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Page added on April 7, 2017

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Plentiful supply can meet strong demand, but forecasts rarely certain, admits BP exec

Consumption

Gone forever are the days when the world stressed over what would happen when humanity began running out of oil—a fear based on M. King Hubbert’s theory of peak oil—or the point in time at which the maximum rate of petroleum extraction occurred.

The North American shale revolution proved that not only are there plenty of hydrocarbons left to fuel humans for centuries, there are plenty of people with substantial grit and ingenuity to find ways to reach these resources. What worries the oil industry today is the idea of peak oil demand—when demand growth for oil and gas resources begins to stagnate and lose ground to other energy sources, such as renewables, due to cost and/or environmental concerns.

“There could be a time, and it could be as early as 2035, when we start to see peak oil; not what is sometimes discussed by geologists where we start to run out oil, but perhaps the time when we start to run out of demand,” said BP America Senior V.P. Cindy Yeilding at AAPG’s 2017 Annual Conference and Exhibition (ACE) on April 4 in Houston. Yeilding participated in a panel discussion at the conference, titled “The Next 100 Years of Global Energy Use: Resources, Impacts and Economics.”

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BP America Senior V.P. Cindy Yeilding

“(Reaching peak demand) would probably mean that we leave some oil in the ground, but that would also mean that there probably is a better offer out there. That point could be reached well into the next century, or it could also start as early as the next half of this century,” said Yeilding, as she referenced a quote from former Saudi Oil Minister Sheikh Ahmed Zaki Yamani, remarking “the Stone Age didn’t end because we ran out of stones.”

Yeilding acknowledged that BP forecasts 33% energy demand growth by the year 2035, driven by non-OECD countries, including those in Africa, as well as China and India. However, she said that OECD demand growth, in developed countries like the U.S. and those in Western Europe, will begin to plateau in the next 20 years, as fuel efficiency improves, meaning virtually all possible demand growth will come from the developing world. BP forecasts oil demand growth to average 0.9% annually until 2035, with OPEC meeting the bulk of demand growth. The cartel is expected to provide 70% of global supply, followed by the U.S. and Russia.

Natural gas demand is expected to grow more rapidly, at 1.6% annually. Shale production is expected to increase 5.2%/year and provide 60% of the total increase in natural gas supply, due in large part to U.S. operations. China should become second, behind the U.S., in shale production by 2035. Both China and Europe are forecast to become increasingly dependent on natural gas, according to BP.

Coal demand is forecast to decrease 0.2% annually, with China and India expected to be the largest consumers. Renewables should grow their share of total power generation, from 7% in 2015 to 20% in 2035, forecasts BP.

Still, “all that is certain is uncertainty,” Yielding said. “Could there be a peak? I think most of us actually think there will be, and there will certainly be technology and policy support for a zero-net carbon future coming very soon.” Yielding noted that advances in technology, like carbon capture, could help adapt oil and gas production to future environmental standards. She also said that she expects growth in petroleum demand could come from some non-combustible sources, such as infrastructure and manufacturing.

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8 Comments on "Plentiful supply can meet strong demand, but forecasts rarely certain, admits BP exec"

  1. Anonymouse on Fri, 7th Apr 2017 6:35 pm 

    Forecasts about future events, that by definition, have not actually occurred, rarely certain says highly educated BP mouthpiece.
    What a startling admission, usually the oil cartel is not this forthright

  2. rockman on Fri, 7th Apr 2017 9:39 pm 

    “The North American shale revolution proved that not only are there plenty of hydrocarbons left to fuel humans for centuries” Truer words never spoken: for those that have use for oil and can the price there will always be production to supple that demand. It might only be a few % of the current production rate and the price may be many times the current.

    As has always been the case since the beginning of the oil age supply has always met demand. Demand determined by the price of oil and not the desire for that form of energy. That desire has always been much greater then the available volume whatever the price of oil at the time. As it is today just as it was in 1998 when it was $17/bbl.

  3. Midnight Oil on Sat, 8th Apr 2017 12:49 am 

    These are the same people that brought us the Deepwater Horizon Diaster… Yes sir, we should stop and listen in order to proceed in the opposite direction.
    Sounds like a PR piece not to alarm the sheeple. Yep, there WILL be a PEAK, Cindy, and a descent down afterward.
    The trick is to get out if it’s way on the downslope, good luck with that

  4. Cloggie on Sat, 8th Apr 2017 12:59 am 

    One should not worry too much about peak this and climate that in 2017. The real immediate impact in our lives will come from financial, social and political developments, aka war.

  5. rockman on Sat, 8th Apr 2017 6:11 am 

    Cloggie – “The real immediate impact in our lives will come from financial, social and political developments, aka war.”. Also known as the Peak Oil Dynamic…the POD. Or would you prefer an acronym in your language? LOL. And what would that be?

  6. Creedon on Sat, 8th Apr 2017 6:58 am 

    Shale is produced via debt that will never be paid back. If they do not know that, they should. The economy is likely weakening as they flood the world with oil, although that is not the story they are telling us. If we can manage to destroy Syria, that will be one less country using oil.

  7. Cloggie on Sat, 8th Apr 2017 8:09 am 

    Also known as the Peak Oil Dynamic…the POD. Or would you prefer an acronym in your language? LOL. And what would that be?

    Hollanders are basically Westward-looking Anglo-Germans. They don’t bother to translate Anglo terms with global reach, very much unlike the Eastward looking nominal Germans, who translate everything. In Holland even the garbage man speaks English, in Germany not so much.

  8. Nony on Sat, 8th Apr 2017 12:05 pm 

    US LTO played an important role in stopping oil prices from moving from the 100s to the 150+ regime (2010-2014). Eventually they helped drive price down to 50s. LTO is incapable of driving prices down into the 20s. For that, we need OPEC disharmony. SA is capable of driving the price into the 20s or of propping it up into the 50s. Any way, you cut it, LTO has been an amazing development that has affected World supply and demand balance.

    Natural gas is a more regional market. Here shale gas has had an amazing impact. Remember David Hughes (and even many mainstream prognosticators) were predicting 1.5 BCFpd per year declines and that we couldn’t build LNG IMPORT fast enough to keep up. Instead we have grown 8 BCFpd in about 10 years.

    And the natural gas explosion actually happened without price as the driver (prices dropped from 10+ to sustainably well under 4). That is a classic sign of increased supply, increased LOW COST supply. Shale gas is mightier than shale oil. Just ask the Rockman. It kicked his ass out of drilling in the shallow Gulf.

    Fear the Marcellus…fear it. In region gas prices are in the 1s in NE and SW PA. IF that infrastructure gets built, PA is going to head on down south and kick some TX ass. Strange days, indeed.

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