DISCUSSION QUESTION No. 1 WEEK 01 / FINAL RESPONSE

KMGT-648 MANAGING ENERGY SOURCESMSC PROJECT MANAGEMENT OIL & GAS

NAME: LEONARDO TRIGOS GUERREROSTUDENT ID: H00024346DATE: 21 / 03 /2015PAGE 2 OF 9

DISCUSSION QUESTION No. 1

WEEK 01

MANAGING ENERGY SOURCES

LEONARDO TRIGOS G.

DISCUSSION QUESTION WEEK 1

1. INTRODUCTION

The important economic growth that are experiencing the new emerging economies in their eagerness to become developed economies are carrying an important energy demand. This is the case of Asia-Pacific economies and Latin America economies that are experiencing an accelerated growth in the last decade, and have a positive growth projection, according to BP (2014, p. 14) as depicted in the Figure 1. An important finding is shown by Leung (2010, p. 934), where the demand of a country for energy is a direct reflection of its economy.

The economic development experienced by this developing economies has been influenced by factors like population growth, industrial and technological advancement, high demands of transportation and increased living standards that have made that energy demands and consumption are rise continuously on this regions.

Figure 1. Projection of Energy production

Figure 2. Primary Energy demand by Region [Source: EIA(2014, p. 63)]

2. ECONOMIC GROWTH AND ENERGY DEMAND: ASIA PACIFIC REGION

In the Asia-Pacific Region, China and India show a triggered growth in their economies. As ExxonMobil (2015, p. 10) explains, the projections show that China and India together are expected to account for half the growth in global energy demand because these two developing economies will lead the world in terms of population size and the pace of growth in standards of living. These significantly growth of the China and India economies will require the supply of important quantity of energy. The most likely energy mix to meet the demands of the energetic market in China and India leaded by sectors like power generation, industry and transportation are:

COALOne of the main sources of energy for China and India are the Coal. The Figure 3 illustrates the demand and production that is worldwide leaded by China and India. China will remain the largest coal consumer (52% of global consumption), while India (12%) will become the second largest in the next decade. The use of this resource will be affected by its significant impacts to the carbon emissions, regulated worldwide. This brings the need to search a different energy mix, to not affect dramatically the China and Indias industry.

Figure 3. Coal demand and Supply by region CRUDE OILThe producing oil capability of China and India are decreasing significantly its demands are increasing due to the demand of transport, industry and power generation. According to Zhao (2009, p. 380), the increasing dependence of the international market for oil, makes that China and India will look for other energy sources in the long term like unconventional, increasing their need for exploration.

Figure 4. Liquids demand by region

NATURAL GASThe important projection of shale gas make think that this energy source will become the second largest energy source globally, according to ExxonMobil (2015). In particular case, China and India will have an important demand of Natural gas as depicted in the Figure 5, considering its uses on transport, power generation and industry as an immediate replacement of the coal as primary energy source.

Figure 5. Natural Gas demand by region NUCLEAR POWERThe projection for China and India is to get more energy from nuclear power, as an alternative source in their energy mix that supports the energy demand required for their expected economic development. This energy source becomes an important safeguard to the depletion of primary energy sources like coal and oil.

Figure 6. Nuclear generation by region

3. ECONOMIC GROWTH AND ENERGY DEMAND: LATIN AMERICA REGION

In Latin America, Brazil and Mexico lead the region showing an important development of their economies, according to Al-mulali, Lee, & Hakim (2013, p. 43). The most likely energy mix to meet the demands of the energetic market in Latin America are:

CRUDE OILThe oil production in the region shows an important growth due to the production of conventional reserves and the implementation of enhanced oil recovery technology like CO2 injection, chemical injection and steam techniques. These oil production will contribute in major quantity to the international oil market, but the increasing industrialization of Latin American countries will show an increased need of refined products, increasing the need of refineries.

Figure 7. Oil production projection by Countries NATURAL GASThe natural gas demand is expected to continue its expansion by the significantly contribution of important gas reserves discovered in Latin America. The growth in natural gas consumption is influenced by the additional policies to reach the goal of limiting the global warming and its low costs contrasted to the oil. These developing economies has an increased demand of gas for power generation, industry use, buildings, transport and upstream and refining.

Figure 8. Natural gas production projection by regions

HYDRO POWERHydropower is the world's largest source of renewable energy. In Latin America, it is the main source of power generation, accounting for roughly 65% of all electricity generated. The potential for hydropower growth in Latin America is significant, and current generation is impressive for many countries in Latin America. The major markets in the region include Brazil, Chile, and Colombia. Brazil possesses the largest power system in Latin America, generating 74 percent of all electricity from hydropower.

Figure 9. Electricity demand by region

Figure 10. Incremental global electricity generation from renewable sources

4. DOMESTIC AND IMPORTS OF ENERGY

The situation of China and India according to the supply of energy sources and specially fossil fuels are similar. They need to import Crude oil and natural gas from the International market, based on the fact that they have not the capacity to produce these energy sources to meet demands. It shows a high dependability of their economies to the continuous and high use of domestic fossil fuels as coal and fossil fuels.

In the case of Latin America, the situation is different. They produce enough quantity of energy sources to supply its energetic demand, including crude oil, natural gas, coal getting a special balance with the use of renewable resources like Biofuels and Hydro power.

5. CONCLUSIONS

The trends shows that energy is gradually decoupling from economic growth due to the influence of energy efficiencies to get a proper balance between economic development and sustainability, enforced by the influence of policy and technology that enable efficiency improvements.

The fuel mix is slowly shifting away from fossil fuels, and the renewable sources are becoming more important.

Industrial growth remains steady since the production of petrochemicals is already an efficient process and as yet there are no large scale alternatives to oil available.

6. REFERENCE LIST

Leung, G. (2010). China's oil use, 1990-2008. Energy Policy, Vol. 38(2): 932944. Available online from: http://www.sciencedirect.com.ezproxy.liv.ac.uk/science/article/pii/S0301421509007927 (Accessed: 10th January, 2015). BP (2014) BP Energy outlook 2035 [Online]. Available from:http://www.bp.com/content/dam/bp/pdf/Energy-economics/Energy-Outlook/BP_Energy_Outlook_Booklet_2015.pdf(Accessed: 21 March 2015). EIA (2014) Annual Energy Outlook 2014 [Online]. Available from: http://www.eia.gov/forecasts/aeo/er/pdf/0383er(2014).pdf (Accessed : 21 March 2015). ExxonMobil (2015) Outlook for energy, a view to 2040 [Online]. Available from: http://www.erdoel-vereinigung.ch/UserContent/Shop/2015%20The%20Outlook%20for%20Energy.pdf (Accessed: 21 March 2015). Zhao, H., (2009) AN ENERGY COMPARISON OF THE ASIAN GIANTS: CHINA AND INDIA, Asian Affairs, Vol.40, Issue 3, pp. 377-390. Available online from: http://www.tandfonline.com.ezproxy.liv.ac.uk/doi/pdf/10.1080/03068370903195162 (Accessed: 21 March 2015). Al-mulali, U., Lee, J., Hakim Mohammed, A., & Sheau-Ting, L. (2013) Examining the link between energy consumption, carbon dioxide emission, and economic growth in Latin America and the Caribbean. Renewable And Sustainable Energy Reviews, 26, pp. 42-48, ScienceDirect, EBSCOhost, viewed 22 March 2015