Operating company executives, their heirs and successors will produce oil and gas when the next century mark turns over.

When 2100 rolls around, oil and gas producers will continue to feed oil and gas to a growing, thriving world.
Under any scenario that makes sense, oil and gas will play a major role in the growth of the Third World and the continued welfare of First and Second World nations. The world will not become a desiccated victim of greenhouse gases, and people will live better than they've ever lived before.
Forecasts can be made for a range of probabilities based on logical decisions by world leaders during the next century, and an Austrian think tank, the International Institute for Applied Systems Analysis (IIASA), with the World Energy Council (WEC), has presented
a range of six alternatives moving toward the next century.
In all of those scenarios, the world will use a smaller percentage of oil than it does now, and in most, it will use a smaller percentage of gas, but the amounts of oil and gas will be greater than today's levels in most of those futures.
In all six scenarios, population will grow from a 1990 level of 5.3 billion to 10.1 billion in 2050 and 11.7 billion 50 years later. And the paths for all six scenarios will be about the same through 2020, because of the long life of existing power plants and refineries. After that time, all scenarios move away from the existing strong reliance on oil and gas as a 53% owner of the total energy supply. To establish a baseline, coal had 24% of the market in 1990, and other sources had 23%.
The three basic cases are:
A) a future of impressive technological improvements and consequent high economic growth;
B) a future with less ambitious, though perhaps more realistic, technological improvements, and consequently more intermediate economic growth; and
C) an ecologically driven future that includes substantial technological progress and unprecedented international co-operation centered explicitly on environmental protection and international equity.
Technology and economic growth
In Case A, the high-technology, high-growth situations vary by types of energy used.
In Scenario A1, oil and gas resources are freely available. Dominance of oil and gas is perpetuated to the end of the 21st century. That view of the future is not unreasonable.
At the other end of the spectrum, Scenario A2 assumes oil and gas resources are limited to known reserves, resulting in a massive return to coal. Experience and coal's reputation as a poor neighbor for the environment make this future unlikely.
Finally, in Scenario A3 rapid change in nuclear and renewable energy technologies results in a phase-out of fossil fuels for economic reasons rather than resource scarcity. This picture is more likely than a return to coal, but without a breakthrough in technology, it is less likely than A1.
Each future picture carries with it a set of assumed results based on the decisions of policy makers and the availability of resources. Each set of decisions creates consequences that may or may not be good for different areas of the world.
For instance, Scenario A1's high levels of availability of oil and gas mean primary energy demand would grow from 9 gigatons of oil equivalent (Gtoe) in 1990 to 25 Gtoe in 2050 and 45 Gtoe in 2100.
It also assumes a high availability of fossil and non-fossil fuels and low technology costs with a high level of technological dynamics. Finally, it assumes there will be no environmental taxes and no constraints on carbon dioxide.
Under Case A, carbon emissions would grow from 6 gigatons in 1990 to a range of 9 to 15 gigatons in 2050 and 6 to 20 gigatons in 2100. The higher numbers in the ranges assume the A2 option with a high use of coal.
The present path
Case B assumes a world that travels a logical path from the current status with no breakthroughs in technology and no consensus among nations to impose international environmental standards.
It incorporates modest levels of economic growth and technological development and the demise of trade barriers and expansion of new arrangements facilitating international exchange. Compared with the Case A scenarios and the Case C scenarios, it is more "pragmatic." Case B fulfills development aspirations of the Southern Hemisphere, but less uniformly and at a slower pace than the other cases. For regions such as Africa, progress is painfully slow.
In this case, primary energy demand grows from 9 Gtoe in 1990 to 20 Gtoe in 2050 and 35 Gtoe in 2100. Resource availability, technology costs and technology dynamics all are at medium levels. There are no environmental taxes or restrictions on carbon dioxide.
Under this case, carbon emissions grow from 6 gigatons in 1990 to 10 gigatons in 2050 and 11 gigatons in 2100.
The environmental options
Case C is a wish list by traditional standards. It probably will not take place in full without a push from some environmental disaster, but pieces of this case already are forming. It assumes unprecedented international co-operation focused on environmental protection and international equity. It includes substantial resource transfers from industrialized to developing countries spurring growth in the Southern Hemisphere. These resource transfers, which move funds from developed nations to developing countries, reflect stringent international environmental taxes and incentives to reduce carbon emissions in 2100 to 2 GtC (gigatons of carbon) per year, one-third of today's level.
In Case C, nuclear energy is at a crossroads. Two scenarios are included. In Scenario C1 nuclear power proves a transient technology that is eventually phased out by the end of the 21st century. In Scenario C2, a new generation of nuclear reactors is developed that is inherently safe, acceptable and small scale - 100 to 300 megawatts (MW) installed capacity.
Under these scenarios, primary energy demand grows only from the present 9 Gtoe to 14 Gtoe in 2050 and to 21 Gtoe in 2100.
They assume fossil energy resources are low and non-fossil resources are high. Technology costs would be high for fossil energy sources but low for non-fossil sources.
Oil and gas
In this industry, a primary concern is the fate of oil and gas in the future. In 1990, the world needed almost 9 Gtoe of primary energy. Oil supplied 3.06 Gtoe of that and gas another 1.68 Gtoe.
Moving to 2050, scenario A1 would use 7.9 Gtoe of oil and 4.7 Gtoe of gas, the high-coal A2 scenario would use 4.78 Gtoe of oil and 5.46 Gtoe of gas, and A3 would use 4.33 Gtoe of oil and 7.91 Gtoe of gas.
In Case B in 2050, the world will use 4.04 Gtoe of oil and 4.5 Gtoe of gas.
Under the environmentally active Case C in 2050, the use of oil would decline to 2.67 Gtoe in the first scenario and 2.62 Gtoe in the second, but gas use would more than double to 3.92 Gtoe and 3.34 Gtoe, respectively.
Regional preferences
Those broad futures are all right as far as they go, but nations in different economic circumstances have different priorities. People in a rich nation will be more willing to spend for environmental enhancements to their energy sources than the poorest 20% of people in Bangladesh with per-capita incomes of less than US $90 a year.
In an IIASA survey, experts on developing regions where energy demand will grow most chose the high-growth Case A. Even the international equity in massive resource transfers from the Northern Hemisphere to the Southern Hemisphere under Case C didn't sway their preferences.
"Thus in Asia and several other developing regions, such as Latin America and the Caribbean and the Middle East and North Africa, there was a clear preference for the vigorous development represented by Case A, characterized by high rates of economic growth with developing countries quickly 'catching up.' There were differences of opinion about how quickly the high-growth path of Case A could unfold, with regional aspirations generally favoring short- to medium-term economic growth rates even above those of Case A," the study said.
The study also pointed out local environmental impacts will take precedence over global change. Indoor air pollution from open fireplaces is a problem in developing countries. It produces indoor pollution levels 20 times that of developed countries. Whole regions could be at risk in some cases. Without abatement measures in rapidly growing, coal-intensive, densely populated areas of Asia, "sulfur emissions could cause serious public health problems and subject key agricultural crops to acid deposition 10 times sustainable levels," IIASA said.
The money game
The good news for the oil and gas industry in the work done by the IIASA was that no expert expected a shortage of resources. The world apparently isn't running out of anything.
The forecasts project continuing high income for oil-exporting nations. Regional reviews concurred with the global perspective that long-term revenues for energy exporters will remain solid. Oil export revenues for the Middle East and Africa are high in all scenarios: up to $300 billion by 2020 in Case A. Even under Case B, they reach $200 billion, and $140 billion in Case C. For the former Soviet Union, gas exports consistently increase in all scenarios through 2020, reaching around 10.6 Tcf a year with revenues increasing to about $50 billion, five times the 1990 value. Beyond 2020, exports and revenues increase further in Scenarios A2 and C1 and Case B, with revenues exceeding $100 billion, 10 times the 1990 value.
All this energy won't be free. In a separate study titled "Financing Energy: The Challenge Ahead," the WEC concluded world financial resources are more than adequate to fund the future needs of the energy section if local financial resources can be mobilized in developing and underdeveloped countries to form viable capital markets.
Cumulative investments in energy supply in 1990 dollars also vary by scenario. Scenario A1 requires an investment of $14.3 trillion between 1990 and 2020 and another $23.4 trillion to 2050. Under Case B, investors would spend $12.4 trillion in the first period and $22.3 trillion in the next 30 years. Under scenario C1, the cost would be $9.5 trillion to 2020, and another $14.1 trillion to 2050.
In the 1990s, global energy capital expenditures ranged between $240 billion and $280 billion a year. The need for financial reform is greatest in lesser-developing countries in Asia, Africa and parts of Latin America. Those regions have most of the 2 billion people with no access to commercial energy supplies.
Key elements for drawing private investment capital are:
l rule of law and contract enforceability;
l creditworthiness at macroeconomic and energy enterprise levels;
l sector policies including ultimate market-related pricing based on reducing subsidies over time to reflect full energy costs to the point of delivery;
l transparent legal and regulatory frameworks to signal pricing and tariff policies;
l bankability of investments;
l creation of effective domestic capital markets and institutional capabilities; and
l government commitment to sustained and effective action for reform, long-term planning and change.
If those developing countries don't take action and implement those changes, WEC said, "the 2 billion people who today are unable to satisfy their basic needs for energy services are likely to increase in number and suffer even worse economic deprivation in the future."
World wealth
Effective use of energy creates economic comfort, and the three cases examined by IIASA create different degrees of wealth, starting with gross world product of $20 trillion in 1990.
Case A is the classic pattern of successful industrialization characterized by free trade and favorable, cooperative politics. Under this case, gross world product (GWP) rises 2.6% a year to $100 trillion in 2050 and 2.2% from that time until it hits $300 trillion in 2100. By 2050, in 1990 dollars, average family incomes - 3.2 people in 2050 and 2.7 people in 2100 - climb above $30,000 and reach $70,000 by the end of the century. Best of all, distinctions between developed and developing countries will disappear.
Case B also anticipates significant economic expansion but has more cautious expectations about politics and trade. The world is more fragmented than in Case A, and economic development is more fragmented.
Growth is painfully slow in Africa and south Asia but impressively fast in central Asia and China. Worldwide growth is 2.2% a year, and GWP expands to $75 trillion in 2050 and $200 trillion in 2100.
Case C reflects aggressive efforts to advance international economic equity as well as environmental protection. The massive direct resource transfers from the Northern Hemisphere to the Southern Hemisphere and high environmental taxes paid by highly industrial countries to developing nations result in a positive-sum game that sustains growth in developing countries and spreads wealth throughout the world. Case C matches Case B in GWP in 2050 at $75 trillion but rises to $220 trillion in 2100.
Global trends
All three cases have distinct advantages and drawbacks. Case A contributes most to world wealth, but - at least under the high-coal-use scenario - creates unacceptable pollution. Case B is the easiest path, requiring no great changes in world political policy, but the rich tend to get richer and the poorer tend to get poorer. Case C requires cooperation and the transfer of wealth on a scale imagined only in science-fiction novels, but it's a better environmental path and it spreads wealth more equitably.
Clearly, the world is moving along the Case B path, but it's edging toward an environmentally friendlier future.
Oil is plentiful enough that the US Energy Information Administration, in its "Annual Energy Outlook 2000," lowered its estimate of oil prices in 2020 to $22.04/bbl in 1998 dollars, compared with an estimate of $22.73/bbl last year. That assumes an increase of production from non-OPEC countries from 44.5 million b/d in 2000 to 56.6 million b/d in 2020. OPEC production will increase from 30.4 million b/d to 58.8 million b/d in the same period. World demand should reach 112.4 million b/d in 2020 from 74.9 million b/d in 2000.
Those continued low prices argue against the development of breakthrough nuclear technologies assumed in scenarios A3 and C2 or the rapid development of renewable energy sources assumed in C1.
Although the Kyoto Protocol has not been accepted and will not be accepted by any US Congress in the foreseeable future, it represents a strong push to Case C, which targets massive cutbacks in greenhouse gas emissions from 1990 levels in the United States (7%), the European Union (8%) and Japan (6%), with the focus on carbon dioxide emissions. World acceptance is virtually impossible without US ratification.
It also provides for emissions banking and trading, but it doesn't specify the mechanism. Most experts assume high-energy-use nations would sell emissions to low-energy-use nations. That's the transfer of resources described in Case C. The estimated payment rate ranges from $10 per ton of carbon to $100 per ton of carbon over allowable levels. If the United States lowered carbon emissions by 420 million tons, back to 1990 levels, the cost would be between $4.2 billion and $42 billion a year.
Even as nations discuss the Kyoto Protocol, OPEC Secretary-General Rilwanu Lukman said the protocol, if enacted would cost OPEC members $23 billion a year, equivalent to a drop of 6.5 million b/d in demand from nations in the Organization for Economic cooperation. OPEC members earned a combined $110 billion in 1998, down from $165 billion the previous year.
Oil is a political and economic hot potato. Wide swings in prices triggered by tussles over market share and temporary changes in regional economies create the kinds of volatility that shake corporations and nations.
"The OPEC role as market stabilization force is about to finish sometime in the early years of the next century," Erwin Arrieta-Valera, former president of OPEC and former minister of energy and mines for Venezuela - now a consultant and adviser - told an audience attending the 10th annual Ernst & Young Energy Conference in Houston. "Even if the willingness is there, the capability will not [be there]. It is only a matter of time. In the interim, more frequent, and more violent, boom-bust price cycles will be the norm."
He recommended a stabilizing organization within the United Nations, and said the alternative to a stabilizing organization is a future with uneven, or discontinuous, supplies of oil and gas to world markets and a world energy market "that will keep the United Nations Security Council very busy fighting the kinds of fires nobody wants to have."
At the same conference, Adrian Lajous, director general and chief executive officer of Pemex, said, "In this industry, the price of crude has no relation to the cost, and as long as there is a big difference between them, someone must manage the price or we will get boom and bust cycles.
"If the volume isn't regulated, we will have very low prices and a reaction to very high prices, like today," he added.
Natural gas may prove to be the compromise fuel. Recent conferences discussing the energy future of South America concentrate on the development of natural gas to fuel power plants. Ecuador wants to be the energy hub of South America. Brazil wants foreign investment to help develop its gas resources. Venezuela holds a tight grip on light oil production through Petroleos de Venezuela SA, but it's accepting outside investment in heavy oil and natural gas. Mexico is counting on gas from giant Borgas Field near the US border and from northern Tabasco for clean fuel.
As with most forecasts, the predictions being made will be wrong, but the examination of potential futures and an examination of the mistakes of the past and the deficiencies of the present can make the future better for the world.