2002 AAPG Briefing2002 AAPG Briefing

““Energy and Environment: Energy and Environment: A Partnership that WorksA Partnership that Works”

Energy Supply SettingEnergy Supply Setting

Pete StarkIHS Energy Group

Washington, D.C.23 September, 2002

2002 AAPG Briefing2002 AAPG Briefing

““Energy and Environment: Energy and Environment: A Partnership that WorksA Partnership that Works”

Energy Supply SettingEnergy Supply Setting

Pete StarkIHS Energy Group

Washington, D.C.23 September, 2002

Thesis:Thesis:

• Public desires secure, reliable, clean, sustainable & affordable energy supplies that are available on demand.

• Balanced environmental and energy development policies needed to meet energy demand growth forecasts.

• Oil and natural gas expected to contribute dominant share of energy supplies for > 20 years.

Energy Supply IssuesEnergy Supply Issues

• Confusing & conflicting information about energy supplies

• Challenging oil & gas demand scenarios• Natural gas: the challenge & opportunity of this

decade• Public policy pressure for renewable resources• Petroleum industry squeezed by volatile

markets, financial constraints, anti-hydrocarbon pressures, regulations and limited access to prospects

Challenging Oil Challenging Oil Demand Demand ScenariosScenarios

World Oil Demand Consumption in MMbopd

1993 - 99 2000-20

1993 1999 % 2000 2005 2020 %• World 67.6 75.0 +11 % 75.6 84.6 118.9 56%

• U.S.A. 17.2 19.5 +13 % 19.7 21.2 25.8 31%

Source: IEA and EIA

Is 2020 target attainable?

Confusing Oil Supply PredictionsConfusing Oil Supply PredictionsConfusing Oil Supply PredictionsConfusing Oil Supply Predictions “Campbell - Laherrère – Deffeyes School”• Oil ultimate recoverable: 1,694* MMMb

– Produced 849– Remaining 845 MMMb– Reserves/Production 36 Years

• Oil production will peak and commence decline by the end of this decade.

(* 2000 data excludes heavy oil & reserves growth.)

World Oil ResourcesWorld Oil ResourcesMajor Non-conventional Liquid Resources In PlaceMajor Non-conventional Liquid Resources In Place

Alberta Bitumen & Orinoco Extra Heavy Oil compared with Saudi Arabia

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Alberta Bitumen Ultimate Alberta BitumenEstablished

Orinoco Extra-Heavy Saudi Arabia

Mill

ion

Ba

rre

ls

Remaining In Place

Cumulative Production

World Liquids ResourcesWorld Liquids Resources

Including Reserves Growth, Oil Sands / Extra-heavy Oil & Yet-to-FindWith Percentage Depletion at End-2001

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

North America Latin America Europe Former SovietUnion

Africa Middle East Asia-Pacific

Mill

ion

Bar

rels

Cumulative Conventional Liquids ProductionUndiscovered Conventional Liquids (USGS) at End 2001Remaing Oil Sands and Undeveloped Orinoco with Reserves GrowthConventional Liquids Reserves GrowthRemaining Discovered Conventional Liquids at End 200130.5%

(50.4% w/o oil sand)

17.4%(30.3% w/o Orinoco)

29.7%

27.3%

28.8%

21.2%

40.2%

World Liquids ResourcesWorld Liquids ResourcesIHS Energy Group December 2001IHS Energy Group December 2001World Liquids ResourcesWorld Liquids Resources

IHS Energy Group December 2001IHS Energy Group December 2001

Liquids Resources (million barrels)

Total Discovered

Cumulative Production

Remaining Recoverable

Percent Remaining

Year 2001 Production

Year 2001 R/P

Conventional Liquids Resources Discovered to End-2001 2,069,796 957,470 1,112,326 53.7% 26,756 42

Alberta Bitumen314,500 3,080 311,420 99.0% 238 1,308

Orinoco Undeveloped248,000 0 248,000 100.0% 0 n/a

Total Discovered Liquids 2,632,296 960,550 1,671,746 63.5% 26,994 62

Total Discovered Liquids with "Reserves Growth"

2,045,000 68.0% 76

Total Discovered Liquids with "Reserves Growth" and "Yet-to-Find"

2,848,000 74.8% 106

Remaining recoverable Campbell IHSE 845 2,848 + 2,003

International Resources Discovered vsInternational Resources Discovered vsResources Put On-streamResources Put On-stream

International Resources Discovered vsInternational Resources Discovered vsResources Put On-streamResources Put On-stream

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000P

re-1

901

01 -

05

06 -

10

11 -

15

16 -

20

21 -

25

26 -

30

31 -

35

36 -

40

41 -

45

46 -

50

51 -

55

56 -

60

61 -

65

66 -

70

71 -

75

76 -

80

81 -

85

86 -

90

91 -

95

96 -

2000

2001

Mill

ion

Bar

rels

Oil

Eq

uiv

alen

t

Resources Discovered in Period

Resources On-stream in Period

(excludes USA and Canada)

U.S. O&G Well Completions1980 - 2001

U.S. O&G Well Completions1980 - 2001

0

10

20

30

40

50

60

70

80 82 84 86 88 90 92 94 96 98 20 2

OIL Gas

Wells X 1,000

Source: IHSE

Issue: Energy SecurityDependence on Oil Imports

U. S. Petroleum Imports vs. Production 1989 - 2002U. S. Petroleum Imports vs. Production 1989 - 2002

5000

6000

7000

8000

9000

10000

11000

12000

13000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

DOE Imports IHS Prod DOE Prod

Mb/d

1991 = 7,627Mb/d 2001 = 11,607Mb/d

1991 = 7,417Mb/d 2001 = 5,848Mb/d

Oil Supply VolatilityOil Supply VolatilityOPEC Quotas & Production: 1996-2002OPEC Quotas & Production: 1996-2002

20

22

24

26

28

30

32

Quota Overage Iraq

MM Bopd Capacity

(06) (11)

(Dec)

(Dec)

(Dec)

(Dec)

(04) (08)

Capacity

Oil Supply & Policy IssuesOil Supply & Policy IssuesOil Supply & Policy IssuesOil Supply & Policy Issues

• No near-term decline in oil supplies– Crisis policies not required. Orderly transition to

alternate sources.

• Reduce import dependency – boost production– Access to prospective lands

– Investment incentives – tax credits, royalties

– Efficient regulatory processes – reduce delays & costs

• Supply security: – Enhance Western Hemisphere policies & alliances

World 80.4 91 +13 % 162 78%

U.S.A. 22.07 22.5 + 2.1% ~ 27 33.8 50%

World Gas DemandWorld Gas DemandConsumption in Tcf/yrConsumption in Tcf/yr.

1996-2000 2000-20

1996 2000 % 2010 2020 %

Source: EIA

U.S. 2001 ~ 22.83 + 0.2% U.S. 2002 ~ 23.81 + 4.3% U.S. 2003

September 9, 200121.43 -

4.7%22.13 + 3.3%22.92 + 4.6%

Sept. 6, 2002

World Natural Gas ResourcesWorld Natural Gas Resources

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

North America Latin America Europe Former SovietUnion

Africa Middle East Asia-Pacific

Bill

ion

Sta

ndar

d C

ubic

Fee

t

Cumulative Gas ProductionUndiscovered Gas (USGS) at End 2001Gas Reserves GrowthRemaining Discovered Gas at End 2001

48.5%

14.5% 32.5%

15.7%

12.9%

4.9%

14.7%

Produced and Remaining Natural Gas Resources (Including Reserves Growth and Conventional Yet-to-Find) (With Percentage Depletion at End-2001)

Produced and Remaining Natural Gas Resources (Including Reserves Growth and Conventional Yet-to-Find) (With Percentage Depletion at End-2001)

Total Remaining Tcf = 11,750 Years = 124

U.S. Energy Consumption by FuelU.S. Energy Consumption by Fuel1970-20201970-2020

Source: EIA Annual Energy Review 2002

quadtrillion Btu

© 2001. Petroleum Information/Dwights LLC d/b/a IHS Energy Group.