IMGA Annual Meeting- NG Fundamentals Update. March 28, 2017

Transcription

1 IMGA Annual Meeting- NG Fundamentals Update Presenter Trevor Cooper Name / Date March 28, 2017

2 Disclaimer Copyright. All rights reserved. Contents of this presentation do not necessarily reflect the Company s views. This presentation and its contents have been provided to you for informational purposes only. This information is not advice on or a recommendation of any of the matters described herein or any related commercial transactions. BP is not responsible for any inaccuracies in the information contained herein. BP makes no representations or warranties, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information, assumptions or analysis contained herein or in any supplemental materials, and BP accepts no liability in connection therewith. BP deals and trades in energy related products and may have positions consistent with or different from those implied or suggested by this presentation. This presentation may also contain forward-looking statements. Any statements that are not historical facts, including statements about BP's beliefs or expectations, are forward-looking statements. These statements are based mostly on publicly available information, estimates and projections and you should not place undue reliance on them. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast, suggested or implied in any forward-looking statements in this presentation due to a variety of factors. Factors which could cause actual results to differ from these forward-looking statements may include, without limitation, general economic conditions; conditions in the markets; behavior of customers, suppliers, and competitors; technological developments; the implementation and execution of new processes; and changes to legal, tax, and regulatory rules. The foregoing list of factors should not be construed as exhaustive. BP disclaims any intention or obligation to publicly or privately update or revise any forwardlooking statements, whether as a result of new information, future events, or otherwise. Participants should seek their own advice and guidance from appropriate legal, tax, financial and trading professionals when making decisions as to positions to take in the market. 2

3 Natural Gas Storage For the Week Ending 3/17/2017 Source: EIA, EIA reported an inventory of 2,092 bcf, which represents a draw of 150 bcf over last week. The five year average activity for this week is a draw of 21 bcf. US storage inventories are 399 bcf below year ago levels and 266 bcf above the five year average. 3

4 Storage (Weather) is key to price in the shortrun Source: EIA, ; NYMEX,

5 Rig counts have recovered from the lows Source: Baker Hughes, 2/3/2017 5

6 Drilled but uncompleted wells (DUCs) have helped partially offset the decline in rig counts Source: EIA, Drilling Productivity Report, January 2017 Total December Oil DUCs: 4,509 Total December Gas DUCs: 870 6

7 Gas demand growth: Power sector Source: Energy Velocity, December 2016 What changes under the new administration? Extension of PTC & ITC and growth in renewables generation EPA??? Slower electricity demand Gas/coal pricing relationship * Under construction or financed future projects only Regulatory policy changes driving coal retirements, new generation capacity additions 7 But uncertainty around those policies could delay investment, gas demand growth

8 Generation capacity changes: Coal and nuke retirements, gas and renewable builds Source: Energy Velocity, 02/03/2017 Midcontinent ISO (MISO) New York ISO (NYISO) New England ISO (ISO-NE) WECC (Including CA) Southwest Power Pool (SPP) PJM California ISO (CAISO) SERC Electric Reliability Council of Texas (ERCOT) Midwest composed of IA, KS, MN, MO, NE 8

9 Exports to Mexico have increased, with more pipe expansions to come Source: Sener, EIA, January Operating Pipelines Pipelines completed in Pipelines under construction Awarded Pipelines CFE Planned Pipelines Compression Station NET Mexico / Los Ramones: 2.1 Bcf/d Dec 2014 Waha to Presidio: 1.4 Bcf/d Mar 2017 Waha to San Elizario: 1.1 Bcf/d Jan 2017 Columbia to Escobedo: Bcf/d: Jul 2017 Brownsville to Tuxpan : 2.6 Bcf/d May

10 The US is shifting towards a net export market Source: EIA Monthly, December 2016; AEO

11 US LNG export capacity: What will be the impact to the global markets? Sources: EIA, various companies websites, Platts, Heren, 2/3/

12 Gas demand growth: Industrial sector Source: Wood Mackenzie Q3 2016, Federal Reserve Economic Data, EIA, February 2017 Low gas/ethane prices prompted an industrial revolution at a time with slower demand growth, strong U.S. dollar *Note: Forecast aggregated from public company announcements 12

13 Marcellus flows into the Midwest are impacting regional flows Source: Platts Analytics Bentek Energy, January 2017 NGPL TET REX Rox Flows to Mid-con 1/26/ YTD YTD YTD Change (32) TGT TGP Texas Flows to Mid-con 1/31/2017 2,132 YTD ,072 YTD ,262 YTD Change 190 Mid-con to Texas/SE 1/31/2017 3,874 YTD ,431 YTD ,814 YTD Change 383 Midwest from SE 1/31/ YTD ,301 YTD ,030 YTD Change (1,271) 13 13

14 Regional pricing: Relationships continue to evolve Source: NYMEX, ICE 2/7/

15 Long-term Henry Hub spot price outlooks Source: NYMEX, Various External Consultants, 2/7/2017 View of crude oil prices, competing fuels, supply costs, production growth, structural demand trends and global trade flows will influence gas price outlook 15

16 Nymex Henry Hub 5-Yr Fwd History 16

17 Historical Range of the 10-Yr Fwd Curve Since Jan

18 5 Year Fwd Near the All Time Bottoms! 18

19 Questions? 19