The world will see far more incremental barrels of heavy crude in the market over the next two decades than the additional condensate supply that will come on stream, according to an analyst at Hart Energy, a provider of specialized data and information products to the energy industry.
Global crude production is expected to grow from 73.5 million b/d in 2010 to 93 million b/d in 2030, of which heavy crude oil (API gravity of less than 22 degrees) will account for 38% and condensates and natural gas liquids or NGLs for 14%, Hart Energy's executive director for refining, planning and evaluation, Rodrigo Favela, told a recent industry conference in Singapore.
The percentages translate to around 7.4 million b/d of new heavy crude oil supply over the next 20 years, and approximately 2.73 million b/d of condensates and NGLs.
Going into 2030, heavy crude supply should rise further to around 16 million b/d, according to Hart research, with growth coming from all regions except Europe and the former Soviet Union countries, and concentrated on the Americas.
The remainder of the 19.5 million b/d increase in oil supply will come from biofuels (19%), gas-to-liquids/coal to liquids (9%), light/medium crude (5%), shale oil (6%), and synthetic crude oil (9%), Favela told the 27th Asia Pacific Petroleum Conference in Singapore September 7.
Asked about the relative production cost of unconventional oil, Favela pegged it at $40-60/b for Canada's syncrude, around $38/barrel for US shale oil, and "less than $35/barrel" for Venezuela's Orinoco production.
GASOIL TO ACCOUNT FOR HALF THE RISE IN PRODUCTS DEMAND
Meanwhile, Favela projects global refined products consumption to rise from 86.6 million b/d in 2010 to 113.5 million b/d in 2030, a compound annual growth rate of 1.5%.
Gasoil will account for 49% of that increment, followed by gasoline at 15%, LPG at 9%, naphtha at 8% and jet fuel at 7%, he said.
Residual fuels will have the smallest share of the growth, accounting for 3%, with total consumption declining from a little over 10 million b/d in 2008 to just over 8 million b/d by 2030. All of that decline will come from the industrial/power sector, with bunker fuel demand rising slightly from just under 4 million b/d now to just over that level in 2030, Favela predicted.
The increase in bunker fuel consumption will happen despite a portion of the market switching from residual to distillate marine fuel because of new low sulfur specifications, he added.
The Middle East is projected to become the center of the marginal refined product barrel supply to the world markets, Favela said.
In the global refining sector, Favela sees overcapacity until 2015, characterized by low and volatile refining margins. But beyond 2015, growth in demand will mop up the surplus and boost margins, he predicted.
The evolution of the refining sector in the industrialized world will be marked by capacity rationalization, accommodation of biofuels, and a rebalancing to focus on more gasoil demand, he said.
In the developing world, Favela projects a 2.5% annual growth in refining capacity because of expanding populations and growing economies and a focus on cleaner fuels.
Both gasoline and gasoil markets will continue to evolve into less than 10 ppm sulfur going into 2030, with gasoline leading the way and gasoil following more slowly. High sulfur gasoil will retain 25% of the gasoil demand by 2030, mainly for industrial and bunker use, he estimated.
Desulfurization of fuel oil is unlikely, according to Favela, with ships being economically retro-fitted or constructed with exhaust gas after-treatment, or scrubbers.
