petroleum and natural gas markets workshop presentation slides · 2 days ago · opec increase july...
TRANSCRIPT
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Petroleum and Natural Gas Markets Workshop
This event will begin shortly.
EIA Workshop Series:Trends and Expectations Surrounding the Outlook for Energy Markets
www.eia.gov/outlooks/aeo/workshop/energy_markets/
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Session 1:
Identifying signposts for rebalanced oil and gas marketsPanelists:
• John Kemp, Reuters
• Kevin Book, Clearview Energy Partners (Managing Director)
Petroleum and Natural Gas Markets Workshop
www.eia.gov/outlooks/aeo/workshop/energy_markets/
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Oil market situationSelected indicators
JOHN KEMPREUTERS28 September 2020
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What do we mean by “oil market rebalancing”?At least five elements
Closer balance between supply & demand
Normalisation of crude & product stocks
Forward price curve
Sustainable flat price
Sustainable investment
We will put aside for the moment the question of whether the oil market has ever been or will be “in balance”
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PRESENTATION TO THE U.S. ENERGY
INFORMATION ADMINISTRATION
KEVIN BOOKMANAGING DIRECTOR
SEPTEMBER 29, 2020
OIL MARKET QUESTIONS
FOR AN “ASTERISKYEAR”
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DISCLOSURES
RisksLegislative, regulatory and diplomatic agendas are subject to change.
Analyst CertificationsI hereby certify that the views expressed in this presentation accurately reflect my personal views as of the date of this presentation. I further certify that no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views contained in this presentation.
By: Kevin Book
DisclosuresThe opinions, forecasts, recommendations, projections and interpretations of macro events contained in this report are those of the analysts preparing this report and are based upon information available to them as of the publication date of this report.
The analysts preparing this report based the opinions, forecasts, recommendations, projections and interpretations of macro events contained herein on sources they believe to be accurate and reliable, but completeness and/or accuracy is neither implied nor guaranteed.
The opinions, forecasts, recommendations projections and interpretations of macro events contained herein are subject to change without notice.
The analysts preparing this report are not registered lobbyists and do not advocate or lobby for any particular policy action on behalf of clients.
Although this report may mention specific companies by name and/or specific industries and industry sectors, this report was not prepared, is not intended and should not be interpreted as a research report regarding the equity securities of any company.
(c) 2009-2020 ClearView Energy Partners, LLC.
2 SEPTEMBER 29, 2020
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THE ASTERISK: A SYMBOL OF OMISSION OR LIMITING FACTS
3 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC
*
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THE ASTERISK: A SYMBOL OF OMISSION OR LIMITING FACTS
4 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC
*Is Demand Different, And For How Long?
• COVID-19 could change the nature of demand:(1) scale; (2) form; (3) timing; and (4) location.
• Examples:
– Electrons at home vs. molecules on the road
– Consumption effects of enhanced unemployment (and the loss of it)
– Going local: U.S. light-duty consumption is ~10% of global liquids
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THE ASTERISK: A SYMBOL OF OMISSION OR LIMITING FACTS
5 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC
*Key Uncertainties
(1) How governmental, institutional and individual risk perceptions might shape consumption behaviors;
(2) The nature of COVID-19 itself, especially the existence and duration of immunity; and
(3) The inertia and plasticity of economies wracked by stark job losses.
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ASTERISK-YEAR DEMAND: LESS AIR TRAVEL
6 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using photo from blog.zoom.us
*An Industry Conference In the 2020s?
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ASTERISK-YEAR DEMAND: LESS DAILY COMMUTING
7 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using photo from freepik.com
*The Morning Commute In the 2020s?
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ASTERISK-YEAR DEMAND: LESS PUBLIC TRANSIT FOR THOSE WHO COMMUTE
8 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using photo from vox.com credited to Kevork Djansezian/Getty Images
*Public Transportation In the 2020s?
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ASTERISK-YEAR DEMAND: LOWER LABOR INTENSITY AT WORK
9 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using photo from airbus.com
*Factory Workers In the 2020s?
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ASTERISK YEAR SUPPLY QUESTION #1: OPEC+ (OR OPEC*) ?
10 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using EIA data (thru September 2020 STEO)
OPEC Increase Apr - Oct 2000
OPEC Cuts Feb 2001 - Jan 2002
OPEC Increases Jan - Jun 2003
OPEC Increase July 2004 - July 2005
OPEC Cut Nov 2006 - Feb 2007
OPEC Cuts Nov 2008 - Jan 2009
OPEC Cut Sept 2016
OPEC Increase June 2018
OPEC Cut Apr 2020
-300
-200
-100
0
100
200
300
400
500
Jan-
00
Aug
-00
Mar
-01
Oct
-01
May
-02
Dec
-02
Jul-0
3
Feb-
04
Sep-
04
Apr
-05
Nov
-05
Jun-
06
Jan-
07
Aug
-07
Mar
-08
Oct
-08
May
-09
Dec
-09
Jul-1
0
Feb-
11
Sep-
11
Apr
-12
Nov
-12
Jun-
13
Jan-
14
Aug
-14
Mar
-15
Oct
-15
May
-16
Dec
-16
Jul-1
7
Feb-
18
Sep-
18
Apr
-19
Nov
-19
Jun-
20
OECDInventoriesvs. 5 Year Average(MM bbl)
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ASTERISK YEAR SUPPLY QUESTION #2: UPSTREAM CAPEX AND SUPPLY
11 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using BP, EIA and IEA data
0
1
2
3
4
5
6
7
8
$0
$50
$100
$150
$200
$250
$300
CY 2
006
CY 2
007
CY 2
008
CY 2
009
CY 2
010
CY 2
011
CY 2
012
CY 2
013
CY 2
014
CY 2
015
CY 2
016
CY 2
017
CY 2
018
CY 2
019
CY 2
020P
MM bbl/d
$ BUPSTREAM CAPEX CLOSELY LINKED (R2 = ~0.72) W/SAME YEAR PRODUCTION
Adjusted Global Oil Investment ($ B) Estimated New Oil Supply (MM bbl/d)
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MORE LIKELY A BIRD (OR SUPERMAN) THAN A PLANE
12 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using IATA and IEA data
7.99 7.848.18 8.00
6.89
3.18
4.805.49
6.04 5.896.23 6.05
0
1
2
3
4
5
6
7
8
9
1Q20
19
2Q20
19
3Q20
19
4Q20
19
1Q20
20
2Q20
20
3Q20
20P
4Q20
20P
1Q20
21P
2Q20
21P
3Q20
21P
4Q20
21P
GlobalJet Fuel/
KeroseneDemand
(MM bbl/d)
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LOCKDOWN DEMAND DESTRUCTION VS. INCOME-DRIVEN DEMAND EFFECTS
13 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using BEA, Census Bureau, EIA, FHWA and St. Louis Fed data
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
1/20
16
3/20
16
5/20
16
7/20
16
9/20
16
11/2
016
1/20
17
3/20
17
5/20
17
7/20
17
9/20
17
11/2
017
1/20
18
3/20
18
5/20
18
7/20
18
9/20
18
11/2
018
1/20
19
3/20
19
5/20
19
7/20
19
9/20
19
11/2
019
1/20
20
3/20
20
5/20
20
7/20
20
GasolineShare
ofPer
CapitaDPI(%)
GasolineProductSupplied
vs.Year-Ago(%)
Gasoline Product Supplied vs. Year-Ago (%) Annualized U.S. Gasoline Spending as a Share of Real, Per Capita DPI (%)
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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: MARCH 2020
14 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
-10% 0% 10% 20% 30% 40% 50% 60% 70%
MonthlyNew
Casesas
Shareof
StatePopulation,
March2020(%)
Change in State VMT vs. Year-Ago, March 2020 (%)
Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption
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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: APRIL 2020
15 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
-10% 0% 10% 20% 30% 40% 50% 60% 70%
MonthlyNew
Casesas
Shareof
StatePopulation,
April2020(%)
Change in State VMT vs. Year-Ago, April 2020 (%)
Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption
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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: MAY 2020
16 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
-10% 0% 10% 20% 30% 40% 50% 60% 70%
MonthlyNew
Casesas
Shareof
StatePopulation,
May2020(%)
Change in State VMT vs. Year-Ago, May 2020 (%)
Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption
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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: JUNE 2020
17 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
-10% 0% 10% 20% 30% 40% 50% 60% 70%
MonthlyNew
Casesas
Shareof
StatePopulation,
June2020(%)
Change in State VMT vs. Year-Ago, June 2020 (%)
Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption
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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: JULY 2020P
18 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
-10% 0% 10% 20% 30% 40% 50% 60% 70%
MonthlyNew
Casesas
Shareof
StatePopulation,
July2020(%)
Change in State VMT vs. Year-Ago, July 2020 (%)
Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption
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M/M Δ U.S. CASES VS. Y/Y Δ VMT: ALL U.S. STATES + DC
19 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, FEC, FHWA and Johns Hopkins CSSE data
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
3/2020 4/2020 5/2020 6/2020 7/2020
MonthlyNew
Casesas
Shareof
Population(%)
VMTDecline
vs.Year-Ago(%)
VMT Decline vs. Year-Ago (%) New Cases as a Share of Population (%)
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M/M Δ U.S. CASES VS. Y/Y Δ VMT: 2016 “RED” (TRUMP) STATES
20 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, FEC, FHWA and Johns Hopkins CSSE data
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
3/2020 4/2020 5/2020 6/2020 7/2020
MonthlyNew
Casesas
Shareof
Population(%)
VMTDecline
vs.Year-Ago(%)
VMT Decline vs. Year-Ago, R (%) New Cases as a Share of Population, R (%)
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M/M Δ U.S. CASES VS. Y/Y Δ VMT: 2016 “BLUE” (CLINTON) STATES
21 SEPTEMBER 29, 2020
Source: ClearView Energy Partners, LLC, using Census Bureau, FEC, FHWA and Johns Hopkins CSSE data
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
3/2020 4/2020 5/2020 6/2020 7/2020
MonthlyNew
Casesas
Shareof
Population(%)
VMTDecline
vs.Year-Ago(%)
VMT Decline vs. Year-Ago, D (%) New Cases as a Share of Population, D (%)
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Session 2:
Supply competition in oil and gas marketsPanelists:
• Mark Finley, Rice University’s Baker Institute (Fellow)
• Sara Vakhshouri, SVB International (Founder)
• Ross Wyeno, S&P Global Platts (Lead Analyst, LNG Analytics)
Petroleum and Natural Gas Markets Workshop
www.eia.gov/outlooks/aeo/workshop/energy_markets/
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Global Gas and LNG MarketSeptember 29, 2020
Ross WyenoLead Analyst, Americas LNG AnalyticsS&P Global Platts
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Global LNG prices have been down trending since 2018, but the pandemic caused outright prices to invert below the Henry Hub
$0$2$4$6$8
$10$12$14
$/M
MBt
u
Global Gas and LNG Prices
JKM TTF Henry Hub M01 Oil-Indexed**Estimate based on 14.85% Brent Crude Oil
WHO Declares Global Pandemic
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US LNG exports became constrained this summer as global prices fell below the variable costs of delivered LNG
3
-$2-$1$0$1$2$3$4$5$6
$/M
MBt
u
US Gulf Coast LNG Netbacks
JKM TTF PSV
PRICE CONSTRAINED
02468
10
Bcf/d
US LNG Feedgas Deliveries
US LNG feedgas deliveries collapsed when netback spreads turned negative
Exports expected to recover this winter, but price risks persist into 2021
LNG Netbacks: Destination market price minus variable costs of supply and transportation
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US is expected to become the worlds largest LNG exporter by 2022; North American capacity to breach 16 Bcf/d by 2026
4
0
5
10
15
20
Bcf/d
North American LNG Export Capacity
US Capacity Canada Capacity
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Upcoming:
Electric Power Markets Workshop Thursday, October 1, 2020 (1:00 p.m.–2:30 p.m.)
Follow up questions: [email protected]
EIA Workshop Series:Trends and Expectations Surrounding the Outlook for Energy Markets
www.eia.gov/outlooks/aeo/workshop/energy_markets/