BP plc's annual benchmark review of world energy sees continued growth in global natural gas resources, particularly in the United States, while oil lost worldwide market share for the 13th year in a row.
The United States last year recorded the world's highest production growth for both natural gas and oil, according to BP's 62nd Statistical Review of World Energy 2013, published on Wednesday. With rising natural gas output driving domestic prices lower, gas displaced coal in power generation, causing the United States to experience the largest decline in coal consumption in the world, according to the report.
The review "provides an annual opportunity to examine the latest data, country-by-country and fuel-by-fuel," highlighting the "flexibility with which our global energy system adapts to rapid global change," BP noted.
"The U.S. recorded the world's highest growth in production of both oil and natural gas in 2012, on the back of increasing production of unconventional hydrocarbons such as tight oil, an example of the increasing diversity of energy sources as the global market continues to adapt, innovate and evolve," the review noted.
Oil remains the world's leading fuel, at 33.1% of global energy consumption, but it continued to lose market share for the 13th consecutive year, and its current market share is the lowest in BP's data set, which begins in 1965, the review noted.
Because of lower natural gas prices and reduced gas drilling, BP trimmed its estimate of U.S. gas reserves, a cut that was borne out in a recent review by Fitch Ratings (see Daily GPI, June 3). By BP estimates, domestic reserves ended 2012 at about 282.5 Tcf, or 8 trillion cubic meters (tcm), down about 105.9 Bcf (3 billion cubic meters) from 2011.
"For those of us in the energy industry, the challenges are about how we respond to the big shifts we are seeing -- a shift in demand toward emerging economies and a shift in supply toward a greater diversity of energy sources, including unconventionals," said BP Group CEO Bob Dudley.
"The data show there is ample energy available. Our challenge as an industry is to make the best choices about where to invest. We want to provide energy in ways that enable us to be both safe and competitive -- deploying our strengths while reducing our risks, and managing our costs."
Among the highlights for the natural gas section of BP's 2012 report, economists said:
Global proven gas reserves at the end of 2012 were estimated at 6,614.4 Tcf (187.3 tcm), or 6.6 quadrillion cubic feet (Qcf) -- "enough for about 56 years worth of global production at current rates," said BP. In the report last year, BP estimated global gas reserves at 7,359.6 Tcf (208.4 tcm), or 7.4 Qcf.
"While natural gas grew at a below-average rate, it was the only fossil fuel to see consumption growth accelerate in 2012," according to BP. "Cheaper natural gas competed strongly with coal in North America, displacing it as a power feedstock. Hydroelectric and renewable energy also competed strongly against coal globally; renewables in power generation grew by 15%. However in Europe, where gas was more expensive, coal was often the fuel of choice for power generation, while the LNG tankers that used to supply Europe turned toward Asia."
Russia, considered to be the world's largest gas reserves holder, was responsible for most of the reductions, with its reserves downgraded to 1,161.9 Tcf (32.9 tcm), or 1.2 Qcf, from year-ago numbers of 1,575 Tcf (44.6 tcm), or 1.6 Qcf, which "equals roughly about seven years of global gas consumption."
BP's chief economist Christoph Ruhl said the estimates were adjusted for the Former Soviet Union, including Russia, because because of the way the FSC countries calculate reserves.
"Traditionally countries of the former Soviet Union had different criteria than used elsewhere," said Ruhl. "So we used a conversion factor to convert that from those countries where we don't get direct data...In some countries, reserves are still a state secret, so we have to rely on these data." With the downward revisions to Russia's gas numbers, Iran for the first time in years is at the top of BP's chart as the world's largest holder of gas reserve.
Global proven oil reserves were estimated at 1,669 billion bbl at the end of 2012, up slightly from year-ago estimates of 1,654 billion bbl. The newest estimate is enough to maintain current global production levels for 53 years, BP noted.
In the United States, oil reserves jumped to 35 billion bbl from 31 billion bbl, which accounted for about 2% of total global reserves, BP found.
Overall global energy consumption growth last year declined to 1.8% from 2.4% in 2011. "This was partly as a result of the economic slowdown, but also because individuals and businesses responded to high prices by becoming more efficient in their use of energy," Ruhl said. The emerging economies "firmly established themselves as the source of what demand growth was seen, with China and India alone accounting for nearly 90% of the increase. Just 20 years ago, the emerging economies accounted for only 42% of global consumption; now that figure is 56%.
Coal remained the world's fastest-growing fossil fuel, with China now consuming most of the resource for the first time. However, coal also was the fossil fuel that saw the weakest growth relative to its historical average, according to BP.
"Hydroelectric and renewable energy (along with cheap natural gas in North America) competed against coal in power generation," BP noted. "Global biofuels output fell for the first time since 2000 due to weakness in the U.S., but renewables in power generation grew by 15.2% and accounted for a record 4.7% of global power output.
"2012 was yet another year of adaptation to a changing energy landscape," said Ruhl. As emerging economies "industrialize, they unlock ever more resources." The data indicate that the industrializing part of the world outpaces the already industrialized countries in terms of proved reserves growth, but "also contributes its fair share to energy production."
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