The recent global financial crisis has brought about a significant deterioration in near-term energy demand and a consequential reduction in supply which has possible longer-term implications. Secondly, climate change considerations and greater regulation of the energy mix are also on the horizon. The combination of these - one being a mega event and the other a mega trend - already had significant near-term impact on the oil and gas sector and could also lead to a fundamental transformation in the long-term.
Even with the projected reduction of carbon in the energy mix, it is expected that the level of energy demand in 2050 will be such that it will require similar levels of oil and gas production as today. Since oil and gas production declines naturally, sustaining it to 2050 effectively requires re-building the equivalent of today's oil and gas business over the next 40 years - and doing so from more technically challenging deposits.
At the same time, the world increasingly desires lower carbon energy. Governments and industry are responding. A rapid transition to green energy will likely prompt the introduction of more green incentives and increased regulation of fossil fuels. This in turn could lead to an increase in the total cost of energy, since most renewable energy options are inherently more expensive to scale up than energy derived from fossil fuels.
All of this raises key questions. What are the desirable energy mix and transition pathways which will provide the world with affordable, secure and increasingly lower-carbon energy?