Energy: reflections on the past, present and future · Energy: reflections on the past, present and...
Transcript of Energy: reflections on the past, present and future · Energy: reflections on the past, present and...
Energy: reflections on the past, present and future
Impacts, transitions and what´s next for the Brazilian O&G industry
Décio OddoneDirector General
Rio de JaneiroFebruary 28th, 2018
International Conference on The Economics of Oil
NOTICE
• The ANP´s institutional presentation is based on currentand reliable information, but no representation orwarranty is made as to its accurateness andcompleteness, and it should not be relied upon as such.
• Projections and estimated values are included withoutany guarantee as to their future realization.
• Forward-looking data, information, projections andopinions expressed during the presentation are subjectto change without prior notice.
Outline
STEP 1 STEP 2
STEP 3 STEP 4
Energy Outlook and Brazil´s E&P proposals
Final Remarks
Highlights on the history of energy
EV / Biofuels
An exciting energy future
Social preferences, new technologies and
Government policies will
alter the way in which energy is
produced and consumed in the
future.
A successful energy history
The development of
energy solutions framed the contemporary
world
Each time with its own challenges
Our time’s choice
No risks = no wealth
Economic and environmental populism claims for development and wealth but does not accept impacts or risks. It is not compatible. Progress was achieved because risks were mitigated.
The precautionary principle
Energy made the modern world
possible
Abundant, cheap energy powered airconditioning which enabled cities todevelop in the tropics. Energy allowedmodern medicine to spread across theglobe. Planes, trains, automobiles,computers, the internet, wireless
communication were developed.The O&G industry had a fundamental role in the
construction of the modern world. 200 years ago, we still depended on the candle light…
Jean Jacques de Boisseau, "Evening in the Village," 1800
The reading light in the 1800s
In 1800 it took the average person six hoursof labor to earn one hour ofreading light from a tallowcandle. By 1880, two decades after the first oil
well was drilled in Titusville Pennsylvania, kerosene
lamps lowered this to only 15 minutes oflabor to earn one hour of readinglight. Today it requires the average worker only
a fraction of a second of labor to
earn an hour of reading light .**By Chris Wright
Night Scene, by Peter Paul Rubens (sec XVII)
Jean Jacques de Boisseau, "Evening in the Village," 1800
Life expectancy in the 1800s
Life expectancy has increased rapidly
since the enlightenment.
Estimates suggest that in a pre-modern,poor world, life expectancy was around
30 years in all regions of the
world. Since 1900 the global averagelife expectancy has more than doubled
and is now around 70 years. No
country in the world has a lower lifeexpectancy than the countries with thehighest life expectancy in 1800.**Life Expectancy, by Max Roser (Our World in Data)
Whaling station Grytviken, 1916
Whale oilThe first principal use of whale oil was as an illuminant in lamps and as candlewax. Other uses came in time. The sperm whale was the main whale beingsought for its oil when the petroleum industry opened in 1859. By some
estimates, sperm whales have been driven down to one-third of their pre-
whaling population. Kerosene and later electricity had replaced whale oil as theluminescence.**Whale Oil, by Samuel T Pees
Horses in the 1900s
By 1880, there were 25 humans for each horse.
The use of horses in transportation created manydifficulties, primarily among which was managingmanure and waste. The manure brought flies andthe possibility of outbreaks of typhoid, cholera,tuberculosis or infantile diarrhea.One journalist writing in Appleton Magazine in1908, charged that each year 20,000 New Yorkersdied from “maladies that fly in the dust, createdmainly by horse manure.” In 1880, New YorkCity also removed 15,000 dead horses from its
streets. In the 1900s, NY had 130,000 horses
and London around 300,000. We are
grateful for the automobile that arrived to replacethem.**When Horses Posed a Public Health Hazard, by Jennifer Lee (NY Times)Crude Reality: Petroleum in World History, by Brian C. Black
Horses pull carriages among the peddlers and pedestrians on the Lower East Side in 1900.
Biomass Oil
Coal Gas
Energy Sources Timeline
In ancient times, nearly all of human energy wassupplied by biomass. This meant burning of trees,sticks, grass, and dung. But, nowadays…
Biomass1
1.1Billion humans still use biomass as primary source
due to lack access to electricity
1.2Billion people have gained
access since 2000, (70% getting
access with power generated from
fossil fuels)
2.5Billion humans rely on the traditional
use of solid biomass to cook
their meals
2.8Million people die due to pollution from indoor burning of
biomass, coal and kerosene
Source: IEA Energy Outlook 2018
Coal was the first major source of energy beyondbiomass. It powered the spread of the industrialrevolution and by the middle of the nineteenthcentury it became a meaningful contributor tototal world energy consumption.
Coal
Oil became significant fifty years later asautomobiles and the internal combustion engineburst on the scene.
Oil2 3
Gas4
Natural gas didn’t become a major source ofenergy until after World War II as it required alarge pipeline network to transport it.
Renewable5
Nowadays, the utilization of solar, windgeothermal …
World´s Energy Consumption by source
Global Primary Energy Consumption by source (2016)
Oil
33%
Gas
24%
Coal
28%
Nuclear
4%
Hydro
7% Renew.
4%
� O&G counts for 57% of the energy consumption
� Fossil fuels count for 85% of the energy
consumption
Source: BP Energy Outlook 2018
Biomass Oil
Coal Gas
Renewals (solar, wind, geothermal…)
In the past ten years, the biggest energy transformation has not been from a new energy source, but from the
shale revolution that has radically altered the world energy landscape.
Shale revolution
Energy Sources Timeline
The US Shale Revolution
0
5
10
15
20
25
2000 2010 2020 2030 2040 2050
US Crude oil production million barrels per day
tight oil
2017
history projections
Reference
other0
10
20
30
40
50
60
2000 2010 2020 2030 2040 2050
US Natural gas productiontrillion cubic feet
2017
history projections
Reference
tight/shale gas
Source: EIA Annual Energy Outlook 2018
670,000 of the 977,000 producing wells were hydraulically
fractured and horizontally drilled (2016).
69% of all oil and natural gas wells drilled in the US were fractured
horizontal wells (2016)
In only September, October and November of 2017, the
US added 1.23 million bbl/d
of supply from tight oil
Yes, we live better now . Thanks to energy
The world is about 100 times
wealthier than 200 years ago
Number of people in extreme
poverty fell by 137,000 every day
for 25 years
The vast majority of poor Americans enjoy luxuries
unavailable to the Vanderbilts and Astors of 150 years ago, such as
electricity, air conditioning and
colour televisions.
The Case for Reason, Science,
Humanism and Progress.
By Steven Pinker
(Feb 24th 2018)
Now two-thirds of people
live in democracies. Two
centuries ago only 1%
Yes, we want to continue benefiting from the responsible utilization of our energy resources
Outline
STEP 1 STEP 2
STEP 3 STEP 4
Energy Outlook and Brazil´s E&P proposals
Final Remarks
Highlights on the history of energy
EV / Biofuels
Competitive pressures within global energy markets will intensify
The global energy mix will the most diverse the world has ever seen by 2040, with oil,
gas, coal and non-fossil fuels each contributing around 25%
Demand for oil grows before plateauing in the late 2030s
Natural gas demand grows strongly and overtakes coal as the second largest source of
energy. It will account for around a third of the increase in global energy demand.
Renewables are by far the fastest-growing fuel source, increasing five-fold and providing
around 14% of primary energy
What the future looks like?
Source: BP Energy Outlook 2018
Future: a quicker transition and an increase in
competition
Brazil has to boost O&G activities to produce its resources while they are valuable.
Energydrives the world economies.
• The increasing use of technologies and innovations and the
societal pressure for low carbon emissions will speed up the
energy mix transformation
• According to IEA, by 2022, renewable electricity capacity should
increase by 43%, equivalent to half of the current global capacity
in coal power which has taken 80 years to build
• Costs of renewable energy have fallen in many areas, particularly in
solar power, where costs have being reduced by 80% over thepast decade
• The changes currently underway in the world of mobility appearmore evolutionary
• Although there is a lot of uncertainty around the oil forecastingand is far too early to be worrying about the demise of fossil fuelsin the near term, the main oil companies agree that oil demand will
peak until 2040, leading to a competitive environment toproduce the reserves worldwide
This is a sample text.
Insert your desired text here.
Three main goals Boosting O&G activities in:
01 02 03
Increasing the knowledge of our sedimentary basins to know the remaining potential
01Increasing the exploratory activities02
Maximizing production and reservoirs recovery factors03
Potential investments and forecast production (up to 2027)
0
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
The preThe preThe preThe pre----salt region salt region salt region salt region has the potential to contribute with has the potential to contribute with has the potential to contribute with has the potential to contribute with the the the the largest largest largest largest nonnonnonnon----OPECOPECOPECOPEC production growth in production growth in production growth in production growth in
the decade to comethe decade to comethe decade to comethe decade to come
Brazilian Oil Production Forecast (bpd)
39 R$845Billion of potential
investments in development
New platforms
US$18Bi
1111% % % % addition addition addition addition in in in in the the the the BBBBrazilian razilian razilian razilian
recovery recovery recovery recovery factor:factor:factor:factor:New Investments 2,2Bi boe
Reserves
Natural gas in the transition
The world continues to electrify, with almost 70% of the increase in primary energy going to power sector
Natural gas grows strongly, supported by broad-based demand and the continuing expansion of LGN, increasing the availability of gas globally
Natural gas is the transition energy source for a low carbon economy. As demand grows, mainly in thepower sector, Brazilian natural gas production needs to rise.
To prioritize domestic gas instead of
imported LGN
Uncertainty can be
assessed scientifically
and actions be taken
when benefits
outweigh risks
Don’t act
when in doubt or
in the presence
of any potential
risk
Unconventional resources: choosing the right path
Unconventional resources:
an important discussion to shape
the transition
A strong regulatory framework to mitigate risks must be in place for the unconventional resources to be produced
Considering that there is significant
potential in the unconventionalplays (more than 200 TCF), evaluation
activities must be authorized
Outline
STEP 1 STEP 2
STEP 3 STEP 4
Energy Outlook and Brazil´s E&P proposals
Final Remarks
Highlights on the history of energy
EV / Biofuels
Electric Vehicles
Electric vehicles (EVs) may offer a glimpse of the future but they
still have challenges and for the time being their impact is
limited.
The number of electric cars will grow. But the following considerations shall be taken into account:
� The emissions of the entire life cycle, including the origin of the energy
� The disposal and the reuse of the batteries
� The charging infrastructure in place and the need to
develop it
� The initial investment to generate the electrical capacity for
the market
� The cost of the EV. Despite improvements in battery
technology, range is limited even for the most expensive models, which still can’t compete with ICE cars as a complete package.
Electric Vehicles or biofuels in Brazil?
Brazil is the world´s second largest
producer of both ethanol and biodiesel
Brazil began developing biofuels in the 1970s.
Brazil has all the infrastructure, including
383 Ethanol Mills
51 Biodiesel Plants. Many of the cars
produced here are dual fuel (flex) The role of EV is an important discussion to be taken in Brazil in the short term
Flex vehicles (fuelled by ethanol) have the same GEEimpact as EV
Hybrid flex vehicles fuelled by ethanol may be part ofthe solution
Brazil has already taking the lead in biofuels
(RENOBIO), which aim to secure their
participation in the market to reduce carbonemissions
For the EV questions like cost competitiveness andtechnology, infrastructure (recharging stations etc) arestill to be answered
Outline
STEP 1 STEP 2
STEP 3 STEP 4
Energy Outlook and Brazil´s E&P proposals
Final Remarks
Highlights on the history of energy
EV / Biofuels
Energy drives economies and
has changed human lives drastically in the last centuries
The O&G sector had an important
contribution to the modern life and it powers innovation,
environment, economy, progress and health
But the pendulum is starting to
swing. The leading players
recognize it and will commit an increasingly higher proportion of
capital into next decade to shape the
transition
Final Remarks
In Brazil, we must accelerate exploration and
production to benefit from the resources
The country is in the middle of the greatest transformation in the upstream, gas and
downstream markets
A diverse and competitive market shall
result from this process
National Agency of Petroleum, Natural Gas and Biofuels ANP
Av. Rio Branco, 65, 21st floorRio de Janeiro – Brazil
Phone: +55 (21) 2112-8100
www.anp.gov.br
www.brasil-rounds.gov.br