Some difference of opinion has emerged between two oil and gas heavyweights as to the future of energy supply. According to its annual energy outlook, ExxonMobil, the largest of the oil and gas majors, expects natural gas to surpass coal to become the second-largest global energy source behind oil by 2030.
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Exxon expects oil to supply 32% of the world’s energy needs in 20 years, down from 35% in 2005, while gas will increase its market share by 5%, to 26%, helped by environmental policies that seek to limit CO2 emissions. Coal, on the other hand, will cede 3% of its share, dropping to 21% of the total. It is perhaps not surprising that Exxon is enthusiastic about natural gas: the company became the largest gas producer in the US last year, following a US$ 25 billion acquisition of XTO Energy Inc., and has also invested in the burgeoning shale gas industry. Its bullishness is not, however, universally shared. In marked contrast to Exxon, BP predicts that oil, natural gas and coal will end up with an almost equal share of 26 – 27%. Meanwhile, the US Energy Information Administration predicts that gas will account for only 22% of total energy supply by 2030, remaining in third place behind oil and coal.What is agreed is that energy demand will grow and it will grow most in emerging markets.
Indeed, Exxon predicts that demand growth will come almost exclusively from these markets, where usage will climb 70%. Of these, the largest (China and India) will continue to rely on coal – in pretty staggering quantities. The International Energy Agency (IEA) estimates China will build 600 GW of coal-fired capacity in the next 25 years; Nomura, a Japanese bank, puts this rise stronger and quicker – 500 GW by 2015. India will be the biggest importer of coal by 2015. As Gregory Boyce, chairman and CEO of Peabody Energy, argues in the first in a new series of Industry Views, coal is “the only baseload fuel with the scale, abundance, reliability and cost profile” to meet the world’s growing energy needs. The figures from China and India certainly back this up.