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Petroleum and Natural Gas Situation

Petroleum and Natural Gas Situation. John C. Felmy Chief Economist and Director Statistics Department American Petroleum Institute Felmyj@api.org www.api.org www.gasolineandyou.org www.naturalgasfacts.org. What is needed in a National Energy Policy?.

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Petroleum and Natural Gas Situation

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  1. Petroleum and Natural Gas Situation John C. FelmyChief Economist and Director Statistics DepartmentAmerican Petroleum InstituteFelmyj@api.orgwww.api.orgwww.gasolineandyou.orgwww.naturalgasfacts.org

  2. What is needed in a National Energy Policy? • Conservation and energy efficiency are important but are insufficient alone. • Renewable energy is an important but small source of energy. Until it’s cost is reduced, it will continue to be a small source. • Even with improved efficiency and more renewable energy, we will still need more conventional energy – oil, coal, natural gas and nuclear. Robustness, Redundancy and Diversity

  3. EIA Forecast of Winter Fuel Costs – October 2004

  4. NOAA Winter Outlook

  5. 2003 Early 2003 Cold winter Venezuela shutdown Nigerian strikes Iraq High crude oil prices California MTBE ban transition start Summer 2003 Blackout Pipeline problems Strong demand Japanese nuclear outages 2004 OPEC cuts Cold winter Japanese nuclear outages Venezuela uncertainty Iraq uncertainty Nigerian uncertainty Terrorist attacks Norwegian Strikes Yukos Strong economic growth Dollar depreciation High crude oil prices High natural gas prices Lower sulfur gasoline California finishes MTBE ban transition Mississippi river accident Refinery outages Strong gasoline demand NY/CT MTBE bans Hurricanes Déjà vu, All Over Again

  6. Crude oil futures prices - NYMEX

  7. Gasoline - Retail

  8. Gasoline and crude oil prices

  9. Crude oil and gasoline prices – from lows to highs

  10. Diesel and crude oil prices

  11. Natural gas prices have been above year ago levels

  12. NYMEX propane futures prices are at or near record levels

  13. NYMEX heating oil prices are at record levels

  14. NYMEX coal prices

  15. Table 3a. OPEC Oil Production (Thousand Barrels per Day) (Energy Information Administration\Short-Term Energy Outlook -- July 2004) Table 3a. OPEC Oil Production (Thousand Barrels per Day) (Energy Information Administration\Short-Term Energy Outlook -- July 2004) OPEC Capacity - EIA

  16. Table 3a. OPEC Oil Production (Thousand Barrels per Day) (Energy Information Administration\Short-Term Energy Outlook -- July 2004) Table 3a. OPEC Oil Production (Thousand Barrels per Day) (Energy Information Administration\Short-Term Energy Outlook -- July 2004) EIA Crude Oil Forecast

  17. Table 3a. OPEC Oil Production (Thousand Barrels per Day) (Energy Information Administration\Short-Term Energy Outlook -- July 2004) Table 3a. OPEC Oil Production (Thousand Barrels per Day) (Energy Information Administration\Short-Term Energy Outlook -- July 2004) EIA Natural Gas Forecast

  18. U.S. Energy Consumption Shares – 2003 - EIA

  19. U.S. Energy Consumption Shares – 2003 - EIA

  20. U.S. Energy Consumption Shares – 2003 - EIA

  21. U.S. Energy Consumption Shares – 2025 - EIA

  22. U.S. Residential Energy Consumption Shares – 2003 - EIA

  23. U.S. Industrial Energy Consumption Shares – 2003 - EIA

  24. U.S. Electricity Energy Consumption Shares – 2003 - EIA

  25. Transportation Fuel Shares – 2003 - EIA

  26. Petroleum Product Use Shares – 2003 - EIA

  27. Petroleum Product Usage – 2003 - EIA

  28. Petroleum Product Shares – 2003 - EIA

  29. Natural Gas Shares – 2003 - EIA

  30. Fuel 2003 2025 Percent Change Petroleum Share 38.7 39.5% 55.0 40.3% 41.9 Natural Gas Share 22.7 23.1% 32.2 23.6% 42.1 Coal Share 22.6 23.0% 31.7 23.2% 40.4 Nuclear Share 8.0 8.1% 8.5 6.2% 7.1 Other Share 6.1 6.2% 9.0 6.6% 47.5 Total 98.1 136.5 39.2 U.S. Energy Consumption – Quadrillion BtusAEO 2004 - EIA

  31. EIA Forecast to 2003 to 2025 • Real Gross Domestic Product is projected to increase by 92 percent • Population is projected to increase by 19 percent • Renewable energy supply is projected to increase by 50 percent • Energy efficiency (output per unit of energy) is projected to improve by 27 percent • Net petroleum imports are projected to increase, providing 70 percent of U.S. demand in 2025. • Growth in petroleum demand is led by transportation, where efficiency improvements are more than offset by growing travel demand and petroleum’s market share increases slightly. • Crude oil production falls by 19 percent. • Imports of crude oil grow by 65 percent. • Petroleum product imports increase by 80 percent. • Refinery capacity expands from 16.8 to 21.8 million barrels per day • Refinery utilization is projected to increase from 91 to 95 percent

  32. Fuel 2001 2025 Percent Change Petroleum Share 156.5 38.7% 245.3 39.4% 56.7 Natural Gas Share 93.1 23.1% 156.5 25.1% 68.1 Coal Share 95.9 23.7% 140.2 22.5% 46.2 Nuclear Share 26.4 6.5% 30.4 4.9% 15.2 Other Share 32.2 8.0% 50.4 8.1% 56.5 Total 403.9 622.9 54.2 World Energy Consumption – Quadrillion Btus - EIA

  33. World Energy Demand Total Energy Other Energy Solar & Wind MBDOE MBDOE MBDOE Growth Rate 2000-2020, % Growth Rate 2000-2020, % Growth Rate 2000-2020, % Solar & Wind 1.2 Other 1.7 1.3 Biomass, MSW Coal 14.0 2.9 Gas 0.2 Nuclear Wind 10.4 Oil 1.8 Solar 2.4 Hydro Source: ExxonMobil

  34. Forecast demand growth ROW LA Other Asia Pacific OECD Source: ExxonMobil

  35. Massive supply growth needed Non-OPEC Total NGL / Other 44 Non-OPEC Crude Undeveloped / Undiscovered Other OPEC Crude NGL/ Condensate Non-OPEC Crude Developed Non-OPEC Crude Source: ExxonMobil

  36. World Oil Balance: 2000 - 2020 Net Imports, MBD Net Exports, MBD FSU & Eastern Europe 6.8 Europe 6.2 3.1 2000 2010 2020 US/Canada 7.2 10.6 8.8 2000 2010 2020 2000 2010 2020 Asia Pacific 10.6 12.3 13.6 2000 2010 2020 Africa 8.1 Middle East 12.6 18.2 27.2 7.2 5.3 34.5 Latin America 2000 2010 2020 21.8 18.5 3.5 4.1 2.0 12.1 2000 2010 2020 30.1 2000 2010 2020 Source: ExxonMobil

  37. Technology • Can be expected to adapt over several generations • Markets work – they provide flexibility and discipline • Attempts to replace oil prematurely are likely to be costly • “Running out” is not likely

  38. Developing additional supply will be challenging • Non-OPEC production shifting to new challenging frontiers • Gulf OPEC needs to double capacity • Capital needs are enormous

  39. Policy • Promotion of free investment and trade is essential • Accurate depiction of impact of resource development is key • Opposition to oil development is a serious threat

  40. One Word • Hydrates

  41. First – Do No Harm!

  42. Global Change – What is really happening?

  43. History

  44. Carbon vs Solar

  45. Second quarter 2004 industry profits were below average

  46. Industry profits in perspective

  47. Industry concentration

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