Global competition for liquid fuels heating up
August 18th, 2010 by Jim JustThe August 2010 edition of Oilwatch Monthly has just been released. It leads off with a discussion of Chinese demand for oil, which has been running at 8.8 million barrels per day (mbd) for the first half of 2010. Chines consumption has been growing at a rate of 7% per year since 2003. This compares to current U.S. consumption of 19 mbd. U.S. consumption had been stable at 20.7 mbd prior to the economic crunch.
While Chinese consumption is rising, Chinese production is expected to peak in 2010 and then begin to decline at a rate of about 3% per year. Chinese production rose to just over 4 mbd in July, hitting 4.09 mbd. But 70% of Chinese production comes from nine giant fields, five of which are declining and another three of which have peaked or are expected to peak in 2010.
China, like the U.S., must import the difference between production and consumption. Dropping production and rising consumption can only mean one thing: greater demand for oil imports. This, at a time when it’s already looking like supplies are beginning to get tight.
Global crude production has been going down since 2005.
2008 – at least for the moment – saw the peak in all liquids production.
The main reason that all liquids production has been maintained above 2005 levels is the increase in natural gas liquids. Other nonconventional sources, such as biofuels, extra heavy oil, and tar sands, have played a rather minor role.
Aa the world struggles to maintain the volume of liquids fuels production, the struggle to maintain the energy content of liquid fuels production is proving even more of a challenge.
In production statistics all liquid fuels are aggregated as total “oil” production. However, different liquid fuels contain different amounts of energy per barrel produced. For example, a barrel of crude oil contains around 5.8 million British Thermal Units (BTUs) while a similar barrel of natural gas liquids contains 4.2 million BTUs. Conversion to BTUs shows that actual available energy worldwide in January 2010 was 3.3% lower than liquids statistics counted in barrels would suggest.
Oil consumption in OPEC, China and India is growing at a good clip. Consumption in the U.S. and Europe has been dropping. Were that not the case, there already would not be enough to go around.
The global competition for energy from liquid fuels is soon going to get fierce.