IEA’s Net-Zero Plan Leaves Exploration Behind
The roadmap presented by the International Energy Agency requires extreme measures that could be career changing for petroleum engineers.
The drastic effect that reaching net-zero emissions would have on oil and gas jobs can be summarized by a sentence in the International Energy Agency's plan for getting to net zero by 2050:
“No new oil and natural gas fields are needed in our pathway, and oil and natural gas supplies become increasingly concentrated in a small number of low‐cost producers,” according to the plan from the influential energy agency.
If this plan comes to fruition, the result would be the loss of 5 million jobs in the fossil fuel sector by 2030, with nearly half of those in oil and gas and the balance in coal.
The global footprint of the business also would shrink, with the low-cost producers in OPEC holding more than half of the oil market in 2050, up from 37% now, as investor-owned companies get out because of depressed prices.
The IEA roadmap for holding the line on global warming will be a really tough sell when global leaders gather for the 2021 United Nations Climate Change Conference to consider a deal to reduce emissions blamed for climate change.
Still, for oil engineers considering their long-term job prospects, the IEA offers a sense of scale for the changes ahead even if a watered-down version of the plan is adopted (Fig. 1).
A strong argument for the plan is that the aggressive spending and technology development program promises to increase the pace of economic growth and add nearly 14 million jobs.
Those added jobs generally are outside of the fossil energy sector, which will take a hit if nearly every car sold by 2035 is electric powered, as required by the plan, which sees fossil fuels supplying 20% of energy demand in 2050, down from 80% now.
“Fossil fuels that remain are used in goods where the carbon is embodied in the product such as plastics, in facilities fitted with carbon capture, and in sectors where low-emissions technology options are scarce,” the IEA plan said.
Impossible but Interesting
The IEA argument for paying heed to the report is that it is still possible to limit the damage caused by global warming, which it described as the “greatest challenge humankind has ever faced.”
The degree of difficulty is so extreme, an engineer is likely to think the goals are absurd but also be intrigued by the challenge.
On the list of things to do, according to the release summarizing the report, is
- Installing 630 GW of solar capacity a year by 2030, four times the level in 2020 and the equivalent of “installing the world’s current largest solar park roughly every day.”
- Improving energy efficiency by 4% a year through 2030—three times the rate during the past 2 decades.
- By 2050, almost half the reductions come from technologies that are currently only at the demonstration or prototype phase.
That innovative thinking will need to begin in earnest in 2030 as proven methods reach their point of decreasing returns.
For the next decade, the plan expects spending on oil and gas exploration and production to remain low and steady. The plan predicts annual spending of $350 billion, around the same level as last year, which was 30% below the average during the previous 5 years.
That is not enough to support current levels of oil production, which is the plan’s goal. It calls for a 4% decline in oil production each year, which its models conclude is possible with that level of support for existing production plus development of the approved projects.
On the face of it, that would mean a sudden drop in work for those in exploration and field development and an uptick in demand for production and enhanced oil recovery experts.
On average, established production costs less than exploring for new fields, but, with the focus on adding low-cost reserves from nearby existing oil platforms or in massive unconventional formations in old basins, the line between exploration and production has been blurry for years.
Natural gas demand in 2050 will hold up better than oil for reasons that will create some jobs down the road. Demand for gas is expected to rise as feedstock for hydrogen, whose role as a clean fuel is expected to push production from 87 million tons/year to 526 million tons/year by 2050.
Developing the hydrogen economy will create jobs for engineers with large project development and process management skills. Those operations will generate carbon dioxide, creating opportunities with those able to find and develop long-term underground storage. Carbon capture and storage (CCS) will need to grow from 40 million tons a year to 7,600 million tons over the next 30 years
One area of interest for petroleum engineers—geothermal energy—was merely mentioned in the report, which put it at the bottom of an “other” category, with 1% of the energy market in 2050.
If demand is reduced along the lines described in the plan, the value of a barrel of oil is expected to be $35 by 2030 and $25 by 2050.
But, in the real world, the value of the benchmark Brent crude oil is up to nearly $70/bbl based on rising demand, which the IEA reported last month is up 2 million B/D.
So, for now, the prospect of a world where each month engineers will need to “equip 10 new and existing heavy industry plants with CCS, add three new hydrogen‐based industrial plants, and add 2 GW of electrolyzer capacity at industrial sites,” remains a theoretical possibility.