Fossil fuel demand has likely hit its peak, BP says – Globe and Mail

Pumpjacks draw oil out of the ground near Olds, Alta., Thursday, July 16, 2020. THE CANADIAN PRESS/Jeff McIntosh
Emma Graney Energy reporter
Published September 14, 2020

For Subscribers

Options to listen to or read article

The article gives two different opinions and three scenarios from BP about future oil demand and it differs for natural gas.

https://www.theglobeandmail.com/business/industry-news/energy-and-resources/article-fossil-fuel-demand-may-have-hit-its-peak-bp-says/

Archive below

Related

We’ve Been Incorrectly Predicting Peak Oil For Over a Century – Gizmodo 12/11/2014

Comments

It hard for Alberta oil sands producers to compete with state run and other large producers in Saudi Arabia, Russian and elsewhere due to more costly production and refinement plus better human rights and environmental protections.

Just the latest headline in a stream of bad news for the oil industry over the past year. Other gems include:

“The New Geopolitics af Energy: Power is shifting from longtime oil giants like Russia and Saudi Arabia to innovators like China and maybe the US” (WSJ)

“Exxon’s departure from Dow highlights market’s retreat from energy bets” (WSJ)

“Bank of England chief Mark Carney issues climate change warning” stating up to half af
already developed oil reserves will be stranded. (BBC)

“BlackRock C.E.O. Larry Fink: Climate Crisis Will Reshape Finance” (NYT)

“US Supreme Court deals blow to Keystone oil pipeline project.” (G&M)

In ether words, huge geopolitical, economic and environmental forces are disrupting the
global oil industry, none of which can be blamed on Trudeau and the Liberals.

If Alberta is smart. it will step playing ‘victim’ and start working with the Feds ta develop programs that support jobs for the 21 st century. Legacy oil sands players may run for another I a-20 years, but they won’t be creating new jobs the province needs to make a living now or in the decades to come.

The Globe and Mail
Energy and Resources

Energy giant BP is predicting fossil fuel consumption will shrink for the first time in modern history, with peak oil demand now likely in the world’s rear-view mirror.

The forecast in the company’s 2020 Energy Outlook, released Monday, says that global economic activity will partly recover from the COVID-19 pandemic over the next few years, but “scarring effects,” including work-from-home edicts, will lead to slower growth in energy consumption.

While the overall demand for energy will grow, the supply will change: The role of fossil fuels will decrease while renewable energy will increase, the report says.

In the case of oil, BP expects global demand to fall over the next 30 years, driven in part by an increase in electric – and more efficient – vehicles.

Canada is the fourth-largest producer and exporter of oil in the world, the vast majority of which comes from Alberta’s oil sands.

The pandemic-caused hit to oil has already decimated Alberta’s coffers, where royalties from fossil fuels are set to drop to their lowest point in more than four decades. The slump plays a huge part in the province’s forecast deficit of $24.2-billion. Canada’s bottom line will also take a hit if BP’s forecast holds steady; the oil and gas sector comprises 5.6 per cent of the country’s GDP, according to federal government figures.

The report includes three scenarios that assume different levels of government policies around the world aimed at meeting the 2015 Paris climate agreement to limit global warming to well below 2 degrees Celsius from preindustrial levels.

In BP’s two faster-moving scenarios, COVID-19 accelerates the slowdown in oil consumption, leading to use peaking last year. In the third scenario, oil demand peaks around 2030.

While the share of fuels has shrunk in the past as a percentage of the total energy pie, consumption of them has never contracted in absolute terms, BP chief economist Spencer Dale told reporters.

“[The energy transition] would be an unprecedented event,” Mr. Dale said. “Never in modern history has the demand for any traded fuel declined in absolute terms.”

At the same time, he said, “the share of renewable energy grows more quickly than any fuel ever seen in history.”

That prediction reflects BP’s own move out of fossil fuels.

New chief executive Bernard Looney vowed to reinvent BP by shifting to renewables when he took the helm of the 111-year-old oil and gas company in February. He wants to reduce BP’s oil and gas production by 40 per cent – or at least one million barrels a day – by 2030.

The company sold off its global petrochemicals business for US$5-billion this summer. It’s also preparing to sell a large chunk of its oil and gas assets even if crude prices bounce back from the COVID-19 crash, according to reports from Reuters, because it wants to invest more in renewable energy.

BP’s energy outlook veers from the common narrative that oil demand will grow over the coming decades, fuelled by the rise of the middle class in countries such as India and China and continued economic development in other parts of the world.

The International Energy Agency, for instance, said in its March oil forecast that demand will likely grow by 5.7 million barrels a day by 2025, despite the difficult start in 2020 because of the coronavirus.

Although the pandemic “added a major layer of uncertainty to the oil market outlook,” the IEA said in its August oil market report that global demand would hover around 97 million barrels a day in 2021, up from 92 million in 2020. That’s actually down from the agency’s initial predictions, because of the continued high number of COVID-19 cases and weakness in the aviation sector.

Alberta Premier Jason Kenney has taken a similar position, arguing that oil demand and prices will only grow after the pandemic. On Monday, Alberta Energy Minister Sonya Savage said in an e-mail that energy consumption forecasts show oil and gas “dominating” the mix “for decades to come.”

“That oil will come from somewhere, and if not Alberta, other countries [such as] Russia and Saudi Arabia will increase their market share,” she said.

Despite the bleak outlook for oil, BP puts natural gas in a far better spot, noting it’s likely to be more resilient because of the crucial role it will play in ‎supporting developing economies as they reduce their reliance ‎on coal.

The report notes gas is also a source of near-zero carbon emissions when combined with carbon capture technologies.

With a report from Reuters

BP Energy Oil and gas Renewable energy

Comments

Related articles
BP enters offshore wind power with $1.1-billion Equinor deal
Subscriber content
September 10, 2020

Exxon downsizes global empire as Wall Street worries about dividend
Subscriber content
September 8, 2020

Imperial shuts Kearl oil sands operations after pipeline outage
Subscriber content
September 2, 2020

Follow Emma Graney on Twitter @EmmaLGraney

Report an error
Editorial code of conduct

Tickers mentioned in this story
Data Update
Symbol Name Last Change % Change
BP BP Plc 19.84 -0.22 decrease -1.10% decrease

About Kevin Yaworski

I use my blog to write about things that I think are a matter of public interest or that I think others will be interested in
This entry was posted in Automobiles, Canada, Financial, international, News and politics, Oil and Gas, Opinion, Science & Technology and tagged , , , , , , , , . Bookmark the permalink.