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US pumps up oil production volumes by 13.9%

The US is leading the way in oil and gas production growth

Led by the rapid rise of onshore drilling, the US continues to lead the world in oil and gas production growth, according to BP’s 2013 Statistical Review of World Energy.

At 1.1 million barrels a day (b/d), US oil output rose 13.9% in 2012 - the fastest since BP began keeping records in 1965 - and accounted for more than half of global oil production growth of 1.9m b/d.

US natural gas production increased by 4.7% to 681.4 billion cubic metres (cm), accounting for more than 20% of the world’s gas production.

By now the transformation of the US exploration and production sector is well documented. What’s less clear is the effect it will have on global energy balances. The statistical review provided some telling glimpses, as the US continues to buck key global trends.

World primary energy consumption grew by 1.8% in 2012. But it was well below the 10-year average of 2.6%, led by an overall decline of 2.8% in the US. However, global energy demand continues to rise. Lower US energy consumption was offset by a 4.2% increase in non-OECD countries, though it was below the 10-year average of 5.3%. In 1993, emerging economies accounted for only 42% of global energy consumption; that figure is now 56%.

Non-OECD countries firmly established themselves as the source of demand growth, with China and India alone accounting for nearly 90% of the increase.

Oil remains the world’s leading fuel, accounting for 33.1% of the global energy mix. But oil continued to lose market share for the 13th consecutive year, as a consequence of lower US demand. Net US oil imports fell by 930,000 b/d in 2012 and are now 36% below their 2005 peak. Conversely, China’s net oil imports grew by 610,000 b/d.

The unconventional drilling boom is altering the US energy mix in subtler ways. Shale gas continues to displace coal for power generation, prompting a 7.5% decline in US coal consumption. In turn, US greenhouse gas emissions are the lowest since 1994.

The irony is that cheap US coal is displacing higher-priced gas in other parts of the world, including the EU. Last year, coal consumption grew by 24% in the UK and by 24.2% in Spain. Germany recorded a 3.9% increase in coal consumption. “For those of us in the energy industry, the challenges are about how we respond to the big shifts we are seeing – a shift in demand towards emerging economies and a shift in supply towards a greater diversity of energy sources, including unconventionals,” said Bob Dudley, BP’s chief executive.

Global nuclear output fell by 6.9%, the largest decline on record. Japanese output fell by 89%, accounting for 82% of the global decline. However, this was due to the shut-in of the country’s nuclear fleet in the wake of the 2011 Fukushima Dai’ichi meltdown. Nuclear output accounted for 4.5% of global energy consumption, the smallest share since 1984.

Hydroelectric output rose 4.3%, with China accounting for all of the net increase.

Global biofuels production recorded its first decline since 2000, less than half a per centage point, due to a 4.3% decline in the US. In contrast, renewable power generation grew 15.2%.

Renewables accounted for 2.4% of global energy consumption in 2012, up from 0.8% in 2002. Renewables in power generation accounted for a record 4.7% of global power generation.

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