NPEC Meeting, July 12, 2017 Geoffrey Styles GSW Strategy Group, LLC
Hydrocarbons supply ~98% of Iran’s energy Gas production & consumption still growing ◦ 6% CAGR since 2006 ◦ Led by electricity, industrial and petrochemical segments ◦ Exports become significant around 2020 Electricity consumption near all-time high ◦ 53 GW earlier this month ◦ Expected to roughly double by 2040, led by industrial growth
Oil – 157.8 BB (billion barrels) ◦ #4 in global proved reserves ◦ 110 years at current production Gas – 1,201 TCF ( 207 BBOE) ◦ #1 in global proved reserves ◦ 177 years at current production Coal – 2.5 B tons ◦ Production ~ 2 M tons/yr Significant renewable energy potential, especially solar Data: 2016 BP Statistical Review of World Energy
Current reserves essentially all conventional Additional shale resource potential of 2 BB ◦ Unlikely to be economical for years Plans to expand oil production to 5 MBD Gas production growth mainly from S. Pars ◦ Primarily domestic consumption ◦ Constrained by int’l capital and export capacity
Annual Solar Irradiance, Peak-Sun Hours Source: NASA SSE GIS
Signed Paris Agreement ◦ Pending ratification and entry into force INDC committed to 4-12% vs. BAU by 2030 ◦ Conditioned on sanctions, financial/tech transfer, other aid and transfers ◦ Mentions nuclear, renewables and CCGT ◦ Hydrocarbon development still needed for social & economic goals On a practical level, local air pollution appears to be a bigger concern
Multiple low-emission, non-nuclear options for meeting future electricity demand ◦ Natural gas Substituting gas for fuel oil in existing power plants would cut CO2 by 30-60% per MWH CCS options for ~zero-emission gas Incl. “ Allam cycle” gas plants Unknown potential market for captured CO2 ◦ Solar Good candidate for PV or CSP but cost of former dropping much faster than latter
Oil displacement for exports widely discussed as rationale for nuclear power Currently burning ~350 MBD f.o. for power, equivalent to 10% of total oil production. However, global market for HSFO is shrinking, especially in light of IMO 2020 sulfur cap Export opportunities for gas Turkey, Armenia, Iraq Fallacy of nuclear displacement rationale
Subsidy reform of 2010 substituted cash subsidies to families for fuel subsidies However, energy prices still controlled at well-below market levels ◦ E.g., current gasoline pump price ~$1/gal. ◦ Electricity price ~ 1¢/kWh
Iran has 3.5 million CNG vehicles ◦ #1 globally ◦ ~20% of all passenger cars, essentially saturated Currently modest exporter of gas, but large demand centers in close proximity Analysis by the Stanford Iran 2040 Project concluded that for alternative* generation aimed at gas displacement to be economical, the equivalent PPA price must be <8 ¢/kWh.
Scale: Only 5% of 2014 generation from RE ◦ Mostly large hydro Iran renewable energy agency (SUNA) ◦ But Iranian RE industry small (More needed here)
Iran’s oil minister on record citing $200 B of int’l investment needed in oil & gas sector ◦ Total/CNGC $5B deal for South Pars (Phase 11) is a downpayment on this (More needed here)
Source: Lazard “ Levelized Cost of Energy Analysis - Version 10.0”
Source: Lazard “ Levelized Cost of Energy Analysis - Version 10.0”
McKinsey marginal GHG analysis (2010) clearly outdated Use well-to-wheels analysis and social cost of carbon as a proxy? Cost/benefit analysis in CPP?
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