Gas, Nuclear, and Renewables Will Grow the Most, in that Order

The global energy mix will not look that much different for oil and gas in 2040, according to Exxon Mobil’s (ticker: XOM) recently released 2017 Outlook for Energy: A View to 2040.

Oil and Natural Gas will Provide 60% of World Energy by 2040: Exxon

Source: Exxon 2017 Outlook for Energy

Both the middle class and world GDP is expected to double in the next 15 years, accelerating demand for air conditioned homes, cars, and appliances such as refrigerators, washing machines, and smart phones. Non-OECD nations, particularly China and India, will experience the most economic growth, driven by urbanization.

Oil is expected to remain the world’s primary energy source, driven by demand for transportation fuel and feedstock for the chemical industry. Plastics and other advanced materials provide advantages to manufacturers and consumers including energy efficiency gains.

Natural gas is projected to grow the most of any energy type, accounting for a quarter of all demand by 2040. Coal will remain important but will lose a significant amount of its share as the world transitions to cleaner energy.

The World Electrifies

Increasing electrification will drive the growth in global energy demand over the next 25 years, 55% of energy demand growth coming from power generation to support increasingly digital and plugged-in lifestyles and electricity will grow the most of any sector.

Oil and Natural Gas will Provide 60% of World Energy by 2040: Exxon

Source: Exxon 2017 Outlook for Energy

Natural gas demand will increase significantly, with the fuel gaining share across all sectors due to its abundance and flexibility. Different sectors will use different types of energy based on their economic supply options and suitability to different purposes.

A wide variety of energy types will support electricity generation, with gas, nuclear, and renewables all increasing their share in the mix to offset the decline of coal.

LNG Critical to Supplying Natural Gas Net Importers

Evolving natural gas supply and demand will also cause gas trade balances to shift, with North America, Russia, and the Middle East being net gas exporters by 2040.

Oil and Natural Gas will Provide 60% of World Energy by 2040: Exxon

Source: Exxon 2017 Outlook for Energy

Asia Pacific will continue to be the largest gas importer despite growing production, with regional gas demand doubling by 2040. Demand in Europe will also grow as regional gas production there declines. Unconventional gas is expected to account for 33% of total gas production by 2040.

To meet increasing demand, LNG export supplies will need to diversify, with major new exports expected from the U.S., Canada, Australia, and East Africa. North America is expected to become the largest exporter due to growth in unconventional resources.

The LNG market is expected to remain highly competitive due  to abundant resources and many potential exporters, so lower cost supply sources will have the advantage.

Liquids Demand Grows 20%; Don’t Forget About Conventional

Demand for liquids, covering NGLs and all liquid fuels, is anticipated to grow 20% through 2040, with Latin America, Africa, Russia, the Middle East, and the Asia Pacific accounting for the largest increases. Chemical demand is expected to increase in all regions.

Oil and Natural Gas will Provide 60% of World Energy by 2040: Exxon

Source: Exxon 2017 Outlook for Energy

As with gas, Europe and Asia are expected to account for the majority of net imports, with the U.S., Middle East, and Russia remaining major exporters

Production from tight oil, deep water, and oil sands reserves will grow to account for over 25% of the liquid supply, with the U.S. producing the majority of all tight oil in 2040. However, continued investment in conventional crude and condensate will also be required to offset the decline in existing fields.

Exxon estimates that continued demand for liquids through 2040 will require upwards of $450 billion to meet demand. A lack of investment will cause liquids production to decline steeply and 80% of the current new liquids supply is needed to offset natural declines.


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