Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on December 11, 2011
From King Coal to King Gas
The 2012 edition of Exxon’s long-term report, released on Thursday, offers an insight into one of the talking points in Big Oil’s boardrooms: the golden age of natural gas. The increasing importance of natural gas is behind some of the tectonic shifts in the hydrocarbon industry, including Royal Dutch Shell’s efforts to brand itself as a gas rather than an oil company; Exxon’s acquisition of US gas producer XTO Energy for $25bn last year; and BHP Billiton takeover in July of US-based gas developer Petrohawk for $12bn.
Exxon believes that over the next three decades natural gas will overtake thermal coal to become the world’s most important source of energy except oil. The company says on the closely watched report that while crude oil will remain the “most widely used fuel” until 2040, overall energy demand will be “reshaped by a continued shift” towards greener energy sources, particularly natural gas. The company goes as far as to predict that the energy market will start to wave goodbye to thermal coal.
The forecast is important not only to oil companies, which are investing billions of dollars in gas production, but also for mining and trading companies such as Xstrata, Anglo American, Peabody Energy and Glencore, whose profitability is closely linked to thermal coal. And it is of interest to other trading houses, such as Mitsubishi and Mitsui, which have poured billions of dollars into gas projects in the Middle East and Russia.
“Less-carbon-intensive fuels, particularly natural gas, gain market share, while coal peaks and begins a decline for the first time in modern history,” the report states. In short, from King Coal to King Gas.
The trend of the report fits Exxon’s investment priorities, but it would be wrong to disregard Outlook for Energy as self-promotion by the world’s largest energy company. The conclusions echo talk by many energy executives, who see a growing role for natural gas in years to come.
It would be wrong, too, to dismiss the importance of thermal coal. The commodity is still the main source of electricity worldwide. According to the US Department of Energy, coal-fired power plants account for more than 80 per cent of the electricity generated in China and India. The trend is unlikely to change in the short term as both countries continue to build conventional coal-fired power plants. Because the life of the generators is about 40 years, the build-up will tie China and India to thermal coal, one of the most polluting forms of energy, for decades to come.
Indeed, Exxon believes that consumption of the commodity will continue to grow for the next 15 years, mostly to generate electricity. After that, it sees an inflection point. “The mix of fuels used to produce electricity will change dramatically, however, as nations shift away from coal in favour of lower-carbon sources such as natural gas.”
3 Comments on "From King Coal to King Gas"
BillT on Sun, 11th Dec 2011 1:53 pm
Another ad for Big Petroleum/Gas. It will never last more than 20 years as we will use more and more gas to off-set the shrinking oil supplies to power vehicles. Coal will last until there is not oil to run the machines that mine it. Then, it too will end. All of these ‘other’ energy sources start in the mines. Every one of them. And mines require huge machines that require oil to be manufactured from ores, mined by these same machines….
Kenz300 on Sun, 11th Dec 2011 2:53 pm
Exxon is promoting Exxon. It does not reflect what is actually going on.
Renewable energy investment is surpassing fossil fuels in new power plants. Electricity from sun power, wind energy, wave energy and biomass had an investment of $187 billion last year compared with $157 billion for natural gas, coal and oil, according to Bloomberg New Energy Finance.
BillT on Mon, 12th Dec 2011 3:58 am
Yes, there is a big investment in ‘renewable’ energy. But, ‘renewable’ is not the correct word, ‘alternative’ is. None of the renewables will be possible after oil is gone. None of them. So, when the windmills wear out and the PV panels are gone, so will the electric we built our consumer civilization on.
By then the nuclear plants will be all mothballed forever as there will be no fuel to run them or new generator equipment to repair or replace the worn out ones. Ditto hydro power. Ditto all of the other ‘renewables’ that require anything to be manufactured to keep them in repair or to replace them.
The wind will blow, the sun will shine, and water will flow, but, we will only use them indirectly as we did prior to the days of coal and oil.