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Page added on July 10, 2014
World Sets New Oil Production and Consumption Records
Last month BP (NYSE: BP) released the Statistical Review of World Energy 2014. This report is one of the most comprehensive sources of global and country level statistics on production and consumption of oil, natural gas, coal, nuclear power and renewables. Right after the release of the report, I wrote a short post discussing the highlights. Today I will take a deeper dive into oil production and consumption figures. In coming weeks, I will delve into the rest of the report.
Oil Production
First a note about BP’s definitions. “Oil” in the BP Statistical Review (BPSR) is defined as ”crude oil, tight oil, oil sands and natural gas liquids”, but excludes biofuels and liquid fuels produced from coal or natural gas. Consumption numbers do include all liquid fuels, so consumption numbers are always greater than production numbers, but this is merely an artifact of BP’s definitions.
Global oil production advanced in 2013 by 557,000 barrels per day (bpd), an increase of 0.6 percent over 2012 and a new all-time high of 86.8 million bpd. After declining in 2009, global crude oil production has now increased 4 years in a row. But as I noted in last month’s short article, while global oil production did indeed set a new record, the US production increase alone was 1.1 million bpd. Thus, outside the US global production actually declined by 554,000 bpd.
The 1.1 million bpd gain in US oil production was the largest year over year gain for any country in 2013, and the largest gain in US history. For perspective, the second-largest increase in oil production was recorded by the United Arab Emirates with a gain of 248,000 bpd over 2012, and Canada was the only other country in the world to record an increase of more than 200,000 bpd, at 208,000 bpd over 2012. The US remained the world’s third-largest oil producer at 10 million bpd in 2013, trailing Saudi Arabia’s 11.5 million bpd and Russia’s 10.8 million bpd. Rounding out the top five were China (4.2 million bpd) and Canada (3.9 million bpd).
Just to put the current US oil boom into further perspective, over the past five years global oil production has increased by 3.85 million bpd. During that same time span, US production increased by 3.22 million bpd — 83.6 percent of the total global increase. Had the US shale oil boom never happened and US production continued to decline as it had for nearly 40 years prior to 2008, the global price of oil might easily be at $150 to $200 a barrel by now. Without those additional barrels on the market from (primarily) North Dakota and Texas, the price of crude would have risen until supply and demand were in balance.
Libya had the largest decline of any country due to military action there. Oil production fell in Libya by 521,000 bpd, a 35 percent loss from 2012. Production in Iran was down nearly 200,000 bpd, while military action also impacted Syria’s production, which fell 115,000 bpd. Production in Saudi Arabia and Nigeria was down about 100,000 bpd from 2012.
Oil Consumption
Oil accounted for 33 percent of all the energy consumed in the world in 2013. Globally, oil demand increased by 1.4 million bpd over 2012, keeping upward pressure on crude prices throughout the year. After two years of declines, US consumption increased by 397,000 bpd – a 2 percent increase from 2012. While much has been made of a slowdown in China, oil demand there still increased by 390,000 bpd (following a 500,000 bpd increase from 2011-2012). Despite the slowdown in the rate of growth from the previous year, this represented a 3.8 percent consumption increase for China, 2.5 times the global increase of 1.4 percent.
Together the US and China were responsible for 56 percent of the global increase in oil demand in 2013. The big difference between the two countries is that US oil production was up far in excess of our increase in consumption, while oil production in China edged up by only 24,000 bpd. This means that while US oil imports declined and finished product exports (e.g., gasoline, diesel, jet fuel) increased, China’s dependence on oil imports continued to increase.
Double-digit percentage increases in oil consumption were recorded by Pakistan, Venezuela, and Azerbaijan from 2012 to 2013, and over the past five years double-digit percentage consumption increases were recorded by Central and South America (15.2 percent), the Middle East (18.3 percent), Africa (12 percent), Asia Pacific (17.4 percent), and the former Soviet Union (12.8 percent). Oil demand in the developed countries belonging to the Organisation for Economic Co-operation and Development (OECD) decreased 5.3 percent over the past five years, while demand in non-OECD countries increased 20.3 percent.
After posting the above graphic to my Twitter feed, several asked if I would reproduce it in barrels per day. I have to agree that this really puts Asia Pacific’s influence on global oil demand growth in perspective. Over the past 5 years, 87 percent of the demand growth for oil came from the Asia Pacific region:
Oil Prices
The loss of oil production from Libya and strong demand in developing countries ensured that oil prices remained high, despite surging US production. Contrary to expectations — given a tighter supply/demand picture for international crudes — Brent crude declined by $3.01 from 2012 to a yearly average of $108.66/bbl. Prices for West Texas Intermediate (WTI), on the other hand, actually averaged $97.99/bbl for the year, an increase of $3.87/bbl from 2012.
Conclusions
The story of oil in 2013 was one of surging US production and increasing demand in developing countries. The US continues to lead the world in increasing oil production, while developing countries — in particular the Asia Pacific region — have added the vast majority of oil demand in recent years. Arguably the only thing preventing the world from experiencing oil prices in the $150-$200/bbl range is the continuing shale oil boom in the US.
Consumer Energy Report » R-Squared Energy Blog by Robert Rapier
26 Comments on "World Sets New Oil Production and Consumption Records"
M1 on Thu, 10th Jul 2014 8:07 am
Good to see the arabs burn up their oil faster then ever, soon to be back in the desert roaming.
Northwest Resident on Thu, 10th Jul 2014 9:25 am
It is party time around the world, burning up every drop of oil that we can get our hands on as fast as we can burn it. To achieve the increases in oil production, the world has gone deeply into debt and abandoned all fiscal common sense — anything to get that oil. It is a sad, pathetic spectacle, and it is going to end ugly.
JuanP on Thu, 10th Jul 2014 10:39 am
In an article titled “World Sets New Oil Production and Consumption Records”, the author neglects to provide the new consumption record. I know we were around 91-92 mbpd not too long ago. Can someone help?
shortonoil on Thu, 10th Jul 2014 10:52 am
“Arguably the only thing preventing the world from experiencing oil prices in the $150-$200/bbl range is the continuing shale oil boom in the US.”
Our model which has a 47 year variance of zero between the model’s projected price, and the price reported by the EIA for WTI gives a 2014 price of $119 per barrel. The lower 98.5% confidence interval (CI) is $97. So, it is highly unlikely that prices would now be in the $150 – $200 range without shale production. It is true, however, that prices have not advanced for more than three years, and this is very bad for the future of oil production, and its future price. Production costs are increasing, like they have since Drake bailed his first barrel of oil in 1859, and will continue to increase. The oil industry is working with ever declining margins, and this translates into ever declining E&D. Because the petroleum industry has a developmental lead time of 6 to 8 years, that means that we will be paying those higher prices further down the road. Prices which are now being restrained as a result of shale production.
The consequences of this will be one BIG price shock when shale falls off its ivory, FED supported, hyped-up tower. The amount of light, and ultra light crude in storage keeps building up along the Gulf Coast, and at some point this will come to its conclusion. Jean Laharrere commented that we may eventually discover that we would have been better off without shale altogether. He was probably correct!
http://www.thehillsgroup.org/
Plantagenet on Thu, 10th Jul 2014 11:09 am
Thank god for fracking—we’ve had a few more years to enjoy our decadent cheap energy life-styles. Wheeeee!
Northwest Resident on Thu, 10th Jul 2014 11:18 am
Plant — I agree. Fracking has bought us a few more years of BAU. It has also sent a clear and unmistakable signal to anyone alert enough and smart enough to listen that “this is the end of the line — prepare now for what comes next”.
Plant, it is amazing how your sense of humor so closely resembles that of another poster on this site — Nony. Do you guys know each other? PapaSmurf and MSN Fanboy have also exhibited the same exact outbursts of goofy “humor” that you are displaying in your post above. Are you guys all in the same club, taking turns posting on this forum? Just wondering…
Perk Earl on Thu, 10th Jul 2014 1:59 pm
One big question here is how much frackable oil is there in the rest of the world?
Is it enough to keep BAU going for another 20 years? I don’t know so I’m just asking.
Northwest Resident on Thu, 10th Jul 2014 2:13 pm
Perk Earl — I’m no expert, but I’ve asked the same question on this forum and the experts have responded. The problem is that there aren’t enough experienced drillers with enough equipment to exploit all the “tight oil” in the world. I believe it was rockman who explained that Halliburton, a service company, is going gang-busters here in America on the fracking projects, but if fracking in the UK picked up and Halliburton was offered more money, then they might be tempted to move their operations to the UK. The implication, and my understanding, is that Halliburton has limited personnel and equipment — they can’t be in both places, not adequately. There aren’t enough drilling rigs. The infrastructure that makes fracking possible in America does not exist in other countries, for the most part. The land-use and land-ownership laws that make fracking possible in America do not exist in other countries, for the most part. So the answer is, there is a lot of frackable oil in other countries, but it is not obtainable — not without huge significant investment in equipment, infrastructure and training — none of which comes easy, and in fact, none of which is even realistic. Another point that shortonoil has made is that fracking is an energy intensive operation. There may be a “net gain” in energy from fracking, but it takes a huge amount of conventional oil to get that small net gain. The way I look at fracking, and the way I encourage others to look at it, is that fracking is solely intended to buy us and the world some time before things really start heading downhill. That’s it. It is a short term patch, definitely not a long term solution to any problems that the world is facing. This is the opinion of Northwest Resident and may not reflect the views of other posters on this site.
RobertRapier on Thu, 10th Jul 2014 3:11 pm
“In an article titled “World Sets New Oil Production and Consumption Records”, the author neglects to provide the new consumption record. I know we were around 91-92 mbpd not too long ago. Can someone help?”
That’s a good point. It was 91.3 million bpd; up 1.4% from 2012. I will indicate this in the original, but can’t edit the one posted here.
JuanP on Thu, 10th Jul 2014 3:33 pm
Robert, I was just being the ass I am. I appreciate the work you do and look forward to keep reading your essays. I have enjoyed reading your work for years.
RobertRapier on Thu, 10th Jul 2014 4:02 pm
“One big question here is how much frackable oil is there in the rest of the world?”
It’s also a question of water. China has the biggest recoverable shale gas resource and 3rd largest oil resource, but insufficient water where the resources are located. In other countries, the geology or politics are more difficult.
Perk Earl on Thu, 10th Jul 2014 5:04 pm
That’s interesting info., NWR. I did a frac job for Halliburton in Colorado in 77. It was a small job with one pump truck (I was the pump operator), that unfortunately did not increase flow rate even though one tank was filling while they other diesel pump was screaming at 15k rpm, then switch to the other pump, rinse repeat a few times.
From photos I’ve seen of these frac jobs today they utilize a whole array of pumping equipment on a much bigger scale. Maybe they even offer them ear protection. Back then I stuffed tissue in my ears much to the dislike of my partner who had to yell over the engines and through my ear protection to communicate with me. But heck I wasn’t willing to lose my hearing for a Summer job.
Later I worked for them in the north sea off of Aberdeen. Flew in this tiny helicopter from one rig to another in the BP40’s in winds of 40-50 mph. I didn’t say a word to the pilot next to me while his eyes were glued to the controls.
Northwest Resident on Thu, 10th Jul 2014 5:12 pm
That a couple of scary stories, Perk Earl. I never worked in the oil business. But I was assigned to a Marine Corp search and rescue helicopter crew during my 4-year stretch in the Navy, and one time while flying over the Santa Ana mountains in SoCal the hydrolic system went out, and we started slowly spinning downward into the deep abyss of a rocky canyon. I just figured it was time to die and that it would all be over soon enough. The pilot was jerking and pulling hard on the controls, and suddenly got a burst of fluid. We shot up like a rocket, then fell flat down onto a narrow rock finger jutting out over a steep and very deep dropoff, where we sat with the rudders barely straggling the rock, teetering back and forth. That is when the adrenaline hit me and I got a burst of fear. Short story — we carefully crawled out of the helicopter one man at a time, trying to keep the balance. Your story about flying in the helicopter under dangerous conditions made me think of that story, and several others. Guys, I’m lucky to be alive today, that’s all I can say.
UK13 AMP on Thu, 10th Jul 2014 5:13 pm
As fracking is an expensive game that requires a lot of debt to get each rig up and running, what will happen when the recovery rates start to slow? The big banks will class the debt to finance the rigs as “sub-prime”! And we all know how the last sub-prime boom came crashing down….
shortonoil on Thu, 10th Jul 2014 5:20 pm
Another element that is limiting shale development in the rest of the world is simply cost. Shale has shown itself to be a very expensive endeavor. The profitability of shale production is very questionable; it is quit likely that for its full life cycle it has none. Investing in the infrastructure needed to accomplish any significant production probably wouldn’t make much economic sense for most of the world. It is still cheaper for most other countries to just buy their oil from some other producer. The rest of the world may also just be waiting to see how it all turns out for those Yankees. Even the Chinese, the greatest risk takers in the world, have not jumped on the shale band wagon! Until they do, don’t expect much to happen anywhere else.
http://www.thehillsgroup.org/
rockman on Thu, 10th Jul 2014 7:58 pm
NR – Yes the sad reality is that more hands are killed in chopper transits in the GOM offshore the on the drill rigs. Had to be HUET certified when I worked offshore: Helicopter Underwater Escape Training. You probably did similar. Of course the chance of surviving impact was minimal but I did get a nice diploma out of it. LOL.
Northwest Resident on Thu, 10th Jul 2014 8:18 pm
rockman — Yeah, they made me float for an hour in a swimming pool, along with other fun stuff. I still have my “wings” and my S.A.R. patch in my little box of prized memories. Ask me sometime how I rappelled down a 100 foot rope on a training exercise once through thick fog onto the ground around the San Diego mountains, only to find myself surrounded by mean looking buffalo wondering “WTF” and the pilot I came to “rescue” up in a tree using his parachute as a hammock. Ah… the good old days. Huey’s huh? That’s what I flew in too. Fun, until it gets scary.
Nony on Thu, 10th Jul 2014 9:02 pm
NR: I can neither confirm nor deny that I am a sock puppet. 😉
Northwest Resident on Thu, 10th Jul 2014 9:24 pm
Nony, you don’t have to. We both know the truth, don’t we? I actually like your sense of humor — and all the others’ sense of humor too for that matter, equally as much as I like your’s. Even PapaSmurf in all his nastiness still cut loose with a whacky sense of humor a couple of times, which is one of the reasons that YOU’RE BUSTED!
Nony on Thu, 10th Jul 2014 9:34 pm
Just ban the other double logins. 😉
Musher on Fri, 11th Jul 2014 1:54 am
Considering the rapid depletion rates for tight oil, it may be that we are blithely running toward a cliff. The relatively low EROI of tight oil will eventually be expressed in declining investment and, ultimately, falling production. At that point the total global production of oil would literally fall out of bed taking the world financial system with it.
shortonoil on Fri, 11th Jul 2014 9:02 am
“Considering the rapid depletion rates for tight oil, it may be that we are blithely running toward a cliff.”
Undoubtedly, you will turn out to be correct. The ERoEI of shale is too low for it to be a sustainable source for the production of transportation fuels. That is why 40% of US LTO production is shipped to Canada to use as a diluent for its bitumen production. Over the next couple of years that situation is likely to change.
The Duvernay, a huge condensate field, in Western Canada, and only 200 miles from Ft. MacMurray is now coming on line. Platts recently reported that by year end they expect there to be 100 rigs drilling in that field. Because of the transportation differential, condensate from the Duvernay will have a $20 per barrel price advantage over US LTO production. Loss of its primary customer, the Canadian bitumen industry, will be a significant blow to the US shale industry.
The US was able to develop its shale fields as a result of several factors that the rest of the world does not share. It had a good deal of the infrastructure needed already in place. It had the advantage of the FED’s ZIRP policy, which according to our calculation provided about a $20 per barrel subsidy to Bakken production (and probably most other production) and until recently it had a captured market in Canada. Because only the US had these unique advantages we believe that the wide scale development of shale resources in other parts of the world probably will not occur.
http://www.thehillsgroup.org/
Nony on Fri, 11th Jul 2014 9:44 am
EROI blablabla
Nony on Fri, 11th Jul 2014 9:45 am
You doomers failed to predict the US oil industry taking off. Eat those miserable 2005-2008 predictions! Eat the Piccolo Bakken prediction. Eat the Rune Red Queen.
MAN UP and FESS UP.
Cranks…sheesh.
Davy on Fri, 11th Jul 2014 9:55 am
Moo Noo, time is on our side and frowning upon Cornucopians. Sorry Noo, you will find acceptance eventually. All denial is a path to acceptance.
Newfie on Sat, 12th Jul 2014 6:05 am
Yeah sure, oil production is going to keep going up and the economy is going to grow forever. 😉