Shades of Energy Independence Dr. Nansen G. Saleri President & CEO Quantum Reservoir Impact, LLC November 16, 2012 Energy Forum, Massachusetts Institute of Technology NASA s NanoSail-D Source: sciencenews.org 1
US Energy Independence Definition: The state of US energy market where key indicators in play (Price, spare capacity, other) are insensitive to external supplies Benchmark: 90% self-sufficiency 2
US Energy Independence What is it? Does it matter? Free trade and energy independence? Are they mutually exclusive? When will it happen? Lessons of Sandy? 3
World Energy Use by Fuel Type 2010 27.64 52.05 130.26 172.90 Coal Natural Gas Liquids Nuclear Renewables 117.30 Total quadrillion British thermal units (QBtu) US consumption (QBtu) 500.15 97.89 Source: EIA, International Energy Statistics database (as of July 27, 2010), www.eia.gov/emeu/international. Projections: EIA, World Energy Projection System Plus (2010). 4
World Proved Oil Reserves 1980 to 2010* 2000 1500 Billion Barrels 1000 500 1,003 1,268 1,660 668 0 1980 1990 2000 2010 *End of each year Note: Includes Canada oil sands under development for 2000 and 2010 Sources: BP Statistical Report, OPEC 5
World Oil Reserves / Production Ratio vs. Global Resource Size 300 250 Reserves / Production 200 150 100 200 50 55 100 0 1.66 trillion barrels 3 trillion barrels 6 trillion barrels *Using 2010 production of 30 billion barrels Sources: Energy Detente 6
Case Study: NOC Production * Efficiency initiatives, collaboration and new technologies lead to: 0% decline rate, 100% reserves replacement ration (RRR) 7
Case Study: NOC Known Conventional Resources 256 billion Original Oil in Place 102,400 Cumulative production = 40 billion (16%) Cumulative + Reserves = 81 billion (32% OIIP) 72,140 Reserves + Contingent + Prospective = 113 billion (assumes 60% EUR) 18,921 12,046 10,593 Non recoverable with current technology = 102 billion (40% NR) 39,900 2011 Cum Prod Proved Probable Possible EUR 60% OIP 40 % NR 8
Total Carbon Emission Sources: Miller McCune November / December 2010 9
Primary Energy Flow by Source and Sector Supply Sources Total = 94.6 QBtu (~61% of energy lost) Demand Sectors Percent of Source 72 22 5 1 Percent of Sector 94 3 3 3 32 35 30 41 40 7 11 100 7 <1 93 12 26 9 53 17 76 1 7 1 18 48 11 22 Note: Sum of components may not equal total due to independent rounding. Source: U.S. Energy Information Administration / Annual Energy Review 2009 10
Current Energy Reality Current energy deficit is 16% 60% of energy is wasted Natural gas provides 25% of energy consumption US has >100 years of gas supplies Gas is approximately 4.3x times cheaper than oil on MMbtu equivalent basis (9.2x times in March 2012) Renewables account for 8% of energy sources 11
Crude vs. Gas Price 1995 to 2012 Source: EIA, International Energy Statics database (as of November 2012), www.eia.gov/emeu/international Derived Price & Use: QRI (2012) 12
Federal OCS Areas of the United States Source: BOEM, Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation s Outer Continental Shelf, 2011 13
OCS: Oil and Gas Resources Mean Source: BOEM, Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation s Outer Continental Shelf, 2011 14
OCS: Undiscovered Technically Recoverable Resources Source: BOEM, Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation s Outer Continental Shelf, 2011 15
Impact of Fuel Efficiency & EV on US Gasoline Consumption 4.00 Billion Barrels / Year 3.00 2.00 1.00 3.11 1.74 1.53 1.13 0.00 2010 2025 2025 2025 Total vehicles: 23 mpg 251 mm EV = 0% 40 mpg 305 mm EV = 20% 40 mpg 305 mm EV = 30% 54 mpg 305 mm EV = 30% Average car miles traveled per year: 12,000. 16
US Crude Production and Declining Demand Source: EIA, IEA, Raymond James & Associates, April 2, 2012 Energy: Stat of the Week 17
US Unconventional Gas Production 45 Production Capacity (Bcf / day) 40 35 30 25 20 15 10 5 Shale Gas Coalbed, Natural Gas Tight Gas 0 1990 2000 2010 2018 Source: Journal of Petroleum Technology, December 2010 www.spe.com/jpt 18
Unconstrained Growth: North Dakota Source: EIA, IEA 19
North American Supply Growth Source: Citi Investment Research and Analysis, Global Perspectives & Solutions 20 March 2012 20
2010 versus Future Scenario Nuclear Power 8% Renewables 12% Coal 20% Oil 19% NG/NGPL 41% Total = 98 Qbtu 2010 Total = 103 Qbtu Future Source: EIA (2011), QRI 21
Concluding Thoughts The US is on track to be 90% plus energy-sufficient by 2020 Technologies and public perception will dictate political and policy choices in shaping the future energy outlook Even under imperfect scenarios, prevailing outcome favors an enhanced sense of US energy security and independence Lessons of Hurricane Sandy point to the importance of diversity and debottlenecking in the entire energy web 22
Thank You. A downloadable version of today s presentation may be found on the QRI website: www.qrigroup.com 23