David Stratas Federal Court of Appeal Writing up the argument.
Energy Future Sources and Challenges - Stratas Advisorslp.stratasadvisors.com › rs › 879-OFY-001...
Transcript of Energy Future Sources and Challenges - Stratas Advisorslp.stratasadvisors.com › rs › 879-OFY-001...
UPSTREAM | MIDSTREAM | DOWNSTREAM | FUEL & TRANSPORT
Energy – Future Sources and Challenges
John Paisie Executive Vice-President
TEL +1.713.260.4628 / MOBILE +1.832.517.7544
September 14, 2017
© Stratas Advisors. All rights reserved. 2
• Global consulting and advisory firm
• Coverage of the energy sector and related
industries
• Focused on helping clients achieve tangible results
• Clients include IOCs, NOCs, independents, energy
consumers, financial entities and policy-makers
• Research and consulting staff comprises
professionals located in key global energy centers
• Combined, our team brings over 500 years of
combined energy industry expertise, including
– Technical (Petroleum Engineers, Geologists, Process
Engineers)
– Economists
– Political Scientists
– Financial Analysts
Who We Are
www.stratasadvisors.com
© Stratas Advisors. All rights reserved. 3
Service Matrix
Upstream Midstream DownstreamFuel &
Transportation
Executive
SuiteBy Region By Industry
North
American
Shale
North
American
Shale-Related
Infrastructure
Global Refining
& Products
Global Fuel
SpecificationsThe Executive
Dialogue
AfricaHeavy
Industries
International
Shale Service
North
American Oil
North American
Refining &
Products
Global
Alternative
Fuels
Global Risk
OutlookAsia Logistics
Global
Hydrocarbon
Supply
North
American NGL
Base
Petrochemicals
Global Biofuels
Assessment
Macroeco-
nomic OutlookEurope
Power
Global Heavy
Crude Oil
Outlook
North
American
Natural Gas
Catalyst Market
Outlook
Global Biofuels
Outlook
Global Energy
Scenarios
Latin
AmericaPetrochemical
Global
Upstream
Projects
Analytics
Global Natural
Gas Outlook
Global Syngas
Conversion Global
Automotive
Long-term
Price
Forecasting
Middle East Financial
Global NGL
Outlook
Short-term
Price
Forecasting
North
America
Global LNGRussia &
CIS
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Examples of Consulting Offerings
Strategic
Alignment
Competitive
Assessment
Portfolio
Management
Organization
Development
Market
Studies
Value
Management
Transaction
Support
Risk
Management
Energy
Supply
Opportunity
Assessment
Supply
Chain
Strategic Initiatives
Performance Improvement Programs
Communication
Management
External Assessment
Client-Focused
Short-term
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Key Market ThemesHow market thinking has progressed this year
January 2017 September 2017
Showing weakness; led by US
gasoline data
Global
DemandShowing strength; supported
by Asian pricing spreads
OPEC cuts portend market
tightening
Global
Supply
OPEC cuts proven insufficient,
but extension might work
(March ‘18 vs. June ‘18)
Prices pushing higher while
forward curve remain flat
Crude
PricesPrices need to be higher to
support US production growth
Could be under pressure with
weak demand
Product
Prices /
Cracks
Strong global demand
supporting high cracks and
runs
New administration likely to
promote pro-business,
nationalist agenda
PolicyAdmin unlikely to shift US
policy in immediate term
© Stratas Advisors. All rights reserved. 7
Scenarios
© Stratas Advisors. All rights reserved. 8
Brent Price by Scenario
• Scenario 1
OPEC deal holds with
strong demand
• Scenario 2
OPEC deal collapses with
strong demand
• Scenario 3
OPEC deal holds with
strong weak demand
• Scenario 4
OPEC deal collapses with
weak demand
Looking Further Out
© Stratas Advisors. All rights reserved. 10
GDP Forecast
2016 Total GDP: 76.24 trillion USD 2035 Total GDP: 123.47 trillion USD
Source: Stratas Advisors , 2010 prices and exchange rates
Africa, 2.37, 3.1%
Asia, 24.58, 32.2%
Europe, 20.61, 27.0%
Latin America,
5.65, 7.4%
Middle East, 2.25, 2.9%
North America,
18.66, 24.5%
Russia & CIS, 2.12,
2.8%
Africa, 4.63, 4%
Asia, 48.69, 39%
Europe, 26.71, 22%Latin
America, 9.42, 8%
Middle East, 3.76, 3%
North America,
27.05, 22%
Russia & CIS, 3.22,
2%
© Stratas Advisors. All rights reserved. 11
Oil Demand by Region
0
20
40
60
80
100
120
140
2016 2025 2035
Millio
n b
/d
Africa Asia Europe Latin America Middle East North America
Source: Stratas Advisors
• Global oil demand is expected to continued to increase
• Asia will represent the overwhelming portion of future demand growth
• Demand in North America and Europe is expected to decline
© Stratas Advisors. All rights reserved. 12
Oil Demand by Sector
0
20
40
60
80
100
120
140
2016 2025 2035
Millio
n b
/d
Non-Road Transportation Commercial & Residential Industrial
On-Road Transportation Other Electricity Generation
Source: Stratas Advisors
• The transportation sector will represent an increasing portion of overall oil demand
• Furthermore, the bulk of incremental demand will stem from the transportation sector
© Stratas Advisors. All rights reserved. 13
China Product Demand
0
1,000
2,000
3,000
4,000
5,000
6,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Motor gasoline Diesel Other Gasoil Fuel oil
Tb
/d
© Stratas Advisors. All rights reserved. 14
US Product Demand
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Motor gasoline Diesel Other Gasoil Fuel oil
Tb
/d
© Stratas Advisors. All rights reserved. 15
Global Electric Vehicle Sales
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Nu
mb
er
of
Ve
hic
les
Mil
lio
ns
Canada United States Australia China - People's Republic India
Indonesia Japan Malaysia Pakistan Philippines
Russia South Korea Taiwan Thailand Austria
Belgium Czech Republic Denmark Finland France
Germany Greece Hungary Iceland Ireland
Italy Luxembourg Netherlands Norway Portugal
Spain Sweden Switzerland Turkey United Kingdom
Poland Argentina Brazil Chile Colombia
Mexico Peru Venezuela
© Stratas Advisors. All rights reserved. 16
Global EV & PHEV % of Sales
80%
82%
84%
86%
88%
90%
92%
94%
96%
98%
100%
Perc
en
tag
e o
f N
ew
Sale
s
Global - All Other LDVs Global EV & PHEV
© Stratas Advisors. All rights reserved. 17
US Electric Vehicle Sales
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Nu
mb
er
of
Veh
icle
s
PC - 100 Mile Electric Vehicle PC - 200 Mile Electric Vehicle PC - Plug-In 10 Gasoline Hybrid
PC - Plug-In 40 Gasoline Hybrid LDT - 100 Mile Electric Vehicle LDT - 200 Mile Electric Vehicle
LDT - Plug-In 10 Gasoline Hybrid LDT - Plug-In 40 Gasoline Hybrid
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U.S. EV & PHEV New Sales Penetration Rates – Driven by CAFE Compliance
United States: EV & PHEV Sales % (2016-2035)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Perc
en
tag
e o
f N
ew
Sale
s
PC - All Other LDT - All Other PC - EV & PHEV LDT - EV & PHEV
© Stratas Advisors. All rights reserved. 19
Europe Electric Vehicle Sales
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Nu
mb
er
of
Veh
icle
s
Austria Belgium Czech Republic Denmark Finland France
Germany Greece Hungary Iceland Ireland Italy
Luxembourg Netherlands Norway Portugal Spain Sweden
Switzerland Turkey United Kingdom Poland
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Europe EV & PHEV New Sales Penetration Rates – Driven by E.C. Target ( 2021- 95
gCO2/Km); Additionally driven by country level legislative bans (France, Germany, etc.)
Europe: EV & PHEV Sales % (2016-2035)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Perc
en
tag
e o
f N
ew
Sale
s
All Other LDVs EV & PHEV
© Stratas Advisors. All rights reserved. 21
China Electric Vehicle Sales
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Nu
mb
er
of
Veh
icle
s
Plug-In Gasoline Hybrid Plug-In Diesel Hybrid Electric
© Stratas Advisors. All rights reserved. 22
China EV & PHEV New Sales Penetration Rates – Driven by ‘NEV’ Program
China: EV & PHEV Sales % (2016-2035)
86%
88%
90%
92%
94%
96%
98%
100%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Perc
en
tag
e o
f N
ew
Sale
s
All Other LDVs EV & PHEV
© Stratas Advisors. All rights reserved. 23
Oil Production
0
20
40
60
80
100
120
2016 2025 2035
Millio
n B
bl/d
Oil Production* By Region
AFRICA LATIN AMERICA ASIA PACIFIC NORTH AMERICAEUROPE MIDDLE EAST RUSSIA & CIS
*: Oil Production Include Crude Oil and Field CondensateSource: Stratas Advisors
• North American production is forecasted to increase substantially during the next 20
years – increasing from 12.6 MMBPD to 21.2 MMBPD
• Production from the Middle East will increase even more – from 28.7 MMBPD to
nearly 41.0 MMBPD
© Stratas Advisors. All rights reserved. 24
Oil Production
0
20
40
60
80
100
120
2016 2025 2035
Millio
n B
bl/d
Oil Production OPEC** vs Non-OPEC
OPEC CRUDE OPEC CONDENSATE NON-OPEC CRUDE NON-OPEC CONDENSATE
**: OPEC Group: Algeria, Angola, Libya, Nigeria, Gabon, Ecuador, Venezuela, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, UAE
Source: Stratas Advisors
• OPEC will continue to play an important role over the next 20 years
• OPEC’s share of production will increase from around 40% to 43%
© Stratas Advisors. All rights reserved. 25
Natural Gas Demand by Region
0
50
100
150
200
250
300
350
400
450
2016 2025 2035
BC
FD
Africa Asia Europe Latin America Middle East North America
Source: Stratas Advisors
• Global demand for natural gas is expected to continued to increase
• Asia will represent the overwhelming portion of future demand growth
© Stratas Advisors. All rights reserved. 26
Natural Gas Demand by Sector
0
100
200
300
400
500
600
2016 2025 2035
BC
FD
Non-Road Transportation Commercial & Residential Industrial
On-Road Transportation Other Electricity Generation
Source: Stratas Advisors
• The bulk of future demand growth will come from the industrial and electricity
generation sectors
• Demand associated with electricity generation will increase by 55%
© Stratas Advisors. All rights reserved. 27
Natural Gas Production
0
100
200
300
400
500
600
2016 2025 2035
Billio
n C
f/d
Natural Gas*** Production By Region
AFRICA LATIN AMERICA ASIA PACIFIC NORTH AMERICAEUROPE MIDDLE EAST RUSSIA & CIS
***: Marketed Dry Natural Gas ProductionSource: Stratas Advisors
• The bulk of future supply will come from North America and Russia & CIS
• Production from North America is forecasted to nearly double over the next 20 years
© Stratas Advisors. All rights reserved. 28
Scenario Narratives
• Upside Case: Shifting to a New Global Framework
– Technology / carbon reduction focus
• Reference Case: Muddling Through
– Business as usual / focus on efficiency
• Downside Case: Breakdown into Multi-Polarization
– Energy Security Focus
© Stratas Advisors. All rights reserved. 29
Scenario Inputs
Factor Reference Upside Downside
GDP Growth Moderate Strong Weak
Technology
penetration
Power-focused;
efficiency gains
strong but new
tech minimal on
transportation
Aggressive
penetration
of
renewables
and EVs;
strong
efficiency
gains
Moderate,
but based
on energy
security, not
carbon
Geopolitical
stability
Regional
conflicts
Focus on
global
cooperation
Trade wars,
conflict
ridden
Policy Limited
meaningful
action; some
countries take
action
Widespread
carbon-
reduction
focus
Energy-
security
focused
Relative Impact of Factors
© Stratas Advisors. All rights reserved. 30
Reference Case – Muddling Through
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030 2035 2040
Oil and Oil Products Natural Gas Coal Renewables Hydro Nuclear
mm
bo
ed
© Stratas Advisors. All rights reserved. 31
Upside Case – New Global Framework m
mb
oed
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030 2035 2040
Oil and Oil Products Natural Gas Coal Renewables Hydro Nuclear
© Stratas Advisors. All rights reserved. 32
Downside Case – Breakdown in Multi-Poles
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030 2035 2040
Oil and Oil Products Natural Gas Coal Renewables Hydro Nuclear
mm
bo
ed
© Stratas Advisors. All rights reserved. 33
Oil Price Outlook – Brent Crude
0
20
40
60
80
100
120
140
2010 2015 2020 2025 2030 2035
$/B
BL
(n
om
inal)
Upside Case Downside Case Reference Case
Business as usual –
increasing demand with
cost inflation
Demand pops on strong
growth, but wanes as
fracking spreads and
world moves away from
CO2
Demand weak; price
oscillates as OPEC invests
to suppress new
investment and gain share
© Stratas Advisors. All rights reserved. 34
Natural Gas Price Outlook – Henry Hub
Exports drive greater
demand – both through
LNG and pipeline –
setting marginal price
Strong gas demand as
world becomes more
CO2 focused; price
increases temper as
fracking spreads
Price remains US centric
as trade is stymied and
carbon reduction remains
of minimal concern
0
1
2
3
4
5
6
7
8
9
10
2010 2015 2020 2025 2030 2035
$/M
Mb
tu(n
om
inal)
Upside Case Downside Case Base Case
Conclusion
© Stratas Advisors. All rights reserved. 36
Key Takeaways
• Non-OECD demand and demand growth – across the value chain – will
continue to grow in importance
• Sales of electric vehicles are increasing – but a major upward shift is not
expected until the second half of the 2020s
• OPEC is not going away – even with increasing North American shale-
related production
• The US energy sector is becoming more integrated with and dependent on
the rest of the world
• Utilization of alternative fuel sources will continue to grow – but
hydrocarbons will still play a major role
• There will be more volatility with respect to the oil market in comparison to
the natural gas market
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