EMGC '17: Forecasting prosperity to predict global energy demand

By Adrienne Blume, Editor, Gas Processing and Executive Editor, Hydrocarbon Processing on 3/15/2017

NICOSIA -- Gulf Publishing Company's Eastern Mediterranean Gas Conference (EMGC) 2017, the world's primary event for discussing the forces shaping gas industry development in the Eastern Med, continued on March 15. Sessions covered a variety of topics, ranging from predicting energy demand, to the logistics of operating gas projects and boosting regional gas supplies, to the long­-term future of the Eastern Med gas market.

Forecasting prosperity to predict energy demand. In the opening keynote address, founder and director of the Centre for Global Socio-Economic Change, Dr. Ir. A. J. (Guus) Berkhout discussed energy's role in fostering economic development in Eastern Med countries.

Dr. Ir. A. J. (Guus) Berkhout, founder and director, Centre for Global Socio-Economic Change

Berkhout started off by asking the audience, "What do you think if aliens came to planet Earth? What would they say? Would they say we have a problem, or a challenge?" He then went on to enumerate the segments of the world's population that do not have access to energy and clean water.

Berkhout outlined three key messages:

  1. The energy industry is a strategic partner in the realization of prosperity ambitions. Supply and demand is a circular, energy-prosperity system. Demand feeds energy production, which feeds prosperity creation.
  2. Big data technology looks at systems and asks how they behave, conducts as many relevant measurements as possible to discover patterns in this behavior, and constructs models based on these data.
  3. Whatever the energy industry does, be sure to respect the natural environment, or the world will turn against you.

Around 1800, he noted, a global population explosion led to an income explosion during the "age of enlightenment." Health care began to flourish. The energy curve is correlated with these expansions. Initially, the energy demands of this population expansion were covered by coal. In the early 1900s, however, oil and gas began to take over.

Berkhout then posed the question: "Despite criticism of fossil fuels, why do they remain so popular?" The answer, he said, is energy density. The energy value of oil is far greater than that of coal, nuclear power, solar panels and other forms of energy. However, he speculated that if it were possible to push coal out of the energy mix and replace it with gas—which major companies are already realizing is an attractive choice because of environmental concerns—then the gas market would expand considerably. "The big winner is gas," he asserted.

Energy choices are driven by global prosperity, which varies widely by country and region. Annual GDP can be used to divide countries into various "clusters," or levels of prosperity and energy consumption.

"Prosperity is key to understanding the energy market," Dr. Berkhout said. "If you do forecasting about prosperity, then you have a way to understand the future demands of the energy market. What happens in rich clusters is totally different than what happens in poor clusters. More prosperity means more energy consumption."

"We think that the amount of energy needed in 2050 is at least double [what it is today]," Berkhout said. "Fossil fuels will be able to fulfill that need. It's our challenge to push the coal out of the mix." He also shared several scenarios for prosperity forecasting in India, Nigeria and China, showing how their growing economic prosperity—or lack thereof—can be used to predict their future energy needs.

"Whatever is going to happen, the oil and gas companies must transform themselves into energy companies that sell energy mixes to the world. Not only oil and gas, but the total energy mix," Berkhout said.

Please see additional stories posted on World Oil’s website for discussions of the remainder of the March 15 sessions.

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