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Energy transition needs oil and gas:

WoodMac

GLOBAL ENERGY transition will require oil and gas for basins, and exploration on this scale over the
several decades, Wood Mackenzie has said in a next two decades will add oil and gas supply of
report, but the supply of low-cost and low-car- around 10-15mn barrels of oil equivalent per day
bon “advantaged” resources is limited. The (boepd) by 2050.
analysis shows that the total discovered and Decarbonisation technologies and biofuels
prospective oil and gas resources are more than could play an even bigger role in meeting the
double the projected demand for 2050. However, demand for low-carbon energy sources. Bio-
truly advantaged resources, with low breakeven based diesel and aviation fuels produced from
and emissions, are scarce. The global energy plant-based feedstock could emit up to 80% less
industry will have to face the challenge of man- carbon than crude oil-based products.
aging the demand for energy and reducing its Despite these potential solutions, Wood Decarbonisation
carbon footprint. Mackenzie highlights the fact that advantaged
According to Wood Mackenzie, most devel- resources alone will find it difficult to meet all technologies
oped fields have little to offer, and only 28% ETO (Energy Transition Outlook) oil and gas
of the resources in commercial undeveloped demand. Some companies may decide to double and biofuels
fields, roughly 49bn barrels of oil equivalent, down on their current strategies, hoping for less
are advantaged in terms of breakeven below competition in the sector. However, many com- could play an
$30 per barrel with emissions intensity of less panies may begin or accelerate their exit from even bigger role
than 20 kg of CO2 equivalent per boe. Wood the sector to pursue low-carbon energies and
Mackenzie’s data reveals that only enough renewables. If this is the case, the security of sup- in meeting the
advantaged resources are available to meet ply may become threatened, and unfortunately,
about half of the base-case oil and gas demand companies may resort to using disadvantaged demand for low-
forecast to 2050. resources to meet demand.
Even under the most ambitious targets of In conclusion, the energy industry will have carbon energy
the Paris Agreement some disadvantaged sup- to find ways to manage the demand for energy sources.
ply will be necessary, meaning that companies and reduce its carbon footprint. The transition
will have to pivot to new strategies to meet the to low-carbon energies will require a mix of
demand for oil and gas. Exploration could play solutions, including exploration, decarbonisa-
a vital role in locating and increasing this sup- tion technologies and biofuels. While there are
ply, as Wood Mackenzie found that high-impact significant challenges ahead, the industry has
exploration could contribute around 5-10bn the potential to meet the demand for energy and
boe of new advantaged barrels per year. This achieve the most ambitious targets of the Paris
new supply will be found within energy super Agreement.™

P10 www. NEWSBASE .com Week 10 08•March•2023