Natural Gas Supply/Demand Outlook Presentation to: The Fertilizer - PowerPoint PPT Presentation

Natural Gas Supply/Demand Outlook Presentation to: The Fertilizer Outlook and Technology Conference Jacksonville, Florida By: John Harpole November 14, 2018

Fertilizer Industry vs. Natural Gas Industry Source: http://www.search.com/reference/Lucy_van_Pelt 3

$/MMBtu BENTEK Expects The Forward Curve To Fall Further $0 $1 $2 $3 $4 $5 $6 $7 11/1/2010 2/1/2011 NYMEX *Forecast from my 2010 speech: 5/1/2011 8/1/2011 11/1/2011 BENTEK Est. 2/1/2012 5/1/2012 8/1/2012 11/1/2012 2/1/2013 5/1/2013 8/1/2013 11/1/2013 2/1/2014 5/1/2014 Source: BENTEK 8/1/2014 11/1/2014 2/1/2015 5/1/2015 8/1/2015 11/1/2015 4

Circa 2010 What will impact natural gas prices during the next 5 years? • Shale gas/productivity gains (We aren’t exploring, we are manufacturing gas.) • Lower EPA Air Standards (demand increase) • Renewable Portfolio Standards (in an inexpensive gas environment?) • Coal to gas conversion (demand increase) • Demand in Mexico (potential demand increase) • LNG exports from North America (China is waiting) 5

Natural Gas Outlook Presentation to : 2013 Fertilizer Outlook & Technology Conference Tampa, Florida By: John Harpole November 20, 2013

Conclusions from November 20, 2013 • U.S. continues to produce more gas, shale gas revolution was too successful, end-users will benefit • During the next 3 years, supply will likely exceed demand • Prices will remain in the $3.50 to $4.75 range, with short period above and below that band during adjustments • Long term prices depend on demand growth. Without demand growth, supply will continue to be long and prices relatively low. • A significant demand response can’t occur for at least 3 - 5 years 7

The End of Scarcity? Natural Gas Outlook Presentation to : The Fertilizer Outlook and Technology Conference Jacksonville, FL By: John Harpole November 11, 2015

Circa 2015 The Big Three Issues to Watch 1. Global Oil Price Recovery 2. Marcellus and Utica Shale Production 3. U.S. LNG Exports 9

1990-2013: Wellhead total data from DI Desktop 2014-2025: Kinder Morgan forecast 10 Source: Kinder Morgan, 2015 Business Meeting: West Region Gas Pipelines, November 2, 2015

11 Source: Kinder Morgan, 2015 Business Meeting: West Region Gas Pipelines, November 2, 2015

NYMEX Historical and Future Forecast $10.00 $9.00 $8.00 $7.00 $6.00 Per MMBtu $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 NYMEX – 1996- Nov 2018 - Average last 3 days of close as reported in Platts Gas Daily Report, Publication 2019-2021 Future Forecast as of 11/07/2018 reported by MarketView Software 12

It is not a scarce resource anymore 13

US RIG COUNTS: Aug 2018 vs Aug 2016 61/+34 2/+0 OTHER ROCKIES WILLISTON MICHIGAN 1/+1 19/+17 POWDER RIVER MARCELLUS WIND RIVER 2/+1 OTHER DRY D-J 12/+5 MIDCONTINENT ILLINOIS 32/+24 25/+7 GREEN RIVER 5/+2 122/+68 5/+1 UTICA 6/+2 8/+5 18/+9 ANADARKO PICEANCE UINTA MARCELLUS WET ARK FAYETTEVILLE 1/-1 0/+0 15/+9 46/+11 1/+0 4/+4 OTHER RATON EAST ARK WOODFORD APPALACHIAN SAN TX 35/+21 10/+8 CALIFORNIA JUAN PERMIAN ARKLA 33/+21 15/-1 2/-2 25/+1 TOTAL AL-MS-FL 471/+290 1144 FT 23/+12 10/+0 WORTH LA GULF CHANGE TX GULF Rig Increases Dry Gas Focused Areas OFFSHORE +610 96/+57 45/+3 Rig Increases Liquids-Rich/Oil Focused Areas TX GULF Source: S&P Global, Aug 2018 Rig Declines EAGLE FORD Active rig count: Aug 3, 2018 / Change in rig count from Aug 5, 2016 Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 14

Source: LNG Allies, The US LNG Association, www.lngallies.com 15

Source: LNG Allies, The US LNG Association, www.lngallies.com 16

US supply growing again; largest year-over-year gain in history Y-O-Y U.S. Dry Gas Production (Forecast) Bcf/d 2017/2018 85 +7.0 Bcf/d Y-O-Y (YTD) 80 2017/2018 +5.0 Bcf/d 75 Y-O-Y 2014/2015 70 +3.4 Bcf/d Y-O-Y 2013/2014 65 +4.0 Bcf/d 60 2013 2014 2015 2016 2017 2018 Forecast Source: S&P Global Platts Analytics Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 17

Source: LNG Allies, The US LNG Association, www.lngallies.com 18

Source: www.eia.gov/dnav/ng/hist/n9132mx2m.thm accessed 08/20/2018 19

Major delays on Mexico’s interior gas pipelines Mexican Pipeline Construction Tracker Project Details Start Date Tracker Pipeline Import Corridor Capacity MMcf/d Original ISD Estimated Start 6/1/2018 Days Delayed El Encino - La Laguna West Texas 1,500 Apr-17 Mar-18 334 El Encino - Topolobampo West Texas 670 Oct-16 Jun-18 608 Nueva Era South Texas 504 Jun-17 Dec-18 548 Tula - Villa de Reyes South Texas 886 Dec-17 Jul-18 212 La Laguna - Aguascalientes West Texas 1,189 Dec-17 Nov-18 335 Villa de Reyes - Aguas. - Guadalajara West Texas 886 Dec-17 Nov-18 335 Samalayuca - Sasabe West Texas 472 Jun-17 Nov-18 518 Sur de Texas - Tuxpan South Texas 2,600 Jun-18 Oct-18 122 Tuxpan - Tula South Texas 886 Mar-17 Dec-19 1,005 Average Delay 460 • 4.7 Bcf/d delayed downstream of West Texas • 4.9 Bcf/d delayed downstream of South Texas • Average delay over 400 days • Most new capacity delayed past 2018 • US pipeline exports will remain capacity constrained until 2019 Source: SENER, S&P Global Platts Analytics Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 20

Downstream constraints alleviated in 2019 MEXICO IMPORT CAPACITY CONSTRAINTS (BCF/D) Imports peak at ~6.2 Bcf/d in Jul-19 Imports peak at ~4.9 Bcf/d in Oct-18 15 10 5 0 2017 2018 2019 Imports Border Capacity Estimated Downstream Constraint Source: S&P Global Platts Analytics Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 21

Source: LNG Allies, The US LNG Association, www.lngallies.com 22

Source: LNG Allies, The US LNG Association, www.lngallies.com 23

Source: LNG Allies, The US LNG Association, www.lngallies.com 24

High Utilization of US LNG Expected to Persist US LNG Feedgas Capacity and Forecast 12 Elba Island T7-10 Elba Island T1-6 Corpus Christi T2 10 Corpus Christi T1 Cove Point T1 8 Cameron LNG T3 Bcf/d Cameron LNG T2 6 Cameron LNG T1 Freeport LNG T3 4 Freeport LNG T2 Freeport LNG T1 2 Sabine Pass T5 Sabine Pass T4 Sabine Pass T3 0 Sabine Pass T2 Sabine Pass T1 LNG Export Forecast LNG Feedgas Forecast Source: S&P Global Platts Analytics Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 25

Latin America and Asia main markets US LNG 17% to India and Middle-East Netherlands 6 Bcf Lithuania UK 3 Bcf 9 Bcf POLAND SPAIN SOUTH PORTUGAL TURKEY 3 Bcf 27 Bcf KOREA PAKISTAN 23 Bcf 29 Bcf CHINA 151 Bcf ITALY 13 Bcf SABINE PASS and COVE JORDAN 163 Bcf 7 Bcf KUWAIT POINT LNG TERMINALS 65 Bcf MALTA 30 Bcf JAPAN Israel 5 Bcf 87 Bcf 3 Bcf 10% MEXICO DOMINICAN TAIWAN INDIA UAE 275 Bcf REPUBLIC EGYPT 12 Bcf 65 Bcf 17 Bcf 15 Bcf 17 Bcf to Colombia THAILAND 2 Bcf Europe 3 Bcf 37% BRAZIL 36% to Asia 45 Bcf to Americas ARGENTINA 46 Bcf CHILE 68 Bcf 1,240 BCF US LNG exports shipped to 27 countries Source: S&P Global Platts Analytics *Numbers may not add up to 100% due to rounding Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 26

Asia Clearly Driving LNG Demand Bcf/d LNG Demand By Region 60 LNG Demand in Asia expected to 50 account for roughly 50% of the total 40 LNG demand growth 2023 v 2018 30 20 10 0 Asia Demand Europe Demand ME Demand Americas Demand Other Demand Source: S&P Global Platts Analytics Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 27

China almost 30% of growth in global LNG demand (2018 to 2023) 60 18% 16% 50 14% 40 12% Bcf/d 10% 30 8% 20 6% 4% 10 2% 0 0% China All Others China % of Total Source: S&P Global Platts Analytics Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 28

Source: Greg Ruben, KinderMorgan, Colorado Oil and Gas Association Trade presentation, August 21, 2018 29

Source: Greg Ruben, KinderMorgan, Colorado Oil and Gas Association Trade presentation, August 21, 2018 30

Global Supply Concentrate to Three Players Bcf/d LNG Supply By Region 60 50 US follows ramp in Australian volumes; +60% of total liquefaction 40 capacity increase 2023 v 2018 30 20 10 0 Other Supply Qatar Supply US Supply Australian Supply Source: S&P Global Platts Analytics Source: Rick Allen, S&P Global Platts, The Energy Summit – COGA 2018 presentation, August 22, 2018 31

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Source: LNG Allies, The US LNG Association, www.lngallies.com 33

Source: LNG Allies, The US LNG Association, www.lngallies.com 34

35 Source: Antero Resources Company Presentation, November 2018

36 Source: Antero Resources Company Presentation, November 2018

37 Source: Antero Resources Company Presentation, November 2018