Lack of high grade oil and gas supplies 'threatens healthy energy transition' - WoodMac study

A lack of high quality oil and gas supplies is threatening emissions targets and a “healthy energy transition”, according to new research.

Publishing its “Scraping the Barrel” report, energy consultancy Wood Mackenzie said the energy transition would require oil and gas for decades to come. But analysts noted that the supply of lower-cost, lower-carbon “advantaged” barrels remained scarce, threatening emissions targets and causing upstream providers to “pivot to new strategies”.

The firm’s analysis concludes that in terms of overall supply, total discovered and prospective oil and gas resources are more than double projected demand in 2050. However, “truly advantaged” resources, with low breakeven and resilience to low prices are anything but plentiful, it noted.

Andrew Latham, vice president, energy research for Wood Mackenzie Upstream, said: “We see enough advantaged resources to satisfy only about half of our base-case oil and gas demand forecast to 2050. We expect high-impact exploration to be an important source of new resource for as long as demand remains at or near our energy transition outlook trajectory.”

The study suggests that decarbonisation technologies and biofuels could play an even bigger role in the energy transition. Bio-based diesel and aviation fuels from plant-based feedstock could emit 80 per cent less carbon than the crude oil-based products that dominate today’s oil market.

“This is really a wake-up call for the industry and for the overall energy transition outlook,” Latham added. “These are avenues that help alleviate advantaged supply pressures, but it is definitely going to be an uphill struggle.”