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

Nov 19, 2023 224 likes •590 views

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

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Petroleum and Natural Gas Markets Workshop

This event will begin shortly.

EIA Workshop Series: Trends and Expectations Surrounding the Outlook for Energy Markets

www.eia.gov/outlooks/aeo/workshop/energy_markets/

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Session 1:

Identifying signposts for rebalanced oil and gas markets

Panelists:

  • John Kemp, Reuters
  • Kevin Book, Clearview Energy Partners (Managing Director)

Petroleum and Natural Gas Markets Workshop

www.eia.gov/outlooks/aeo/workshop/energy_markets/

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Oil market situation

Selected indicators

JOHN KEMP REUTERS 28 September 2020

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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”

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PRESENTATIONTO THE U.S. ENERGY INFORMATIONADMINISTRATION

KEVIN BOOK

MANAGING DIRECTOR

SEPTEMBER 29, 2020

OIL MARKET QUESTIONS FOR AN “ASTERISKYEAR”

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DISCLOSURES

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 SEPTEMBER 29, 2020

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THE ASTERISK: A SYMBOL OF OMISSION OR LIMITING FACTS

3 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC

*

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THE ASTERISK: A SYMBOL OF OMISSION OR LIMITING FACTS

4 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC

*

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

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THE ASTERISK: A SYMBOL OF OMISSION OR LIMITING FACTS

5 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC

*

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.

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ASTERISK-YEAR DEMAND: LESS AIR TRAVEL

6 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using photo from blog.zoom.us

*

An Industry Conference In the 2020s?

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ASTERISK-YEAR DEMAND: LESS DAILY COMMUTING

7 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using photo from freepik.com

*

The Morning Commute In the 2020s?

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ASTERISK-YEAR DEMAND: LESS PUBLIC TRANSIT FOR THOSE WHO COMMUTE

8 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using photo from vox.com credited to Kevork Djansezian/Getty Images

*

Public Transportation In the 2020s?

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ASTERISK-YEAR DEMAND: LOWER LABOR INTENSITY AT WORK

9 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using photo from airbus.com

*

Factory Workers In the 2020s?

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ASTERISK YEAR SUPPLY QUESTION #1: OPEC+ (OR OPEC*) ?

10 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using EIA data (thru September 2020 STEO) OPEC Increase Apr - Oct 2000 OPEC Cuts Feb 2001 - Jan 2002 OPEC Increases Jan - Jun 2003 OPEC Increase July 2004 - July 2005 OPEC Cut Nov 2006

  • Feb 2007

OPEC Cuts Nov 2008 - Jan 2009 OPEC Cut Sept 2016 OPEC Increase June 2018 OPEC Cut Apr 2020

  • 300
  • 200
  • 100

100 200 300 400 500 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 OECD Inventories

  • vs. 5 Year

Average (MM bbl)

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ASTERISK YEAR SUPPLY QUESTION #2: UPSTREAM CAPEX AND SUPPLY

11 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using BP, EIA and IEA data

1 2 3 4 5 6 7 8 $0 $50 $100 $150 $200 $250 $300 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 MM bbl/d $ B

UPSTREAM CAPEX CLOSELY LINKED (R2 = ~0.72) W/SAMEYEAR PRODUCTION

Adjusted Global Oil Investment ($ B) Estimated New Oil Supply (MM bbl/d)

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MORE LIKELY A BIRD (OR SUPERMAN) THAN A PLANE

12 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using IATA and IEA data

7.99 7.84 8.18 8.00 6.89 3.18 4.80 5.49 6.04 5.89 6.23 6.05 1 2 3 4 5 6 7 8 9 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020P 4Q2020P 1Q2021P 2Q2021P 3Q2021P 4Q2021P Global Jet Fuel/ Kerosene Demand (MM bbl/d)

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LOCKDOWN DEMAND DESTRUCTION VS. INCOME-DRIVEN DEMAND EFFECTS

13 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using BEA, Census Bureau, EIA, FHWA and St. Louis Fed data

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

  • 40%
  • 35%
  • 30%
  • 25%
  • 20%
  • 15%
  • 10%
  • 5%

0% 5% 10% 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 Share

  • f

Per Capita DPI (%) Gasoline Product Supplied vs. Year- Ago (%) Gasoline Product Supplied vs. Year-Ago (%) Annualized U.S. Gasoline Spending as a Share of Real, Per Capita DPI (%)

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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: MARCH 2020

14 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data

  • 0.40%
  • 0.20%

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80%

  • 10%

0% 10% 20% 30% 40% 50% 60% 70% Monthly New Cases as Share

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State Population, March 2020 (%) Change in State VMT vs. Year-Ago, March 2020 (%) Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption

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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: APRIL 2020

15 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data

  • 0.40%
  • 0.20%

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80%

  • 10%

0% 10% 20% 30% 40% 50% 60% 70% Monthly New Cases as Share

  • f

State Population, April 2020 (%) Change in State VMT vs. Year-Ago, April 2020 (%) Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption

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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: MAY 2020

16 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data

  • 0.40%
  • 0.20%

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80%

  • 10%

0% 10% 20% 30% 40% 50% 60% 70% Monthly New Cases as Share

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State Population, May 2020 (%) Change in State VMT vs. Year-Ago, May 2020 (%) Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption

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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: JUNE 2020

17 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data

  • 0.40%
  • 0.20%

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80%

  • 10%

0% 10% 20% 30% 40% 50% 60% 70% Monthly New Cases as Share

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State Population, June 2020 (%) Change in State VMT vs. Year-Ago, June 2020 (%) Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption

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M/M Δ U.S. CASES VS. Y/Y Δ VMT BY STATE: JULY 2020P

18 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, EIA, FHWA and Johns Hopkins CSSE data

  • 0.40%
  • 0.20%

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80%

  • 10%

0% 10% 20% 30% 40% 50% 60% 70% Monthly New Cases as Share

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State Population, July 2020 (%) Change in State VMT vs. Year-Ago, July 2020 (%) Bubble Size Corresponds to State Share of CY 2019 U.S. Road Fuels Consumption

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M/M Δ U.S. CASES VS. Y/Y Δ VMT: ALL U.S. STATES + DC

19 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, FEC, FHWA and Johns Hopkins CSSE data

0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 3/2020 4/2020 5/2020 6/2020 7/2020 Monthly New Cases as Share

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Population (%) VMT Decline vs. Year- Ago (%) VMT Decline vs. Year-Ago (%) New Cases as a Share of Population (%)

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M/M Δ U.S. CASES VS. Y/Y Δ VMT: 2016 “RED” (TRUMP) STATES

20 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, FEC, FHWA and Johns Hopkins CSSE data

0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 3/2020 4/2020 5/2020 6/2020 7/2020 Monthly New Cases as Share

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Population (%) VMT Decline vs. Year- Ago (%) VMT Decline vs. Year-Ago, R (%) New Cases as a Share of Population, R (%)

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M/M Δ U.S. CASES VS. Y/Y Δ VMT: 2016 “BLUE” (CLINTON) STATES

21 SEPTEMBER 29, 2020 Source: ClearView Energy Partners, LLC, using Census Bureau, FEC, FHWA and Johns Hopkins CSSE data

0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 3/2020 4/2020 5/2020 6/2020 7/2020 Monthly New Cases as Share

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Population (%) VMT Decline vs. Year- Ago (%) VMT Decline vs. Year-Ago, D (%) New Cases as a Share of Population, D (%)

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Session 2:

Supply competition in oil and gas markets

Panelists:

  • Mark Finley, Rice University’s Baker Institute (Fellow)
  • Sara V

akhshouri, SVB International (Founder)

  • Ross Wyeno, S&P Global Platts (Lead Analyst, LNG Analytics)

Petroleum and Natural Gas Markets Workshop

www.eia.gov/outlooks/aeo/workshop/energy_markets/

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Global Gas and LNG Market

September 29, 2020

Ross Wyeno Lead Analyst, Americas LNG Analytics S&P Global Platts

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Global LNG prices have been down trending since 2018, but the pandemic caused outright prices to invert below the Henry Hub

$0 $2 $4 $6 $8 $10 $12 $14 $/MMBtu

Global Gas and LNG Prices

JKM TTF Henry Hub M01 Oil-Indexed*

*Estimate based on 14.85% Brent Crude Oil

WHO Declares Global Pandemic

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US LNG exports became constrained this summer as global prices fell below the variable costs of delivered LNG

3

  • $2
  • $1

$0 $1 $2 $3 $4 $5 $6 $/MMBtu

US Gulf Coast LNG Netbacks

JKM TTF PSV

PRICE CONSTRAINED

2 4 6 8 10

Bcf/d

US LNG Feedgas Deliveries US LNG feedgas deliveries collapsed when netback spreads turned negative Exports expected to recover this winter, but price risks persist into 2021

LNG Netbacks: Destination market price minus variable costs of supply and transportation

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US is expected to become the worlds largest LNG exporter by 2022; North American capacity to breach 16 Bcf/d by 2026

4

5 10 15 20 Bcf/d

North American LNG Export Capacity

US Capacity Canada Capacity

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Upcoming:

Electric Power Markets Workshop

Thursday, October 1, 2020 (1:00 p.m.–2:30 p.m.) Follow up questions: AnnualEnergyOutlook@eia.gov EIA Workshop Series: Trends and Expectations Surrounding the Outlook for Energy Markets

www.eia.gov/outlooks/aeo/workshop/energy_markets/