meeting the world’s demand for liquid fuels a roundtable discussion a new climate for energy eia...
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Meeting the World’s Demand for Liquid Fuels
A Roundtable Discussion
A New Climate For Energy EIA 2009 Energy Conference
April 7, 2009
Washington, DC
2
World Marketed Energy Use by Fuel Type
0
50
100
150
200
250
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Qua
drill
ion
Btu
Liquids
Natural Gas
Coal
Renewables
Nuclear
History Projections
Source: EIA, IEO2008
36%
23%
6%
8%
29%
33%
24%
8%
6%
27%
3
World Liquids Consumption by End-Use Sector, 2005, 2015, and 2030
0
50
100
150
200
250
2005 2015 2030
Qu
ad
rill
ion
Btu
Building Industrial Transportation Electric Power
Source: EIA, IEO2008
4
$0
$50
$100
$150
$200
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Lig
ht
Sw
ee
t C
rud
e O
il (
20
07
$/B
)
Reference Case
High World Oil Price
Low World Oil Price
World Oil Prices in Three Price Cases, AEO2009 – Real Prices
History Projections
Source: EIA, AEO2009, NYMEX
$130
$200
$50
Closing price on April 3, 2009
5
40
50
60
70
80
90
100
110
120
130
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Mil
lio
n B
arr
els
pe
r D
ay
Reference Case
Low World Oil Price
High World Oil Price
World Liquids Consumption in Three Price Cases, AEO2009
History Projections
Source: EIA, AEO2009
105
89
119
86
2008
6
NOCs Increasing Control over the World’sOil and Gas Reserves
1970
85%
14%
1%
Source: PFC Energy, Oil & Gas Journal, BP Statistical Review
2009
65%
12%8%15%
Full IOC Access
Full IOC Access
Reserves Held by Russian Companies
NOC Reserves(Equity Access)
(Limited Equity Access)NOC Reserves
(Limited Equity Access)
NOC Reserves
SOVIETReserves
7
Liquids Supply in 2030
Low Price Case
3%7%
45%45%
2007
40%
4%1%
55%
High Price Case
1%
18%
30%
51%
Source: EIA, AEO2009
Reference Case
1% 11%
40%48%
OPEC Conventional
Non-OPEC Unconventional
OPEC Unconventional
Non-OPEC Conventional
8
World’s Liquid Fuels Supply
Source: EIA, AEO2009
0
10
20
30
40
50
60
70
80
90
100
110
Mil
lio
n B
arre
ls p
er D
ay
0
10
20
30
40
50
60
70
80
90
100
110Non-PetroleumUnconventionalLiquidsNon-OPECUnconventionalPetroleum ProjectsNon-OPECUnconventionalPetroleum LiquidsOPEC UnconventionalPetroleum Liquids
Non-OPECConventional Projects
OPEC ConventionalProjects
Non-OPEC ExistingConventional
OPEC ExistingConventional
AEO2009 ReferenceTotal Consumption
Source: EIA, AEO2009
43
Unidentified Projects
9
Top 15 Liquids Producers and Their Prospects
Source: EIA, AEO2009
Russia
United States
Mexico
Canada
Kuwait
Norway
Nigeria
Brazil
Algeria Saudi Arabia
China
IranUAEVenezuela
Iraq
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
Current Liquids Production ('000 b/d)
Ch
an
ge
in T
ota
l Liq
uid
s P
rod
uc
tio
n
fro
m 2
00
7 t
o 2
01
5 (
'00
0 b
/d)
Source: EIA, AEO2009
10
Top 15 Liquids Producers and Their Prospects
Source: EIA, AEO2009
Russia
United States
Saudi Arabia
ChinaIran
Mexico
Canada
United Arab Emirates
Venezuela
Kuwait
Norway
Nigeria
Brazil
Algeria
Iraq
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Current Liquids Production ('000 b/d)
Ch
an
ge
in T
ota
l Liq
uid
s P
rod
uc
tio
n
fro
m 2
01
5 t
o 2
03
0 (
'00
0 b
/d)
Source: EIA, AEO2009
11
Costs of Production by Resource
0
20
40
60
80
100
120
140
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Resources (billion barrels)
Pro
du
ctio
n C
ost
(d
oll
ars
- 20
08)
Produced MENA
Other Conventional
Oil
CO
2 -
EO
R
EO
R
Deepwater and ultra
deepwater
Arctic Heavy oil
and bitumen
Oilshales Gas
to liquids
Coalto liquids
Source: International Energy Agency, IEA
12
Additional Slides
• Country Sheets
13
United States
Downside Risks & Upside Potential• Onshore fields might not be as responsive to EOR as
currently expected• Independent E&P companies may not have access to
capital in the near-term
• Legislation could open to development more currently restricted areas
• Legislation on climate change could provide additional incentives to use CO2 for EOR
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
Index of Total Wells Drilled Annually
0
20
40
60
80
100
120
140
160
180
200
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
2007 Oil Production by Company
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Th
ou
san
d B
arre
ls p
er d
ay
Source: Global Insight, September 2008
Domestic NOC
IOC
Foreign NOC
14
Saudi Arabia
Downside Risks & Upside Potential• Production could be cut to support world oil prices• Kingdom could abandon commitment to spare capacity
and high production levels• Field decline rates could accelerate
• Production could be expanded to discourage alternatives
Index of Total Wells Drilled Annually
0
20
40
60
80
100
120
140
160
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Saudi Aramco Chevron
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
15
Russia
Downside Risks & Upside Potential• High levels of taxation could remain in place• Exploration in eastern Siberia and offshore could fall
due to concerns about nationalization • Levels of investment could remain low.
• Future changes in taxation policies could have large impact and encourage investment
• Small firms could rebound faster than expected from financial crisis
Index of Total Wells Drilled Annually
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
500
1000
1500
2000
2500
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
16
Brazil
Downside Risks & Upside Potential• Changes to licensing and bid round structure could be
severe enough to discourage some foreign investors• Subsalt potential could be less than expected• Unexpected technical difficulties could slow production
of subsalt resources
• Changes to licensing and bid round structure could work to facilitate investment and joint development
• Subsalt potential could be much larger than expected
Index of Total Wells Drilled Annually
0
50
100
150
200
250
300
350
400
450
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
500
1000
1500
2000
2500
Petrobras Shell Repsol YPF Other
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
17
Canada
Downside Risks & Upside Potential• Current conventional decline rates could accelerate• Environmental legislation (in Canada or the U.S.) could
limit bitumen production
• Decline rates at conventional fields might be slowed• Bitumen extraction technology could continue to
improve
Index of Total Wells Drilled Annually
0
50
100
150
200
250
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Total Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Conventional Liquids BitumenSource: EIA, AEO2009
2007 Oil Production by Company
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Oth
er
Syn
cru
de
Su
nco
rE
ner
gy
Imp
eria
l Oil
Hu
sky
En
erg
y
Pet
ro-
Can
ada
Sh
ell
Can
adia
nN
atu
ral
Res
ou
rces
En
Can
a
Th
ou
san
d B
arre
ls p
er d
ay
Source: Global Insight, 2009
Domestic
IOC
Foreign NOC
18
Algeria
Downside Risks & Upside Potential• Government could further discourage foreign
investment, as it did with the 2006 Hydrocarbon Law• Sonatrach’s ability to invest in production maintenance
and expansion could be hindered due to competing government expenditure needs
• Government could reverse nationalization tendencies expressed in the 2006 Hydrocarbon Law
Index of Total Wells Drilled Annually
0
50
100
150
200
250
300
350
400
450
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Total Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0100200
300400500600
700800900
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
19
Nigeria
Downside Risks & Upside Potential• Violence in the Delta could continue and expand into
deepwater locations• Financial management at NNPC could deteriorate
further
• Nigerian government might implement policies that reduce violence in the Delta
Index of Total Wells Drilled Annually
0
50
100
150
200
250
300
350
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0100200300400500600700800900
1000
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOCForeign NOC
20
Kuwait
Downside Risks & Upside Potential• KPC’s technical ability to maintain and expand
production could be hindered by politically motivated management changes
• Political disagreements could prevent Project Kuwait from achieving expected progress
• Political disagreements could settle and allow Project Kuwait to move forward
• KPC technical capabilities could return to previous levels
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
500
1000
1500
2000
2500
Kuw ait Oil Company (KOC) Kuw ait Gulf Oil Company (KGOC)
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
Index of Total Wells Drilled Annually
0
20
40
60
80
100
120
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Total Drilling WTI Price
Source: I.H.S. Energy, 2007
21
Iraq
Downside Risks & Upside Potential• Violence could escalate as U.S. troops withdraw• Legislation and licensing issues between national
government and Kurdistan regional government could inhibit large scale foreign investment
• Security could continue to improve• National and Kurdistan regional governments could
reach agreement on licensing and jointly encourage foreign investment
Index of Total Wells Drilled Annually
0
20
40
60
80
100
120
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Total Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
200
400
600
800
1000
1200
1400
1600
1800
2000
South Oil (SOC) North Oil (NOC) DNO KurdistanRegional
Government
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
22
Iran
Downside Risks & Upside Potential• Domestic consumer gas needs reduce gas volumes for
EOR• NIOC management and performance issues could
escalate and cause production from existing fields to decline faster than expected
• Domestic gas production could increase, allowing more EOR
• NIOC investment and development capabilities could improve and/or financial terms for international companies could improve
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
500
1000
1500
2000
2500
3000
3500
4000
Nat
ion
alIr
ania
n O
ilC
om
pan
y
Sh
ell
En
i
Pet
roir
anD
evel
op
men
tC
om
pan
y
JJI S
&N
To
tal
Oth
er
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
Index of Total Wells Drilled Annually
0
20
40
60
80
100
120
140
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Total Drilling WTI Price
Source: I.H.S. Energy, 2007
23
Venezuela
Downside Risks & Upside Potential• Nationalization tendencies could continue• Foreign investment could continue to be discouraged
either directly through government actions or indirectly through threats of nationalization and instability
• E&P investment could become more limited due to non-sector expenditures
• Confidence in contract stability might be repaired, encouraging renewed foreign investment
Index of Total Wells Drilled Annually
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
2008 Oil Production by Company
0
500
1000
1500
2000
2500
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Conventional Liquids Extra-HeavySource: EIA, AEO2009
24
UAE
Downside Risks & Upside Potential• Government could refuse to renew concessions and
place additional pressure on ADNOC to achieve production goals without IOC participation
• Government could renew concessions upon expiry or enable different structure encouraging IOC participation
Index of Total Wells Drilled Annually
0
50
100
150
200
250
300
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
200
400
600
800
1000
1200
1400
1600
1800
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
25
Mexico
Downside Risks & Upside Potential• Government may be unable to adopt legislation to
allow foreign technology to be implemented• Deepwater GOM resources could be much lower than
anticipated
• Government could adopt legislation that allows foreign technology to be implemented
• GOM resources might higher than expected
Index of Total Wells Drilled Annually
0
100
200
300
400
500
600
700
800
900
1000
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2008 Oil Production by Company
0
500
1000
1500
2000
2500
3000
3500
Pemex
Th
ou
san
d B
arre
ls p
er d
ay
Source: Wood Mackenzie, Pathf inder 2009
Domestic NOC
IOC
Foreign NOC
26
China
Downside Risks & Upside Potential• Declines at major mature fields could accelerate• Offshore developments could prove insufficient to
compensate for onshore declines
• Offshore boundary issues might be resolved • Offshore resources might prove more significant than
currently thought
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2006 Oil Production by Company
-
500
1,000
1,500
2,000
2,500
CNPC Sinopec CNOOC other
Th
ou
san
d B
arre
ls p
er d
ay
Source: PFC NOC Service, 2009
Domestic NOC
IOC
Foreign NOC
Index of Total Wells Drilled Annually
0
50
100
150
200
250
300
350
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
27
Norway
Downside Risks & Upside Potential• Decline rates at major fields could accelerate• Smaller finds could be unable to compensate for
declines at existing large fields
• Government’s licensing terms could continue to encourage investment despite competition from other promising offshore developments
• A significant number of small finds could be capable of offsetting some of decline in existing fields
Index of Total Wells Drilled Annually
0
20
40
60
80
100
120
140
160
1996 1998 2000 2002 2004 2006
Dri
llin
g In
dex
to
199
5
$-
$10
$20
$30
$40
$50
$60
$70
$80
Do
llars
per
Bar
rel
Onshore Drilling Offshore DrillingTotal Drilling WTI Price
Source: I.H.S. Energy, 2007
Expected Production
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2006 2015 2030
Mill
ion
Bar
rels
per
Day
Source: EIA, AEO2009
2006 Oil Production by Company
-
100
200
300
400
500
600
700
Th
ou
san
d B
arre
ls p
er d
ay
Source: I.H.S. Energy, 2007
Domestic NOC
IOCForeign NOC