The U.S. Petroleum Renaissance: What Does it All Mean?

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1 The U.S. Petroleum Renaissance: What Does it All Mean? Lucian Pugliaresi, President Energy Policy Research Foundation, Inc. (EPRINC) 33 RD Alaska Resources Development Conference Anchorage, Alaska November 14, 2012 Energy Policy Research Foundation, Inc st St, NW Washington, DC

2 Employment Recovery Remains Slow Source: U.S. Bureau of Labor Statistics 20% is Oil & GAS

3 Energy Policy Research Foundation, Inc st St, NW Washington, DC

4 tcf per year of LNG $/MMBTU Remember to be humble...projected Imports of LNG vs. Actual Reference Case - Net U.S. imports of LNG (tcf) EIA Annual Energy Outlook Actual US Net LNG Imports Henry Hub Gulf Coast Natural Gas Spot Price ($/MMBTU) (right axis) Source : EIA data and forecasts Energy Policy Research Foundation, Inc st St, NW Washington, DC

5 EIA Forecast of Natural Gas Production

Thousand barrels per day NGL Production Outlook to 2020 3500 3000 2500 2000

Gas Plant Production of NGLs Forecast NGL Production Ethane Share 1000 500 0

2015 2017 2019 Source: EIA Data, EPRINC forecast.

6 Thousand barrels per day NGL Production Outlook to U.S. Gas Plant Production of NGLs Forecast NGL Production Ethane Share Source: EIA Data, EPRINC forecast. Assumes ethane continues to incrementally increase its share of the NGL pool. Energy Policy Research Foundation, Inc st St, NW Washington, DC

7 Rig Count and Permits Source: Photo Baker Hughes Interactive Rig Count Jan 25, 2012 Energy Policy Research Foundation, Inc st St, NW Washington, DC

8 Drilling Efficiencies Doing more with less... Source: Continental Resources Oct 9 th 2012 Investor Presentation Energy Policy Research Foundation, Inc st St, NW Washington, DC

9 Williston Basin Production Forecasts Source: Continental Resources, from Platts Midstream Development & Management Conference, May 12, 2011 NDPA Energy Policy Research Foundation, Inc st St, NW Washington, DC

1/1/2000 9/1/2000 5/1/2001 1/1/2002 9/1/2002 5/1/2003 1/1/2004 9/1/2004 5/1/2005 1/1/2006 9/1/2006 5/1/2007 1/1/2008 9/1/2008 5/1/2009 1/1/2010 9/1/2010 5/1/2011 1/1/2012 9/1/2012 5/1/2013 1/1/2014

00 Adding 4 mm b/d by 2020 with selected plays alone upside exists in periphery plays and enhanced recovery Utica Anadarko Basin Powder River and Niobrara Permian Basin 3,000,000.

10 1/1/2000 9/1/2000 5/1/2001 1/1/2002 9/1/2002 5/1/2003 1/1/2004 9/1/2004 5/1/2005 1/1/2006 9/1/2006 5/1/2007 1/1/2008 9/1/2008 5/1/2009 1/1/2010 9/1/2010 5/1/2011 1/1/2012 9/1/2012 5/1/2013 1/1/2014 9/1/2014 5/1/2015 1/1/2016 9/1/2016 5/1/2017 1/1/2018 9/1/2018 5/1/2019 1/1/2020 9/1/2020 Barrels Per Day EPRINC s Forecast for Major U.S. Shale Plays 7,000, ,000, ,000, ,000, Adding 4 mm b/d by 2020 with selected plays alone upside exists in periphery plays and enhanced recovery Utica Anadarko Basin Powder River and Niobrara Permian Basin 3,000, Bakken and Three Forks 2,000, Eagle Ford 1,000, Source: HPDI data with EPRINC forecast estimates Energy Policy Research Foundation, Inc st St, NW Washington, DC

11 Canadian Production Additional 1 mbd in three years = tightness Possible upside in tight oil Source: CAPP Energy Policy Research Foundation, Inc st St, NW Washington, DC

million barrels per day Resulting Decline in US Net Imports* 9 8 7 6 5 4 Net Crude Oil Imports Net Non-Canadian Imports 3 2 1 0 2012 2013 2014

Assumes 1 mm bd of Canadian production growth dispersed evenly over 5 years, and that all incremental Canadian production enters the US.

12 million barrels per day Resulting Decline in US Net Imports* Net Crude Oil Imports Net Non-Canadian Imports *Holds all US crude oil and biofuel production constant except for the plays listed in the previous slides. Assumes 1 mm bd of Canadian production growth dispersed evenly over 5 years, and that all incremental Canadian production enters the US. Also assumes US demand remains unchanged from current levels. Energy Policy Research Foundation, Inc st St, NW Washington, DC

13 Barrels Per Day The Americas nearly self sufficient by ,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 Less than 3 mm b/d (2.8 mm b/d) are needed to offset production and consumption for all of the U.S., Canada, and Latin America Latin America Crude Oil Production Canadian Crude Oil Production 5,000,000 U.S. Crude Oil Production Forecast 2013 forecast 2014 forecast 2015 forecast 2016 forecast 2017 forecast 2018 forecast 2019 forecast 2020 forecast U.S., Canada, and Latin America Crude Oil Consumption Source: US 2012 data from May EIA-forecasts using EPRINC shale additions, Canada forecast from CAPP, Latin America production from BMI with some small estimates for "other latin america countries" from Energy Energy Policy Research Foundation, Inc st St, NW Washington, DC

14 Major Positive Shift in US Competitive Position

15 Source: EIA North Slope Production Scenarios

16 Conclusions This is a petroleum renaissance. The U.S. is the largest producer of gas in the world and quickly moving into first place in oil production. Downstream is Connected to the Upstream Need Both. Regulatory Fix is Critical Permitting, Permitting, Permitting!!!! Federal Access and Alignment of Interests are Essential Positive Future is Not Guaranteed without Policy Accomodation to New Reality. Energy Policy Research Foundation, Inc st St, NW Washington, DC

UPDATE ON THE NORTH AMERICAN PETROLEUM RENAISSANCE

UPDATE ON THE NORTH AMERICAN PETROLEUM RENAISSANCE The Outlook for NGLs and Crude Exports New York Energy Forum February 24, 2014 1 About EPRINC Founded in 1944 Not-for-profit organization that studies