Top Ten Global Energy Trends in 2011

Top Ten Global Energy Trends in 2011 - In 2009, global energy consumption was at 11.05 Btoe (billion tonnes of oil equivalent), which was a decrease of 2.2% from 11.3 Btoe in 2008. The global financial crisis, followed by the global economic slowdown, resulted in a decreased demand for products. This had a negative impact on energy consumption toward the end of 2008 which continued throughout 2009. The developed economies were the most affected by the economic slowdown, explaining the decline in energy consumption in these countries. However, the high economic growth in the emerging economies, such as India and China, sustained the demand for energy in 2009.

After the 2009 slump, the global economies recovered, thereby increasing energy consumption in 2010. The total global energy consumption was estimated to be about 11.26 Btoe in 2010 with a growth rate of 1.9% from 2009. The global economy witnessed a recovery in 2010 and it is expected to continue its positive growth rate in 2011. The emerging economies are expected to continue developing with high growth rates in 2011, thereby driving the global energy consumption. With a positive outlook, the global total energy consumption in 2011 is expected to grow to around 11.47 Btoe.

Exploration and Production Capital Expenditure to Lead the Growth In 2011

The global exploration and production (E&P) industry witnessed low levels of growths during the year. Tight capital budget plans had a strong impact on global markets, with North America taking the biggest hit. However, with economic recovery and reduced construction costs, 2010 witnessed an encouraging environment for investments. Further, the growth in investments is expected to continue in 2011 due to stabilized high oil prices. Ease of credit terms and adequate capital availability in the market are also driving investor confidence, which in turn is resulting in an increased spend in the sector. The global upstream oil and gas expenditure is expected to grow from $532 billion in 2010 to $613 billion in 2011. While the national oil companies (NOCs) persist with their aggressive capital expenditure plans, most of the integrated companies that lowered their capital spending in 2010 are also boosting their investments. Though small independent E&P companies continue to face investment problems, the overall trend looks positive with the eased credit availability, low construction costs and high oil prices.

Strong demand in Asia-Pacific and the Middle East is driving the growth in capital investments in the global midstream and downstream (M&D) sector. M&D companies, mainly NOCs, are aggressively expanding their capacities amid the positive outlook for demand. Companies that delayed or scrapped their capital intensive M&D projects are considering realization of these projects. Super majors like ConocoPhillips, BP plc and Chevron Corporation are expected to increase their investments in the sector. Similarly, most NOCs are increasing their spending. M&D capital expenditure is expected to increase by about 15% from $266 billion to $307 billion in 2009-2010. Planned M&D projects in the Middle East and Asia-Pacific will drive the overall capital expenditure in 2011.

High Environmental Safety Concerns in the Aftermath of the US GOM Oil Spill

The Gulf of Mexico (GOM) oil spill, resulting from the Deepwater Horizon rig explosion which occurred on April 20, 2010, has been one of the most disastrous of its kind. It has had a significant impact on the environment and has also led to health concerns along the southern US coast. The oil spilled at an estimated 1,000 barrels per day (bpd), which reached around 62,000 bpd by July 15, 2010, when the well was finally capped.

BP has incurred huge costs in containing the oil spill. The company has also announced plans to sell its non-core assets to generate funds for the oil spill response. The most significant reason for the oil spill is believed to be faulty safety procedures being followed for drilling rigs and well services. The US government and various other agencies are undertaking actions to make the safety laws stricter to prevent a future disaster. The oil spill has affected other offshore areas globally, where regulators are considering reviewing the safety policies to prevent any such major incidents in the future.

North America Leading the Way in the Unconventional Oil and Gas Sector

The unconventional natural gas industry has changed the overall outlook of the North American natural gas demand and supply, especially in the US. The total natural gas production in North America (US and Canada) is expected to reach 82.1 billion cubic feet per day (Bcf/d) by 2020, with unconventional natural gas accounting for 42.7 Bcf/d (~52%) of this production.

Unconventional natural gas resources have changed the market dynamics of the natural gas industry in the US. The rising production from unconventional natural gas resources has made the country less reliant on natural gas imports. From the time of the 2000-2001 California energy crises, it appeared that the US was headed for an extended period of tight supplies, and even shortages, of natural gas. Increased drilling activities were also failing to replace the falling conventional natural gas production in the 48 contiguous states of the US. However, the rise of production from the unconventional resources has changed the entire situation. The US even struggled with an excess of natural gas supplies in 2009, which led to natural gas prices plummeting to a five year low.

Natural gas production in the US is expected to reach 65.3 Bcf/d in 2020, of which 37.6 Bcf/d (~58%) will come from unconventional sources. Unconventional natural gas production in the US is expected to increase at an average annual growth rate (AAGR) of 2.3% by 2020.

Rising Energy Demand and Increasing Focus on Energy Efficiency Asserts Attractiveness of Clean Technology

With the growing energy demand and the increasing scarcity of resources, governments are trying to diversify their energy needs. On the one hand the major energy consuming nations are trying to secure energy supplies, while on the other they are trying to reduce the consumption of energy by increasing energy efficiency. The increase in demand and in the price of fuels, such as crude oil, as well as government focus on energy independence are driving the growth of sustainable energy sources. In this context, increasing energy efficiency has assumed greater significance. This is manifested in the growth of the clean technology markets in recent years. The growing need to reduce carbon emissions is also driving the governments towards clean energy. Consequently, with major developments in areas of clean energy, the clean technology sector is expected to continue to gain importance and play a significant role in satisfying the global energy needs in 2011.

Renewable Fuel Standards and Mandatory Blending Targets Are the Key Driving Factors

From the early 1990s bio-fuel has been a lucrative market, especially in the eastern part of the globe. The advanced technology for developing quality bio-fuel was not easily achievable. This was due to fewer Research and Development (R&D) investments in the energy sustainability sector. With rising concerns over energy independence and sustainability, there has now been a significant investment in R&D. Moreover, the growing concern for reducing oil dependence has driven the private sector companies, who in turn have made huge investments to increase the production of sustainable bio-fuels. Government intervention is essential for the development and application of bio-fuel as they mandate the amount of bio-fuels to be used in the market, and so are expected to spur the use of bio-fuels globally. Governments are introducing policy tools that reduce the risk and uncertainty for investors. Government involvement also ensures reliability in response to farmer's concern about energy input prices and output bio-fuel prices. The global economies also rely on subsidies, tax credits and preferential taxes to ensure that producers are confident they can surmount the high cost of bio-fuel production. Trade policy instruments such as import restrictions are used to promote the emerging bio-fuel industry in American and European countries. Most countries have made it an essential requirement to blend bio-fuel with conventional fuels, which in turn provides a guaranteed market for bio-fuel.

Incentives and a Minimum Level of Standards Are Key Drivers for the Green Building Sector

Governments across the globe have adopted a wide range of strategies to encourage green buildings including financial or structural incentives and policy instruments such as mandatory labeling, certification programs and building codes. Various governments are leading by example, implementing a two-pronged strategy of incentivizing green initiatives and enforcing a minimum level of standards. Several state and local governments already offer financial incentives in the form of tax credits or grants to reward homeowners and developers who practice green building techniques. Financial assistance in the form of revolving loan funds is yet another measure which helps to lower the up-front costs associated with some green building practices. Various governments have adopted policy and regulatory instruments as a cudgel for accelerated sustainable development. These policies include building codes, building certification and labeling systems. Governments in many countries have set a minimum level of standard for buildings and are increasingly addressing energy efficiency in existing buildings and new constructions. The policy instrument is set to drive the green building market.

Report overview

This report covers the analysis and key statistics on the crude oil, natural gas, refining, unconventional oil and gas sector, power and other related sectors. The report has global geographical scope. It also covers the impact of the GOM oil spill on the oil and gas industry. The report analyses the rise of the unconventional oil and gas sector. It also covers the alternative fuels industry such as biofuels and also the clean technology industry. This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research's team of industry experts.

In 2009, global energy consumption was at 11.05 Btoe (billion tonnes of oil equivalent), which was a decrease of 2.2% from 11.3 Btoe in 2008. The global financial crisis, followed by the global economic slowdown, resulted in a decreased demand for products. This had a negative impact on energy consumption toward the end of 2008 which continued throughout 2009. The developed economies were the most affected by the economic slowdown, explaining the decline in energy consumption in these countries. However, the high economic growth in the emerging economies, such as India and China, sustained the demand for energy in 2009. After the 2009 slump, the global economies recovered, thereby increasing energy consumption in 2010. The total global energy consumption was about 11.26 Btoe in 2010 with a growth rate of 1.9% from 2009.

Report scope

The report analyses market opportunities and challenges in the global pipeline industry. Its scope includes -
- Key geographies including Asia Pacific, Europe, Middle East and Africa, North America and South and Central America.
- Qualitative analysis of key success factors and trends in the global energy industry including oil and gas, refining, power and related sectors
- Key statistics on global energy consumption, global capital expenditure in the oil and gas industry by sub sector and company type, refining capacity, biofuel market, etc. to 2011
- Global oil and gas and biofuel market merger and acquisition and deal analysis by deal type is included
- Effect of the US Gulf of Mexico oil spill on the oil and gas industry
- Success of the unconventional oil and gas sector and the outlook for 2011 is analysed
- Effect of the delay in implementation of the carbon emission laws on the renewable energy sector in analysed

Reasons to buy

The report will enhance your decision making capability in a more rapid and time sensitive manner. It will allow you to -
- Develop business strategies with the help of specific insights about the global energy industry
- Identify opportunities and challenges in the global energy industry.
- Increase future revenues and profitability with the help of insights into the future opportunities and critical success factors in the global energy industry.
- Make more informed business decisions from the insightful and in-depth analysis of the global energy industry and the factors shaping it