the changing energy market · •u.s. reversing 40 years of oil production declines • oil prices...

THE CHANGING ENERGY MARKET DUE TO THE GROWTH OF PRODUCTION FROM SHALE PLAYS IN THE US AND POTENTIAL OUTSIDE US

Mark Peters Publisher Oil & Gas Financial Journal markp@pennwell.com www.ogfj.com

• Tight Oil and Gas • Climate Change • Energy Nationalism • Growth in World Population • EuroZone

• China and India • Energy Security • Overcapacity • Game Changer: Shale • The “Golden Age” of Gas

FACTORS SHAPING ENERGY EXPANSION FOR THE NEXT DECADE:

QUICK LOOK AT OIL PRICES

CRUDE PRODUCTION BUCKING 40 YEAR TREND

• U.S. Reversing 40 Years of oil production declines • Oil Prices appear to be range-bound • U.S. natural gas poised for long-term recovery • Recent prediction that U.S. will surpass Saudi

Arabia as largest oil producer by IEA • U.S. already surpassed Russia as largest gas

producer • Potential for U.S. to become energy independent • Implications go way beyond energy

CHANGES IN US OIL & GAS

US DEPENDENCE ON IMPORTED LIQUIDS DECLINES

US PRODUCTION OF CRUDE INCREASES DUE TO TIGHT FORMATIONS (SHALE)

NATURAL GAS PRODUCTION GROWS AND US BECOMES NET EXPORTER

SHALE GAS LEADS PRODUCTION INCREASE

SHALE OIL AND GAS IS GLOBAL

CO2 EMISSIONS DECLINE

WORLD POPULATION GROWTH 2050

Source: Cagle Cartoons, Week of June 17-23, 2012

INDUSTRY TAX RATES

Source: CEE, M.M. Foss, 9/25/2012

• Economic Nationalism • Growth in Population • Consumption

CHINA & INDIA

ENERGY SECURITY

Source: T. Boone Pickens, March 2012

OVERCAPACITY

“CNG IN A BOX” TM

Source: GE, AP file photo/Douglas C. Pizac

RE-FUELING LOCATIONS IN THE U.S.

THE SEVEN BIG SHALES

Source: Oil & Gas Financial Journal, Warlick International Article, August 2012

SHALE PLAYS ARE MORE PRODUCTIVE

A NATURAL GAS SUPER SPIKE 2016?

15.0

16.0

17.0

18.0

19.0

20.0

21.0

22.0

23.0

24.0

25.0

Average Annual Industrial Demand

Source: Energy Information Administration May 2012 & RJ Estimates

*Includes LNG export plants operational

• More refining capacity added to handle increased oil production and potential for export

• Additional pipelines and gas processing facilities will be needed to handle changes in the flow of raw material and finished products

• Potential GTL and LNG export from U.S. • Petrochemical facilities upgraded and expanded and

potential for new plants in U.S. Northeast • US economy will benefit from lowered trade deficit and

increase in manufacturing base • US $ Goes Higher • All the above will require more valves

INFRASTRUCTURE CHANGES:

THE CHANGING ENERGY MARKET DUE TO THE GROWTH OF PRODUCTION FROM SHALE PLAYS IN THE US AND POTENTIAL OUTSIDE US

Mark Peters Publisher Oil & Gas Financial Journal markp@pennwell.com www.ogfj.com