Warnings that the world is headed for “peak oil” – when oil supplies decline after reaching the highest rates of extraction – appear “increasingly groundless”, BP‘s chief executive said on Wednesday.
Bob Dudley’s remarks came as the company published a study predicting oil production will increase substantially, and that unconventional and high-carbon oil will make up all of the increase in global oil supply to the end of this decade, with the explosive growth of shale oil in the US behind much of the growth.
As a result, the oil and gas company forecasts that carbon dioxide emissions will rise by more than a quarter by 2030 – a disaster, according to scientists, because if the world is to avoid dangerous climate change then studies suggest emissions must peak in the next three years or so.
So-called unconventional oil – shale oil, tar sands and biofuels – are the most controversial forms of the fuel, because they are much more carbon-intensive than conventional oilfields. They require large amounts of energy and water, and have been associated with serious environmental damages.
While some new conventional oilfields are likely to come on stream before 2020, they will be balanced out by those being depleted.
BP predicts that by 2030, the US will be self-sufficient in energy, with only 1% coming from imports, the company’s analysts predict. That would be a remarkable turnaround for a country that as recently as 2005, before the shale gas boom, was one of the biggest global oil importers.
As the US becomes self-sufficient, however, China and India will soak up the excess production and become increasingly reliant on imports of energy, BP’s annual Outlook report found. BP also predicts that by 2030 at least 70% of global emissions will come from countries now classed as developing, with major implications for international climate policy.
Dudley said the report showed that peak oil was not going to happen any time soon. “The outlook shows the degree to which once-accepted wisdom has been turned on its head. Fears over oil running out – to which BP has never subscribed – appear increasingly groundless. The US will not be increasingly dependent on energy imports, with energy set to reinvigorate its economy. And China and India are expected to need a lot more imports to keep growing,” he said.
BP’s projections confirm some of those made by the International Energy Agency, which late last year forecast that the US would be the world’s biggest oil producer by the final years of this decade, surpassing Saudi Arabia and other Opec countries.
The shale gas boom of the past five years took the US by surprise. Gas prices there have plunged and electricity production is shifting fast from coal to gas-fired power stations. This has had a huge effect on all parts of the US economy, and is changing politics globally.
While gas prices have plunged in the US, to about $2 a unit, they have remained high elsewhere around the world, at over $10 in Europe, as the US lacks exportation infrastructure and domestic demand has soaked up the supply. The ramifications of such low-energy prices in the US have yet to be fully felt in industry. Cheap energy will make US manufacturers more competitive, which is worrying many European rivals.
Falling gas prices in the US have also encouraged shale companies to explore shale oil as well as gas, which will make for upheaval in the oil market. The success of shale in the US is also prompting other countries around the world to scramble to exploit their own resources.
While the use of shale gas could cut greenhouse gas emissions in the US, the coal not being burnt in its power stations is now being used increasingly in other countries, with coal experiencing a major upturn in its fortunes.
Christof Rühl, chief economist at BP Group, said other countries could mimic the US in shale only if they put the right conditions in place: “Vast unconventional reserves have been unlocked in the US, with oil production following gas. This delivery has been made possible not only by the resources and technology, but also by ‘above-ground’ factors such as a strong and competitive service sector, land access facilitated by private ownership, liquid markets and favourable regulatory terms.”
BP also forecast that global energy demand would continue to increase at an average of 2% a year to 2020 and then by 1.3% a year to 2030. Almost all of this demand growth is forecast to come from currently developing economies, with China and India alone responsible for half the increase in demand. The company expects fossil fuels to continue to dominate over renewables, forecasting that low-carbon fuels – nuclear, hydroelectricity and other forms of renewables – will take only a 6% to 7% share each of the global energy market.
Plantagenet on Wed, 16th Jan 2013 5:27 pm
Then: Drill baby drill.
Now: Frak baby frak.
Gale Whitaker on Wed, 16th Jan 2013 5:42 pm
The picture is very rosy. Wait a minute! Oil is $100/b and gasoline is still $3.80/gal. The “tight” oil doesn’t seem to be having any affect. Could it be that the whole fracking thing is a ponzi scheme like chinchillas, emus and goji berries.
J-Gav on Wed, 16th Jan 2013 5:42 pm
See how he couches his argument: “Fears over oil running out … appear increasingly groundless.”
First of all, how can anything be “increasingly” groundless? It’s either groundless or it isn’t. Secondly and more importantly, Nobody in their right mind is worried about oil running out. It’s all a question of EROEI, net energy, flow rates.
The result of this horse-race (or should that be horse-hooey?): all this non-conventional oil is going to cost more than many countries will be able to afford.
Apart from that, we are apparently perfectly willing to fry ourselves (and most living species along with us) in order to get our fossil-fuel fix. This is supposed to be good news?
BS on Wed, 16th Jan 2013 6:05 pm
$2/unit.
Unless this author’s unit is not a gallon, he is wrong, by a lot…
http://fuelgaugereport.aaa.com/?redirectto=http://fuelgaugereport.opisnet.com/index.asp
Newfie on Wed, 16th Jan 2013 6:20 pm
Drill Baby Drill,
Frak Baby Frak,
and then
Fry Baby Fry.
Kenz300 on Wed, 16th Jan 2013 6:22 pm
Quote — “BP also forecast that global energy demand would continue to increase at an average of 2% a year to 2020 and then by 1.3% a year to 2030. Almost all of this demand growth is forecast to come from currently developing economies, with China and India alone responsible for half the increase in demand.”
————————
China and India with their billion plus populations are the driving force in oil prices and oil demand.
Climate Change will depend on what they do to provide energy for their countries. They have an opportunity to leap frog the fossil fuel economy and move to safe, clean alternative forms of energy.
If we are to slow Climate Change the world will need to stop building any more coal fired power pants.
Keith_McClary on Wed, 16th Jan 2013 6:47 pm
BS:
This British author is talking about natural gas, not petrol.
Arthur on Wed, 16th Jan 2013 8:35 pm
Drill Baby Drill,
Frak Baby Frak,
and then
Fry Baby Fry.
and then
Cry Baby Cry.
rollin on Wed, 16th Jan 2013 9:35 pm
Always remember that the sunniest company forecasts often appear just before a fall.
Either way it looks like the fossil fuel companies are going to try to push this as far as possible, not good, not good at all.
Science sans conscience on Wed, 16th Jan 2013 10:57 pm
They can’t agree:
“Technological constraints led in 2007 the French oil major [Total Final Elf] to believe that “peak oil” occurs at roughly 95 million barrels per day, a conservative estimate compared to its competitors.”
[…]
“As for the shale oil boom in the United States, Christophe de Margerie [the CEO] said [Dec. 2012] that it was impossible for the moment to tell what impact it would have on oil production. “This is something of the order of 1 to 3 million barrels a day,” he said, adding that the amount would not allow the United States access to oil independence.”
(http://goo.gl/3VkCc)
BillT on Thu, 17th Jan 2013 1:03 am
What a mopuntain of bull shit! Yes, the US will be self-sufficient in oil by 2030. Why?
1. The economy will have collapsed and the US will be in the Greatest Depression ever and no-one will be able to afford energy in any form.
2. Climate change will have destroyed the very things that are consuming the most energy now, cars and mega-farms.
3. There will be far less people in the Us by 2030 because of #2 above.
So, he may be correct, but it will NOT be because there is an abundance of cheap oil(or NG).
Beery on Thu, 17th Jan 2013 2:16 am
The current irrational exuberance about shale oil, oil shale etc., is just a pipe dream. The oil and gas industry are fervently hoping that if they say the words ‘Peak oil is dead’ enough, it will magically come true. People only get this desperate when things (from their perspective) are looking very glum indeed.
If Peak Oil were dead, oil prices would be in the $20-$30 range. But they are hovering around $100. The oil industry doth protest too much, methinks.
Arthur on Thu, 17th Jan 2013 2:33 pm
The fact that oil costs $100 does not necessarily mean that peakoil is not dead. There could be a lot of ‘high-hanging fruit’, in fact there can be little doubt that there are indeed gigabarrels of oil hidden in rock, waiting like Snow White for some oilprince to drop by and kiss it awake, to use a slightly distasteful comparisson, we are after all talking about oil. The question of course is, at what financial and environmental cost can these barrels be extracted. And what about eroei?
GregT on Fri, 18th Jan 2013 6:05 pm
“Warnings that the world is headed for “peak oil” – when oil supplies decline after reaching the highest rates of extraction – appear “increasingly groundless”, BP‘s chief executive said on Wednesday.”
“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
Upton Sinclair
econ101 on Fri, 18th Jan 2013 7:47 pm
LOL. Truth is in front of you but it’s difficult to understand when you have been peak oiled and climatized! There is so much oil out there you have no clue, no really, you have no clue. The crack pot that put forth peak oil theory didn’t either. He had no idea how much there was. We don’t have a clear picture today either, except to say there are oceans more of oil than previously thought.
Why the drilling techniques have any negative bearing on this is beyond me. Was there a problem when the oil drillers went from pounding the bit to turning it? Were they still getting oil or was it some kind of alternative that didn’t count?
econ101 on Fri, 18th Jan 2013 7:53 pm
Oil prices are high in part becuase of governement regulations and taxes. The politics of shortage have also contributed to supply problems resulting in much higher prices than necessary.
Unfortunately the politics of peak oil caused a huge generational wind-down of oil production in the USA. That allowed the worlds businees model to change from market share based on ample supply and immediate delivery to supply controls to adjust price against demand keeping the price as high as the market could bear.
If allowed to operate normally oil would be as cheap as possible and pleantiful. What you see now is a political result, not a business driven result.