News / Economy

Experts See Big Changes in World Energy Market

Greg Flakus

As world population grows so does the demand for energy, driving fierce competition for diminishing resources. Many energy experts believe world oil production will soon peak and no alternative energy has been developed that can fill the demand. But at a forum held this week in Houston, energy experts examined trends that could radically transform the energy sector in the decades ahead.

In the past few years the world's energy scene began to shift. Brazil has discovered huge oil reserves in deepwater offshore projects and the United States unlocked natural gas and some oil in shale rock through horizontal drilling and a process known as “fracking.”

At the same time, Canada has ramped up production of petroleum from its oil sands deposits in the western province of Alberta.

Speaking at an energy conference this week in Houston, Canada's Minister of Natural Resources, Joe Oliver, says technology has unlocked an energy bonanza in North America. “Between shale and Canada's oil sands, North America is now the fastest-growing oil-producing region outside of OPEC, with output projected to increase by more than 10 percent over the next five years," he said.

Oliver says the rise in North American production and deepwater and shale production elsewhere will reduce the power of the Organization of Petroleum Exporting Countries. “There will not be the same influence going forward, it seems to me, that the OPEC countries have had in respect to oil and other natural resources," he said.

This dramatic shift is the focus of Daniel Yergin's new book “The Quest: Energy Security and the Remaking of the Modern World.”  “The map is changing of oil supply and also expectations are going to change as well and that means markets will change as well and that will have an impact on geopolitics," he said.

Yergin, who is chairman of the Massachusetts-baed energy consulting firm IHS-CERA, notes that almost all the technological innovation that is transforming the global energy market has come in the traditional oil and gas sector. But he says development of renewable energy sources like wind, solar and biofuels will proceed and become more important a few decades from now. “We have to worry about the here and now and what things will look like in the next decade or two as well as think about the future, so in a way what it requires is that we work on all fronts at once," he said.

One nation taking that approach is Turkey, a country that is developing its wind energy with an aim to meet 30 percent of its domestic electricity demand in the next 20 years.

But the commissioner of Turkey's EMRA energy agency, Alparslan Bayrakrtar says his country is also seeking to develop its geographic position bridging Europe and Asia to become a regional energy hub. “We are at the center of supply and demand. The European side has a great demand and also our domestic demand is huge and also we have supply countries neighboring Turkey," he said.

This is the kind of planning that is helping transform the world, according to Secretary-General Christoph Frei, of the London-based World Energy Council. “We have established corridors for oil and gas, why not use some of those corridors to bring some of that wind energy, first to Turkey, but why not further, to Europe, et cetera," he said.

Frei says there are many environmental and geopolitical challenges facing the energy sector, but it is an exciting time for those involved in energy development. “Huge uncertainty on one side, lots of innovation on the other ... we are on the verge of a great, ongoing revolution," he said.

The world economy, food production and distribution, and the environment all depend on how this revolution turns out.

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