Expect oil rush, experts tell BHP
BHP Billiton may be underestimating the need to tap new oil supplies to cover demand in the coming years, according to a number of the world’s leading energy forecasters.
Among those with higher predictions of the need to bring on new supply to cover existing field decline and meet rising demand is the Paris-based International Energy Agency.
BHP’s new petroleum president Steve Pastor returned to the US yesterday after spending the week meeting with major Australian investors.
His trip to Australia follows BHP’s petroleum division releasing its most significant portfolio briefing in three years, earlier this month.
The division has been savaged by a rout in global crude prices over the past two years with its US onshore shale assets – bought at the height of the fracking boom – posting more than $13 billion in writedowns.
A key part of BHP’s new outlook is the expectation that 30 million new barrels of oil a day will be needed by 2025 to cover natural field decline and rising demand from emerging economies such as China and India.
The resource major says its US shale division, where it has cut back production and spending, is ideally placed to fill the gap.
IEA senior energy analyst Tim Gould said the world will need around 38 million barrels of new oil a day by 2025, a forecast 25 per cent higher than BHP’s estimates.
McKinsey oil and gas analyst Occo Roelofsen is also expecting a larger supply gap than BHP, putting it at be-
tween 30 million and 35 million barrels per day.
“All of this is based on our business-as-usual case and does not take any major disruptions into account such as a major step up on climate measures, driving down demand,” he cautioned.
Running counter to this, high-profile commodities forecaster Wood Mackenzie puts the supply gap at just 20 million barrels per day by 2025 – one-third less than BHP’s forecasts.
Global oil supply research director Patrick Gibson said the difference came from different expectations about how fast output from fields already in operation would decline as opposed to overall demand.