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By Robert Rapier on Jul 29, 2013 with 5 responses

The State of Oil According to BP

This is the 3rd installment in a series that examines data from the recently released 2013 BP Statistical Review of World Energy. The previous posts - Renewable Energy Status Update 2013 and Hydropower and Geothermal Status Update 2013 – focused mainly on renewables. This post delves into the world’s oil production and consumption patterns.

Global Oil Consumption

Global oil consumption trends received a lot of misleading press coverage shortly after the Statistical Review was released. Many of the news articles reported that global oil consumption is slowing. I addressed this in some detail in Did Global Oil Consumption Slow in 2012?, but the gist is that global oil consumption increased in 2012 to a record 89.8 million barrels per day (bpd). Global oil production also achieved a new record of 86.2 million bpd. (The reason the consumption and production number aren’t in sync is that ethanol and biodiesel are included in the consumption number, but the production number represents only “crude oil, shale oil, oil sands and natural gas liquids.”)

global oil consumption

What did slow down in 2012 was growth in oil consumption. Following consumption increases of 2.8 million bpd from 2009 to 2010, and 1.0 million bpd from 2010 to 2011, the increase in consumption fell to 895,000 bpd from 2011 to 2012. This “decrease in the increase” is the source of the myth that global oil consumption slowed in 2012.

Global oil consumption trends from recent years continued in 2012. While the US and EU both saw consumption decline again in 2012, every developing region in the world increased oil consumption from 2011 to 2012. Leading the way once again was the Asia Pacific region, which increased consumption by just over 3.7% (an increase of ~ 1 million bpd). The largest percentage gainer was Africa (+5.1%), followed by the Middle East (+4.5%), Asia Pacific, and then Central and South America (+2%). Consumption in China, India, and in the Former Soviet Union increased by 5%. North America saw consumption decline by 1.8%, and Europe/Eurasia saw consumption decline by 2.5%.

US Oil Production

One of the biggest stories in global oil production was the continued renaissance in US oil production. The US recorded the largest oil and natural gas production increases in the world, and the largest oil production gain in US history. In 2012 US oil production increased by just over 1 million bpd, which accounted for 53% of the total global increase. The US oil production increase has been facilitated by advances in hydraulic fracturing (fracking) and horizontal drilling in places like the Bakken Formation in North Dakota, the Eagle Ford Shale and Permian Basin in Texas, and the Denver-Julesburg Basin centered in Colorado.

US Oil Production for ETI

Oil Prices

Oil prices remained strong in 2012, with Brent crude setting a new record with a yearly average of $111.67/bbl. Prices for West Texas Intermediate (WTI) prices were somewhat softer due to the expansion of oil production in the US that outpaced the logistical capability of getting that crude to global markets. The average spot price of WTI declined by $0.91/bbl in 2012 to $94.13/bbl. The average annual record price for WTI was $100.06/bbl set in 2008.

Oil Reserves

Global proved oil reserves increased by 15 billion barrels to set a new record of 1.67 trillion barrels. This represents an increase of 347 billion barrels over 2002 levels and an increase of 630 billion barrels over 1992 levels. The global reserves/production (R/P) ratio — which represents the number of years those proved reserves would last at 2012 consumption levels — was 52.9 years globally and 10.7 years for US production and reserves.

Conclusions

The world remains very much addicted to oil, but some areas are making progress in reducing that addiction. However, the areas that are making progress are those that are the most addicted in terms of per capita consumption. Developing areas with low per capita consumption continue to increase their consumption levels, despite prices that remain historically high.

Link to Original Article: The State of Oil According to BP

By Robert Rapier. You can find me on TwitterLinkedIn, or Facebook.

  1. By Benjamin Cole on July 29, 2013 at 5:34 am

    Nice wrap-up. But hard to see “Peak Oil” in that first chart.

    Probably also worth noting is that oil consumption in Europe and Japan has been declining for decades, and hopefully we have turned the corner in the USA too.

    Maybe worth mentioning is that huge amounts of easy to produce oil are effectively locked away in thug nations, such as Iran, Iraq, Saudi Arabia, Russia, Nigeria, Mexico, Libya, Venezuela. In free markets, free democratic societies, you might see another 30 mbd in those nations.

    This is not important now—we can’t get the oil. Saying we might does not increase the actual production now.

    But in going decades, we might see positive changes.

    Meanwhile, rival fuels and conservation technologies improve with every year.

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    • By ChielfEngineer on July 31, 2013 at 4:19 am

      “Nice wrap-up. But hard to see “Peak Oil” in that first chart.”

      Hi Robert, Deja Vu. What is this? 1982 Alaska coming online, 6 to 8 years of tripled gasoline prices, recovering from an economic turn down, new improved café standards coming online, reserves increasing, production increasing, a new peak oil year. I’ve been here before. Those independent refinery stock prices should be looking pretty good about right now.
      What do you say ? 95 million barrels a day by 2020. Do you have 2 cents you would like to share ?

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  2. By ian807 on July 30, 2013 at 2:55 pm

    Interesting. The figures, such as they are, appear roughly accurate. Unmentioned of course, is the price per barrel over those next 52.9 years, and the net energy return on those hydrocarbons. Without those two pieces of information, I’m afraid that the report says little of meaning. If, in 30 years, oil is too expensive to maintain international supply chains in a cost effective manner, then absolute supply will no longer matter. If prices go up enough to trigger oil price feedback, where high oil prices themselves cause oil production costs to increase, oil will cease to be a useful fuel source. Lastly, net energy is a hard limit. When we use more energy to get the oil than we get from it, we stop.

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  3. By Joe Clarkson on July 30, 2013 at 9:58 pm

    The main reason that areas with low per capita oil consumption are continuing to increase their consumption is that their uses are much higher value than in the high per capita consumption developed world. Minimal light and refrigeration are worth paying a lot more for than most of the typical uses of energy in more developed countries. This means that, much to our surprise, we (here in the US) can be outbid in the oil market by poor folk in emerging market counties.

    A small example from my past work in Fiji is illuminating. Poor rice farmers in rural Vanua Levu were very glad to pay $2.00 per kWh for energy delivered by small solar energy systems I helped install there. Their use of the electricity was to power small CFL lights, which were functionally far superior to the kerosene lamps and battery powered flashlights they were used to using. Similarly, they were willing to pay far higher diesel prices than any American would like to pay. This was because they used it for irrigation pumps, not for commuting in F250 pickups.

    As oil gets more expensive there will be a worldwide convergence in usage rates. Developed nations, which are now profligate oil users, will use less and less and developing nations will use more and more. This also means that the rich world will get poorer and the poor world will get richer (or at least get poorer slower).

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  4. By Forrest on August 18, 2013 at 8:16 am

    How about relieving summer peak demand upon the electric grid per NG A.C. absorption process? Japan pushing this technology and utilization up to 30%. Cost of operation 30%-50% less. Units have low maintenance and longer lifespan (no compressor). Also, Japan and Europe more invested in CHP home heating technology utilizing NG. The units heat water and generate electric power for grid or home use. Combine efficiencies of heat and power much higher (85%-95%) than power generating stations. Power companies use steam turbine generators that are about 35% thermal efficient, NG turbines maybe 40%. But electric grid will steal 5%-10% power loss. Don’t forget the power companies have no market or use for heat generated. Home CHP generators produce power at the source of consumption (no grid loss) and can utilize heat for home heating and hot water needs. If an ammonia/water AC process could be adapted to heat output that would be a big plus. If consumer has large thermal need, such as larger building, large hot water use, pool heating needs, etc. the CHP unit will have a return on investment meaning you will make money and this at current wholesale rate of electric. No artificial green energy rate required. Also, these units so efficient the higher cost of propane fuel not a game changer on the economics. Seems this technology more important for the country to adapt/exploit than the anemic wind solar high cost alternatives.

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