EROCI and the tough road ahead for oil

BNP Paribas
By January 13, 2020 17:33

EROCI and the tough road ahead for oil

W e l l s , w i r e s , a n d  w h e e l s …

Oil needs long-term break-evens of $10-$20/bbl to remain competitive in mobility. In this report we introduce the concept of the Energy Return on Capital Invested (EROCI), focusing on the energy return on a $100bn outlay on oil and renewables where the energy is being used specifically to power cars and other light-duty vehicles (LDVs). For a given capital outlay on oil and renewables, how much useful energy at the wheels do we get? Our nalysis indicates that for the same capital outlay today, new wind and solar-energy projects in tandem with battery electric vehicles (EVs)* will produce 6x-7x more useful energy at the wheels than will oil at $60/bbl for gasoline-powered LDVs, and 3x-4x more than will oil at $60/bbl for LDVs running on diesel. Accordingly, we calculate that the long-term break-even oil price for gasoline to remain competitive as a source of mobility is $9-$10/bbl, and for diesel $17-19/ bbl.

 

BNP Paribas
By January 13, 2020 17:33

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