BP Energy Outlook 2016: NatGas Surpasses Coal by 2035

UK oil and gas giant BP released the 2016 edition of their BP Energy Outlook on Wednesday. BP, being a European company, lards the Outlook up with flowery talk of renewable this and sustainable that. But there are a few facts from the Outlook that slap you in the face: (1) By 2035, across the entire world, 80% of all energy will come from fossil fuels. So much for renewables riding in to the save us all “any day now.” (2) Natural gas is the largest-growing fossil fuel and by 2035 it will have replaced coal as the #2 source of energy in the world. (3) The U.S. will achieve overall energy self-sufficiency by 2021, and oil self-sufficiency by 2030. Another fun fact from the BP Energy Outlook: shale gas will account for 20% of total global gas output by 2035. Read the full report below…
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New BP Technology Report Predicts O&G Supplies will Double by 2050

researchPeak Oil theorists like Art Berman won’t be happy with the latest report just published by oil giant BP. BP and other large energy companies publish annual energy outlook studies that we’ve highlighted in the past (see BP’s Annual Energy Report: Smallest Demand Increase since 1990s). For the first ever, BP has just published a report called the BP Technology Outlook (full copy below) that reveals much of their internal research on new technologies that will keep energy supplies plentiful and affordable, “enough to meet projected demand many times over” according to the study’s authors. While BP pays much lip service to so-called renewable sources of energy in this new study, here’s the part that will give Berman and other Peak Oil fanatics heartburn: “applying today’s best technologies to discover oil and gas resources could significantly increase ‘proved reserves’ from 2.9 trillion barrels of oil equivalent to 4.8 trillion barrels – nearly double the 2.5 trillion barrels required to meet projected cumulative global demand through to 2050.” Did you catch that? New tech available today can and will double the amount of recoverable oil and gas. So much for Peak Oil and Gas! We’re awash in it and will remain so for generations…
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10 Sell-Out Big Oil Companies Support Paris Global Warming Treaty

Eight CEOs from the Gang of 10

In a repugnant and self-serving public relations stunt, the CEOs for 10 of the world’s largest oil and gas companies are pushing for “an effective climate change agreement to be reached at next month’s 21st session of the United Nations (UN) Conference of Parties to the UN Framework on Climate Change (COP21)” at the meeting being held in Paris in early December. That is, they’re pretending they believe in the total hoax that mankind is causing global warming and therefore all of the nations of the earth, including the United States, should give up their sovereignty to achieve something they have no control over–whether or not global average temps go up more than 2 degrees Celsius by the end of this century. Conveniently, most of us won’t be alive to see whether or not that ever happens. Fortunately none of the big oil companies signing this asinine statement are U.S.-based companies, although they all have serious (and large) operations in the U.S. Who are the Gang of 10?…
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BP Makes Offer to Buy Penn Virginia, Other Majors Interested Too

George Soros smilingAlthough headquartered in Radnor, Pennsylvania (near Philadelphia), Penn Virginia Corporation is an oil and gas driller (i.e. “producer”, i.e., E&P company) with only a small presence in the Marcellus Shale: 21,700 net acres with no drilled wells. They concentrate on oil drilling the Texas Eagle Ford Shale play. MDN told you in March that Democrat billionaire corporate raider George Soros, one of the most vile big money investors in the world who has repeatedly damaged not only corporations but entire country’s economies, had taken a 9.1% ownership position in Penn Virginia in order to force it to sell and was doing exactly that (see George Soros Finally Bullies Penn Virginia into Selling Itself). Since March all has been quiet, until yesterday when somebody leaked the rumor that oil and gas giant BP has made an offer to buy Penn Virginia, driving the stock price up over 20% at one point. However, another rumor says Penn Virginia rejected BP’s offer as too low and is holding out for more. In addition to BP, Exxon Mobil and Chevron are also said to be interested in buying Penn Virginia. All of this buyout talk is driving Penn Virginia’s stock price up, putting a big smile on George Soros’ face…
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BP’s Annual Energy Report: Smallest Demand Increase since 1990s

BP (what used to be known as British Petroleum) is, and has been for years, North America’s top natural gas marketer. Although first quarter 2015 marketer rankings aren’t out just yet, if you look at fourth quarter 2014, BP sold (i.e. marketed) twice as much natural gas on a daily basis as the next nearest company, which happens to be Shell (see NGI’s 4Q14 NatGas Marketer Rankings). Like other oil “majors,” BP issues a yearly outlook on worldwide energy consumption and trends. BP calls their version of this report the BP Statistical Review of World Energy. The company released the 64th edition of that review today (full copy below). BP themselves say this edition, “highlights the continuing importance of the US shale revolution, with the US overtaking Saudi Arabia as the world’s biggest oil producer and surpassing Russia as the world’s largest producer of oil and gas.” Readers of MDN already know those two facts: that the US years ago dethroned Russia as the #1 natural gas producer, and that more recently we’ve dethroned Saudi Arabia as the world’s #1 oil producer. What else do we learn from this year’s report?…
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Big European Oil Companies Want UN to Slap Carbon Tax on U.S.

The Europeans are sometimes, well, stupid. How else can you explain six large oil companies–BG Group, BP, Eni, Royal Dutch Shell, Statoil and Total–buying into the tax scheme called carbon credits? The six sent a letter (copy below) to the United Nations Framework Convention on Climate Change (UNFCCC) begging the UN to introduce carbon pricing systems and “create clear, stable, ambitious policy frameworks that could eventually connect national systems” that would “reduce uncertainty and encourage the most cost effective ways of reducing carbon emissions widely.” This is madness. Create laws that supersede each country’s sovereignty and impose a worldwide tax on carbon–the stuff you breathe out with every breath–as some sort of solution for the imaginary problem of man-made global warming? If the UN does such a thing, it will spell the end of the companies sending the letter! What do you call a company trying to commit economic suicide? Do the investors of these six companies know the heads of those companies are trying to destroy the company and their investments along with it? No wonder Europe is in decline…
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List of World’s 21 Biggest Oil & Gas Companies

Over the past decade, from 2004 to 2014, something happened: the miracle of hydraulic fracturing. Because of fracking, the world now pumps more oil than it did a decade ago. During the past decade the price for a barrel of oil went sky high. Now, according to the popular narrative of the day, the price of oil has “collapsed” because we’re swimming in “too much oil.” Who woulda thunk? (Side note: the price for a barrel of West Texas Intermediate crude in 2004 was $41.50. Today? About $43. So much for a price “collapse”–it’s more like a “price maintenance.”) For a while some people, like the now thoroughly discredited Art Berman, peddled the “peak oil” theory–that the world was running out of oil and would soon be paying $200 a barrel or more (see Peak Oil Theorist Art Berman Says Shale Gas is Peaking Too). So much for those theories. A decade ago the world was pumping 64.1 million barrels of oil equivalent per day (boepd)–that is, oil and the energy equivalent in natural gas. Today? The world is pumping 80.4 million boepd. So who are the world’s 21 largest oil and gas producing companies? We have the list below…
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BP Annual World Energy Report Shows Natgas Growth in US

Last week BP released their 63rd annual BP Statistical Review of World Energy report (full copy embedded below). Many of the “majors” like BP and Exxon publish an annual look at world energy supplies. What do the wizards at BP find when peering into their crystal ball? Last year worldwide energy usage rose 2.3%, which is up from 2012. However, it’s still below the historical average increase of 2.5%. Translation: the world economy still sucks with fewer jobs and economic activity happening. Natural gas consumption grew by 1.4% last year, well below the historical average of 2.6%. But there was one place in the world where gas consumption rose–yep, right here at home in the U.S. consumption rose by 2.4%. China and the U.S. together accounted for 81% of the growth in natgas consumption last year. What else did the report find?…
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Some Utica Shale Drillers are Winners, and Some are Losers

Interesting to note that Crain’s Cleveland Business comes to the same conclusion that MDN espoused a week ago: BP rolled the dice in the Utica Shale–and they bet wrong (see BP Calls it Quits in the Utica Shale – Total Write-off).

The Crain’s piece makes a valid observation: Although shale drilling is far less risky than other types of oil and gas exploration and production–it’s still a risk. With any risk, some will win and some will lose (contrary to the pap taught today in schools that everyone can be a winner). Shale drilling is high stakes in some respects, a lesson that BP learned the hard way…
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MDN Quoted on WKSU Radio News Re BP Leaving the Utica

Every now and again when MDN editor Jim Willis answers the phone, it’s a reporter on the other end of the line. Earlier this week he spoke to a reporter from Kent State University’s PBS affiliate WKSU. The topic was BP pulling out of the Utica Shale in Trumbull County (see BP Calls it Quits in the Utica Shale – Total Write-off). Jim told the nice reporter essentially what he said in that article: All is not lost for future drilling in Trumbull County–but it may take a few more years for things to pick up there. In the meantime, there’s plenty of ways for people in Trumbull to benefit from the shale drilling that’s happening south of them.

Here’s a transcript of the interview:
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BP Calls it Quits in the Utica Shale – Total Write-off

I QuitA sad day for landowners in Trumbull County, OH. Flashback: In March 2012 BP leased 84,000 acres in Trumbull County, OH from the Associated Landowners of the Ohio Valley (see BP’s Big Utica Shale Deal, Leases 84K Acres in Ohio). Just two years later and what started out with great fanfare is all down the toilet. BP announced today they are pulling out of the Utica Shale and writing it all off. In a very brief mention in a press release issued this morning about first quarter 2014 results, BP says: “Following on from the decision to create a separate BP business around its US lower 48 onshore oil and gas activities, and as a consequence of appraisal results, BP has decided not to proceed with development plans in the Utica shale. The Upstream result includes a write-off relating to the Utica acreage.”

Last November MDN wondered aloud whether BP would decide to move forward, or call it quits (see Decision Point: Will BP Drill Their Utica Acreage? Or Pass?). Now we know. Why leave? As we pointed out at the time, Trumbull County has proven to be mostly dry gas, and not wet gas (or natural gas liquids) which makes it a much less profitable part of the play to drill in. BP rolled the dice and bet wrong. The only other driller in Trumbull has been Halcon Resources. They pulled out too (see Halcon Resources Stops Drilling, Gives Up on the Utica Shale). Is there any hope for future Utica drilling in Trumbull County?…
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BP Shifts into First Gear with Shale – Splits Offshore/Onshore

BP is one of the world’s largest integrated oil and gas companies, with operations that span from exploration and production in the upstream to midstream pipelines and even downstream (one of the world’s largest energy traders). A truly huge company. They also own 84,000 acres of leases in the Ohio Utica Shale–acreage they’ve done almost nothing with since leasing in early 2012. According to Volume 3 of the Marcellus and Utica Shale Databook (published in January), we count 5 drilling permits for BP in the OH Utica Shale for all of 2013. Barely a pulse.

Our course hindsight is 20/20, but one of the problems is BP leased all of that land in the northern part of the Utica play–in Trumbull County. As we’ve noted elsewhere today on MDN, Utica drilling has decidedly shifted southward (away from Trumbull and other northern counties). But perhaps geography hasn’t been the only thing holding BP back in their Utica drilling program. Could it be an inefficient management structure in the company? Perhaps! Two days ago BP announced they are splitting offshore and US onshore drilling into separate divisions within the company. Judging from the announcement, it appears the decision to split operations is an effort to take better advantage of shale drilling. While they don’t mention the Utica specifically, we believe part of the reason BP has not drilled in the Utica is due to their own internal structure, which they’re moving to remedy…
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BP’s Annual Energy Outlook Through 2035 – Fool’s Errand?

Yesterday BP, a huge driller with a sizable acreage position in the Utica Shale (84,000 leased acres), issued its annual BP Energy Outlook 2035 (full copy embedded below). The 96-page report sets out BP’s view of the most likely developments in global energy markets to 2035, based on up-to-date analyses. BP experts expect global energy demand to rise 41% from now until 2035 with 95% of that growth coming from “emerging economies.” According to BP, gas as a source of energy is growing fastest among the fossil fuels and by 2035 gas is expected to be at parity with coal–each providing about 27% of power needs in 2035. BP says shale gas will make up 68% of U.S. gas production by 2035.

Of course, all of this speculation is fun to read, but frankly is just so much folly. MDN editor Jim Willis heard Charif Souki, CEO of Cheniere Energy address the predictions game at the Platts Global Energy Forum in New York City last December (see Energy Industry Leaders Gather at Platts Forum in NYC). At that forum, Souki said any kind of prediction beyond 2-3 years in the rapidly changing energy industry is meaningless. He said if you go back 20 years and look at those predictions about today, none of them predicted shale and how the industry would change so dramatically. We concur with Souki–making these kinds of predictions is a fool’s errand. Still, it’s fun to read and muse about what might be…
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Decision Point: Will BP Drill Their Utica Acreage? Or Pass?

In March 2012, BP leased 84,000 Utica Shale acres in Trumbull County, OH for $3,900 per acre and 17.5% royalties (see BP’s Big Utica Shale Deal, Leases 84K Acres in Ohio). They now have a total of 104,000 acres under least in northeast Ohio. But it’s been hurry up and wait. For an entire year we heard nothing from BP about drilling. A year later, in March 2013, BP obtained their first permit to drill in the OH Utica (see Better Late than Never: BP Gets First Permit for OH Utica). The original plan was to drill 10 test wells. So far they’ve drilled four, one of which is actually producing and online. Which seems like an awfully slow start for one of the world’s largest oil & gas companies. Landowners are frustrated at BP’s lack of drilling.

BP’s problem is, of course, that the more profitable “wet gas” zone for Utica drilling is well south of the acreage they’ve leased. So the question becomes, how much wet gas is there in the BP acreage? And if there’s not much, how productive (and cost effective) is the methane or “dry gas” they’re able to extract from the acreage? The jury is still out. NGI’s Shale Daily reports BP will make a decision “early next year” about whether or not they’ll commit to drilling on their OH Utica acreage…
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Utica Drilling Innovation: Plastic Pipelines Replace Water Trucks

An interesting innovation that we have not heard of before: BP is using temporary, plastic pipelines to transport water to the test wells they’re drilling in Trumbull County, OH. When a series of wells are finished being drilled, the pipes can be rolled up and used somewhere else without having to dig a trench and leave a permanent pipeline underground. No more thousands of trips by water trucks to drill a well!

Could this be the start of yet another new, environmentally-friendly innovation by the shale drilling industry?…
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