meeting the world’s demand for liquid fuels a roundtable discussion a new climate for energy eia...

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%


Reference Case

1% 11%

40%48%

OPEC Conventional

Non-OPEC Unconventional

OPEC Unconventional

Non-OPEC Conventional

8

World’s Liquid Fuels Supply


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


43

Unidentified Projects

9

Top 15 Liquids Producers and Their Prospects


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)


10

Top 15 Liquids Producers and Their Prospects


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)


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


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


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



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



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


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



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



0

500

1000

1500

2000

2500

Th

ou

san

d B

arre

ls p

er d

ay


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


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



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



0

500

1000

1500

2000

2500

Petrobras Shell Repsol YPF Other

Th

ou

san

d B

arre

ls p

er d

ay


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


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


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


-

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


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



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



0100200

300400500600

700800900

Th

ou

san

d B

arre

ls p

er d

ay


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


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



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



0100200300400500600700800900

1000

Th

ou

san

d B

arre

ls p

er d

ay


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



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


Domestic NOC

IOC

Foreign NOC


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



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


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



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



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


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



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


Domestic NOC

IOC

Foreign NOC


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



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


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




0

500

1000

1500

2000

2500

Th

ou

san

d B

arre

ls p

er d

ay


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


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



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



0

200

400

600

800

1000

1200

1400

1600

1800

Th

ou

san

d B

arre

ls p

er d

ay


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


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



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



0

500

1000

1500

2000

2500

3000

3500

Pemex

Th

ou

san

d B

arre

ls p

er d

ay


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



-

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


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



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


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



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



-

100

200

300

400

500

600

700

Th

ou

san

d B

arre

ls p

er d

ay


Domestic NOC

IOCForeign NOC

meeting the world’s demand for liquid fuels a roundtable discussion a new climate for energy eia...

Documents

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eor slide

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