World Energy Economics Change - US becomes largest energy producer
The US is now the world’s largest energy producer, surpassing Russia and Saudi Arabia, according to the New York-based PIRA Energy Group. The US Energy Information Administration (EIA) had predicted the change, with petroleum and natural gas hydrocarbon production reaching similar levels and proportions between the US and Russia over recent years.
‘(The US news) will reshape markets. It will change the trade flows considerably. This has an impact on the direction of exports around the world changing direction from West to East, to China for example,‘ said Peter Jackson, VP, Upstream Research, at IHS CERA. LNG exports from the US are also now becoming more viable.
Carbon Capture and Storage Delayed
The Norwegian government has ceased plans to construct the well-publicised $1bn full-scale carbon capture and storage (CCS) project at the Mongstad oil refinery on the Norwegian west coast, instead committing $68mn to the site for it to continue to research CCS technology. Reports suggested that the decision to abandon the overall project – described in 2007 as Norway’s equivalent of the moon landing – was due to mounting costs and delays. The Norwegian Minister of Energy and Petroleum Ola Moe said that the low price of carbon in European markets and the economic environment have resulted in less commercial interest in CCS.
Changes in Global Energy Supply and Demand
On the demand side, OECD countries are using less energy, while developing countries are still seeing consumption growth – overall global consumption has risen in the last year, but not by very much. Just two countries, though rather large ones – China and India, were responsible for nearly 90% of the growth in consumption by non-OECD countries in 2012. The so-called ‘emerging economy’ countries now account for over half of global energy consumption.
On the supply side, the US is becoming a sizeable oil and gas producer again, albeit increasingly from unconventional sources – ‘tight’ oil and shale gas. It recorded the largest oil and natural gas production increases in the world in 2012, and saw the largest gain in oil production in its history. As a result the US burned less coal to make power, using natural gas instead.
Last, power generation from hydro, wind, solar and other renewable sources will exceed that from gas and be twice the size of the contribution from the nuclear sector by as early as 2016. Already the fastest-growing power generation sector, renewable power is expected to grow by 40% in 2018.