A ‘revolutionised’ energy world
RIYADH: The energy world stands completely revolutionised today, the 2013 Energy Outlook of the US Energy Information Administration (EIA) insists in very explicit terms.
The 8th Administrator of the EIA Adam Sieminski was here in Riyadh last week presenting, ‘EIA’s Annual Energy Outlook 2013 and the future of US domestic oil and gas production’ unveiled only about a month ago, before a packed audience at the IEFS headquarters.
And the outlook underlined in rather explicit terms that growth in energy production is outstripping consumption growth as crude production is set to rise sharply over the next decade. And by 2040, the US should also be producing an additional 8 million bpd – courtesy the tight oil.
Yet despite the rising US domestic production, the EIA stresses that the country would continue to import a part of its requirements by 2040.
However, with one change – Washington would no more be dependent on Middle East for its crude requirements. Canada would be meeting most of the remaining crude needs of the big brother next door then. And in gas terms, US would already be a net exporter by 2020.All this carry huge geo-political implications too.
On the issue of crude price trajectory to 2040, the EIA points to uncertainty. However, the EIA administrator was blunt enough to concede that a market price of $140/150 a barrel was still affordable. Economies can sustain it – he admitted.
And according to the EIA projection, the Opec share into the global liquids market is to creep up slightly to 44 per cent – from 40 per cent in 2011.
Indeed the growing emphasis on efficiency is contributing to the emerging trend. Energy used to generate a dollar of GDP has been going down for some time now. And it continues. New light duty vehicle fuel economy is to touch 50 miles per gallon by 2040, Sieminski
And then, despite issues with pollution, the role of coal in the electricity generation seems continuing, not only in China and the developing world, but in the US too. Though the electricity mix shifts somewhat towards natural gas (courtesy production from shale), coal would continue to stay the largest source of electricity in the US, the EIA
Administrator conceded. Economy planners in Islamabad need to take a serious note of it.
However, Sieminski was also quick to point out an interestingly inverse relationship between coal consumption and the charge levied on carbon. The greater the charge, greater appears the will to generate power from nuclear source – despite the Fukushima debacle.
And while the US has often been criticised for opting out of the Kyoto protocol, the EIA administrator laid out before the audience that the US carbon emission is estimated to be 5.69 billion MT in 2040 – less than 6 billion MT in 2005.How far all these forecasts are to be taken seriously? No one has the Crystal Ball to look into the future of the energy world. At best these are guesstimates. Energy forecasting could be professionally hazardous too, one can’t argue. Many instances could be cited. ‘All such compilations are projections into future,’ Sieminski himself conceded.
And then during the Q&A session, the future of the Strategic Petroleum Reserves (SPR), created in the aftermath of the 1973 Opec oil embargo, came up for discussion. The issue needs the attention of the policy makers in Washington.
The EIA administrator appeared in agreement, stressing that the growing domestic production in the US has, to a very great extent, altered the need of the SPR. However, how to put this to use remains a question.
When asked to comment on the recent Saudi output cut and on the divisive issue of the Keystone XL pipeline, Sieminski was cautious enough to avoid any controversy. After all he has a family to feed too – and – no one likes to be fired, one has to understand. And Sieminski is no exception.