Released September 18, 2020 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Over the next three decades, the global oil industry's prospects range from "about the same" to dramatically lower demand in three scenarios created by BP plc (NYSE:BP) (London, England) that underlie its annual energy outlook, released September 14.
The three scenarios are not predictions, BP said, but rather illustrations of what could unfold across a large and interconnected global energy market. The three scenarios -- Business as Usual, Rapid Transition and Net Zero Carbon -- are summarized in the September 16, 2020, article - BP: Renewables, Electric Vehicles to See Sharp Global Growth in Coming Decades. To see BP's view of how the COVID-19 pandemic could alter the global economy and the demand for oil, see September 15, 2020, article - BP Assesses How COVID-19 Could Cut Global GDP, Oil Demand.
Over the next 30 years, all three scenarios crafted by BP show global oil demand falling, though at different rates.
The best outcome for oil producers is BP's Business as Usual case, in which there is a slight increase in global demand, about 1 million barrels per day (BBL/d), for the next decade compared to 2018 demand levels. But by at the end of that scenario, in 2050, demand falls to about 93 million BBL/d, about 7% less than it was in 2018. During this period, there are only modest increases in vehicle efficiency and only a slight uptick in the penetration of electric vehicles.
BP's other two scenarios, Rapid Transition and Net Zero Carbon, are far bleaker for oil producers. Both cases see a 2% near-term drop in demand by 2025, widening to respective declines of between 15% and 21% in 2035, 38% and 58% in 2045 and 48% and 69% by 2050.
Click on the image at right to see BP's three scenarios for global crude oil demand out to 2050.
In releasing its Energy Outlook: 2020 edition on September 14, BP Group Chief Economist Spencer Dale said, "The scale and pace of these falls stem primarily from the increasing efficiency and electrification of road transportation." Demand for refined products from the transportation sector falls by slightly less than 10% by 2050 in the Business as Usual case, to about 53 million BBL/d from roughly 57 million BBL/d in 2018.
But the drop in demand is more dramatic in the other two cases: Under the Rapid Transition case, transport demand for refined products falls by more than half, to about 25 million BBL/d. In the Net Zero Carbon scenario, oil use by the transportation sector falls even further, to about 16 million BBL/d in 2050.
Click on the image at right to see how demand for oil in the transportation sector changes out to 2050 in BP's three scenarios.
Two key factors affecting demand for oil going forward is the rate at which vehicle efficiency gains are recorded and the penetration of electrified transportation. "Global liquids demand in all three scenarios is significantly affected by the impact of COVID-19, which disproportionately impacts economic activity and prosperity in emerging economies, which are the main growth markets for liquid fuels" over the next three decades, the BP report said. "The experience of coronavirus also triggers some lasting changes in behavior, especially increased working from home."
A world with lower demand for refined products also has less need for refineries, the Energy Outlook said.
"The outlook for refining is downbeat, reflecting the impact of COVID-19 in the near term and a combination of declining liquids demand and increasing competition from alternative feedstocks farther out," the report continued. "Refinery throughputs in both the Rapid Transition and Business as Usual scenarios are significantly lower in the near term as a result of COVID-19 reducing the demand for refined products, especially in the transport sector."
Global refinery throughput in the Business as Usual scenario falls gradually over the next three decades, ending at about 72 million BBL/d in 2050, down about 11 million BBL/d from 2018 levels. The demand decline is much sharper in the Rapid Transition scenario, falling to about 36 million BBL/d in 2050, down about 57%.
Click on the image at right to see how global refinery throughput could fall over the next three decades in two BP scenarios.
The Energy Outlook notes that this potential decline in net global refinery throughput could result despite previously announced plans by various companies to build roughly 9 million BBL/d of new refining capacity over the next five years. Assuming this new capacity comes online, this is expected to lead to increasing competition and the eventual shut down of the least competitive refineries, the report continued.
The report projects that the potential refinery shutdowns in the Business as Usual scenario are concentrated in the developed economies, particularly Europe, parts of North America and the Asian nations that are part of the Organization of Economic Cooperation and Development (OECD), "where falling domestic demand increases refineries' exposure to the highly competitive product export market."
On a less dour note, in two of the scenarios crafted by BP, Business as Usual and Rapid Transition, U.S. production of crude oil, condensates and natural gas liquids (NGLs) oil from unconventional formations rises from about 10 million BBL/d in 2018 to about 15 million BBL/d in 2030. But production falls to about 10.8 million BBL/d by 2050 in the Business as Usual scenario and about 8 million BBL/d in 2050 in the "Rapid Transition" case.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The three scenarios are not predictions, BP said, but rather illustrations of what could unfold across a large and interconnected global energy market. The three scenarios -- Business as Usual, Rapid Transition and Net Zero Carbon -- are summarized in the September 16, 2020, article - BP: Renewables, Electric Vehicles to See Sharp Global Growth in Coming Decades. To see BP's view of how the COVID-19 pandemic could alter the global economy and the demand for oil, see September 15, 2020, article - BP Assesses How COVID-19 Could Cut Global GDP, Oil Demand.
Over the next 30 years, all three scenarios crafted by BP show global oil demand falling, though at different rates.
The best outcome for oil producers is BP's Business as Usual case, in which there is a slight increase in global demand, about 1 million barrels per day (BBL/d), for the next decade compared to 2018 demand levels. But by at the end of that scenario, in 2050, demand falls to about 93 million BBL/d, about 7% less than it was in 2018. During this period, there are only modest increases in vehicle efficiency and only a slight uptick in the penetration of electric vehicles.
BP's other two scenarios, Rapid Transition and Net Zero Carbon, are far bleaker for oil producers. Both cases see a 2% near-term drop in demand by 2025, widening to respective declines of between 15% and 21% in 2035, 38% and 58% in 2045 and 48% and 69% by 2050.
Click on the image at right to see BP's three scenarios for global crude oil demand out to 2050. In releasing its Energy Outlook: 2020 edition on September 14, BP Group Chief Economist Spencer Dale said, "The scale and pace of these falls stem primarily from the increasing efficiency and electrification of road transportation." Demand for refined products from the transportation sector falls by slightly less than 10% by 2050 in the Business as Usual case, to about 53 million BBL/d from roughly 57 million BBL/d in 2018.
But the drop in demand is more dramatic in the other two cases: Under the Rapid Transition case, transport demand for refined products falls by more than half, to about 25 million BBL/d. In the Net Zero Carbon scenario, oil use by the transportation sector falls even further, to about 16 million BBL/d in 2050.
Click on the image at right to see how demand for oil in the transportation sector changes out to 2050 in BP's three scenarios.Two key factors affecting demand for oil going forward is the rate at which vehicle efficiency gains are recorded and the penetration of electrified transportation. "Global liquids demand in all three scenarios is significantly affected by the impact of COVID-19, which disproportionately impacts economic activity and prosperity in emerging economies, which are the main growth markets for liquid fuels" over the next three decades, the BP report said. "The experience of coronavirus also triggers some lasting changes in behavior, especially increased working from home."
A world with lower demand for refined products also has less need for refineries, the Energy Outlook said.
"The outlook for refining is downbeat, reflecting the impact of COVID-19 in the near term and a combination of declining liquids demand and increasing competition from alternative feedstocks farther out," the report continued. "Refinery throughputs in both the Rapid Transition and Business as Usual scenarios are significantly lower in the near term as a result of COVID-19 reducing the demand for refined products, especially in the transport sector."
Global refinery throughput in the Business as Usual scenario falls gradually over the next three decades, ending at about 72 million BBL/d in 2050, down about 11 million BBL/d from 2018 levels. The demand decline is much sharper in the Rapid Transition scenario, falling to about 36 million BBL/d in 2050, down about 57%.
Click on the image at right to see how global refinery throughput could fall over the next three decades in two BP scenarios. The Energy Outlook notes that this potential decline in net global refinery throughput could result despite previously announced plans by various companies to build roughly 9 million BBL/d of new refining capacity over the next five years. Assuming this new capacity comes online, this is expected to lead to increasing competition and the eventual shut down of the least competitive refineries, the report continued.
The report projects that the potential refinery shutdowns in the Business as Usual scenario are concentrated in the developed economies, particularly Europe, parts of North America and the Asian nations that are part of the Organization of Economic Cooperation and Development (OECD), "where falling domestic demand increases refineries' exposure to the highly competitive product export market."
On a less dour note, in two of the scenarios crafted by BP, Business as Usual and Rapid Transition, U.S. production of crude oil, condensates and natural gas liquids (NGLs) oil from unconventional formations rises from about 10 million BBL/d in 2018 to about 15 million BBL/d in 2030. But production falls to about 10.8 million BBL/d by 2050 in the Business as Usual scenario and about 8 million BBL/d in 2050 in the "Rapid Transition" case.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
