American Oil and Gas Reporter - December 2018 - 34

IEA: Governments Will Shape Energy
PARIS-Global energy demand will
increase more than 40 percent by 2040,
the International Energy Agency predicts,
and the world must invest more than $2
trillion annually to develop new energy
sources. IEA's World Energy Outlook
2018 says governments will have a critical
influence in the direction of future energy
systems as geopolitical forces exert new
and complex forces on global markets.
"Our analysis shows that more than
70 percent of global energy investments
will be government-driven and as such
the message is clear-the world's energy
destiny lies with government decisions,"
says IEA Executive Director Fatih Birol.
"Crafting the right policies and proper
incentives will be critical to meeting our
common goals of securing energy supplies, reducing carbon emissions, improving air quality in urban centers, and
expanding basic access to energy in
Africa and elsewhere."
According to World Energy Outlook,
oil consumption will increase in coming
decades because of rising petrochemicals,
trucking and aviation demand, but meeting
this growth in the near term means approvals of conventional oil projects must
double from current levels. Without any
increases in project investment, IEA predicts U.S. shale production, which has
been expanding at a record pace, would
have to add more than 10 million barrels
a day from today to 2025 to meet global
demand. The analysis points out that
would be equivalent to adding another
Russia to world supplies in seven years.
While the geography of energy consumption continues its historic shift to
Asia, World Energy Outlook says it finds
mixed signals on the pace and direction
of change. It notes that oil markets are
entering a period of renewed uncertainty
and volatility, including a possible supply
gap in the early 2020s. Natural gas demand
is increasing, erasing talk of a glut as
China emerges as a giant consumer. IEA
points out the solar photovoltaic industry
continues to improve, but other lowcarbon technologies-and especially efficiency policies-still require a major push.
"Robust data and well-grounded projections about the future are essential
foundations for today's policy choices,"
IEA says. "This is where the World
Energy Outlook comes in. It does not
aim to forecast the future, but provides a
way of exploring different possible futures,
the levels that bring them about, and the
interactions that arise across a complex
energy system."
34 THE AMERICAN OIL & GAS REPORTER

Possible Policies
IEA says World Energy Outlook uses
scenario-based analysis to outline possible
futures for the energy system across all
fuels and technologies, offering contrasting
pathways based on current and planned
policies, and those that can meet longterm climate goals under the Paris Agreement, reduce air pollution and ensure
universal energy access.
Under its current policies scenario,
the agency foresees increasing strains on
almost all aspects of energy security and
a major additional increase in energy-related carbon dioxide emissions.
The new policies scenario broadens
the scope to include policies and targets
announced by governments. While the
picture brightens, the World Energy Outlook cautions there still is no peak in
global energy-related CO2 emissions.
Global energy demand grows by more
than a quarter to 2040 in this scenario,
because of increasing incomes and a
global population growing by 1.7 billion
people, mostly in urban areas.
All of the growth comes from developing economies, led by India. Asia
makes up half of global growth in natural
gas, more than 80 percent of the increase
in oil, 60 percent of the rise in wind and
solar energy, and more than 100 percent
of the growth in coal and nuclear, given
declines elsewhere, IEA says.
Low-carbon technologies, led by renewables, and natural gas meet more
than 80 percent of the demand increase,
the analysis forecasts. Energy demand
increases would be twice as large as predicted if it were not for continued improvements in energy efficiencies, it notes.
Under the sustainable development
scenario, in which accelerated clean energy transitions put the world on track
to meet goals related to climate change,
IEA says the power sector proceeds
further and faster with deploying lowemissions generation technology. Electrification of end-uses grows strongly,
but so does the direct use of renewables-
bioenergy, solar and geothermal heat-to
provide heat and mobility. The scenario
predicts the share of renewables in the
power mix increases from one-quarter
today to two-thirds in 2040.
The Role Of Oil And Gas
Oil and gas will be part of the energy
mix for decades to come, even under
ambitious efforts to reduce greenhouse
gas emissions in line with the Paris Agreement, IEA asserts, noting that minimizing

air pollution, water use and contamination,
and local disruptions are key to reducing
the environmental and social impact associated with producing and consuming
those fuels.
The shale revolution continues to shake
up the world's oil and gas supply, enabling
the United States to pull away from the
rest of the field as the global leader in
production, World Energy Outlook says.
In its new policies scenario, the United
States accounts for more than half of
global oil and gas production growth to
2025-nearly 75 percent for oil and 40
percent for gas. By 2025, it says nearly
every fifth barrel of oil and every fourth
cubic meter of gas in the world will be
produced in the United State, it predicts.
Indirect GHG emissions from oil and
gas operations, including CO2 and methane,
today total 5.2 billion CO2-equivalent
tonnes, the agency says. Those emissions,
which IEA notes do not include any emissions associated with the fuels' consumption, amount to 15 percent of the energy
sector's total GHG emissions. Total emissions from producing, refining and transporting a barrel of oil account for as much
as 30 percent of its full "well-to-wheel"
life cycle emissions intensity, IEA indicates.
For natural gas, that figure is between 15
percent and 40 percent.
"Aboveground practices such as venting
methane emissions, venting CO2 that occurs naturally alongside natural gas, and
flaring of unwanted methane, rather than
the type of oil or gas that is extracted, are
most responsible for where different types
of oil and gas fall along the spectrum.
Tackling these sources of emissions offer
some of the lowest-cost options to cutting
energy-related emissions," IEA suggests.
Other options examined in World Energy
Outlook include electrifying upstream and
midstream operations; installing renewable-based systems in upstream and midstream operations; equipping carbon capture, utilization and storage units at large
point sources of emissions; and injecting
CO2 in enhanced oil recovery operations.
"Countries and companies that can
credibly demonstrate that they are taking
action to reduce their indirect emissions
could reasonably argue that these resources
should be preferred over higher emission
options in a carbon-constrained world,"
IEA argues. "It is crucial for the oil and
gas industry to be proactive in limiting, in
all ways possible, the environmental impact
of oil and gas supply, and for policy
makers to recognize this is a pivotal element
of global energy transactions."
r



American Oil and Gas Reporter - December 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - December 2018

Contents
American Oil and Gas Reporter - December 2018 - Intro
American Oil and Gas Reporter - December 2018 - 1
American Oil and Gas Reporter - December 2018 - 2
American Oil and Gas Reporter - December 2018 - 3
American Oil and Gas Reporter - December 2018 - 4
American Oil and Gas Reporter - December 2018 - Contents
American Oil and Gas Reporter - December 2018 - 6
American Oil and Gas Reporter - December 2018 - 7
American Oil and Gas Reporter - December 2018 - 8
American Oil and Gas Reporter - December 2018 - 9
American Oil and Gas Reporter - December 2018 - 10
American Oil and Gas Reporter - December 2018 - 11
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American Oil and Gas Reporter - December 2018 - 33
American Oil and Gas Reporter - December 2018 - 34
American Oil and Gas Reporter - December 2018 - 35
American Oil and Gas Reporter - December 2018 - 36
American Oil and Gas Reporter - December 2018 - 37
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