I.H.T. Special Report: Oil & Money

LONDON - Over two days of special reports, in print and online, the International Herald Tribune is examining how the global energy landscape is shifting in fundamental ways that few would have predicted, and how new opportunities and risks are arising - geopolitical, economic and environmental.

The special reports coincide with a conference in London that the IHT is convening with Energy Intelligence, an energy consultancy, bringing together the top executives in the oil and gas industry, as well as leaders who deal with energy issues in government, academia and the media. The IHT's energy editor, Stanley Reed, and I will be tweeting from the first day of the conference on Tuesday @iht_rdv and #OM2012 and Stanley will be blogging here on RDV.

Tuesday's special print section comes as a new report from the International Energy Agency claims that in five years the United States will be the world's largest oil producer and by 2030 will become a net exporter of oil.

That increased oil production, combined with new American policies to improve energy efficiency, means that the United States will become “all but self-sufficient” in meeting its energy needs in about two decades - a “dramatic reversal of the trend” in most developed countries, the report says.

“The foundations of the global energy systems are shifting,” said Fatih Birol, chief economist at the Paris-based organization, which produces the annual World Energy Outlook, in an interview before the release. The agency, which advises industrialized nations on energy issues, had previously predicted that Saudi Arabia would be the leading producer until 2035.

But as David Goldwyn, a former U.S. State Department special envoy for international energy and assistant secretary of energy, writes in the lead article in the special report, “The reduced U.S. dependence on crude imports does not mean an end to history. The issues of price volatility, diversity of supply and helping U.S. friends and allies to be free from monopolistic pricing or coercive supply arrangements will remain as vital 20 years from now as they are today.”

He says the American oil and gas boom will lead to more jobs and more infrastructure and refining capacity in the United States, but will not end dependency on foreign oil, or American interests being linked to affairs in the turbulent nations where that oil comes from.

Mr. Goldwyn says the controversial shale gas boom (a.k.a. fracking) can lead to environmental and economic benefits globally, if done in an economically sound way, but will require changes in American diplomacy and policy.

Referring to the largest shale deposits in the United States, he writes, “If the technology and project management deployed in the Marcellus, Barnett and Eagle Ford shales can be even partially replicated in Eastern Europe, China and India, the world could see faster greenhouse gas reduction - through substituting gas for coal - at lower cost than any mechanism envisioned by our climate negotiators.”

But the special report lays out in stark relief that the more things change on the global energy landscape, the more they stay the same - especially when it comes to coal.

Dirty, fickle and dangerous, coal may seem an odd contender in a world where promising renewable energy sources like solar, wind and hydroelectric power are attracting attention. Anathema to environmentalists because it creates so much pollution, coal still has the undeniable advantages of being widely available and easy to ship and burn.

The biggest attraction, however, is low cost. By many estimates, including that of Li Junfeng, longtime director general of the National Development and Reform Commission of China, burning coal still costs about one-third as much as using renewable energy like wind or solar.

He predicts within a year or two, coal will surpass oil as the planet's primary fuel.

And coal is not the only fossil fuel experiencing a revival.

Shell is betting more than $10 billion by some estimates on just one facility that will reach and process liquified natural gas where it has never been processed on such a scale before: at sea. Shell is building the world's biggest ship, Prelude, as a floating L.N.G. platform off Australia.

And, in Qatar, Shell “is ramping up production of a facility called Pearl. Not a tiny jewel, Pearl is a sprawling $20 billion network of pipes and tanks designed to perform the alchemy of turning Qatar's matchless natural gas resources into even more valuable diesel and jet fuel.”

Still, Iain Pyle of Bernstein Research in London figures that Shell could make $1 billion a year in net profit. Prelude will produce a lot of gas - more than enough to supply the needs of Hong Kong, for instance, Shell says.

Assuming Prelude works, it should provide Shell with a persuasive talking point when it approaches governments.

Marjan van Loon, a Shell vice president for liquefied natural gas, says Shell wants to build a new floating liquefied natural gas project each year “for the foreseeable decades.”

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Environmentally concerned readers may be asking, “Prelude to what? Earth, dessert planet?”

All of this has a certain Back to the Future element to it. Just a few years ago, many people were talking about a future based on renewable energy as if it were a foregone conclusion.

Indeed, the International Energy Agency report that predicts the United States' rise to leading oil exporter also includes a warning that unchecked energy consumption will have dire consequences for the planet's climate.

“The report confirms that, given the current policies, we will blow past every safe target for emissions,” said Michael Levi, senior fellow for energy and environment at the Council on Foreign Relations.

Now, the energy needs of the industrialized world and the rapidly developing world - as well as the cost associated with building renewable-energy infrastructure amid a global economic crisis and new supplies and technology aimed at fossil fuels lowering the costs of exploiting these forms of energy - have pushed renewables into the background and brought the opportunities of old fuels to the fore.

We'll be discussing these issues - the opportunities and the risks - in the coming days. We hope you'll join the conversation.