The International Energy Agency is out with its 2009 World Energy Outlook. Some of the revelations presented at the Council on Foreign Relations in New York on Monday were hardly startling: energy demand and investment down due to global recession, but demand expected to return and grow, China using more energy, etc.
But a couple of its predictions and analyses are both surprising and useful.
• To use an image, unless we cut back on energy needs, within 20 years we will need the equivalent of four Saudi Arabias to meet demand.
• Depending on the policies chosen, China alone could bring about 25% of the needed reductions in emissions to help with climate change. And they seem to be interested in moving that way. It isn’t so much that China is keen on greening the planet as it is concerned about its own energy security. Fatih Birol, the chief economist for the IEA, calls it the fear-of-the-return-of-$147-a-barrel-oil. This sentiment is echoed not only in China but in much of the developing world, where countries have much shallower pockets, face local pollution problems from increasing fossil fuel use, and still remember the economic catastrophe of the oil shocks of the 1970s.
• The third was the emphasis on unconventional natural gas, mostly meaning shale gas. Although the IEA predicts a glut of natural gas, especially in the US, and that low prices mean that there won’t be sufficient investment (at least till gas hits $5 per million BTUs — it’s in the $3-4 range now), I do know that it has not slowed corporate interest and leasing in the Marcellus gas field. Recent leases in north central Pennsylvania were going for around $5,000 an acre with steep royalties. In Texas, sections of the Barnett shale deposit have gone for $25,000+ an acre (proven). There is a glut but at least in the US, investment in gas is moving forward fast.
