Canadian Energy Research Institute Canadian Oil, Gas and LNG Market Review Allan Fogwill Strait of Canso – Superport Days’16 Dundee, Nova Scotia July 2016 Relevant • I ndependent • Objective 1 www.ceri.ca Relevant • I ndependent • Objective 1 www.ceri.ca
Mission Statement Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, non-profit research Institute specializing in the analysis of energy economics and related environmental policy issues in the energy production, transportation, and consumption sectors. Our mission is to provide relevant, independent, and objective economic research of energy and environmental issues to benefit business, government, academia and the public. 2 Relevant • I ndependent • Objective 2 www.ceri.ca
Current Sponsors Core supporters include: In-kind support is also provided: 3 Relevant • I ndependent • Objective 3 www.ceri.ca
Agenda • Oil Market • Natural Gas Market • LNG • Conclusion 4 Relevant • I ndependent • Objective 4 www.ceri.ca
Evolution of Energy Markets • The supply availability of oil and natural gas has fundamentally changed over the last 5 years. Horizontal drilling and hydraulic fracturing have • opened up vast additional reserves creating a downward pressure on prices. 5 Relevant • I ndependent • Objective 5 www.ceri.ca
OIL 6 Relevant • I ndependent • Objective 6 www.ceri.ca
World Oil Reserves Source : EIA • Reserves have increased over 27% in the last 10 years with the 2013 reserves to production ratio of 53 years 7 Relevant • I ndependent • Objective 7 www.ceri.ca
Canadian Conventional Oil Production (Aug 2015) 1,600,000 Crude Oil Production (excl Oil Sands) 1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 1,000,000 bbls/day 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Eastern Canada Pentanes Plus MB Oil Forecast BC Oil Forecast NWT Oil Forecast SK Oil Forecast AB Oil Forecast (Conv) Oil from Gas Wells Source: CERI, CAPP 8 Relevant • I ndependent • Objective 8 www.ceri.ca
Oil Sands Growth (Aug 2015) 6.0 5.0 4.0 (MMbpd) 3.0 Oil Sands Growth – CERI’s Projections (August 2015) 2.0 (Production, High Case Scenario) (Production, Low Case Scenario) (Production, Reference Case Scenario) 1.0 0.0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 Source: CanOils, CERI * Growth dependent on market access – TMX, Gateway or Energy East 9 Relevant • I ndependent • Objective 9 www.ceri.ca
Factors Affecting Oil Market Demand • • Economic Growth • Europe • US • China Strategic Oil Reserves (short term) • • Supply • High levels of inventories (short term) Delayed investments • Geopolitical Issues • - Iran - Venezuela - Iraq - Yemen - Nigeria - Russia 10 Relevant • I ndependent • Objective 10 www.ceri.ca
Natural Gas 11 Relevant • I ndependent • Objective 11 www.ceri.ca
Natural Gas Reserves Source: BP • Reserves have increased over 19% in the last 10 years with the 2013 reserves to production ratio of 55 years 12 Relevant • I ndependent • Objective 12 www.ceri.ca
Canadian NG Demand Outlook By Province 20.00 18.00 16.00 14.00 12.00 BCFD 10.00 8.00 6.00 4.00 2.00 0.00 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 AB BC SK MB YK NW ON QC NB NS PE NF NU Source: NEB, CERI * Primary demand – includes steam and electricity generation demand 13 Relevant • I ndependent • Objective 13 www.ceri.ca
US Natural Gas Production Forecast Source: EIA 14 Relevant • I ndependent • Objective 14 www.ceri.ca
US Natural Gas Demand Outlook by Sector 120 100 80 60 Bcf/d 40 20 0 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 Residential Commercial Industrial Electric Power Transportation Pipeline Fuel Lease and Plant Fuel Total Natural Gas Consumption Source: EIA 15 Relevant • I ndependent • Objective 15 www.ceri.ca
Export Potential from Western Canada Source: CERI * Demand excludes steam and electricity requirements (approx. 3 bcf/d) 16 Relevant • I ndependent • Objective 16 www.ceri.ca
Factors Affecting Natural Gas Market • Supply Pipeline access from US into Canada • Storage inventories • • Demand • Weather Liquefied Natural Gas Facilities • Power Generation • • Industrial Demand (Petrochemical Feedstock, oil sands) 17 Relevant • I ndependent • Objective 17 www.ceri.ca
LNG 18 Relevant • I ndependent • Objective 18 www.ceri.ca
LNG Supply and Demand – Asian Markets Two Russian pipelines, Altai and Power of Siberia can supply China with natural gas volumes in excess of 6 bcfd Source: CERI, IEA 19 Relevant • I ndependent • Objective 19 www.ceri.ca
The Pipeline Challenge to LNG - Asia Source: Singapore Straits Times 20 Relevant • I ndependent • Objective 20 www.ceri.ca
The Pipeline Challenge to LNG - Europe Source: Rethink Institute 21 Relevant • I ndependent • Objective 21 www.ceri.ca
Factors Affecting LNG Market • Supply Pipeline access (china and Europe) • Russia • • Caspian Sea States • Geopolitics Europe/Russia • Oil Price Merchant Plants • • Demand • European Carbon Management Policies • Industrial Demand 22 Relevant • I ndependent • Objective 22 www.ceri.ca
Conclusions • Markets for conventional oil and oil sands will grow, albeit slowly. • Eastern Canada access to Western Canadian Oil dependent on pipeline access. • Western Canadian sourced gas evolving into a regional market. • Eastern Canadian markets likely to be sourced almost completely by US shale gas. • LNG markets highly uncertain due to risk valuation of supply availability 23 Relevant • I ndependent • Objective 23 www.ceri.ca
Canadian Energy Research Institute Thank you for your time Please visit us at www.ce .ceri.ca .ca 24 Relevant • I ndependent • Objective 24 www.ceri.ca
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