Conference Presentation, Panel
Energy Infrastructure: Getting New Supply to Market Faster
Milken InstituteMark Florian, Rick Grafton, Charlotte Phillips, Gerd Vandevoe, Conrad, Gary, Jordan Sherry, Ambassador, Mark Kahn
- Global energy infrastructure investment is projected to reach approximately $37 trillion by 2035, driven primarily by growth in Asia and emerging markets, with renewables estimated to account for 60% of new global power generation.
- Cost parity between renewables and grid electricity is anticipated within a five-to-ten-year timeframe as solar photovoltaic panel prices decline by 20% to 30% annually, potentially rendering large transmission infrastructure obsolete in favor of distributed models.
- Storage technology affordability is expected to occur over the long term, creating a significant inflection point for energy futures, while the transportation sector's shift to gas will require extensive infrastructure transformation taking considerable time.
- In North America, coal is expected to be decommissioned at a rate of 50% to 60% over the next three to five years, with no new plants planned beyond the final stages of approval currently underway, though a resurgence could occur if gas prices exceed $3.37/MMBtu.
- Canadian energy strategy involves moving oil and gas to global markets via pipeline, rail, or tanker, with rail transport expected to escalate by 40% over the next three to five years if the Keystone pipeline is not approved.
- Russia faces significant challenges in pipeline development, with a single pipeline to the Pacific coast currently; however, a pipeline to China is considered inevitable, though pricing agreements could take anywhere from five to 20 years to finalize.
- Investment horizons for many leaders focus on five-to-ten-year windows due to the capital intensity and learning curves of new energy systems, such as gas-to-liquids or biofuels, which require decades to develop and commercialize.
- Regulatory environments in the U.S. and Alberta are described as complex and slow, involving First Nations, environmental groups, and multiple government levels, resulting in an estimated $25 billion annual loss in potential tax revenue for Alberta due to delays.
- America cannot achieve self-sufficiency due to the 60% to 80% annual decline rate of unconventional reservoirs, requiring the discovery of an additional 8.5 million barrels per day to maintain independence, a target unlikely to be met without shifting the transportation sector to natural gas.
- Projects generally require oil prices above $80 per barrel to be viable, while Arctic drilling is deemed unlikely to occur in the immediate future due to short seasons and high costs, and emerging markets are advised to maintain transparency in energy infrastructure investment.