Related Articles
Forward article link
Share PDF with colleagues

Supermajor BP declares the death of peak oil

The supermajor sees energy landscape shifting as demand growth slows and new fuels emerge to challenge oil's supremacy

UK supermajor BP has claimed the concept of global energy supply peaking amid rapidly rising consumption is no longer valid as new fuels emerge and energy demand growth slows."The theory of peak oil has peaked," BP chief executive Bob Dudley said as he unveiled the company's new energy outlook to 2035.

The outlook, which forecasts global energy supply and demand trends between 2012 and 2035, estimates total global energy consumption will rise by 41% between 2012 to 2035. This is compared to a rise of 55% over the last 23 years and 30% over the past decade. 

Global energy demand will grow at around 2% per year between now and 2020 then falling to a rate of 1.2% per year to 2035, BP said. Around 95% of that demand growth is expected to come from non-OECD economies, with China and India accounting for more than half of the increase.

By 2035, energy use in non-OECD countries is expected to be 69% higher than in 2012. Fuel use in the OECD will have grown by only 5% in the same period and is expected to fall after 2030, even with continued economic growth.

Christof Ruhl, BP's chief economist, said improved technology which has unlocked new sources of energy supply combined with greater energy efficiency means "there will be no apparent resource constraints" between now and 2035. 

Oil, natural gas and coal are each expected to make up around 27% of the total global energy mix by 2035 with the remaining share coming from nuclear, hydroelectricity and renewable energy which will each make up between 5-7% of the mix. Renewable energy will be the fastest growing fuel, rising by around 6.4% per year until 2035. Renewables' share of global electricity production is expected to grow from 5% to 14% by 2035. 

Shale gas, tight oil, and renewable energy will account for a significant share of the growth in global energy supply. Gas will be the fastest growing fossil fuel over the next two decades with unconventional gas expected to account for 21% of total global gas production by 2035.

Global carbon dioxide (CO2) emissions are expected to rise by 29% by 2035, from 2012 levels, with all of the growth coming from non-OECD countries. Emissions from the OECD region will fall by 9% by 2035 while 72% of total CO2 emissions will come from non-OECD by then. The growth in CO2 emissions will slow as natural gas and renewables gain market share from coal and oil, BP said.

BP expects gas and coal to make up around 54% of global energy consumption by 2035 while renewable energy's share of the global mix will rise from around 2% in 2012 to 7% in 2035. 

BP said that towards the end of the period, many developed countries will be seeing their economies grow while their energy use falls because of a switch from oil to natural gas and greater energy efficiency. 

Natural gas demand will rise by around 2% per year until 2035, BP said. Almost 80% of this growth will come from non-OECD countries with industry and power generation sectors accounting for the bulk of growth. 

Liquefied natural gas exports are expected to grow twice as fast as global gas consumption, at around 4% per year, and accounting for 26% of the growth in global gas supply between 2012 and 2035.

Shale gas supplies are expected to meet 46% of the growth in gas demand and account for 21% of total global gas production. By 2035 shale gas will comprise 68% of US gas output. 

Although North American shale gas production growth is expected to slow after 2020 and output from other regions to increase, the region will still account for 71% of total global shale gas production, BP said. However Europe "will have very limited prospects" for developing shale gas over the next two decades, Ruhl said, as infrastructure constraints and political opposition will curb development. 

Huge regional disparities in terms of oil demand will persist to 2035, BP said. While rising oil production in the US will help the country on a path to achieve energy self-sufficiency, oil import-dependence in Europe, China and India will soar. 

By 2035 US oil-dependency will fall to less than 10% of its domestic demand, Ruhl said, while China will be importing 75% of the oil it consumes domestically in the same period.  

Oil is expected to be the slowest growing of the major fuels to 2035 at around 0.8% per year. All the net demand growth will come from outside the OECD region with China, India and the Middle East making up the bulk.  

Growth in the supply of oil and other liquids, including biofuels, will come mainly from the Americas and Middle East. More than half of the growth will come from non-Opec sources, with rising production from US tight oil, Canadian oil sands, Brazilian deep-water and biofuels more than offsetting mature declines elsewhere. 

Tight oil will account for around 7% of total global consumption by 2035, Ruhl said, the equivalent of around 8 million barrels a day.

Soaring US production of light, tight oil help the country overtake Saudi Arabia to become the world's largest liquid producer this year. US oil imports are expected to fall nearly 75% between 2012 and 2035. 

Opec's share of the oil market is expected to fall early in the period, reflecting growing non-Opec production. Slowing oil-demand growth, because of high prices and increasingly efficient transport technologies, will also cut the cartel's market share. However Opec's market share is expected to rebound after 2020, BP said.

Coal demand will rise by around 1.1% per year until 2035, BP said, and its growth will flatten to just 0.6% per year after 2020. This growth will be driven by China and India, who will account for 87% of total net growth in coal demand. China and India's combined share of total global coal consumption will rise from 58% in 2012 to 64% in 2035. 

Also in this section
Gas breaks the oil price link
10 July 2020
The proportion of LNG priced on an oil-indexed basis fell to its lowest ever level in 2019
Letter from Houston: Energy hotspot hopes for a ‘bronze lining’
30 June 2020
The US oil capital may be battling both the oil price crash and a Covid-19 resurgence, but there are still reasons to be optimistic
Crude edges higher on Opec+ compliance promises
19 June 2020
Traders see the positives as producers commit to even greater respect for quotas