DALLAS - Expansion of the global economy will increase energy demand by 50 percent over the next quarter-century, creating major challenges for energy producers, Exxon Mobil Corp. said yesterday in its annual energy outlook.
The 1.7 percent annual growth in demand will be driven mostly by Asia, the company said. The world's largest publicly traded oil company uses the annual long-term outlook as it plans projects expected to run several decades into the future.
Exxon Mobil predicts widespread efficiency improvements and greater diversification into nuclear energy and biofuels such as ethanol to meet demand. But even as governments try to spur the development of pollution-free energy such as solar and wind power, Exxon Mobil said, those sources will comprise only 1 percent of world energy supply by 2030.
"Ultimately, market fundamentals will prevail," Alan Kelly, Exxon Mobil's general manager of corporate planning, told analysts and investors. "That means it's likely for hydrocarbons to remain the principal source of energy for many decades to come."
Despite some concerns about the adequacy of global oil reserves, Exxon Mobil says the world has plenty available.
The planet has consumed about 1 trillion barrels of oil to date. Most estimates put the world's proven oil reserves - those economically recoverable today - at another 1 trillion barrels.
But the globe has more than 6 trillion barrels of conventional oil in the ground, and several trillion barrels of unconventional supplies such as oil sands and oil shale.
The energy sector will need investment of $200 billion a year to support that supply growth, Kelly said.
While that level is "likely and achievable" especially with new technologies, he declined to say where prices would need to be to support that level of development.
Kelly said the company has faith in Saudi Arabia's ability to raise its output capacity in the coming years to meet demand.
As a whole, the Organization of Petroleum Exporting Countries would need to expand output each year by 1 million barrels a day. The cartel now produces about 30 million barrels a day.
"The interesting question is going to be, how will that be financed without international oil company involvement?" he said, adding that companies like Exxon Mobil will need to be involved to bring new technology to fields.
Among highlights of Exxon Mobil's latest energy outlook:
Global energy demand will increase from today's equivalent of 220 million barrels of oil a day to 335 million in 2030.
The global economy is expected to grow at 2.8 percent a year, the same pace as the past two decades. World population will go from 6.3 billion to 8 billion by 2030.
Among fossil fuels, natural gas demand will increase the most, at 2.2 percent a year. Oil demand will rise 1.5 percent, and coal demand at 1.7 percent annually.
Emerging Asian countries will account for 50 percent of the energy demand growth.
Gains in average fuel efficiency will help meet the demand.