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Annual global oil & gas capital expenditure to pass $1-trillion mark in 2012

23 August 2012

Increased activity in the Exploration and Production (E&P) sector will be the primary driver in pushing oil and gas capital expenditure (capex) to $1.039 trillion for 2012, according to the latest report by business intelligence firm GlobalData.

The new report—Oil & Gas Capital Expenditure Outlook, H1 2012—forecasts that the total oil and gas capex will increase by 13.4% this year over the 2011 total of $916 billion, as oil companies intensify upstream operations across locations as diverse as offshore Brazil, the Gulf of Mexico and the Arctic Circle.

Investor confidence in new upstream projects is being driven by the increasing number of oil and gas discoveries (242 last year alone), combined with consistently high oil prices and the arrival of new technologies that are giving the major firms access to deep offshore reserves that were previously technically and financially unviable.

North America is expected to witness the highest capex globally, with $254.3 billion, representing a share of 24.5% of the 2012 global total. Compared to a global average capex growth rate of 13.4%, North America is expected to witness a capex growth of 15.7%. The increase of unconventional oil and gas activities, especially the continuing exploitation of shale oil and gas sites and the development of Canadian oil sands are the major drivers for these investments.

GlobalData predicts Asia-Pacific to follow very closely with a capex of $253.1 billion, while the Middle East and Africa are forecast to spend $229.6 billion.

National Oil Companies (NOCs) are expected to lead in terms of capex, contributing approximately half of the total, with Integrated Oil Companies (IOCs) and independents making up the remainder. NOCs including Petroliam Nasional Berhad, China Petroleum & Chemical Corporation and Petroleo Brasileiro S.A plan on substantially increasing their E&P spending this year.

In terms of capital expenditure for the 2012–2016 period, Petroleo Brasileiro S.A. ranks first globally amongst NOCs, whereas ExxonMobil Corporation is expected to be the number one IOC. Together, these two plan to undertake a massive oil and gas capex of $409 billion through to 2016.

August 23, 2012 in Brief | Permalink | Comments (10) | TrackBack (0)

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Sure, at $100-120 a barrel, a lot of stuff becomes a viable source. We should get the price to $200, then they'll be plenty of oil right here in the good ol' US of A. Additionally, the profit for the oil companies will be off the charts. Sure, gas will be $6 a gallon but the consumers know that gasoline is the only fuel that will work. Their training tells them that.

A very strange coincidence.......this is exactly equivalent to the $1T given in direct and indirect subsidies to this industry in 2012.

I wonder how much renewable energy collectors and H2 infrastructure can we build for $1T? These are environmentally friendly and will create local jobs everywhere there are sun and wind.

In contrast, oil workers must often travel to far and remote corners, and away from their family, work 12-14 hr-day at a time for many consecutive weeks and flown back home just when they get thoroughly exhausted and sick.

The US generating capacity is 1 trillion watts.
If solar is $2-$4 per peak watt (installed including land purchase, but not transmission lines) and the load factor is 26% (from the sun not being at full force all day), then you could install effectively 1/16 * 1 trillion watts for 1 trillion dollars = 60 GW. Wow - 60GW is a lot, but not that much. It would make solar an addition 6% of the energy mix. You could probably do better wind wind, but it has load factor issues too.

Thanks, TM for the info.
Recent data reveals that average German solar costs $2.24 installed, on typical roof top which negates land purchase and transmission line costs.
http://www.greentechmedia.com/articles/read/German-Solar-Installations-Coming-in-at-2.24-Per-Watt-Installed-U.S-at-4/

At 1.06 TW generation capability with about ~4,000 tWh of electricity generated yearly will give us about 43% load factor. At ~22% load factor, then each of W of solar power will be equivalent to 1/2 of overall generation W capability at 43%. So, $1T /$2.24/W = 446 GW and x 1/2 = 223 GW the equivalence of overall generation capacity. Wow!!! That is almost 1/4th the overall generation capacity. Solar energy follows load pretty well, since peak solar energy production correlates with peak summer time A/C consumption and day-time industrial and business power usage.


Now, let's investigate further to see how much petroleum-energy equivalence will that $1T's worth of solar generation capacity will give you in one year.

446 GW x 22% load factor x 24 x 365 = 859531.2 GWh or 858 TWh per year for solar electrical energy.

In 2010, the US consumes 28,700 TWh of energy total from all sources, of which, ~29% is in transportation. So, 28,700 x .29= 8,323 TWh of total energy. Since overall ICE's efficiency of all modal is about 33% that of electrical transportation, dividing that 8,323 by 3 will give 2,774 TWh of electricity equivalent of energy.
So, the 858 TWh of solar electricity generated dividing by 2,774 TWh of overall electricity-equivaent transportation enery use will give a walloping 31% of total of petroleum-equivalent energy consumption.

With $1T's worth of solar panel energy generation investment, it can generate or replace the equivalence of 31% of total yearly petroleum consumption in transportation in the USA! If we will just invest this much ($1T) yearly in solar electricity generation for just a few years, we will be able to replace petroleum consumption altogether!!!

@ Roger - yes, I forgot to compare it to the "effective" load factor of the 1 TW generation capacity, so my number should have been 2 x 60 GW = 120GW. If solar panels installed cost $2 instead of $4, then that brings it to 240 GW. But Solar is way too intermittent to be treated as steady. You have to add storage to be able to treat it as base, and as of today, batteries cost a lot more than the panels. Solar can relieve the use of fuel at this time, but not replace base stations.

http://www1.eere.energy.gov/solar/review_meeting/pdfs/p_20_moore_snl.pdf

3.5 MW solar array next to a 420 MW coal plant.

3.3 Impact on Utility Operations
The PV Generating Plant is located next to the
coal-fired Springerville Generating Station and is intertied to the same transmission line that feeds power back to Tucson. TEP is observing that PV generating intermittencies associated with short timescale events, such as cloud passage and storms, are in fact swinging the controls of a 420 MW coal fired unit at the generating station. These impacts bring into question the capacity value of solar in the utility plant operations and emphasize the need to stabilize PV power output, perhaps through storage or inverter modifications, in the utility environment.

Their report does say they get their money's worth out of the system, but they do say there are issues integrating solar with their local grid - presently an unsolved problem.
Here is another good paper/report with a host of great references:
http://www.clubs.psu.edu/up/math/presentations/Curtright-Apt-08.pdf

Problems related with solar and wind power integration to the power grid have been solved years ago in many countries. No need to re-invent the wheel here. When all environmental cost are considered, wind power is already competitive with coal fired power plants. Solar power will be next.

Well designed, maintained and managed power grids are extremely reliable.

Future home solar installations will reduce the need to build new coal power plants and the need to expand distribution power networks. People with large roof could generate enough clean power for the house and 2 or 3 electrified vehicles. Exchanging energy with the grid on a daily basis could suit-benefit both parties.

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