ENERGY 20 YEARS FROM NOW

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ENERGY 20 YEARS FROM NOW

Shale Gas Will Dramatically Change The World’s Energy Outlook

The shale gas revolution, which has already transformed the United States and Louisiana into manufacturing powers, will vastly alter the world’s energy landscape by 2035, a BP executive said recently.

Shale production will help make the United States a net exporter of natural gas in 2018, with exports growing to 10.6 billion cubic feet per day by 2035, said Mark Finley, general manager, global energy markets and U.S. economics, for BP.

Increases in U.S. oil production in the last two years were among the largest in history. “The numbers here are staggering,” Finley said.

Last year’s increase was the fourth-largest ever worldwide. Only Saudi Arabia has ever increased production by a greater amount.

U.S. shale gas production will grow an average of 4.3 percent between 2012 and 2035, Finley said. U.S. gas production will increase by 45 percent overall during that period.

That production will also allow the U.S. to become a net exporter of liquefied natural gas in 2016.

“The arrival of U.S. LNG exports at scale has a profound impact on global LNG markets, contributing to a shake-up in the structure of LNG supplies,” Finley said.

By 2035, U.S. LNG net exports are expected to reach 11.2 billion cubic feet per day. By then the United States will have overtaken Qatar, now the world’s largest LNG exporter, and trail only Australia in LNG exports.

Finley was one of the speakers at the Grow Louisiana Coalition “Energy Outlook 2035” forum, which was recently held at the LSU Center for Energy Studies. The coalition is one of the pro-oil-and-gas industry groups formed to promote the positive impacts of the energy industry on Louisiana and its residents. The coalition has organized a series of meetings across the state to push its message.

In his presentation, Finley said the 2035 energy picture will be quite different than that of today. Oil will supply most of North America’s transportation needs through 2035, but oil and gas purchases for conventional vehicles will account for just 26 percent of total sales. Full hybrids will account for 24 percent of sales, with mild hybrids accounting for 38 percent. Plug-in vehicles, including fully electric, battery-operated automobiles, will make up 11 percent of sales.

Mild hybrids typically use electric motors as a power booster for an internal combustion engine. Full hybrids, such as the Toyota Prius, typically use their electric motors the entire time the vehicle is running.

Fossil fuels will continue to dominate as the primary fuels of vehicles, and will constitute 81 percent of the energy market. But for the first time since the Industrial Revolution, there will be no single dominant fuel for industry overall.

Meanwhile, renewable energy, including biofuels, will grow from 2 percent to 7 percent of the overall sources of energy, overtaking nuclear power by 2025 and equaling hydropower by 2035.

The United States will experience the largest non-OPEC oil supply increase, at 3.6 million barrels per day. Canada will be second at 3.4 million barrels. Those gains will be largely driven by shale oil production.

By 2035, the United States will be importing less than 10 percent of its daily oil needs — that is, fewer than 1 million barrels of oil per day. In 2005, the U.S. imported more than 60 percent of its oil, or more than 12 million barrels per day.

China, which will pass the U.S. as the world’s largest importer in 2015, will be importing 14 million barrels of oil per day, or 75 percent of its supply.

Power generation will continue to consume much of the energy produced. In 1965, 30 percent of primary energy was converted to electricity; in 2012, the amount was 42 percent. In 2035, that will grow to 46 percent.

Coal will remain the largest source of power globally. But natural gas will be the major source of power in the Organization for Economic Cooperation and Development Countries, the U.S., Canada and 18 European countries.

natural gas

Petrochemical Industries Plan For Cheap Gas

Petrochemical companies are making multibillion-dollar bets that they will profit from the abundant cheap natural gas pouring out of shale-rock formations across the U.S.

Making sure those plans pay off was a focus of the recent World Petrochemical conference in Houston.

Natural-gas prices have plummeted in recent years as a new wave of supply has been unlocked from Texas to Pennsylvania through technological advances, including horizontal drilling and hydraulic fracturing.

The low prices have been tough on some oil and gas companies’ bottom lines. But the trend has given chemical and plastics producers a reason to expand in the U.S., creating jobs and reviving a sector of the economy that some people had written off.

The manufacturing renaissance sweeping across the U.S. is a shift from the turn of this century, when it seemed unlikely that many new petrochemical plants would be built in places such as the coastal region near the Gulf of Mexico. So says Dave Witte, general manager of IHS Chemical, an energy consulting group.

The assumption as the new millennium began was that new petrochemical plants, and the associated investments in plastics, rubber resins and metals manufacturing, would be centered in Asia and in countries outside of Asia that are rich in natural gas, such as Iran.

“There’s [now] a lot more interest in what’s happening [in the United States], and people are coming here to figure that out,” Witte said, pointing to the record attendance at the conference.

Executives from such big international players as Dow Chemical Co., Exxon Mobil Corp.’s XOM chemical operation and German chemical conglomerate BASF BAS made presentations at the event.

Much of the petrochem boom they were talking about relates to gases and liquids, including ethane, that are pumped out of the ground and are processed into chemicals that are then made into products ranging from plastics and antifreeze to cosmetics. Among the new petrochemical projects that are under way are several being engineered by Sasol, Dow Chemical, Phillips 66 and others. The projects involve the building of 48 factories and a number of plant expansions. All this new industry comes thanks to the plentiful natural gas now available in the U.S., the American Chemistry Council said.

The combined price tag for all that new construction is more than $100 billion, the council said.

IHS Chemical estimated that $125 billion in petrochemical investments related to U.S. shale gas have been announced, with more likely to come.

In an about-face, the U.S. is drawing foreign manufacturing investments, Witte said. Inexpensive gas is luring Canada’s Methanex Corp. to pack up its one-million-ton-a-year methanol plant in Chile and move it to Louisiana at a cost of $550 million.

All that building could cause construction costs to balloon as companies compete for a limited supply of labor and materials, particularly in Gulf Coast states, according to IHS.

The resurrection of U.S. manufacturing in the service of developing the chemical sector and pumping more oil and gas — including the fuel needed for building machinery and fabricating steel and iron — is breathing new life into major metropolitan areas, according to a recent IHS report that was commissioned by the U.S. Conference of Mayors.

From 2010 to 2012, energy-intensive manufacturing sectors added more than 196,000 U.S. jobs and increased real sales by $124 billion in the nation’s metro areas, according to the report.

Steel plants across Indiana’s Rust Belt, and other plants from Birmingham, Ala., to Knoxville, Tenn., to West Mifflin, Pa., have seen significantly increased orders for metal.

And machinery-sector growth all but exploded between 2010 and 2012, with Houston leading the way. Other big winners in the huge boost included Chicago, Detroit, Los Angeles and Milwaukee, the report said.

“That means jobs,” said Lansing, Mich., Mayor Virg Bernero. “There are still people who need jobs, and advanced manufacturing is the ticket.”

   — Provided courtesy of the Louisiana Oil and Gas Assoc.