, affordable supplies to meet this energy demand will be an enormous challenge,” said Frank Sprow, the company’s Vice President for Safety, Health and the Environment. “Meeting future demand and developing more efficient uses of energy while taking actions to reduce greenhouse gas emissions will make this challenge even greater.”
By 2020, ExxonMobil projects that the world’s consumption of energy will approach the equivalent of 300 million barrels of oil daily. The company expects oil and gas will continue to supply 60 per cent of all energy generated. Although the demand placed on these reserves will increase significantly by 2020, ExxonMobil believes the challenge can be met.
“The conventional resource base is very large and is likely to continue to be the primary source of energy through at least the middle of the century,” according to the report. The report notes that the US Geological Survey’s most recent assessment, conducted in 2000, estimated the conventional recoverable liquids resource base at 3 trillion barrels of oil. Reserves of unconventional resources – extra-heavy oil, oil sands and similar deposits — are estimated by the International Energy Agency at 4.3 trillion barrels. “To put this volume into perspective, less than 1 trillion barrels of petroleum has been produced since production started in the 1800s,” the report observes.
The report projects that new technology will increase the resource base by making recovery more economical. It cites a U.S. Geological Survey finding that improved technologies have increased the total remaining recoverable oil resources by more than 70 per cent since 1980, despite the production since then of more than 400 billion barrels.
ExxonMobil also has high hopes for energy efficiency improvements from improved vehicles and power plants. It projects these improvements at 1 per cent annually, a rate that by 2020 will save more than the oil-equivalent currently consumed daily by all of Europe.
While ExxonMobil is convinced of the potential of improved energy efficiency, it holds out far less hope for the potential of currently identified sources of alternative energy. The company said this is why it has chosen to focus on its traditional oil and gas business, plus LNG, not to invest in alternative energy segments such as wind power and to divest its coal extraction, nuclear and solar energy projects.
“In our view, current renewable technologies do not offer near-term promise for profitable investment relative to attractive opportunities that we see in our core business,” according to the report. “Therefore, we have chosen not to pursue investments in renewable energy options.”
For example, the report states that renewable resources – primarily hydro – account for just 8 per cent of all electricity generated in the United States and project little chance for any meaningful increase in the near future.
In the company’s assessment:
* Wind generation is only economical due to government subsidies, which are in jeopardy.
* Manufacturing of solar photovoltaic technology requires energy equivalent to two years of the device’s output.
* Wind and solar power are intermittent, making them incompatible with the steady requirements of electric power grids.
* Ethanol production “requires substantial land that would otherwise be available for food, forests and other use,” costs twice as much as gasoline, and requires substantial fossil fuel to produce.
* Hydrogen is unstable, explosive and, again, requires the consumption of fossil fuel to produce.
For all of these reasons, ExxonMobil says it has chosen to focus on its core business of oil and gas production while cooperating with the automotive industry on improved energy efficiency and the development of hybrid gasoline/electric vehicles.
While both of these efforts will help to reduce the output of greenhouse gases, more must be done as the world’s consumption of fossil fuels increases, the company acknowledges. Developing natural gas as an alternative to oil and coal, reducing the flaring of natural gas, cogeneration, internal combustion engine research and participation in Stanford University’s Global Climate and Energy Project to develop greenhouse gas mitigation technologies are among the contributions ExxonMobil cites in this regard.