Shale oil: a real game changer

430 views

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
430
On SlideShare
0
From Embeds
0
Number of Embeds
40
Actions
Shares
0
Downloads
6
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Shale oil: a real game changer

  1. 1. SHALE GAS & OIL REVOLUTION Koen De Leus KBC Economic Autumn Seminar 5 september 2013
  2. 2. 2 Shale Gas & Oil Revolution Topics  Shale revolution & the gas & oil production boom  Glut of oil & North American oil independence  Macro economic impact US  Worldwide impact low oil prices
  3. 3. 3  1990-2002: stable oil prices  From 2002 on prices up because of economic recovery, huge demand China + ‘Peak Oil’ fear  Start of Pig Cycle  New technology of horizontal hydraulic fracking Brent Oil Price (US$/barrel, 1990 – today) Shale revolution Investments & new technology Bron: Thomson Financial Datastream Bron: Thomson Financial Datastream 0 20 40 60 80 100 120 140 160 Low prices, no investments, no concessions High prices, Pig Cycle.
  4. 4. 4 Shale revolution Booming gas & oil production US: Production of natural gas & import (In billion cubic feet) 2016 US: Production, consumption & net import oil (In billion barrels per day) -500 0 500 1000 1500 2000 2500 3000 3500 4000 0 5000 10000 15000 20000 25000 Natural gas production, lhs Net import, rhs 0 5 10 15 20 25 0 2 4 6 8 10 12 14 16 Petroleum Net Imports, lhs Crude Oil Production, Total, lhs Oil consumption, rhs
  5. 5. 5  Worldwide oil capacity 2011: 93 mbd  Iraq: +5.1 mbd  US: +3.5 mbd  Brazil: +2.5 mbd  Canada: +2.2 mbd  …  Worldwide oil capacity 2020: 110.6 mbd (Harvard Kennedy School) Non-conventional oil Shale revolution Worldwide capacity & energy independance
  6. 6. 6 Economic impact Current account & FX US petroleum trade balance & prices (In bn US$ & US$ per barrel) US relative oil deficit & exchange rate (oil deficit vs Germany & €/$ exchange rate) 0 20 40 60 80 100 120-450 -400 -350 -300 -250 -200 -150 -100 -50 0 US Trade balance petroleum (in bn $) US trade balance petroleum (in bn $, 2005 prices) Crude Oil-WTI Spot Cushing U$/BBL - DS MID PRICE 0,6 0,8 1 1,2 1,4 1,6 1,8 0 5000 10000 15000 20000 25000 30000 35000 40000 1/01/2000 1/01/2001 1/01/2002 1/01/2003 1/01/2004 1/01/2005 1/01/2006 1/01/2007 1/01/2008 1/01/2009 1/01/2010 1/01/2011 1/01/2012 1/01/2013 US - Germany oil deficit, in mio US$ EUR/US$ exchange rate
  7. 7. 7  Employment:  Gas & Oil: 0.44% total employment  Precedent 4Y: +190K  Till 2020: +400K  Multiplicator: 3x to 4x = +1.2 mio  Low Gas prices:  Refinery & chemical sector: 46% industrial gas consumption  No positive output effect  Industrial fuel mix: gas from 31.5% to 36.5% since 2006  No positive effect on electricity prices No manufacturing renaissance (yet) Natural gas price (Europe, US & Japan, in US$/MMBtu) Economic impact No Manufacturing Renaissance 0 2 4 6 8 10 12 14 16 18 20 9/03/2005 16/11/2005 26/07/2006 4/04/2007 13/12/2007 21/08/2008 30/04/2009 7/01/2010 16/09/2010 26/05/2011 2/02/2012 11/10/2012 20/06/2013 US GAS EURO GAS Japan import price
  8. 8. 8  Spare capacity increases, risk premium decreased.  Long term oil price  Futures WTI (delivery 60 months): 90US$  Break-even price: 90US$ or lower - deepwater: 50-70 US$/barrel - Shale oil: 50-80 US$/barrel - Oil sand: 80-90 US$/barrel But short term supply failures (4% global supply) keep risk premium high Evolution (estimated) spare capacity OPEC (in % world demand) 2,7% 6,5% 6,8% 2,7% 3,7% 5,3% 6,2% 6,3% 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0% 8,0% 2008 2009 2010 2011 2012 2013 2014 2015 Bron: KBC Economic impact Structural lower oil prices
  9. 9. 9  Inflation < 2%  Positive supply shock net importers  OPEC main loser  Dilemma: - High oil price (production restrictions) leads to more production non-conventional oil. Will coherence uphold (e.g. Iraq, Venezuela) - Low oil price: national income implodes, fiscal break-even level >100$. Arab Spring part II? US: CPI versus Brent oil (Brent change in US$, % YoY) -60 -40 -20 0 20 40 60 80 100 120 -2 -1 0 1 2 3 4 US CPI, %YoY Brent %YoY, right hand scale* * Brent moving to 90US$ by 05/2015 and stabilising afterwards Economic impact Positive supply shock & OPEC dilemma
  10. 10. SHALE GAS & OIL REVOLUTION Koen De Leus KBC Economic Autumn Seminar 5 september 2013

×