Today’s rapidly changing world – economically, socially, technologically, and geopolitically – means that future E&P activity will be driven by a multitude of factors. No one in the upstream industry believes staring into a crystal ball will give the answers, but when it comes to the views of some of the biggest energy companies in the world, most of us sit up and take notice. Whether the information comes from ExxonMobil, BP, or Statoil, however, the same picture appears to emerge: Looking ahead to 2030, 2040, and even 2050, it is oil and gas that will fuel the world’s economic growth.

Statoil’s future perspective

Statoil, the most recent of this trio to give its global view in its annual “Energy Perspectives” report, forecasts that oil demand will peak around the year 2030, with gas demand increasing at an annual average of 1.6% until 2040 at least. Global primary energy demand will grow 40% by 2040, with this coming mainly from non-OECD countries, where demand will rise by more than 60%.

The company’s chief economist, Eirik W?rness, said in the report that although oil will see an average growth of a modest 0.5% per year (compared to 8.9% per year for renewables), fossil fuels will continue to supply a massive 72.5% of total primary energy demand in 2040. Oil demand will grow less than demand for other energy sources but is still expected to rise by 15 MMb/d to around 100 MMb/d by 2040.

Statoil’s outlook also forecasts total liquids supplies becoming more diversified and less dependent on crude. The technology-driven shale revolution and continuous improvements in oil sands technology mean that several “new” types of oil liquids – like tight oil, NGL from shale gas, and oil sands – have become economic, the company said.

One of the prime movers behind this trend is the US. Statoil’s report flagged how the shale gas revolution in the US began to expand in the late 2000s into oil. From modest output levels then, US tight oil production has increased sharply over the last four years, with production to possibly hit 2 MMb/d by year-end 2013.

“The Bakken and the Eagle Ford formations in North Dakota and Texas, respectively, currently account for two-thirds of total production. The tight oil revolution has exceeded most expectations. A stronger increase in drilling activities than expected and significant improvements in well and rig productivity have been important drivers behind the surprisingly strong growth,” the company said in the report.

“Furthermore, the limitations of the pipeline system, which potentially could have restrained the production growth, have effectively been dealt with through a fast expansion of the rail capacity,” the report continued.

Outside North America, Brazil and Kazakhstan have the largest potential for production growth, the company said. However, new project developments have been hampered increasingly by local content requirements and capacity problems. These restraining factors will probably continue to affect future projects and suggest only moderate output growth.

One last highlight from Statoil’s latest report is that the elevated level of oil prices since 2011 has led to increased exploration activities, several new finds, and a significant upward revision of estimated recoverable resources, especially regarding US shale oil resources.

The size of the shale oil resources outside North America is still unclear, but the total resource picture for various oil sources, including conventional oil, tight oil, and Canadian unconventional oil, continues to improve, according to the report.

“The economic recoverable resources depend on access, the associated cost level including the capacities and competence of the supplier industry, fiscal regimes, and the level of oil prices. Although low-cost production in the Middle East potentially could replace much of the high-cost production outside OPEC, the full-cycle costs of marginal projects in North America, tight oil in other regions, and ultra-deepwater products will probably continue to be important determinants of the long-term price formation,” the company said in the report.

ExxonMobil’s outlook

So what does ExxonMobil think? Its annual “Energy Outlook” came out at the beginning of the year, but with such long-term views being taken, the story looks much the same.

Energy demand in non-OECD developing nations will rise 65% by 2040 compared to 2010, the report said. Global energy demand will grow 35%, even with significant efficiency gains, and will be driven by the world’s population expanding from about 7 billion people today to nearly 9 billion people by 2040.

Technology is enabling the safe development of once “hard-to-produce” energy resources, the company said in the report, with oil to remain the “No. 1 global fuel, while natural gas will overtake coal for the No. 2 spot.”

Oil and gas will supply about 60% of global energy demand in 2040, up from 55% in 2010, according to ExxonMobil. It projected that total liquids demand will rise to 113 MMboe/d in 2040, representing a 30% increase from 2010.

Although conventional crude production from both OPEC and non-OPEC sources will see a slight decline, the company said, this would be more than offset by rising production of crude oil from deep water, oil sands, and tight oil resources.

According to ExxonMobil’s outlook, “The successes of deepwater and oil sands developments are examples of how new technologies are key to delivering additional sources of liquid supplies to meet rising demand. Ten years ago these supplies were barely on the radar screen.

“The same is true for tight oil, which is growing as a result of recent advances in technology that have enabled the energy industry to unlock the oil found in tight rock formations,” the report continued. “The advances are very similar to the ones that have enabled the growth in unconventional production of natural gas, which is also producing a rise in NGL.”

The major went on to point out that the world continues to hold significant oil resources. Even by 2040 it believes that less than half of the world’s recoverable crude and condensate will have been produced. Even while being produced, the resource base continues to grow due to the industry’s ability to find and develop new types of resources through improved science and technical innovations.

The company also pointed out that, by 2040, only about 55% of the global liquids supply will come from conventional crude oil production, with the rest to come from deep water, tight oil, NGL, oil sands, and biofuels, enabled by continuing improvements in development and production technology.

Like Statoil’s report, ExxonMobil’s report highlights North America’s dramatic rise, with production of technology-enabled supplies representing 75% of the region’s total by 2040. The majority of these supplies come from tight oil resources like the Bakken formation in North Dakota, deepwater developments in the Gulf of Mexico (GoM), and Canadian oil sands. These will enable North American total liquids production to grow about 40%, the company said.

Elsewhere, total Latin American liquids production will almost double due to developments in Brazil’s deepwater boom and production from Venezuelan oil sands, while in the Middle East continued growth in conventional liquids along with NGL and tight oil developments coming later will lead to a 45% supply growth.

Africa’s large deepwater developments, primarily in Angola and Nigeria, will drive growth in supplies there.

Gas remains the fuel of the future, and ExxonMobil expects global gas supplies to rise about 65% by 2040, with 20% of production to take place in North America. Globally, about 60% of the growth in natural gas will come from unconventional resources, which is approaching one-third of the forecast global supply by 2040.

The International Energy Agency estimated there are about 28,000 Tcf of remaining natural gas resources around the world. This is enough to meet current demand levels for more than 200 years. Globally, unconventional gas makes up about 40% of the estimated remaining resource.

BP’s 2030 vision

Fellow major BP appears to strongly agree. Its annual “Energy Outlook to 2030,” unveiled earlier this year, has global energy demand growing at an average 1.6% a year to 2030. “While the fuel mix is evolving, fossil fuels will continue to be dominant,” the report said. Oil, gas, and coal are expected to have market shares of around 26% to 28% each by 2030, with oil demand again expected to be the slowest growing to 2030 at an average of 0.8% a year.

“Nonetheless, this will still result in demand for oil and other liquid fuels being 16 MMb/d higher in 2030 than 2011. All the net demand growth will come from outside the OECD. Demand growth from China, India, and the Middle East together will account for almost all of net demand growth,” the report said.

Supply growth for oil and other liquids will come mainly from the Americas and the Middle East, the company said, with more than half of the production growth to come from non-OPEC sources. Rising output from US tight oil, Canadian oil sands, Brazilian deepwater fields, and biofuels will more than offset mature declines elsewhere.

Unsurprisingly, the company also forecasts that gas will be the fastest growing of the fossil fuels, with demand rising at an average of 2% per year. Shale gas supplies are expected to meet 37% of the growth in demand and account for 16% of world (and 53% of US) gas production by 2030, according to BP’s outlook. While North America’s shale gas production growth is expected to slow after 2020 and production from other regions is expected to increase, in 2030 North America is still expected to account for 73% of world shale gas production.

Although major shale gas and tight oil resources exist around the world, and while advances in technology and high prices offer the potential for development of these resources, a combination of other factors also is necessary, the company said. According to BP’s chief economist Christof R?hl, the unconventional reserves unlocked in the US have been made possible not only by the resources and technology but also by above-ground factors such as a strong and competitive service sector, land access facilitated by private ownership, liquid markets, and favorable regulatory terms.

These factors are not easy to replicate. “While we expect other regions will adapt over time to develop their resources, by 2030 we expect North America still to dominate production of these resources,” R?hl said in the report.

“In 1980 companies and governments collectively had proved reserves of just under 700 billion barrels of oil. Today there are more than 1,600 billion, despite massive consumption over this period,” the report said.

Future exploration trends

The desire to look into the future came up at a recent event in London, where explorationists gathered at the annual European Association of Geoscientists and Engineers Conference and Exhibition to look at where some of this future production might come from.

In one session titled “Exploration to 2050,” panelists discussed their future visions, with the general consensus being that exploration activity will be affected by the level of access to new areas and emerging technologies as well as growing energy demand.

The panel acknowledged the industry’s exploration success over the past decade, which has seen it reap the rewards not only from the world’s deepwater plays but also from the meteoric rise of unconventionals in the US. In addition, the panel also noted the emerging role of familiar old plays such as the presalt carbonates of the South Atlantic and the dry gas resources of the Rovuma Delta in East Africa.

Panelist Mike Daly, BP’s executive vice president of exploration, said that, in his opinion, deep water had been the “opportunity of the past two decades” and that the “curve today is still rising steeply.” However, he went on to say that although new deepwater and ultra-deepwater fields will continue to be found, this success would not continue over the course of the next 50 years at the same level as it previously had.

“So we are going to have to go to new frontiers like the Arctic, and we have already seen exploration activity pick up, especially in countries such as Russia,” he said.

He also flagged the continuing move back onshore by the industry “to places where we have been before, like has been done in the US,” as well as the need to go and search for hydrocarbons in “areas that have just not been explored yet.”

Mario Carminatti, executive manager of exploration at Petrobras, highlighted what he described as a “significant change in the exploration strategies of the oil companies for the coming decades” for them to continue to replace their produced reserves.

Pointing out his own company’s dramatic success in the presalt Campos and Santos basins offshore Brazil, he predicted that there are still many unexplored basins around the world that could prove as successful as the presalt carbonates of the South Atlantic basin and onshore unconventionals in the US. “These can be used around the world. These two new paradigms point toward increasing success elsewhere,” he said. “I believe the current and best activity at present can be used to predict activity in the future.”

Alison Goligher, executive vice president of unconventionals at Shell, pointed out that the sheer level of growing demand means that oil and gas will have a major role to play going forward to at least 2050. Unconventionals will play a vital role in helping to supply the reserves required, with oil’s role as a transport fuel meaning there will be a long-term requirement for liquid fuels as part of the energy mix.

She added, “There are changing frontiers, and we need time to get it right. But unconventionals are here to stay.”

Brian Maxted, president of Kosmos Energy, said that in terms of exploration, “The winners are going to be the companies that can go early, do the analysis, and make a quick decision on an area.” This does not mean just in areas previously untouched. Maxted highlighted Anadarko Petroleum’s recent and large Shenandoah discovery in the deepwater US GoM as an example of how new technology and a renewed focus can help to “open up basins that have been there for 50 years.” There are stratigraphic plays in existing basins that still have “huge potential.”

Luca Bertelli, Eni’s vice president of exploration and unconventionals, summed up the attitude needed to keep finding new production sources. “There are always a lot of implications when you go somewhere new like the Arctic, for example. But we have to look everywhere, keep an open mind, and take up the challenge.”