2. THREE FUNDAMENTAL GAME CHANGERS
• The end of the commodity super-cycle & falling oil price – for ever
• Decarbonisation & the next generation of renewable technologies
• Digitalisation & the transformation of demand

3. END OF THE COMMODITY SUPER-CYCLES
BP OUTLOOK
OIL PRICE (BRENT CRUDE, 2014$/BBL)
Source: BP and Thomson Reuters
0
10
20
30
40
50
60
70
80
90
100
110
120
130
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
2014$/bbl
$50

4. Source: Thomson Reuters
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Oil Brent…
$50
BACK TOWARDS $50

5. US GAS PRICE IN RELATION TO THE OIL
PRICE
Sources: World Bank, Aurora Energy Research
Notes: 1. Oil price shown is Brent Crude
0
2
4
6
8
10
12
0
20
40
60
80
100
120
201220001998 200620042002 2010 20162008 20141992 199619881986 19901984 1994
Henry Hub Gas PriceBrent Crude Oil PriceOil price,1
2016$/bbl
Henry Hub Gas price,
2016$/mmbtu

6. US SHALE PRODUCTION HAS PUSHED DOWN PRICES, AS WELL AS
SUPERSEDING REINVESTMENT IN CONVENTIONAL GAS PRODUCTION
Sources: World Bank, IEA, Aurora Energy Research
Notes: 1. Non-shale gas production includes conventional, coal bed methane and tight gas production
26
28
24
4
2
6
8
14
12
10
16
20
18
22
0
20102007 20092008 2011 2012 2013 2014 2015
Non-shale gas productionShale gas production1Henry Hub gas price
US gas production,1
tcf
Henry Hub Gas price,
2016$/mmbtu

7. TOTAL EUROPEAN GAS DEMAND HASN’T CHANGED
DRAMATICALLY OVER THE LAST 25 YEARS
Sources: Eurostat, Aurora Energy Research
Notes: Consumption shown here is the gross inland consumption per fuel type.
0
5
10
15
20
25
30
200620042002 2012201019981996 2000 201420081990 1992 1994
EU-28 coal & gas consumption,
tcf
Coal
Gas

8. Iraq
DEMAND
Iraq
SUPPLY
WHY OIL PRICES WILL CONTINUE TO FALL
• Transportation – electric vehicles - gas
• Petrochemicals – gas
• US production
• Russian production
• Iran & Iraq

9. 5 X 10MBD COUNTRIES
US Russia Saudi
Arabia
Iraq Iran
10million+ 10million+ 10million+
US
Saudi
Arabia
Russia
Iraq
10million?
Iran
10million?

10. Iraq
DEMAND
STRONGE
R
Iraq
SUPPLY
ABUNDANT
GAS GAINS BEFORE DYING DOWN
• Gas for electricity
• Gas for petrochemicals
• Gas for heating
• US exports not imports
• Qatar & Iran & Australia
• LNG global supply chains

11. NEW TECHNOLOGIES
OUR DIGITAL FUTURE
Next
Generation
Solar
Graphene
3D Printing
Robotics
Batteries
Electric
Cars
Large
Scale
Storage
Smart
grids
Smart
Meters Surprises
Iraq
ROBOTS
Iraq
3D PRINTING
Iraq
ARTIFICIAL
INTELLIGENC
E

12. DIGITAL WORLD IS ELECTRIC
• Future energy markets dominated by electricity
• Next generation solar delivers
• Digital & renewables all zero-marginal cost
• CAPACITY NOT WHOLESALE MARKETS
• CCGTs & OCGs, NEED TO BID CAPACITY
• CONTRIBUTION FROM BATTERIES & STORAGE & DEMAND
SIDE

13. CORPORATE STRUCTURES UNDER
PRESSURE
• Oil companies – harvest-and-exit
• Electricity companies – vertical break-up
• Lots of new entrants – car companies, battery companies,
broadband hubs supply points

14. FOR GAS COMPANIES LOTS OF OPTIONS
• Into CCGTs & OCGs
• Into petrochemicals
• Into LNG
• Into fixed priced capacity contract
But almost all are derivative on electricity markets

16. FOR INFORMATION – DIETERHELM.CO.UK
• Greg Clark’s energy agenda, Paper 20, Sep 16
• Flawed in almost all its parts – the final CMA report on electricity
markets, Paper 19, Jul 16
• After Hinkley – how to contract for the rest of the nuclear programme,
Paper 18, Apr 16
• The CMA Energy Market investigation: Companies 5-0 CMA? Paper
17, Mar 16
• The new normal – oil prices after the crash, Paper 16, Feb 16
• Stranded Assets – a deceptively simple and flawed idea, Paper 15,
Oct 15
• Reforming the FiTs and capacity mechanisms, Paper 14, Sep 15
Energy Futures Network
Paper 22.
Are the electricity price
increases justified?
Dieter Helm
Feb16
Energy Futures Network
Paper 23.
Not so smart – what has gone
wrong with the smart meter
programme and how to fix it
Dieter Helm
March 2017
Energy Futures Network
Paper 24.
Why intervention on electricity
prices is needed and how to do it
without undermining competition
Dieter Helm
Sep 16
Energy Futures Network
Paper 21.
Energy and Climate
Policy after BREXIT
Dieter Helm
Oct 16
• The first 100 days of Conservative energy policy, Paper 13, Aug 15
• Penalty tariffs, open ended regulation and embedding overcharging.
Paper 12, Jul 15
• British energy policy- what happens next? Paper 11, Jun 15
• Energy Policy and the Coalition, Paper 10, March 15
• What should oil companies do about climate change? Paper 9, Feb 15
• Competition in the British electricity sector: a set or practical measures,
Paper 8, Feb 15