BP has predicted a bright future for the oil and gas industry with crude prices spiking at $100 a barrel again, huge increases in shale output and new production from Canadian tar sands.
The British oil company believes fossil fuels will still be providing 80% of total energy supply in 2035 and admits the carbon emissions that cause global warming will rocket under this scenario.
The predictions are contained in the latest annual BP Energy Outlook, which looks at long-term trends and develops projections for world energy markets over the next two decades.
“In the middle of a downturn in oil and gas prices, it is important not only to adapt to the current tough conditions, but also to prepare for the next set of challenges,” argued BP chief executive Bob Dudley.
The key message seems to be that the oil and gas industry must keep on extracting new reserves amid expectations of strong growth for energy from developing countries and a growth in the world population.
Spencer Dale, BP’s chief economist, was unwilling to say what price assumptions were used in his predictions but did expect an improvement away from a current level of just above $30 a barrel oil.
Prices would eventually be likely “be in the middle somewhere” between $30 and $100 saying the high figure was not a natural “resting place” but “something will happen to make prices spike up again [on occasions to $100],” he said.
Dudley told an International Petroleum conference in London on Wednesday that the commodity cycle that saw oil prices hit $100 as little as eight months ago was not over and said the second half of 2016 would see stronger prices because “every storage tank and swimming pool” would be full of oil.
The oil company admits that in the past it has underestimated the growth of wind and other renewable power technologies to the energy mix but overestimated the contribution from nuclear and biofuels.
BP expects carbon emissions to grow by almost 1% per annum for the two decades “suggesting the need for further policy action” such as a meaningful price for carbon, it argues.
