BP sees US oil production rising at record pace

The year 2012 included the largest single-year increase in US oil production ever recorded, offering new evidence of the flexibility of the world’s energy system in meeting rapid global change, BP officials said Wednesday.

BP revealed these findings in its 62nd annual review of global energy markets, titled Statistical Review of World Energy 2013.

The US recorded the world’s highest growth in production of both oil and natural gas in 2012, on the back of increasing production of unconventional hydrocarbons such as tight oil, the company said.

This illustrates an example of the increasing diversity of energy sources as the global market continues to adapt, innovate and evolve, according to BP officials. With rising natural gas output driving prices lower in the US, natural gas displaced coal in power generation, causing the US to experience the largest decline of coal consumption in the world.

Market changes outside the US

Elsewhere, 2012 saw the largest annual decline in world nuclear output, BP reported. In Japan, where nuclear power generation all but disappeared after 2011’s Fukushima accident, higher imports of fossil fuels including liquefied natural gas (LNG) ‘kept the lights on’.

In Europe, where gas prices were higher than in the US, power generators took the opposite course from the US, and substituted coal for gas.

“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 chief executive.

“The data show there is ample energy available. Our challenge as an industry is to make the best choices about where to invest. We want to provide energy in ways that enable us to be both safe and competitive -- deploying our strengths while reducing our risks, and managing our costs.”

Decline in total energy consumption growth

The review also revealed a drop in the growth of overall global energy consumption to 1.8% in 2012, down from 2.4% the previous year. This was partly as a result of the economic slowdown, but also because individuals and businesses responded to high prices by becoming more efficient in their use of energy.

The emerging economies, meaning the non-OECD countries, firmly established themselves as the source of what demand growth was seen, with China and India alone accounting for nearly 90% of the increase. Just 20 years ago, the emerging economies accounted for only 42% of global consumption; now that figure is 56%.

Record production in Middle East countries

For a second consecutive year, oil supply disruptions in Africa and the Middle East were offset by growth among other Middle East producers, with record oil production in Saudi Arabia, the UAE, and Qatar. Despite these supply increases, average nominal oil prices reached another record high.

Coal remained the fastest-growing fossil fuel, with China now consuming the majority of the world’s coal for the first time—but it was also the fossil fuel that saw the weakest growth relative to its historical average.

Alternative energy offers hope for lower CO2 emissions

Hydroelectric and renewable energy (along with cheap natural gas in North America) competed against coal in power generation. Global biofuels output fell for the first time since 2000 due to weakness in the US, but renewables in power generation grew by 15.2% and accounted for a record 4.7% of global power output.

Global carbon dioxide (CO2) emissions from energy use continued to grow in 2012, but at a slower rate than in 2011. Lower coal use helped the US reduce its emissions of carbon dioxide to 1994 levels, and EU emissions declined despite coal gaining market share from natural gas in power generation.

“2012 was yet another year of adaptation to a changing energy landscape,” said Christof Rühl, BP’s chief economist. “As the non-OECD economies industrialize, they unlock ever more resources. The data tell us that the industrializing part of the world not only outpaces the OECD in terms of proved reserves growth, it also contributes its fair share to energy production.”

For more statistics from BP's review, visit the company's website.

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