lng: demand opportunities and supply challenges · nigeria lng: rapidly growing capacity plant...

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LNG: Demand opportunities and supply challenges

Kathleen Eisbrenner

Executive Vice-President, Global LNG

Shell Gas & Power

EIA 2008 Energy Conference

Washington D.C., 7th April 2008

The energy challenge

• Population growth

• Economic growth

• More affluent society

• End of ‘easy oil’

• Resource nationalism

• More unconventionals

• Hydrocarbons remain dominant

• CO2 consequences

1. RISING DEMAND 2. SECURITY OF SUPPLY 3. ENVIRONMENT & SOCIETY

Major economies are climbing the energy ladder

The growing role of LNG

0

1000

2000

3000

4000

2000 2006 2010 2020

TCF

Indigenous & Pipeline Imports LNG % increase over 2000

344%

53%

Sources: BP Statistical Review 2007, CERA 2006, EIA 2006

Global market developments

Shell analysis

TODAY2012

29

2012

LNG importers

# Countries

70.6%17

% increaseTODAY

.

.

.

.

.

.

.

LNG importers

LNG exporters

Supply challenges

• Growing energy demand

• Natural gas exporting countries

• Competition with exports

• Skyrocketed costs

• Construction delays

• More complex projects

• Large integrated projects

• Technical and project management challenges

1. DOMESTIC DEMAND 2. HIGH EPC COSTS 3. PEOPLE AND SKILLS

Energy sector inflation

INDEX (2000 = 100)

80

100

120

140

160

180

200

220

2000 2001 2002 2003 2004 2005 2006 2007 2008

Q3 2007

Q1 2007

Q3 2006

CERA Upstream Capital Cost Index (UCCI)

People and skills to deliver complex projects

Construction of Pearl GTL at Ras Laffan Industrial City in Qatar

Global market developments

Shell analysis

TODAY2012

18

29

2012

70.5%17LNG importers

LNG exporters

# Countries

20%15

% changeTODAY

.

.

.

.

.

.

.

LNG importers

LNG exporters

Nigeria LNG: Rapidly growing capacity

PLANT CAPACITY (YEAR END 100%, MTPA)

0

5

10

15

20

25

1999 2001 2003 2005 2007

Sakhalin II: World’s largest integrated oil and gas project

Floating LNG (FLNG)

• Unlocking stranded offshore gas accumulations

• Small environmental footprint

• No pipeline or dredging

• Limited onshore support base

• Cyclone tolerant

• Redeployable

Shell’s global LNG portfolioLeading position … and 5 new trains under construction

LNG SUPPLY:

IMPORT CAPACITY:

OPERATION CONSTRUCTION

Start up 2008

NLNG T6

Start up 2010+

Qatargas 4

Start up 2008-09

Sakhalin T1 & 2

Start up 2008

NWS T5

Start up 2010+

Pluto