U.S. oil production growth was the largest in the world last year, showing that despite some suggestions to the contrary, crude is plentiful, BP Chief Executive Officer Bob Dudley said Wednesday.
He added that the real challenge for the industry is how much money and where in the world to invest to reap the greatest rewards from the changing landscape.
“The supply of energy is coming from an increasing diversity of sources as the world’s energy market continues to adapt, innovate and evolve,” Dudley said.
During a presentation in London that was broadcast on the Internet, Dudley outlined the British oil giant’s annual statistical review of world energy markets. The review looked at how energy was produced, consumed and traded in 2012, and it also analyzed how past data will impact future trends.
BP forecast: Oil will remain king for transportation through 2030
The biggest phenomenon last year, by far, was the impact of the growing shale revolution in the U.S., Dudley said. Oil production growth in the U.S. — by more than a million barrels per day to 8.9 million — was the largest in the country’s history, BP noted.
The increase in U.S. oil output helped keep global oil prices from rising sharply, Dudley said.
At the same time, the review noted, natural gas prices rose in Europe and Asia, but fell in North America, where rising U.S. natural gas output pushed gas prices to record discounts against both crude oil and international gas prices. Coal prices declined in all regions, the review noted.
Asked how OPEC will react to the U.S. shale revolution, BP’s chief economist, Christof Ruhl, said, “Everybody’s guess here is as good as mine.”
Ruhl suggested OPEC will come under increasing pressure to cut production to maintain current price levels or to push prices higher, but how Saudi Arabia reacts is a wild card right now.
World markets: US shale boom putting OPEC on the defense
Overall, world primary energy consumption grew by a below-average 1.8 percent in 2012, BP said.
“The data shows there is ample energy available,” Dudley said. “Our challenge as an industry is to figure out the best places to invest.”
At BP, the company is focusing on four key areas around the world, including the Gulf of Mexico and the North Sea.
Ruhl summed up 2012 as a year of adaptation to a changing landscape, not random disruptions that can be so common in the industry.
He said that while oil in 2012 remained the dominant source of fuel, at roughly 33 percent, it continued to lose market share to other sources of fuel for the 13th year in a row. He said oil’s current market share as a source of fuel is the lowest in BP’s data set, which dates back to 1965. BP has said previously it believes that oil will still remain the dominant transportation fuel over the next two decades.
“The conclusions are not new, but that does not make them less important,” Ruhl said. “Energy concerns all of us.”
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