BP's Browne sees no problems with US refining capacity
John Browne, BP PLC group chief executive, Tuesday said the US does not need any more refineries. The US imports more than 2 million b/d of products. Browne said the best US refineries are getting bigger and more efficient, through debottlenecking and technological improvements.
NEW YORK CITY, June 27 -- John Browne, BP PLC group chief executive, Tuesday said the US does not need any more refineries.
The US imports more than 2 million b/d of products.
Browne said the best US refineries are getting bigger and more efficient, through debottlenecking and technological improvements. "We don't need any more refineries," he said.
Browne also was critical of recent Bush administration statements indicating that the recent US gasoline price problems have been exacerbated by a lack of refining capacity.
Browne spoke Wednesday as BP issued its first statistical review of US energy markets and production. BP officials also predicted there would be a "correction" in US refining margins in the coming year.
Browne maintained there is no fundamental world energy shortage. "It's every clear from the data that it is market responses and regulations rather than structure" that are behind higher energy prices.
He stressed that energy markets are more international than ever. "Markets work, markets respond to price signals, and the market is the best means to adjust for patterns of supply and demand. Trade makes us more efficient and increases diversity of supply." Browne noted that 58% of the world's oil is traded internationally.
BP plans to invest up to $10 billion in the US Gulf of Mexico over 20 years. Browne predicted oil operators would invest $20 billion in the gulf over that period and the region would be producing more than 1 million b/d of oil by 2006; he said the additional 200,000 b/d could reverse the decline in US production.
Natural gas is a more difficult story, BP officials said. US gas output is expected to be slightly less than consumption in the near term, but much hinges on the future of Alaskan production.
Browne said he hoped market fundamentals would support construction of a pipeline to bring North Slope gas to Lower 48 markets. BP officials said the company anticipates investing $5 billion in Alaska over a 5-year period.
Global energy markets have worked and are working now, BP chief economist Peter Davies said in the report.
"World and US energy markets have both been through testing times over the last year; energy prices have been rising, high, and volatile."
In the US during 2000, the study said, "Energy markets were characterized by high prices, low inventories, increased capacity utilization, and increased dependence on net energy imports.
"Energy consumption growth in 2000, at 2.3%, was somewhat above the 10-year average of 1.8%, but well above the rate of growth in production, at 0.5%."
Globally, the report noted that natural gas remained the fastest growing fossil fuel with consumption rising 4.8%, the highest rate since 1996.
"Gas demand increased in all regions but grew especially fast in Asia-Pacific, where it increased by almost 8%. Chinese consumption was exceptionally strong, rising by 16%. The US and Canada also outstripped the global average, with a 5.1% rise. In the Former Soviet Union, gas consumption increased for the second year running, rising by 2.9% and reversing a trend of near continuous decline since the early 1990s.
"Globally, natural gas production increased by 4.1%. The biggest increases occurred in countries tapping into the even faster growing international trade in natural gas: Output grew by more than 50% in Nigeria and Oman as new LNG projects began building towards capacity. Production in Turkmenistan more than doubled as Russia pulled in additional Turkmen gas to compensate for declining domestic production."
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