Global Crude Oil Supply and Quality Trends - coqa … Crude Oil Supply and Quality Trends ......

Global Crude Oil Supply and Quality Trends

Geoff HoultonVice President

COQA – San Antonio 2011

February 24, 2011

2COQA – San Antonio 2011 2

About Purvin & Gertz, Inc.

Company founded in 1947

Independent firm owned by the active employees

Provide technical, commercial and strategic advice in crude oil, natural gas, and gas liquids industries

Offices in Houston (HQ), Calgary, London, Dubai, Moscow and Singapore


Global Crude Oil Market Outlook

Global focus examining supply, demand and trade of crude oil streams

Production forecasts for greater than 400 marketable crude oils and condensates

Trade balances for over 80 streams to 10 primary regions (plus Canada, US, India, China, Korea, Japan and Singapore)

Price forecasts for over 60 different grades/destinations

4COQA – San Antonio 2011

Economic and Petroleum Demand Growth

The impact of the world recession in 2009 was dramatic – with global petroleum demand declining by nearly 2 million B/D vs. 2007

The corresponding rebound in 2010 was equally astounding! –with global petroleum demand increasing by over 2.5 million B/D vs. 2009

Demand growth expected to moderate post-2011 to below 2% per year

(3)

(2)

(1)

0

1

2

3

4

5

2000 2003 2005 2007 2009 2011 2013 2015

Petroleum Demand World GDP

Percent Growth


OECD / Non-OECD Demand Outlook

Economic crisis largely a developed country concern –although non-OECD saw a slowing in growth

Future petroleum demand expected to concentrated in developing regions (non-OECD demand strength)

Consistently higher energy prices likely puts downward pressure on OECD growth

(3)

(2)

(1)

0

1

2

3

4

2000 2003 2006 2009 2012 2015

OECD Non-OECD Global Demand

World Petroleum Demand: Year-On-Year Change(Million Barrels per Day)


Global Oil Supply Outlook

Million Barrels per Day

20

30

40

50

60

70

80

90

1995 2000 2005 2010 2015 2020

Future

New

Existing


Global Production by Development Type Global Oil Production: New Developments

6

-

5

10

15

20

25

2010 2015 2020

Canada

CIS Region

Iraq

Brazil

Nigeria + Angola

Other Non-OPEC

Other OPEC


Reserve Growth Needed to Meet Global Supply Requirements

398483

440412

0

200

400

600

800

1,000

1990 - 2009 2010 - 2029

Current OPEC Non-OPEC

Billion Barrels


Heavy Sour Crude Oil Production Outlook

4

6

8

10

12

14

2000 2005 2010 2015 2020

Rest of World Canada Saudi Arabia Brazil + Colombia Iraq



Evolution of World Crude Qualities2009 Crude Quality by Region Change in Quality by 2020 by Region


Global Overview Highlights

Petroleum demand’s recovery from the 2009 recession was impressive Driver for current price response Continued strong growth expected – driven primarily

by non-OECD countries

Crude supply challenge achievable, but dependent on pace of new developments and future discoveries

Global crude oil quality will evolve to a heavier, more sour barrel

10


North American Crude Production Outlook

0

1

2

3

4

5

6

7

8

9

10

1995 2000 2005 2010 2015 2020


Canada

U.S.


U.S. Gulf of Mexico

0.6

0.8

1.0

1.2

1.4

1.6

1.8

1995 2000 2005 2010 2015 2020

Million Barrels per Day Est. Macondo Impact


Crude Output Response to Rig Activity

(150)

(100)

(50)

-

50

100

150

200

250

300

350

4.0

4.5

5.0

5.5

6.0

6.5

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Oil Rigs U.S. Lower 48 Crude Production


Source: Rig count information from Baker Hughes

Annual Change in Active U.S. Oil Rigs


U.S. Lower 48 Crude Production Outlook

0

1

2

3

4

5

6

1995 2000 2005 2010 2015 2020

Other PADD III PADD II


Note: PADD III includes U.S. Gulf of Mexico

Horizontal Shale PlaysPermian BasinHigh Oil Prices


Canada Crude Production Outlook

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1995 2000 2005 2010 2015 2020

Conventional (incl. Pentanes +) Bitumen Synthetic Crude Oil



Major Latin America Crude Production Changes

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2000-2005 2005-2010 2010-2015 2015-2020

Mexico

Venezuela

Colombia

Brazil


5-Year Change in Crude Output


U.S. Heavy Sour Crude Import Sources

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

2005 - 2010 2010 - 2015 2015 - 2020

MexicoCanadaVenezuelaBrazilOther Latin AmericaMiddle East

Thousand Barrels per Day

Note: Heavy Sour defined as < 28°API and > 1.0% sulfur.

5-Year Change in Supply Volumes * Approximately 150,000 B/D of coking capacity tied to Canadian supply due online by 2015.


North America Crude Supply Highlights

Healthy increases in crude supply from North America anticipated in the near term. Oil sands development expected to remain strong Domestic E&P response to price and success in

horizontal shale plays will overcome GOM woes

Additional heavy crude to the rescue, but changes in traditional sources Output troubles from Mexico and Venezuela make way

for new Colombia and Brazil supplies Refinery conversion tie-ups and additional pipeline

capacity result in strong growth of Canadian supply

18


Major Africa Crude Production Changes

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2000-2005 2005-2010 2010-2015 2015-2020

Nigeria

Angola

Libya + Algeria

Other West Africa

Rest of Africa


5-Year Change in Crude Output


CIS Crude Production Outlook

4

6

8

10

12

14

16

1995 2000 2005 2010 2015 2020

Russia Azerbaijan Kazakhstan


Note: CIS – Commonwealth of Independent States


Russia Crude Oil Production Outlook

4

5

6

7

8

9

10

11

12

2005 2010 2015 2020 2025

Urals Other ESPO



European Light Sour Crude Import Sources

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2005 - 2010 2010 - 2015 2015 - 2020

CPC Blend

Urals

Middle East

Other

Thousand Barrels per Day

Note: Light Sour defined as > 28°API and > 1.0% sulfur.

5-Year Change in Supply Volumes


Atlantic Basin Crude Trade to Asia

0

1

2

3

4

5

6

7

2005 2010 2015 2020

Latin America

CIS (BTC, CPC & Urals)

Africa



Outside N.A. Crude Supply Highlights

Offshore developments in Africa expected to drive near term output growth Long-term developments may be fueled from frontier

areas

East Siberia production and ESPO pipeline will become game changers for Urals common stream European refiners will be faced with significant

changes in light sour availability

Oversupply situation in Atlantic Basin to continue – feeding robust demand growth in Asia

24


Geoff [email protected](713) 331 - 4000

Global Crude Oil Supply and Quality Trends - coqa … Crude Oil Supply and Quality Trends ......

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