#AOGA2015
#AOGA2015
Which honored guest graduated from Service High School in 1990? Attorney General Craig Richards House Majority Leader Charisse Millett Senator Lesil McGuire Department of the Interior Chief of Staff Tommy Beaudreau ANSWER: DOI Chief of Staff Tommy Beaudreau #AOGA2015
#AOGA2015 Department of the Interior Chief of Staff Tommy Beaudreau
Industry Update 2015 KARA MORIARTY ALASKA OIL AND GAS ASSOCIATION MAY 28, 2015 #AOGA2015
#AOGA2015 AOGA Member Companies
#AOGA2015 What has happened in the past 12 months?
#AOGA2015 What has happened in the past 12 months?
Major pull-back of activity outside Alaska Up to 185,000 jobs could be lost in the oil and gas industry this year, study says The Canadian Press, May 19, 2015 CALGARY - Shrinking budgets in the oil and gas industry could lead to as many as 185,000 direct and indirect job losses in Canada this year, according to a new study by an industry group. The report, released Tuesday by the labour market division of Enform, says the potential losses would represent a 25 per cent drop in the number of jobs the sector supports and are the result of major budget cuts in the oilpatch. Major State Variances This Week +/- Last Week +/- Year Ago Alaska 10 0 10 0 10 Arkansas 7-1 8-5 12 California 13-1 14-27 40 Colorado 39 2 37-26 65 Kansas 10-1 11-23 33 Louisiana 70-3 73-44 114 New Mexico 44-2 46-47 91 North Dakota 80 1 79-94 174 Ohio 24-1 25-11 35 Oklahoma 102-6 108-90 192 Pennsylvania 47 0 47-11 58 Texas 379-1 380-516 895 Utah 6-1 7-21 27 West Virginia 20-1 21-7 27 Wyoming 24 0 24-21 45 #AOGA2015
How much has Cook Inlet oil production increased since the Cook Inlet Recovery Act passed? 25 percent 50 percent 70 percent 80 percent ANSWER: Cook Inlet oil production has increased 80% since the Cook Inlet Recovery Act passed. Source: http://dor.alaska.gov/portals/5/docs/pressreleases/rsb%20fall%202014%20highres%20page.pdf #AOGA2015
Oil production in Cook Inlet up by 80% Cook Inlet production 2005-2014 20 18 16 14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Production (thousand bbls/day) Source: DOR, Fall 2014 RSB #AOGA2015
Oil tax credits are working as designed Refundable credits were implemented as an investment in the future. There is no systemic problem with the credits themselves. They were put in the place for certain purposes - DOR Commissioner Hoffbeck January 2015 #AOGA2015
Where are we & where are we headed? TAPS Throughput (MBD) Forecast figures: State of Alaska DOR, Spring 2015 Revenue Sources Book Actual figures are calendar year; forecast figures are State of Alaska fiscal year #AOGA2015 13
#AOGA2015 Where are we & where are we headed?
How many wells have been drilled in Alaska's Arctic offshore since the 1970s? 2 4 24 42 ANSWER: There have been 42 wells drilled in Alaska s Arctic offshore since the 1970s. Source: http://www.boem.gov/about-boem/boem-regions/alaska-region/historical-data/index.aspx #AOGA2015
#AOGA2015 The next generation of oil & gas development
Permitting & Regulations BOEM Offshore leasing programs BOEM/BSEE Arctic Specific Regulations Air Quality Regulations Hydraulic fracturing Small remote incinerators Wetlands Mitigation Off Permit Notice Change ADEC Anti-degradation Rulemaking Hazardous spill and response Beluga whale and other endangered species And others #AOGA2015
#AOGA2015 Why should I care?
Why should I care? All other revenue sources 12% Oil and gas unrestricted general fund revenue 88% Source: Department of Revenue, 2014 #AOGA2015
True or false: The state is collecting more in tax revenues under SB 21 than it would have under the former tax system at current oil prices. ANSWER: True. According to analysts, Alaska will collect over $850 million dollars more over the next two years at current prices than the state would have under the former tax system. Source: http://www.legis.state.ak.us/basis/get_documents.asp?session=29&docid=1271 #AOGA2015
State s other revenue sources Excise tax 31% Fisheries business 6% Other non-petroluem taxes 6% Charges for services 5% Fines & Forfeitures 2% Licenses & Permits 8% Investment revenue 24% Rents & Royalties 6% Miscellaneous revenues and transfers 12% Source: DOR, 2014 #AOGA2015
#AOGA2015 Work together. Win together.
#AOGA2015
How many bills in Senator Murkowski's energy package deal directly with Alaska energy issues? 2 3 4 5 ANSWER: Five. Source: http://www.energy.senate.gov/public/index.cfm/republican-news?id=e925c1cc-f74c-4b4b- 935d-57de4d474bf0%29 #AOGA2015
#AOGA2015
Lower oil prices and the energy outlook For Alaska Oil & Gas Association Conference May 2015 Anchorage, AK By Adam Sieminski U.S. Energy Information Administration U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov
27
28
29
30
Short-term considerations Lower oil prices and the energy outlook May 2015 31
For oil prices, the market-implied confidence band is very wide WTI price dollars per barrel 150 125 100 75 50 25 0 Historical Spot Price STEO Forecast NYMEX Futures Price Current 95% NYMEX futures price confidence interval May 2014 95% NYMEX futures price confidence interval Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2013 2014 2015 2016 Source: EIA, Short-Term Energy Outlook, May 2015 Lower oil prices and the energy outlook May 2015 32
Production growth in top crude producing regions (Permian, Bakken, Niobrara, and Eagle Ford) reverses in early 2015 monthly percent change three month rolling average 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0-0.5-1.0 Source: EIA, DPR, May 2015-1.5 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Lower oil prices and the energy outlook May 2015 33
North American oil production growth slows with lower oil prices but remains the main driver of global production growth world crude oil and liquid fuels production growth million barrels per day 2.0 Forecast 1.5 1.0 0.5 0.0-0.5 2014 2015 2016 OPEC countries North America Russia and Caspian Sea Latin America North Sea Other Non-OPEC Source: EIA, Short-Term Energy Outlook, May 2015 Lower oil prices and the energy outlook May 2015 34
World liquid fuels consumption picks up million barrels per day (MMbbl/d) 1.0 0.8 Forecast 0.6 0.4 0.2 0.0-0.2-0.4-0.6 2014 2015 2016 OECD* Non-OECD Asia Former Soviet Union Other * Countries belonging to the Organization for Economic Cooperation and Development Source: EIA, Short-Term Energy Outlook, May 2015 Lower oil prices and the energy outlook May 2015 35
Surprises in liquid fuel demand to the upside are rare world liquid fuels consumption million barrels per day (MMbbl/d) annual change (MMbbl/d) 96 Change in U.S. consumption (right axis) Forecast 8 94 Change in China consumption (right axis) 7 92 90 Change in other consumption (right axis) Total world consumption (left axis) 6 5 88 4 86 3 84 2 82 1 80 0 78-1 76 2008 2009 2010 2011 2012 2013 2014 2015 2016-2 Source: EIA, Short-Term Energy Outlook, May 2015 Lower oil prices and the energy outlook May 2015 36
Oil supply and demand rebalance by late 2016 million barrels per day (MMbbl/d) MMbbl/d 98 96 Implied stock change and balance (right axis) World production (left axis) Forecast 6 5 94 World consumption (left axis) 4 92 90 88 86 84 3 2 1 0 82-1 80-2 78 2010-Q1 2011-Q1 2012-Q1 2013-Q1 2014-Q1 2015-Q1 2016-Q1-3 Source: EIA, Short-Term Energy Outlook, May 2015 Lower oil prices and the energy outlook May 2015 37
OECD commercial crude oil stocks remain high days of supply 70 Forecast 65 60 55 50 45 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Source: EIA, Short-Term Energy Outlook, May 2015 Lower oil prices and the energy outlook May 2015 38
OPEC surplus crude oil production capacity remains moderate to low million barrels per day (MMbbl/d) 6 5 Note: Shaded area represents 2004-2014 average (2.2 MMbbl/d) Forecast 4 3 2 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: EIA, Short-Term Energy Outlook, May 2015 Lower oil prices and the energy outlook May 2015 39
Long-term considerations Lower oil prices and the energy outlook May 2015 40
World crude oil price projection is lower in the AEO2015 Reference case than in AEO2014, particularly in the near term Brent crude oil spot price 2013 dollars per barrel 160 History 2013 Projections 120 AEO2014 80 AEO2015 40 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Source: EIA, Annual Energy Outlook 2015 Reference case and Annual Energy Outlook 2014 Reference case Lower oil prices and the energy outlook May 2015 41
All of the growth in liquid fuels consumption occurs in the emerging non-oecd (million barrels per day) petroleum and other liquid fuels consumption, 1990-2040 million barrels per day 90 history 2010 projections Non-OECD 60 30 OECD 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Source: EIA, International Energy Outlook 2014 Lower oil prices and the energy outlook May 2015 42
Most significant contributors to non-opec crude and lease condensate production: Canada, Brazil, U.S., Kazakhstan, Russia non-opec crude and lease condensate production, Reference case million barrels per day 24 2010 2025 2040 18 12 6 0 Canada United States Mexico Brazil Kazakhstan Russia Other Source: EIA, International Energy Outlook 2014 Lower oil prices and the energy outlook May 2015 43
Reductions in energy intensity largely offset impact of GDP growth, leading to slow projected growth in energy use U.S. primary energy consumption quadrillion Btu 120 History 2013 Projections 2025 2040 100 Renewables (excluding liquid biofuels) 80 60 40 Natural gas Coal Nuclear Liquid biofuels 27% 8% 18% 8% 1% 27% 9% 19% 8% 1% 29% 10% 18% 8% 1% 20 Petroleum and other liquids 36% 35% 33% 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Source: EIA, Annual Energy Outlook 2015 Reference case Lower oil prices and the energy outlook May 2015 44
In the transportation sector, motor gasoline use declines; diesel fuel, jet fuel, and natural gas use all grow transportation energy consumption by fuel quadrillion Btu History 2013 30 Projections 2030 2040 25 20 15 10 Other* 24% 10% 3% 4% Diesel Jet fuel Ethanol 1% 31% 13% 4% CNG/LNG 2% 31% 14% 5% 3% 3% 5 58% Motor gasoline 48% 44% 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Source: EIA, Annual Energy Outlook 2015 Reference case *Includes aviation gasoline, propane, residual fuel oil, lubricants, electricity, and liquid hydrogen Lower oil prices and the energy outlook May 2015 45
U.S. crude oil production rises above previous historical highs before 2020 in all AEO2015 cases, with a range of longer-term outcomes U.S. crude oil production million barrels per day 20 History 2013 2013 2013 Reference High Oil and Gas Resource Low Oil Price 15 U.S. maximum production level of 9.6 million barrels per day in 1970 10 Tight oil 5 Lower 48 offshore Source: EIA, Annual Energy Outlook 2015 Other lower 48 onshore Alaska 0 1990 2000 2010 2020 2030 2040 2020 2030 2040 2020 2030 2040 Lower oil prices and the energy outlook May 2015 46
Projected U.S. natural gas exports reflect the spread between domestic natural gas prices and world energy prices U.S. natural gas imports and exports trillion cubic feet 16 12 8 4 History 2013 Alaska LNG exports 2013 Projections 2013 billion cubic feet per day Lower 48 states LNG exports Pipeline exports to Mexico 40 30 20 10 0 0-4 Pipeline exports to Canada Pipeline imports from Canada -10 High Oil and Gas LNG imports Reference Low Oil Price Resource -20-8 2000 2010 2020 2030 2040 2020 2030 2040 2020 2030 2040 Source: EIA, Annual Energy Outlook 2015 Lower oil prices and the energy outlook May 2015 47
U.S. crude oil supply and disposition change, 2025 v. 2013 thousand barrels per day 8,000 7,000 Source Use Use 6,000 5,000 4,000 Source Use Exports Hydroskimmers Stabilizers Splitters 3,000 2,000 Refinery Runs Declining Imports Production 1,000 0 Low crude production case Crude exports restricted High crude production case Crude exports unrestricted Crude exports restricted Source: U.S. Energy Information Administration, based on Turner, Mason and Company Lower oil prices and the energy outlook May 2015 48
EIA is publishing a series of reports on U.S. crude exports Report U.S. crude oil production forecast analysis of crude types www.eia.gov/analysis/petroleum/crudetypes/ What drives U.S. gasoline prices www.eia.gov/analysis/studies/gasoline/ U.S crude oil import tracking tool www.eia.gov/beta/petroleum/imports/browser/ Technical options for processing additional light tight oil volumes within the United States www.eia.gov/analysis/studies/petroleum/lto/ Implications of increasing light tight oil production for U.S. refining (Turner Mason) www.eia.gov/analysis/studies/petroleum/morelto/ U.S. crude oil production to 2025: Updated projection of crude types Publish date May 2014 October 2014 November 2014 April 2015 April 2015 May 2015 Effects of relaxing U.S. crude export restrictions June 2015 Lower oil prices and the energy outlook May 2015 49
For more information U.S. Energy Information Administration home page www.eia.gov Annual Energy Outlook www.eia.gov/aeo Short-Term Energy Outlook www.eia.gov/steo International Energy Outlook www.eia.gov/ieo Monthly Energy Review www.eia.gov/mer Today in Energy www.eia.gov/todayinenergy State Energy Profiles www.eia.gov/state Drilling Productivity Report www.eia.gov/petroleum/drilling/ International Energy Portal www.eia.gov/beta/international/?src=home-b1 Lower oil prices and the energy outlook May 2015 50
Test your oil and gas IQ and become a brain-i-ak. Enter your email address to receive more information on Alaska s oil and gas industry www.brain-i-ak.com #AOGA2015
THANK YOU! #AOGA2015 #AOGA2015