Global Energy Outlook. Offshore Center Danmark Esbjerg Jon Fløgstad, Manager Nordic Oil & Gas Ernst & Young September 13 th, 2012

Size: px

Start display at page:

Download "Global Energy Outlook. Offshore Center Danmark Esbjerg Jon Fløgstad, Manager Nordic Oil & Gas Ernst & Young September 13 th, 2012"

Reynold Cook
6 years ago
Views:

1 Global Energy Outlook Offshore Center Danmark Esbjerg Jon Fløgstad, Manager Nordic Oil & Gas Ernst & Young September 13 th, 2012

2 Agenda Introduction Short-term perspectives Longer-term perspectives Concluding remarks Page 2

3 Ernst & Young a global partner in Oil & Gas 4300 professionals Calgary Aberdeen Stavanger London Moscow Beijing Houston Bahrain 3200 professionals 1700 professionals Singapore Rio de Janeiro Capetown Perth Our dedication to Oil & Gas More than 9200 professionals serving the global Oil & Gas Industry We serve most of the Fortune 100 O&G companies from 13 Global Oil & Gas Centres We have 200 professionals in Norway focusing on the Oil & Gas sector North-Sea Team established for seamless operations across the North Sea Page 3

4 Oil & Gas Thought Leadership Ernst & Young s Global Oil & Gas Centres keep you updated with the latest development in the sector with monthly publications of Thought Leadership, exploring the development and trends within the sector. EY Insights provides access to more than 500 of our most recent global and country-specific Thought Leadership pieces via ipad, iphone and Android devices. Page 4

5 Short-term perspectives

6 Current environment short term outlook Extreme oil & gas price volatility Political unrest in key producing geographies Constrained capital availability Regulatory and fiscal uncertainty Dislocations / disruptions Infrastructure issues Global economy still with downside risks High geopolitical risks expect the unexpected Near-consensus confidence in sustainable high oil prices Less consensus for natural gas prices Page 6

7 Longer-term perspectives

8 Some key facts & figures Global population + 1,7 B Annual average growth + 3,5% Oil demand 87 -> 99 mbbls/d Energy demand + 40% Global investments in energy infrastructure $ 38 trillion Gas demand growth: 1,7% p.a. Oil demand growth: 0,7% p.a. Page 8 Source: IEA, World Energy Outlook 2011

9 Fossil fuels will continue to dominate the energy mix 100 % 90 % 80 % 70 % Energy demand by fuel type 60 % 50 % 40 % 30 % Nuclear Renewables Gas Oil Coal 20 % 10 % 0 % Page 9 Source: IEA, World Energy Outlook 2011

10 Underlying oil & gas demand is strong Increasing role for natural gas, largely driven by demand from power sector Huge investment challenge Change in oil and gas demand (2010 vs. 2025) China India Middle East Other Asia Africa Gas Oil Latin America Europe North America -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Page 10 Source: IEA, World Energy Outlook 2011

11 Changing patterns of oil supply New unconventional oil supplies offset decline in conventional oil output 120 Oil supply growth (mb/d) 25% Change in oil supply (2010 vs in mb/d) % Natural Gas Liquids 80 15% Gas to liquids % 9% 6% 5% 3% % 5% 0% Venezuelan extra-heavy oil Canadian oil sands Unconventional Oil Conventional Oil Conventional Oil Natural Gas Liquids Unconventional Oil Biofuels Share of unconventional (RH scale) Non-OPEC OPEC Page 11 Source: IEA, World Energy Outlook 2011

12 Tcm Tcm Sizeable unconventional gas potential to be unlocked Unconventional gas production Gas supply growth 5 35% % 29% 4 25% 3 21% 20% % 15% 2 10% 1 1 5% 0 0% Non-OECD OECD Share of unconventional (RH scale) 1,4 1,2 1 0,8 0,6 0,4 0, Share of unconventional in total gas production 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mexico European Union Australia China Canada US US Canada China Mexico European Union Australia Page 12 Source: IEA, World Energy Outlook 2011

13 $ trillion Major investment challenge ahead Cumulative investment in energy infrastructure ( ) $ billion Coal Oil Gas Power Biofuels % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % Over $19 trillion investment required in oil & gas supply 25 Investment in oil & gas supply infrastructure ( ) Upstream Oil Upstream Gas Refining Gas T&D Page 13 Source: IEA

14 $ trillion Spending being directed to upstream projects 8 7 Cumulative oil & gas investment by region ( ) Predominantly NOC controlled markets investment likely to be under-estimated 2 1 Gas Transmission & Distribution Upstream Gas Refining 0 Americas Europe (inc. Russia) Asia + Oceania Africa Middle East Upstream Oil Page 14 Source: IEA

15 Investment in mature and developing basins Projects under development (starting production within five years) 2 Oil sands Heavy Oil Conventional Deepwater Conventional Deepwater EOR Conventional Deepwater EOR 5 Conventional Deepwater Conventional Conventional Conventional Deepwater 6 7 Conventional Deepwater EOR Conventional LNG 8 Developing Mature Projects with a minimum proved plus probable (2P) reserves of 25 million barrels of oil equivalent or greater 1 Conventional LNG Page 15 Source: IHS Herold Inc.

16 BNOK Million Sm 3 o.e. per year BDKK Million Sm 3 o.e. per year High activity level expected on the Norwegian Continental Shelf 25 Investments on the DCS 35 Historical and forecast production of oil and gas Denmark Operations Transport Investments in fields Oil Production Sales Gas Production Investments on the NCS Historical and forecast production of oil and gas Norway Well costs Existing facilities New subsea facilities New fixed and floating facilities Pipelines and onshore facilities Exploration and consept studies Oil Gas NGL Condensate Reserves Resources in fields Page 16 Source: Danish Energy Agency, NPD

17 Concluding remarks

18 Challenges going forward Increasing longer-term energy demand Changing demand patterns Declining production from existing fields Increasing exploration, development and production costs The pace of technological change versus the length of the investment lifecycle Page 18

19 The energy and natural resources trilemma Page 19 New operational and unfamiliar environments HS&E risk REDUCE AND MINIMIZE ENVIRONMENTAL IMPACT Competition from new technologies Gas demand growth : 1.7% p.a Climate change concerns OPTIMIZE COST IEA Forecast c.$20 trillion of oil and gas investment required Oil demand growth: 0.7% p.a Uncertain energy policy Cost containment Price volatility Worsening fiscal terms Human capital deficit Access to reserves ENSURE SECURITY OF SUPPLY

20 Page 20 Thank you for your attention

January Christof Rühl, Group Chief Economist

January Christof Rühl, Group Chief Economist January 213 Christof Rühl, Group Chief Economist Contents Introduction Global energy trends Outlook 23: Fuel by fuel Implications Energy Outlook 23 BP 213 Introduction Global energy trends Outlook 23: