The Coming Renaissance in North American Oil and Gas The Alaska - - PowerPoint PPT Presentation

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The Coming Renaissance in North American Oil and Gas The Alaska - - PowerPoint PPT Presentation

May 25, 2023 131 likes •403 views

The Coming Renaissance in North American Oil and Gas The Alaska World Affairs Council Northrim Bank Oil and Gas Series Anchorage, Alaska Lou Pugliaresi, President Energy Policy Research Foundation, Inc. (EPRINC) April 20, 2012 Energy Policy

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 1

Lou Pugliaresi, President Energy Policy Research Foundation, Inc. (EPRINC) April 20, 2012

The Coming Renaissance in North American Oil and Gas

The Alaska World Affairs Council

Northrim Bank Oil and Gas Series Anchorage, Alaska

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 2

NPC Findings

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 3

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 4

Projected Imports of LNG vs. Actual

(or why forecasters should have humility)

Source : EIA data and forecasts

1 2 3 4 5 6 7 8 9 10 0.00 0.50 1.00 1.50 2.00 2.50 3.00 $/MMBTU tcf per year of LNG Reference Case - Net U.S. imports of LNG (tcf) - 2008 EIA Annual Energy Outlook Actual US Net LNG Imports Henry Hub Gulf Coast Natural Gas Spot Price ($/MMBTU) (right axis)

Prices at $2.50 to $2.80 in Feb 2012

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 5

NGL Production Outlook to 2020

500 1000 1500 2000 2500 3000 3500 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Thousand barrels per day U.S. Gas Plant Production of NGLs Forecast NGL Production Ethane Share Source: EIA Data, EPRINC forecast. Assumes ethane continues to incrementally increase its share of the NGL pool.

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 6

Petrochemical Cost Curve , By Country 2010

Source: American Chemistry Council

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 7

Thermoplastic Exports and Oil-to-Gas Ratio

Source: American Chemistry Council

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 8

Low Cost NG Lowers Production Costs

Source : OGJ Data for 2009, EPRINC Calculations Effective Production Cost takes into account a refinery’s ability to use heavy crude feedstocks (complexity), product slate (yields) and operating costs (OPEX).

4 5 6 7 8 9 10 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100 103 106 109 112 115 118 121 $/bbl Refinery # (most complex on left, least complex on right) <<<---Higher CAPEX/OPEX, generally large, but better yields, feedstock flexibility Lower CAPEX/OPEX, generally smaller, but worse yields, less flexibility --->>>

U.S. Refiners' Effective Cost of Production

Effective Production Cost Production Cost with Low NG Price of $4/mcf = $0.75/bbl lower cost

5 mbd 10 mbd 15 mbd Cumulative Capacity

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 9

Bakken Production in Only Montana

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 10

Oil and Gas Permits in Past 90 Days

Source: HPDI March 16 , 2012

As of Feb 13th As of March 16th

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 11

Rig Count and Permits

Source: Photo Baker Hughes Interactive Rig Count Jan 25, 2012

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 12

Estimated Ultimate Recovery

Source: Brigham Exploration via World Oil

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Technology Progression, ND and MT

Source: Continental Resources , from Platts Midstream Development & Management Conference, May 12, 2011.

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 14

Williston Basin Production

Source: NDIC 100,000 200,000 300,000 400,000 500,000 600,000 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Barrels Per Day North Dakota Eastern Montana South Dakota TOTAL

North Dakota accounts for almost 10% of US Production Almost all new production is from the Bakken/Three Forks

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 15

Trend Area Daily Average Production

100000 200000 300000 400000 500000 600000 50000 100000 150000 200000 250000 1/1/1985 11/1/1985 9/1/1986 7/1/1987 5/1/1988 3/1/1989 1/1/1990 11/1/1990 9/1/1991 7/1/1992 5/1/1993 3/1/1994 1/1/1995 11/1/1995 9/1/1996 7/1/1997 5/1/1998 3/1/1999 1/1/2000 11/1/2000 9/1/2001 7/1/2002 5/1/2003 3/1/2004 1/1/2005 11/1/2005 9/1/2006 7/1/2007 5/1/2008 3/1/2009 1/1/2010 11/1/2010 9/1/2011 mcf/day Barrels Per Day LIQ GAS Source: HPDI March 21, 2012

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 16

Eagle Ford Production

Source: HPDI March 21, 2012 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1800000 50000 100000 150000 200000 250000 300000 350000 1/1/2000 6/1/2000 11/1/2000 4/1/2001 9/1/2001 2/1/2002 7/1/2002 12/1/2002 5/1/2003 10/1/2003 3/1/2004 8/1/2004 1/1/2005 6/1/2005 11/1/2005 4/1/2006 9/1/2006 2/1/2007 7/1/2007 12/1/2007 5/1/2008 10/1/2008 3/1/2009 8/1/2009 1/1/2010 6/1/2010 11/1/2010 4/1/2011 9/1/2011 mcf/day Barrels Per Day LIQ GAS

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 17

Three Win indow Map of f Eagle le Ford

Oil Wet Gas/Condensate Dry Gas

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18

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 1/1/1995 11/1/1995 9/1/1996 7/1/1997 5/1/1998 3/1/1999 1/1/2000 11/1/2000 9/1/2001 7/1/2002 5/1/2003 3/1/2004 1/1/2005 11/1/2005 9/1/2006 7/1/2007 5/1/2008 3/1/2009 1/1/2010 11/1/2010 9/1/2011 7/1/2012 5/1/2013 3/1/2014 1/1/2015 11/1/2015 9/1/2016 7/1/2017 million barrels per day Eagle Ford Liquid Daily Average Bakken/Three Forks Liquid Daily Average Niobrara/Codell Liquids Daily Average Permian Basin Liquids Daily Average

Unconventional Liquids 2011 to 2017

Raymond James

Source: EPRINC , Building Blocks of the NA Petroleum Renaissance

Note: Sustainable rates

  • f NA upstream

Liquids Growth now Likely at 500 kbbls/yr.

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 19

Resources for the Future on the Keystone XL Pipeline*

…from a national perspective, whether the pipeline is approved or not is relatively unimportant. Instead, we should focus on reducing our contribution to the global carbon footprint and improving the efficiency of our carbon-based fuel use.

Putting Politics Aside: The Consequences of the Keystone XL Rejection RFF Feature, By Joel Darmstadter and Alan J. Krupnick, January 24, 2012

*Did they miss something?

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 20

Source: GeoWeb Portal Rextag Hart Energy Mapping Service Feb 13 2012

North American Crude Oil Pipelines

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North American Pipes

Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 21

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 22

Canadian Imports and Potential Markets

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 23

Choke Points

Source: Savage, Presentation Bakken Product Markets and Take-Away Denver Jan 31-Feb 1 2012 with EPRINC Additions

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 24

Bakken Prices at Clearbrook

Source: Bloomberg, Mar 16, 2012

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org 25

North Dakota Crude Oil Transport

Source: North Dakota Pipeline Authority

October Estimates, 2011 December Estimates, 2011 January Estimates, 2012

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Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org

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Final Observations

  • Major new pipeline infrastructure will deliver sustained and large

scale benefits. Keystone decision has created uncertainty on whether those benefits will be realized.

  • U.S. is now poised for major economic renaissance from the both oil

sands and unconventional liquids. Net present value of $1 to $2 trillion if appropriate policies put into place.

  • Paradigm shift possible, but not without new approach to

government regulations (and permitting) of both midstream and downstream facilities & access to federal lands.

(