AS I write these lines on the train from Amersfoot to Frankfurt, with white, fluffy snow as far as the eye can see, the world seems engrossed with the deliberations in Copenhagen, with focus on global warming and carbon emission.
However, in the hullaballoo of this entire debate, the very issue of energy poverty appears to have been sidelined. After all it affects the daily lives of billions — and not millions — of people. By 2050 there may be 10 billion people demanding energy — a daunting prospect, considering that of today’s 6.2 billion people, nearly 2 billion “don’t even have electricity — never flipped a light switch, says Keith O. Rattie, the CEO of Questar Corporation. Rattie projects the global energy demand will in fact grow 30 to 50 percent over the next 20 years and there are no near-term alternatives to fossil fuels.
And this is an interesting conclusion — and cannot be overlooked in the idealism that seems to have got hold of some. The fact is that wind and solar power combined are just one-sixth of 1 percent of American energy consumption. Nuclear? The United States and other rich nations endorse reducing world carbon emissions 80 percent by 2050. But Oliver Morton, a science writer, says that if nuclear is to supply only 10 percent of the necessary carbon-free energy, the world must build more than 50 large nuclear power plants a year. Currently five a year are being built.
In fact the issue is where all this energy is going to come from?
In Foreign Affairs magazine, Edward L. Morse, the energy veteran of the Carter administration, underlines that the world’s deep-water oil and gas reserves are significantly larger than was thought just a decade ago, and high prices have spurred development of technologies — a drilling vessel can cost $1 billion — for extracting them. The costs of developing oil sands (Canada contains significantly large resources and some compare it to Saudi Arabia too) are declining, so projects that last year were not economic with the price of oil under $90 a barrel are now viable with oil at $79 a barrel.
Morse says new technologies are also speeding development of natural gas trapped in US shale rock. The Marcellus Shale, which stretches from West Virginia through Pennsylvania and into New York, “may contain as much natural gas as the North Field in Qatar, the largest field ever discovered.”
And playing almost the same tune, the Questar Corporation CEO continues to underline that the US known reserves of natural gas are sure to become larger, exceeding 100 years of supply at the current rate of consumption.
And developments are not taking place in the US only. Good news seems to be creeping in from all over the world. Only last week, Iraq often termed the virgin as far as available crude resources are concerned, was again in the news — courtesy the second round of bidding for its assets. At the end of the two-day process, the Iraqi Oil Minister Hussain Ali Shahristani boasted that the Iraqi crude production would reach 13 million barrels a day by 2013.
Indeed that appears a daunting task to many, yet it could not be rejected outright. After all it is known that Iraqi resources are the least exploited. Hence most agree that if things as desired, Iraqi output will at least reach six to seven million bpd mark. With 115 billion barrels of already proven reserves, Baghdad has the third largest asset base in the world. And currently the country is not even in the top 10 in terms of oil production. The country could easily take its oil production from the current 2.5 million barrels per day to at least 7 million bpd during the next seven years, most believe. And this could mean at least another 4 million bpd in total global output, which already has a surplus cushion of at least 5 million-6 million bpd.
In the meantime, Saudi Aramco is moving ahead too with Manifa — definitely “the largest single offshore crude oil project in Saudi Aramco’s history.” Manifa will comprise 27 man-made islands connected by 41 km of causeway. Moreover, it will produce 900,000 barrels per day (bpd) of Arabian heavy crude, 90 MMSCFD (million standard cubic feet per day) of associated gas, and 65,000 bpd of condensate. Manifa’s crude could constitute as much as a tenth of the current Saudi daily production.
Brazil too is emerging as a contributor. As per available projections, the Brazilian state oil company Petrobras should be able to increase its production to 1.8 million barrels a day over the next 12 years.
BP too recently announced a “giant” oil discovery beneath the Gulf of Mexico.
And thus energy historian Daniel Yergin, says: “careful examination of the world’s resource base ... indicates that the resource endowment of the planet is sufficient to keep up with demand for decades to come.”
Availability is not an issue for the moment. The world is definitely not running out of crude. There is much still to be exploited from under the ground. The issues are often on the surface.