September 18, 2020 Read More →

BP, ExxonMobil, upstream, shale, drilling, market data show oil demand collapse

In April, oil prices fell to historic lows, briefly dipping into the negatives for the first time ever. Since then, prices have stabilized but remain modest, and they’ll likely stay that way for the foreseeable future.

BP (NYSE: BP) made major headlines this week when it released its latest energy outlook, which laid out three scenarios, all of which show oil demand either already having peaked, or peaking in the next few years in the most optimistic scenario.

– In BP’s middle-of-the-road scenario (“Rapid), oil demand falls by half by 2050 to under 55 mb/d, while a more ambitious climate-focused “Net Zero” scenario leads to an 80 percent decline in demand. “Demand for oil falls over the next 30 years,” BP said in the report. “The scale and pace of this decline is driven by the increasing efficiency and electrification of road transportation.”

– At the same time, BP sees natural gas demand mostly unchanged through 2050 in the more, holding up much better than crude oil. In the business-as-usual scenario, natural gas demand actually rises by 35 percent. But in the “Net Zero” scenario sees gas demand falling by 40 percent.

– BP has staked a claim as the first oil major to jump on board with the “peak demand” mantra, and the British oil giant has plans to transition into a diverse energy company, which includes ramping up renewables and cutting oil and gas production by 40 percent over the next decade. 

– A survey of 34 North American oil and gas companies by IEEFA found that the group reported a combined net negative cash flow of $3.3 billion in the second quarter.

– Of the 34, 27 companies were cash-flow negative. EOG (NYSE: EOG) stood out with $360 million in negative cash flow, and Continental Resources (NYSE: CLR) reported $334 million in negative cash flow.

– “Collectively, the companies in IEEFA’s sample racked up negative free cash flows every single year from 2010 to 2019,” the report said. Together, the group spent $29 billion more than they generated since 2017. 

[Staff Report]

More: Has Oil Demand Peaked?

Posted in: IEEFA In the News

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