denver world oil conference the peak oil context
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PETRIE PARKMAN & Co. Denver World Oil Conference The Peak Oil Context. November 10, 2005. Thomas A. Petrie, CFA Chairman & CEO Petrie Parkman & Co. Initial Perspectives and Assertions:. World daily production: 84 million barrels/day - PowerPoint PPT PresentationTRANSCRIPT
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Denver World Oil ConferenceDenver World Oil Conference
The Peak Oil ContextThe Peak Oil Context
PETRIEPETRIE PARKMAN & Co.PARKMAN & Co.
Thomas A. Petrie, CFAThomas A. Petrie, CFAChairman & CEOChairman & CEO
Petrie Parkman & Co. Petrie Parkman & Co.
November 10, 2005November 10, 2005
PETRIE PARKMAN & Co.2
World daily production: 84 million barrels/day
World excess capacity: 1-1.5 mmb/d (Refining capacity a determinant of “relevant capacity”)
US daily consumption: 21 mmb/day
Global annual decline rate: 4% - 6% / year?
Net Non-OPEC production likely to peak around 2010
OPEC nations may not reach governmental projections
Reasonable world peak oil date: 2010-2015?
Initial Perspectives and Assertions:Initial Perspectives and Assertions:Initial Perspectives and Assertions:Initial Perspectives and Assertions:
PETRIE PARKMAN & Co.3
84.782.6
80.578.5
76.574.6
84.7
80.5
76.4
72.6
69.0
65.5
84.7
77.9
71.7
66.0
60.7
55.855
60
65
70
75
80
85
2005 2006 2007 2008 2009 2010
8% Decline 5% Decline 2.5% Decline
Current World Production in Serious Decline Current World Production in Serious Decline
(Millions b/d)
-19.2
-28.9
-10.1
Conclusion: Depletion Matters
PETRIE PARKMAN & Co.4
End of Decade “Potential” New Production SourcesEnd of Decade “Potential” New Production Sources
Conclusion: Project Timing will be Critical
(millions b/d)
U.S. (Alaska / Deepwater GOM) 0.5 - 1.0South America 1.0 - 2.0West Africa 2.0 - 3.0Caspian Sea 1.5 - 3.0Russia 1.0 - 2.0Asia 1.5 - 3.0Canada 1.0 - 2.0Middle East 4.5 - 6.0Total 13.0 - 22.0
PETRIE PARKMAN & Co.5
Morphing Toward Peak Oil?Morphing Toward Peak Oil?
Conclusion: Ex the Optimistic Case, There Remains Limited Supply to Accommodate Economic GrowthConclusion: Ex the Optimistic Case, There Remains Limited Supply to Accommodate Economic Growth
(millions b/d)
Optimistic Case
2005 Production level 85Natural decline (10)
75
New Projects 2297
Net gain - 2010 12
85(19)66
2288
3
85(10)75
1388
3
Downside Case
85(19)66
1379
(6)
PETRIE PARKMAN & Co.6
0
10
20
30
40
50
1975 1980 1985 1990 1995 2000
MM
b/d
Excess Capacity
Production
Source: International Energy Agency
OPEC Excess Crude Production CapacityOPEC Excess Crude Production Capacity
?
Conclusion: Absent a Global Recession, the Margin for Error is Small
56 63 60 67 70 77 84
Global Demand (MMb/d)
PETRIE PARKMAN & Co.7
Maturing of Non-OPEC ProductionMaturing of Non-OPEC ProductionMaturing of Non-OPEC ProductionMaturing of Non-OPEC Production
In Decline:• United States• United Kingdom• Egypt• Pakistan• Congo• Norway• Australia • Oman• Columbia• Argentina• Gabon• New Zealand• Syria• Peru• Tunisia
At Plateau:• Mexico• Brunei• Malaysia• China• India (?)• Denmark• Yemen • Canada (conventional and non-Arctic only)
Conclusion: Ex Caspian Sea, West Africa, and Unconventional and Arctic North American Sources, Non-OPEC Production Probably is Close to Irreversible
Decline
PETRIE PARKMAN & Co.8
Discoveries precede extraction; a peaking in discoveries precedes a peaking in production
World oil discoveries peaked in 1964
In fields, basins, “provinces,” and the world: we tend to find the biggest oil structures early on
Today, we find 1 barrel for every 3-4 consumed This concept is not disputed Technology hasn’t changed this reality
PETRIE PARKMAN & Co.9
We found the most oil during the 1960s; production follows discoveries; technology hasn’t helped much
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
-
10
20
30
40
50
60
Bil
lion
bbl
/yea
r
PETRIE PARKMAN & Co.10
Global Natural Gas: Where are we headed?Global Natural Gas: Where are we headed?
Source: China Newsphoto/Reuters/Corbis.
PETRIE PARKMAN & Co.11
Oil to Gas Convertibility per Futures StripOil to Gas Convertibility per Futures Strip
Conclusion: Fear of LNG, Unconventional Gas, Demand Destruction Lives!Conclusion: Fear of LNG, Unconventional Gas, Demand Destruction Lives!
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
5/1/
05
1/1/
06
9/1/
06
5/1/
07
1/1/
08
9/1/
08
5/1/
09
1/1/
10
9/1/
10
$/M
cf
$4.00$8.00$12.00$16.00$20.00$24.00$28.00$32.00$36.00$40.00$44.00$48.00$52.00$56.00$60.00$64.00$68.00$72.00$76.00$80.00$84.00$88.00$92.00$96.00
$/B
bl
Henry Hub - 10/14/2005
WTI - 10/14/2005
Nov-05Oil to Gas - 5:1
Jan-08Oil to Gas - 6:1
Dec-10Oil to Gas - 8:1
PETRIE PARKMAN & Co.12
Conclusion: Dynamic Market Shifts in the OffingConclusion: Dynamic Market Shifts in the Offing
PETRIE PARKMAN & Co.13
World oil peak: range is broad by well-informed estimators; most by 2015
Since 2000:
• BP – 2010-2015
• Hirsch et al: 2016
• Matt Simmons: 2006 – 2008 (Bush team advisor/insider)
• Campbell: 2007 – 2010
• Deffeyes: Thanksgiving day 2005
• Walter Youngquist: 2007 – 08
PETRIE PARKMAN & Co.14
20051930 1970 2010 2050
10000 kb/d
0 kb/d
5000 kb/d
Lower 48 Alaska Deepwater
U.S. Oil Production
Big, New Discoveries &
New ‘Technology’
...only shift the curve
Lower 48
AK
DWWhy would U.S. Production Peak?
What about new discoveries like Alaska?
What about new technologies and investments?
My Young Analyst PerceptionsMy Young Analyst Perceptions
Source: rao-D cityworks
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