The Outlook for Energy A View to 2030 & Impact Of Global Geopolitics

Florida International University 29 th Annual Journalist & Editors Workshop on Latin America and the Caribbean “Latin America’s Energy Future” Presented by: Dr. Eduardo G. Del Valle EGDV CONSULTANTS, INC Miami, May 5, 2011

Energy sources evolve; new technologies have huge influence on both supply and demand

Global Demand By Fuel

Quadrillion BTUs 700

Standard of living improved dramatically over past century driven by technology and abundant energy. By 2030 demand projected at 6 times 1950 level with increasing diverse energy mix; GDP 20 times 1950 level

600 500 1901- First gasoline powered automobile mass produced 400 1884- First steam turbine 1980 – First U.S. windfarm consisting of 20 turbines built in New Hampshire 1954 – Modern silicon solar cell invented

Other Renewables Nuclear Hydro Gas

300

Oil

1859- First oil well drilled in Titusville, PA 200 100

Coal Biomass

0 1800 1850 1900 1950 2000 Source: Smil,

Energy Transitions;

ExxonMobil

Energy Outlook Basis

100 countries 15 demand sectors 20 fuel types technology & policy

3

Geopolitical Forces/Conflicts that Impact Outlook

• Resource nationalism is making access to new reserves more difficult and/or more costly • Examples: Russia, Venezuela, Bolivia, Ecuador, some African countries • Revolution in communications is increasing societal expectations in less developed countries and social pressures for more freedom and a better life are building • 400 million Chinese with capacity to move from bicycle to vehicles. From cooking with wood to cooking with electricity • • India will follow Cumulative environmental impact?

• Chinese oil companies aggressiveness in pursuit of new energy reserves is pre-empting Western Oil companies from economically accessing new supplies. • Prrivate sector companies cannot compete with promises of additional Chinese government assistance for economic and social development • Up to now Western government have abastained from reacting, but will this posture last?

Geopolitical Forces/Conflicts that Impact Outlook

• The complex corporate social difficulties that arise working in unstable political/social environments that are prone to corruption and human rights violations • What is the appropriate responsibility of oil companies to ensure that human rights are respected and the monies generated from their investment are properly channeled for economic development • Should Western democracies develop legal protocols to assist oil companies in these complex balancing acts • Combination of producing countries budgetary pressures coupled with climate change uncertainties are making longer term planning and capital investment decisions increasingly complex and risky • Non-Opec production has been unable to keep up with growth in demand – not a good sign • Legal and regulatory framework: Climate change lesgislation, subsidies, environmental restrictions, government mandates and taxation • Middle East Instability – where will it lead?

• There is no known technology today that is expected to have any major impact in altering the projected energy mix by 2030

Population + Improved Standard of living Drives Energy Demand Growth

Population

Billion 18

Average Growth / Yr. 2005 – 2030 0.9%

15

GDP

Trillion 2005$ 100

Average Growth / Yr. 2005 – 2030 2.8%

80

Energy Demand

Quadrillion BTUs 1200

Average Growth / Yr. 2005 – 2030 1.2%

1000 12 800 60 9 600 40 6 400 20 3 200 0 1980 2005 2030 0 1980 6 2005 2030 0 1980 2005 2030

Economic Growth Fastest in Non-OECD

GDP

Trillion 2005$ 100

China and India grow at 6%/yr

80

Other Non OECD Africa Middle East Latin America India

60

China Other OECD

40

Europe OECD

20

United States

0 1980 2005 2030

Average Growth / Yr. 2005-2030 Non OECD 4.9% ~ 40% of GDP by 2030 OECD 2.0%

Source: ExxonMobil Energy Outlook

Expanding Economies Drive demand up by 35% OECD

Quadrillion BTUs 450

OECD energy demand flat due to increased energy efficiency, even as GDP rises 60%

300 150

Other Non OECD

Quadrillion BTUs 450

Non OECD demand up > 70%. Higher electricity demand and increased vehicle ownership due to rising prosperity Other

300 150

Africa Middle East Latin America India

0 1980

Europe OECD

2005

United States

2030

China

0 1980 2005 2030 Source: ExxonMobil Energy Outlook

Demand by Sector --

Efficiency is key

Demand would have grown by 84 MBDOE were not for efficiency gains

Quadrillion BTUs 300

1.7% 2030

250

Transportation consumes 70% of oil demand

200

0.9% 2005

150

1.3%

100

0.3%

50 0 Transportation Industrial Res/Comm PowerGen 9

167

Growth

300

Savings

Energy Efficiencies to Accelerate

Efficiency gains saves 55 MBDOE Rate of energy efficiency improvements expected to dramatically accelerate by 50% driven by higher prices and advances in technology

Source:

Energy Information Administration

Transportation Demand Grows 40%

Demand

MBDOE 70

Growth heavily concentrated in Asia. Rising personal income produces steep increase in vehicle ownership, up by 80% by 2030

60

Rail Marine

50

Aviation

40

Light Duty Demand

MBDOE

400 million vehicles more than today,

30

but demand offset by efficiency gains

20

Non OECD

30

Heavy Duty

10 20 10 0 1980 2005

Light Duty

2030

OECD

0 1980 2005 Source: ExxonMobil Energy Outlook 2030

Electricity Demand will grow by 80%

By Sector

k TWh 30

Transportation By Region

k TWh 30

Demand will grow 150% in NonOECD in conjunction with broader prosperity and rising income Commercial

20 20

Non OECD

10

Residential Other Industry

10 0 1980 2005

Heavy Industry

2030

OECD

0 1980 2005 Source: ExxonMobil Energy Outlook 2030

Future U.S. Power Costs

Baseload, Startup 2025

2010 cents/kWh 20

$60/ton CO 2 2

15 PV 10 5 0 Coal Gas Nuclear Wind Coal-CCS Gas-CCS Geo Thermal 13 Solar Thermal

Power Generation Mix Evolves

Global Capacity

GW 800 700

Nuclear

600 500 400 300 200 100 0 '05 '30

Wind

'05 '30

Solar

'05 '30

By Generation

k TWh 35 30 25 20 15 10 5 0 1980

Oil

14

Gas Coal

2005

Nuclear Wind & Solar Other Renewables

2030

North America

Quadrillion BTUs 140 120 100 80

Power Generation by Fuel

Europe

Quadrillion BTUs 140

Natural Gas and Coal will show the greatest growth.

120 100 80

90% of new power gen in China will be from Coal.

A big impediment and source of conflict with the objective to reduce GHG.

Asia Pacific

Quadrillion BTUs 140 120 100 80

Renewables Nuclear

60 60 60

Coal

40 20 40 20 0 1980 2005 2030 Source: ExxonMobil Energy Outlook 0 1980 2005 2030 40 20 0

Oil

1980 2005

Gas

2030

By Region

Billion Tons 40 30

Energy-Related CO

2

Emissions

20

Emissions per Capita

Tons per Person

2005 2010 Energy related CO2 emissions in Non-OECD countries exceed by 40% those of OECD, and are doubling those of OECD by 2030

15

2030 Other Non OECD India

20 10

China

10 5

OECD

0 1980 2005 2030 0 United States Europe OECD China India Source: ExxonMobil Energy Outlook

Global Demand by Fuel

Quadrillion BTUs 250 Oil, Gas and Coal will still provide over 80% of total energy demand by 2030

0.7%

200

2.0% 2030

150

0.7%

100

2005 World Average Growth/Yr. ’05 to ’30 – 1.2%

50 0 Oil Gas Source: ExxonMobil Energy Outlook

0.4% 2.3%

Coal Biomass/Other Nuclear

2.1% 9.9%

Hydro/Geo Wind, Solar, Biofuels

Global Liquids

Dependence on OPEC will continue to grow

Liquids Demand OPEC Crude ~27 Average Growth / Yr. 2005 – 2030 0.8% ~29 ~35 Biofuels ~36 2030 OPEC Non-OPEC 2005 NGL, OPEC Condensate, Other Canadian Oil Sands Non-OPEC Crude & Condensate

Supply 18

Development Challenges and Solutions

Increase World development continues, while lives improve and economies grow Efficiency Mitigate Emissions 8 billion people 100% increase in global GDP 35% increase in energy demand 300 quadrillion BTUs saved via efficiency or equivalent to 55 MBDOE All reliable, affordable energy supplies needed Expand Supplies

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