Meeting the world’s growing energy demands in economically and environmentally sound ways will be more difficult than sending someone to the moon, a top oil executive said Tuesday in Bismarck.


Clarence Cazalot Jr., president and CEO of Marathon Oil Corp., the nation’s fourth-largest petroleum firm, gave the capstone address at the 18th Williston Basin Oil Conference and Expo that ended Tuesday.

Cazalot also announced the Houston-based company’s first quarter net income came in at $457 million, up 69 percent over the year-ago figure of $282 million. He cited the recovering world economy and higher oil prices in a news release. In his speech, he said the wish of people worldwide to share in such prosperity is driving up energy needs.

The globe’s population is projected to grow from 6.5 billion to 8 billion by 2030. Even now, 1.5 billion people don’t have daily access to electricity and want it, he said.

Combined with such growing demand from undeveloped nations, that means energy needs will increase 40 percent in the next 20 years, according to the International Energy Agency, Cazalot said.

“That’s roughly equivalent to adding two countries the size of the United States to the world’s consumption,” he said.

It means world oil production will have to rise from 85 million barrels a day to about 100 million barrels a day, and half of it will have to come from new sources as old fields die off, said Cazalot, who spent a career as a geophysicist and petroleum geologist, often in offshore drilling.

“To put this in perspective, that’s equivalent to adding the supply of four more Saudi Arabias in the next 20 years,” Cazalot said. Finding it won’t be easy, but North Dakota is a part of the answer, he said.

North Dakota last year set its own record by producing 80 million barrels, and state oil industry leaders think that will rise to about 100 million barrels in the next year or two.

Diversity needed

But oil is only part of the answer, he said.

“Now I know this is a petroleum conference, but I must say that I believe there is no question renewable energy is an essential and growing part of our future energy mix, and Marathon is indeed investing in both conventional and advanced biofuels.”

North Dakota’s doing a good job in biofuels, too, he said.

“But the fact is that all of the world’s biomass, wind, solar, wave, tide and geothermal energy today accounts for about 10 percent of total energy supply,” he said.

That makes calls within Congress and elsewhere to replace fossil fuels with renewable energy and cut greenhouse gas emissions by up to 80 percent in only 40 years “political rhetoric and posturing,” he said.

The challenge of finding needed new energy “is far greater than putting a man on the moon (and) must be addressed in a rational, fact-based manner that taps the leadership and finest critical-thinking skills of people across the entire spectrum, regardless of ideology or political affiliation.”

He said investing more in energy efficiency, such as upping car fuel standards to 35 miles per gallon, could cut energy demand by 20 percent.

At the same time, all forms of energy production, from renewables to nuclear and fossil fuels, need to grow, he said.

“Diversity equals security and comes in two forms: diversity in the forms of energy we use and diversity as to where the energy comes from,” Cazalot said.

Oil and gas promise the most potential for rapid, smart growth to meet demand, while biofuels, for example, still face many questions about how economically they can be produced, he said.

Natural gas production should be increased because the U.S. has a 100-year supply, and it’s cleaner than other fossil fuels, he said.

Oilwise, the United States is the world’s third-largest oil producer. But only 5 percent of federally owned lands are open for development, Cazalot said, calling for more access in Alaska and off the nation’s coasts.

“President Obama’s recent proposal to open areas of the Atlantic Ocean and Gulf of Mexico to new exploration and production is a positive development, but specifics remain unclear, and any such activity is likely years away.

“However, I will say that given the current oil spill in the Gulf, our industry will need to redouble its efforts to demonstrate our ability to safely develop these resources, which are so vital to our nation’s economy and our standard of living,” he said.

Innovation and new technology, such as that being demonstrated almost daily in North Dakota’s oil patch as previously unreachable oil supplies are getting drilled, can provide the answers to meeting the world’s energy needs, he said.

For example, the relatively new process of Carbon Capture and Sequestration is storing CO2 out of harm’s way in the ground while facilitating the drilling of difficult to reach oil.

Marathon is working to use CCS in its work in Canada’s oil sands, which have eight times more oil as U.S. reserves hold now, Cazalot said.

It’s all part of how energy companies are going invest what’s projected as up to $30 trillion to meet the world’s energy needs by 2030, he said.

Marathon has invested $1 billion already in North Dakota’s Bakken oil formation and plans to spend another $1.5 billion over the next few years, much of it in what is expected to be the next big play, the Three Forks formation under the Bakken, Cazalot said.

Ron Ness, executive director of the North Dakota Petroleum Council, which with the state’s Oil and Gas Division organized the conference, said at final count it drew a record 2,750 people from 42 states, several Canadian provinces and a half-dozen foreign countries.

Next year’s conference will be held in Regina, Sask.

Source: GrandForksHerald.com

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