BP Statistical Review of World Energy 2013

Last week I attended Mark Finley’s presentation in Chicago of BP’s Statistical Review of World Energy for this year. In his role as General Manager of Global Energy Markets at BP, Mark is responsible for this annual analytical survey of world energy production, consumption, and trends. He’s an outstanding economist whose presentations are a master class in public communication of quantitative analyses, so attending his presentation was a real treat for me.

As the press release for the Review indicates,

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, an example of the increasing diversity of energy sources as the global market continues to adapt, innovate and evolve. 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.

Elsewhere, 2012 saw the largest annual decline in world nuclear output. 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.

A few of Mark’s insights that aren’t reflected fully in the graphs and data really struck me. Not surprisingly, he talked quite a bit about the increase in oil and natural gas production in the US due to shale, and this change has led to a couple of interesting trade patterns. One is the reduction of US oil imports by one-third in the past five years, and the shift in consumption from the US to China. That’s the “national security-reduce Middle East imports” desired outcome from shale oil, right? Not exactly — oil is not a homogeneous product, and it turns out that North American shale oil is most similar in weight and composition to the oil in Africa, not the Middle East. So the US imports of African oil have fallen, and Chinese imports of African (and other) oil have risen. BP also estimates that China has increased its oil inventories by more than all of the OECD country inventory increases combined.

One reason for the increase in Asian oil imports is the increase in automobile ownership in China and India. The majority of new car sales in 2012 occurred in emerging economies, with much of that activity occurring in China and India.

There were other fascinating insights in Mark’s analysis, but I’ll leave it there for a Friday afternoon!

I also recommend the interactive energy charting tool accompanying the Review — it uses the historical data and generates comparative regional charts elegantly and effectively. You can also export a particular graph, the data underlying the graph, and/or a spreadsheet with all of the data in the Review. I had fun playing around with the natural gas price history graph, which you can scroll through by year and see year-by-year how the price changes, as well as seeing in 2012 the large price difference between US/Canada and Europe/Japan.

French fracking fracus

Michael Giberson

There is oil in shale formations in France, possibly even shale oil under the Eiffel Tower, and at least for now it looks like that is where the oil will remain. According to a report by Bloomberg News, a parliamentary committee agreed on a proposal to ban hydraulic fracturing in the country, the full parliament is slated to vote on the issue later this month and the proposal could become law by July.

A parliamentary committee yesterday agreed on a ban that removed the possibility of fracking even for “scientific experiments.” Both houses of the French parliament are slated to vote on the bill this month and it could become law in July.

Companies that were planning to use the technique will have their permits canceled under the proposal, which also includes jail time and fines for fracking and the creation of a commission to oversee research and evaluation of unconventional oil and gas exploration.

The view from Paris:

“I’m against hydraulic fracturing,” French Environment Minister Nathalie Kosciusko-Morizet has said. “We have seen the results in the U.S.,” with its “devastated countryside” and “sullied water tables.”

The French Environment Minister concluded remarks to developers with, “Now go away or I shall taunt you a second time.”*

*Just kidding, but really – “devastated countryside” and “sullied water tables”? I guess if you know no more about fracking than you saw in Gasland and the New York Times maybe you’d think so, but surely standards for policy analysis should be higher than that.

[HT to FuelFix.]

Matt Ridley writing up the shale gas shock

Michael Giberson

Matt Ridley, esteemed science writer (The Red Queen, The Origins of Virtue, Genome: The Autobiography of a Species in 23 Chapters, Nature via Nurture, Francis Crick: Discoverer of the Genetic Code, and most recently The Rational Optimist), turns his prodigious writing talent to a short booklet on the prospects for shale gas to remake the energy landscape: The Shale Gas Shock.

At Knowledge Problem, we’ve covered bits and pieces of the  shale gas story and the policy and market consequences, but now you can get a current, thoughtful and well-written assessment from Ridley. Among other things, he addresses resource estimates, costs, shale gas skepticism, environmental concerns, and effects on electric power, transport fuel, and other markets. It is an excellent overview and introduction to the topic for the general public and (especially) folks in the public policy community.

Ridley also had a column on this topic in The Times which appeared earlier this week.

The international possibilities of petroleum from shale will reshape markets

Michael Giberson

There is a lot of natural gas locked up in shale in the world. Once shale gas was mostly a footnote to the energy industry, known about but inconsequential because mostly inaccessible. But the technology, and hence the economics, of shale gas development has improved. And those improvements are reshaping the world’s energy markets.

The Energy Information Administration has released a preliminary analysis of several regions throughout the world which concludes the now-producible shale gas resources are vast:

Although the shale gas resource estimates will likely change over time as additional information becomes available, the report shows that the international shale gas resource base is vast. The initial estimate of technically recoverable shale gas resources in the 32 countries examined is 5,760 trillioncubic feet… Adding the U.S. estimate of the shale gas technically recoverable resources of 862 trillion cubic feet results in a total shale resource base estimate of 6,622 trillion cubic feet for the United States and the other 32 countries assessed. To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of January 1, 2010 are about 6,609 trillion cubic feet, and world technically recoverable gas resources are roughly 16,000 trillion cubic feet, largely excluding shale gas. Thus, adding the identified shale gas resources to other gas resources increases total world technically recoverable gas resources by over 40 percent to 22,600 trillion cubic feet.

By the way, the U.S. Department of Energy wants you to know that its early R&D investment in shale gas technology is producing results today.

But it isn’t just natural gas.

Technology is improving access to oil from shale formations as well. A story in the Wall Street Journal yesterday suggests that Israel may have the potential to become a major oil producer based upon its shale oil potential. See “Could Israel Become an Energy Giant?” In the U.S., oil from shale is one of the reasons North Dakota is booming, and their are several other oil shale efforts now new-and-improved as technology has improved.

It isn’t that everything you once thought you knew about the oil and gas industry is wrong, but you do have to pay attention and allow yourself to, reluctantly, learn something new once in a while.