BP has predicted a bright future for the oil and gas industry with crude prices spiking at $100 a barrel again, huge increases in shale output and new production from Canadian tar sands.
The British oil company believes fossil fuels will still be providing 80% of total energy supply in 2035 and admits that under this scenario, carbon emissions will rocket.
The forecasts were immediately attacked by critics who accused BP of deliberately talking up the prospects for its own business while providing a downbeat assessment of future demand for wind and solar power.
The predictions are contained in the latest annual BP Energy Outlook, which looks at long-term trends and develops projections for world energy markets over the next two decades.
“In the middle of a downturn in oil and gas prices, it is important not only to adapt to the current tough conditions, but also to prepare for the next set of challenges,” argued BP’s chief executive, Bob Dudley.
The key message seems to be that the oil and gas industry must keep on extracting new reserves to meet strong demand for energy from developing countries and a growth in the world population.
Spencer Dale, BP’s chief economist, was unwilling to say what price assumptions were used in his predictions but did expect an improvement away from a current level of just above $30 a barrel oil.
Prices would eventually rise to somewhere between $30 and $100 and while the high figure was not a natural “resting place”, Dale said he expected events to ensure prices would spike up again on occasions to $100.
The positive picture for fossil fuel prices and production from BP was attacked by critics as disingenuous and self-serving.
“This is a story of how an oil and gas company predicts the rosy prospects of oil and gas companies. BP would like us to believe that government action on climate will fail, that clean technologies will fizzle, and that the future of energy will still be based on the carbon fuels of the past,” said Greg Muttitt of Washington-based campaign group Oil Change International.
“Dressed in a veneer of concern about climate change, in fact BP’s outlook is a public relations exercise, designed to boost fossil fuels and undermine public faith in clean alternatives. Meanwhile it deflects responsibility to government or to coal companies, to distract from its own extraction of oil and gas. This is not a credible view of the future of energy.”
Dudley told the International Petroleum Week conference in London on Wednesday that the commodity cycle that saw oil prices hit $100 as little as eight months ago was not over. He said the second half of 2016 would see stronger prices because “every storage tank and swimming pool” would be full of oil.
The oil company admitted that in the past it has underestimated the growth of wind and other renewable power technologies in the energy mix but had overestimated the contribution from nuclear and biofuels.
It expected carbon emissions to grow by almost 1% a year for the two decades, “suggesting the need for further policy action” such as a meaningful price for carbon, it said in its outlook.
BP was unwilling to speculate on where its base case scenario would leave the Earth’s temperatures, but it would be way above the two degrees centigrade growth seen as safe by most scientists.
The company also outlined a mixture of alternative scenarios, some of which presume much more policy action to counter global warming, including one with a very high carbon price of $100 a tonne (compared with around $5 a tonne now).
The outlook predicted that “tight oil” – mainly US shale – would rise from around 4m barrels of oil equivalent to 8m in the 2030s. It added that US shale gas could provide almost 20% of the world’s supplies within 20 years.
BP also forecast a major future increase in output from non-Opec production in deep water Brazilian fields and the Canadian tar sands, even though the latter is very expensive and involves high carbon production methods.
Launching the outlook, Dale denied the base case forecast was one the company planned its business round but said it was up to ministers to find wider solutions to climate change.
“The idea that you plan on any single base case would not be a sensible thing … I am not a climate scientist and the mapping between carbon emissions and temperatures itself is highly ill-defined and uncertain thing.
“Its a very challenging environment but our job here is not to do anything in terms of advocacy. Our job is not to say whats optimal what is the right thing to do, that’s for policy makers. Our job is to say what is the most likely case.”