SAN ANTONIO — At the extreme edges of the fossil fuel debate are two poles that sometimes seem to inhabit different plants. One side advocates for more of oil and gas, albeit produced responsibly; the other wants alternatives that eliminate hydrocarbons altogether. Disagreements can be contentious, but perhaps one area of agreement is that no source of energy—from wood to coal—has yet to be discontinued.

Rystad Energy CEO Jarand Rystad, speaking at the Society of Petroleum Engineers’ (SPE) Annual Technical Conference and Exhibition on Oct. 16, told the audience that the energy transition is alive and will happen. But oil and gas remains a critical energy source.

 “Solar, wind, hydrocarbon biomass will outcompete gas, oil and coal,” Rystad said. “It's not logical to stop oil and gas power. That will only create disruptions in the market if you stop. Market forces will take care of stopping it when new infrastructure is already implemented.”

While the current energy transition isn’t happening as fast as the transition shale oil made from 2008 to 2013, the growth of renewables is still impressive, he said.

Solar, wind, geothermal and energy derived from carbon sequestration look to be the new frontier for energy. In Rystad’s view, the key to completing the energy transition isn’t stopping oil and gas, but rather the development of new infrastructure.

Coal replaced wood as the world’s primary source of energy in the 19th century. Coal brought forth the age of railroads, steamships and more effective ways to heat homes and water. In the transportation sector, coal utilization was high in the 1920s, but faced a downturn in the 1930s.

Rystad said coal was able to be replaced rather quickly between 1945 and 1960 due to the advent of the electric train.

“This enormous infrastructure was completely taken out—a  12% annual decline because we got a new disruptor technology coming in. This electric train basically took over the market in less than 15 years,” Rystad said. “So this just shows that big energy systems can be completely transformed in 15 years.”

Nevertheless, coal remains in the mix. In 2022, coal consumption hit a record 8.3 billion tonnes, according to the International Energy Agency’s mid-year Coal Market Update. Coal demand is set to remain at record levels this year, the agency reported in July.

While electric trains represented infrastructure that spurred the advancement of other energy sources within the transportation industry, but today’s energy industry is suffering from a lack of it. Because of the dearth of infrastructure, there is still a place for oil and gas within the energy industry.

“Seventy-two percent of the production from oil is from wells that are less than 10 years old. So we have to drill and drill and drill even to save that production,” said Rystad. “This shows how much new oil we are drilling every year. So every year we're drilling due to the fundamental decline, and we're drilling about 50,000 new wells, which gives us 15 million barrels for new oil.”

In the last decade, global production of oil and gas has nearly doubled. On top of that, Rystad said, the price of wells has never been cheaper, giving the industry enough oil with about half of the investments typically expected.

As traditional sources of energy continue to supplement the needs of the world, infrastructure for alternative energy sources are steadily being built. Earlier this year, the completion of the photovoltaic modules for the 2-gigawatt (GW) Al-Dhafra solar power project in the United Arab Emirates will pave the way for the project’s full commissioning later this year. The project will be among the least expensive energy sources in the world at $30 per megawatt-hour.

The Western Green Energy Hub, another alternative energy project, is looking to come online in the near future. The proposed renewable energy hub will have a 50 GW capacity for wind and solar energy and will be one of the largest infrastructure projects in the world, Rystad said.

Many within the energy industry approach the transition with a “get right or get left” outlook, but that doesn’t need to be the case, he said. Despite 2015 being the last year that fossil fuels produced more electricity than renewable resources, there is a place for traditional energy sources.

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