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Page added on February 7, 2018

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Exxon To Produce All Of Its Oil Despite Peak Demand Fears

Exxon To Produce All Of Its Oil Despite Peak Demand Fears thumbnail

ExxonMobil was forced to finally acknowledge the possibility that future climate change policy could lead to peak oil demand, a serious threat to the company’s operations over the long-term.

In response to a shareholder resolution passed last year, the oil major just released a report that recognizes the danger of peak oil demand. By 2040, climate change policies and regulations could cut into oil demand, leading to a drop in consumption by 20 percent.

Under this scenario, oil demand would decline by an average of 0.4 percent per year, with the lower end of the range seeing declines of 1.7 percent per year.

This would mean that global oil demand would decline to 78 million barrels per day (mb/d) by 2040, down from 95 mb/d in 2016. In the most pessimistic scenario (from the oil industry’s perspective), demand drops to 53 mb/d.

It’s a rather bleak picture for oil, and one echoed by a long list of analysts, environmental groups, and increasingly, the oil industry itself. A few weeks ago, a report coauthored by a top BP official, lays out a case in which oil demand peaks and declines, ushering in an era of permanently lower oil prices.

Still, Exxon was clearly issuing the report under duress. The tone of Exxon’s “2°C pathway” scenario suggests that the company doesn’t really see it playing out. While the report suggests that oil demand could fall, Exxon goes to great lengths to downplay the significance, arguing that “[o]il demand is projected to decline modestly on average, and much more slowly than its natural rate of decline from existing producing fields,” and “[e]ven under a 2°C pathway, significant investment will be required in oil and natural gas capacity,” and “[p]roduction from our proved reserves and investment in our resources continue to be needed to meet global requirements,” and the like.

Moreover, the oil major issued a second report, “2018 Outlook for Energy,” that basically undercut its own report on a low-carbon future. In this more bullish report, Exxon predicted oil demand would rise by 20 percent through 2040, essentially the opposite conclusion from the scenario in which climate policy slashes oil demand.

We can tell which one Exxon really believes because it says it uses the more bullish Outlook for Energy report “to help inform our long-term business strategies and investment plans.”

(Click to enlarge)

Ultimately, Exxon predicts that it will be able to produce 90 percent of the total oil and gas reserves that it has in its portfolio. The company also says that even in the climate scenarios in which demand falls, ongoing investment will be needed to offset depletion from existing fields. So, even in that case, the oil major still believes that it will produce nearly all of the oil and gas it has on its books.

That is the justification for why Exxon envisions “little risk” related to climate change policies. Exxon says that only a small portion of its reserves would be affected by climate policy, but in those situations the company believes “that investments could mitigate production-related emissions and associated costs,” which could make them viable even in a carbon-constrained world.

Plus, the company would learn a lot more about the reserves in the ensuing decades. “Accordingly, we believe the production of these reserves will likely remain economic even under the 2°C Scenarios Average.”

As a result, Exxon does not see a scenario in which it will be forced to leave oil in the ground — it plans to produce everything it has, even in the face of tightening climate regulations.

Environmental groups say that is exactly the problem. “ExxonMobil’s own analysis assumes the world will continue to burn through oil and gas to drive their profits and keep us on a path toward global temperatures well above the 2 degree Celsius target,” Kathy Mulvey, a campaign manager at the Union of Concerned Scientists, said in an emailed statement to Bloomberg. “Nowhere do they foresee carbon emissions bending rapidly toward zero — as they must well before 2040,” she wrote.

By Nick Cunningham of Oilprice.com



22 Comments on "Exxon To Produce All Of Its Oil Despite Peak Demand Fears"

  1. Shortend on Wed, 7th Feb 2018 9:14 pm 

    Sure they will…just because of climate change…harr,harr,harr
    Gee, we HAVE to blame somebody…its those damn environmentalists that are causing all the problems..aholes

  2. Cloggie on Wed, 7th Feb 2018 10:22 pm 

    Poor Heinberg, from peak oil supply and “the party is over” towards peak oil demand and self-driving e-vehicles in a matter of ten years.

  3. MASTERMIND on Wed, 7th Feb 2018 10:33 pm 

    Clogg

    As M. King Hubbert (1956) shows, peak oil is about discovering less oil, and eventually producing less oil due to lack of discovery.
    https://imgur.com/a/6dEDt

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Saudi Aramco CEO sees oil shortage coming as investments, oil discoveries drop
    https://www.reuters.com/article/us-aramco-oil/aramco-ceo-sees-oil-supply-shortage-as-investments-discoveries-drop-idUSKBN19V0KR

    Peak Oil Vindicated by the IEA and Saudi Arabia

  4. MASTERMIND on Wed, 7th Feb 2018 10:33 pm 

    Clogg

    Self driving EV’s LOL you are so dumb!

  5. Sissyfuss on Wed, 7th Feb 2018 11:30 pm 

    Yes, Exxon, known as a paragon of virtue is telling us the unvarnished truth once again. Because it cares.

  6. deadly on Thu, 8th Feb 2018 4:52 am 

    You can’t make this stuff up.

    In Britain, there is a power plant that generates electricity, goes by the name of Drax.

    In North Carolina whole trees harvested from tree plantations are pelleted, loaded onto ships, shipped to England to be burned at Drax generating station.

    The total amount of electricity generated amounts to 20 percent of renewable energy produced in Britain. More than wind and solar combined, trees from North Carolina do more for renewable energy than wind and solar can do, all of the know-how should be concentrating on increasing CO2 sinks, not destroying them and contributing even more CO2 gas into the atmosphere.

    In other words, it all more or less adds up to fraud. To add insult to injury, the taxpayer is the sucker who pays for it all.

    Harvesting trees in the US to ship to Britain to burn them is the height of stupidity. Just plain dumb. It cannot last forever, that’s for sure. You gotta know what is gonna happen, forested areas in North Carolina will be under severe pressure.

    Go to Lebanon and plant Cedars.

    http://www.bbc.com/news/science-environment-22630815

    You cannot make this stuff up.

  7. rockman on Thu, 8th Feb 2018 7:22 am 

    Shareholders need not worry about XOM’s profits for many decades. Remember an oil company’s profits isn’t determined by how much oil it produces. XOM was a very healthy company when the world was consuming half the current rate. It’s the cost per bbl vs what it’s sold for. As global production declines XOM will spend much less capex on exploration because there will less new reserves to discover. Nearly all of its existing production at that time will have recovered its investment. The primary cost then will be the lifting cost which has always been much less then the discovery cost. Good profits would be the case even if oil prices are relatively low at the time.

    That’s the irony: as the industry shrinks the profit margins may be some of the highest in history. At least until they completely disappear.

    deadly – Yes, equally ironic. Perhaps if they are replanting trees as they harvest that resourse would truly be renewable. If not there will be plenty of coal left to burn in the future. Until it’s also gone.

  8. MASTERMIND on Thu, 8th Feb 2018 10:44 am 

    Exxon Mobil: The Perfect Storm

    https://seekingalpha.com/article/4144104-exxon-mobil-perfect-storm

  9. MASTERMIND on Thu, 8th Feb 2018 10:53 am 

    Clogg has to be the biggest fucking moron in the world! By 2030 you wont own a car? What a fucking idiot! He lives in a total fantasy land to escape his life in his moms basement! LOL

  10. george on Thu, 8th Feb 2018 11:44 am 

    Every twenty years the forecast moves ahead another twenty years.
    ROFLMAO

  11. Cloggie on Thu, 8th Feb 2018 2:24 pm 

    “By 2030 you wont own a car? ”

    That is the conclusion of a British peer reviewed study, so it is true, well according to your standards:

    https://reneweconomy.com.au/death-spiral-for-cars-by-2030-you-probably-wont-own-one-93626/

    But millimind, your statement is quite revealing as you have been trolling this board with your repetitive BS that society will break down in a few years. And now you dismiss any idea that by 2030 a large number of people will not a own a car because they will travel in robots “from the pool”.

    Busted, apneaman.

  12. Harquebus on Thu, 8th Feb 2018 4:10 pm 

    The global growth economy is currently being fueled by debt and not by surplus energy as it used to be. This is not a long term solution and how much longer consumption can be sustained with this new system is anyone’s guess. My opinion is, not much longer.

  13. Roger on Thu, 8th Feb 2018 4:12 pm 

    Europe does seem to have a thing about burning trees…I balked at the price of mesquite in Houston (for my smoker; being from S. Texas where it’s plentiful and practically free…at least 20 yrs ago it was) and was told the Czech republic was driving the price up. Purchasing it to burn for power (has to be some tax angle here…otherwise, I’m sure we’d burn it ourselves). Here’s the link:
    http://fuelfix.com/blog/2013/04/28/europe-energy-found-in-corpus/

  14. Roger on Thu, 8th Feb 2018 4:15 pm 

    So, now Corpus is the leading exporter of mesquite and oil ;).

  15. MASTERMIND on Thu, 8th Feb 2018 4:27 pm 

    Clogg

    Now you listen to me and you listen good. By 2030 you will be dead, I will be dead, and the central bankers will be dead!

  16. Harquebus on Thu, 8th Feb 2018 4:55 pm 

    Here it is again.
    http://theaimn.com/depopulate-or-perish/
    Authored by me.

  17. deadly on Thu, 8th Feb 2018 5:30 pm 

    Here’s an idea, and I know it sounds really dumb, but here goes: Build a power plant in North Caroline that burns trees!

    It can’t be that hard to figure out!

    Leave it to the British to float a ship 8000 miles to buy some firewood. lol

  18. JuanP on Thu, 8th Feb 2018 7:16 pm 

    Micromind is this forum’s most retarded and ignorant regular here. He keeps posting links to old articles that he claims prove all of us will be dead in a few years. I read most of those articles when they came out and none of them make such a ridiculous claim. His ignorance and arrogance know no bounds and are only matched by his insanity and stupidity. The fact that he thinks anyone should listen to him is clear evidence of his complete disconnection from reality. Why would anyone on his/her right mind listen to such an obvious ignorant fool? LOL!

  19. MASTERMIND on Thu, 8th Feb 2018 7:47 pm 

    Juanp you are not arguing with me you are arguing with yourself! So sad…and pathetic…

  20. Mad Kat on Thu, 8th Feb 2018 8:29 pm 

    Juan, that is why I stopped reading his immature, arrogant bullshit. He and Davy are both delusional to infinity. Neither deserve any recognition for their rants.

  21. Kenz300 on Sun, 11th Feb 2018 11:42 am 

    Electric 🙂
    No stopping at gas stations, no oil changes, less over all maintenance, no emissions, no noise, less stress.
    Leave home in the morning with a full charge.
    The future is electric.

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