BP outlook: gas will be the fastest growing fossil fuel
UK-based oil and gas giant BP expects fossil fuels to remain the dominant form of energy over the period to 2035, according to the 2016 edition of the “BP Energy Outlook”.
Despite the rapid growth of other sources, fossil fuels “will remain the dominant form of energy over the period to 2035, meeting 60% of the projected increase in demand and accounting for almost 80% of the world’s total energy supplies in 2035,” the report said.
According to BP, gas will be the fastest growing fossil fuel, increasing 1.8% a year and oil will grow steadily at 0.9% a year, although its share of the energy mix continues to decline.
Growth of coal is projected to slow sharply, such that by 2035 its share in the energy mix is at an all-time low, with gas replacing it as the second-largest fuel source.
Non-fossil fuels are projected to grow even faster than anticipated in last year’s outlook. Renewables, including biofuels, are projected to grow at around 6.6% per year, and as a result their share in the energy mix increases from 3% today to 9% by 2035, BP said in the report.
LNG role rising
International trade in gas grows broadly in line with global consumption, such that the global trade share of gas remains around 30%.
But within that, “LNG trade grows twice as fast as consumption, with LNG’s share of world demand rising from 10% in 2014 to 15% in 2035“, BP said in the report.
According to BP, over 40% of the increase in global LNG supplies is expected to occur over the next five years as a series of in-flight projects are completed. This equates to a new LNG train coming on stream every eight weeks for the next five years.
By 2035, LNG “surpasses pipeline imports as the dominant form of traded gas. The growing importance of LNG trade is likely to cause regional gas prices to become increasingly integrated“, the report said.
The growth in LNG coincides with a significant shift in the regional pattern of trade. The US is likely to become a net exporter of gas later this decade, while the dependence of Europe and China on imported gas is projected to increase further, the report said.
“In the middle of a downturn in oil and gas prices, it is important not only to adapt to the current tough conditions, but also to prepare for the next set of challenges. Energy is a long-wavelength industry and we need a long term perspective of how the energy landscape we operate in is likely to evolve,” said Bob Dudley, CEO of BP.
“As this year’s Outlook demonstrates, the world is going to continue to demand growing supplies of energy but the mix of those supplies is changing and becoming less carbon-intense. However, further policy action may be necessary to meet international targets to limit carbon emissions,” Dudley added.