BP sees growing diversity of oil, gas supply

The oil and gas industry faces a growing diversity of reserves worldwide ranging from shale plays to Arctic drilling, BP PLC Chief Executive Bob Dudley said in an opening keynote address Mar. 6 to attendees at IHS CERAWeek in Houston.

“The opportunities are plentiful, but they are also complex and difficult,” Dudley said. “And from BP’s perspective, and many other companies in our industry, the message is that we have learned from recent events and we plan to address those opportunities safely, responsibly, and reliably.”

BP’s Energy Outlook 2030 publication forecasts nonfossil energy—nuclear, hydro, biofuels, and other renewables—will grow faster as a group than any fossil fuel. Dudley noted nonfossil fuels start from a very low base and are expected to provide, on a combined basis, about 20% of all energy in 2030.

“Gas will be the fastest growing fossil fuel at around 2% annually. It’s clean, cheap, and increasingly available,” Dudley said. “Oil will grow more slowly, at less than 1%/year. But that still means the world will need around 16 million b/d more in 2030 than today. Let us pause on what that means—that increase alone is nearly the combined daily 2011 production of Russia, Canada, and the United Arab Emirates.”

Meanwhile, shale plays and deepwater discoveries are helping industry produce what Dudley calls “an enormous amount of previously unreachable oil and gas.” He noted, “At current consumption rates, the data suggests the world has 54 years’ worth of proved oil reserves and 64 years’ worth of proved gas reserves in place.” He also believes more reserves will be found and developed.

Diversity of supply means some reserves are technically difficult to develop and produce such as shale oil and gas, tight oil and gas, heavy oil, the deepwater, and the Arctic Circle.

“And the physical and technological risks are not the only ones,” Dudley said. “Other factors range from fiscal regimes and other policy-related issues, to geopolitical tensions and even the risk of terrorism. We at BP were brutally reminded of that fact a few weeks ago, when four of our employees and colleagues from other companies were murdered in the terrorist attack on the In Amenas gas plant in Algeria.”

Islamist militants attacked the In Amenas gas production plant Jan. 16 in eastern Algeria near the Libyan border (OGJ Online, Jan. 16, 2013).

Russia’s unrealized potential

Unconventional plays in the US have received a lot of attention, Dudley said, adding that international opportunities involving conventional and unconventional formations also abound.

“Russia is the biggest country in the world. It also has the largest combined oil and gas reserves, as well as the highest combined production of oil and gas. And in our view, its potential has yet to be realized,” Dudley said.

He sees “enormous scope” for increasing Russia’s production through enhanced recovery in Western Siberian to exploration and production in Eastern Siberia and the Yamal Peninsula. Russia also has the potential to develop its own shale and tight oil, Dudley said.

“What Russia and the US have in common is that each will require energy investment on an epic scale, undertaken by energy partners who are not daunted by the obstacles and have the resources, experience, capability, and appetite for the task,” he said.

Oil Gas Journal