Texas Oil and Gas Attorney Blog
Recently the IHS hosted CERAWeek in Houston, Texas (you can view the brochure here). CERA stands for Cambridge Energy Research Associates, an organization founded in the early 1980s to consult on energy issues for both the government and private companies, and that hosts the annual event in Houston each year. This year’s event, the 32nd such conference, had about 2,200 participants from the energy industry coming from about 50 countries around the world, including 300 speakers.
This year’s CERAWeek’s conference was called “Drivers of Change: Geopolitics, Markets & the New Map of Energy.” It focused on the profound transformations in the industry and hoped to shed new light on the future of energy and focus on changes in the competitive landscape, the unconventional oil and gas revolution, and new fuels and technologies of the future. Daniel Yergin, the conference’s chairman, said, “All this is leading to a vigorous discussion of how the energy needs of a growing world economy will be met over the next 2 decades and what the mix will be. Will an energy transition unfold over years or over decades?”
In terms of the US, we are expected to average 7.3 million barrels per day of oil in 2013, up 900 million barrels since just last year. Our oil imports have been declining since they peaked in 2005, because of this growth in production. Tight oil development in the US and Canada has far outpaced any other region of the world, and the question will continue to be one of the pace of growth. Michael Stoppard, managing director of global gas for IHS, said there was a “redrawing” of the global gas map focusing on three supplies- unconventional gas, deepwater gas, and gas from tight oil. He noted that the world demand for gas would continue to grow in the next few years but that the US probably could not export significant light natural gas until 2015. He also predicted a rebalancing of gas prices from their “unsustainably low levels” of today.
Aside from the US, the other country that will be one of the biggest factors in the energy industry is China, which accounted for 40% of global oil demand growth in 2012. IHS’s China energy director, Xizhou Zhou, stated that China’s focus is on diversification and that the new power plants are shifting away from coal and toward fuels such as gas and nuclear. China expects to reduce its dependence on coal, which is now at 80%, to about 50 to 60% by 2025. In Russia and the Caspian, IHS’s staff believes there will be stable growth, after 20 years of instability, due to a stable political and economic environment. Their senior director of Russian and Caspian energy, Thane Gustafson, said the biggest changes, and possible the biggest surprises, will be in the increased pace of Russian development of tight oil, now that Russia and other countries are adopting the US definition of tight oil to include difficult to extract conventional oil.
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