February 11, 2016 [OPIS] - Oil major BP forecast NGLs to account for over 30% of global liquids supply growth in the next two decades in its 2016 Energy Outlook released Wednesday largely as the U.S. shale revolution shows no signs of faltering.
Of the projected 19 million b/d growth in global liquids supplies by 2035, NGLs were forecast to increase the most of the non-refined liquids, expanding by more than 6 million b/d, of which around two-thirds was driven by the U.S. and one-third from the Middle East.
BP said it has revised its outlook for U.S. shale production successively higher as technology and productivity gains unlock new resources.
Shale gas was expected to more than double its share of the market to represent 24% of global gas supply by 2035, expanding by 5.6% per annum. U.S. growth alone was expected to account for around 4% per annum to form almost 20% of global output by 2035, in addition to pockets developing in China.
Spencer Dale, BP’s chief economist, said: “For U.S. shale gas, the resources look far bigger based on current estimates and so we see rapid growth of U.S. shale gas over the next 20 years, pretty much throughout that period of time.”
In addition, BP expects U.S. tight oil (or shale oil) production to reach nearly 8 million b/d by 2035, almost 40% of total U.S. oil production, after projections of 3.6 million b/d for 2030 made three years ago were surpassed in 2014. However, North American tight oil growth was anticipated to moderate going forward, plateauing in the 2030s after a “brief retrenchment” due to low prices and falling investment.
Industrial use, especially in the petrochemical sector, was said to be the fastest-growing source of demand for liquid fuels supported by the rapid growth in NGLs.
But for refiners, with almost half of total global liquids supply growth to come from NGLs, biofuels and other liquids that do not require refining, BP implied a “long period of volatile margins” and further capacity reductions in disadvantaged locations.
Fuel substitution with gas, particularly in the power sector, was also expected to become more pronounced as shale volumes grow. BP argued that an additional 260 million tons of oil equivalent (toe) of coal and 100 million toe of renewables could be crowded out in the stronger shale case.
