Oil world says fossil fuels most realistic for now
* Fossil fuels the way to meet energy needs
* December deadline on Copenhagen hard to meet
* Natural gas the ideal bridging fuel
LONDON, Oct 21 (Reuters) - The world must invest heavily in fossil fuels or face an energy crisis, said leaders of the oil industry gathered in London this week as they voiced scepticism about prospects for a climate change deal in Copenhagen.
The oil industry has shifted its message to a more climate-friendly approach, but argued that for now oil and gas were the ways to meet the world's energy needs.
"There is no getting away from fossil fuels," said Nigerian Oil Minister Rilwanu Lukman, speaking on the sidelines of the Oil and Money industry conference.
As the oil minister of an OPEC member country, his view was not surprising, but many others at the conference predicted a December deadline to replace or extend the Kyoto Protocol on cutting planet-warming emissions would not be met.
"I think at the moment we are concerned that there probably won't be any deal in Copenhagen, I'm afraid. That is I think what the industry is beginning to feel," said Ian Taylor, chief executive of Vitol, one of the world's largest energy traders and a major player on the carbon market.
Chief executives were less direct, but still sceptical.
"In some cases, there are high expectations, other countries indicate this is just a base step as we approach a pretty complex subject, so it's difficult for me to really say," said Jim Mulva, CEO of ConocoPhillips, when asked about the chances of a Copenhagen deal.
"We want to be part of the public debate because viewpoints and ideas have been formulated, continue to be formulated, even though may be the whole (situation) has not been completed and may not be completed for another year or two," he said further.
The danger, meanwhile, was crude supply would not meet demand, which Mulva saw rising from today's levels of roughly 85 million barrels per day.
"It's going to be very difficult to get up towards 100 million barrels," Mulva told reporters.
He predicted a margin of spare capacity would be swiftly eroded and said the cost of new supplies had not fallen as rapidly as the oil price. It has rallied to around $80 a barrel from a December low of little more than $30, but it is still little more than half the July 2008 record of almost $150.
Others agreed the need was to invest in conventional fuel.
"If we do not act now, we will have a devastating oil crisis in the next five to 10 years," John Hess, CEO of Hess Corp, said in a speech.
"We will ultimately be at risk of supply rationing demand through sky-rocketing prices that will threaten economic stability and prosperity."
EIGHTY PERCENT OF NEEDS
British oil major BP estimates that by 2030, fossil fuels will still meet about 80 percent of energy needs.
"I believe that in the realm of alternatives, it's dangerous to promise too much too soon," said its CEO Tony Hayward in a conference speech. "So we're talking about an evolution -- not a revolution in the energy mix."
Hayward put forward natural gas as the ideal transition fuel, as a means of moving away from coal, which is far more carbon intensive, for power generation. Gas has the merit of relying on proven technology.
He also advocated second-generation biofuels, which in contrast to early biofuels, did not compromise food production, he said.
OPEC's Secretary General Abdullah al-Badri disagreed.
"Biofuels will not work. You can't use your food to have energy," he said and went on to rule out nuclear power, which many in the energy industry regard as a low-carbon option.
"Nuclear energy is just waiting for a catastrophe," he said.
The Organization of the Petroleum Exporting Countries, which pumps around one third of the world's oil, next meets in Angola on Dec. 22 to reconsider its output policy in talks rearranged so as not to clash with the Copenhagen negotiations just before, which oil ministers were also expected to attend.
The International Energy Agency (IEA), which represents energy consumers, has warned of the dangers of too little investment in fossil fuels, although it also signals the need for many billions to be spend on alternative supplies.
"Oil will continue to grow," Nobuo Tanaka, executive director of the IEA said during a panel session with the OPEC secretary general. "But coal consumption must decline." (Additional reporting by Tom Bergin, Alex Lawler, Daniel Fineren and Barbara Lewis; writing by Barbara Lewis, editing by William Hardy)
- Deadly gun attack in eastern Ukraine shakes fragile Geneva accord |
- Japan expands army footprint for first time in 40 years, risks angering China
- Pfizer considers $100 billion bid for AstraZeneca: report
- Prosecutors extend Korea ferry captain's detention as death toll mounts |
- Rubin 'Hurricane' Carter, U.S. boxer famous in folk song, dies at 76