BP: US oil production growth hit record-high in 2012

by Conglin Xu, OGJ, June 12, 2013

The US recorded the largest single-year increase in oil production in 2012, according to the BP Statistical Review of World Energy. The review, released June 12 [2013], was the company’s 62nd annual report.

Backed by increasing production of unconventional oil and gas, the US recorded the highest growth in both oil and natural gas output in 2012, BP said. Meanwhile, coal consumption in the US experienced the largest decline in 2012 as it was displaced by less-expensive natural gas in electric power generation.

According to BP, world nuclear output recorded the largest annual decline in 2012. After 2011’s Fukushima accident, “higher imports of fossil fuels including [LNG] kept the lights on” in Japan. Due to higher natural gas prices in Europe, power generators substituted coal for gas—an opposite course from the US. [...]

World [primary - D.R.] energy consumption also dropped to 1.8% in 2012, down from 2.4% the previous year, BP reported. The decline was attributable to the economic slowdown as well as improved energy consumption efficiency due to high prices. As the major source of demand growth, emerging countries accounted for 56% of global consumption, up from 42% just 20 years ago.

Global oil consumption increased by 890,000 b/d, 0.9% below the historical average. OECD consumption declined by 1.3% (530,000 b/d) and non-OECD consumption grew by 3.3% (1.4 million b/d).

Global oil production climbed by 1.9 million b/d. Despite a decline in Iranian output due to international sanctions, OPEC contributed to about three quarters of the global increase. [Libyan production recovered strongly after the sharp drop in output in 2011, and Saudi Arabia, the UAE, and Qatar all produced at record levels - D.R.]. Non-OPEC production grew by 490,000 b/d [revised figure 440,000 b/d, according to BP data - D.R.] with increases in the US, Canada, Russia, and China.

BP’s review also stated that world natural gas consumption grew by 2.2%, below the historical average of 2.7%. [Read more]

(Please see BP Statistical Review of World Energy June 2013 - D.R.)

Argentina's Senate Approves Bill to Expropriate YPF

by OGJ editors, OGJ, Houston, Apr 26, 2012
Argentina’s Senate voted in approval of Argentina President Cristina Fernandez de Kirchner's bill to expropriate YPF SA, and the Lower House of Congress is expected to vote on the measure next week. YPF was a state-run company until it was [fully] privatized in 1999. [Please see remarks below -- D.R.]

Kirchner asked Congress to renationalize YPF by expropriating 51% of it from Repsol YPF SA, which holds 57% of the company [thus slashing Repsol's stake to 6.4% -- D.R.]. She has said YPF underinvested in exploration and production, forcing Argentina to become a net energy importer. [Please see remarks below -- D.R.]

Repsol has vowed to take legal action, saying YPF invested about $3 billion in 2011 and that the company was the biggest investor in Argentina’s oil and gas industry.

“The unlawful expropriation of YPF does not affect the growth capacity of any of Repsol’s businesses outside Argentina,” Repsol said (OGJ Online, Apr. 17, 2012).

The Argentina Senate voted 63-3 in favor of expropriating YPF with 4 members abstaining from the vote. [Full story]

(The full privatization of YPF was completed in 1999 when Repsol of Spain acquired controlling stock from the Argentine state and the stock market---please see Sang-Hyun Yi, "The Political Economy of Privatization of YPF in Argentina," paper, Pusan University of Foreign Studies. For Argentina's crude oil production during the last years, please see "Top 6 Oil Producers in Central & South America, 2006-Feb. 2011 -- EIA." There has been a gradual erosion of Argentine crude oil output from its peak in 1998: in 1998 Argentina produced a record 846,700 barrels per day, but production has declined since, falling to 587,200 barrels per day in 2011---please see U.S. EIA data. The EIA attributed this decline to relatively low levels of exploration activity, combined with natural declines from maturing fields---please see EIA, Argentina Country Analysis Brief. ExxonMobil's Argentinean operations were so far unaffected by YPF takeover: The Argentinean government's decision to take control of Spanish-owned YPF didn't affect ExxonMobil's first-quarter operations in the country. The U.S. oil major said it finished drilling two unconventional wells in that period and will complete or frack those wells in the second quarter. Exxon said it will continue to observe developments in the region---please see SmartBrief, Apr 27, 2012. Update: The Chamber of Deputies [The Lower House of Congress] voted 207 to 32 in favor of expropriating YPF [...], clearing the way for President Cristina Fernandez to sign the bill into law---please see The Telegraph, May 4, 2012 -- D.R.)

The U.S. Surpassed Russia as World's Leading Producer of Dry Natural Gas in 2009 and 2010

EIA, Today in Energy, Mar 13, 2012

[Click on chart to enlarge]

Source: U.S. Energy Information Administration. Download CSV Data

EIA estimates of annual dry natural gas production indicate that the United States surpassed Russia as the world's leading producer of dry natural gas beginning in 2009 when Russian production dropped in conjunction with the economic downturn and reduced demand (see chart above). Both countries produced more than 20 trillion cubic feet (Tcf) of dry natural gas in 2010. Definitive comparisons of natural gas production trends in the two countries are imprecise due to differences in terminology and reporting methodologies.

Dry natural gas production in the United States rose 18% between 2005 and 2010—mainly due to growth in shale gas production. Increased use of horizontal drilling in conjunction with hydraulic fracturing spurred natural gas supply gains. Other factors contributed to gains in natural gas production: improved site planning and field optimization, multi-well drilling from a single pad, rising associated natural gas production from oil plays, and improved drill-bit technology. According to Lippman Consulting, annual shale natural gas production in key shale plays grew from 1.6 Tcf to 7.2 Tcf between 2007 and 2011 (see chart below).

[Click on chart to enlarge]

Source: U.S. Energy Information Administration, based on Lippman Consulting, Inc.
Note: Lippman Consulting, Inc. gross withdrawal estimates, as of December 2011, converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play.

Since 1996, Russia's dry natural gas production record has been mixed. It was relatively unchanged between 1996 and 2001, grew to almost 22 Tcf in 2006, and then remained relatively stable before declining in 2009. Two factors leading to this decline were a slow-down in domestic natural gas consumption in Russia and Russian suppliers' cutbacks to match reduced gas needs in Europe. Russian dry natural gas production rebounded somewhat in 2010, although the best available data indicate it remained about 2% lower than U.S. production of natural gas that year. [Full story]

(Also, according to the BP data, in 2010, the U.S. has surpassed Russia as the world's top natural gas producer for the second consecutive year---please see "World's Top 21 Natural Gas Producers, 2005-2010 -- BP." In addition, please see "World's Top 15 Natural Gas Proven Reserve Holders, Jan 1, 2012 -- OGJ." -- D.R.)

World's Top 15 Natural Gas Proven Reserve Holders, Jan 1, 2012 -- OGJ

by David Rachovich

Estimated Proved Reserves of Natural Gas

Rank	Country	Proved reserves (billion cubic feet), Jan 1, 2012	Proved reserves (billion cubic feet), Jan 1, 2011	Proved reserves (billion cubic feet), Jan 1, 2010	Share of total, Jan 1, 2012
1.	Russia	1,680,000	1,680,000	1,680,000	24.9%
2.	Iran*	1,168,000	1,045,670	1,045,670	17.3%
3.	Qatar*	890,000	895,800	899,325	13.2%
4.	Saudi Arabia*	283,000	275,200	263,000	4.2%
5.	United States	272,509	244,656	244,656	4.0%
6.	Turkmenistan	265,000	265,000	265,000	3.9%
7.	United Arab Emirates*	215,035	227,900	214,400	3.2%
8.	Venezuela*	195,100	178,860	175,970	2.9%
9.	Nigeria*	180,458	186,880	185,280	2.7%
10.	Algeria*	159,000	159,000	159,000	2.4%
11.	Indonesia	141,060	106,000	106,000	2.1%
12.	Iraq*	111,520	111,940	111,940	1.7%
13.	China	107,000	107,000	107,000	1.6%
14.	Kazakhstan	85,000	85,000	85,000	1.3%
15.	Malaysia	83,000	83,000	83,000	1.2%
World total		6,746,751	6,647,341	6,609,346	100.0%
Total OPEC**		3,330,137	3,211,152	3,182,829	49.4%

Notes: OGJ's annual look at worldwide gas reserves shows an increase to 6,746.8 trillion cubic feet/tcf from 6,647.3 tcf in last year's survey. Total gas reserves for OPEC are up nearly 4% from a year ago. Reported gas reserves climbed by 12% in Iran to 1,168 tcf and declined in Libya by 3% to 52.8 tcf. As of Jan. 1, 2012, OPEC's gas reserves totaled 3,330.1 tcf, or 49% of the worldwide total. Dry natural gas proved reserves in the United States were estimated at 272.5 tcf for 2009, according to the U.S. Energy Information Administration. EIA also reported that proved reserves of wet gas, which includes natural gas plant liquids, increased by 11% in 2009 to 284 tcf. This is their highest level since 1971. Shale gas development in Louisiana, Arkansas, Texas, Oklahoma, and Pennsylvania drove the increase in proved reserves of natural gas. Louisiana led the nation in wet natural gas proved reserves additions with a 77% increase of 9.2 tcf owing primarily to development of the Haynesville shale. Please read Marilyn Radler, "Worldwide Oil Production Steady in 2011; Reported Reserves Grow," OGJ, Dec. 5, 2011. According to the OGJ, Australia is not in the Top 15 this year? -- D.R.

* OPEC member. Data for Kuwait and Saudi Arabia exclude one-half of the reserves in the Kuwait-Saudi Arabia Neutral Zone. Neutral Zone contains 1,000 bcf, i.e. 1 tcf, of gas reserves.

**Including also Angola, Ecuador, Libya, Kuwait and the Neutral Zone.

Sources: "Worldwide Look at Reserves and Production [Table]," Oil & Gas Journal, Dec, 2011; "Special Report – Worldwide Look at Reserves and Production," OGJ, Dec 6, 2010.

(The United States has surpassed Turkmenistan as the world's fifth largest natural gas proven reserve holder and please see notes above. Also, please see Aaron and David Rachovich, "World's Top 22 Natural Gas Proven Reserve Holders, Jan 1, 2011 – OGJ," and (update) "World's Top 24 Natural Gas Proven Reserve Holders, Jan 1, 2013 -- OGJ." According to OGJ, Oman has proven reserves of natural gas of 30 tcf as of Jan. 1, 2012 -- unchanged from Jan. 1, 2011. Also, please see "World's Top 23 Proven Oil Reserves Holders, Jan 1, 2012 -- OGJ," the world's largest oil and gas companies by the combined production volumes of oil and natural gas: "Mid 2012 Ranking of the World's Biggest Oil & Gas Companies -- Forbes" and the world's largest oil and gas companies by oil and gas reserves, oil and gas production, product sales and refinery distillation capacity, i.e. PIW rankings: "[Petroleum Intelligence Weekly Ranks World's Top 50 Oil Companies -- ] Suncor Up, ConocoPhillips Down in PIW`s New Top 50 Oil Rankings." – D.R.)