U.S. energy demand shot up by half a million barrels daily last year, BP said in its latest annual review of the industry out this week, adding this was the highest annual increase in a decade, coming on the back of rising shale oil and gas production that was soaked up by a slew of new petrochemicals plants. Production of oil, however, rose much more substantially, at 2.2 million bpd in the shale patch alone.
In an ironic twist, changing weather patterns have contributed greatly to this trend in energy demand on a global level, BP said, and have fed a continued rise in oil, gas, and coal production as well in what the supermajor called a vicious circle.
The outlook in the near-term does not hold any surprises. EIA’s latest Short-Term Energy Outlook, published a couple of days after BP’s statistical review, sees U.S. oil production growth at 1.4 million bpd this year and 900,000 bpd in 2020.
Shale oil production is rising and petrochemical plants are churning out more ethylene that the U.S. is now exporting at rates overtaking the world’s only other exporter of ethylene - Norway. Yet U.S. refiners are finding it hard to accommodate the shale oil boom. Most of the oil produced in the shale patch is light while Gulf Coast refineries need a mix of light and heavy to operate. Converting the equipment to only work with light oil would cost tens of billions.
Exports are the natural outlet for the extra light oil but the world…