ECONOMIC IMPACTS OF VALUE-ADDED USES OF OIL AND NATURAL GAS Evar Umeozor, Ph.D. Senior Research Engineer June 20, 2020 www.ceri.ca
WEBINAR PARTICIPATION Audio Your microphone has been muted for the duration of this presentation. To hear webinar audio: Choose Mic & Speakers to use VoIP Choose Telephone and dial using the information provided: CANADA: 1-647-497-9385 US: 1-213-929-4231 ACCESS CODE: 955-009-570 Allan Fogwill Questions Please submit your text questions and comments using the Questions panel . Questions will be answered during the Q&A period following the presentation. Note: A copy of this presentation can be downloaded by selecting the document in the Handouts panel. 2 2
OVERVIEW Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, registered charitable organization 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. CERI publications include: Market specific studies Geopolitical analyses Quarterly commodity reports (crude oil, electricity and natural gas) In addition, CERI hosts a series of study overview events and an annual Petrochemicals Conference. 3
CORE FUNDERS FUNDING SUPPORT IVEY FOUNDATION S.M. BLAIR FAMILY FOUNDATION IN-KIND SUPPORT Alberta Energy Regulator | Bow Valley College | CEPA Foundation JWN Energy | Northern Alberta Institute of Technology Petroleum Services Association of Canada
AGENDA Background Methodology Results Conclusions Questions? 4
BACKGROUND – Global Feedstocks 700 600 500 400 Mtoe 300 200 100 0 2015 2020 2025 2030 2035 2040 2045 2050 Year Coal Oil Gas Biomass 5 Source: Data by IEA, Figure by CERI
BACKGROUND – Regional Feedstocks 100% 7% 11% 16% 18% 19% 90% 80% % of Feedstock used 11% 15% 70% 56% 60% 50% 78% 84% 40% 71% 66% 30% 20% 37% 10% 11% 0% North America Europe Middle East China Other Asia Ethane Naphtha Other 6 Source: Data by Deloitte, Figure by CERI
BACKGROUND – Feedstocks and Products Source: IEA 2018 7
BACKGROUND – Study Focus Feedstock Product Assessment Methods - Process (amounts of - - Gas-based Gas-based (Natural feedstocks, products and gas): Ammonia, GHG emissions) Methanol - Microeconomic (FOB supply cost) - - - Oil-based Macroeconomic Oil-based (Naphtha): (employment, Ethylene, Propylene salary/wage, tax revenue, GDP impacts) 8
METHODOLOGY – IPEM Workflow 9
METHODOLOGY – Business Cases & Attributes Attribute Reference Business Case Competitive Business Case (RBC) (CBC) Facility Size Smaller Bigger Process Efficiency Lower Higher Project Funding Debt Equity Carbon Tax Yes No 10
METHODOLOGY – Product Supply Scenarios • Business As Usual (BAU) Scenario ; 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝐸𝑓𝑛𝑏𝑜𝑒 + 𝐹𝑦𝑞𝑝𝑠𝑢𝑡 = 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝑇𝑣𝑞𝑞𝑚𝑧 + 𝐽𝑛𝑞𝑝𝑠𝑢𝑡 • Medium Supply Growth (MSG) Scenario ; 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝐸𝑓𝑛𝑏𝑜𝑒 + 𝐹𝑦𝑞𝑝𝑠𝑢𝑡 = 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝑇𝑣𝑞𝑞𝑚𝑧 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝑇𝑣𝑞𝑞𝑚𝑧 = 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝑇𝑣𝑞𝑞𝑚𝑧 𝐶𝐵𝑉 + 𝐽𝑛𝑞𝑝𝑠𝑢𝑡 𝐶𝐵𝑉 + 1% 𝐻𝑚𝑝𝑐𝑏𝑚 𝐹𝑦𝑞𝑝𝑠𝑢 𝑁𝑏𝑠𝑙𝑓𝑢 • High Supply Growth (HSG) Scenario ; 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝐸𝑓𝑛𝑏𝑜𝑒 + 𝐹𝑦𝑞𝑝𝑠𝑢𝑡 = 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝑇𝑣𝑞𝑞𝑚𝑧 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝑇𝑣𝑞𝑞𝑚𝑧 = 𝐸𝑝𝑛𝑓𝑡𝑢𝑗𝑑 𝑇𝑣𝑞𝑞𝑚𝑧 𝐶𝐵𝑉 + 𝐽𝑛𝑞𝑝𝑠𝑢𝑡 𝐶𝐵𝑉 + 3% 𝐻𝑚𝑝𝑐𝑏𝑚 𝐹𝑦𝑞𝑝𝑠𝑢 𝑁𝑏𝑠𝑙𝑓𝑢 11
RESULTS – Supply Costs 1800 1600 1400 1200 1000 $/t 800 600 400 200 0 AB SK NL AB SK NL Reference Business Case (RBC) Competitive Business Case (CBC) Ammonia Ethylene Methanol Propylene 12
RESULTS – Cash Costs 1,600 1,200 $/t 800 400 0 Ammonia Methanol Ethylene/Propylene Ammonia Methanol Ethylene/Propylene Ammonia Methanol Ethylene/Propylene AB SK NL RBC CBC 13
RESULTS – Carbon Tax (Additional to Costs) 44.74 44.74 39.64 39.64 40 37.36 33.03 31.93 30 27.42 $/t 20 10 0 RBC CBC RBC CBC RBC CBC RBC CBC Ammonia Ethylene Methanol Propylene 14
RESULTS – Cash Flows and Pay Back Periods 15
RESULTS – Cash Flows and Pay Back Periods 16
RESULTS – Regional Price Competitiveness Ammonia Price 700 600 500 Price Range (US$/t) 400 300 200 100 0 North America Europe Asia RBC CBC 17
RESULTS – Regional Price Competitiveness Ammonia Price 700 600 500 $37 Price Range (US$/t) 400 $32 300 200 100 0 North America Europe Asia RBC CBC 18
RESULTS – Regional Price Competitiveness Methanol Price 500 450 400 350 Price Range (US$/t) 300 250 200 150 100 50 0 North America Europe Asia RBC CBC 19
RESULTS – Regional Price Competitiveness Methanol Price 500 450 400 350 Price Range (US$/t) $33 300 250 200 $27 150 100 50 0 North America Europe Asia RBC CBC 20
RESULTS – Regional Price Competitiveness Ethylene Price 1800 1600 1400 1200 Price Range (US$/t) 1000 800 600 400 200 0 North America Europe Asia RBC CBC 21
RESULTS – Regional Price Competitiveness Ethylene Price 1800 1600 $45 1400 1200 $40 Price Range (US$/t) 1000 800 600 400 200 0 North America Europe Asia RBC CBC 22
RESULTS – Regional Price Competitiveness Propylene Price 1800 1600 1400 1200 Price Range (US$/t) 1000 800 600 400 200 0 North America Europe Asia RBC CBC 23
RESULTS – Regional Price Competitiveness Propylene Price 1800 1600 $45 1400 1200 $40 Price Range (US$/t) 1000 800 600 400 200 0 North America Europe Asia RBC CBC 24
RESULTS – Economic Impacts of Scenarios BAU Total GDP Increase Total Tax Increase Jobs created Total Pay (USD Million) (USD Million) Increase Economic Impacts (USD Million) Methanol 2020 - - - - 2030 5.69 0.88 16 0.46 2040 44.30 9.30 64 0.75 2050 107.02 28.27 103 1.21 Ammonia 2020 - - - - 2030 68.99 4.70 199 2.04 2040 261.22 20.49 376 3.83 2050 574.02 48.96 551 5.81 Ethylene 2020 - - - - 2030 134.10 53.41 386 4.27 2040 604.83 280.04 870 10.21 2050 1,528.16 777.57 1,466 18.35 Propylene 2020 - - - - 2030 15.77 5.38 45 0.61 2040 79.67 33.09 115 1.37 2050 204.22 96.83 196 2.50 25
RESULTS – Economic Impacts of Scenarios MSG Total GDP Increase Total Tax Increase Jobs created Total Pay Increase (USD Million) (USD Million) (USD Million) Economic Impacts Methanol 2020 4.01 0.62 115 0.63 2030 50.34 10.90 145 0.97 2040 131.79 35.50 190 1.57 2050 262.99 82.57 252 2.52 Ammonia 2020 7.45 0.37 214 1.17 2030 122.33 8.31 352 2.69 2040 357.91 28.05 515 4.54 2050 718.59 61.18 689 6.59 Ethylene 2020 26.63 8.31 766 4.17 2030 426.14 171.52 1,226 9.40 2040 1,288.35 593.25 1,854 17.25 2050 2,748.08 1,384.92 2,636 28.00 Propylene 2020 15.08 4.76 434 2.36 2030 194.07 76.83 559 3.80 2040 513.16 231.80 738 6.13 2050 1,019.11 504.83 978 9.62 26
RESULTS – Economic Impacts of Scenarios HSG Total GDP Increase Total Tax Increase Jobs created Total Pay Increase (USD Million) (USD Million) (USD Million) Economic Impacts Methanol 2020 6.39 1.23 184 1.00 2030 80.03 20.29 230 1.54 2040 208.95 62.80 301 2.48 2050 415.99 140.99 399 3.98 Ammonia 2020 14.91 0.85 429 2.34 2030 200.35 14.35 577 3.97 2040 522.11 41.95 751 5.96 2050 977.99 84.34 938 8.15 Ethylene 2020 48.62 15.66 1,399 7.62 2030 680.57 275.87 1,959 13.98 2040 1,891.42 871.36 2,722 23.52 2050 3,828.88 1,924.97 3,673 36.59 Propylene 2020 26.90 8.71 774 4.22 2030 336.63 135.50 969 6.46 2040 868.79 396.73 1,250 10.10 2050 1,693.17 844.49 1,624 15.56 27
CONCLUSIONS • Tariffs on imports is a major driver of whether to import or produce locally (relatively higher in Asian countries) • In terms of global trading opportunity, decreasing order would be: methanol, ethylene, propylene, and ammonia • Lower emissions transportation is a major driver of methanol demand growth • Many countries are going for self-sufficiency in ammonia production due to its ties to agricultural sector for fertilizer production • A lot of countries with negative olefins trade balance, indicate potential export opportunities • Export-focused olefins production might need to be in polymer form for ease of movement to destination markets • Oil-based pathways may not be viable in Canada, still crude oil access to market needed and future refinery-petrochemical investments integration maybe way forward 28
QUESTIONS? Please submit your text questions and comments using the Questions panel . A recording of the presentation will be sent to you following the event. 33
Recommend
More recommend
