IOOA Chairman, Professor Pat Shannon, examines the impact of oil and gas in our daily lives
Oil and gas have been used by humanity for thousands of years. For centuries pitch (bitumen or tar) was used to caulk the seams of wooden sailing vessels helping to waterproof them and enabling exploration, travel and transport of goods. Hydrocarbons (oil and gas) have been a key enabler for building society, fueling the global industrial revolution and powering travel.
The birth of the modern oil industry with Edwin Drake’s oil discovery at Titusville in Pennsylvania in August 1859 started a new age of lighting and power, replacing whale oil with a more efficient and plentiful form of energy.
Oil and gas are now the world’s most important energy and transport fuels and underpin rising standards of living globally. They provide modern convenience and freedom of movement. By-products from oil refining are extremely valuable while natural gas, in addition to its role as a clean and efficient energy source, is used to make products including fertilizer, pharmaceuticals, plastics and fabrics.
However, we now need to transition to lower carbon forms in order to cut greenhouse gas emissions significantly and rapidly.
As we plan and implement the transition, it is worth examining the many ways in which oil and gas are used in our lives. Either as fuels or feed-stocks, they impact in so many ways in our home, workplace, schools, hospitals and shops, and when we travel on the roads, by air or by sea.
A quick journey through our average day illustrates how they are an integral and essential part of our daily lives.
First thing in the morning we might rush to take a warm shower (almost 83% of the energy used to produce Ireland’s heating comes from oil and gas). Oil is used in the manufacture of cosmetics, toothbrushes and hairbrushes. As we get dressed, remember that if our shirt is made from nylon or polyester, or if our jumper is acrylic, then we are wearing a product that comes from natural gas.
Having grabbed our mobile phones (containing a significant amount of petroleum-based plastic), the rush is on to get on the road to school, college or work. The soles of our shoes are usually made of synthetic oil-based rubber, our outdoor and sports clothing are petroleum products, the roads are made of bitumen and virtually all our cars and buses run on petrol or diesel (97.5% of the energy used in Ireland’s transport sector comes from oil.
Most of the fittings in the cars (even electric cars) and buses – for example the instrument panels, tyres, window seals, hydraulic steering fluids, brake fluids, lubricants, bumpers and interior coverings – are made using oil as a major feed-stock.
When we get to work where much of our surroundings would not exist without oil or gas. Look at the chairs and office furniture, the computers, lampshades, paints, pens and plug sockets – they all have a petroleum ingredient.
The heating and the lighting in our workplace are likely to be largely produced from oil or gas (48.5% of the energy used to produce Ireland’s electricity comes from gas . If we work in a manufacturing industry, much of the power will come from oil or gas. They are important for fueling many industrial operations, including glass and steel foundries, aluminium production, and many manufacturing industries.
Oil is used to power the mining, transport and refining of a vast number of elements used in everyday life and especially in the renewable industry. These include copper used in electrical equipment such as wiring and motors (including electric cars), rare earth elements such as neodymium in wind turbine magnets, and cobalt, lithium and cadmium in batteries and in our electronic devices such as our mobile phones, tablets and laptops. Gas is used in producing fertilisers and a wide range of industrial products, including plastics, polymers and textiles.
On our way home, a journey almost certainly powered by oil, we might drop into the supermarket to buy the ingredients for the dinner. Much of the produce there needs to be kept refrigerated or cooled and this requires energy (probably oil- or gas-derived).
If there is a power cut, the food stock will be lost unless the backup generator (oil-fueled) kicks in almost immediately. Much of our food has been grown using fertilisers (made from gas, oil or oil by-products) and has either been imported or transported by road, sea or air, requiring oil. Paying by credit card for our purchases we are again using an oil-based product.
When we get home, we may cook by gas and wash up using oil or gas-based detergents.
Relaxing on the sofa (the upholstery and foam fillings are oil-based), we might turn on the TV (note the plastic surround and covering, close the windows (the frames of which are probably and oil-derived product), pull the curtains (which, like many of our clothes, may be and oil- or gas-based product), turn on the lights (the lampshades are almost certainly produced using a by-product from oil refining), relax and wind down at the end of the day.
This is the reality of the role of oil and gas in our everyday lives. During the day we have almost certainly experienced the benefits of close to a hundred products that would not exist without oil or gas.
This piece is written to demonstrate the many uses of oil and gas, and to start a discussion as to how we can transition away from these uses as we move to alternative fuel sources.
As we face into the transition to a low-carbon energy future, we need to consider which of these products we can rapidly find an affordable, producible and reliable substitute for or are willing to eliminate from our daily lives. We all have a role to play in this regard.
By IOOA chairman, Professor Pat Shannon.
Increased greenhouse gas emissions resulting from population growth, rising living standards, industrialisation and modern life, are placing unprecedented pressures on the global climate, and we must transition to a lower carbon future.
In planning and implementing the transition, a review of the current energy system, and of past and recent trends in energy consumption, as well as risks and costs of energy interruptions, provides a useful backdrop and highlights the challenges and realities faced at global, European and Irish levels.
The world’s population is projected to grow by approximately 24% from the present 7.4 billion to 9.2 billion in 2040 . The latest CSO projections indicate that Ireland’s population will grow by 18-40% by 2051. Reflecting increasing population growth and rising living standards, global energy consumption rose by 2.2% in 2017, and has increased by approximately 65% in the past 25 years)  (Fig. 1).
The IEA predicts that this growth will increase by approximately 30% in the period to 2040.
BP’s 2018 Statistical Review of World Energy (67th annual review)  shows that fossil fuels (oil, gas, coal) provide 85% of global primary energy, with renewables providing less than 4%. The share of global primary energy consumption by fuel has changed somewhat over the past 40 years: oil falling from a high of 50% in 1971 to 34% in 2017; gas rising from 15% in 1965 to 23% in 2017; and coal initially falling from 37% in 1965 to an average of 28% over the past 45 years.
Hydroelectricity has remained generally flat (<7%) over that period, with nuclear energy flattening and falling slightly in the past 30 years (currently ~4.5%). Renewable energy has been rising considerably but still only comprised a 3.6% share of consumption in 2017.
This shows that change in energy fuel demand and consumption happens slowly, on a multi-decadal scale, and that the global energy transition from high to lower and non-carbon sources, is likely to be lengthy. Recent forecasts  indicate that by 2040 oil, gas, coal and non-fossil fuels (hydro, nuclear, renewables) will each contribute around 25% of the world’s energy.
Even if renewable sources continue to grow globally at exponential rates, they will be insufficient to meet the added energy demands and replace the 85% of energy that is currently provided by fossil fuels in the short or medium term. Oil and especially gas will therefore remain vital energy sources for decades to come, throughout the energy transition.
The location of energy resources is unevenly distributed across the globe meaning that many regions of the world are dependent upon energy imports. Sometimes the import distance can be long, adding additional carbon footprint through transport-related emissions. Europe is one such region.
Europe imports 75% of its oil and 50% of its gas requirements . 33% of Europe’s gas comes from Russia . The UK, through which Ireland imports almost half our current gas requirements, imports more than 1 million barrels of oil equivalent per day to meet its needs. UK energy import dependency, currently at 36%, is anticipated to reach 55% by 2030.
At the opening of the 4th EU Energy Summit in Brussels in April 2018, the EU Commissioner for Climate Action & Energy, Miguel Arias Cañete gave a thought-provoking speech highlighting the major geopolitical challenges that need to be addressed in the transition to a less carbon intensive energy future.
He said that secure, competitive and environmentally sustainable supply of energy is fundamental for our modern societies, our industries, our homes and our very way of life. For the EU, an important challenge in an increasingly uncertain world is that we are still heavily dependent on fossil fuels, and this dependence will only decrease gradually. He stressed that coal, gas and oil still accounted for 72% of EU primary consumption in 2016, with most imported, including approximately 88% of oil requirements and 70% of the natural gas used.
He stated that future scenarios show that we will be producing less of these fossil fuels in the EU and, while our overall consumption of fossil fuels will be reduced over time, the level of fossil fuel imports required to meet our needs will not decline at the same pace. He said that the main challenge for the EU is the natural gas sector.
In 2016, 76% of our extra-EU gas imports came from just two countries, Russia and Norway. A further 13% was in the form of LNG (mostly from Qatar), while the remaining 11% came from Algeria and Libya. The current and recent international geopolitical situation requires the EU to look even more urgently at enhancing its own energy reliance. Cañete suggested the key to this over the medium to longer term is reducing the overall dependence on imported hydrocarbons.
In Ireland, fossil fuels account for 92% of our primary energy requirements . Oil is the main source of primary energy, at 48%, with gas at almost 30%, coal over 9%, peat at 5% and renewables at 8% (Fig. 2).
Almost 71% of our energy sources are imported, including all our oil and coal, and currently 45% of our gas need and we must be mindful that our geographical location at the edge of Europe makes Ireland extremely vulnerable to potential interruptions in energy supplies.
The Corrib field offshore Mayo currently provides just over half of our gas needs. However, production levels have already peaked and will continue to decline naturally. Production is forecast to be less than two-thirds of peak production levels by 2020.
Until recently, the Kinsale Head gas field stored some strategic gas supplies (capacity of 230 million cubic metres). This facility will be decommissioned soon. Ireland will then hold no contingency gas reserves, further increasing the exposure to supply interruptions.
Ireland currently has no direct link to mainland Europe gas or power networks. This poses a significant risk to our energy security in the event of gas interruptions – likely to be further increased when the UK is no longer a member of the EU. During the cold spell in early 2018 (Storm Emma), the UK, our only external source of natural gas via the gas interconnector, came close to being unable to meet its own gas demands.
The Economic and Social Research Institute (ESRI) estimated that the cost of losing one day of gas‐fired electricity in Ireland could be in the range €0.1-1 billion, and losing three months of gas‐fired power could cost up to €80 billion or 50% of GDP. Losing natural gas for heating for three months could add another (on average) €8 billion cost to the economy. The effects would be felt in all our homes, schools, hospitals, and throughout industry.
The pathways to a low-emissions future require international action on (a) significant policy implementation, (b) technology development and deployment and (c) business response, with all sectors working in harmony rather than in opposition. At a regional level, an EU energy union with a fully connected and integrated energy network is required, with a greater focus on the replacement of imported energy sources by indigenous supplies, including hydrocarbons.
For Ireland, a small and relatively isolated energy system, a coherent and realistic strategy is needed that will ensure energy security and affordability while minimising damage to the economy or society. A broad range of energy sources will help lessen risks and build a sustainable future.
The transition will involve the increasing growth of renewable forms of energy. However, natural gas and oil will continue to play a key role in terms of security of affordable energy supply and in providing the necessary base load backup for intermittent renewable energy sources such as wind and solar. Oil will continue to be important for aviation, shipping and haulage, as well as for non-burning uses including petrochemicals and other feedstocks.
Revenue from Irish offshore gas and oil can provide vital revenue that could be used to help fund the energy transition. The direct tax take to the State from a single commercial oil discovery under the 2014 revised fiscal system is estimated to be in the range of €4 to €8 billion.
To put these figures into context, according to the SEAI website it would take €6 billion to retrofit the 150,000 BER G houses in Ireland up to an acceptable modern standard . Therefore, it is vital that we keep open all available energy supply options, especially indigenous oil and gas exploration, a view which is also recommended by the International Energy Agency.
Having our own oil and gas would bring benefits in many ways in securing Ireland’s energy independence as well as providing a revenue stream to support the energy transition.
The oil and gas industry can play a key role in Ireland’s energy transition. This can be done by exploring for, and developing, in a safe and environmentally-responsible manner, indigenous offshore gas and oil, and by utilising the expertise, innovative ideas and technologies being pioneered by the oil and gas industry.
Partnering the oil and gas industry with the developing renewables industry through natural synergies will help realise the transition to a more sustainable energy future.
 BP Energy Outlook. 2018 Edition.
 BP Statistical Review of World Energy. June 2018. 67th Edition.
 World Energy Outlook 2017. International Energy Agency. https://www.iea.org/weo2017/
 IOGP Global Production Report 2018. International Association of Oil & Gas Producers. 33 pp.
 Energy in Ireland 1990-2016. 2017 Report. Sustainable Energy Authority of Ireland (SEAI). 88 pp. https://www.seai.ie/resources/publications/Energy-in-Ireland-1990-2016-Full-report.pdf
 Leahy, E., Devitt, C., Lyons, S. and Tol, S.R.J. 2010. The cost of natural gas shortages in Ireland. ESRI Working Paper No. 397, 38pp. https://www.esri.ie/publications/the-cost-of-natural-gas-shortages-in-ireland/
 http://www.seai.ie/resources/publications/Behavioural-insights-on-energy-efficiency-in-the-residential-sector.pdf Pg. 15