Oil and gas currently accounts for close to 50 per cent of total primary energy demand. While the total remaining recoverable resources are estimated to last for almost 200 years, we are facing an annual oil depletion rate of 8 per cent, making it hard to anticipate how we can meet demand that is expected to increase by 28 million barrels a day by 2040.
According to the International Energy Agency (IEA), 42 per cent of worldwide recoverable gas is unconventional and three quarters of ultimately recoverable resources will still remain to be recovered in 2035. The global reserves-to-production ratio of conventional gas based on current consumption levels is in the range of 55 to 60 years.
As far as oil is concerned, even with discoveries of new proven reserves, oil prices continue to rise as we deplete a finite natural resource. Even with these additional documented reserves, 40 percent are hard to reach offshore – two-thirds in the artic and one-third in deep-water.
Deep water and sub-sea: the future of energy production
As the conventional “easy” reserves are exhausted, energy producers will need to push the limits of technology to gain access to resources in new and extreme locations, including distant offshore and deep sea resources, subsea production, and shale deposits; reserves that might have been seen as economically unviable a few years ago.
There are three areas in particular that are receiving large amounts of investment to ensure we can meet future energy demand:
- FLNG plants - floating vessels with facilities to produce, liquefy, store and transfer liquefied natural gas at sea, enable further access to natural gas, the cleanest-burning fossil fuel which is abundant and affordable. Having the ability to process gas at the point of extraction eliminates the need for costly long pipelines and onshore production facilities and the product can be shipped straight to market. You can read more on FLNG in our recent post on the topic.
- Sub-sea extraction involves moving to ever deeper waters and more challenging environments. The deeper we go in future –3,000m below sea level and beyond- the higher the costs and risks involved in processing resources topside. Even though sub-sea production is still in its infancy, it brings many potential benefits as outlined in one of our recent blog posts, including tapping into new reserves.
- Shale gas extraction has seen unprecedented growth in recent years and significant investments are being made in research and development to support the industry. The combination of horizontal drilling and hydraulic fracturing has allowed access to large volumes of shale gas that were previously uneconomical and unsafe to extract. While North America accounted for around 90 per cent of unconventional gas production in 2012, other resource-rich countries, including China, Latin America and Russia, are set to accelerate production.
Electrification powers exploration
A key requirement for these oil and gas extraction techniques is electric power. In the case of FLNG plants, where space is at a premium and weight restrictions apply, electric drive motors are used to run the compression and cooling systems for liquefaction. In a deep-sea scenario, HVDC extends transmission range, allowing us to power electrical equipment installed on the seabed from land or FPSO based power supplies. The shale gas boom, on the other hand, has driven a need for more sophisticated and flexible LNG distribution networks, for which small-scale LNG plays a key role.
The world’s power needs continue to grow at a substantial rate and our energy future remains a topic of significant debate. Unlocking the potential of these more challenging energy reserves is a core objective of the next decade of exploration, research and development, and electric technology has a key role to play.