Energy Market Update Mark Finley Meet Alaska, January 21, 211
Agenda Where we ve been Trends in global energy Where we are: The short-term outlook Why has oil been different? Where we are going (or might be!): The long-term outlook Prospects for oil & gas The policy case and implications
Global energy: Changing center of gravity, but fossil fuels still dominate Billion toe Billion toe 14 14 12 1 8 6 Non-OECD 12 1 8 6 * Renew ables Hydro Nuclear Coal 4 2 OECD 4 2 Gas Oil 199 2 199 2 * Includes biofuels Source: BP Statistical Review of World Energy
Coal has gained market share Shares of world primary energy 5% Oil 4% 3% Coal 2% 1% Gas Hydro Nuclear Renewables* % 197 198 199 2 Source: BP Statistical Review of World Energy * Includes biofuels
Ample oil and natural gas proved reserves Oil Natural Gas Trillion bbls Trillion m 3 2. 1.5 Canadian oil sands Other OECD FSU OPEC 2 15 OECD Other Middle East FSU Mexico North Sea 1. 1.5 5. 1989 1993 1997 21 25 29 Note: Canadian Oil Sands are remaining established reserves, less reserves under active development (from 1999 only). 1989 1993 1997 21 25 29 Source: BP Statistical Review of World Energy
Energy prices: Oil has been different $/boe 16 Oil (WTI) Gas (Henry Hub) Coal (Basket) 14 12 1 8 6 4 2 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Source: includes data from Platts and McCloskey.
Oil demand outpacing supply 3 Mb/d, y-o-y Global Consumption OPEC NGLs Non-OPEC OPEC Crude 2 1-1 -2-3 -4 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 4Q1
Non-OPEC growth slows; OPEC holds steady Non-OPEC changes OPEC-11 crude production cuts Mb/d, y-o-y 2 US Other OECD ROW Net FSU Biofuels Other Change since Sept 28, Mb/d. -.5 1-1. -1.5-2. -2.5-3. -1 1Q1 2Q1 3Q1 4Q1-3.5 Oct-8 Apr-9 Oct-9 Apr-1 Oct-1
What drives prices at the pump: Crude Annual change ($/gal) 1. Crude Oil Retail Diesel.5. -.5-1. -1.5 1986 1989 1992 1995 1998 21 24 27 21
23: Non-OECD drives consumption growth Billion toe 18 16 14 Billion toe 18 16 14 * Renewables 12 12 Hydro 1 1 Nuclear 8 6 4 2 Non-OECD OECD 8 6 4 2 Coal Gas Oil 199 2 21 22 23 199 2 21 22 23 * Includes biofuels Energy Outlook 23
Natural gas, renewables gain share Shares of world primary energy Contributions to growth 5% Oil 2.5% Renewables* 4% 2.% Hydro 3% Coal 1.5% Nuclear 2% Gas 1.% Coal Gas 1% Hydro.5% Oil Nuclear Renewables* % 197 199 21 23.% 197-199 199-21 21-23 * Includes biofuels Energy Outlook 23
Non-OECD power, industry drive growth Growth of world energy consumption 21-3 Billion toe by sector and region Billion toe by sector and fuel 3. 3. 2.5 2. 1.5 Other Non-OECD Middle East 2.5 2. 1.5 Hydro Nuclear Renew. Electricity 1..5. -.5 Transport Industry Other Final energy use China & India OECD Inputs to power 1..5. -.5 Transport Industry Other Final energy use Gas Biof uels Oil Coal Inputs to power Energy Outlook 23
Liquids: Demand from non-oecd; supply from OPEC and biofuels Mb/d Demand Supply 15 1 Other S&C Am 23 level Other Iraq 95 Mid East Other Asia Oil Sands Biofuels Saudi NGLs 9 85 China Brazil FSU 8 75 21 OECD Declines Non- OECD Grow th 21 Non- OPEC Grow th Non- OPEC Declines OPEC Grow th Energy Outlook 23
Natural gas the fastest-growing fossil fuel Bcf/d Production Bcf/d Consumption 5 2.1% p.a. 5 S & C America 4 4 North America 3 2.4% p.a. 3 Middle East 2 2 Europe FSU 1 1 Asia 199 21 23 199 21 23 Africa Energy Outlook 23
Mixed implications for import dependence Mtoe OECD Europe US China 15 125 1 Oil & Gas Consumption 1% 75% 75 5% 5 25% 25 Oil & Gas Production % 199 199 23 21 23199 199 23 21 199 23199 23 21 23 Net imports as % of consumption (rhs): Oil Gas Energy Outlook 23
Alternative: Stronger policy action on climate change CO 2 emissions from energy use Sources of carbon abatement versus Base Case, 23 Billion tonnes CO 2 4 35 Base Case Iraq 5.4 billion tonnes reduction 22 CCS 23 3 Policy Case Fuel switching 25 IEA 45 Scenario * Energy efficiency 2 2 21 22 23 * a back-cast which illustrates what is required to stabilise greenhouse gas concentrations at 45 ppm from IEA, World Energy Outlook 21 Energy Outlook 23
Conclusions Where we ve been: Energy mix dominated by fossil fuels Where we are (short-term): Oil supported by OPEC cuts Where we re going (longer-term): Energy dominated by rapidly-growing emerging economies Weak oil consumption growth; role of OPEC & biofuels likely to grow Natural gas the fastest-growing fossil fuel; share of renewables likely to rise as well Policy important to the base case; more aggressive policy could begin to reduce CO2