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BP Statistical Review finds global oil share down for 12th year in a row, coal share up to highest level since 1969; renewables at 2%

13 June 2012

Bpstatrev
World primary energy consumption grew by 2.5% in 2011, close to the historical average. Oil remains the world’s leading fuel, but its 33.1% share of consumption is the lowest on record. Coal’s market share of 30.3% was the highest since 1969. Source: BP. Click to enlarge.

Global energy consumption grew by 2.5% in 2011, broadly in line with the historical average but well below the 5.1% seen in 2010, according to the newly released BP Statistical Review of World Energy, 2012. Emerging economies accounted for all of the net growth, with OECD demand falling for the third time in the last four years, led by a sharp decline in Japan. China alone accounted for 71% of energy consumption growth.

The averages hide a mixed picture by fuel, however. Oil demand grew by less than 1%—the slowest rate amongst fossil fuels—while gas grew by 2.2%, and coal was the only fossil fuel with above average annual consumption growth at 5.4% globally, and 8.4% in the emerging economies.

The report also highlighted supply disruptions as one of the major energy events of the year. The “Arab Spring” affected oil and gas supplies—most notably the complete, albeit temporary, loss of Libyan supply—while the tragic Fukushima accident in Japan had knock-on effects for nuclear and other energy sources around the world. These shocks pushed energy prices higher in much of the world, with oil prices reaching a record annual average of more than $100 per barrel (bbl) for the first time.

Fossil fuels still dominated energy consumption with 87% market share, while renewables rose fastest but are still only 2% of the global total. The fossil fuel mix continues to change with oil, the world’s leading fuel at 33.1% of global energy use, losing share for 12 consecutive years.

Oil. Oil consumption reached 88 million barrels per day (bpd) after a below average rise of 0.6 million bpd or 0.7%. The loss of oil supplies in Libya and elsewhere was eventually more than offset by large production increases among Middle Eastern OPEC members, leading to record oil production in Saudi Arabia, the UAE and Qatar.

Brent oil prices were on average 40% higher than 2010 and exceeded $100 a barrel for the first time ever; at $111.26/bbl, they were the second-highest in inflation adjusted terms, behind only 1864. Crude prices peaked in April as Libyan supplies dried up, and the differential between Brent and West Texas Intermediate (WTI) benchmarks reached a record premium due to North American infrastructure bottlenecks.

Gas. World natural gas consumption grew by 2.2%, below average in all regions except North America where low prices due to the shale gas “revolution” drove robust growth. There was a record decline in EU gas consumption (-9.9%) driven by the weak economy, high prices, warm weather and continued growth in renewable power generation.

Gas prices increased broadly in line with oil prices except in North America where prices reached record discounts both to crude oil and to international gas markets.

Gas production globally grew by 3.1%; the US recorded 7.7% growth and is the world’s biggest producer. Output grew rapidly in Qatar (+25.8%), Russia (+3.1%) and Turkmenistan (+40.6%), more than offsetting declines in Libya (-75.6%) and the UK (-20.8%). The EU’s decline in gas production was the highest on record (-11.4%).

Natural gas trades grew modestly by 4%, driven by liquefied natural gas (LNG) growth of 10.1%, with Qatar (+34.8%) taking 87.7% of the LNG increase.

Coal. Coal was again the fastest growing fossil fuel with predictable consequences for carbon emissions; it now accounts for 30.3% of global energy consumption, the highest share since 1969. OECD coal consumption declined by 1.1%, although the EU used 3.6% more as natural gas was diverted to Asia. Prices increased in all regions.

Nuclear and hydro. Nuclear output fell 4.3%, the largest decline on record driven by Japan (-44.3%) and Germany (-23.2%). Hydro-electric output grew just 1.6%, the weakest growth since 2003.

Renewables. Renewable energy sources saw mixed results with global biofuels production stagnating (+0.7% or 10,000 bpd equivalent), the lowest rise seen since 2000. Growth in the US slowed as the share of ethanol in gasoline approaches the blendwall. Brazilian output was hit (-15.3%) by a poor sugar harvest.

Renewable energy used in power generation rose by an above average 17.7% driven by wind energy (+25.8%) which accounted for more than half of renewable power generation for the first time, with the US and China showing the largest increments. Solar powergen rose 86.3%, though from a low base.

The data suggests that growth in global carbon dioxide emissions from energy use continued in 2011, but at a slower rate than in 2010.

Political unrest and violence caused outages in oil and gas production in parts of the Arab world; the shut-down of Fukushima and earthquake-related reductions in Japanese coal-fired power generation, plus the subsequent closure of additional reactors in Japan and Europe; the first annual average oil price above $100; the first release of strategic petroleum reserves since 2005; the largest increase in OPEC production since 2008; an exceptional swing in European weather; and huge floods in Australia impairing coal production—it was anything but a boring year.

And yet nothing in the aggregate data indicates anything out of the ordinary. In fact both GDP and energy consumption growth last year landed right at their long term average. Fuel substitution, supply and demand responses, and trading patterns … three major adjustments took place.

An increase in oil supplies, most notably from Saudi Arabia, together with flexibility in trading and the global refining system, allowed heavier Saudi crudes to replace lighter Libyan oil in Europe; a diversion of natural gas from Europe to Asia allowed the substitution of lost nuclear energy in Japan without harming the energy needs of other economies in the region; and the release of coal from the US, facilitated by the availability of unconventional gas, helped to replace gas in Europe.

2011 saw big price increases: average annual Brent prices increased by 40%; a simple average of the international coal marker prices increased by 24%, with the biggest increase in Europe and with average annual US coal prices approaching US gas prices. While US gas prices continued their decline following the shale gas revolution, oil indexed gas prices outside the US increased, pulled up by the rising price of crude.

I do think there are a few takeaways to be had from this year of disruptions, with seemingly normal growth and in line with long-term structural changes. These evolve around the flexibility of markets—the ability to increase production, to substitute across fuels, and to change trading patterns has been crucial to the ease with which the system has adapted. For this to work, prices must be allowed their role as signals to guide the reallocation of energy flows. Our messages change only slowly as well—and one of them is to praise the role of markets in guaranteeing energy security.

—Christof Rühl, BP’s chief economist

June 13, 2012 in Coal, Fuels, Natural Gas, Nuclear, Oil, Power Generation | Permalink | Comments (24) | TrackBack (0)

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World oil production is plateauing since mid 2004 so no surprise here...

@Treehugger and anyone else that spews one-liners on this site:

I don't know maybe you can't read or just ignorantly commented without reading the article but that wasn't the conclusion I'd come to after reading: "Oil demand grew by less than 1%", "Gas production globally grew by 3.1%", "An increase in oil supplies, ..".

More likely though if you could be honest with yourself it seems you're viewing the world through peak oil glasses when the data you're presented with may not actually be pointing to that conclusion.

The article clearly articulates the dips have a lot to do with world events than the finite resource effects you're trying to attribute them to.

Some people may not read the whole article and just skip to the editorial comments to see if it's worth reading. Before posting maybe you could do everyone the favor of asking yourself if you actually have anything worth adding that might further enlighten or help draw links to other FACTS.

Unless I'm mistaken and greencarcongress is not factual but instead just a forum to dispense your personal conclusions. No Wait! That would be your blog... and if I wanted your opinion I could go find that.

Are BP's conclusions completely disinterested?

Trevor

I might be ignorant but I know that crude oil has been plateauing since mid 2004, that's a fact not my opinion. And if you were educated enough you would know that what they call oil is in fact oil + liquified nat gaz, and out of the 88MBD of world production 13 of it are liquified NatGaz, the "increase in oil supply" are only increase of liquefied NatGas and not of crude oil. So see the numbers as you wish but blame yourself for been poorly uniformed not others!

Trevor,

Play nice, they may ask you to leave and it will go on your permanent record :)

Ah, SJC... now that you're back, are you going to address any of those 11 questions you've left hanging?

Another part of the increase in so-called-oil production comes from tar sands. There is no "oil" in tar sands, it's actually bitumen - which takes a lot of extra chemistry to get to the point where it can even be put into a pipeline so it can be moved to a refinery.

It's also much harder to clean up when it leaks;
http://www.ctv.ca/generic/generated/static/business/article2008982.html

http://www.ctv.ca/CTVNews/Canada/20120611/alberta-oil-spill-animals-120611/

Quote from the last paragraph:
"For this to work, prices must be allowed their role as signals to guide the reallocation of energy flows. Our messages change only slowly as well—and one of them is to praise the role of markets in guaranteeing energy security.
—Christof Rühl, BP’s chief economist.
"

Sure, market forces are important to ensure adequate supply to meet with demand. But, what about the External Costs of Oil, Gas, and Coal? Such as economic disruptions due to oil prices fluctuation, cost of oil wars born by US and NATO forces to ensure the flow of oil, pollution from coal combustion, and global warming from all fossil fuels? How do one figure these into the market economy? If there is a way to fairly assess all the external costs of fossil fuels and pass on these costs onto the immediate consumers of fossil fuels, I would be that Renewable Energy (RE) will grow much more rapidly, since RE will be the cheapest form of energy once all the external costs are equitably born by the immediate consumers. The current 2% RE market share is quite depressing in the face of accelerating global warming, when the fossil fuels are heavily subsidized when it comes to external costs.

Once upon a time, BP ran ads announcing that BP stood for "Beyond Petroleum!" Obviously, BP is still very much "Beholden to Petroleum."


The BP statistical review is the best source there is for global energy statistics. It is a must read for anyone who need to follow energy markets.

Some of the things that I have noted are this:
1) Coal is on track to overtake oil as the most important energy source globally by 2013 or 2014. At page 41 in the report you can see coal is at 3724 million ton of oil equivalent and oil is at 4059 million ton for 2011. However, coal is growing at 5.4% while oil grows at less than 1% per year now. For comparison gas is consumed by 2906 million ton of oil equivalent in 2011.
2) Coal cost about 120 USD per ton in global markets in 2011. Two ton of steam coal is about one ton of oil so 240 USD for a ton of oil equivalent in coal. A ton of oil is 8 barrels at 100 USD in global markets so 800 USD for a ton of oil. Natural gas selling at 10 USD per million BTU at global markets in 2011 is about 400 USD per ton of oil equivalent in gas.
3) China produced 1956 million ton of oil equivalents of coal in 2011, see page 32. With 8 barrels of oil per ton this compares to producing nearly 16 billion barrels of oil per year or 43 million barrels of oil per day in terms of coal.
4) USA, Europe and Japan are now making good annual progress in terms of using less oil, coal and nuclear while still being able to grow their economies. Renewable energy and natural gas is taking over in these parts of the world.

Inferences: The high price of oil will mean it will continue to grow at very slow rates as cheaper substitutes for oil like natural gas will slow its growth. Coal is cheap compared to oil so it will keep growing strongly for now but natural gas can be produced very profitable at 5 USD per million BTU from abundant shale formations so a long-term global price of natural gas could result in gas being priced at 200 USD per ton of oil equivalent or cheaper than coal at 240 USD. Moreover, natural gas pollutes far less than coal and can be transported much cheaper than coal over long distances. Gas can furthermore be used for powering vehicles on land and at sea unlike coal that is too cumbersome for that. China will be running gradually out of cheap domestically produced coal from around 2025. That will mean huge imports of much more expensive internationally traded coal, gas and oil for China in the coming years. Their imports will be bigger than imports for USA, Europe and Japan combined. In fact, the US will most likely be a net exporter of energy by 2025 both in terms of coal, natural gas and probably also oil.

In conclusion, from 2013 to about 2025 coal will rule as the world’s most used fuel probably hitting 7000 million ton of oil equivalents in 2025 (or 153 million barrels of oil per day). Oil will not be much larger than 90 million barrels per day in 2025. After that natural gas will take over as increased production from shale formations will drop the global price to 5 USD per million BTU and make this fuel the most affordable and practical fuel for most uses. Renewable energy will need to be able to compete with natural gas at 5 USD per million BTU or it will only be used in the wealthy parts of the world. This should be doable for both wind and solar in a few decades from now on.

Informative, Henrik.  Thank you.

Thank you Henrik, your post is the type of post I'd like to highlight as an example of value added information. Your personal predictions based on the data you've come across and sought out are also well presented and thought out.

In response to people thinking I'm trying to start something - I'm not. I just get a little sick of one-liners that have ONLY tangential connection to the article.

I actually tend to agree with the "Peak" oil argument basis but the data I've seen (not just this article) seems to lead to a different result/conclusion than the predictions made by the "Peak Oil" authors.

So we're in agreement then, coal and oil are dying. They are dirty and expensive and long term we'll need something else.

Henrik,
How do you jumped to the conclusion US will be exporting oil?
Average natural gas price is down due to USA market. For Asia and Europe natural gas price linked to oil price therefore nobody expects big shifts on this market although some indicators show due to natural gas consumption reduction in Europe price formula change possibility.

Darius
You are right I use other information than the BP report to conclude that USA is heading for positive net exports of oil by 2025. The most important information is this graph from EIA showing the US net oil imports combined with knowledge of the things that drives the development.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTNTUS2&f=M

As you can see net US oil imports drops from about 12.5 million barrels per day in 2006 to 7.5 million barrels per day in 2012. That is a drop of 5 million barrels per day in just 7 years. For the US to become a net exporter it just needs to drop its oil consumption another 4 million barrels per day from currently 18 million barrels per day and increase its production by 4 million barrels per day from currently 10.5 million barrels per day all liquids included (including natural gas liquids, ethanol and biodiesel). You have a number of things that drives this development:

1) US production of sweet crude oil from shale rock in Ford Eagle and Bakken is increasing rapidly. Combined it is now about 400k barrels per day more per year.
2) US production of natural gas liquids as a byproduct of increasing production of primarily natural gas from shale rock is also increasing rapidly.
3) New shale plays both oil rich and gas rich will start production in the coming years in other places in the US than the current places for such production.
4) New ethanol production from cellulose biomass and waste will add at least a million barrels (possibly 2 million) of ethanol per day by 2025.
5) The US petrochemical industry is capable of switching more of its feedstock from expensive oil to cheap natural gas.
6) More efficient vehicles will substantially lower the about 9.5 million barrels per day of US gasoline consumption by 2025.
7) The US daily consumption of nearly 4 million barrels of diesel can be switched to a large part to less expensive natural gas.
8) The US use of over 1 million barrels of oil per day for fueling commercial cargo ships could substantially shift to LNG.

All in all I think it is likely that the current trend of decreasing US oil imports by 5 million barrels per day for every 7th year will continue at least until about 2025.

@Henrik,
Thanks for the very credible prediction regarding the USA's energy independence in the near future. That is a very good outlook that confirms the notion that sometimes the seemingly impossible is achievable. Better still, your prediction assumes no advancement at all in the field of renewable energy nor in plug-in electric vehicles nor in H2-vehicles.

Before the end of this decade, the trend in battery cost predicts halving in the cost of car battery, opening the door for much higher market share of plug-in EV (PEV's). The trend in cost reduction of solar and wind energy will also predict lower cost of renewable energy that will pave the way for lower fossil fuel consumption in a decade from now. Continual global warming and climate-related catastrophes will likely spur more governments to attach or to pass-on the external costs of fossil fuels directly to the consumers, thus making renewable energy even more competitive.

Nothing can beat the free-market system in bringing about supply abundance of a given commodity in the most cost-effective manner, when all the true costs of that commodity and all competing commodities are laid down on the table fairly and squarely, especially when the playing field is leveled.

This article reports on the global energy mix, in America things are different;
http://inhabitat.com/us-coal-produced-electricity-to-fall-to-the-lowest-level-since-1949/

Innumerate reporters and editors!  It's not the lowest level, it's the smallest fraction.  The coal-fired generation reported by the EIA for 2010 is MORE THAN SIX TIMES the total electric generation for 1949 (a href="http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0802a">data).

What is the best and quickest way for USA to reduce crude oil import:

1. Increase local Oil production (Oil producers favorite).

2. Increase local NG production and consumption (NG/SG producers favorite).

3. Increase local bio-fuel production and consumption (Ethanol-bio-fuel and farming industries favorite)

4. Reduce local fossil fuel consumption (Green vehicle supporters and e-energy producers favorite)

The common sense long term solution is (4) but many local powerful groups with $$$$$$ will not agree an for politicians to promote the solutions that will best suit their pocket book.

correctio:

last para should read ....will not agree and force politicians to ......

Looks like the common sense solutions are (1) and (2) with the others brought into the mix when/if they can pay their way.

Reducing oil imports is not the root goal, reducing the cost of importing oil is.

This means reducing the price of oil and reducing imports.

Low cost oil threatens to make renewable energy peak.

http://www.greencarcongress.com/2012/06/maugeri-20120627.html

http://www.msnbc.msn.com/id/26315908/ns/msnbc_tv-rachel_maddow_show/#48089212

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