International energy markets

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International energy markets. For. Cheung Kong Graduate School of Business. July 29, 2015 | Beijing, China by. Adam Sieminski, Administrator. U.S. Energy ...
International energy markets

For Cheung Kong Graduate School of Business July 29, 2015 | Beijing, China by Adam Sieminski, Administrator U.S. Energy Information Administration

U.S. Energy Information Administration

Independent Statistics & Analysis

www.eia.gov

Mandate: EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment Independence: EIA, an element of the Department of Energy, is one of 14 federal statistical agencies; by law, its data, analyses, and forecasts are independent of approval by any other officer or employee of the United States Government Mission: EIA provides data and analysis to help stakeholders understand the rapidly changing energy sector in areas such as: •

Oil and gas production



Changing energy trade flows



Oil price volatility and projections



Vehicle, building, and manufacturing consumption trends



Distributed renewables generation



Coal and nuclear power outlooks International energy markets July 29, 2015

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EIA principles • Provide relevant energy statistics and analysis as a public good

• Be accurate and objective • Protect the confidentiality of respondents

• Maintain the public trust

International energy markets July 29, 2015

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EIA information is used by a range of stakeholders Examples of Activities

EIA Customers

Media Government 9% 2%

Business/ Industry 22%

Education 12%

Energy Sector 21%

Private Citizen 16% Finance/ Consulting 18%

Source: 2014 EIA Web Customer Survey

Government • Executive Agencies – WH, DOE, & EPA use EIA data to track energy markets and program performance and to analyze policy proposals • Congress – policy development and agency funding • State Governments – planning and program development Energy Sector • Consumers – monitor price forecasts • Producers – track inventory statistics Business/Industry • Manufacturers – market research Finance/Consulting • Commodities Analysts – market response to supply data Media/Education • Journalists – cite energy statistics • Teachers – use Energy Kids materials • Researchers – energy forecasting and modeling Private Citizens • Public – research gasoline prices

Customer-focused Performance Results • Quality: 95% of customers are satisfied or very satisfied with the quality of EIA information • Timeliness: 96% of selected EIA recurring products meet their release date target International energy markets July 29, 2015

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The importance of China in the global energy markets

International energy markets July 29, 2015

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By 2040, China’s energy use will be double the U.S. level; India’s a little more than half despite its faster GDP growth energy consumption by selected country quadrillion Btu History 2010 250

Projections

200 China 150 United States 100 India 50

0 1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

Source: EIA, International Energy Outlook 2013 International energy markets July 29, 2015

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Net oil imports: Trends in the largest consuming countries million barrels per day (MMb/d) 10 History

Forecast

9 8 7 6 5 4 3 China net imports

2

U.S. net imports

1 0 2011

2012

2013

2014

2015

2016

Source: EIA, Short-Term Energy Outlook, July 2015 International energy markets July 29, 2015

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Current oil and gas markets

International energy markets July 29, 2015

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For oil prices, the market-implied confidence band is very wide WTI price dollars per barrel 150 125 100

75 50

Historical Spot Price STEO Forecast NYMEX Futures Price

25 0

Current 95% NYMEX futures price confidence interval June 2014 95% NYMEX futures price confidence interval Jan Apr

Jul Oct Jan Apr Jul Oct Jan Apr Jul 2013 2014 2015

Oct Jan Apr

Jul 2016

Oct

Source: EIA, Short-Term Energy Outlook, July 2015 International energy markets July 29, 2015

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The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources

Eagle Ford (TX)

U.S. tight oil production million barrels of oil per day 5.0

U.S. dry shale gas production billion cubic feet per day 45 Marcellus (PA & WV)

Bakken (MT & ND) Spraberry (TX & NM Permian) Bonespring (TX & NM Permian)

Wolfcamp (TX & NM Permian) Delaware (TX & NM Permian) Yeso-Glorieta (TX & NM Permian) Niobrara-Codell (CO, WY)

4.5

4.0 3.5

Eagle Ford (TX) Fayetteville (AR)

Granite Wash (OK & TX) Austin Chalk (LA & TX) Monterey (CA)

35 30

3.0

Woodford (OK)

25

2.5

Bakken (ND)

2.0

Antrim (MI, IN, & OH)

1.5

Utica (OH, PA & WV)

15

Rest of US 'shale'

10

Marcellus

Woodford (OK)

40

Barnett (TX)

Haynesville Utica (OH, PA & WV)

Haynesville (LA & TX)

1.0

20

0.5

5

0.0

0

Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through May 2015 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s). International energy markets July 29, 2015

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Production growth in top crude producing regions (Permian, Bakken, Niobrara, and Eagle Ford) reverses in early 2015 monthly percent change three month rolling average 4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0% Jan 2012

Jan 2013

Jan 2014

Jan 2015

Source: EIA, Drilling Productivity Report, July 2015 International energy markets July 29, 2015

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Oil supply and demand begin to rebalance in 2016 million barrels per day (MMb/d)

MMb/d

98

6 Implied stock change and balance (right axis)

96

World production (left axis)

94

World consumption (left axis)

5 4

92

3

90 2 88 1 86 0

84 82

-1

80

-2

78 2010-Q1

-3 2011-Q1

2012-Q1

2013-Q1

2014-Q1

2015-Q1

2016-Q1

Source: EIA, Short-Term Energy Outlook, July 2015 International energy markets July 29, 2015

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Surprises in liquid fuel demand to the upside are rare world liquid fuels consumption million barrels per day (MMb/d) 96 94 92

annual change million barrels per day 8

Change in U.S. consumption (right axis)

Forecast

Change in China consumption (right axis)

7

Change in other consumption (right axis)

6

Total world consumption (left axis)

90

5

88

4

86

3

84

2

82

1

80

0

78

-1

76

-2

2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: EIA, Short-Term Energy Outlook, July 2015 International energy markets July 29, 2015

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OPEC surplus crude oil production capacity remains moderate to low million barrels per day (MMb/d) 6 Forecast 5

Note: Shaded area represents 2004-2014 average (2.2 MMb/d)

4

3

2

1

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: EIA, Short-Term Energy Outlook, July 2015 International energy markets July 29, 2015

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OECD commercial petroleum stocks remain high days of supply 70 Forecast 65

Note: Shaded area represents the range between the minimum and maximum from Jan 2010 to Dec 2014

60

55

50

45 Jan 2010

Jan 2011

Jan 2012

Jan 2013

Jan 2014

Jan 2015

Jan 2016

Source: EIA, Short-Term Energy Outlook, July 2015 International energy markets July 29, 2015

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Long-term U.S. energy projections

International energy markets July 29, 2015

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Reductions in energy intensity largely offset impact of GDP growth, leading to slow projected growth in energy use U.S. primary energy consumption quadrillion Btu History

Projections 2025

2013

120

2040

Renewables (excluding liquid biofuels) 100

80

Coal 40

Nuclear Liquid biofuels

0 1980

27% 8%

9%

10%

18%

19%

18%

8%

8%

8%

Natural gas

60

20

29%

27%

1990

1995

2000

2005

2010

1%

35%

36%

Petroleum and other liquids

1985

1%

1%

2015

2020

2025

33%

2030

2035

2040

Source: EIA, Annual Energy Outlook 2015, Reference case International energy markets July 29, 2015

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U.S. crude oil production: Supply rises above previous historical highs before 2020 in all AEO2015 cases, with a range of longer-term outcomes dependent on prices, resources and technology U.S. crude oil production million barrels per day (MMb/d) 2013 History 20

2013

2013

High Oil and Gas Resource

Reference

Low Oil Price

15 U.S. maximum production level of 9.6 million barrels per day in 1970 10 Tight oil 5 Lower 48 offshore

Other lower 48 onshore Alaska 0 1990 2000

2010

2020

2030

2040

2020

2030

2040

2020

2030

2040

Source: EIA, Annual Energy Outlook 2015 International energy markets July 29, 2015

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U.S. natural gas trade: Projected U.S. natural gas trade reflects the spread between domestic natural gas prices and world energy prices, along with resource outcomes U.S. natural gas imports and exports trillion cubic feet 16

billion cubic feet per day

History 2013

2013

Projections

2013

40

Lower 48 states LNG exports

12

Alaska LNG exports

30 20

8 Pipeline exports to Mexico

4

10 0

0 Pipeline exports to Canada

-4 LNG imports

-8 2000

2010

High Oil and Gas Resource

Reference 2020

2030

2040

-10

Pipeline imports from Canada

2020

2030

2040

Low Oil Price 2020

2030

-20 2040

Source: EIA, Annual Energy Outlook 2015 International energy markets July 29, 2015

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U.S. energy trade • Net exporter of petroleum products since 2010

• Crude oil export policy debate underway • Net exporter of natural gas by 2017

• Net exports of coal are small and steady • Net imports of electricity are small

Source: EIA, Annual Energy Outlook 2015, Reference case International energy markets July 29, 2015

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Long-term international outlook

International energy markets July 29, 2015

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Renewable energy and nuclear power are the fastest growing source of energy consumption world energy consumption by fuel quadrillion Btu History 2010 250

Projections 28% 27%

200 liquids (including biofuels)

23%

coal

34%

share of world total

28%

150

natural gas 15% 100

22%

renewables (excluding biofuels) 7%

11% 50 nuclear 5% 0 1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

Source: EIA, International Energy Outlook 2013

International energy markets July 29, 2015

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Non-OPEC petroleum and other liquids production million barrels per day (MMb/d) 70

60

rest of non-OECD

50 Brazil 40

China

30

Russia rest of OECD

20

Canada 10 United States 0 2010

2015

2020

2025

2030

2035

2040

Source: EIA, International Energy Outlook 2013, Reference case International energy markets July 29, 2015

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World natural gas production trillion cubic feet 200 180 rest of non-OECD

160 140

China

120

MENA

100 Russia

80 60 40

rest of OECD Canada

20

United States

0 2010

2015

2020

2025

2030

2035

2040

Note: The MENA region consists of the Middle East and North Africa countries Source: EIA, International Energy Outlook 2013, Reference case International energy markets July 29, 2015

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World coal production billion short tons

14 12

world total

10 other non-OECD Asia Australia India United States

8 6 4

China 2 0 2010

2015

2020

2025

2030

2035

2040

Note: Indonesia accounted for 72 percent of the total coal production in Other non-OECD Asia in 2010, rising from 52 percent in 2000. Throughout the projection period, Indonesia continues dominating the region's coal production. Source: EIA, International Energy Outlook 2013, Reference case International energy markets July 29, 2015

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World net hydropower and other renewable electricity generation trillion killowatthours 12

10

rest of non-OECD

8

India Brazil 6 China 4 rest of OECD

2 Canada United States

0 2010

2015

2020

2025

2030

2035

2040

Source: EIA, International Energy Outlook 2013, Reference case International energy markets July 29, 2015

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World net nuclear electricity generation trillion killowatthours 6

5

China

4

rest of world

3

India Russia OECD Europe

2 other Asia Japan United States

1

0 2010

2015

2020

2025

2030

2035

2040

Source: EIA, International Energy Outlook 2013, Reference case International energy markets July 29, 2015

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For more information U.S. Energy Information Administration home page | www.eia.gov Annual Energy Outlook | www.eia.gov/aeo Short-Term Energy Outlook | www.eia.gov/steo International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer Today in Energy | www.eia.gov/todayinenergy

State Energy Profiles | www.eia.gov/state Drilling Productivity Report | www.eia.gov/petroleum/drilling/ International Energy Portal | www.eia.gov/beta/international/?src=home-b1 International energy markets July 29, 2015

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