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World oil production is rising

Hydrocarbon Engineering,

According to the US Energy Information Administration (EIA), the largest potential for growth in demand for liquid fuels lies in the emerging economies of China, India, and countries in the Middle East.

In its International Energy Outlook 2014 (IEO2014) Reference case projection, world liquid fuels consumption increases 38% from 87 million bpd in 2010 to 119 million bpd in 2040. China, India, and other developing countries in Asia account for 72% of the net world increase in liquid fuels consumption, with Middle East consumers accounting for another 13%. Most liquid fuel demand is for industrial uses and transportation.

In the US, Europe, Japan and other mature industrialized economies, liquid fuel demand has leveled off and is projected to slowly decline. The combined effects of several factors have slowed or even reversed the growth in liquid fuels use. These factors include sustained oil prices, efficiency standards for vehicles and equipment together with high taxation of motor fuels, price driven fuel switching towards non-oil fuels outside of transportation, vehicle saturation, as well as structural changes in factors such as demographics and consumer behaviour.

EIA projects that 33 million bpd of additional liquid fuel supply will be needed in 2040 compared to 2010 in order to satisfy growing demand for liquid fuels. The Reference case assumes that OPEC producers invest in incremental production capacity that enables them to increase crude and lease condensate production by 14 million bpd from 2010 to 2040 and that OPEC crude and lease condensate producers maintain a share of between 40% and 45% of total world liquid fuels production throughout the projection. The Middle East OPEC member countries alone account for 90% of the total growth in projected OPEC crude and lease condensate production.

Non-OPEC crude and lease condensate production is projected to increase by 10 million bpd between 2010 and 2040. Much of this production is projected to come from areas previously considered uneconomical, as a combination of technological improvements and rising world oil prices attract additional investment. In addition, oil from tight and shale resources will help to meet growing demand. Compared to previous reports, IEO2014 incorporates large new supplies of tight oil from the US and Canada; but other countries as well, including Mexico, Russia, Argentina, and China, begin producing substantial volumes of tight oil in the Reference case.

Other liquid resources – including natural gas plant liquids, biofuels, coal to liquids, and gas to liquids (GTL) – currently supply a relatively small portion of total world petroleum and other liquid fuels, accounting for approximately 14% of the total in 2010. However, they are expected to grow in importance, rising to 17% of the world’s total liquids supply in 2040.

Adapted from a press release by Emma McAleavey.

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