• 35 mins Higher Oil Prices Reduce North American Oil Bankruptcies
  • 3 hours Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 4 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 6 hours Venezuela Officially In Default
  • 8 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 10 hours Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 16 hours Saudi Oil Minister: Markets Will Not Rebalance By March
  • 21 hours Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 1 day Rosneft Announces Completion Of World’s Longest Well
  • 1 day Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 1 day Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 1 day Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 1 day Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 2 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 2 days Russian Hackers Target British Energy Industry
  • 2 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 2 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 2 days Lower Oil Prices Benefit European Refiners
  • 2 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 3 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 3 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 3 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 3 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 3 days OPEC To Recruit New Members To Fight Market Imbalance
  • 3 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 4 days GE Considers Selling Baker Hughes Assets
  • 4 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 4 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 4 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 4 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 4 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 7 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 7 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 7 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
  • 7 days Kenya Set To Give Local Communities Greater Share Of Oil Revenues
Alt Text

Is China Heading Toward An Energy-Debt Crisis?

China’s influence is often overlooked…

Alt Text

A Very Bullish Case For Commodities

Goldman Sachs has put forward…

Alt Text

The U.S. Export Boom Goes Beyond Crude

While U.S. crude oil exports…

Peter Tertzakian

Peter Tertzakian

Peter is an economist, investment strategist, author and public speaker on issues vital to the future of energy. He has clocked over 30 years of…

More Info

The Energy Battlefield – New Tech Upending Decades Of Stable Markets

Oil Tanker approaching

The world buys about $US 3.5 trillion worth of primary energy – coal, oil, natural gas, nuclear and renewables – every year. Fighting for every Megajoule supplied to hungry consumers has become the mother of all market share battles.

Renewable energy systems continue to demonstrate impressive wins. Natural gas is also on the front lines, making gains with wind and solar in electrical power markets. Coal, the king of carbon, is surrounded, wounded and in retreat. Oil is on a different battlefield altogether, advancing quickly and unchallenged while, nuclear and hydro remain largely under the radar.

These are the high-level messages taken from the annual BP Statistical Review, a mandatory read for energy pundits following the upstream energy battlefield. Released last week, the 65-year-old publication always gives a sobering view of the world’s voracious energy needs, and how the market share of these six primary energy groups is changing.

First let’s review our needs. Our global appetite for primary energy is enough to make anyone slap their forehead in disbelief: As of 2015, our scaled-up world of seven billion people is gorging on 22 million tonnes of coal, 93 million barrels of oil, 10 billion cubic metres of natural gas, 180,000 kilograms of uranium and millions of hectares of wind farms, solar panels and hydroelectric reservoirs every single day.

BP’s retrospective numbers show that the world’s top-line appetite for primary energy is still growing, albeit at a moderating pace: 1.0 percent in 2015 instead of 1.1 percent in 2014. That pullback doesn’t sound like much self-discipline in an energy obese world. Candidly, it’s not; but 1.0 percent is noticeably lower than the 2.5 percent average growth realized between 2000 and 2012. Slower overall demand growth means the fight for market share is more competitive and less forgiving.

The 2015 supply data shows that renewables are still on a compounding uptrend growing by about 14 percent per year since 2000. Because the overall pull for more energy is moderating, most units of energy coming from wind, solar, geothermal or animal dung are now units stolen from one or more of the other energy suppliers, notably the coal producers.

BP’s numbers show that coal producers not only lost market share in 2015, their total output shrunk by 1.8 percent – the first significant contraction in the absence of a financial crisis. Related: Exxon Misses Estimates By A Mile, Plunges To Two-Month Lows

Oil’s market share grew in 2015, because it has a lock on transportation. Most of the world’s wheels on the road are still turned by 1.3 billion internal combustion engines. And with 50 million new piston-fired machines entering service every year, it’s going to be many years before alternatives like electric cars dent the growth market, let alone penetrate the installed base. So it’s not surprising that the BP data shows that oil grew by 1.9 MMB/d in 2015. It’s cheap, compelling in its utility, and addictive to big-vehicle drivers at bottom of the barrel pricing.

BP’s recent Statistical Review highlights that there are significant energy transitions going on; in other words big changes in the supply and use of energy. But “energy transition” is a polite academic buzzword. In the callous world of business it’s called a full-on market share battle that’s occurring with a heavy cost to energy suppliers.

Over the past few years the battle for market share has cut the price of fossil fuels by half. Coal and gas producers duke it out for the North American power market at prices that hemorrhage cash from their bank accounts. Corporate casualties are not limited to high-cost laggards. Longstanding industry stalwarts are being taken prisoner and led off to bankruptcy courts. Some American nuclear power plants may also be in danger of closure. Related: Oil Relieved As Rig Count Shows Negligible Gain

The unit cost of power produced from renewables has fallen too. For example, the average price of a solar panel is down by 75 percent since 2010. Price reduction is a catalyst for adoption, but that’s only the consumer’s side of the story. Looking at things from the back of the solar panel, cheap prices have also been a catalyst for shrinking margins and supplier bankruptcy, just like in the world of fossil fuels.

An article from Greentech Media indicates that 117 solar companies from 2009 to 2015 have shuttered their doors or been acquired. Add to the list, one of the world’s largest solar companies, SunEdison Inc., which filed for Chapter 11 bankruptcy protection this past April. So who says investing in renewable companies is less risky than coal, oil or natural gas? All suppliers are experiencing casualties in this battle.

Recent trends in the BP data should be viewed with caution. How the world’s primary energy market shares shift over time will continue to depend on how well each energy supplier is able to engage dynamic environmental, geopolitical, policy, social and technological forces. Going forward, the winners in this battle for market share will also have to know how to manage the most important weapon: Their costs.

By Peter Tertzakian for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Anant Lele on August 01 2016 said:
    Excellent Article

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News