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. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 1
Employment Recovery Remains Slow Source: U.S. Bureau of Labor Statistics 20% is Oil & GAS
Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 3
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 tcf per year of LNG $/MMBTU Remember to be humble...projected Imports of LNG vs. Actual 3.00 10 2.50 2.00 9 8 7 6 Reference Case - Net U.S. imports of LNG (tcf) - 2008 EIA Annual Energy Outlook Actual US Net LNG Imports 1.50 1.00 5 4 3 Henry Hub Gulf Coast Natural Gas Spot Price ($/MMBTU) (right axis) 0.50 2 1 0.00 0 Source : EIA data and forecasts Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 4
EIA Forecast of Natural Gas Production
Thousand barrels per day NGL Production Outlook to 2020 3500 3000 2500 2000 1500 U.S. Gas Plant Production of NGLs Forecast NGL Production Ethane Share 1000 500 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Source: EIA Data, EPRINC forecast. Assumes ethane continues to incrementally increase its share of the NGL pool. Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 6
Rig Count and Permits Source: Photo Baker Hughes Interactive Rig Count Jan 25, 2012 Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 7
Drilling Efficiencies Doing more with less... Source: Continental Resources Oct 9 th 2012 Investor Presentation Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 8
Williston Basin Production Forecasts Source: Continental Resources, from Platts Midstream Development & Management Conference, May 12, 2011 NDPA Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 9
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 7,000,000.00 6,000,000.00 5,000,000.00 4,000,000.00 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 3,000,000.00 Bakken and Three Forks 2,000,000.00 Eagle Ford 1,000,000.00 - Source: HPDI data with EPRINC forecast estimates Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 10
Canadian Production Additional 1 mbd in three years = tightness Possible upside in tight oil Source: CAPP Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 11
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 2015 2016 2017 *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. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 12
Barrels Per Day The Americas nearly self sufficient by 2020... 35,000,000 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 - 2009 2010 2011 2012 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 2017-2012Energy Energy Policy Research Foundation, Inc. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 13
Major Positive Shift in US Competitive Position
Source: EIA North Slope Production Scenarios
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. 1031 31st St, NW Washington, DC 20007 202.944.3339 www.eprinc.org 16