ETN attended the yearly statistical energy review event of BP at the end of June in Brussels. This was the 59th of its kind, during which a statistical analysis of the 2009 energy data collected by BP was presented and predictions for the future were discussed.
The Gulf of Mexico accident was mentioned in both the introduction and the closing remarks of the event. BP once again stated that they are taking responsibility for the accident, and emphasized their efforts to mitigate the environmental consequences of the accident and the continuous oil leakage. The Head of BP’s EU office pointed to the task force which has been established in collaboration with other oil companies. The task force will look at oil platform safety precautions. It was also mentioned that the technology which is being used to skim the oil off the surface of the water, was originally developed for the 1989 Exxon Valdez oil spill in Alaska. Moreover, due to their strong financial position, BP intends to transfer 20billion USD (or perhaps more) to UNESCO over the next 4-5 years which can be used to continue the efforts in the Gulf of Mexico.
Overall assessment of energy demand and prices
The forecasts for future oil prices and demands by different sources have large gaps, which reflect the current uncertainty in the recovery trends of the economy.
The drastic decline in energy consumption is primarily due to a decrease in industrial consumption, meanwhile there is also a global transformation of the energy scene, especially caused by structural changes in the poorer countries. The biggest decline in energy demand occurred in the gas sector, second to which was the fall in oil, whereas coal demand stayed flat with only a minor decline. However it is worth noting that this decline was still the biggest decrease since records exist on coal demand. Gas prices stayed low due, not only to falling demand, but also to an excess supply of Liquefied Natural Gas (LNG) and unconventional gas in the US.
Another interesting trend in Europe was the large scale of switching from coal to gas (for instance 6% in the UK). This occurred at the same time as a decline of gas arriving to Europe via pipelines, which is largely replaced by LNG. According to BP, the main question of the next decades in terms of energy mix is related to the share of gas and coal. Will gas continue to replace coal?
Key points from the energy review - Energy developments during 2009:
- 2009 was the first year since World War II that the global economy as a whole contracted, dominated by the economic downturn and in the final months by a tentative recovery;
- economic contraction as well as the pattern of energy consumption varied across regions, however overall global primary energy consumption fell in 2009 (-1.1%; the largest decline since 1980);
- worldwide energy intensity of economic activity went against the longer-term trend, rising in 2009 due to the slower economic growth and coupled with governments launching energy-intensive fiscal stimulus programmes;
- this was the case especially in the developing world (not including the Former Soviet Union), where energy consumption grew faster than GDP. The reason for this is the energy intensive recovery plans that favoured large infrastructural projects (for instance extensive road construction projects in China);
- OECD countries’ energy consumption (falling by 5%) fell faster than GDP, and they consumed less primary energy in 2009 than 10 years ago, although GDP has risen by 18% since then;
- As a consequence of lower consumption, energy prices fell, however patterns varied according to the fuel type:
o Oil prices recovered quickly due to OPEC cuts;
o Coal prices fell slightly but then started to recover;
o Natural gas prices fell sharply and remained low throughout most of the year, also as a consequence of the continued development of unconventional resources in the US and an increasing LNG supply.
- Consumption of oil, natural gas and nuclear power declined, while coal was essentially flat, whereas renewable and hydroelectric forms of energy increased in 2009. (Hydroelectric power generation increased by 1.5% and for the second consecutive year was the world’s fastest-growing major fuel);
- Overall prices fell for all traded energy, with the most drastic decline in natural gas and coal in Western Europe and North America.
More data from the BP Statistical Review of World Energy 2010 is available on the BP website.
For regular technical updates on the oil spill in the Gulf of Mexico by BP please click here.
To view a press release by the International Energy Agency (IEA) concerning the uncertainty of natural gas supply please click here.
To view a press release by the European Commission on oil platform safety, please click here.