Page 6 - MEOG Week 09 2023

MEOG PRICES & PERFORMANCE MEOG

Lack of low-emission, low-cost oil,

gas puts transition at risk: WoodMac

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

P6 www. NEWSBASE .com Week 09 01•March•2023