A while ago, BP, the producer of the annual Statistical Review of World Energy, published a forward-looking prediction of energy consumption and production trends in its Energy Outlook 2030 (link here).
There are a few nuggets buried in the report…
Much of the potential 2012-2030 energy demand growth is actually predicted to be met by increased energy efficiency…. BP notes that energy intensity (Toe/$’000 gdp – tonnes of oil equivalent per thousand dollars of GDP) continues to decline for all countries, including “energy intensive” China. As a result of this efficiency, global energy consumption in 2030 is predicted to be 36% greater than consumption in 2011, at around 16.5 billion tonnes of oil equivalent, rather than double 2011’s consumption.
As you would expect, ninety percent of demand growth will be from Non-EOCD countries, as their populations grow by more than 1bn and their economies accelerate.
1 barrel a day is approximately 50 tonnes of oil per year, so 16.5 billion tonnes of oil equivalent energy use is approximately 330 million barrels a day of oil equivalent. Of course, not all of that comes from oil…
The projected energy demand will be met by a mix of supply options. Some might be surprised to discover that BP predict that coal will be the largest single component of 2012-2030 supply growth, followed by natural gas (including shale gas) and then by renewables + biofuels. Oil supply growth actually sits towards the bottom of the growth mix, with demand growing by ~16 million barrels per day to a global daily production of 104 million barrels.
(Note that the illustration below does not seem to account for oilfield decline from 2011 production levels. Incorporating an approximate 6% oilfield decline rate, as suggested by Robelius would imply that over 60 million barrels of additional oil production will need to be found by 2030 to reach the 104Mb/d production rate…)
As expected, much of the story around oil liquids growth is about Unconventionals. Today, somwhere between 1,4000 and 1,800 rigs are active every day in the US. These rigs drill and complete just under 10,000 wells a year in Unconventional plays, leading to production of around 2 million barrels of liquids per day across the country. BP expect US Unconventional production to reach over 6 million barrels of oil a day by 2030 (towards the low end of industry forecasts). This represents ~30% of predicted global liquids supply growth. In total, the Americas will account for 65% of incremental liquid supply growth, with tight oil (5.7Mb/d), oil sands (2.7Mb/d), and biofuels (1.8Mb/d). Unconventional growth in Russia is also predicted to be healthy. As a result, by 2030 just under 1 in every 10 barrel produced will be from Unconventional plays.
As heavily mentioned in the press, US output is expected to surpass its previous 1970 peak production (just under 10 million barrels of crude).
Combined with liquids growth from other sources (Iraq, other Opec, Brazil, NGLs, + oil sands) BP predict that liquid production growth will more than offset the steepest production falls in Mexico and the North Sea. As a result, global spare capacity will increase to more than 6 million barrels a day, the highest since the late 1980s (when prices crashed).
OPEC cohesion will be a key determinant of oil market prices in the next decade or so, and this cohesion will likely be governed by internal politics within countries with large, youthful, under-employed populations – a dangerous mix.
As a result of the Unconventional paradigm shift there appears to be a reasonable chance of marked oil price falls in the next 8-10 years… However, the “oil glut” is likely to be a relatively short term problem. Unconventional growth is predicted to slow post 2020 and as economic growth continues spare capacity will tighten and the the call on OPEC production will increase again.
Shale gas is also expected to grow fast, with North American shale gas production reaching 54Bcf a day by 2030. With additional shale gas growth around the globe, particularly in China towards the end of the 2012-2030 period, production will reach 74Bcf/day by 2030 (approximately in the middle of industry forecasts), accounting for 37% of the total growth in natural gas supply. As has been widely reported, North America could become a net exporter of gas later this decade, subject to political constraint. In contrast, and despite rapid growth towards the end of the 2012-2030 period, China’s gas production will likely be outstripped by local demand, and the country will remain a net gas importer.
Total gas production in 2030 is predicted to be 459Bcf per day. The largest contributor to gas production growth over the period is conventional gas, with 31Bcf/d growth in the Middle East, 15Bcf/d in Africa, and 11 Bcf/d in Russia.
BP also predicts that the US will become nearly self-sufficient in energy by 2030. But the mix matters… A substantial part of the produced energy will be gas, which will be exported rather than used locally. As a result, the US will remain a net oil importer, albeit at a lower level than today.
As a result of predicted demand growth, and the pattern of likely supply response, global CO2 emissions will rise from ~30bn tonnes today, to ~38bn tonnes in 2030. We will not meet the 450ppm CO2 target.