lng investment conference 2014 - david egan, pwc

Global and Canadian LNG Opportunities

David EganPartner, Infrastructure and Project FinanceVancouver, BC

PricewaterhouseCoopers LLP 2

Table of Contents

Introduction

World Demand for Natural Gas

World Supply of Natural Gas

LNG Trade & Pricing

Implications for Canada & British Columbia

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Introduction


Introduction

The emerging Liquefied Natural Gas (LNG) industry in British Columbia is based on world class deposits of natural gas that have so far been developed for North American consumption only.

With worldwide demand increasing for LNG, significant overseas export opportunities are presenting themselves and the province is poised to take advantage.

This paper describes global trends with LNG demand, supply and pricing, and describes the implications for Canada and British Columbia.

Information is drawn from several sources including trade publications, mass media articles, internet sites, government publications, LNG conference presentations and discussions with PwC Energy experts.

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World Demand for Natural Gas

Source: U.S. Energy Information Administration (Annual Energy Outlook)PricewaterhouseCoopers LLP 6

Global Energy Demand by Source

Liquid Fuels37%

Natural Gas27% Coal

20%

Nu-clea

r8%

Hydro3%Bio

mass

3%

Other3%

Year 2014

Liquid Fuels34%

Natural Gas30%

Coal18%

Nuclear8%

Hydro3%

Biomass4%

Other4%

Year 2034


Source: BP Statistical Review of World Energy

Global Primary Energy Consumption

Nor

th A

mer

ica

South

and

Cen

tral

Am

erica

Europ

e an

d Eur

asia

Mid

dle Eas

t

Africa

Asia P

acifi

c0%

10%20%30%40%50%60%70%80%90%

100%

Consumption by Source (Oil-Equivalent), 2012

Oil Natural Gas Coal Nuclear Hydro Renewables


Map of Global Natural Gas Consumption Units in Tonnes Oil Equivalent, Per Capita

Image Credit: BP Statistical Review of World Energy

Image Credit: U.S. Energy Information AdministrationPricewaterhouseCoopers LLP 10

Global Natural Gas Consumption

2010 2015 2020 2025 2030 2035 20400

100

200

300

400

500

600

310 329360

393431

470507

Global Natural Gas Consumption (quadrillion Bcf/d)

Volu

me (

qu

adri

llio

n B

cf/

d)

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World Supply of Natural Gas

Source: BP Statistical Review of World EnergyPricewaterhouseCoopers LLP 12

Global Proved Natural Gas Reserves

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

10

20

30

40

50

60

70

80

90

Asia

Europe

Russia

Rest of the World

North America

Middle East

Proved Natural Gas Reserves by Region

Volu

me i

n T

rill

ion

Cu

bic

Metr

es


Global Natural Gas Production

0

100

200

300

400

500

600

700

800

900

1000

Asia, Rest of

Europe

Middle East

Russia

Rest of the World

China

North America

Natural Gas Production by Region

Volu

me i

n B

illi

on

Cu

bic

Metr

es

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LNG Trade & Pricing


Regional LNG Importers and Import Origins

Source: BP Statistical Review of World Energy

North America Europe and Eurasia

Rest of the World

China Asia, Rest of0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Trinidad & Tobago

Trinidad & Tobago

Peru

Qatar

Qatar

Qatar

Qatar

Qatar

Yemen

Nigeria NigeriaNigeria

Algeria

Australia

Australia

Indonesia Indonesia

Malaysia Malaysia

LNG Import Sources, 2012

Volu

me (

in b

illi

on

cu

bic

metr

es)

Image Credit: BP Statistical Review of World EnergyPricewaterhouseCoopers LLP 16

Map of Major Gas Trade Movements in 2012 Units in billion cubic metres


Global Natural Gas Prices

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0

2

4

6

8

10

12

14

16

18

Natural Gas Prices

German Import Price (cif; LNG)

Japan Import Price (cif; LNG)

Canada (Alberta; Natural Gas)

U.K. National Balancing Point Index (Natural Gas)

U.S. Henry Hub (Natual Gas)

Average

US

D (

per

mil

lion

Btu

)

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Implications for Canada & British Columbia


Map of Canadian Natural Gas Reserves

Image Credit: Pacwest Consulting Partners

PricewaterhouseCoopers LLP

Source: U.S. Energy Information Administration

20

2010 2020 2030 2040

-1

0

1

2

3

2.5

1.21.1

0.3

-0.06

0.65

0.99

2.34

Canadian Net Natural Gas Trade

Pipeline LNG

Volu

me (

in t

rill

ion

cu

bic

feet)

Canadian Net Natural Gas Trade

Export volume is positive; import is negative


Investment Opportunities in B.C.

Investment opportunities exist throughout the LNG supply chain beyond the LNG Consortia that are dominated by major oil & gas companies and major offtakers:

• Exploration companies

• Engineering and construction

• Pipelines

• Camp providers

• Services

22


Source: U.S. Energy Information Administration

26

Canadian Market Share

2014 2020 2030 20400

10

20

30

40

50

60

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

1.9 1.8 2.0 2.7

23.430.4

39.7

47.3

Global Natural Gas Export Volume and Canadian Market Share

Canada World Canadian Market Share

Volu

me (

in t

rill

ion

cu

bic

feet)

Mark

et

Sh

are


Opportunities and Challenges in B.C.

Challenges

• Engagement with First Nations bands, whose traditional lands are affected by projects

• Escalating competition from Australia and other exporting countries — worldwide liquefaction capacity may double over the next decade

• Large potential for marketable natural gas in Western Canadian Sedimentary basin but requires unconventional development —subject to regulatory and environmental approvals

Opportunities

• Western Canada is located close to the growing Asia-Pacific markets —transportation costs are thus minimized

• Proposed liquefaction capacities and export terminals will open access to new Asia — Pacific markets

• Large resource base in Western Canada

• Adequate access to capital to facilitate development of new capacities and export terminals


Contact Information

David Egan

Partner, Infrastructure and Project Finance

P: +1 604 806 7538 E: [email protected]

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