canadian oil, gas and lng market review - ceri.ca · market review. allan fogwill. strait of canso...
TRANSCRIPT
Relevant • Independent • Objectivewww.ceri.ca1
1
Canadian Energy Research Institute
Canadian Oil, Gas and LNGMarket Review
Allan FogwillStrait of Canso – Superport Days’16
Dundee, Nova ScotiaJuly 2016
Relevant • Independent • Objectivewww.ceri.ca
Relevant • Independent • Objectivewww.ceri.ca2
2
Mission Statement
Founded in 1975, the CanadianEnergy Research Institute (CERI) is anindependent, non-profit researchInstitute specializing in the analysisof energy economics and relatedenvironmental policy issues in theenergy production, transportation,and consumption sectors.
Our mission is to provide relevant,independent, and objectiveeconomic research of energy andenvironmental issues to benefitbusiness, government, academia andthe public.
Relevant • Independent • Objectivewww.ceri.ca3
3
Current Sponsors
Core supporters include:
In-kind support is also provided:
Relevant • Independent • Objectivewww.ceri.ca4
4
Agenda
• Oil Market
• Natural Gas Market
• LNG
• Conclusion
Relevant • Independent • Objectivewww.ceri.ca5
5
• The supply availability of oil and natural gas has fundamentally changed over the last 5 years.
• Horizontal drilling and hydraulic fracturing have opened up vast additional reserves creating a downward pressure on prices.
Evolution of Energy Markets
Relevant • Independent • Objectivewww.ceri.ca7
7
Source: EIA
World Oil Reserves
• Reserves have increased over 27% in the last 10 years with the 2013 reserves to production ratio of 53 years
Relevant • Independent • Objectivewww.ceri.ca8
8
0100,000200,000300,000400,000500,000600,000700,000800,000900,000
1,000,0001,100,0001,200,0001,300,0001,400,0001,500,0001,600,000
Crud
e O
il Pr
oduc
tion
(exc
l Oil
Sand
s)
bbls
/day
Eastern Canada Pentanes Plus MB Oil Forecast BC Oil ForecastNWT Oil Forecast SK Oil Forecast AB Oil Forecast (Conv) Oil from Gas Wells
Canadian Conventional Oil Production (Aug 2015)
Source: CERI, CAPP
Relevant • Independent • Objectivewww.ceri.ca9
9
Oil Sands Growth – CERI’s Projections (August 2015)
Oil Sands Growth (Aug 2015)
Source: CanOils, CERI
* Growth dependent on market access – TMX, Gateway or Energy East
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
(MM
bpd)
(Production, High Case Scenario)(Production, Low Case Scenario)(Production, Reference Case Scenario)
Relevant • Independent • Objectivewww.ceri.ca1010
Factors Affecting Oil Market
• Demand• Economic Growth
• Europe• US• China
• Strategic Oil Reserves (short term)
• Supply• High levels of inventories (short term)• Delayed investments• Geopolitical Issues
- Iran - Venezuela - Iraq- Yemen - Nigeria - Russia
Relevant • Independent • Objectivewww.ceri.ca1212
Natural Gas Reserves
Source: BP
• Reserves have increased over 19% in the last 10 years with the 2013 reserves to production ratio of 55 years
Relevant • Independent • Objectivewww.ceri.ca1313
Canadian NG Demand Outlook By Province
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
BCFD
AB BC SK MB YK NW ON QC NB NS PE NF NU
Source: NEB, CERI
* Primary demand – includes steam and electricity generation demand
Relevant • Independent • Objectivewww.ceri.ca1515
0
20
40
60
80
100
120
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040
Bcf/
d
Residential Commercial Industrial
Electric Power Transportation Pipeline Fuel
Lease and Plant Fuel Total Natural Gas Consumption
Source: EIA
US Natural Gas Demand Outlook by Sector
Relevant • Independent • Objectivewww.ceri.ca1616
Source: CERI
* Demand excludes steam and electricity requirements (approx. 3 bcf/d)
Export Potential from Western Canada
Relevant • Independent • Objectivewww.ceri.ca1717
Factors Affecting Natural Gas Market• Supply
• Pipeline access from US into Canada• Storage inventories
• Demand
• Weather
• Liquefied Natural Gas Facilities
• Power Generation
• Industrial Demand (Petrochemical Feedstock, oil sands)
Relevant • Independent • Objectivewww.ceri.ca1919
LNG Supply and Demand – Asian Markets
Source: CERI, IEA
Two Russian pipelines, Altai and Power of Siberia can supply China with natural gas volumes in excess of 6 bcfd
Relevant • Independent • Objectivewww.ceri.ca2020
The Pipeline Challenge to LNG - Asia
Source: Singapore Straits Times
Relevant • Independent • Objectivewww.ceri.ca2121
The Pipeline Challenge to LNG - Europe
Source: Rethink Institute
Relevant • Independent • Objectivewww.ceri.ca2222
Factors Affecting LNG Market• Supply
• Pipeline access (china and Europe)• Russia• Caspian Sea States
• Geopolitics Europe/Russia• Oil Price• Merchant Plants
• Demand
• European Carbon Management Policies
• Industrial Demand
Relevant • Independent • Objectivewww.ceri.ca2323
Conclusions
• Markets for conventional oil and oil sands will grow, albeit slowly.
• Eastern Canada access to Western Canadian Oil dependent on pipeline access.
• Western Canadian sourced gas evolving into a regional market.
• Eastern Canadian markets likely to be sourced almost completely by US shale gas.
• LNG markets highly uncertain due to risk valuation of supply availability