BP: Here’s The Upside For Oil Producers
News Article by Inplex Custom Extruders, LLC
In its industry benchmark 2035 Energy Outlook,BP forecast global demand for energy to increase by 34 percent, driven by growth in the world population and economy, with the share of oil declining in favor of gas and renewables.
U.S. shale or tight oil production using fracking technology was a key driver behind global supply growth in recent years. The sector, with relatively expensive production costs, has nevertheless been hard hit by a 70 percent decline in oil prices over the past 18 months to around $30 a barrel.
But in the longer term, shale production is set to grow from around 4 million barrels per day (bpd) today to 8 million bpd in the 2030s, accounting for almost 40 percent of U.S. production, according to the report.
U.S. onshore production in the lower 48 states has declined by around 500,000 bpd since last spring and is expected to fall further in the near term as the global market readjusts before rebounding, Dale said.
According to the report, “technological innovation and productivity gains have unlocked vast resources of tight oil and shale gas, causing us to revise the outlook for U.S. production successively higher.”
Dale also said global oil demand, which grew by 1.8 million bpd last year, would continue to grow “strongly” this year albeit at a slower pace.
“The market is responding very clearly to lower oil prices,” Dale said.
Fossil fuels, which include oil, gas and coal, will remain the dominant source of energy, accounting for around 80 percent of energy supplies in 2035. Gas remains the fastest-growing fossil fuel, rising by 1.8 percent per year compared to oil‘s 0.9 percent growth.
Yet at the current projection, the world is far from meeting goals set by the United Nations to limit global warming to 2 degrees Celsius above pre-industrial levels by the end of the decade.
While gross domestic product should more than double over the period, energy demand will grow by only one third due to higher energy efficiency and changes in economies such as China, which will become less energy-intensive, Dale said.
Much of the demand growth will be driven by an expansion of the global vehicle fleet, which will double by 2035 from around 1.2 billion today to 2.4 billion.
“Unless the global economy grows far more slowly than anybody thinks, you will get material growth in energy demand over the next 20 years,” Dale said.