World needs Gulf of Mexico's oil, says BP

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Oil production in the Gulf of Mexico has become a much more significant part of meeting the world's energy needs, raising the stakes for decisions on the future of deep-water drilling in the region in the wake of the biggest oil spill in history.

The figures are contained in the survey of energy production, consumption and reserves which is published annually by BP. In the latest bulletin, covering 2009 and published yesterday, BP's chief executive, Tony Hayward, set out what amounted to some home truths for environmentalists fighting to reduce the world's dependence on fossil fuels.

"Let me name just two of the data highlights of this year's review that symbolise the challenges ahead for all of us," Mr Hayward wrote. "China became a large-scale coal importer, which prevented global coal consumption from falling; and, given the Opec cuts, the world's largest increase in oil production by far came from the US, mainly from the Gulf of Mexico. This is not an excuse for anything, but a piece of the reality in which we all live."

The depth of the global recession meant that overall energy consumption decreased in 2009 for the first time in 27 years, but only by 1.1 per cent. Bigger falls in demand in the West were offset by continued growth in developing economies such as China. BP calculated that China's carbon dioxide emissions from fossil fuel use rose by 9 per cent in 2009. And energy consumption has resumed its upward trajectory in the early part of this year, BP's analysts said at a press conference. The company's statistical review has been published every year for 59 years, and is one of the most often-referenced sources of information on energy demand and production.

While members of the Opec cartel of oil-producing nations cut their production as oil prices fell when the recession hit, other countries increased their output – none more so than the US, where deep-water drilling in the Gulf of Mexico contributed to a 7 per cent increase in production. The US upped production by 460,000 barrels per day.

While other forms of renewable energy remain a small share of the global energy mix, they have continued to grow rapidly. Government support helped to boost global wind and solar generation capacity by 31 per cent and 47 per cent respectively. Ethanol production rose by 8.1 per cent, half its historical average.

The BP study continues to reflect the shifting economic tide from West to East, from the members of the Organisation for Economic Co-operation and Development to developing nations. Christof Ruehl, BP's chief economist, said: "OECD demand has peaked and is unlikely to recover to the peak in 2005." He cited high prices, changes in technology and increased energy efficiency. "All the demand growth came from China, Saudi Arabia and India," he said, while demand fell in OECD countries to the lowest level since 1995.

The study reported the world's proved oil reserves at 1,333 billion barrels at the end of 2009, including Canadian oil sands under active development and an upward revision in official Venezuelan reserves. That would be sufficient to meet 2009 production for 45.7 years. On the same basis, reserves of gas are sufficient for 62.8 years and coal for 119 years.

But the calculations were dismissed as complacent by campaigners who believe global oil production is close to peaking, and that new ways must urgently be found to satisfy demand.

Will Whitehorn, the Virgin Group executive who heads a private-sector group called the Peak Oil Task Force in the UK, said BP's oil spill changes the calculation about what levels of production will be deemed safe in the future. "Even with the incentives of the market, we are headed for an oil crunch. This is not just about geology, but about politics and the environmental and legislative background.

"As we have seen with this oil spill, the industry is operating at the limits of the technology now – and beyond them," he added.

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