Approximately 80 percent of today’s global energy supply comes from fossils fuels, 54 percent of which is supplied by oil and gas. Global society’s goal for the near future is to enjoy the same or better quality of life, but with zero carbon emitted.
This presents a set of challenging questions of particular relevance to AAPG members. How will energy demand evolve? How difficult is it to remove oil and gas from the global energy mix? And if they remain part of the mix, what kind of hydrocarbons are we looking for? How important will geological carbon storage be in assisting efforts to reach net zero?
These questions were investigated in a recent paper by the authors entitled, “Demand for ‘advantaged’ hydrocarbons during the 21st century energy transition,” and published in the journal Energy Reports. The results are summarized here.
Energy, from any source, is vital to modern society. It underpins healthcare, education, nutrition, transportation and travel, and has supported societal change through the recent pandemic (for example, by facilitating home working). Indeed, global demand for energy dropped by only 4.2 percent during the first year of the pandemic, according to data from the BP Statistical Review of World Energy – a testament to how deeply ingrained energy use is in our lives.
The subject of energy poverty has been much discussed, not least by past AAPG President Scott Tinker through his important efforts within the Switch Energy Alliance. While global access to electricity, a key form of energy, has improved markedly in recent decades, there are still approximately 3 billion people who have access to electricity at levels that are a tiny fraction of what is enjoyed by developed nations, and another 750 million people have no access to electricity at all.
Eradication of energy poverty is a shared societal goal, but population growth presents a significant challenge. The 2100 global population is expected to be 11 billion people – almost 3 billion more than today. All in all, with a growing population pursuing a higher quality of life, it is inevitable that energy demand will continue to rise. From analysis of an ensemble of energy transition scenarios, the mean value is an expected 17-percent increase in energy demand between now and 2040.
The Evolving Energy Mix
How will that energy be supplied? A “wisdom of crowds” approach is useful to analyze this by considering an ensemble of studies. Many reputable organizations produce energy transition scenarios. These organizations include finance houses, non-governmental organizations and energy companies.
The “energy transition trilemma” is at the heart of these studies. Consumers want energy to meet three conditions simultaneously: it must be sustainable, affordable and secure. Keeping these in balance is a challenge and, accordingly, energy transition scenarios evaluate how resource supply, technology, economics, governmental policies and societal behavior will influence how energy is consumed and supplied.
The replacement of oil and gas by low-carbon energy sources in the manner described is not impossible, but as the figures show, this will take some time, even accounting for technological improvements in energy generation efficiency.
Most organizations produce a range of scenarios, given the uncertainties of controlling factors over the coming decades. Typical scenarios include a “business as usual” expectation, according to which the pace of the energy transition is slow, or a more rapid energy transition in which the controlling factors, such as governmental policy and societal behavior, are aligned to attempt to keep global temperature rise this century to below 2 degrees Celsius from pre-industrial levels, and ideally below 1.5 degrees. From the perspective of hydrocarbon demand, it is most interesting to consider an ensemble of rapid energy transition scenarios and extract a mean scenario for future oil and gas demand from these. We have termed this the “Paris Mean” – a reasonably likely scenario for oil and gas demand in an evolving world pursuing a rapid energy transition in line with the COP21 Paris Agreement on Climate Change. This can be considered as an endmember, with demand unlikely to be less than this, unless new disruptive energies (nuclear fusion, for example) emerge soon.
As might be expected, in this scenario, by 2050 energy supply from a basket of renewables/low carbon energy sources increases markedly from today’s level, largely at the expense of coal. A mean value for the contribution of oil and gas to the global energy mix in 2050 is 37 percent, down from today’s value of 54 percent.
What does that mean in terms the amount of oil and gas that will be required to be produced over the next three decades? The figures are substantial.
In the Paris Mean scenario (figure 2), oil demand will fall by half by 2050, from a value of about 100 Mbbl/day at present to a value of about 50 Mbbl/day. Even so, that equates to the industry supplying the world with more than 943 Bbbl in the next 30 years (figure 3), a figure that is about 60 percent of all the oil that has previously been used.
Gas demand is even more substantial in relative terms. Given its importance as a transition energy source, demand is likely to rise over the next 15 years or so, then fall back to current levels (figure 2). This equates to supplying the world with more than 4,700 Tcf of gas (figure 3), which is 125 percent of all the gas previously used.
Moreover, a substantial portion of oil and gas supply will need to be met by bringing new resources on stream – probably more than 284 Bbbl of oil and more than 2,170 Tcf of gas. Clearly there is much work for the industry to undertake to meet this demand.
These figures may seem surprisingly large, raising the question as to why oil and gas are so difficult to remove from the energy mix. The answers are complex but relate to ensuring security and affordability of supply. A key factor is the energy density of hydrocarbons – they provide a lot of energy from a relatively small amount of source material. Today the world uses 7,758 million tonnes of oil equivalent per year. To replace that with low-carbon energy sources would require an example combination of 737 new nuclear power plants, 12 of the largest-scale hydro-electric facilities, 5.8 billion state of the art photovoltaic cells, 1.1 million state of the art wind turbines and 49,481 large-scale geothermal plants.
In addition to this, overall energy demand will also increase, and that supply from coal (3,838 mtoe) will also have to be replaced by a similar combination of low energy sources. Replacement of existing facilities (closure of existing nuclear power plants at the end of their lifetime, for example) should also be included for consideration.
Note also that the petrochemical uses of hydrocarbons are not included in this assessment of demand – only their energy uses.
The replacement of oil and gas by low-carbon energy sources in the manner described is not impossible, but as the figures show, this will take some time, even accounting for technological improvements in energy generation efficiency. Other brakes on the energy transition include cost to customer (for example, the purchase cost of electric vehicles needs to become the same or less as conventional vehicles), and challenges in meeting the supply of metals for electrification of the energy supply system. For example, the International Energy Authority projects that lithium demand will increase by 4,200 percent over the next 20 years. It is not that this and similar resources (graphite, cobalt and copper, among others) are impossible to find, but that their discovery and extraction will take time.
Not All Hydrocarbons are Equal
Given that even in the Paris Mean scenario, hydrocarbons continue to be a significant part of the energy mix, what can be done to mitigate their contribution to greenhouse gas emissions?
In terms of total lifecycle, GHG emissions from gas are about 25-percent lower than the least carbon-intensive oils. This explains why gas is seen as a key energy transition fuel and why we might expect to see a focus on the search for gas, including large biogenic gas reserves, similar to those recently discovered in the Eastern Mediterranean and Black Sea.
An important consideration is carbon intensity (that is, GHGs produced per barrel equivalent) of the upstream exploitation process. A team led by scientists at Stanford University has shown that the carbon intensity of hydrocarbon production varies markedly around the world. This relates to a number of factors. Fluid type and purity are important. Heavy oil is more energy intensive to extract than light oil. Flaring gas during the process of oil recovery is a significant contributor and needs to be eliminated. Impurities, such as hydrogen sulphide (“sour gas”), can lead to 15-percent higher GHG emissions as compared to conventional gas. Moreover, GHG emissions often increase with the age of a field (figure 4). On average, emissions double with every 25-percent increase in production from an oil field and with every 50-percent increase in production from a gas field.
However, there are a range of values, and it appears that the nature of the subsurface plays a strong role in controlling the energy intensity of production operations. Optimal reservoirs will have high porosity and permeability and have low vertical and lateral heterogeneity. These are easier to produce from, requiring fewer wells and fewer subsurface interventions.
“Advantaged hydrocarbons” is a term that has growing resonance in the industry. It encompasses the costs and economics of upstream operations (leading to a focus on near-field, infrastructure-led exploration for example), which often go hand-in-hand with low-carbon-intensity operations. We may well expect to see companies develop carbon-optimized exploration and production portfolios, with a focus on advantaged hydrocarbons that are both low cost and low carbon intensity to discover and exploit.
This requires a focus on understanding the character of the subsurface, the fluids within it and the application of cutting edge and novel tools for subsurface modelling emphasizing geological plausibility. Given the substantial hydrocarbon demand expected over the coming decades, geoscientists and engineers will need to redouble their efforts to meet this demand, especially if that demand needs to be met by supply from advantaged sources.
Storing the Carbon
The continuing inclusion of (low carbon intensity) hydrocarbons in the energy mix means that anthropogenic CO2 and other GHGs will continue to be released into the atmosphere. Today, annual CO2 emissions from all fossil fuels and cement are 34 gigatons. The Paris Mean trajectory reduces this to 20 gigatons by 2050. A large proportion of CO2 will be captured by natural sinks, which today store 21.6 gigatons per year, but the process can be enhanced by the acceleration of geological carbon storage. The IEA has indicated the need for a massive ramping up in carbon storage volumes. Current levels are less than 100 metric tons per year, which will need to rise to 650 per year in 2030 and 5,266 in 2050. If this occurs, the total CO2 emissions in a Paris Mean scenario will be reduced by 5 gigatons to 15 gigatons per year. Coupled with natural sinks, this gives a possibility of reaching the ambitious net zero targets.
The are several geological options for storing CO2. Use in enhanced oil recovery projects and capture in depleted hydrocarbon fields are typical options under consideration, but to achieve the volumes of storage required in proximity to point sources of emission and capture, saline aquifers ofter huge potential.
Geologically plausible subsurface characterization will be key for these often data-poor rock units, to understand capacity, injectivity and containment.
Geoscientists in Demand
There is little doubt that hydrocarbons will form a significant part of the energy mix over coming decades because of the difficulty in substituting these energy dense-fuels with less energy-dense low-carbon options. Large volumes of oil and gas need to be produced and indeed to be discovered, with a focus on minimal carbon intensity of exploitation. At the same time, geological carbon storage is required to mitigate the continuing use of fossil fuels. Success in these ventures requires superior subsurface characterization. Indeed, many low-carbon energy sources require the same subsurface characterization – be that for hydrogen storage, heat storage or geothermal energy.
One might argue that the real resource of the future is pore space, be that as the host of hydrocarbons or the store for CO2 and low-carbon energy options. Finding and characterizing that pore space means that geoscientists will be in as much demand as they have ever been. It is therefore important that the value of geoscientists as the key workers in meeting global energy demand is understood by society at large. Geoscientists need to be retained and attracted to the discipline – as practitioners we can use a well-informed understanding of the energy transition to help ensure that happens.