EIA-scary Oil Charts

Meeting the World’s Demand for
Liquid Fuels
A Roundtable Discussion
A New Climate For Energy
EIA 2009 Energy Conference
April 7, 2009
Washington, DC
World Marketed Energy Use by Fuel Type
250
History Projections 33%
29%
200
36%
Liquids
Quadrillion Btu
150 24%
27% Natural Gas
Coal
100
23%
Renewables 8%
50 8%
6% Nuclear 6%
0
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Source: EIA, IEO2008 2

World Liquids Consumption by End-Use
Sector, 2005, 2015, and 2030
250 Building Industrial Transportation Electric Power
200
Quadrillion Btu
150
100
50
0
2005 2015 2030
Source: EIA, IEO2008 3

World Oil Prices in Three Price Cases,
AEO2009 – Real Prices
$200
$200
Light Sweet Crude Oil (2007 $/B)
$150
Reference Case
High World Oil Price $130
Low World Oil Price
$100
$50
$50
Closing price on April 3, 2009
History Projections
$0
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Source: EIA, AEO2009, NYMEX 4

World Liquids Consumption in Three Price Cases,
AEO2009
130
2008 119
120
Reference Case
110 Low World Oil Price
105
High World Oil Price
Million Barrels per Day
100
90 89
86
80
70
60
50
History Projections
40
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Source: EIA, AEO2009 5

NOCs Increasing Control over the World’s
Oil and Gas Reserves
1970 2009
Reserves Held by
Russian Companies
NOC Reserves
NOC Reserves (Equity Access)
(Limited Equity Full IOC Access
Access) 15%
8% 12%
1%
85%
SOVIET 14%
Reserves
65%
Full IOC Access NOC Reserves

(Limited Equity Access)
Source: PFC Energy, Oil & Gas Journal, BP Statistical Review 6

Liquids Supply in 2030
Low Price Case High Price Case
2007
30%
45%
45% 51%
40%
55% 1%
18%
7%
3%
1%
4%
Reference Case
40%
48%
Non-OPEC Conventional
Non-OPEC Unconventional
OPEC Unconventional
11% OPEC Conventional
1%
World’s Liquid Fuels Supply
110 110
Non-Petroleum
100 100 Unconventional
Liquids
Non-OPEC
90 90 Unconventional
Petroleum Projects
80 Unidentified 80 Non-OPEC
Unconventional
70 Projects 70 Petroleum Liquids

OPEC Unconventional
60 60 Petroleum Liquids
50 43 50
Non-OPEC
Conventional Projects
40 40 OPEC Conventional
Projects
30 30
Non-OPEC Existing
20 20 Conventional
OPEC Existing
10 10
Conventional
0 0 AEO2009 Reference
Total Consumption
08
10
12
14
16
18
20
22
24
26
28
30
20
20
20
20
20
20
20
20
20
20
20
20

Top 15 Liquids Producers
and Their Prospects
2,500
2,000
Change in Total Liquids Production
United States
from 2007 to 2015 ('000 b/d)
1,500
Brazil
1,000
Canada
Algeria Saudi Arabia
500 Nigeria
Iraq Kuwait
0
China Russia
Venezuela
UAE
-500 Iran
Norway
-1,000 Mexico
-1,500
0
00
00
0
00
00
00
00
,0
,0
2,
4,
6,
8,
10
12
Current Liquids Production ('000 b/d)
Top 15 Liquids Producers
and Their Prospects
3,500
3,000
Change in Total Liquids Production
United States
2,500
from 2015 to 2030 ('000 b/d)
Brazil
2,000 Iraq
1,500
Venezuela Saudi Arabia
Canada
1,000
Algeria Russia
500 Nigeria Iran
China
Kuwait
0 United Arab Emirates Mexico
Norway
-500
-1,000
-1,500
-2,000
0
00
00
0
00
00
00
00
,0
,0
2,
4,
6,
8,
10
12
Current Liquids Production ('000 b/d)
Costs of Production by Resource
140
Production Cost (dollars - 2008)
Deepwater
120 and ultra
deepwater
100
Coal
Oil to liquids
80 shales Gas
to
Arctic
CO2 - EOR
liquids
EOR
Heavy oil
60 and
bitumen
40
Other
Conventional
Oil
20 Produced MENA
0
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Resources (billion barrels)
Source: International Energy Agency, IEA 11

Additional Slides
• Country Sheets
12
United States
Expected Production Index of Total Wells Drilled Annually
13 200 $80
12 180
$70
11
160
10 $60
Drilling Index to 1995

9 140
Dollars per Barrel

8 $50
120
7
100 $40
6
5 80
$30
4 60
3 $20
40
2
$10
1 20
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006
Onshore Drilling Offshore Drilling
Source: EIA, AEO2009 Total Drilling WTI Price
Source: I.H.S. Energy, 2007
2007 Oil Production by Com pany

Downside Risks & Upside Potential
4,500
Dom estic NOC • Onshore fields might not be as responsive to EOR as
Thousand Barrels per day
4,000
Foreign NOC
3,500 currently expected
IOC
3,000
• Independent E&P companies may not have access to
2,500
2,000
capital in the near-term
1,500
1,000
• Legislation could open to development more currently
500
restricted areas
-
• Legislation on climate change could provide additional
il
l
er
ps
on
o
ta
ob
rk
incentives to use CO2 for EOR

th
en
lli
vr
da
nM
O
hi
he
id
na
oP
cc
xo
C
A
oc
O
Ex
on
13
C
Source: Global Insight, September 2008

Saudi Arabia
13 160 $80
12
140 $70
11
10 120 $60

9
Dollars per Barrel

8 100 $50
7
80 $40
6
5 60 $30
4
3 40 $20
2
20 $10
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006

10000
9000 Dom estic NOC • Production could be cut to support world oil prices
Foreign NOC
• Kingdom could abandon commitment to spare capacity
8000
IOC
7000 and high production levels
6000 • Field decline rates could accelerate
5000
4000
3000
2000 • Production could be expanded to discourage
1000 alternatives
0
Saudi Aram co Chevron
Source: Wood Mackenzie, Pathfinder 2009

14
Russia
2000 $80
13
12 1800
$70
11 1600
10 $60

1400
9
Dollars per Barrel

$50
8 1200
7 1000 $40
6
800
5 $30
4 600
$20
3 400
2 $10
200
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006
Total Drilling WTI Price
Source: EIA, AEO2009 Source: I.H.S. Energy, 2007

2500
• High levels of taxation could remain in place
Dom estic NOC

2000 Foreign NOC
• Exploration in eastern Siberia and offshore could fall
IOC
1500 due to concerns about nationalization
1000
• Levels of investment could remain low.
500
• Future changes in taxation policies could have large
0 impact and encourage investment
P
l
• Small firms could rebound faster than expected from

om
ft
er
oi
t
az
-B
s
ef
ne
th
or
tn
eg
K
pr
LU
os
O
st
TN
Ta
financial crisis
az
t
ve
ef
R
G
tn
In
u
e
rg
at
Su
iv
15
Pr

Brazil
450 $80
13
12 400 $70
11
350
10 $60

Dollars per Barrel

300
$50
8
250
7 $40
6 200
5 $30
150
4
$20
3 100
2 $10
50
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006

2500
Dom estic NOC • Changes to licensing and bid round structure could be
severe enough to discourage some foreign investors
2000 Foreign NOC

IOC • Subsalt potential could be less than expected
1500 • Unexpected technical difficulties could slow production
of subsalt resources
1000
500 • Changes to licensing and bid round structure could

work to facilitate investment and joint development
0 • Subsalt potential could be much larger than expected
Petrobras Shell Repsol YPF Other

16
Canada
13 250 $80
12
$70
11
200
10 $60

Dollars per Barrel

9
$50
8 150
7 $40
6
100
5 $30
4
$20
3 50
2 $10
1
0 $-
0
1996 1998 2000 2002 2004 2006
2006 2015 2030
Onshore Drilling Total Drilling WTI Price
Conventional Liquids Bitum en

1,800
1,600 Dom estic • Current conventional decline rates could accelerate
Foreign NOC
1,400
IOC
• Environmental legislation (in Canada or the U.S.) could
1,200 limit bitumen production
1,000
800
600 • Decline rates at conventional fields might be slowed
400 • Bitumen extraction technology could continue to
200 improve
-
EnCana
Canada
Other
Suncor
Energy
Energy
Shell
Syncrude
Imperial Oil
Husky
Resources
Canadian
Petro-
Natural
Source: Global Insight, 2009 17

Algeria
13 450 $80
12 400 $70
11
350
10 $60

Dollars per Barrel

300
$50
8
250
7 $40
6 200
5 $30
150
4
$20
3 100
2 50 $10
1
0 0 $-
2006 2015 2030 1996 1998 2000 2002 2004 2006

900 Downside Risks & Upside Potential
800 Dom estic NOC

700 Foreign NOC
• Government could further discourage foreign
600 IOC investment, as it did with the 2006 Hydrocarbon Law
500 • Sonatrach’s ability to invest in production maintenance
400
300
and expansion could be hindered due to competing
200 government expenditure needs
100
0
• Government could reverse nationalization tendencies
i
c
ch
er
En
ps
sa
as
expressed in the 2006 Hydrocarbon Law

pe
rk
th
ra
ep
lli
G
da
no
O
hi
at
&
na
oP
Si
n
il
So
O
A
oc
k
on
rs
ae
C
M

18
Nigeria
13 350 $80
12
300 $70
11
10 $60

250
9
Dollars per Barrel

8 $50
200
7
$40
6
150
5 $30
4 100
3 $20
2 50 $10
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006

1000
900 Dom estic NOC • Violence in the Delta could continue and expand into
800 Foreign NOC
700 IOC
deepwater locations
600
500 • Financial management at NNPC could deteriorate
400
300 further
200
100
0
• Nigerian government might implement policies that
PC
C
i
reduce violence in the Delta

oP a x
il
ro
l
er
En
ps
x o on
il
ta
el
ia
PD
ob
O
yd
oc dd
N
th
Sh
To
er
lli
v r
St tal
nM
N
O
hi
lH
ig
he
en
N
oi
C
g
at
tin
Ex
in
on
on
uc
C
C
od
Pr
il
ob
19
M

Kuwait
13 120 $80
12
$70
11 100
10 $60

Dollars per Barrel

80
$50
8
7 60 $40
6
5 $30
40
4
$20
3
20
2 $10
1
0 0 $-
2006 2015 2030 1996 1998 2000 2002 2004 2006

2500
Dom estic NOC • KPC’s technical ability to maintain and expand
2000 Foreign NOC production could be hindered by politically motivated

IOC management changes
1500 • Political disagreements could prevent Project Kuwait
from achieving expected progress
1000
500 • Political disagreements could settle and allow Project

Kuwait to move forward
0
• KPC technical capabilities could return to previous
Kuw ait Oil Com pany (KOC) Kuw ait Gulf Oil Com pany (KGOC)
levels
20
Iraq
13 120 $80
12
11 $70
100
10 $60

9
Dollars per Barrel

80
8 $50
7
60 $40
6
5 $30
4 40
3 $20
2 20
$10
1
0 0 $-
2006 2015 2030 1996 1998 2000 2002 2004 2006
Source: EIA, AEO2009

2000
1800 Dom estic NOC • Violence could escalate as U.S. troops withdraw
Foreign NOC
1600 • Legislation and licensing issues between national
1400 IOC
government and Kurdistan regional government could
1200
inhibit large scale foreign investment
1000
800
600 • Security could continue to improve
400
• National and Kurdistan regional governments could
200
reach agreement on licensing and jointly encourage
0
South Oil (SOC) North Oil (NOC) DNO Kurdistan foreign investment
Regional
Governm ent
Source: Wood Mackenzie, Pathfinder 2009 21
Iran
13 140 $80
12
120 $70
11
10 $60

100
9
Dollars per Barrel

$50
8
80
7 $40
6 60
5 $30
4 40
$20
3
2 20 $10
1
0 0 $-
2006 2015 2030 1996 1998 2000 2002 2004 2006

4000 Downside Risks & Upside Potential
3500 Dom estic NOC

• Domestic consumer gas needs reduce gas volumes for
3000 Foreign NOC
EOR
2500 IOC
• NIOC management and performance issues could
2000
1500
escalate and cause production from existing fields to
1000
decline faster than expected
500
0 • Domestic gas production could increase, allowing more
Iranian Oil
Other
Eni
JJI S&N
Total
Development
Company
Shell
National
EOR
Company
Petroiran
• NIOC investment and development capabilities could

improve and/or financial terms for international
Source: Wood Mackenzie, Pathfinder 2009 companies could improve 22
Venezuela
13 20000 $80
12 18000
$70
11
16000
10 $60

9 14000
Dollars per Barrel

8 $50
12000
7
10000 $40
6
8000
5 $30
4 6000
$20
3 4000
2 $10
2000
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006
Conventional Liquids Extra-Heavy Total Drilling WTI Price
Source: EIA, AEO2009

2500
Dom estic NOC • Nationalization tendencies could continue

2000 Foreign NOC
• Foreign investment could continue to be discouraged
IOC
1500 either directly through government actions or indirectly
1000
through threats of nationalization and instability
• E&P investment could become more limited due to
500
non-sector expenditures
0
SA
• Confidence in contract stability might be repaired,

ro
l
er
on
ta
el
ía
B
yd
th
To
Sh
rg
V
vr
PD
O
ne
ilH
he
encouraging renewed foreign investment

E
C
o
at
s
ra
St
ob
tr
23
Pe

UAE
13 300 $80
12
$70
11 250
10 $60

9
Dollars per Barrel

200
8 $50
7
150 $40
6
5 $30
100
4
3 $20
2 50
$10
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006

1800
1600 Dom estic NOC • Government could refuse to renew concessions and
1400 Foreign NOC place additional pressure on ADNOC to achieve

1200 IOC production goals without IOC participation
1000
800
• Government could renew concessions upon expiry or
600
enable different structure encouraging IOC participation
400
200
0
C
P
il
er
ta
el
O
B
ob
th
To
Sh
N
nM
D
O
A
xo
24
Ex

Mexico
1000 $80
13
12 900
$70
11 800
10 $60

700
9
Dollars per Barrel

$50
8 600
7 500 $40
6
400
5 $30
4 300
$20
3 200
2 $10
100
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006

3500
Dom estic NOC • Government may be unable to adopt legislation to allow
3000 Foreign NOC foreign technology to be implemented
IOC
2500 • Deepwater GOM resources could be much lower than
2000
anticipated
1500
• Government could adopt legislation that allows foreign
1000 technology to be implemented
500 • GOM resources might higher than expected
0
Pem ex

25
China
350 $80
13
12 $70
300
11
10 $60

250
Dollars per Barrel

$50
8 200
7 $40
6 150
5 $30
4 100
$20
3
2 50 $10
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006

2,500
Dom estic NOC • Declines at major mature fields could accelerate
2,000
Foreign NOC • Offshore developments could prove insufficient to
IOC compensate for onshore declines

1,500
• Offshore boundary issues might be resolved
1,000 • Offshore resources might prove more significant than
currently thought
500
-
CNPC Sinopec CNOOC other
Source: PFC NOC Service, 2009 26
Norway
13 160 $80
12
140 $70
11
10 120 $60

9
Dollars per Barrel

8 100 $50
7
80 $40
6
5 60 $30
4
3 40 $20
2
20 $10
1
0 0 $-
2006 2015 2030 1998 1996 2000 2002 2004 2006

700
• Decline rates at major fields could accelerate
Dom estic NOC

600
Foreign NOC
500 IOC
• Smaller finds could be unable to compensate for
400 declines at existing large fields
300
200 • Government’s licensing terms could continue to
100 encourage investment despite competition from other
- promising offshore developments
• A significant number of small finds could be capable of
SA
SA
er
S
ps
p
SA
or
A
th
lli
A
L
C
ro
offsetting some of decline in existing fields

hi
TA
il
ro
il
to
oP
ob
TO
yd
at
Pe
oc
St
M
H
on
n
sk
xo
C
or
27
Ex
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Meeting the World’s Demand for

Source: EIA, IEO2008 2

250 Building Industrial Transportation Electric Power

Source: EIA, IEO2008 3

Low World Oil Price

Source: EIA, AEO2009, NYMEX 4

Source: EIA, AEO2009 5

Full IOC Access NOC Reserves

Source: PFC Energy, Oil & Gas Journal, BP Statistical Review 6

70 Projects 70 Petroleum Liquids

Source: EIA, AEO2009 8

Resources (billion barrels)

Source: International Energy Agency, IEA 11

Drilling Index to 1995

Dollars per Barrel

2007 Oil Production by Com pany

incentives to use CO2 for EOR

Source: Global Insight, September 2008

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

Source: Wood Mackenzie, Pathfinder 2009

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

Dom estic NOC

• Small firms could rebound faster than expected from

Source: Wood Mackenzie, Pathfinder 2009

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

2000 Foreign NOC

500 • Changes to licensing and bid round structure could

Source: Wood Mackenzie, Pathfinder 2009

Drilling Index to 1995

Dollars per Barrel

2007 Oil Production by Com pany

Source: Global Insight, 2009 17

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

800 Dom estic NOC

expressed in the 2006 Hydrocarbon Law

Source: Wood Mackenzie, Pathfinder 2009

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

reduce violence in the Delta

Source: Wood Mackenzie, Pathfinder 2009

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

2000 Foreign NOC production could be hindered by politically motivated

500 • Political disagreements could settle and allow Project

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

Drilling Index to 1995

Dollars per Barrel

2008 Oil Production by Com pany

3500 Dom estic NOC

• NIOC investment and development capabilities could