Page 15 - NorthAmOil Week 09 2023

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WoodMackenzie: Lack of low-emission, low-

cost oil and gas puts energy transition at risk

GLOBAL THE energy transition will require oil and basins, and exploration on this scale over the
gas for several decades, Wood Mackenzie has next two decades will add oil and gas supply of
said in a report, but the supply of low-cost and around 10-15mn barrels of oil equivalent per day
low-carbon “advantaged” resources is limited. (boepd) by 2050.
The analysis shows that the total discovered Decarbonisation technologies and biofuels
and prospective oil and gas resources are more could play an even bigger role in meeting the
than double the projected demand for 2050. demand for low-carbon energy sources. Bio-
However, truly advantaged resources, with low based diesel and aviation fuels produced from
breakeven and emissions, are scarce. The global plant-based feedstock could emit up to 80% less
energy industry will have to face the challenge of carbon than crude oil-based products.
managing the demand for energy and reducing Despite these potential solutions, Wood Even under the
its carbon footprint. Mackenzie highlights the fact that advantaged
According to Wood Mackenzie, most devel- resources alone will find it difficult to meet all most ambitious
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 targets of
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- the Paris
$30 per barrel with emissions intensity of less panies may begin or accelerate their exit from Agreement some
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- disadvantaged
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 supply will be
forecast to 2050. resources to meet demand.
Even under the most ambitious targets of In conclusion, the energy industry will have necessary.
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 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
boe of new advantaged barrels per year. This and achieve the most ambitious targets of the
new supply will be found within energy super Paris Agreement.™

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