Oil and gas investments of $1.4 trillion by 2024 will lock in greenhouse gas emissions, report says
Energize Weekly, December 18, 2019
Worldwide investment in oil and gas production, estimated at $1.4 trillion over the next five years, will lock in carbon emissions that will make it impossible to meet the goals to limit global warming, according to a report by a coalition of environmental groups.
“While capital expenditure (CapEx) on new oil and gas projects shrank after the low-price years of 2015 and 2016, it is now on a steady trend upward,” the report – sponsored by groups including Greenpeace and the Sierra Club – said.
Leading the investment push and the increase in emissions will be the U.S., with production of as much as 24 billion barrels of oil equivalent between 2020 and 2024 – more than any other country. The U.S. would make up 85 percent of the new global oil and gas production through 2024.
“U.S. oil and gas expansion by itself will make it virtually impossible for the rest of the world to manage the safe, equitable and necessary phase-out of oil and gas production by 2050,” the report said, estimating that through 2050, new drilling could release a total 120 billion tons of carbon emissions (GtCO2).
The 2015 Paris Climate Accord set a goal of limiting global warming through worldwide emission reductions to no more than 2 degrees Celsius and optimally 1.5 degrees Celsius by the end of the century.
The Permian Basin, which straddles west Texas and New Mexico, would account for 39 percent of U.S. production by 2050, based on planned investment.
The gas-rich Appalachian Basin, covering Pennsylvania, Ohio and West Virginia, would account for another 19 percent of new U.S. production and the Eagle Ford Shale play in Texas, another 9 percent.
Following the U.S., Canada would be the biggest source of new production and emissions with investments in the Alberta tar sands and the Montney Shale Basin in British Columbia. Those investments would add an extra 25 GtCO2 – more than doubling the sector’s emissions, the report estimated.
Worldwide development of shale plays is driving investment with 15 of the top 25 companies, by production over the next five years, having significant shale resources. Among those that do not were four Middle Eastern producers and two Russian companies. The report projects CapEx to reach $365 billion in 2024.
“New financial investment decisions over this five-year period have the potential to unlock more than 148 GtCO2 from currently undeveloped reserves before 2050,” the report said.
The 25 companies would be responsible for 50 percent of production to 2050 based on the investments they are set to make in the next five years.
“We are already seeing the effects of overinvestment in the existing fossil energy system. In 2018, oil and gas production grew by more than 3 percent,” the report said “Not surprisingly, global carbon dioxide emissions grew by a similar amount, the sharpest rise since 2011.”