The Outlook for Global Oil and Natural Gas Resources

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1 The Outlook for Global Oil and Natural Gas Resources James Slutz Deputy Assistant Secretary Office of Fossil Energy U.S. Department of Energy Seventh Oil and Gas Industry Forum Hangzhou,, China Monday, September 11,

2 Presentation Outline Overview of Global Energy Consumption through 2030 Outlook for Global Oil Resources Global Oil Reserves Global Oil Consumption and Production Unconventional Production Outlook for Global Natural Gas Resources Global Natural Gas Reserves Global Natural Gas Consumption Globalization of Natural Gas Trade LNG Market Growth Key Summary Points from the U.S. International Energy Outlook Overview of National Petroleum Council s s Global Oil and Gas Study 2

3 EIA - International Energy Outlook Summary Worldwide marketed energy consumption is projected to grow by 71 percent between 2003 and Highest growth projected for the developing countries. World oil prices are 35 percent higher in 2025 than in last year s IEO. Higher prices dampen growth in world oil demand, which is 8 million ion barrels per day lower in 2025 than in IEO2005. World unconventional production (including oil sands, bitumen, biofuels, coal-to to-liquids, and gas-to to-liquids) accounts for 25 percent of the projected total world liquids supply increase. Higher oil prices increase the competitiveness of coal and natural al gas, which grow by 2.5 and 2.4 percent per year, respectively. Higher fossil fuel prices and concerns about security of energy supplies improve the prospects for nuclear power and renewables over the projection period. Energy-related related carbon dioxide emissions are projected to rise from 25.0 billion metric tons in 2003 to 33.7 billion metric tons in 2015 and 43.7 billion metric tons in 2030.

4 World Marketed Energy Use by Fuel Type, History Projections Quadrillion Btu % 24% 24% 8% Coal 6% Nuclear 5% Oil Natural Gas Renewables 33% 27% 26% Share of World Total 9% 4 Source: Energy Information Administration

5 Saudi Arabia Canada Iran Iraq Kuwait UAE Venezuela Russia Libya Nigeria United States China Qatar Mexico Algeria Brazil Kazakhstan Norway Azerbaijan India Oman Angola Ecuador Indonesia UK Rest of World World Oil Reserves by Country, as of January 1, 2006 (billion barrels) World Total = 1,293 Billion Barrels Source: Oil & Gas Journal, Vol. 103, No. 47 (December 19, 2005).

6 Million Barrels per Day Worldwide Unconventional Production, 2005 and Oil Sands Ultra Heavy Gas to Liquids Coal to Liquids 0.7 Biofuels Shale Oil 6 Source: Energy Information Administration

7 World Gas Reserves 2004 In Trillion Cubic Feet North America Caribbean (19) Western Europe Central & South America 179 Africa 496 2,081 Middle East 2,570 Eastern Europe & Former U.S.S.R. 415 Asia 87 Australia 7 Source: Energy Information Administration

8 World Natural Gas Reserves, as of January 1, 2006, and Cumulative Consumption, (trillion cubic feet) Middle East Transitional Economies Africa Reserves Cumulative Consumption, Emerging Asia North America Central & South America Western Europe World Natural Gas Reserves = 6,112 Trillion Cubic Feet World Cumulative Consumption, = 2,954 Trillion Cubic Feet Mature Market Asia ,000 1,500 2,000 2,500 3,000 8 Source: Energy Information Administration

9 World Importers of LNG Imports as Percent of Total Natural Gas Consumption (2004) Mexico <1% U. S. 3% Puerto Rico 100% Central and South America <1% Belgium 18% France 17% Spain 65% Portugal 37% Italy 8% Japan 97 % Turkey 18% Greece 17% S. Korea 100 % Taiwan 94% 9 Source: Energy Information Administration

10 Global LNG Facilities 10 Source: ChevronTexaco (April, 2005)

11 High Natural Gas Prices Impact Manufacturing Sector Competitiveness According to the Energy Information Administration, industrial demand d for natural gas has decreased 20 percent from 8,142,240 mmcf in year 2000 to 6,528,337 mmcf in year The Department of Commerce estimates that between 2000 and 2004, high natural gas prices reduced employment in the United States by 2.4 million jobs, almost 400,000 of which were in the manufacturing industries. Real shipments from 2000 to 2005 are down in plastics, chemicals,, and the iron and steel industries. 1 1 U.S. Department of Commerce Natural Gas Study (June 2005) 11

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13 Globalization of Natural Gas Trade 13 Source: International Energy Agency

14 Major Trends in the IEO2006 Outlook Total world energy use is about 21 quadrillion Btu higher (3 percent) in 2025 than in last year s s report. High world oil prices result in lower growth in oil demand; coal, natural gas, and renewables all increase relative to IEO2005. Coal and natural gas are the fastest growing energy sources worldwide - increasing by 2.5 and 2.4 percent per year, respectively. China s s energy consumption is 5 quadrillion Btu higher than the U.S. by 2030 (IEO2006 reference case). 14

15 National Petroleum Council Global Oil and Gas Study Overview 15

16 Who is the National Petroleum Council? An advisory body to the Secretary of the U.S. Department of Energy on matters related to oil and gas supply and the oil and gas industries Predominantly composed of the nation s s top chief executive officers from the oil and gas industries Representatives to the Council include approximately 190 members from U.S. oil and gas exploration, production, transportation, refining, distribution, and service companies, as well as electric utilities, the financial community, academia, and other organizations. The federally chartered and privately funded Council was first established in Source: National Petroleum Council

17 National Petroleum Council Study Origins June October November December April May June 2005 Secretary Bodman speech to NPC members Secretary Bodman study request to NPC Agenda Committee recommends acceptance Membership concurrence via ballot Executive Committee established 2006 Coordinating Subcommittee established Global Committee established Status Report 17 Source: National Petroleum Council

18 NPC Study Request Suggested Questions 1. What does the future hold for global oil and natural gas supply? 2. Can incremental oil and gas supplies be brought on-line, on time, and at a reasonable price to meet future demand without jeopardizing economic growth? 3. What oil and gas supply strategies and/or demand-side strategies does the Council recommend the United States pursue to ensure greater economic stability and prosperity? 18 Source: National Petroleum Council

19 NPC Study Principles Principles Not another grassroots energy forecast. Will access and utilize public domain data sources. Input solicited from a broad range of interested parties. Emphasize long-term conditions, not near-term volatility. Recommendations supported by sound data and science. All study teams work within scope and on time. Full compliance with antitrust laws and regulations. 19 Source: National Petroleum Council

20 Study Organization National Petroleum Council Global Committee Chair Lee Raymond Gov t Cochair David Garman Vice Chairs Andrew Gould John Hamre David O Reilly Daniel Yergin Coordinating Subcommittee Chair Alan Kelly Gov t Cochairs Jeffrey Jarrett Jim Slutz Demand Task Group Chair James Burkhard Gov t Cochair Paul Holtberg Technology Task Group Chair Rod Nelson Gov t Cochair Guido DeHoratiis Supply Task Group Chair Donald Paul Gov t Cochair Nancy Johnson Geopolitics & Policy Task Group Chair Frank Verrastro Gov t Cochair David Pumphrey 20 Source: National Petroleum Council

21 NPC Study Scope Oil and Gas Global Supply Global Economy Global Demand Alternative Energy Policy Options Technology Advances Environmental Considerations Geopolitical Events 21 Source: National Petroleum Council

22 Study Task Groups Technology Supply Geopolitics and Policy Demand 22 Source: National Petroleum Council

23 Study Crosscutting Subgroups Refining Infrastructure GTL & LNG Biofuels & Renewables Consumer & Social Trends Economic Variables Energy Efficiency Unconventional Hydrocarbons Nuclear Coal CO 2 Sequestration Technology Development & Gov t role Supply Demand Technology 23 Source: National Petroleum Council

24 Sources The United States Department of Energy The U.S. Energy Information Administration The Office of Fossil Energy The National Petroleum Council 24