BP Energy Outlook 2035 February 2015 bp.com/energyoutlook BPstats BP p.l.c. 2015
Contents Page Introduction 4 Global energy trends 7 Liquid fuels 29 Natural gas 49 Coal and non-fossil fuels 63 Key uncertainties 77 Appendix 93 Energy Outlook 2035 3 BP p.l.c. 2015
Welcome to the 2015 edition of BPs Energy Outlook. At a time when our industry is focused on the rapid response to a dramatic fall in oil prices, it is instructive to look at events from a longer term perspective. Todays turbulence…
Second, the energy mix continues to shift. Fossil fuels are projected to provide the majority of the worlds energy needs, meeting two-thirds of the increase in energy demand out to 2035. However, the mix will shift. Renewables and…
Notes on method and assumptions This edition updates our view of the likely path of global energy markets to 2035. The underlying methodology remains unchanged we build a single most likely view based on assumptions about changes in…
Page Introduction 4 Global energy trends 7 Liquid fuels 29 Natural gas 49 Coal and non-fossil fuels 63 Key uncertainties 77 Appendix 93 Energy Outlook 2035 7 BP p.l.c. 2015
Global population and increases in income per person Population GDP Contribution to GDP growth 2013-35 Billion Trillion, 2011 PPP Trillion, 2011 PPP 9 240 90 Population growth 8 Income growth 7 180 per person 6 60 5 Other 120 4 3 30…
underpin growing energy demand Population growth and increases in income per person are the key drivers behind growing demand for energy. By 2035, the worlds population is projected to reach 8.7 billion, which means an additional…
Primary energy consumption growth slows... Consumption by region Non-OECD Asia energy growth Billion toe % per annum 18 8% Thousands 15 Slower Other 6% GDP growth 12 Faster decline in 9 4% energy Non-OECD intensity…
as the impact of non-OECD industrialization weakens Primary energy consumption increases by 37% between 2013 and 2035, with growth averaging 1.4% p.a.. Virtually all (96%) of the projected growth is in the non-OECD, with energy…
The slowdown in demand growth from industry... Consumption by final sector1 Consumption by fuel Billion toe Billion toe 18 18 Thousands Renew.2 15 15 Hydro Nuclear 12 Other 12 Gas 9 9 6 6 Oil Industry 3 3 Coal…
is reflected in the slower growth of coal The fading impact of industrialization is apparent in the split of primary energy consumption by sector. Industry has been the fastest growing sector since 2000, averaging 2.7% p.a., but…
Fossil fuels continue to provide most of the worlds energy... Shares of primary energy 2013-35 increments by fuel Billion toe 50% 5 Oil Renew.* 4 40% Hydro 3 Coal Nuclear 30% 2 Gas 20% Gas 1 Oil 10% Coal Hydro 0 Nuclear…
even as the mix shifts towards lower carbon fuels Gas gains share steadily, while the shares of both oil and coal fall. By 2035 all the fossil fuel shares are clustered around 26-28% with no single dominant fuel a first since the…
The power sector takes an increasing share of energy Inputs to power as a share of Primary inputs to power total primary energy 50% 100% Oil 75% 40% Coal 50% Gas 30% Renew. 25% Nuclear Hydro 20% 0% 1965 2000 2035 1965 2000…
and plays a key role in changing the energy mix Power generation is expected to account for an ever-increasing share of primary energy consumption as the world continues on a long-term trend of electrification: the share rises from…
Energy efficiency restrains the growth of emissions GDP, energy and emissions Emissions growth 2013 to 2035 Index: 1990 = 100 Billion tonnes CO2 500 35 30 400 GDP Energy 25 intensity 20 300 15 Energy 10 Fuel mix 200 CO2 5 100…
but the changing fuel mix has only a modest impact Total carbon emissions from energy consumption increase by 25% between 2013 and 2035 (1% p.a.), with the rate of growth declining from 2.5% over the past decade to 0.7% in the final…
Energy supply is boosted by unconventional oil and gas ... Primary energy production New energy forms Billion toe Billion toe 18 3 18% Europe Renewables in power FSU Shale gas 12 2 12% N America Tight oil, Middle East oil…
and renewable power, all enabled by technology World primary energy production grows at 1.4% p.a. from 2013 to 2035, matching the growth of consumption. Growth is spread across all regions with the exception of Europe. South and…
Shale gas and tight oil resources are thought to be abundant Remaining technically recoverable resources Cumulative production 2013-35 Billion toe Billion toe 0 20 40 60 0 20 40 60 Asia Pacific North America S & C America…
but production remains concentrated in North America Technological innovation and high oil prices have unlocked vast unconventional resources in North America, significantly increasing US oil and gas production and altering global…
Drivers of tight oil and shale gas supply in the US Largest oil production increases US new-well production per rig Mb/d Boe/d per rig 0.0 0.5 1.0 1.5 2.0 350 Gas Oil Saudi 1991 300 Saudi 1973 250 Saudi 1986 US 2014 200 Saudi 1976…
include rapid growth of investment and significant innovation US oil production growth in 2014 (roughly 1.5 Mb/d) was the largest in US history, driven by tight oil and NGLs (natural gas liquids). The increases in US production in…
The shifting geography of supply and demand Primary energy net balances Asias net imports of energy Billion toe Billion toe 4 2.0 Total as % of primary 28% FSU energy (right axis) 1.6 24% 2 Africa 1.2 20% S&C America Oil 0 Middle…
has big implications for energy trade Regional energy imbalances production minus consumption for each region are set to increase markedly over the next 20 years, with consequent implications for energy trade. North America switches…
Energy Outlook 2035 28 BP p.l.c. 2015
Page Introduction 4 Global energy trends 7 Liquid fuels 29 Natural gas 49 Coal and non-fossil fuels 63 Key uncertainties 77 Appendix 93 Energy Outlook 2035 29 BP p.l.c. 2015
The global liquids balance reflects shifts Demand Supply Mb/d 115 110 2035 level Crude Other 105 NGLs* Mid East North 100 America Other Asia 95 India Other 90 China 85 80 2013 OECD Non-OECD 2013 Non-OPEC OPEC decline…
in non-OECD demand and non-OPEC supply growth Global liquids demand (oil, biofuels, and other liquids) is projected to rise by around 19 Mb/d, to reach 111 Mb/d by 2035. Growth slows over the period: from 1.2% p.a. in 2013-20 to 0.7%…
Asia and the Middle East drive liquids demand growth Demand by region Demand by sector Mb/d Mb/d 120 120 Non-OECD 100 Other 100 transport Middle East OECD 80 80 transport India 60 60 Non-OECD China ind. & other 40 US 40 OECD…
with largest growth in transport followed by industry China is the largest contributor to world demand growth: growing by 7 Mb/d to 18 Mb/d in 2035, surpassing US demand (which falls by 2 Mb/d to 17 Mb/d). Even so, US consumption per…
Vehicle numbers are likely to grow rapidly Vehicle fleet Fuel economy of new cars Transport demand Billions of vehicles Litres per 100 km* Billion toe 3 20 4 Electricity Non-OECD US light vehicles Coal OECD EU Gas China Biofuels…
but efficiency improvements limit growth in fuel demand The global vehicle fleet (commercial vehicles and passenger cars) more than doubles from around 1.2 billion today to 2.4 billion by 2035. Most of that growth is in the…
Petrochemicals are the other key driver of oil demand Oil demand outside of transport NGLs production by region Mb/d Mb/d 24 Other Power 16 Other Petrochemicals Other industry 20 Middle East 12 US 16 12 8 8 4 4 0 0 1965 2000…
... aided by strong growth in NGLs supplies Since the oil price shocks of the 1970s, the use of oil outside of transport has been concentrating in petrochemicals, where there is limited scope for substitution by cheaper fuels. Oil…
North American supply drives growth initially Liquids supply by region Liquids supply by type Mb/d Mb/d 120 120 Europe Other 100 100 Asia Pacific Biofuels 80 80 Condensate FSU Oil sands 60 Africa 60 Tight oil 40 S&C America 40…
before Middle East supply growth increases Liquids supply expands by almost 20 Mb/d by 2035, led by growth in North America during the early part of the Outlook, before the Middle East gains ground during the latter part. North…
Significant supply disruptions Recent supply disruptions Projected disruptions Mb/d Mb/d 4 5 2015 Energy Outlook Iran Libya Other 2014 Energy Outlook 4 3 3 2 Historical 2 average 1 1 0 0 1Q11 1Q12 1Q13 1Q14 1965 2000 2035…
are likely to be a durable factor Since the advent of the Arab Spring in 2011, supply disruptions have once again become a key feature in oil markets, reaching 3 Mb/d in 2014. Libyan production fluctuated throughout the year, civil…
Tight oil remains a disruptive force in the near term Tight oil supply growth Share of global liquids growth Mb/d 6 120% Other Russia 100% 5 Other S&C America China 80% NGLs 4 Canada & Mexico 60% Tight oil 3 US 40% US 2 OPEC…
but the market rebalances in later years Tight oil supply, notably in the US, continues to grow in the first part of the Outlook. US tight oil output grows by about 3 Mb/d between 2013-35 and accounts for around two-thirds of global…
Oil trade patterns change Regional net imbalances Net exports Mb/d Mb/d 75 Middle East FSU 2 China US India Europe Asia Pacific 0 50 Africa S&C America N America -2 25 -4 -6 0 -8 -10 -25 -12 -50 -14 1985 1995 2005 2015 2025…
as Asias imports grow and the US becomes self-sufficient Regional trade imbalances increase and become more concentrated. In particular, Asias imports account for nearly 80% of inter-regional net imports of oil by 2035, up from…
Refiners are challenged by alternative supplies Global liquids supply growth Growth in refining spare capacity Mb/d, cumulative from 2013 Mb/d, cumulative from 2005 20 8 Other NGLs 15 Biofuels 6 Crude oil 10 4 5 2 0 0 2015…
... and already ample spare capacity Of the 20 Mb/d increase in the supply of liquids to 2035, about 8 Mb/d comes from NGLs, biofuels and other liquids that do not require refining. Chinas demand for liquids grows by 7 Mb/d to 2035.…
Energy Outlook 2035 48 BP p.l.c. 2015
Page Introduction 4 Global energy trends 7 Liquid fuels 29 Natural gas 49 Coal and non-fossil fuels 63 Key uncertainties 77 Appendix 93 Energy Outlook 2035 49 BP p.l.c. 2015
Non-OECD leads the growth in natural gas demand Demand by region Demand by sector Bcf/d Bcf/d 500 500 Other non-OECD Transport China Other 400 400 Power Middle East Industry 300 OECD 300 Power 200 200 100 100 0 0 1965 2000…
with increasing usage in power and industrial sectors Global natural gas demand is expected to grow by 1.9% p.a. over the Outlook, reaching around 490 Bcf/d by 2035. Growth is driven by non-OECD demand, which grows 2.5% p.a., adding…
Non-OECD also provides the largest supply increment Gas production by type and region Shale gas production Bcf/d Bcf/d 500 120 24% Non-OECD other Rest of world Non-OECD shale China 400 Europe & Eurasia OECD shale Canada & Mexico…
while OECD shale gas has the fastest growth Around half of the increase in global gas supply comes from non-OECD conventional gas (82 Bcf/d or 1.5% p.a.), driven in particular by the Middle East and Russia. Almost 80% of non-OECD…
Regional imbalances increase significantly Regional net imbalances Production and trade growth Bcf/d Bcf/d 120 FSU Africa 500 Middle East S & C America 80 N America Europe LNG Asia Pacific 450 40 Pipeline 0 400 -40 350 -80…
with Asia overtaking Europe as the key importing region Net inter-regional imbalances more than double by 2035. Growth in gas traded across regions accounts for around a third of the increase in total gas consumption. The expansion…
LNG supply is poised for a growth spurt Global LNG supply Global LNG demand Bcf/d Bcf/d 80 80 Other Africa Other 60 Australia 60 S & C America US Europe Russia Asia Pacific 40 Qatar 40 20 20 0 0 1990 2005 2020 2035 1990…
supporting the expansion of Asian imports The LNG market is poised for a growth spurt with a slew of new projects adding 22 Bcf/d by 2020. LNG supply grows 7.8% p.a. between 2013-20. Overall, LNG supply grows by 48 Bcf/d by 2035,…
LNG becomes the dominant form of traded gas Shares of global gas consumption Asian LNG imports and price differential /mmBtu 40% 80% Asia Pacific as % of 8 total LNG imports Total trade 75% Asia-Europe price 6 30% spread (right…
with supplies pivoting towards large Asian markets Global trade grows by 2% p.a. over the Outlook, causing the share of gas consumption supplied via traded gas to increase marginally. Traded gas supplied via pipelines declines as a…
Growth in LNG leads to more diversified gas supplies Sources of gas supply Europe China Bcf/d Bcf/d 60 60 Net pipeline imports Net LNG imports Production 40 40 20 20 0 0 1995 2005 2015 2025 2035 1995 2005 2015 2025 2035…
for both Europe and China Europes gas imports currently account for around 50% of its total gas consumption. Over 80% of these imports are via pipeline, the vast majority of which are from Russia. European domestic production…
Energy Outlook 2035 62 BP p.l.c. 2015
Page Introduction 4 Global energy trends 7 Liquid fuels 29 Natural gas 49 Coal and non-fossil fuels 63 Key uncertainties 77 Appendix 93 Energy Outlook 2035 63 BP p.l.c. 2015
Growth in coal consumption slows in the non-OECD Consumption by region Ten year increments by region Billion toe Billion toe 5 1.2 Other 1.0 India 4 Other 0.8 China India OECD 3 LNG 0.6 Russian pipeline China 0.4 2 FSU…
whilst OECD consumption declines Global coal demand grows by 0.8% p.a. between 2013 and 2035, making it the slowest growing fuel. Non-OECD consumption increases (1.1 Btoe), partially offset by declines in OECD consumption (-0.4…
Coal loses market share in China Coal share by sector in China Inputs to power in China 100% 100% Oil 75% Power 75% Coal 50% 50% Industry Gas Transport 25% 25% Renew. Other Nuclear Hydro 0% 0% 1965 2000 2035 1965 2000…
as the country transitions to cleaner fuels Growth in Chinese coal consumption is led by demand in the power sector (1.4% p.a.) followed by industry (0.4% p.a.). These two sectors account for 97% of Chinas coal consumption by 2035.…
The share of power generated by non-fossil fuels increases Share of world power generation Growth of non-fossil power Thousand TWh 40% 6 OECD Non-OECD 5 Total non-fossil Renewables 30% 4 Hydro Nuclear 3 20% Hydro 2 Nuclear 1…
driven by the rapid growth of renewables Until recently, the share of non-fossil fuels in global power generation was declining as nuclear and hydro struggled to keep pace with the growth of global power generation, and renewables…
The falling cost of renewables Cost* of new grid-scale power generation, North America example 2014/MWh 300 Solar PV Onshore wind Gas CCGT Coal 250 200 150 100 50 0 2015 2035 2015 2035 2015 2035 2015 2035 * Levelized…
keeps a lid on the growth of the subsidy burden The rapid growth of renewables currently depends on policy support in most markets, as renewables tend to be more expensive than coal or gas-fired power. As renewables grow in volume,…
Europe leads the way in terms of renewables share Renewables share of power Renewables growth 2013 to 2035 Thousand TWh 40% 1.2 EU US 30% 0.9 China 20% 0.6 10% 0.3 0% 0.0 1990 2005 2020 2035 China EU US OECD India Asia…
but China is the largest source of growth Falling costs enable renewables to continue to gain share in Europe and encourage the spread of renewables to other regions. The European Union (EU) has led the way in promoting renewable…
Nuclear and hydro generation grow steadily Nuclear generation by region Hydro generation by region Thousand TWh Thousand TWh 6 Other 6 Other China China 5 5 Other Asia Brazil 4 Europe 4 Europe North America North America 3 3 2 2…
led by the non-OECD, particularly China Despite losing share in the global power sector, nuclear and hydro are still expected to grow by 1.8% p.a. and 1.7% p.a. over the Outlook. Global nuclear growth is driven by China with an…
Energy Outlook 2035 76 BP p.l.c. 2015
Page Introduction 4 Global energy trends 7 Liquid fuels 29 Natural gas 49 Coal and non-fossil fuels 63 Key uncertainties 77 Appendix 93 Energy Outlook 2035 77 BP p.l.c. 2015
Exploring the impact of alternative assumptions Low GDP growth Climate policies - what if growth in China and India - what if policymakers take more slows more rapidly than assumed actions to reduce emissions pages 80 to 83…
illustrates the uncertainties around the Outlook This Outlook presents a single most likely view, constructed to highlight the main trends which are likely to shape energy markets over the next two decades. We believe this provides a…
Low GDP growth The future path of growth in non-OECD Asia GDP and energy demand in Differences from base case in 2035 base and low case Index: 1990 = 100 % 500 0% Low case -5% 400 GDP -10% 300 -15% Energy GDP 200 -20% Energy…
Low GDP growth is a major source of uncertainty for energy demand The future growth paths of China and India represent a major source of uncertainty. Our low GDP case assumes China and India grow at an average rate of 4% p.a. over…
Low GDP growth Demand growth is slower for all fuels... Energy demand by fuel in 2035 Global CO2 emissions from energy use % difference from base Billion tonnes CO2 0% 42 Base 36 Low -2% GDP 30 -4% 24 -6% 18 -8% 12 -10% 6…
Low GDP growth resulting in lower carbon emissions Within the fossil fuels, coal demand shows the largest decline versus the base case (-11%), followed by oil (-9%) and gas (-6%). These differential impacts reflect the fuel mix in…
Climate policies Carbon emissions are rising too fast for comfort Emissions by sector Options that achieve equal CO2 emissions reductions* Billion tonnes CO2 42 Abatement option Change required Other Replace coal with gas in 1% 36…
Climate policies ...which could trigger additional abatement policies Global CO2 emissions from energy use grow by 25% (1% p.a.) over the Outlook. Emissions remain well above the path recommended by scientists, illustrated by the…
Climate policies There are many ways to further mitigate carbon emissions Options to save 2 billion tonne CO2 emissions in 2035 versus base case Reducing carbon intensity in power Energy efficiency gains % share of power generation %…
Climate policies all of which involve significant challenges The charts show the change required for each option to achieve a 2 billion tonne CO2 saving in 2035 relative to the base case roughly 10% of the gap between projected…
Geopolitics Heightened risk perceptions can have important implications Geopolitical risk Alaska - oil production Eurasia Group Risk Index Mb/d 46 3 2 44 1 42 0 2005 2008 2011 2014 1975 1980 1985 1990 1995 2000 France - nuclear…
Geopolitics for both energy supply and demand Geopolitical risks which on some measures have increased in recent years have potentially important implications for energy markets. On the supply side, the level of disruptions to oil…
China electrification The path of electrification in China Electricity consumption per capita Impact on global fuel demand MWh Effect of +/-20% change in China power relative to base case 10 +20% Total 8 Renew. 6 Hydro -20%…
China electrification has significant implications for global energy The future path of electrification in China is a key uncertainty. Chinas power sector accounted for nearly 30% of global energy growth over the past decade. In our…
Conclusion Continuous change is the norm for energy markets Changing energy mix - gas fastest growing fossil fuel, coal the slowest - continued rapid growth in renewables Changing energy trade patterns - increasingly flowing…
Page Introduction 4 Global energy trends 7 Liquid fuels 29 Natural gas 49 Coal and non-fossil fuels 63 Key uncertainties 77 Appendix 93 Energy Outlook 2035 93 BP p.l.c. 2015
Key changes versus last years Outlook Changes in 2035 levels versus the January 2014 Outlook Revised down Revised up N America fossil fuel supply Coal Oil Gas Asia Pacific fossil fuel supply Transport consumption Biofuels Inputs…
result in little net change in total energy Our aggregate projection for world energy demand and supply is little changed since our previous Outlook down by about 0.6% in 2035. North Americas oil and natural gas supply outlook has…
Comparison with other outlooks: the key difference Growth of energy consumption, 2010-2035 Billion toe Billion toe 7 7 Other Nuclear Non OECD Coal Gas 6 OECD 6 Liquids 5 5 4 4 3 3 2 2 1 1 0 0 BP IEA NP IEA CP EIA BP IEA NP IEA…
lies in different views on non-OECD prospects Our Outlook is based on a most likely assessment of future policy trends. In that respect it differs from the energy projections published by the IEA and the EIA, which are based on…
Data sources BP p.l.c., BP Statistical Review of World Energy, London, United Kingdom, June 2014 Energy Information Administration, Drilling Productivity Report, Washington, D.C., United States, 2014 Energy Information Administration,…
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