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.”)
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.
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.
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.
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