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Artem Kozionov, Researcher, Russian State University of Oil and Gas named after I.M. Gubkin, names 5 reasons why oil reserves will not run out. But how dependent are we on oil and can we completely abandon it?
What does oil mean for industry and the economy?
Oil played a key role during the Second Industrial Revolution in the second half of the XNUMXth and early XNUMXth centuries. Exactly then – in 1859, the oil industry was born, combining the extraction and refining of oil. That year was the founding of Pennsylvania Rock Oil, the first oil company in the state of Pennsylvania.
At first, kerosene was made from oil, which was used, for example, for table lamps. And then – fuel, which became in demand with the development of the automotive industry, railway transport and aviation. So gasoline came to replace gas and steam engines.
But by the end of the XNUMXth century, the role of oil began to noticeably decline: alternative sources of fuel and energy appeared, and the Fourth Industrial Revolution was based on completely different factors. The main “engines of progress” are now digital, and the global industry is striving for the most environmentally friendly alternatives to oil.
For the world economy, oil is one of the basic and most dynamic markets: there is always active supply and demand, high competition and advanced mechanisms for regulation. Oil-producing countries build long-term strategies and budgets based on the oil market. The disappearance of this support is fraught with protracted global crises.
Why oil won’t run out
Artem Kozinov names 5 main reasons:
We still don’t know how oil is formed. There are 2 theories on this: organic and inorganic. Proponents of the first believe that hydrocarbons appeared in antiquity from organic matter and plankton under the influence of high temperatures and pressure. Others believe that oil was formed at great depths in the Earth’s mantle due to complex chemical reactions. But both theories say that oil is renewable;
Oil does not always originate where it is mined. This also follows from theories of its origin and means that the latest development methods will allow oil to be extracted again and again in the right quantities;
Humanity produces less than half of the world’s oil reserves. Even with intensive production in oil fields, we recover only a minor part of hydrocarbons;
Oil is not extracted from all discovered fields. Many of them are still poorly researched and not mastered;
Many deposits have not yet been discovered.
An additional factor is that oil production is limited by international organizations such as OPEC and the International Energy Agency.
Oil vs alternative energy sources
There are other renewable energy sources as well. It is on them that the largest energy consuming countries switch, considering this way of generating energy to be more environmentally friendly. The second reason for switching to alternative sources is to stop depending on the oil powers that use oil for geopolitical purposes.
The volume of investments of countries and regions in renewable energy sources and alternative fuels
Full Renewables 2019 Report PDF (see page 148)
Main types of renewable energy sources (RES):
- Hydropower: energy source is water.
The most common way in which energy is generated using a dam and turbines that rotate the water inside. The potential capacity of hydropower stations is 30-40 Terawatt-hours per year. However, this method leads to a change in the water level in reservoirs, a reduction in oxygen in them, disruption of the spawning cycle of fish and other negative consequences for flora and fauna.
- Wind power: the source of energy is the wind.
Energy is also generated using turbines that spin the wind. They are much cheaper than water ones, located at a height of 100 meters, which means that the land under them can be used for farmland.
Denmark, Germany and the Netherlands are planning to build an artificial island in the sea by 2050 and install a wind power station on it, which can generate up to 100 Gigawatts / hour of energy per year.
The main disadvantage of this source is instability: you need to wait for the wind, and a certain force. This is possible only far from populated areas, which means that energy delivery will be too expensive.
- Solar energy: source of energy is the sun.
Such stations can be arranged in different ways: for example, store sunlight with batteries that convert it into energy. The second method is much simpler and more popular, but in many northern regions there is not enough sunlight to fully provide them with energy. And even in very sunny places there is a change of day and seasons, so energy production will be uneven.
- Wave energy: source – sea waves.
In this case, special modules swing on the waves and generate energy from the movement. In addition to generating cheap electricity, such stations protect the coast, as well as bridges and supports from destruction. However, their potential is only 2 Terawatt-hours per year, they can be dangerous for water transport and create noise that frightens aquatic life.
- Geothermal Energy: source – heat + water.
Two wells are dug at a depth, one of which is supplied with water. It evaporates, heating up from the ground, the steam passes through the second well and is sent through pipes to the turbines, being cleared of impurities along the way. This is a fairly stable source of energy, the potential of which is 47 Terawatt-hours per year. However, now we can get only 2% of this volume.
According to the analytical company Enerdata, in Norway about 97% of electricity is produced from alternative sources, in New Zealand and Brazil – about 80%, in Germany, Italy, Spain and the UK – 30-40%. In our country, the share of consumption from RES is 17,2%.
Bill Gates, one of the most influential ideologists of renewable energy, in one of the interviews, he cites the following figures: a cyclone operates in Tokyo for 3 days a year, from which a huge amount of energy could be generated. This would be enough for the entire 27-million metropolis. At the same time, electricity generated in the traditional way creates 25% of all harmful emissions.
Disadvantages of Renewable Energy
RES is cheap to produce, but expensive to transmit. According to International Energy Agency, the transfer of energy derived from wind is 3 times more expensive than from coal. The same can be said about nuclear power. This is also due to the fact that it is possible to extract energy using renewable energy sources only far from settlements – that is, the main consumers. A whole infrastructure for power transmission needs to be rebuilt;
source instability. You can get energy from the wind only 25-35% of the time, from the sun – 10-25%. The level of control in such power networks is also much lower, and power is difficult to stabilize;
Modern batteries cannot yet accumulate enough energy from renewable energy sources to be able to use it while the stations are idle;
To build stations for generating energy from alternative sources, we need all the same hydrocarbons, which so far have nothing to replace;
Finally, and most importantly, alternative energy sources do not yet cover all needs. At the moment, their main advantage is environmental friendliness and rapid renewability.
Annual increase in renewable energy capacity (in gigawatts)
How will energy develop further?
Skolkovo Energy Center, together with the Energy Research Institute (INEI) of the Russian Academy of Sciences, presented his forecast until 2040. It follows from this that the world energy industry is already on the verge of a global transformation – the “fourth energy transition”: the first was associated with the development of coal production, the second – oil, the third – gas. This means that the share of RES will increase, displacing oil and gas.
The forecast describes 3 scenarios:
Conservative: technology and energy consumption will remain at current levels or increase slightly. The share of RES in the world will be 35%, in our country – 15%;
Innovative: accelerating the development of technologies and the transition to renewable energy. Distribution of shares – 40% and 16% respectively;
energy transition: even greater acceleration of technology and a special emphasis in the policy of states on the rejection of hydrocarbons. In this case, RES will account for 49% in the world, and 21% in our country.
According to the authors of the study, all three scenarios for our country will be negative: it is Russian oil supplies that will be the first to be reduced, which will result in long-term economic stagnation for us. Our country is already preparing for such a scenario: there is a state program to support the development of renewable energy until 2035. It assumes that all plants based on RES will return investments. This will help make green energy cheaper and more accessible, and its share in total generation will grow to 3,3%.
When will we give up oil?
Today, oil is still the No. 1 fuel in the world: the share of its consumption is 31%, i.e. higher than coal, gas and renewable sources. But this is already 14% less than in the early 1970s, at the peak of the development of the industrial economy. Partly influenced by restrictions on oil production, first introduced in 1973 by OPEC to combat the oil crisis.
Next will be something like this:
Some experts believe that by 2050 the demand for crude oil will will be reduced to 14 million barrels per day (forecast for 2021 – 96,7 million barrels);
The consumption of crude oil for energy needs will fall from 11 to 4 million barrels per day. In the fall in demand, the fact that international organizations aim to recycle up to 75% of all plastic. This, in turn, will reduce the need for new plastic products, which are also made from petroleum products;
Demand for petrochemicals – that is, refined products – on the contrary, will grow up to 20 times in the next 30-2 years. Over the past 10 years, it has increased by 50%, due to the rapid growth of urban infrastructure in the US, Canada, Japan, China and South Korea;
Oil consumption in construction and agriculture will increase if world population growth remains at the same level. By 2050, these industries will consume 46% more oil than now: 28 million barrels per day;
Other experts note the impact of the pandemic, which led to a collapse in oil demand, but in the future everything will return to pre-dovid indicators, mainly due to developing countries.
The world’s largest suppliers of petroleum products have not yet come to a single scenario. For example, Exxon is doubling its production, counting on a steady increase in demand for oil and gas. At the same time, BP, on the contrary, is switching to renewable energy sources.
But everyone agrees that the oil industry is now going through one of its most difficult periods since the 1960s. At the same time, peak demand for oil already passed, and for gas it will come in the next 5 years. The strategy of the oil market will certainly change. But we will see a global rejection of oil not earlier than in 20-30 years, including due to environmental factors. For example, the production of 1 kg of lithium-ion batteries that power electric cars results in the emission of 2,5 kg of CO2 equivalent. With the extraction of 1 kg of oil, this figure is 0,15 kg.
Artem Kozinov adds that hydrocarbons are unique in their high energy intensity due to special chemical bonds. Therefore, in the next 80–100 years, oil and gas are guaranteed to remain the main sources of energy.