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Oil Markets Unmoved By North Korea Summit

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Today’s North Korea summit, and…

BP Breaks Ranks, Endorses Carbon Price In Latest Report

Current technology, with a boost from alternative energies, will ensure that consumers will have plenty of oil and gas through 2050, no matter how much fuel they consume, according to a new report by British energy giant BP.

“Energy resources are plentiful,” David Eyton, the director of technology for BG Group, said Nov. 2 during an event in London to launch BP’s first publication of its annual Technology Outlook. “Concerns over running out of oil and gas have disappeared.”

Eyton said there are enough resources to meet global energy demands 20 times over, not only because solar, wind and nuclear power are becoming increasingly available, but also because energy companies are maximizing their development of oil and gas with the help of computers, robots, and chemicals, particularly in the field of hydraulic fracturing.

Related: North Dakota No Longer Attractive For Drillers Or Refiners

The outlook for fossil fuels alone is more optimistic, Eyton said, even though the energy industry has recently abandoned more than $200 billion in projects to find new sources of fuel because of the steep decline in the price of oil since the summer of 2014.

The BP report says existing technology could enlarge the supply of fossil fuels on hand from the current 2.9 trillion barrels of oil equivalent to 4.8 trillion barrels of oil equivalent by mid-century, nearly twice what most forecasts say will be needed by then.

“Technology is one of the very few levers that you have to pull to make a significant impact,” Eyton said.

The report puts particular emphasis on the extraction of energy from shale, particularly in the United States. “Technologies, such as horizontal drilling and hydraulic fracturing, have opened up significant shale oil and gas formations,” it says.

Related: Why Has Carbon Capture And Storage Not Taken Off Yet?

Drillers in the United States have reinvigorated the country’s energy industry by using hydraulic fracturing to extract enough oil to flood the global market, leading to the decline in oil prices. A year ago OPEC, jealous of its market share, decided not to shore up prices by cutting production but to declare a price war on shale producers, whose technology is more costly than conventional extraction.

That strategy has worked up to a point, causing a decline in rig counts in North America, but it hasn’t shut down fracking in the continent altogether. In June, for example, drillers in the United States produced 9.6 million barrels of oil.

The report comes ahead of the United Nations Climate Change Conference in Paris from Nov. 30 to Dec. 11. Delegates will explore ways to balance energy demand with the goal of ensuring that average global temperatures don’t rise more than 2 degrees Celsius (3.6 degrees Fahrenheit) beyond pre-industrial levels of the 19th century.

Related: OPEC Infighting Reaching Critical Levels

BP was among 10 oil companies, calling themselves the Oil and Gas Climate Initiative (OGCI), that publicly endorsed that goal on Oct. 16. Conspicuously missing from their statement, however, was any mention of specific measures they might support, including a possible carbon tax to help discourage the use of coal, which is the least expensive but also the most polluting fuel.

In its report, BP broke ranks with the OGCI on the question of a carbon tax. It says that if governments imposed a tax of $40 per metric ton on the emission of carbon dioxide, a turbine fueled by gas, which is significantly cleaner than coal, would make the use of gas more affordable.

As Eyton put it, “An effective and meaningful price on carbon globally could accelerate the development of low-carbon technologies and drive the decisive shift towards low-carbon energy.”

By Andy Tully of Oilprice.com

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  • Lee James on November 04 2015 said:
    In contrast to European oil companies, U.S. companies think they are doing just fine developing miracle technologies that give us the oil we can't live without. What the U.S. companies to do see are the growing numbers of citizens, private companies and whole countries who are saying, "no thank you" to fossil fuel.

    Let's transition. BP's suggested $40/ton-carbon is a great starting point. The only real question is what to do with the revenue from pricing fossil fuel.

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