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Natural gas will overtake oil as the leading fuel around 2023
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Asia demand growth makes it the biggest energy importer
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North American energy production expected to grow 1.2% per annum through 2035
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North American LNG exports grow to~25% of global trade by 2035
Increasing production of oil and natural gas, along with lower levels of consumption, will allow North America to become energy self-sufficient by 2018, according to a forecast released by BP (ticker: BP). The United States is expected to become energy self-sufficient by 2021, and oil self-sufficient by 2030.
North America’s fuel mix is expected to change substantially over the next 19 years, based on BP’s researchers. Fossil fuels will make up 78% of the energy mix in 2035, down 5% from today. Renewables will make up 10% of the overall mix, more than double the 4% seen currently.
The only fossil fuel that will increase its share of the market moving forward will be natural gas, which is expected to grow 1.4% annually to 39% in 2035. Gas will overtake oil as the leading fuel around 2023.
Oil’s market share in North America is expected to continue declining, reaching 31% in the timeframe used by BP. Oil’s projected share of the market will be lowest on record and down from a high of 48% in 1977.
Production of gas is expected to increase 53% while oil production increases 37%. Total North American production is forecast to reach 29.5 MMBOPD in 2035, the highest level ever recorded, and 20% of total global energy production by the end of the outlook.
North American energy consumption to remain stable as exports become more important
As production continues to ramp up, consumption is expected to remain relatively stable. Total North American energy consumption is expected to increase just 6%, compared to global growth of 34%. Canada and Mexico will see consumption expand 22% while U.S. demand stays flat, growing 0.1% per annum to 2027 before declining through the end of the outlook.
The increase in tight oil production, coupled with slowing demand growth, will reduce North America’s reliance on oil and gas imports, according to BP. This stands in contrast with Asia, where virtually all the growth in global imports over the outlook are expected to be centered.
The dependence of Europe and China on importing natural gas will make North American LNG increasingly important. LNG exports from North America are expected to reach 18 Bcf/d, or roughly one-quarter of global LNG trade, by 2035.
