Platts Global Energy Outlook Forum Looks to 2040

Edward Camp, II
ShaleNavigator Team Lead at Geospatial Corporation

Platts, a Division of McGraw Hill Corporation, is a leading global provider of energy, petrochemicals, metals and agriculture information. Their annual Global Energy Outlooks forum brings energy executives, government officials, and investors together to discuss future trends and opportunities. The recent decline in oil price was a major topic of discussion and specifically how that may change company and investment strategies.

The forum began with a presentation of Exxon Mobil’s 2040 Global Energy Outlook, presented by Bill Colton, Exxon’s Vice President of Corporate Strategic Planning. The presentation explained three major drivers of energy demand – Population, Transportation, and Electricity. With an ever-increasing population achieving consistently higher standards of living, a higher quality of life will be reached by millions in the near future. The massive populations of China and India are achieving middle-class status, and will move the needle of energy demand rapidly in the next few decades. Their path to a higher quality of life will require access to energy for manufacturing of goods and personal transportation. As global economic expansion continues, people will have higher incomes, and demand for shipment of goods will result in substantial increases in freight transportation energy use.

Colton went on to explain that as of today, 1.3 billion people still do not have electricity. Forecasted global economic expansion will require ever-increasing need for fuel supply to create electricity. Coal, oil, natural gas, nuclear, wind, and solar sources will all be called upon globally as living standards improve. As a clean, available energy source, natural gas will soon rival coal as a primary fuel source on the global scale. Coal remains the most available and least expensive option, however the North American shale revolution has proved with technology breakthroughs natural gas can be harvested in greater quantities and lower cost than ever before. North America has quickly become the world’s largest natural gas producer and exporter, and the demand for the product to be exported bodes well for American producers in the long term.

A second major topic at the Forum examined North American energy infrastructure. The roundtable discussion included Tony Clark, Commissioner of Federal Energy Regulatory Commission (FERC), Greg Ebel, Chairman, President, and CEO of Spectra Energy, David Foley, CEO of Blackstone Energy Partners, and William Brilliant, Principal of Global Infrastructure Partners.

The major gap between plentiful supply and lack of pipeline infrastructure to transport natural gas to populated areas was a major theme. FREC Commissioner tony Clark explained the extraordinarily high electricity prices in New England were primarily due to a lack of infrastructure. Greg Ebel of Spectra Energy highlighted the Algonquin Incremental Market (AIM) Project as providing the Northeast with a unique opportunity to secure a cost effective, domestically produced source of energy to support its current demand, as well as its future growth, for clean burning natural gas.

The AIM Project — an infrastructure investment that expands the pipeline capacity of Spectra’s existing Algonquin Gas Transmission system — will allow abundant regional natural gas supplies from the Appalachian basin to flow reliably into the Northeast, helping to meet the increasing demand while lowering energy costs. The full project completion date is November, 2016.

William Brilliant of Global Infrastructure Partners echoed the sentiment that the prolific U.S. shale plays have set up a decades-long infrastructure investment opportunity. A major takeaway from the discussion was that despite current challenging oil commodity prices, there is no shortage of capital to fund infrastructure development.