Fossil fuels are not yet extinct, says Shell
By Matthew Magee
WITH oil prices hitting new record highs, a major oil industry executive has warned that the world will still be reliant on fossil fuels for the majority of its energy in 2050.
Greg Lewin, chief executive of Shell Global Solutions, the oil giant’s technology and research company, predicts that in 2050, 60% of the world’s energy needs will come from hydro carbons – principally oil, coal and gas.
US crude oil rose on Friday to within just 20 cents of its record $62.10 price, while January 2006 futures hit an all-time high of $64. Prices rose on fears that Hurricane Dennis would disrupt US supplies.
Price pressure also resulted from a warning from OPEC that it will be unable to meet energy demand in 10 to 15 years’ time.
OPEC reportedly told oil industry leaders that it would be unable to meet the 50 million barrels of oil a day demand predicted for 2020.
Lewin said: “Far from being in decline, the fossil fuel industry is a growth industry.
“Meeting this growing energy demand involves us searching for new processes that use fossil fuels in a more environmentally-responsible way over the next few decades.” Lewin will outline his view of how Shell and others can eke more energy from fossil fuels to the World Congress of Chemical Engineers, which opens today in Glasgow.
The Congress, which will be attended by Princess Anne, runs until Thursday.
Leewin added: “By the time this year’s new [chemical engineering] graduates are in their early 40s, the International Energy Institute predicts that more unconventional hydrocarbons, such as oil sands and shales, could be producing over 10 million barrels per day. We are focusing on reaching for the prize of clean, green fossil fuels.”
A Morgan Stanley Commodities Outlook last week predicted that even if demand moderates to 1.5% per annum, as it predicts, because of oil depletion of 5% there is a need for the discovery of 28 million barrels per day of new oil, which it says is unlikely. “Great hopes of new oil finds are not coming in,” said the report.
High prices show no indication of curbing demand, which hit 9.7 million barrels a day last weekend in the US.
Demand in the US is currently growing by 2.7% a year. Last year growth for 2005 was predicted to be between 1% and 2%. Supply disruption in the US is a major fear and the hurricane season is well underway.
Hurricanes off the east coast disrupt oil platforms most years, and some US oil firms have recalled staff and halted shipping. On Friday, Florida declared a state of emergency as Hurricane Dennis approached. It was due to hit the Gulf of Mexico over the weekend.
Last year the US government had to issue refiners with 5.4 million barrels of crude to secure supply. Those barrels are returned to the government reserve once the hurricane threat has passed.
Morgan Stanley’s report points out that the industry may not be well enough equipped to deal with mounting demand. The report said the industry has allowed chronic under- investment to affect infrastructure, and the situation is not improving.
Several price records were reached in London and New York on Friday. The jump in price came after oil futures eased in the wake of the London bombings on Thursday.
Mirroring sharp dips in equity markets, oil futures fell in the US from $62 to $57. Brent crude prices fell by 8.5%.
Analysts are not predicting the kind of sustained downward price pressure that the air industry slump caused in oil prices in the wake of the September 11 2001 attacks in the US. Friday’s price recoveries back that analysis.
Lewin said that Shell will be investigating how to produce energy from alternative hydrocarbon sources.
Other scientists are looking for alternative, renewable sources of energy, but there are doubts about how quickly renewable energy can achieve the power capacity of hydrocarbons, and about the reliability of renewables .
However, a second paper to be delivered to this week’s Chemical Engineering Congress predicts that 50% of 2050’s energy will come from renewable energy sources.
Hans Muller-Steinhagen will argue that a highly industrialised society such as Germany will be able to supply as much as half of its energy from renewable sources by that date.