WORLD ENERGY OUTLOOK 2001 - INSIGHTS
Assessing Today's Supplies to Fuel
Tomorrow's Growth
Dr. Fatih Birol
Head, Economic Analysis Division
International Energy Agency / OECD
World
Energy
Outlook
2001
Insights
World Energy Outlook Series
• World Energy Outlook 1998
• World Energy Outlook 1999 Insights
Looking at Energy Subsidies: Getting the
Prices Right
• World Energy Outlook – 2000
• World Energy Outlook – 2001 Insights
Assessing Today’s Supplies to Fuel
Tomorrow’s Growth
• World Energy Outlook – 2002 (forthcoming)
• World Energy Outlook – 2003 Insights
Global Energy Investment Outlook (planned)
World
Energy
Outlook
2001
Insights
Why this study?
• growing concerns over energy security, resource
availability, supply costs and investments
Objectives
• identify and analyse factors behind medium/longterm energy supply trends
• cost drivers at global and regional levels backbone of the study
• ‘fuel-neutral’- no recommendation for fuel mix
• no new set of projections
World
Energy
Outlook
2001
Insights
Outline of the Study
Executive Summary
I. Background to the Study
II. Oil
III. Gas
IV. Coal
V. Renewables
VI. Nuclear Fuels
VII. Beyond 2020
World
Energy
Outlook
2001
Increase in Total World
Energy Production
Insights
5,000
Mtoe
4,000
3,000
OECD
Non-OECD
2,000
1,000
0
1980-2000
2000-2020
Between now and 2020, nearly all increase in world energy
production will come from outside the OECD
World
Energy
Outlook
2001
Global Oil Supply Outlook
Insights
Main Findings (1)
• Conventional reserves adequate to meet
demand to 2020 and beyond
• More oil will be extracted from existing
reservoirs, and more oil will be found
• Price stability and security of supply will
depend on timely and massive
investment
World
Energy
Outlook
2001
Global Oil Supply Outlook
Main Findings (2)
Insights
• Investment and costs will depend on
‹
‹
‹
sources of supply
upstream technology
government policies and industry
developments
• Much of the long-term supply growth will
come from the Middle East and the FSU
• Unconventional oil could play an
increasingly important role
World
Energy
Outlook
2001
USGS Resource Estimates
Insights
4,000
2000
billion barrels
3,500
3,000
2,500
2,000
1991
1984
1994
1987
940
730
1,500
960
1,000
500
720
0
1.1.81
1.1.85
1.1.90
1.1.93
1.1.96
effective assessment date
Cumulative production
Reserves growth
Remaining reserves
Undiscovered recoverable resources
Year of Publication
Remaining reserves assessments in billion barrels:
1,100 IHS Energy; 1,078 OPEC; 1,051 WEC
Insights
Longer Term Scenarios for
Different Resource Estimates
70
Billion Barrels per Year
World
Energy
Outlook
2001
(high) 2047
60
(mean) 2037
50
(low) 2026
40
2 % demand growth
Decline: R/P = 10
30
20
10
0
1900 1925 1950 1975 2000
History
Low (2,248)
2025 2050
Mean (3,003)
2075 2100 2125
High (3,896)
Year of peak production varies with resource estimate and
decline rate assumption
Insights
Impact of Decline Rate on
Investment
120
100
mb/d
World
Energy
Outlook
2001
80
Cumulative new
production required
60
Natural production
decline
Global production
40
20
0
1996 1998 2000 2002 2004 2006 2008 2010
Decline rate assumption 5%; demand growth 2%
Ö around 60 mb/d of additional production capacity
World
Energy
Outlook
2001
Oil Total Supply Costs
Insights
Major Middle East
Producers
Russia
Canada
Unconventional Oil
International Majors
Gas-To-Liquids
outlook
Gas-To-Liquids
0
2
4
6
8
10
12
14
16
$/boe
Major Middle East oil producers have a supply cost
advantage
World
Energy
Outlook
2001
OPEC Annual Oil Revenues
Insights
700
600
$ billion
500
400
300
200
100
0
1997
Low price
2010
Reference scenario
2020
High price
High prices reduce demand, increase non-OPEC and
unconventional oil production and lower OPEC annual
revenues
The 20 Largest Oil Producing
Companies
World
Energy
Outlook
2001
Insights
50
45
40
35
Others
41%
mb/d
30
25
97%
20
15
59%
10
5
?
Companies
Owned by OPEC
Countries
3%
0
1972
2000
2020
The majority of the Top 20 oil production is now operated by
companies owned by OPEC countries.
World
Energy
Outlook
2001
Insights
Growing Oil Import Dependence in
Asia
1975
1999
2010
OECD Pacific
92
90
92
China
0
28
61
India
58
62
85
(%)
In all key Asian regions, reliance on imported oil, in particular
from the Middle East, will increase significantly.
World
Energy
Outlook
2001
Global Gas Supply Outlook
Insights
• Gas markets poised for rapid growth
• Resources are abundant..
• ..but getting the gas to market could
involve rising costs
• Costs will depend on
‹
‹
‹
distance to market
upstream and transport technology
government policies
• New supply chains will promote
market integration
World
Energy
Outlook
2001
Proven Gas Reserves
Insights
56.7
7.7
6.4
58.5
11.6
14.9
8.2
World total: 164 tcm at 1 January 2001
Ultimate remaining resources (including
proven reserves) are an estimated 453 - 527 tcm
World
Energy
Outlook
2001
Gas Transport Costs
Insights
Distances between reserves and markets
Labour, rights-of-way and siting costs
Pipeline Costs
Stronger steels
HP technology
Deepwater pipe-laying
LNG Costs
Larger trains
High-efficiency turbines
de-bottlenecking
Transport costs likely to rise in many cases as
supply chains lengthen
Insights
Europe: Increase in Natural Gas
Transportation
3,500
Trillion Cubic Meters - km
World
Energy
Outlook
2001
3,000
2,500
2,000
1,500
1,000
500
0
2000
2020
Gas transportation distance will increase and security will
become more important.
World
Energy
Outlook
2001
A Global Gas Market?
Insights
Potential New Gas Supply Chains
Europe
North America
FSU
Latin America
Asia/Pacific
Africa
Pipeline
Middle East
LNG
Expanding pipeline networks and new LNG projects
will promote regional & global gas market integration
World
Energy
Outlook
2001
Insights
Global Coal Supply Outlook
• Coal remains the largest energy source for
power generation
• Vast and widely dispersed coal reserves
contribute to energy price stability and
energy security
• Productivity improvements and
competition keep coal supply costs stable
• Environmental concerns pose the greatest
challenge to future coal supply
• Sustained investment in CCT are crucial to
future of coal
World
Energy
Outlook
2001
Insights
Proven Coal Reserves
Middle East
Africa
Latin America
South Asia
East Asia
China
Transition Economies
OECD Pacific
OECD North America
OECD Europe
0
50
100
150
200
billion tonnes
1999 Reserves
250
300
1978 Reserves
Strong proved coal reserve growth closely correlates with
strong coal production growth, which has occurred in
regions with competitive commercial coal industries
World
Energy
Outlook
2001
Global Coal Productivity
Insights
4.5
1000 tonnes/miner/year
4.0
3.5
3.0
2.5
2.0
1.5
1.0
80
85
90
92
94 95 96 97 98 99
Advanced technology and economies of scale have reduced
supply costs through improved mining productivity
World
Energy
Outlook
2001
Coal Productivity
Insights
1000 tonnes/miner/year
12
10
8
6
4
2
Commercial
Subsidised
China
India
Germany
Poland
Russia
United Kingdom
South Africa
Colombia
Canada
United States
Australia
0
Developing
Advanced mining technology and management in key coal
producing countries will ensure future productivity growth
World
Energy
Outlook
2001
Coal Prices
Insights
• Less dependent on long-term contracts
• Rapid evolution of steam-coal spot
market
• More flexible pricing mechanisms
• Sustained price increases unlikely →
‹
‹
diverse availability of competitivelypriced coal
relative ease of market entry/exit for
producers
Impact of Environmental
Policies
World
Energy
Outlook
2001
Insights
1 000
900
gCO2/kWh
800
700
600
500
400
300
Conventional
Supercritical
Ultrasupercritical
PFBC
IGCC
CCGT
Future investments in coal supply hinge upon improvement
of environmental performance
World
Energy
Outlook
2001
Insights
Global Renewable Energy
Supply Outlook
• Resources are plentiful but present
economic potential is limited
• Environmental protection and security of
supply are the largest benefits
• Substantial cost reductions will be
required
• Economics could improve if benefits are
reflected in costs
• Government support will be necessary
World
Energy
Outlook
2001
Insights
OECD Renewable
Electricity Generation
2020
1999
3%
10% 2% 1%0%
8%
1%
13%
75%
87%
1 921 TWh
1 471 TWh
Hydro
Bioenergy
Geothermal
Wind
Solar, Other
Most renewable energy is hydro, but the shares of wind,
bioenergy and solar will increase
World
Energy
Outlook
2001
Insights
Renewable Electricity
Cost Assessment
Current Cost
Bioenergy
Wind onshore
Wind offshore
Solar PV
Solar Thermal
Geothermal
Hydro
Cost Reductions by
2020
High
10%-15%
Relatively low
15%-25%
High
20%- 30%
Very high
30%-50%
Very high
30%+
High
10%
Relatively low (higher
10%
for mini-hydro)
The cost of renewables will continue to fall but the rate
and timing are uncertain
Generating Costs
World
Energy
Outlook
2001
OECD Europe
Insights
2
1
0
2000
2010
Fossil fuels
Onshore high wind
Offshore high wind
Offshore low wind
2020
Onshore low wind
Wind may compete with fossil fuels within the next decade
but intermittence and site availability could limit development
World
Energy
Outlook
2001
PV Generating Costs
Insights
70
cents/kWh
60
50
40
30
20
10
0
10
12
14
16
18
20
22
24
26
Capacity factor (%)
Current cost
50% Reduction
30% Reduction
70% Reduction
PV is capital intensive and large cost reductions are
necessary for it to become competitive
World
Energy
Outlook
2001
Insights
Uranium Supply Outlook
• Abundant reserves
• No security of supply concern
• Key factors affecting supply
‹
‹
‹
Demand for nuclear fuel
Secondary supplies of uranium
Future production in FSU countries
• Government policies are key
World
Energy
Outlook
2001
Beyond 2020
Insights
• Technology advances will affect choice
& cost of future energy systems
• Key long-term supply uncertainties:
‹
‹
‹
‹
oil - recovery rates & unconventional oil
gas - transport costs & hydrates
coal - combustion technologies (demand)
renewables & nuclear - costs and
environmental impact/policies
• Hydrogen & carbon capture could
revolutionise energy supply
WORLD ENERGY OUTLOOK 2001 - INSIGHTS
Main Conclusions
World
Energy
Outlook
2001
Fuelling Tomorrow’s World
Insights
• Proven energy reserves can meet
demand to 2020 and well beyond
• The principal uncertainty in the
energy supply outlook is cost
‹
‹
‹
technology will lower costs
but rising demand will have to be met by
more distant reserves
government policies matter too
• Prices will also influence timing and
amount of investment
World
Energy
Outlook
2001
Insights
Massive Investment will
be Needed
• Acquiring capital for the expansion of
energy infrastructure is a major challenge
• Non-OECD countries will need the bulk of
investment
• The lowering of market barriers will
stimulate investment
• Increased FDI and partnerships reduce
investment risk and cost of capital
World
Energy
Outlook
2001
Insights
International Trade and
Supply Security
• Trade in fossil fuels will grow faster
than demand
• Oil - gas trade from Middle East and
FSU to US, Europe and Asia will rise
‹
‹
supply chains will lengthen
security of international sea-lanes and
pipelines will become more important
• Geopolitical implications
World
Energy
Outlook
2001
Role of Government
Insights
Regulatory &
market frameworks
Research &
development
Environmental
policies & measures
Energy security
policies & measures
ENERGY
SUPPLY
International
trade rules
Consumer-producer
dialogue
Government policies will shape the energy-supply landscape