Foster Wheeler Global Power Group Biomass projects may help meet energy needs.

In a new position, the petroleum industry is warning that investment in alternative energy sources is crucial to meeting growing global demand over the next 25 years.

A new report released on July 18 by the National Petroleum Council says that although the production of oil and gas is expected to increase over the next 25 years, supply from conventional sources will be insufficient to keep up with growing global demand in the years ahead. As a result, “expansion of all economic energy sources will be required, including coal, renewables and unconventional oil and natural gas,” the report concludes.

The council, a federal advisory group to Energy Secretary Samuel Bodman,  makes a number of recommendations that, if implemented, could have far-reaching implications on energy policy over the next 25 years, from the types of projects that are undertaken to an increase in overall investment. But the researchers note that a number of risks, including uncertainties about global political developments and potential future carbon-emission policies, could make it difficult to predict how well the world will be able to keep up with growing demand.

The report, called “Facing Hard Truths About Energy,” estimates that global demand for energy could increase by as much as 50% to 60% by 2030, an increase that will be driven in large part by developing nations. Donald Paul, vice president and chief technology officer for Chevron Corp., one of the study leaders, said at a July 18 NPC meeting that the current uncertainty in the energy sector means that all potential opportunities should be explored. “If you begin to eliminate branches of opportunities, you limit your ability to deal with uncertainties in the future,” he said.

NPC also calls for more investment in infrastructure to support energy development. The International Energy Agency estimates that $20 trillion will be needed overall for energy supply and projects. NPC notes, however, that limitations around permitting as well as social, environmental and land-use constraints make long-term infrastructure planning difficult. “Additional information is needed to understand the full requirements for energy infrastructure additions and the potential limitations to timely investment,” the report says.

James L. Jones, president and CEO of the Washington, D.C.-based U.S. Chamber Institute for 21st Century Energy, says the report will be a useful tool in crafting future energy policies. “It is important to stress that when it comes to energy policy, there is no magic bullet or simple solution,” he says.

The study is particularly significant because it represents the opinion of a broad cross section of groups, from environmental nonprofits to oil companies. More than 350 entities provided input for the study. “This was not the oil companies sitting in a room spouting a story beneficial to the oil companies necessarily,” says Mervyn Sambles, vice president of corporate development at Fluor Corp., Irving, Texas.

Ray Bignell, a consultant for Foster Wheeler’s Global Engineering and Construction Group in London, notes that even though investment in alternative energy sources is likely to increase, “it is still a very small proportion, and the data in this report indicates you’re going to have trouble moving away from hydrocarbon dependency for at least the next 25 years.” 

Few would argue that adopting any of the report’s recommendations would be easy. “I think the report reinforces the challenges that lie ahead...and the many uncertainties,” adds Carolyn Greenhalgh, director of marketing and strategic planning at Foster Wheeler’s Global Engineering and Construction Group.

One constraint is a shortage of workers. As demand for energy-related projects has grown, many contractors find themselves struggling to staff jobs. NPC says that certain federal laws make it difficult for retirees—a potential source of additional labor—to return to work part time. Sambles says Fluor would like to hire retired engineers as consultants and coaches “to ensure the transfer of knowledge to the younger generation,” but the current regulations makes that difficult.

As the energy debate continues in Washington, the report’s authors hope that their recommendations are disseminated widely. “I hope [lawmakers] look at the data,” says Alan Kelly, former corporate planning general manager with Exxon Mobil Corp., one of the study leaders. “This is a landmark effort...I feel the responsibility to put this to the best possible use,” says Bodman.