Global energy demand will peak in 2035 and oil and gas use in the energy sector will start to drop soon — but we’re still on the hook for a hotter planet.

Oil and gas technical advisor DNV GL is forecasting that oil demand from the energy sector will peak even earlier — in 2023 — to be taken over by gas three years later.

But we’ll still have to deal with global warming of 2.6°C above pre-industrial levels, in 2050.

The change will come because of the increasing efficiency of internal combustion engines and the rise of electric vehicles.

It’s good news long term for the ASX’s gas explorers, though.

On the East Coast small caps like Vintage Energy (ASX:VEN) are scrambling to build reserves that might be tempting to the big LNG exporters, which are expected to be coming up short in the early 2020s.

In the Northern Territory companies are unpicking the government’s rules in order to start fracking for gas — that’s hydraulic fracturing, a controversial method for getting gas and oil out of the ground.

Armour Energy (ASX:AJQ) and Empire Energy Group (ASX:EEG) are particularly keen on the Territory’s allegedly sizeable gas resource.

Their blocks also lie close to the Northern Gas Pipeline, completed in July, that will deliver Northern Territory gas to the hot East Coast market.

But DNV’s forecasts of slowing oil demand isn’t terrible for smaller oil explorers keen to prove up reserves that can be bought by bigger companies.

“Conventional oil production will continue to play an important role in the global energy mix for decades to come,” DNV said in its Energy Transition Outlook 2018.

“Conventional onshore oil production will decline by 1.9 per cent per year on average until 2050, but will still account for approximately 55 per cent of all oil production by then.

“Having reached its peak in within the next five years, we forecast global demand for oil to be 50 per cent of today’s production levels by 2050.”

Continued investment in new oil and gas developments will still be needed as reserves decline at a rate of 5 per cent a year.

DNV says offshore oil production will still be important in 2050 but will make up 31 per cent of total oil production rather than today’s 65 per cent as producers increase focus on easier-to-access oil resources.

This is why discoveries like Carnarvon’s Dorado field off West Australia’s northern coast is so important — it’s close to infrastructure and in reasonably shallow water.

More difficult and socially and financially costly locations such as the Arctic or Australia’s deepwater zones are unlikely to be attractive to the majors for exploration.

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