Huge Investment in Energy Forecast by BP

A huge investment in energy of $1 trillion dollars per year, for the next 20 years must be good news for the Canadian Oil & Gas Industry; Oil Sands and heavy oil in Alberta and Saskatchewan, plus natural gas in BC as well as the western prairies must feature strongly in future energy development.

Just to get a handle on this, a billion is a thousand million, and a trillion is a thousand billion; so if just five percent (5%) of this investment is made in Canada it would represent investment of $50 billion a year.

Considering the size of Canada's Oil Sands, 5% should be a very conservative number. (The Athabasca
Oil Sands have approximately 170 billion barrels of economically recoverable oil [about 10% of total], which means that Canada's total oil reserves are the second largest in the world after Saudi Arabia's.)

Tony Hayward, BP's CEO, is projecting a 45% global increase in energy requirement, which will require a huge investment to meet it.

According to BP's projections, we'll need about 45% more energy in 2030 than we consume today. And we mustn't underestimate what it will take to achieve that. We'll need an investment of some $25 to 30 trillion - that's more than $1 trillion a year for the next 20 years.

But BP also sees the necessity of a diverse energy mix, which will include nuclear, wind, solar and biofuels, along with fossil fuels to meet future energy requirements. No doubt the development of diverse sources is vital to the world economy, but in this case BP is paying due respect to the spectre of human induced climate changed.

We also need a more diverse energy mix which will enable energy security and help address the issue of climate change.

Alternative energy - nuclear, wind, solar and biofuels, along with fossil fuels - will all play an important role.

BP has to be politically correct in respect to global-warming theories, but hopefully CO2 theories will be on a firm scientific footing long before 2030, and the current hysteria and wild speculations will have died the death they deserve.

Hayward adds the necessary note of caution to those who want to upset the global economy:

But we need to be realistic - the transition to a lower-carbon economy won't happen overnight.

The sheer scale of the energy industry makes this impossible. To give you an example, it takes more than 30 years to turn over the capital stock in the power sector and 15 years for cars. Such long lead times mean that like it or not, fossil fuels will continue to play a very significant part in the future energy mix.

At BP we estimate that by 2030 they'll still be satisfying about 80% of our energy needs.

The full text of Tony Hayward speech: Meeting the Energy Challenge can be read at the BP website

Gurth Whitaker
Calgary, Alberta