Introduction Some Comments on the Challenges Ahead 22 August 2019 - PowerPoint PPT Presentation

Introduction Some Comments on the Challenges Ahead 22 August 2019 The Workshop on LNG Demand Development & Security in Asia Jakarta, Indonesia Lucian Pugliaresi Energy Policy Research Foundation, Inc. Washington, DC eprinc.org 1

WHY THIS IS AN IMPORTANT PROJECT…………………………………………………………….. The Indo-Pacific is the single most consequential region for America’s future Nine of the world’s 10 busiest seaports are in the region, and 60 percent of global maritime trade transits through Asia. The Indo-Pacific contributes two-thirds of global growth in gross domestic product (GDP) and accounts for 60 percent of global GDP. This region includes the world’s largest economies – the United States, China, and Japan – and six of the world’s fastest growing economies – India, Cambodia, Laos, Burma, Nepal, and the Philippines. A quarter of U.S. exports go to the Indo-Pacific, and exports to China and India have more than doubled over the past decade. This is made possible by free and open trade routes through the air, sea, land, space, and cyber commons that form the current global system. 2

US Government LNG Initiatives Gaining Momentum…………….. Ø Asia Edge Initiative Underway (State Dept, USAID, DOC, DOE, EX-IM, OPIC, & Treasury for Asian Energy) Ø TDA LNG Infrastructure Initiative Ø US Build Act (Development Finance Corporation goes Live On Oct 1, 2019) – a more balanced partnership possible with JBIC and NEXI Ø White House Executive Orders for Regulatory Reform on Pipeline Approval Process, National Environmental Policy Act Reviews Accelerated and Simplified Ø FERC Accelerates LNG Approval Process, MOU with Pipeline Hazardous Materials Administratio (PHMSA) – Opens Houston Office Ø US DOE Export Approvals Accelerate – No Constraints on Alternative Destinations. Approval of Small Scale LNG exports are fast tracked Ø U.S. Senate (Chairman Murkowski) Introduces Legislation for Strategic Energy Initiative, and do not forget …… Ø Japan US Strategic Energy Partnership (JUSEP) 3

US Natural Gas Production Continues to Grow………………………………………….. 4 Source: EIA, Industry Reports

67 MMT per year by 2020 >20% 2018 Global LNG Trade Source: EIA, Industry Reports 5

The Power of the Utica/Marcellus NatGas Remains (Its Not All About the Permian) LOWER 48 Production Approaching 90 Bcf/d Utica/Marcellus 6 Source: OPIS

New Natural Gas Pipelines Providing Diversified Sources and Transportation Routes ………………………… 7 Source: RBN

Understanding Forecast Risks What the Big Cost-Based Models Tell Us 650 Quads All models are wrong, but some are useful – More likely to see more fossil fuel demand than replacement by renewable fuel 8 Source: ExxonMobil

9 Source: ExxonMobil

THANK YOU!! 10

SLIDES FOR ADDITIONAL DISCUSSION 11

… due to production growth & low prices … 12 12 12

This North American production platform provides 25% of world oil production valued at $1 trillion!!! 320 TBD 320 TBD 320 TBD 320 TBD Exports! Exports! Exports! Exports! 5 5 13 5 13 5 5 5

Mature Asia-Pacific Gas Markets are stable… 14 14 14

Key Developing Gas Markets are growing … 15 15 15

U.S. LNG Is Finding Asian Destinations … 16 16 16

Large Markets Are Key To Expansion … Primary Energy Demand in Four Select Countries as Perecentage of Total Asia-Pacific Energy Demand Ann.Growth Asia 2015 2030 Rate China 76.2% 76.9% 2.7% India 20.0% 19.9% 2.6% Philippines 0.9% 0.7% 1.4% Thailand 3.0% 2.6% 1.9% EPRINC Primary Energy Demand in Four Select Countries Percentage PowerGen Energy Demand by Resource Asia Coal Natural Gas China 72.7% 2.9% India 68.0% 11.7% Philippines 30.9% 19.9% Thailand 26.2% 63.2% EPRINC 17 17 17

But Headwinds Creating Uncertainty … 18 18 18

Number of U.S. LNG Cargoes Shipped To China First Half 2019 vs 2018 2018 17 2019 3 EPRINC 19 19 19

Potential Volumes Filled By US (Optimistic) 20 Source: Global forecast from Poten & Partners, US Volume from EPRINC