3rd Asia Energy Security SummitCo-operation for Security, Stability and SustainabilityNorth America, South America and Chi...
The Changing Global Energy Mix and Demand Supply Scenario                                                              Wor...
Global Shale Gas Reserves and PotentialSource: World Shale GasResources,                                Technically recove...
Shale Gas revolution in North America    •   US, which currently imports 20% of its energy is expected to be net exporter ...
Changing Global Dynamics and Energy Trade Flows•  Switch in direction of international energy trade   towards Asia   • Str...
Economic Impact of Shale Gas on US Economy                                                                   •   Significa...
China’s natural gas consumption is expected to grow in the future,reducing the share of coal from the Energy basket•   Chi...
Despite large shale gas reserves, China is expected to import majorshare of its gas requirement, owing to the rapid growth...
Most of the South American nations depend on oil and hydro to meettheir primary energy requirements                       ...
Discoveries of shale gas deposits in Argentina/ Brazil offer the SouthAmerican nations an alternative to meet their energy...
Key Challenges faced by Shale Gas     •   Gas Prices: Uncertainties with respect to gas pricing and current low prices in ...
The future of Shale Gas and its dominance in Global Energy mix may depend on hostof factors                               ...
Shale Gas Impact•    How will reputational risk/ public opinion impact investments in shale gas? What environmental     re...
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its net...
Upcoming SlideShare
Loading in …5
×

North America, South America and China’s standpoint on future Shale gas market

654
-1

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
654
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
5
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

North America, South America and China’s standpoint on future Shale gas market

  1. 1. 3rd Asia Energy Security SummitCo-operation for Security, Stability and SustainabilityNorth America, South America and China’sstandpoint on future Shale gas marketFebruary 2013
  2. 2. The Changing Global Energy Mix and Demand Supply Scenario World Primary Energy Demand (MTOE)• Global energy demand expected to increase by 5000 more that ~33% in next 25 years [IEA] 4000• Highest growth in demand expected in China 3000 and India 2000 2008• Pronounced shift away from oil, coal and in 2035 1000 some countries, nuclear, towards natural gas 0 and renewables• Natural Gas is projected to surpass coal in the primary energy supply mix by 2035. WEO, 2011 (Gas Scenario)• Unconventional gas accounts for more than 40% of increase in gas production by 2035; major share coming from North America and China – WEO 2011• Unconventional together to account for almost a fifth of the increase in global energy supply to 2030.2 ©2013 Deloitte Touche Tohmatsu India Private Limited
  3. 3. Global Shale Gas Reserves and PotentialSource: World Shale GasResources, Technically recoverable Continent2011, EIA (Tcm) North America 54.7 South America 34.7 China 36 Total 2193 ©2013 Deloitte Touche Tohmatsu India Private Limited
  4. 4. Shale Gas revolution in North America • US, which currently imports 20% of its energy is expected to be net exporter in the long term because of Shale gas revolution • Gas prices hit a 10 year low • Infrastructure related to export of gas being set-up in North America • Canada also has good reserve but relatively slower in developing shale gas • Shale gas expected to spur economic activity due to low energy prices • Competitiveness of nuclear energy is being challenged by relatively cheap Natural Gas. • Regulations requiring more disclosure of environmental impact expected in US Natural gas Production (tcf) 19.80 10.90 2.00 4.60 9.40 6.60 4.00 4.40 Canada (2008) Canada (2035) … US (2008) US (2035) Conventional Unconventional Source: WEO: 2011 *Unconventional include shale, CBM and Tight Gas4 ©2013 Deloitte Touche Tohmatsu India Private Limited
  5. 5. Changing Global Dynamics and Energy Trade Flows• Switch in direction of international energy trade towards Asia • Strategic Trade Routes Security• Decreasing dependence of US on Persian Gulf Oil Exports to US from Saudi Arabia and Middle East (Thousand Barrels per day) 2000 • The US - historically a major power shaping developments in ME/ Persian Gulf 1800 • Changes expected in the Geopolitical environment in the region 1600 • Dispute over Iran sanctions and the new 1400 balance of political influence• Coal consumption in Europe 1200 • Domestic Coal Surplus in US because of gas 1000 prices 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 • Coal flowing to Europe • How long will this sustain? Source: IEA• Changing scenario for Russian Gas Exports • Delayed production for projects destined for US • Russian Supplies in Europe • Gazprom supplies to Ukraine5 ©2013 Deloitte Touche Tohmatsu India Private Limited
  6. 6. Economic Impact of Shale Gas on US Economy • Significant price difference • Low energy/ feedstock between US & Europe/ Asia prices expected to improve • Producers may face financing competitiveness of industry risk due to pricing; may affect • Petrochemicals, fertilizer, US Restrictions future investment steel Energy, infrastructure, on • Recent report submitted to US manufacturing and Export of Gas Department of Energy suggests transportation sector to Impact of Low Cost Shale Gas US expected to benefit exports benefit the most on Economy in • Strong domestic production to • Direct and indirect Job North America help reduced volatility in prices creation and improve investment • Reduced pressure on US • U.S. becomes able to produce with respect to emission large quantities of gas from norms shale at low cost6 ©2013 Deloitte Touche Tohmatsu India Private Limited
  7. 7. China’s natural gas consumption is expected to grow in the future,reducing the share of coal from the Energy basket• China’s gas consumption stands at 4% of its Energy mix, Energy Mix (2011) – China considerably lower than the world average.• The demand supply gas of gas in china is expected to 4% widen further owing to demand growth rate 70% 18%• Although conventional gas reserves/production is limited, China is estimated to have ~36 tcm of shale gas deposits. 2% 6% 1%• In the 12th 5-year plan, Chinese government has shown interest towards increasing the development of natural gas Oil Natural gas Coal Nuclear energy Hydro electricity Renewables as a preferred fuel and reduction in emissions Widening gap 7.47 5.72 5.05 4.62 4.19 2.99 3.16 3.61 2009 2011 … 2015 2020 Production (tcf) Consumption (tcf)7 ©2013 Deloitte Touche Tohmatsu India Private Limited
  8. 8. Despite large shale gas reserves, China is expected to import majorshare of its gas requirement, owing to the rapid growth in demand Supply drivers 1. Sino-US Shale Gas Resources Cooperation Initiative Demand drivers 2. LNG Terminal capacity expansion 1. Rapid urbanization – 2.26 tcf planned by 2015 2. Promotion of gas based 3. Acquisition of international transportation companies to learn technical know- how and secure resources 3. Chinese governments push to reduce carbon emissions 4. Focus on increasing production of domestic unconventional fuels 4. Uncertainty over nuclear power 5. Reduction of coal based power supply China expected to play a key role in the Global Energy market: • Persian Gulf and Middle East as China is expected to be major buyer in future • Developing influence in Africa • Diplomatic role with respect to Iranian Crude and US oils sanctions • Imports from Australia and central Asia8 ©2013 Deloitte Touche Tohmatsu India Private Limited
  9. 9. Most of the South American nations depend on oil and hydro to meettheir primary energy requirements • South and Central American energy consumption is mainly concentrated in three countries, viz. Argentina, Energy Mix (2011) – South & Brazil, and Venezuela. (accounting for almost 70% of Central America the region’s energy consumption in 2011) 2% • Argentina produces 1.37 tcf of gas against a demand of 1.64 tcf. 26% • Argentina and Brazil are the only two nations that 45% import large quantities of gas while the other nations 1% either import small quantities or are net exporters 4% • Major share of imports are coming from Bolivia or Qatar 22% • The region is looking to reduce its dependence on Oil Natural gas Coal hydel power because of its unreliable nature Nuclear energy Hydro electricity Renewables • Gas based power generation is expected to increase in the region9
  10. 10. Discoveries of shale gas deposits in Argentina/ Brazil offer the SouthAmerican nations an alternative to meet their energy requirements • Argentina has ~22 tcm of proven shale gas reserves,South American Shale Deposits and Brazil, indicates a potential of ~6.4 tcm of shale gas reserves. • The shale gas reserves are expected to have significant impact the economy, especially in Argentina • Argentina is taking steps towards harnessing the shale gas potential • Well-head gas prices by 44% (to $7.5 per mmBtu) in order to attract private investment into the sector by Argentina • India and China are also looking at shale gas assets in South America in an effort to secure supplies to their respective nations Source: Schlumberger Oilfield Services10
  11. 11. Key Challenges faced by Shale Gas • Gas Prices: Uncertainties with respect to gas pricing and current low prices in North America may affect the investment environment • Managing costs and financing risks are key concerns of investors because of low domestic prices and restrictions on exports • Accessibility to Technology and Capital • Availability of skill base • Environmental issues, especially related to water management and surface impact • Geo-political environment • Reputation Risk and Public Opinion Select Countries where Shale Gas Remarks Development was stalled France Temporary moratorium on shale gas drilling through June 2011. Subsequently, ban on hydraulic fracturing in 2011 Quebec (Canada) Shale gas production and hydraulic fracturing put on hold. South Africa Temporary moratorium in 2012 in certain regions United States Moratorium in hydraulic fracturing in 2010 and 2011 in states of New York and Maryland, respectively11
  12. 12. The future of Shale Gas and its dominance in Global Energy mix may depend on hostof factors Policies/ Regulations Carbon Emission Norms Technology Capital Adoption Requirement Future of Shale Gas Demand and Gas Supply Pricing Environmental Issues Energy Security Geo Politics Energy Strategy/ Diversification12 ©2013 Deloitte Touche Tohmatsu India Private Limited
  13. 13. Shale Gas Impact• How will reputational risk/ public opinion impact investments in shale gas? What environmental regulation will it attract?• How long will low prices in North America sustain? Will global gas market/ pricing emerge?• Will the U.S. become a long-term exporter of LNG or it will remain restrictive to Exports?• How will China’s unending energy appetite affect gas prices and Demand Supply scenario?• How will the global energy trade flows and Geo-politics change in light of Shale gas developments?13 ©2013 Deloitte Touche Tohmatsu India Private Limited
  14. 14. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms,each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure ofDeloitte Touche Tohmatsu Limited and its member firms.This material and the information contained herein prepared by Deloitte Touche Tohmatsu India Private Limited (DTTIPL) is intended to providegeneral information on a particular subject or subjects and is not an exhaustive treatment of such subject(s) and accordingly is not intended toconstitute professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you oryour business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualifiedprofessional adviser.None of DTTIPL, Deloitte Touche Tohmatsu Limited, its member firms, or its and their affiliates shall be responsible for any loss whatsoever sustainedby any person who relies on this material.©2013 Deloitte Touche Tohmatsu India Private Limited ©2013 Deloitte Touche Tohmatsu India Private Limited
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×