BP Energy Outlook To 2030: BP, DVN, PBR, XOM

BP (NYSE:BP) expects global demand for energy to continue to grow over the next two decades, driven by population and income growth from the emerging economies. These forecasts and others related to supply and demand for energy are contained in Energy Outlook 2030, a long-term macro outlook on energy trends recently published by BP.

Global Energy Growth
BP estimates that demand for all forms of energy will increase by 39% through 2030, equal to a 1.6% annual rate. The company expects virtually all of this growth to come from non-OECD countries.

This rate of growth is slightly less than growth forecast by Exxon Mobil (NYSE:XOM) in The Outlook for Energy, a similar publication released by that company in December 2011. The company is looking for annual growth in energy demand to average 0.9% from 2010 to 2040.

Assumptions Used
BP's energy demand growth estimates are based on population growth of 0.9% per year through 2030, implying an additional 1.4 billion people. The company also assumes growth in GDP of 3.7% per year over the next two decades, an increase over the actual growth of 3.2% from 1990 to 2010.

Sources of Growth
As one might expect, BP is looking for almost all demand growth for energy to come from non-OECD countries. The company expects energy consumption for these nations to be 69% higher in 2030, with growth averaging 2.7% per year.

Market Share
BP also expects fossil fuels to maintain its status as the chief source of energy through 2030, with 81% of demand comprised of oil, natural gas and coal by the end of the forecast period. In 1990, these three fossil fuels supplied 89% of the world's energy needs.

The relative share of energy demand within the fossil fuel category will also shift markedly, according to BP, with crude oil losing the most market share through 2030. The company expects demand for liquids to grow 18%, and reach 103 million barrels per day by 2030. This growth, while impressive, will reduce its share of energy demand to 27% by 2030, down from 39% in 1990.

Natural gas demand will gain market share through 2030, with this commodity's market share reaching 26% by 2030, up from 22% in 1990.

Energy Independence?
One interesting prediction by BP is that the Western Hemisphere will become almost totally energy self-sufficient by 2030. This independence will be powered by increased production from the oil sands of Canada, deepwater areas offshore Brazil and production from shale oil and natural gas in the onshore United States, coupled with the anticipated overall decline in oil demand.

Devon Energy (NYSE:DVN) has operations in two of these three areas and might benefit if BP's forecast is realized. The company is involved with the Jackfish Project, a multistage oil sands project in Canada, and also has extensive acreage in a number of onshore shale oil and natural gas plays in the United States.

Petroleo Brasileiro (NYSE:PBR) is the state oil company of Brazil, and has an intensive exploration and development program planned over the next five years. The company is expected to spend $224 billion from 2010 to 2014.

The Bottom Line
BP expects brisk growth in demand for energy to continue for the next two decades, with this growth coming from what used to be called the Second and Third World areas. While some investors might find this forecast reassuring, is anyone really surprised that yet another major oil company has provided a macro forecast that supports an investment in the sector.