the dynamic energy landscape · data source: bp energy outlook 2016 primary energy net balances....

– 21 November 2016, Tel Aviv –

Gürkan Kumbaroğlu, IAEE President

Israel Energy and Business Convention 2016

The Dynamic Energy Landscape

Gürkan Kumbaroğlu, www.gurkankumbaroglu.org



21 November 2016 – Tel Aviv

Source: BP Energy Outlook 2016

0%

10%

20%

30%

40%

2015 2020 2025 2030 2035

Oil

Hydro

Nuclear Renewables

Coal

Gas

Data Source: MIT Joint Program Energy Outlook 2016

0%

10%

20%

30%

40%

2015 2020 2025 2030 2035

Oil

Coal

Gas

Nuclear

Renewables

Data Source: EIA International Outlook 2016 Source: IEA World Energy Outlook 2016





-2500

-2000

-1500

-1000

-500

0

500

1000

1500

2000

2500

1990 2005 2015 2030

Mtoe

Asia Pacific

Africa

Middle East

Europe &Eurasia

S & C America

North America

Data Source: BP Energy Outlook 2016

Primary Energy Net Balances





US Net Energy Imports

Source: US Energy Information Administration





U.S. Oil&Gas Projections 2005

Source: U.S. Dept. of Energy, EIA; Oil = Oil & Condensate (NGLs excluded); LNG and Net Energy Imports predictions from EIA AEO 2005 Report; Oil = extrapolation of trend

0

6

12

18

24

30

198

5

199

5

200

5

201

5

20

25

U.S. Oil Production(millions of barrels per day)

0

2

4

6

8

10

195

0

196

0

197

0

198

0

199

0

200

0

201

0

0

4

8

12

16

20

198

5

199

5

200

5

201

5

202

5

Liquefied Natural Gas Imports(bcf per day)

U.S. Net Energy Imports(millions of BOE per day)

PredictionPredictionPred.Historical Historical





The Unconventional Revolution Dramatically Changed the U.S. Energy Outlook

Source: U.S. Dept. of Energy, EIA; LNG and Net Energy Imports predictions from EIA AEO 2005 Report

0

6

12

18

24

30

1985

1995

2005

2015

2025

0

2

4

6

8

10

19

50

19

60

19

70

19

80

19

90

20

00

20

10

0

4

8

12

16

20

19

85

19

95

20

05

20

15

20

25

2005

Prediction

Outcome Outcome

2005

Prediction

2005

Prediction

Outcome

U.S. Oil Production(millions of barrels per day)

Liquefied Natural Gas Imports(bcf per day)

U.S. Net Energy Imports(millions of BOE per day)





Game-Changers: U.S. Unconventional Natural Gas and Oil Production

Source: U.S. Department of Energy, Energy Information Administration

U.S. Natural Gas Production(Billions of cubic feet per day)

U.S. Oil Production(Million barrels per day)

Shale

Gas

Non-Shale

Gas

25

35

45

55

65

75

2000 2003 2006 2009 2012 2015

Unconventional:

Shale Gas

Conventional

0

2

4

6

8

10

12

1965 1975 1985 1995 2005 2015

Conventional -

Lower-48, Gulf of Mexico

Tight Oil

Alaska

Natural Gas Liquids





New Era of Abundance for U.S. Oil Supply

9

0

5

10

15

20

25

Mill

ion

Bar

rels

pe

r D

ay

Conventional Production

U.S. Tight Oil

NGLsAlaska Crude

High Resource Case

U.S. Crude, Condensate and Natural Gas Liquids ProductionU.S. Department of Energy Forecast

U.S. crude production nearly doubled between 2008 and 2015 after falling by

half during the previous four decades

"Peak Oil"






OPEC Crude Production Volume and WTI Prices

30.0

30.5

31.0

31.5

32.0

32.5

33.0

-

20.00

40.00

60.00

80.00

100.00

120.00

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 OP

EC C

rud

e O

il P

rod

uct

ion

(M

illio

n B

PD

)

WTI

Pri

ce (

$/B

bl)

OPEC Crude Oil Production WTI Price






Supply and Demand

Change in U.S. Production and Chinese Demand: a Surprising Set of Facts

Sources: U.S. Energy Information Administration

Energy Intelligence Group

OPEC

U.S.

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

Saudi Arabia Iraq Iran Russia Global OilDemand

ChinaDemand

Qu

an

tity

InM

MB

/D

Incremental Oil Production & Demand for Selected Countries(Dec. 2014 vs. Aug. 2016)

U.S.





Productivity Improvements in U.S. Tight Oil Production

0

100

200

300

400

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

BOPD

Production Month

Bakken Horizontal Oil Type Curves

Peak IP increased

20% 2010 - 2015

0

100

200

300

400

0 1 2 3 4 5 6 7 8 9 1011121314151617

BOPD

Production Month

Permian Horizontal Oil Type Curves

Peak IP increased

~300% 2010 - 2015

0100200300400500600

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

BOPD

Production Month

Eagle Ford Horizontal Oil Type Curves

Peak IP increased

100% 2010 - 2015

Vintage

2015

2013

2010

Continued productivity improvements are likely

Future Productivity Improvements

• Longer laterals

• Multi-laterals

• Increased drilling efficiency

• More perf clusters per well/stage

• More consistent proppant placement

Source: Drillinginfo, compiled by C.Phillips. Charts represent production profiles for the average of all wells drilled in that year





$0

$20

$40

$60

$80

$100

$120

$140

L48 Tight Play Existing OPEC

Incremental Global Oil Supply

65 80 85 90 95 100

U.S. Tight Oil

U.S. Tight Oil

Russia

Mexico

Rea

l 2

01

6 $

/bb

l

US &

Canada

Saudi Arabia

Gulf States

Algeria

Venez.

NigeriaGhana

Azerbaijan

Brazil

GOM

Oil Sands

Ch

ina

Oth

er

No

n-

OP

EC

U.S. Tight OilO

the

r

OP

EC

Million Barrels per Day

Oth

er

De

ep

wa

ter

70 75

Source: ConocoPhillips, Marianne Kah & originally Rystad

Relatively low cost

Large portions of U.S. tight oil are in the middle to lower end of the oil supply curve

13





U.S. Crude Oil Export Destinations

0.0

0.1

0.2

0.3

0.4

0.5

0.6

2010 2011 2012 2013 2014 2015 2016

Canada Europe

U.S. Exports of Crude Oil (MMBD)

14


Canada’s share of U.S. exports cut from 90-100% to about 50% in a few months





Texas Shale Oil Has Fought Saudi Arabia To A Standstill

OPEC's worst fears are coming true. Twenty months after Saudi Arabia took the

fateful decision to flood world markets with oil, it has still failed to break the back

of the US shale industry.





Production freeze agreement by Russia and Saudi Arabia

Source:

Forbes, 7 March 2016





Crude oil prices






Given the current cost structure in the oil

industry, prices are expected to remain low

Average monthly OPEC basket crude oil price





Need for oil & gas producers to adjust to lower prices

US$380 billion of total project capex deferred

Companies are forced to rework projects with high breakevens, large capital

requirements and high costs

OPEC loses power on oil markets

Impact of continued low oil&gas prices on upstream





22

Spain and Portugal account for about 45% of all LNG imports into Europe

American gas brings supply security, diversification and

competition in Southwestern Europe Pipeline links to RoE

underdeveloped





Albania, Bosnia

Herzegovina, Kosovo,

Macedonia, Montenegro,

Serbia

Non-EU Eastern Europe

high-cost countries

Southeastern Europe

Southern Corridor Needed





Aim: to build a single internal energy market, in which energy flows freely

and in which prices are affordable, without any fragmentation of Europe.

July 10, 2015 – Thirteen countries from Central Eastern Europe (CEE) and

Southеastern Europe (SEE) sign a MoU on creating an integrated gas market

CESEC Central Eastern and South Eastern Europe

Gas Connectivity

– A European Commission initiative





CESEC priority projects:

Trans-Adriatic Pipeline

Interconnector Greece-Bulgaria

Interconnector Bulgaria-Serbia

Bulgaria & Romania System Reinforcement

LNG terminal in Croatia and evacuation system towards Hungary





EUROPEAN COMMISSION JOINT STATEMENT

Malta, 11 July 2014

Security of gas supply:

the role of gas developments in the

Mediterranean region

The European Commission recommended

developing a Mediterranean gas hub as part of

efforts to improve the EU's energy security by

diversifying gas routes and suppliers.

Mediterranean gas - Another corridor?

122 tcf trr acc to USGS





If sufficient volumes are attained, the pipeline option offers economies of scale

and lower cost

Turkey offers the only economically viable pipeline route option for East Med gas

supply to Europe

Mediterranean gas





Source: EC, DG-ENERGY





The Need to Reduce Global GHG Emissions

Country INDC Target Deadline Base Year

United States 25 to 28% 2025 2005

China 60 to 65% (EI) 2030 2005

EU 40% 2030 1990

India 33 to 35% (EI) 2030 2005

Japan 26% 2030 2013

Australia 26 to 28% 2030 2005

Switzerland 50% 2030 1990

Israel 26% 2030 2005

Turkey 21% 2030 BAU





Source:

BP Statistical Review of World Energy, 2016

What’s coming up ?Oil

Gas

For More Information

Gürkan Kumbaroğlu, Ph.D.

President, IAEE & TRAEE

Boğaziçi University (www.boun.edu.tr)

Director, Energy Policy Research Center

Professor, Industrial Engineering Department

Boğaziçi University

34342 Bebek, Istanbul, Turkey

t +90 212 359 7079

f +90 212 265 1800

[email protected] | www.ie.boun.edu.tr

www.gurkankumbaroglu.org

Thank You

the dynamic energy landscape · data source: bp energy outlook 2016 primary energy net balances....

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