Statoil Sees Gas Rise Over Next 20 Years

Oil and gas will remain the backbone of the global energy mix in the next 20 years, said Statoil’s CEO Helge Lund at the 2013 Autumn Conference, adding that the strong rise of renewables will eventually reduce the share of fossil fuels in the global mix from 82% to 75%.

At the same time, the difficult moment of the market and the competition from other energy sources are also an opportunity. These were the main messages delivered by the panellists of the conference. 

Referring to the 2013 World Energy Outlook recently released, Lund argued that fossil fuels’ reduced shares would be more than offset by the global energy demand rise. The central scenario of the International Energy Agency (IEA) does indeed suggest that global energy demand will grow by one-third in the period to 2035. In this sense, it was argued that gas and oil are needed now more than ever. 

Statoil also pointed to the increasingly important role of natural gas, ‘as more gas at the expense of coal in the energy mix contributes to reducing emission by around 50%.”

But gas potentials have not to be affected by bad practices, explained Lund. In this sense, he underlined the importance of reducing methane emissions and flaring.

"The big question is therefore how to make production cleaner than today, and make consumption more efficient. This is not simply a task for politicians and world leaders, although they play a major role. Industry and the private sector need to be committed and to contribute," Lund commented. 

STATOIL’S INVESTMENTS

Norway-based oil and gas major said its 2014 exploration spending would remain close to this year’s record level of $3.75 billion. According to Reuters, Statoil will focus exploration on Norway, the Gulf of Mexico, Angola and Tanzania.

During the conference, the Norwegian Petroleum Directorate (NPD) added that the industry should prioritize keeping production from the existing fields, rather than working on new developments. 

NPD’s Head Bente Nyland suggested that energy firms should cooperate in the Arctic in order to cope with high marginal costs and significant investments. 

Nyland said she expects Statoil to move ahead with the investment in the $15.5 billion Castberg project. The field in the Arctic Barents Sea was put on hold earlier this year, after the Norwegian government announced a tax hike earlier this year.

According to a note released earlier this month, the Norwegian oil and gas major will continue the exploration campaign in the Barents Sea in 2014 with 5-7 new wells. The company expects to test the potential in the Hoop area and continue exploration drilling around the Johan Castberg discoveries.

RISING GLOBAL DEMAND – INDIA TO OVERCOME CHINA IN 2020s

Despite the difficulties, the panellists called the industry to invest, as the rising global energy demand requires new projects and explorations. 

"Those who argue that we should stop exploring and harvesting existing fields, and block new opportunities are, at best, preparing for a future that doesn't exist - or which will be sustainable for very few. At worst, it is a way forward that will prevent a better and brighter future for millions of people," argued Lund referring to developing countries needing more energy to support their economic growth.

According to Lund, India will take over China in the 2020s as the principal source of growth.

CO₂ FOOTPRINT

The rise of the developing world also implies an increased effort to minimize the CO₂ footprint, said Statoil’s CEO.

"As industry players, we also carry a responsibility to meet our common challenge, look for solutions, and implement and improve our CO₂ footprint. We do not have all the answers. There is not one single solution," Lund claimed.

One of option illustrated by Statoil was a global price on carbon reflecting the real impact of emissions. A global price on carbon would stimulate technologies that can deliver energy with minimum carbon footprint, the company said. 

"Our efforts cover a range of areas on which our progress still varies," Statoil's CEO added. 

According to a note released by Statoil on Monday, the Norwegian company is building on its carbon capture and storage (CCS) experience to position for a future commercial CO₂ business. 

All in all, the message of the Norwegian industry is clear. Gas and oil will be central in the next years, the present difficulties and the future opportunities are two sides of the same coin, while growth has to be compatible with the responsibility of the industry to reduce its footprint. Last but not least, investments are needed now more than ever.

Sergio Matalucci