Natural gas will continue to be the fastest growing fossil fuel in the world to 2030, with demand rising by about 2% a year, according to BP plc’s closely watched “Energy Outlook 2030,” which was published on Wednesday.

BP CEO Bob Dudley, who presented the report in London, said the gains in worldwide gas use haven’t come by accident. Because of its growing abundance and lower emissions, it’s come to be the fuel of choice by more power generators.

“Natural gas is a sustainable option being deployed at scale,” Dudley said. “Gas typically generates fewer than half the emissions of coal when burned for power. It is not by accident that gas is growing so fast in the U.S., perhaps the world’s most open and competitive upstream environment.”

According to BP, there was 6,609 Tcf of proved gas reserves worldwide in 2010, “sufficient for 59 years of production at current levels. Unconventionals remain to be appraised in detail globally, but current estimates run up to twice this reserves/production ratio.”

BP expects shale gas and coalbed methane to account for 63% of North American production by 2030. “Sustained growth of shale gas” also raises the prospect for up to 5 Bcf/d of liquefied natural gas (LNG) exports from North America by 2030, the analysis found.

According to BP, global energy demand is likely to jump by 39% over the next two decades, but at a slower annual rate of about 1.6% a year. Increased energy efficiency and “strong” growth for renewable energy also are forecast. Energy consumption in countries that are members of the OECD, or Organization for Economic Cooperation and Development, is expected to increase by only 4% in total over the period.

Fossil fuels continue to dominate to 2030 and should account for 81% of global demand by 2030, which would be 6% below current levels, BP noted.

Fuel switching is predicted to increase, with more natural gas and renewables use at the expense of coal and oil. The gradual switch “should see renewables, including biofuels, continue to be the fastest growing sources of energy globally, rising at an annual clip of more than 8%, much quicker even than natural gas, the fastest growing fossil fuel at about 2% a year over the period to 2030,” said the report.

“This report is by turns challenging, fascinating and stimulating for anyone in the energy business,” said Dudley. “It helps us to be both realistic and optimistic. It shows there are things we can’t change — like the underlying drivers of energy demand — and things we can change — like the way we satisfy that demand. The main message is that we need to have an open, competitive energy sector, which encourages innovation and thereby maximizes efficiency in order to enjoy energy that is sufficient, secure and sustainable into the future.”

BP’s annual update presents the company’s view of the “likely” path of global energy markets to 2030 and the latest report takes into account developments in the past year. Dudley noted that the underlying method remains unchanged in that the company makes assumptions on changes in policy, technology and the economy, based on extensive internal and external consultations, and uses a range of analytical tools to build a “to the best of our knowledge” view.

The outlook supplements BP’s “Statistical Review of World Energy,” which is scheduled to next be published in June.

“Our projection for world energy demand and supply is little changed since our last outlook” in 2011, noted the CEO. A year ago BP was predicting world energy demand would be up by about 1% by 2030 (see Daily GPI, Jan. 21, 2011). “A slightly higher base year, due to strong global consumption growth in 2010, has been offset by a slightly slower annual growth rate.”

BP revised global nuclear prospects after the Fukushima nuclear accident in Japan and the resulting policy changes in Japan and Europe. Biofuels growth, while still robust, was reduced in this year’s report because of more “modest” expectations for next-generation fuels to penetrate the market. Renewables in power generation were revised higher because of improved prospects for cost reductions.

The outlook for North American natural gas and oil supplies also was revised higher because of the “evolving expectations for shale plays.”

“The growth of unconventional supply, including U.S. shale oil and gas, Canadian oilsands and Brazilian deepwaters, against a background of a gradual decline in oil demand, will see the Western Hemisphere become almost totally energy self-sufficient by 2030,” said BP chief economist Christof Ruhl. “This means that growth in the rest of the world, principally Asia, will depend increasingly on the Middle East in particular for its growing oil requirements.”

Oil is expected to continue to lose market share to 2030 even though demand for hydrocarbon liquids still is expected to reach 103 million b/d, up by 18% from 2010. According to BP, the world still would need to bring on enough liquids — oil, biofuels and others — to meet a forecast of 16 million b/d of extra demand by 2030 and replace declining output from existing sources.

“While coal is expected to continue gaining market share in the current decade, growth will wane in the 2020-30 decade; gas growth will remain steady and nonfossil fuels are likely to contribute nearly half of the growth after 2020.

“Power generation is expected to be the fastest growing user of energy in the period to 2030, accounting for more than half the total growth in primary energy use. And it is in the power sector where the greatest changes in the fuel mix are expected. Renewables, nuclear and hydroelectric should account for more than half the growth in power generation.”

By 2030 countries now importing energy would need to import 40% more than they do today, but the experience will vary by region, BP found.

“In North America, efforts to reduce dependence on foreign supplies should show impressive results in the next couple of decades. Bolstered by supply growth from biofuels as well as unconventional oil and gas, North America’s energy deficit will turn into a small surplus by 2030.”

However, Europe’s energy deficit likely “remains at current levels for oil and coal but will increase by some two-thirds for natural gas, supplied by LNG and pipelines from the former Soviet Union. China’s energy deficit across all fuels will widen by more than a factor of five and India’s, mainly of oil and coal, will more than double in the period to 2030.”

Meanwhile, deepwater gas and oil supplies are expected to account for 10% of global supply by 2030, the report stated.

BP’s report also highlights advances in technology, which it said has contributed to efficiency gains and increased resources worldwide.

“Technology underlies many of the trends apparent in this report. For example, the supply of gas has been accelerated as a result of technologies that unlock shale gas and tight gas. In the transport sector, we believe the efficiency of the internal combustion engine is likely to double over the next 20 years. And that will save roughly a Saudi Arabia’s worth of production. By 2030 we expect hybrids to account for most car sales and roughly 30% of all vehicles on the road.”

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