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GE 2014 All rights Reserved
Unlocking the “Age of Gas”
GE Oil and Gas
IEA-IEF-OPEC SYMPOSIUM ON GAS
AND COAL MARKET OUTLOOKS
October 30, 2014
Markus Becker
Senior Director,
Government Affairs & Policy
GE Oil and Gas
175 176
131 126
60 56 61
0
100
200
Global
Impact 2025:
What is the “Age of Gas”?
Source: IHS, Sept. 2013 2
Key Benefits
SUSTAINABILITY SECURITY -
RESILIENCE COMPETITIVENESS
Global gas consumption growth ‘13-’20
Bcm per year
Chin
a
ME Africa Lat.
Am
EU-
Eurasi
a
Asia US-Can
20
0
10
0
Primary Global
Energy Production %
1990
20%
2025
26%
Natural gas has increasing role in global energy mix
www.ge.com/AgeofGas
Source: GE Age of Gas Outlook update June
‘14
“Age of gas” scorecard October 2014
International
connections Coordination
between states on
big LNG and
pipelines
UCR
unleashed Shale development
with technology &
sustainable practice
Distributed
pathway Small scale gas
solutions
Mega project
progress Cost control &
execution
Network
focus Connectivity &
investment
Pricing and
contracts Subsidy
management &
flexible contracts;
new models
Australia & Deep-water
inflation
Russia – Ukraine Crisis
North America &
China progress
Have signposts toward the “Age of Gas” strengthen or weakened?
Africa & South east
Asia, Upstream
North America
US gas cost remain low, Expanding
discussion on new pricing
models for Pacific Basin LNG
Steady, but no major changes in
Gov’t policy or focus that would accelerate NG
(eg. EU, US, gas master plans etc.)
Source: GE Oil and Gas Strategic Marketing
Gas to Power … understanding scale Large scale feeds thermal…small scale feeds DP and virtual pipeline
4 Source: GE Oil & Gas, GE Distributed Power; Bcfd/MMcfd: Billion/Million cubic feet per day; GWe/MWe: Giga-Megawatt equivalent
Gas to Power options
CNG in a Box
Small-scale LNG
MMcfd ~MWe
(DP) 40- 200 $50 - 300MM 8- 40
0.5- 5
BCFD ~GWe Typical project
$B CAPEX
Int’l Mega
Pipeline
LNG
Mega
Regional
Pipeline
3.5 (35 / 25)
Floating
LNG Regas
(Bcm /
MMTPA)
20
2.2 (22 /
16)
12 $10-30B
0.45 (4.5 / 3.3)
2.5
1.2 (12 / 8.5)
6.5
(CCGT)
$1-5B
2.5- 20
Large
Small
Mid
Sovereign
ownership
state to state
deals.
Long-term
commitments
on gas and
infrastructure
Mix of state
owned &
private players
Gas and
infrastructure
can be
separate
(tolling)
Modular, pre-
configured
designs
Single entity or
small JV
partnerships
Typical
Aspects
“Anchor
Systems”
“Satellite
Systems”
Strike zone for natural gas
0
20
40
60
80
100
120
140
160
180
2 4 5 7 8 10 11 13 14 16
Dolla
rs p
er
MW
Hr
Lower
efficiency
Highly
efficient
US
EU
Asia
Price
competitiv
e area
Gas Less competitive
Dollar per MMBtu
US Cts/KWH
Variable cost basis
GE Global Strategy & Analytics, 2013
Note: Estimates of high efficiency natural gas are based on 10,000 heat rate, while lower
efficiency estimates are based on a 6000 heat rate.
Competitive landscape versus coal …
2 4 6 8 10 12 14
16
• Competitive landscape different
by region
• Recognize peaking and load
following benefits of gas
• Recognize environmental benefits
• Pricing outside the strike zone will
limit market growth … particularly
in Asia
Key Issues .18
.12
.10
08
.06
.04
.0
2
.16
.1
4
Recent spot price have been in the “strike zone”
Distributed pathway … small gas-to-power
Oil substitution and energy access are drivers…
Key regions for small gas-to-power Key metrics: % oil generation ‘13 est.
CAGR elec. dem. ‘14-’20
Indonesia
GCC
Australia- PNG (mining &
remote)
SSA (ex SA) Caribbean
65% +3% 35%
+4%
35% +5%
LatAm * 14% +4%
18% +9%
* Chile, Argen., Colum., Venz.
Sources: GE Oil and Gas , GE PW Feb ‘14 Outlook , IEA
North America (Upstream, mining &
remote)
Large growth opportunity with right structures …
6
Distributed gas … rail and small shipping solutions Cost of small LNG continue to fall … industrial fleets and power opportunities NGV … Railroad opportunities
Integrating value chain to create comprehensive solution is key
Sources: GE Oil and Gas , GE Distributed Power
Global diesel use in Rail ~ 620K bbl/d
Sources: GE Oil and Gas , GE Distributed Power , IEA 2012, EIA
US Class 1 diesel use in Rail ~ 240K bbl/d ~ 7% US diesel Demand
Generation … Island power examples
US LNG/CNG
Trinidad
Indonesia
Caribbean & Cent. America
Gas to Power potential
2.5 GW
2.7 GW
LNG potential by ’20 *
3.5
MTPA
3.7
MTPA * Assumes replacement of 30% installed oil
capacity & gas captures 50% recip growth . 3-5
Year potential
Sources: EIA, Office of Oil & Gas and
CSX, 2013
Example Integration:
Multi model hubs for LNG/CNG USA
Gas pipe
existing Gas Pipe
proposed Marine
CNG/LNG
7
0.9 2.1 2.3 2.2
(0.5)
2.9 1.5
6.4 0.4 1.0
2.2
(1.4) (0.9) (0.6) (1.6)
2.5 6.4
11.6
0.2 0.7
4.8
8.1
5.0
US Gas demand trajectory uncertain Power sector use and exports will drive US gas demand
65.7
‘25 ‘20 ‘15 ‘14 ‘18
Total US Gas Demand*
73.5 84.8 ~92 ~100 72.9
Changes in
demand by
sector from
2013
Mexico Exports
LNG Exports
Canada Imports
Vehicle
Power
Industrial
Res/Com
Power sector gas demand
has biggest growth
potential … will be
sensitive to price and
policy
Demand side issues
1
2
3
LNG exports could be big
US Gov’t policy and gas
prices will dictate how fast
Transportation, Industrial
sectors are all lining up
for lower cost NG
Sources: GE Oil and Gas , Baseline case Aug ‘14. EIA, Excludes Alaska
* Includes Net Exports
Changes in US Gas Demand ‘14 to ‘25
Billion cubic feet per day
8
Lessons from North America
Upstream
9
Midstream & downstream
Unleash the innovators … build the networks … to unlock the Age of Gas
Source: GE Global Strategy & Analytics “Age of Gas” 2013
Innovation – exploration
Development
Standardization is difficult because
each basin/well is different
+ Fast scale up
+ Rapid investment
- Coordination issues &
constraints
Competitive industry structure
Learning by doing … Integrating infrastructures
Gas with renewable energy
Gas for transportation
Multiple
Networks
Hub-and-spoke
Point-to-point Developing
Phase:
Growth
Phase:
Mature
phase:
Gas network evolution + Pipeline
+ LNG
+ CNG
Natural gas-fired power share varies by region…
2%
7%
20%
24%
28%
31%
32%
35%
44%
60%
China
India
Europe
Latin America
North America
North Asia
Africa
Southeast Asia
Eurasia
Middle East
Source: GE Strategy and Analytics 2014.
Note: North Asia includes Japan, Chinese Taipei Korea
Southeast Asia excludes India
0.00
0.02
0.04
0.06
0.08
0.10
0.12
Coal ST@ 4.5
Coal St@ $3.5
IGCC CCGT@ $16
CCGT@ $14
CCGT@ $12
CCGT@ $10
Plant
Cost
Fuel
Cost
~800 MW – 36%
efficient
90% CF
$1,900 KW
30 year asset life
15% return
60/40 Debt Equity
No Carbon price
~770 MW – 61% efficient
90% CF
$790 KW
30 year asset life
15% return
60/40 Debt Equity
No carbon price
Share of gas fired generation
2013 estimated
Levelized cost of electricity LCOE
US Cents/Kwh - North Asia example
Competition versus coal … CAPEX vs Fuel contract
11
LNG industry evolution continues
12
+7-8% CAGR
‘20 ‘10
105
220
360
+40
‘00
Global LNG demand MTPA ’00 - ‘20
+11% CAGR
Source: GE, CERA
Industry poised to grow 60% over next 5-7 years … but will look very different
LNG designs evolve
Feedstock slate growing
Small-scale
LNG
LNG
Mega-
trains
Floating LNG
Brownfield
Regas plant
Conversions
LNG
1st
gen
Next gen
onshore LNG
Stranded gas (big fields)
Offshore
Sour
Associated
CBM
Shale &
tight gas
Arctic
Stranded gas (small fields)
Upside
potential
‘00 ’10 ‘20
LNG network expanding
Europe
China
India
Asia
-Pac
LA
JKT
1GE
Age of Gas
LNG
LNG demand growth MTPA ‘14-’20
+145
35
32
31
23
12
8
85% in
contract
or tolling