Providing coverage of Alaska and northern Canada's oil and gas industry
June 2019

Vol. 24, No.24 Week of June 16, 2019

BP’s 68th Statistical Review notes US has record oil, gas increases

Kristen Nelson

Petroleum News

BP released the 68th annual edition of the BP Statistical Review of World Energy June 11. Among the highlights: the U.S. had the largest-ever annual production increase, for any country, of both oil and natural gas.

But the top news wasn’t all good.

Bob Dudley, BP group chief executive, said in introducing the Statistical Review that while the world needs carbon emissions to fall dramatically, they are continuing to grow, and in 2018 global energy demand and carbon emissions grew at the fastest rate in seven years, with demand driven by China, India and the U.S.

“The longer carbon emissions continue to rise, the harder and more costly will be the necessary eventual adjustment to net-zero carbon emissions,” Dudley said in a statement. “As I have said before, this is not a race to renewables, but a race to reduce carbon emissions across many fronts.”

What drove energy increases?

Spencer Dale, BP group chief economist, noted the rapid growth in both energy demand and emissions and asked what drove the increases - a 2.9% growth in global primary energy consumption and a 2% increase in carbon dioxide emissions. This was the fastest growth since 2010 and was largely driven by China, the U.S. and India, which represented two-thirds of the growth in demand, he said.

The 3.5% growth in U.S. demand was the sharpest in 30 years, and while it was reflected across all fuels was particularly pronounced in natural gas, where demand was up by more than 5%, representing almost 45% of the entire growth last year, Dale said.

Why the strong demand? And why wasn’t it predicted based on GDP growth and changes in oil price?

Dale said much of the increased energy consumption may be related to weather. There were unusually large numbers of both hot and cold days - an increase in both heating and cooling days, requiring heat or air conditioning - particularly in the U.S., China and Russia.

In the past in the U.S., Dale said, a high number of heating days tended to coincide with a low number of cooling days or vice versa.

When the large number of both heating and cooling days are thrown into the mix, it greatly reduces the surprise in last year’s energy demand growth, he said, and suggests that stimulus from weather effects accounted for about a quarter of the increase in consumption.

There was also a pronounced weakness in demand in 2014-16, much of which appears to come from slow Chinese economic growth in this period, when major industrial activity in China - iron, steel and cement - slowed after 10 years of rapid growth, accounting for around one-quarter of China’s energy growth and pulling down international growth, he said.

The scale of the Chinese slowdown suggested some might by cyclical, Dale said, and pickup began in 2017 and strengthened in 2018.

Between weather and China, that accounts for almost all of the weakness and growth in energy demand over the last four or five years. The strong demand in 2018, he said, was largely weather related (China, Russia, U.S.), with unwinding of cyclical industrial factors in China.


It was a rollercoaster year in oil, Dale said: Prices started up, reached $80 in October and then plunged to near $50 at the end of the year.

Oil demand was up by 1.4 million barrels per day, with China and India accounting for two-thirds of that growth, but the U.S. also figuring in, with the largest increase in 10 years. The U.S. increase, Dale said, was related to the petrochemical sector and increased use of ethane.

On the supply side, oil production grew by 2.2 million bpd, more than double the historic level, with almost all of that increase coming from the U.S., with the 2.2 million bpd increase in U.S. production from tight oil and natural gas liquids the largest ever increase from one country, and representing an increase of more than 7 million bpd since the U.S. shale revolution began.

Production from the Organization of the Petroleum Exporting Countries was down as OPEC consistently overshot production cuts in 2017 and the first half of 2018, Dale said, volumes which largely reflect declining production from Venezuela.

The role of OPEC was very significant last year, he said, but reflects the difficulties of trying to stabilize global oil growth.

As for the future, Dale said it feels like the rollercoaster will run for some time to come.

Natural gas

It was a bonanza year for natural gas, he said, with more than a 5% increase in both demand and output. The U.S. was the main player, with 40% of the demand increase and 45% of the global production increase, driven by shale plays.

As with oil, the U.S. had the largest ever single increase in natural gas production.

In China, gas consumption grew by 18% - a continuation of that country’s environmental policy of switching from coal to natural gas - with 10 million households in China switching from coal to gas in the last two years, and an increasing use of gas in industry and buildings. Unlike the U.S., the Chinese growth in gas use had nothing to do with power use, Dale said.

Global liquefied natural gas supplies were up by almost 10%, led by Australia, the U.S. and Russia, and while the growth in LNG was absorbed in the first half of the year, Asian spot prices fell back at the end of the year, Dale said, and there is the possibility of the first meaningful curtailment of some LNG supplies over the next few years.


Dale said renewable energy has come of age, with renewable power growing by 14.5%, slightly below its historic average.

China was again the largest contributor to renewable growth, surpassing growth in the entire OECD (Organization for Economic Cooperation and Development).

The cost of renewable energy is falling, he said, but the issue is literally the pace at which renewable energy can expand. In both China and India renewable energy increased by more than one-quarter, but power demand is growing even more rapidly. It’s very hard to grow renewables fast enough to meet the growth in demand, Dale said, and coal is being sucked in as a balancing fuel.


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