Hydrocarbon Processing - January 2021 - 39

Special Focus

Sustainability
F. KETELAARS, DNV GL Oil and Gas, Houston, Texas

Hydrocarbons face toughest challenge yet

Changing energy demand. The outlook forecasts a single likely future of
the world's energy system, not a range of
scenarios. Slower growth in productivity
and global population, along with continuous increases in energy efficiency,
particularly in transport, will cause global
energy demand to plateau by 2050-unlike the past 15 yr, where it increased by
approximately 30%.
COVID-19 has played its part, as well.
Before the pandemic, the author's company forecast total global energy demand
in 2050 to be 456 exajoules (EJ). However, updated modeling shows that the
pandemic will reduce energy demand by
8% to 2050-and this is nearly the exact
level seen in 2018.
Oil demand will likely never fully recover from market shocks brought on by
the COVID-19 pandemic. The outlook
forecasts that global crude oil demand will

decrease 13% in 2020, reaching a level not
seen since the early 2000s. It will rebound
somewhat to 2023, before gradually declining to half of its 2018 level by 2050 (FIG. 1).
However, while oil demand will decline rapidly in some regions, it will continue to increase in others. Therefore,
continued investments in oil and gas will
be needed to maintain production at the
levels required to meet global demand,
even in a declining market.
The decrease in oil demand will be led
by the transportation sector. The decline
will first be due to the electrification of passenger vehicles-followed by natural gas,
decarbonized and green gas, and biofuels
that are increasingly supplying the energy
for ships, larger road vehicles and aviation.
The Middle East, North Africa, Northeast
Eurasia and North America will account
for 90% of oil supply in 2050 and will be
the only net exporting regions. This will
be caused by a shift from producing " more
oil " to " cheapest oil, " and will put increasing pressure on unconventional onshore
and offshore oil production to 2050.
As the least carbon-intensive fossil
fuel, natural gas will play a prominent role
in the energy transition, taking its place as
the world's largest energy source as of the
mid-2020s. Global gas demand will peak
in the mid-2030s.

Multiple energy transitions. The outlook anticipates that rapid electrification
of energy, along with growth in renewables, will significantly reduce emissions
in the coming decades. Without greater
efforts to remove and adapt to carbonfree operations, the world will miss the
2°C limit for global warming under the
Paris Agreement. The analysis warns that
the current 1.5°C carbon budget will be
exhausted in 2028, with the 2°C budget exhausted in 2051. Extrapolating the
emission trends, this points to a 2.3°C
warming of the planet by 2100.
There will not be just one energy transition to 2050 but several transitions. These
include transitions from fossil fuels to renewables, from coal and oil to natural gas
and from fossil fuels to decarbonized gas.
Carbon emissions are expected to remain high until the mid-2030s, falling approximately 15% to 2035 before dropping
40% to 2050. The scaling of decarbonized
natural gas, along with the enhanced use of
green gas (which is produced using renewable sources), will be key contributors.
The growing awareness of the urgency
and magnitude of the climate change challenge is increasing pressure on the oil and
gas industry to decarbonize. Several major
players have already set net-zero carbon
targets and are shifting from being " big oil "

25
NAM
LAM
EUR
SSA
MEA

20
Units, MMbpd

Over the next 30 yr, the globe's energy
ecosystem-where fossil fuels dominate
and renewables play catch-up-will
evolve exponentially, as efforts intensify
to curb carbon emissions and mitigate
the detrimental impact of climate change.
In 2018, 81% of the world's energy was
supplied by fossil fuels. By 2050, oil and
gas will account for 54% of the world's
primary energy supply, while non-fossil
fuels will comprise 46%.
In DNV GL's latest energy outlook1,
the company forecasts a decarbonizing
world in which energy demand plateaus,
renewables grow significantly, natural
gas becomes the world's largest energy
source and oil demand never reaches the
levels it saw in 2019.
Although the study predicts that,
mid-century, there will still be demand
for hydrocarbons, their role in the energy
mix depend on how quickly diversification and significant carbon reductions
can be achieved.

NEE
CHN
IND
SEA
OPA

10
5
0
1980

1990

2000

2010

2020

2030

2040

2050

FIG. 1. Oil demand forecast, by region, to 2050.
Hydrocarbon Processing | JANUARY 2021 39

Hydrocarbon Processing - January 2021

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