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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Is Big Oil Prepared For The Natural Gas Era?

By 2034, natural gas will overtake oil as the main source of energy, and by 2050 it will be the single largest such source globally, satisfying 27 percent of demand. That’s according to the first Energy Transition Outlook by DNV GL, a global quality assurance and risk management services provider for the oil and gas, maritime, and power industries. Gas supply, however, will peak in 2035.

In crude oil, DNV’s report forecasts, supply will plateau between 2020 and 2028, after which it will begin declining steadily. That’s bad news for pure-play oil producers, especially given that the company’s report is conservative, but it would be welcomed by gas suppliers and those like BP and Shell, which are already moving away from oil, investing much more in gas and renewables.

Renewables will be the culprit behind fossil fuels’ decline: by 2050, fossil fuels and renewables will have an even share in global energy supply. This will happen thanks to the quickly falling costs of renewable energy installations, especially solar and wind, which means that the transition from fossil fuels to renewables will take place without any significant hikes in annual energy expenditure.

As solar PV and wind capacity doubles, the costs for each of the two energy sources will fall by 18 percent and 16 percent respectively. DNV says this will bring down the overall cost for global energy from the current 5 percent of the world’s GDP to less than 3 percent. Related: How Long Can U.S. Refineries Remain Offline?

Oil’s biggest enemy is the electric vehicle. Increased adoption of electric cars will be the driver of oil’s demise after 2028. By 2022, DNV estimates, EVs will “achieve cost parity” with internal combustion engines as their cost performance will improve at a much faster pace than the cost performance of ICE vehicles. By 2033, 50 percent of new car sales globally will be EVs.

Although these trends sound optimistic, they won’t be fast enough to help hit the Paris Agreement target of reducing the rate of global warming to 2.5 degrees Celsius by the end of the century.

By Irina Slav for Oilprice.com

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Leave a comment
  • moron on September 04 2017 said:
    " Increased adoption of electric cars will be the driver of oil’s demise after 2028." And how will the electric in electric cars be produced? Magic or out of thin air, or from gas?
  • snoopyloopy on September 04 2017 said:
    A new report from AAA is already showing that outside of depreciation, EVs are way cheaper to operate than their oil-fueled cousins. That will probably change as the word continues to get out about EVs and they will likely be outright comparable by 2019. Also, it's not just electric cars. Trucks, buses, tug boats, and ferries are all going electric too and the bigger ships are going to natural gas. None of that bodes well for the oil industry at all.
  • El Gato on September 05 2017 said:
    Yup, you still need to generate the electricity, and the materials to make the vehicles. And electric motors are no substitute for heavy equipment engines and jet engines. Sorry Charlie, the all electric world is just a fantasy
  • AmityGeo on September 06 2017 said:
    The full length article (available at the link in the body of the article) makes a lot of predictions with little to no basis given, then goes on to discuss global temperatures and carbon dioxide levels in the distant future,. If the global temperature predictions are anywhere near as inaccurate as the past predictions they are nearly meaningless. The article states this inexact "science" as fact, then goes on to extrapolate other predictions on the basis of likely flawed predictions. I can't figure out why anyone would jump to the conclusion that ANY of the predictions stated are anything more than one author or one groups wild ass guess, particularly considering that similar predictions have been dead wrong in the past.

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