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Vital Signs Volume 20
The Trends That Are Shaping Our Future
By Linda Starke
ISLAND PRESSCopyright © 2013 Worldwatch Institute
All rights reserved.
Energy and Transportation Trends
Growth in Global Oil Market Slows
Shakuntala Makhijani is a research associate on the Worldwatch Institute Climate and Energy team.
Global oil consumption increased by 0.7 percent in 2011 to reach an all-time high of 88.03 million barrels per day. (See Figure 1.) This rate of increase was considerably slower than in 2010, when oil consumption rose by 3.3 percent following a decline of 1.3 percent in 2009 due to the global financial crisis. China's oil consumption increased by 5.5 percent in 2011, and China accounted for about 85 percent of global net growth. An increase in oil consumption of 5.7 percent in the former Soviet Union contributed another 37 percent of net growth. But these increases were offset by declines in the United States and European Union, where oil consumption fell by 1.8 and 2.8 percent.
The gap in oil consumption between countries in the Organisation for Economic Cooperation and Development and all other countries narrowed further in 2011, with the two groups respectively accounting for 51.5 and 48.5 percent of total oil consumption. Oil remained the largest source of primary energy worldwide in 2011, but its share fell for the twelfth consecutive year to 33 percent.
To meet continued growth in demand, global oil production rose for the second year in a row, by 1.3 percent in 2011, to reach 83.58 million barrels per day. (See Iran Figure 2.) Most of this increase was driven by higher production in countries that belong to the Organization of Petroleum Exporting Countries (OPEC), which overall grew by 3 percent in 2011 due to significant production growth in Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates. Meanwhile oil production in non-OPEC countries fell slightly, by 0.1 percent. Oil production growth was slow compared with natural gas and coal production, which grew by 3.1 and 6.1 percent, respectively, in 2011.
Political unrest in the Middle East and North Africa had a significant effect on oil production in certain countries in the region. Output in Libya fell by 71 percent in 2011—from 1.7 million barrels per day (2 percent of global production in 2010) to just 479,000 barrels (0.6 percent of global output) due to the disruptions from the civil war. At the same time, tense political situations and violence in Iran, Syria, and Yemen resulted in production declines of 0.6, 13.7, and 24 percent in 2011.
The growth in OPEC oil production led to a widening gap between OPEC and non-OPEC production, which respectively accounted for 43 and 41 percent of global production in 2011, with the remaining 16 percent produced by the former Soviet Union. (See Figure 3.) Saudi Arabia increased its oil production by 12.7 percent to 11.2 million barrels per day in 2011, regaining its position as the world's largest producer and overtaking Russia, where production growth slowed to 1.2 percent. Saudi Arabia's decision to increase production, in part a response to concern over the impact of the Libyan civil war on global oil markets, drew sharp criticism from other OPEC members, particularly Iran, that were concerned about the dampening effect this would have on oil prices.
The impacts of the April 2010 Deepwater Horizon offshore drilling rig blowout and oil spill on U.S. offshore oil production are expected to persist for the next few years. The International Energy Agency expects that by 2015, delays due to the subsequent temporary drilling moratorium will drop production from offshore drilling in the Gulf of Mexico 300,000 barrels a day (about 3.8 percent of 2011 U.S. oil production) lower than previously projected. Since the incident, the United States has implemented only a few new rules on standards for oil-well permits, blowout preparedness, inspections, and workplace safety, which are not expected to significantly affect future levels of offshore oil drilling. Although many key investigations and lawsuits are ongoing, political pressure due to continuing economic difficulties and high oil prices has led to a renewed push for offshore oil drilling in the Gulf of Mexico as well as Alaska.
The global impacts of the April 2010 accident have been limited thus far, with reviews in most countries finding that existing safety requirements suffice to prevent similar accidents. Despite expanding offshore drilling efforts, the share of offshore oil is expected to remain steady at 30 percent of global oil production due to declining output from North Sea and Mexican offshore oil wells. Deepwater oil production is expected to constitute a growing portion of this production and is projected to go from 6 percent of total global oil supply today to 9 percent by 2016.
Oil prices reached all-time highs in mid-2008 but then fell sharply as the global financial crisis drove demand down. (See Figure 4.) With OPEC's decision to cut production targets in the first quarter of 2009, world crude prices began to recover, and average annual prices for West Texas Intermediate crude reached $94.83 per barrel in 2011, close to the average 2008 price of $99.67 per barrel.
Against the backdrop of fluctuating oil prices and concerns about supply risk, many countries are paying more attention to their dependence on imports and the stability of the countries they purchase oil from. In 2011, the United States imported 60 percent of the oil it needed, and Europe imported 90 percent. Imports accounted for 68 percent of China's oil consumption, while Japan actually imported slightly more oil than it consumed in 2011.
The Middle East remains the world's largest oil exporter, accounting for 36.2 percent of exports in 2011 and a growing share of the global market. Russia and the Asia Pacific region were the second and third largest exporters, with 15.9 and 11.4 percent, respectively. Oil exports from North Africa fell by 32.8 percent in 2011 due largely to the disruptions in oil production caused by political instability in the region. Exports from the United States grew by 19.4 percent in 2011, faster than in any other region, but they accounted for only 4.7 percent of the global market.
Meanwhile, global proven oil reserves, including natural gas condensate and natural gas liquids in addition to crude oil, have been increasing since 1980. They grew by 1.9 percent in 2011 to reach an estimated 1,652.6 billion barrels (1,821.8 billion barrels if Canadian oil sands are included and 2,041.8 billion barrels with Venezuelan heavy oil). (See Figure 5.) OPEC countries control 72.4 percent of global oil reserves, and the Middle East has the largest share of reserves of any region, at 48.1 percent of the total. Venezuela has the largest share of crude oil reserves of any country, with 296.5 billion barrels (17.9 percent of the global total). Heavy oil (which is not typically included in global oil reserve estimates) in Venezuela's Orinoco belt adds another 220 billion barrels to that country's reserves. Saudi Arabia has the second largest share of any country, with 16.1 percent of global oil reserves.
Canadian oil sands proven reserves remained steady between 2010 and 2011, at 169.2 billion barrels, or 9.3 percent of global oil reserves when oil sands are included. Canada's oil sand reserves currently under development likewise remained steady between 2010 and 2011, at 25.9 billion barrels.
Canadian oil sands reserves became a high-profile issue in 2011 thanks to protests by environmental groups over the proposed Keystone XL pipeline that would bring oil sands from Alberta in Canada to Texas refineries on the Gulf Coast. Faced with a short deadline imposed by Republicans in Congress in January 2012, President Obama rejected the original proposed pipeline route, citing the risk to groundwater resources in the Ogallala aquifer and the ecologically sensitive Sand-hills region of Nebraska. TransCanada, the company seeking approval for the pipeline, submitted a new application to the State Department in May 2012 with an updated route that bypasses the Sandhills. A decision on this new proposal was not expected until early 2013. Proponents of the oil pipeline claim benefits of increasing oil production from a geopolitically stable country, job creation, and the need for new oil sources in a tightening global oil market. Environmental groups continue to oppose the revised route due to unresolved concerns about developing Alberta oil sands, including the climate impacts of tapping this energy-intensive oil source, the high water requirements for oil sands development, the risk of oil spills along the pipeline, and landscape alteration and toxic waste streams from oil sands mining. Despite these concerns, oil sands account for about half of Canada's crude oil production, a share that is expected to rise in the future.
Global Coal and Natural Gas Consumption Continue to Grow
Matt Lucky and Reese Rogers
Matt Lucky is a Climate and Energy research associate and Reese Rogers is a MAP Sustainable Energy Fellow at Worldwatch Institute.
Global consumption of coal and natural gas continued to grow in 2011. Coal use increased by 5.4 percent to 3,724.3 million tons of oil equivalent (mtoe) from the end of 2010 to the end of 2011. Demand for natural gas grew by 2.2 percent in 2011, reaching 2,905.6 mtoe.
Although oil remains the world's leading energy source, coal and natural gas continue to grow in importance. Both are the primary fuels for the world's electricity market. And because they often act as substitutes for each other, their trends need to be looked at together.
Spurred mainly by demand growth in China and India, coal's share in the global primary energy mix reached 28 percent in 2011—its highest point since the International Energy Agency began keeping statistics in 1971. While the United States remained one of the world's Thailand, largest coal users, consumption growth in 2011 was concentrated among countries that are not part of the Organisation for Economic Cooperation and Development (OECD), including China and India. (See Figure 1.) Consumption in non-OECD countries grew by 8.4 percent to 2,625.7 mtoe. These countries accounted for 70.5 percent of global coal consumption in 2011. The bulk of this usage occurs in the electricity-generating sector, with smaller amounts used in steelmaking.
China remains the largest coal consumer in the world, accounting for 49.4 percent of global use in 2011. The country maintained the rapid rate of coal demand growth seen over the last decade, with consumption growing 9.7 percent to 1,839.4 mtoe. Over the period 2001–11, China accounted for 80 percent of global coal demand growth. Much of this coal is used in the domestic power sector. In 2010, almost 80 percent of China's power generation came from coal-fired units, and in 2011 China overtook the United States as the largest power producer in the world.
India also figures prominently in the growth of the international coal market as the second largest contributor to demand growth. India's coal consumption grew 9.2 percent to 295.6 mtoe in 2011. It remains the third largest consumer of coal in the world, after surpassing the European Union in 2009.
Coal demand in the United States, the second largest coal user, decreased by 4.5 percent in 2011 and continued to fall in 2012 due to the shale gas boom and the abundance of cheap natural gas. Even with the decrease in demand, the United States still accounts for 45 percent of coal demand within the OECD. Over 90 percent of coal consumption in the United States occurs in the power sector. As of August 2012, net generation from coal accounted for 38.5 percent of U.S. electricity output, a rapid fall from 45 percent in 2010.
Global coal production increased by 6.1 percent to 3,955.5 mtoe (6,941 million tons of coal) in 2011, making it the fastest-growing fossil fuel. Coal production, like coal consumption, is mainly concentrated in China. (See Figure 2.) While China is far and away the largest producer, it does not hold the largest proven reserves in the world. That title belongs to the United States, with 28 percent of the global total. China holds 13 percent, and Russia, Australia, and India account for 18, 9, and 7 percent, respectively. Thus these five countries accounted for three quarters of the proven reserves in the world as well as three quarters of global production in 2011.
China alone accounted for 46 percent of global coal production in 2011, with an output of 1,956 mtoe. With proven reserves at 114,500 million tons, China's current levels of production could continue for over three decades. But demand and production are likely to continue rising during that time, a trend reflected in recent changes to China's twelfth Five-Year Plan (2011–15), which seeks to expand domestic coal mining capacity to 4.1 billion tons.
In 2011, the United States produced 556.8 mtoe, compared with its peak at 596.7 mtoe in 2008. While domestic demand for coal has declined, coal exports are increasing, with net exports in 2011 reaching nearly 55.76 mtoe. Data through August 2012 show that U.S. coal exports are growing at a rate not seen since the 1979–81 export boom and that 2012 export numbers should more than double the level of 2009. While demand for American coal is growing in Asia, the United States still exports more coal to Europe than to the entire rest of the world—sales that have been bolstered by growing exports of steam coal.
Coal prices increased across all major markets in 2011. (See Figure 3.) After the record high prices in 2008 and the subsequent crash, coal prices rose from early 2009 through mid-2011. However, diverging trends in regional markets have created disparities in coal pricing around the world, as growing demand in Asia led to higher prices in the Pacific Basin market, while increasing exports from the United States kept prices lower in Europe, where overall demand was weak.
China's dominance of the global coal market places it in a crucial position of affecting import prices for the rest of the world. China's domestic price for coal sets the price for countries exporting coal to the Chinese market and then acts as a price marker for the international market.
The story with natural gas is a bit different. Global consumption grew at a slower rate than coal in 2011—2.2 percent, to reach 2,905.6 mtoe. (See Figure 4.) Usage grew in all regions but Europe; in fact, the European Union experienced a 9.9 percent decline in natural gas consumption—the largest on record and mainly due to a struggling economy and high natural gas prices.
Natural gas accounted for 23.7 percent of global primary energy consumption in 2011, down slightly from 23.8 percent in 2010. Consumption increased most significantly in East Asia, with China (21.5 percent) and Japan (11.6 percent) accounting for most of this growth.
Natural gas production increased at a higher rate (3.1 percent) than consumption in 2011, reaching 2,954.8 mtoe. The United States (20.0 percent) and Russia (18.5 percent) accounted for nearly 40 percent of the world's output in 2011, while Canada, Iran, and Qatar were the next largest producers at 4–5 percent each. Yemen (51.3 percent), Iraq (42.0 percent), Turkmenistan (40.6 percent), and Qatar (25.8 percent) experienced the greatest production growth rates. China (8.1 percent) and the United States (7.7 percent) also increased production substantially in 2011.
Estimates of proven natural gas reserves increased by 6.3 percent to 187,900 mtoe, or 63.6 years at current production levels. The Middle East (38.4 percent) and the former Soviet Union (36.0 percent) have the highest concentration of reserves. Proven reserves increased in Turkmenistan by 9,854 mtoe alone, accounting for 89 percent of the net increase in global proven reserves.
Excerpted from Vital Signs Volume 20 by Linda Starke. Copyright © 2013 Worldwatch Institute. Excerpted by permission of ISLAND PRESS.
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