SOI2012

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SOI2012

  1. 1. State of the Industry Don BriggsThursday, January 26, 12
  2. 2. Office of the Press Secretary For Immediate Release - January 25, 2012 • To save the economy, President Obama will announce today that he is ordering the immigration department to start deporting old people in order to lower Social Security and Medicare costs • President Obama insist that old people are easier to catch and will not remember how to get back home.Thursday, January 26, 12
  3. 3. Roy Culle n Clint Murchison n hardso Sid Ric H.L. HuntThursday, January 26, 12
  4. 4. Thursday, January 26, 12
  5. 5. The advanced technology of hydraulic fracturing and lateral drilling has revolutionized the domestic oil and gas industryThursday, January 26, 12
  6. 6. 2012 Projected Global Crude oil demand & supply Million Barrels Per Day Global Demand 89.3 Global Supply 89.04 US Demand 18.96Thursday, January 26, 12
  7. 7. Global Top Five Producing & Consuming Countries Top five producing top five consuming countries countries countries Production countries consumption Million Barrels per day Million barrels per day Russia 10.2 million 12% United States 19.8 million 22% Saudi Arabia 10.1 million 12% China 8.3 million United States 9.6 million 11% Japan 4.6 million China 4.26 million 5.0% India 3.1million Iran 4.2 million 4.9% Russia 2.7 millionThursday, January 26, 12
  8. 8. Global Top Five Producing & Consuming Countries Top five producing top five consuming countries countries countries Production countries consumption Million Barrels per day Million barrels per day Russia 10.2 million 12% United States 19.8 million 22% Saudi Arabia 10.1 million 12% China 8.3 million United States 9.6 million 11% Japan 4.6 million China 4.26 million 5.0% India 3.1million Iran 4.2 million 4.9% Russia 2.7 millionThursday, January 26, 12
  9. 9. Global Top Five Producing & Consuming Countries Top five producing top five consuming countries countries countries Production countries consumption Million Barrels per day Million barrels per day Russia 10.2 million 12% United States 19.8 million 22% Saudi Arabia 10.1 million 12% China 8.3 million United States 9.6 million 11% Japan 4.6 million China 4.26 million 5.0% India 3.1million Iran 4.2 million 4.9% Russia 2.7 millionThursday, January 26, 12
  10. 10. OPEC Surplus Capacity WTI Average Crude Oil Price Price Million/BBl 110 6 5.54 104 98 100 Forecast Average Price / Barrel 88 91 Million Barrels 4.07 4 66 3.93 70 3.62 3.71 64 3.51 3.03 58 2.97 54 44 50 2.07 2 1.92 38 22 27 28 1.27 1.42 1.37 23 23 1 0 2000 2002 2004 2006 2008 2010 2012 EIA 1/10/2012Thursday, January 26, 12
  11. 11. Threat to the global oil market 14 Tankers carrying 15.5 million barrels of crude oil pass through the strait every day. Represents 35% of the world’s seaborne oil shipments, and 20% of oil traded worldwide, in 2011 One of the worlds most strategically important choke pointsThursday, January 26, 12
  12. 12. U.S. Liquid Fuels Supply / Consumption 2011 Data Source EIA Liquid Fuels Source Million Barrels Percent per day of Total U.S. Crude Oil Production 5.6 29% Natural Gas Liquids 2.2 12% Refinery Processing Gains 1.1 6% Biofuels 0.9 5% Other 0.2 1% Total U.S. Liquid Fuel Supply 10.0 Net Imports 8.9 47% Total U.S. Liquid Fuel Supply 18.9 100% Total U.S. Liquids Consumption 18.9Thursday, January 26, 12
  13. 13. source: EIA 1/23/12Thursday, January 26, 12
  14. 14. Primary Energy Consumption by Source and Sector (Quadrillion BTU) Source EIA Source Sector 37% Percent of Sources Percent of Sectors 27 71 94 Transportation Petroleum 22 2 5 4 1 40 20 25% 3 41 Industrial 33 8 Natural Gas 34 18 11 76 30 1 11 Residential & Commercial 6 21% 8 <1 1 40 19 Coal 92 28 8 48 14 10 Electric Power 50 21 8% Renewable Energy 100 9% Nuclear Electric PowerThursday, January 26, 12
  15. 15. Thursday, January 26, 12
  16. 16. Levelized Cost of New Electricity Generation Capacity Entering Service in 2016 400 Value Cost per Megawatt Hour ($) 311.8 300 243.2 221.7 200 103.5 97 100 94.8 63.1 SolarThermal SolarPV OffshoreWind NaturalGas 0 Wind AdvancedNuclear ConventionalCoalSource: EIA Cost Estimates in 2009 DollarsThursday, January 26, 12
  17. 17. Average Annual US Rig Count 1949 - 2012 3974 4,000 3974 3105 2909 3,200 2641 2683 2614 2623 2547 2509 2429 2428 2259 2175 2232 2,400 2156 20742016 2001 1980 2000 1923 1879 1879 1760 1747 1768 1641 1662 1656 1649 2016 1501 1502 1388 1475 1383 1546 1,600 1273 1196 1196 1172 1134 1107 1156 1192 1027 1089 974 1010 1032 964 936 936 943 918 869 860 843 755 779 754 723 722 830 800 625 625 0 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 YEARThursday, January 26, 12
  18. 18. AVERAGE OIL & NATURAL GAS PRICES 2000 - 2012 Oil Trend 1 Gas Title 110 9 Natural gas prices 82.5 6.75 Oil Prices 55 4.5 27.5 2.25 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 EIAThursday, January 26, 12
  19. 19. AVERAGE OIL & NATURAL GAS PRICES 2000 - 2012 Oil Trend 1 Gas Title 110 9 98 100 100 91 Natural gas prices 82.5 6.75 70 64 Oil Prices 58 54 55 50 4.5 38 27 28 27.5 23 23 2.25 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 EIAThursday, January 26, 12
  20. 20. AVERAGE OIL & NATURAL GAS PRICES 2000 - 2012 Oil Trend 1 Gas Title 110 8.67 9 7.98 98 100 100 91 6.81 Natural gas prices 82.5 6.11 6.75 5.94 70 5.48 64 Oil Prices 58 4.34 54 55 3.94 50 4.18 4.5 3.66 3.55 3.53 3.26 38 27 28 2.45 27.5 23 23 2.25 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 EIAThursday, January 26, 12
  21. 21. Average January Drilling Rig Activity Oil rigs vs. Gas 1988 - 2012 OIl GasThursday, January 26, 12
  22. 22. Average January Drilling Rig Activity Oil rigs vs. Gas 1988 - 2012 1500 1452 1411 OIl 1267 Gas 1219 1191 1125 1063 957 919 862 877 781777 744 750 710 706 633 627 574 532 515 475488 480 466 427 442425 427 392375 409 404 356357328 363366 375 313 297 316346 279 244 243 158 177 133 138127147 0 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 yearThursday, January 26, 12
  23. 23. Average January Drilling Rig Activity Oil rigs vs. Gas 1988 - 2012 1500 Natural Gas Rigs 1452 1411 OIl 2008 82% 1267 Gas 2012 42% 1219 1191 1125 1063 957 919 862 877 781777 744 750 710 706 633 627 574 532 515 475488 480 466 427 442425 427 392375 409 404 356357328 363366 375 313 297 316346 279 244 243 158 177 133 138127147 0 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 yearThursday, January 26, 12
  24. 24. The Game ChangerThursday, January 26, 12
  25. 25. Thursday, January 26, 12
  26. 26. Global Shift to unconventionl Energy • Energy companies are shifting their focus away from the Middle East and toward the West - with profound implications for the companies, global politics and consumers. • By 2020 shale sources will make up about a third of U.S. oil and gas production • By 2020 U.S. will be the top global oil and gas producer, passing Russia and Saudi Arabia.Thursday, January 26, 12
  27. 27. GLOBAL FRASER INSTITUTE PETROLEUM SURVEY • A total of 502 respondents completed the survey to evaluate 136 jurisdictions around the globeThursday, January 26, 12
  28. 28. Thursday, January 26, 12
  29. 29. NORTH AMERICA THE INVESTMENT CLIMATE HOT SPOT • #1 Mississippi • #5 Texas • #14 Louisiana • The Gulf of Mexico dropped from 11th in investment attractiveness this year to 60thThursday, January 26, 12
  30. 30. Thursday, January 26, 12
  31. 31. Institute for Energy Research in a recent study - North America holds the world’s largest combined oil, coal, and natural gas resources in the world,enough to fuel our present needs for 250 years.Thursday, January 26, 12
  32. 32. UNCONVENTIONAL ENERGY ➡“It’s the elixir of economic life, providing business longevity and renewal and ...apparently.....about to turn the US back into an industrial powerhouse” The Australian. ➡ "This shale gas development is a game-changer of huge proportions," said Dan DiMicco, chief executive officer of Nucor Corp ➡ “We are in the midst of a significant global shift as unconventional energy sources become more attractive to oil and gas companies” BDO USA ➡ Youngstown Steel & Tube building $650 million Plant in Youngstown, Ohio all made possible by cheap shale gas from PennsylvaniaThursday, January 26, 12
  33. 33. WORLD OIL POWERS BUY INTO U.S. SHALE PLAYSThursday, January 26, 12
  34. 34. Thursday, January 26, 12
  35. 35. Thursday, January 26, 12
  36. 36. federal issues • Investment incentives • Hydraulic Fracturing • Gulf of Mexico • Keystone Pipe LineThursday, January 26, 12
  37. 37. Investment Incentives • Repeal expensing of intangible drilling cost • Repeal deductions for tertiary recovery • Repeal percentage depletion allowance for oil and gas wells • Repeal domestic manufacturing deductions for oil and gas companies • Increase geological and geophysical amortization for independent producers to 7 yearsThursday, January 26, 12
  38. 38. Hydraulic FracturingThursday, January 26, 12
  39. 39. Hydraulic Fracturing ➡First commercial “frac” job was conducted in 1947 ➡States regulate hydraulic fracturing ➡More than 1 million wells had been completed using this method by 1988 ➡Estimated that nearly 85% of wills drilled today are completed using hydraulic fracturing ➡Multiple federally funded studies have shown that there is no risk associated with hydraulic fracturingThursday, January 26, 12
  40. 40. Thursday, January 26, 12
  41. 41. Average Gulf of Mexico Rig Activity 2000 - 2012 GOM Rigs 148 150 136 Prior Macondo 109104 93 89 100 86 71 63 61 42 40 50 31 32 00 0 1 2 3 4 5 6 7 8 9 4/1/10 10 11 12Thursday, January 26, 12
  42. 42. Gulf of Mexico Unprecedented Uncertainty • GOM oil production has • Approval of exploration declined from 1.6 to 1.3 plans have slowed to 131 million barrels of oil per day days from a pre moratorium of 36 days • Regulatory web continues to be more burdensome and • “On Aggregate, in the 12 complex months following the lifting of the moratorium, the 51 • Safety & Environmental permits approved result in System (SEMS) 1 & 2, along an annual rate of approval with Idle Iron NTL 2010 will that was 32% of the send the independents historical average onshore (151)permits.” IHS-CERAThursday, January 26, 12
  43. 43. No to Standby Vessel Legislation • Landry Amendment to • The cost to industry will HR 2838 Coast Guard be in the $100s of millions. Reauthorization bill One company alone the would require operators cost will be $50 million in the GOM to have standby vessels near their • Industry has emergency facilities. supports systems, helicopters, field vessels, • The Standby Vessel emergency evacuation legislation will require an plans and drills, life estimated 200 additional saving equipment, crafts, vessels in the the GOM rafts daily.Thursday, January 26, 12
  44. 44. Thursday, January 26, 12
  45. 45. Thursday, January 26, 12
  46. 46. Thursday, January 26, 12
  47. 47. What’s Wrong With this picture?? Spain Norway India Malaysia Vietnam Brazil Venezuela China Angola ChinaThursday, January 26, 12
  48. 48. Thursday, January 26, 12
  49. 49. Louisiana The Energy StateThursday, January 26, 12
  50. 50. Louisiana The Energy StateThursday, January 26, 12
  51. 51. US to Export LNGThursday, January 26, 12
  52. 52. BROWN DENSE Louisiana HAYNESVILLE SHALE COTTON VALLEY Shale & Ultra Deep Plays TUSCALOOSA MARINE SHALE/ EAGLE FORD LA SHALE WILCOX ULTRA DEEP FRONTIERThursday, January 26, 12
  53. 53. Haynesville ShaleThursday, January 26, 12
  54. 54. Haynesville Shale #1 Producing Natural Gas Field in US $14 Billion Est. Economic Impact in 2012 60,000 Plus Jobs Supported by Shale in 2012 1,700 Plus Producing Wells 2,207 Units as of 12/15/11Thursday, January 26, 12
  55. 55. Since 1997, more than 13,500 gas wells completed in the Barnett TextThursday, January 26, 12

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