The number of vehicle population growth is expected to increase from 1 billion in 2010 to 1.7 billion by 2035 worldwide. Market explosions have happened in China with the largest volume (over 27% vehicle population growth in 2010), and in India, Brazil, and Japan. Petroleum supplies are likely to become even more strained for the predicted growth, increasing the demand for gasoline higher and higher. In 2014, The China Association of Automobile Manufacturers reported a 14% increase in car sales in 2013 over 2012’s numbers, with a further projected increase in 2014. Obviously, global and domestic automakers vie for these Asian markets.
One thing is a fact: gasoline-operated vehicles generate significant air pollution. China’s growing ‘dirty air’ is a serious problem and the conversation in recent years has moved beyond a matter of ’nice to have’ – it’s a daily necessity.
Fossil fuel producers are prepared: research into enhanced oil recovery (EOR) has demonstrated promising results to extend the life of existing oil assets, presenting a potential to boost recovery rates from 40% of the original oil to as high as 70%. Governments and businesses have been testing EOR as a solution in response to a higher petroleum demand, at least in the next few years.
At the same time, auto manufacturers have been working on more efficient combustion engine technologies, resulting in numerous offerings of vehicles with high MPG (miles per gallon) utilization.
According to Lux Research, Canada and the Middle East drive the growth of the $500 million Chemical EOR market.
What is EOR?
EOR has three main methods: thermal, gas and chemical and has been around for a number of decades. However, EORt hasn’t delivered economies of scale justification, since oil prices have often been too low. Chemical EOR projects involve the injection of hundreds of thousands of pounds of chemicals on a monthly basis, where it takes years before an incremental production is detected. EOR doesn’t only involve long time periods, but is also costly. However, EOR has opened up a market for specialized chemical EOR service companies, reducing risk management issues in large-scale operations. These suppliers have improved formulations and in utilizing advanced laboratory evaluation techniques are able to provide a consistent supply of high quality chemicals and potentially increase revenues for oil producers.
Lux Research reports that the current EOR global market size is estimated at $500 million with 135 individual field-projects. Canada and the Middle East producers are leading the chemical EOR market, and such projects have been growing rapidly since 2003.
According to Navigant Research report released on August 4, 2014, global gasoline consumption will decline 4% from 2014 to 2035, although by 2021 oil consumption for transportation is expected to rise every year. After 2021, gasoline consumption will start to fall.
However, many governments and societies around the world have faced the consequences and price of dependence on petroleum for decades. The dependency on oil comprises national and energy security, a heavy carbon footprint leading to environmental damage and health repercussions, and affect economic resiliency.
In the U.S., federal, state and local policy have been in support of clean transportation, the development of alternative fuels, biofuels, fuel-cells, liquified natural gas, electric and various alternative vehicles. Further, stimulus, subsidies, rebates, and various grant programs in millions of dollars have been awarded. Automobile and fuel markets have been gradually responding to the government regulations. Although programs rely on regional policy, infrastructure, and local resources, alternative fuels and transportation drivetrains have begun to impact global gasoline demand. Players in the automotive industry have been developing zero-net emission vehicles, improve or come up with new technologies and systems, resulting in a proliferation of innovations and advancements to address green transit. Renewable energy sources and energy storage solutions are being explored. The electric vehicles market is growing year by year.
While the fuel savings strategy through fuel efficiency improvements in conventional internal combustion-engine vehicles (ICE) will show immediate effect, clean transportation is here to stay and, eventually, will take over gasoline-based engines. It’s not a matter of ‘if’, but a matter of how soon.
1. Source: Lux Research report “New Age of Oil Drives Growth of Chemical Enhanced Oil Recovery” — client registration required. More information: https://portal.luxresearchinc.com/research/report_excerpt/17282
2. Source: Navigant Research, August 14, 2014
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