session i 16 february 2017 ann-louise hittle - ief · 16 february 2017 ann-louise hittle ......
TRANSCRIPT
IEF- KAPSARC Roundtable
Session I
16 February 2017
Ann-Louise Hittle
Trusted commercial intelligencewww.woodmac.com
Trusted commercial intelligence© Wood Mackenzie
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Onshore OPEC
Other L48 Tight Oil
Wolfcamp Eagle Ford
Onshore Non-OPEC
Mid-Continent SCOOP/STACK
Vertical
Shallow Water OPEC
Bone Spring
Deepwater Brazil
Bakken
Deepwater Non-OPEC
Niobrara
Shallow Water Europe
Canada Oil Sands Deepwater Angola
Deepwater US
Deepwater Nigeria
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20
40
60
80
100
120
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000
Bre
kev
en
US
$/b
bl
Bre
nt
eq
uiv
ale
nt
Liquids production 2026 (million b/d)
Deepwater US
Canada Oil Sands
Shallow Water Europe
Deepwater Non-OPEC
Weighted average based on production in 2026
Source: Wood Mackenzie onshore breakevens at 10% discount rate, offshore at 15%.
Shallow Water Non-OPEC
DeepwaterShallow waterOnshoreLower 48 Tight OilWeighted average breakeven based on 2026 production
0 1 2 3 4 5 6 7 8 9 10 11 12
Pre-FID and US L48 future drilling cumulative production by breakeven in 2025 – by resource theme
Competitors repositioning at the low end of the oil cost curve
US tight oil, Brazil and low cost Middle East opportunities in demand
$60/bbl
Source: Wood Mackenzie onshore breakevens at 10% discount rate, offshore at 15%
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30%
35%
40%
45%
50%
55%
60%
65%
70%
2016 2018 2020 2022 2024 2026 2028 2030
% G
as
Pro
du
cti
on
BP ex. Russia Chevron
Eni ExxonMobil
Shell Statoil
Total
70
80
90
100
110
120
130
2016 2018 2020 2022 2024 2026 2028 2030
Ind
ex
ed
Pro
du
cti
on
BP Chevron
Eni ExxonMobil
Shell Statoil
Total
Oil majors’ growth to fall late next decade; Gas is a big differentiator
Some competitors starting to address the long-term sustainability challenge
Majors’ WM base case production indexed to 2016 Evolution of % gas in the production mix
Source: Wood Mackenzie CBT Q4 2016
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In low oil price environment since late 2014, the ‘hopper’ of conventional pre-FID developments has diminished
Production from pre-FID conventional projects Change in production outlook since 2014
-4.5
-4.0
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
Yr1 Yr3 Yr5 Yr7 Yr9 Yr11
Pro
du
cti
on
ch
an
ge,
'millio
n b
/d
Other
UAE
Kazakhstan
Congo
United States
Libya
Russian Fed.
Brazil
Norway
Nigeria
Angola
Source: Wood Mackenzie
0
1
2
3
4
5
6
7
8
9
10
Yr1 Yr3 Yr5 Yr7 Yr9 Yr11
Pro
du
cti
on
, m
illio
n b
/d
2014 Pre-FID projects
Q3 2016 Pre-FID projects
Source: Wood Mackenzie
Production volumes from 2014 and 2016 datasets rebased to same start year for comparison purposes
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Global oil demand: growth focused on transport and petchem
Global oil demand by sector Oil intensity (bbl per $1000 GDP in 2010 prices)
Oil intensity (amount of demand per unit of GDP) declines in all regions
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6
US Lower 48: declines have now bottomed out and production is expected to respond strongly to recent higher oil prices
But how fast will operators move to ramp up activity and can production growth be sustained in the long term?
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
200
0
200
1
200
2
200
3
200
4
200
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200
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201
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201
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203
5
Pro
du
ctio
n '0
00
b/d
NGLs Other tight oil
STACK SCOOP
Niobrara Bone Spring
Wolfcamp Eagle Ford
Bakken Conventional
Source: Wood Mackenzie
Trusted commercial intelligence© Wood Mackenzie
7
70
75
80
85
90
95
100
105
110
2015 2020 2025 2030 2035
Mil
lio
n b
/d
YTF
Other discoveries
Reserves growth
Commercial
*Yet-to-find (YTF) production forecasts in the oil supply view are based on past success ratesand include volumes from Frontier basins. Excludes Unconventionals (Biofuels, gas-to-liquids (GTL) & coal-to-liquid (CTL))
Over 10% of global liquid supply by 2035 will be sourced from conventional volumes that are yet to be discovered
Africa, Latin America and North America account for around 60% of those volumes
0
2
4
6
8
10
12
2015 2020 2025 2030 2035
Mil
lio
n b
/d
Russia and the Caspian
Oceania
North America
Middle East
Latin America and theCaribbeanEurope
Asia
Africa
Global liquids capacity outlook Yet-to-find* capacity outlook by region
Source: Wood Mackenzie’s Oil Supply Tool. Note, Macro Oils and Oil Supply Tool use the same analysis
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COP21 world and low oil prices both pushing majors to focus on low cost production raising risk of supply shortfall by 2035
� Post 2020, oil demand growth slows although continues to 2035 despite inroads by EVs and declines in oil intensity
� US tight oil drives non-OPEC growth; Permian Basin is the focus and current prices are high enough for operators
� Project-FIDs for conventionals declined in low oil price world of 2014-2016
� Incentive is against exploration but our 2035 supply outlook includes 10% from conventional volumes yet to be discovered
� If US tight oil does not deliver, there is risk for price spike due to low OPEC spare capacity and limited other non-OPEC investment.
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Disclaimer
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conclusions are confidential and may not be disclosed to any other persons or
companies without Wood Mackenzie’s prior written permission.
� The information upon which this report is based has either been supplied to us by IEF-
KAPSARC or comes from our own experience, knowledge and databases. The opinions expressed in this report are those of Wood Mackenzie. They have been
arrived at following careful consideration and enquiry but we do not guarantee their
fairness, completeness or accuracy. The opinions, as of this date, are subject to
change. We do not accept any liability for your reliance upon them.
Strictly Private & Confidential
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