Petroleum and Natural Gas Markets Workshop This event will begin - PowerPoint PPT Presentation

EIA Workshop Series: Trends and Expectations Surrounding the Outlook for Energy Markets Petroleum and Natural Gas Markets Workshop This event will begin shortly. www.eia.gov/outlooks/aeo/workshop/energy_markets/

Petroleum and Natural Gas Markets Worksho p Session 1: Identifying signposts for rebalanced oil and gas markets Panelists: • John Kemp, Reuters • Kevin Book, Clearview Energy Partners (Managing Director) www.eia.gov/outlooks/aeo/workshop/energy_markets/

Oil market situation Selected indicators JOHN KEMP REUTERS 28 September 2020

What do we mean by “oil market rebalancing”? At least five elements Closer balance between supply & demand Normalisation of crude & product stocks Forward price curve Sustainable flat price Sustainable investment We will put aside for the moment the question of whether the oil market has ever been or will be “in balance”

O IL M ARKET Q UESTIONS F OR AN “A STERISK Y EAR ” P RESENTATIONTO THE U.S. E NERGY I NFORMATION A DMINISTRATION K EVIN B OOK M ANAGING D IRECTOR S EPTEMBER 29, 2020

D ISCLOSURES Risks Legislative, regulatory and diplomatic agendas are subject to change. Analyst Certifications I hereby certify that the views expressed in this presentation accurately reflect my personal views as of the date of this presentation. I further certify that no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views contained in this presentation. By: Kevin Book Disclosures The opinions, forecasts, recommendations, projections and interpretations of macro events contained in this report are those of the analysts preparing this report and are based upon information available to them as of the publication date of this report. The analysts preparing this report based the opinions, forecasts, recommendations, projections and interpretations of macro events contained herein on sources they believe to be accurate and reliable, but completeness and/or accuracy is neither implied nor guaranteed. The opinions, forecasts, recommendations projections and interpretations of macro events contained herein are subject to change without notice. The analysts preparing this report are not registered lobbyists and do not advocate or lobby for any particular policy action on behalf of clients. Although this report may mention specific companies by name and/or specific industries and industry sectors, this report was not prepared, is not intended and should not be interpreted as a research report regarding the equity securities of any company. (c) 2009-2020 ClearView Energy Partners, LLC. 2 S EPTEMBER 29, 2020

T HE A STERISK : A S YMBOL OF O MISSION OR L IMITING F ACTS * Source: ClearView Energy Partners, LLC 3 S EPTEMBER 29, 2020

T HE A STERISK : A S YMBOL OF O MISSION OR L IMITING F ACTS Is Demand Different, And For How Long? • COVID-19 could change the nature of demand: (1) scale; (2) form; (3) timing; and (4) location. * • Examples: – Electrons at home vs. molecules on the road – Consumption effects of enhanced unemployment (and the loss of it) – Going local: U.S. light-duty consumption is ~10% of global liquids Source: ClearView Energy Partners, LLC 4 S EPTEMBER 29, 2020

T HE A STERISK : A S YMBOL OF O MISSION OR L IMITING F ACTS Key Uncertainties (1) How governmental, institutional and individual risk perceptions might shape consumption * behaviors; (2) The nature of COVID-19 itself, especially the existence and duration of immunity; and (3) The inertia and plasticity of economies wracked by stark job losses. Source: ClearView Energy Partners, LLC 5 S EPTEMBER 29, 2020

A STERISK -Y EAR D EMAND : L ESS A IR T RAVEL An Industry Conference In the 2020s? * Source: ClearView Energy Partners, LLC, using photo from blog.zoom.us 6 S EPTEMBER 29, 2020

A STERISK -Y EAR D EMAND : L ESS D AILY C OMMUTING The Morning Commute In the 2020s? * Source: ClearView Energy Partners, LLC, using photo from freepik.com 7 S EPTEMBER 29, 2020

A STERISK -Y EAR D EMAND : L ESS P UBLIC T RANSIT FOR T HOSE W HO C OMMUTE Public Transportation In the 2020s? * Source: ClearView Energy Partners, LLC, using photo from vox.com credited to Kevork Djansezian/Getty Images 8 S EPTEMBER 29, 2020

A STERISK -Y EAR D EMAND : L OWER L ABOR I NTENSITY A T W ORK Factory Workers In the 2020s? * Source: ClearView Energy Partners, LLC, using photo from airbus.com 9 S EPTEMBER 29, 2020

A STERISK Y EAR S UPPLY Q UESTION #1: OPEC+ ( OR OPEC*) ? OECD OPEC Cut Inventories 500 Sept 2016 vs. 5 Year OPEC Increase OPEC Cut Nov 2006 Average Apr - Oct 2000 400 - Feb 2007 (MM bbl) OPEC Cut OPEC Cuts Feb 300 Apr 2020 2001 - Jan 2002 OPEC Cuts Nov 2008 - Jan 2009 200 100 0 -100 OPEC Increase July 2004 - July 2005 OPEC Increase -200 June 2018 OPEC Increases Jan - Jun 2003 -300 Jan-00 Aug-00 Mar-01 Oct-01 May-02 Dec-02 Jul-03 Feb-04 Sep-04 Apr-05 Nov-05 Jun-06 Jan-07 Aug-07 Mar-08 Oct-08 May-09 Dec-09 Jul-10 Feb-11 Sep-11 Apr-12 Nov-12 Jun-13 Jan-14 Aug-14 Mar-15 Oct-15 May-16 Dec-16 Jul-17 Feb-18 Sep-18 Apr-19 Nov-19 Jun-20 Source: ClearView Energy Partners, LLC, using EIA data (thru September 2020 STEO) 10 S EPTEMBER 29, 2020

A STERISK Y EAR S UPPLY Q UESTION #2: U PSTREAM C APEX AND S UPPLY $ B MM $300 8 U PSTREAM C APEX C LOSELY L INKED (R 2 = ~0.72) W /S AME Y EAR P RODUCTION bbl/d 7 $250 6 $200 5 $150 4 3 $100 2 $50 1 $0 0 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 CY 2019 CY 2020P Adjusted Global Oil Investment ($ B) Estimated New Oil Supply (MM bbl/d) Source: ClearView Energy Partners, LLC, using BP, EIA and IEA data 11 S EPTEMBER 29, 2020

M ORE L IKELY A B IRD ( OR S UPERMAN ) T HAN A P LANE Global 9 8.18 Jet Fuel/ 7.99 8.00 7.84 8 Kerosene Demand 6.89 7 (MM bbl/d) 6.23 6.05 6.04 5.89 6 5.49 4.80 5 4 3.18 3 2 1 0 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020P 4Q2020P 1Q2021P 2Q2021P 3Q2021P 4Q2021P Source: ClearView Energy Partners, LLC, using IATA and IEA data 12 S EPTEMBER 29, 2020

L OCKDOWN D EMAND D ESTRUCTION VS . I NCOME -D RIVEN D EMAND E FFECTS 10% 3.0% Gasoline Gasoline Share Product 5% of Supplied 2.5% 0% Per vs. -5% Capita Year- 2.0% DPI Ago -10% (%) (%) -15% 1.5% -20% 1.0% -25% -30% 0.5% -35% -40% 0.0% 1/2016 3/2016 5/2016 7/2016 9/2016 11/2016 1/2017 3/2017 5/2017 7/2017 9/2017 11/2017 1/2018 3/2018 5/2018 7/2018 9/2018 11/2018 1/2019 3/2019 5/2019 7/2019 9/2019 11/2019 1/2020 3/2020 5/2020 7/2020 Gasoline Product Supplied vs. Year-Ago (%) Annualized U.S. Gasoline Spending as a Share of Real, Per Capita DPI (%) Source: ClearView Energy Partners, LLC, using BEA, Census Bureau, EIA, FHWA and St. Louis Fed data 13 S EPTEMBER 29, 2020

M/M Δ U.S. C ASES VS . Y/Y Δ VMT B Y S TATE : M ARCH 2020 Monthly 1.80% Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption New 1.60% Cases as 1.40% Share 1.20% of State 1.00% Population, 0.80% March 2020 0.60% (%) 0.40% 0.20% 0.00% -0.20% -0.40% -10% 0% 10% 20% 30% 40% 50% 60% 70% Change in State VMT vs. Year-Ago, March 2020 (%) Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data 14 S EPTEMBER 29, 2020

M/M Δ U.S. C ASES VS . Y/Y Δ VMT B Y S TATE : A PRIL 2020 Monthly 1.80% Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption New 1.60% Cases as 1.40% Share 1.20% of State 1.00% Population, 0.80% April 2020 0.60% (%) 0.40% 0.20% 0.00% -0.20% -0.40% -10% 0% 10% 20% 30% 40% 50% 60% 70% Change in State VMT vs. Year-Ago, April 2020 (%) Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data 15 S EPTEMBER 29, 2020

M/M Δ U.S. C ASES VS . Y/Y Δ VMT B Y S TATE : M AY 2020 Monthly 1.80% Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption New 1.60% Cases as 1.40% Share 1.20% of State 1.00% Population, 0.80% May 2020 0.60% (%) 0.40% 0.20% 0.00% -0.20% -0.40% -10% 0% 10% 20% 30% 40% 50% 60% 70% Change in State VMT vs. Year-Ago, May 2020 (%) Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data 16 S EPTEMBER 29, 2020

M/M Δ U.S. C ASES VS . Y/Y Δ VMT B Y S TATE : J UNE 2020 Monthly 1.80% Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption New 1.60% Cases as 1.40% Share 1.20% of State 1.00% Population, 0.80% June 2020 0.60% (%) 0.40% 0.20% 0.00% -0.20% -0.40% -10% 0% 10% 20% 30% 40% 50% 60% 70% Change in State VMT vs. Year-Ago, June 2020 (%) Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data 17 S EPTEMBER 29, 2020

M/M Δ U.S. C ASES VS . Y/Y Δ VMT B Y S TATE : J ULY 2020P Monthly 1.80% Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption New 1.60% Cases as 1.40% Share 1.20% of State 1.00% Population, 0.80% July 2020 0.60% (%) 0.40% 0.20% 0.00% -0.20% -0.40% -10% 0% 10% 20% 30% 40% 50% 60% 70% Change in State VMT vs. Year-Ago, July 2020 (%) Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data 18 S EPTEMBER 29, 2020