May 12, 2015Volume 5, No. 2
docFinder alert

A new hydrocarbon world order

Supply sources changing - global demand stays course


After a decade, US dominates shales

Over 100,000 US gas shale wells

April 8, 2015

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Energy demand to 2040

Oil & gas dominate growth

March 4, 2015

Full Presentation

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This docFinder Alert brings us back to fundamentals beyond the daily myopic focus on rig counts and storage numbers.  The trend is clear.  Cheniere Energy has termed this A New Hydrocarbon World Order. On a global basis, oil and gas will continue to be the dominant energy source for the world.  And the world will demand more and more over time.

The slide above left, from Cheniere Energy, clearly shows the impact of the US unconventional revolution propelling the US as the world’s largest oil and gas producer.  For reasons well-documented, not the least important of which are existing infrastructure and private mineral rights, this growth IS uniquely a North American phenomenon.  After unleashing the benefit of horizontal drilling and hydraulic fracturing in shale source rocks nearly a decade ago, the US stands alone as the undisputed leader of this new supply.  Despite efforts and ambitions to export this disruptive technology profitably across the world, the stars have not aligned to make this a profitable endeavor.  With the exception of Canada, no other country has even drilled more than 200 gas shale wells, despite having tremendous gas shale resources.  On the oil side, US production is responsible for a remarkable ~75% of global incremental growth from 2010 through 2014.  Knocking it back a notch, Texas alone achieved over half of the US growth and now as a stand-alone “country” would be the 4th largest global oil producer – behind Saudi Arabia, Russia and the US (ex-Texas).

The slide above right, from ExxonMobil, shows that over the next 25 years, global energy demand is expected to grow by 35%, driven almost exclusively by Non-OECD countries.  Oil and gas is expected to account for 60% of this future growth.  Gas is seen as the fuel of choice with an annual growth rate of 1.6% versus 0.8% for oil.  On a global scale this translates into production in 2040 of ~550 Bcf/d of natural gas and 115 MMbbl/d of oil – up from current rates of ~330 Bcf/d and ~93 MMbbl/d.  For XOM, the short-game playbook (through 2017) based on this outlook (and $55/bbl Brent) shows a doubling of US onshore oil production and startup of 24 major projects with higher margins, the majority of which have long-plateau production.  This year alone has 7 major projects adding 300,000 bbl/d.

More HOT slides and data below.

Shown below are more hot slides from PLS’s docFinder database that allow you to take a deeper dive into the calculus behind the long-term bullishness for global oil and gas.  Below are slides from Liquefied Natural Gas Ltd, BP, Enterprise Products Partners, and Lukoil.

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featured.slides from docFinder

Slide Slide Slide Slide

Global LNG Demand

Up >70% by 2023


April 9, 2015

Gas Supply Source

Conventional to 2035


February 27, 2015

Oil Supply Security

12.3 MMbb/d Unstable


March 25, 2015

Price war almost over

Recover in 2H 2015


March 5, 2015

Liquefied Natural Gas Ltd, a developer of LNG opportunities, cites a UBS study that concludes global LNG is expected to grow at least 72% from 323 Bcm in 2014 to 560 Bcm by 2023. Japan, China, Europe and India are all major drivers of this demand. This company highlights three projects in its portfolio: Magnolia, Bearhead and Fisherman’s Landing. On the east coast of Canada, this slide shows the price advantage to Europe for the Bearhead project in particular.


Like Exxon, BP provides an annual long-term outlook for the industry. In its 2015 edition of Energy Outlook to 2035, BP states that fossil fuels will meet two-thirds of the increase in energy demand out to 2035.  A growing global population and global GDP underpin energy growth. Among the major energy sources, natural gas clearly becomes the fuel of choice.  While the US shales are front-page news for natural gas, non-OECD conventional sources are the largest suppliers to global gas demand.


Enterprise Products Partners shows that OPEC opened the door during the last decade for higher-cost North American oil production. EPD suggests that the world remains a dangerous place with 12.3 MMbbl/d of production rated unstable. The conclusion is that US oil exports are needed to assure stable supply to the world. While this is a political question for Washington D.C., it also reminds us that there are a plethora of sparks that could shut down significant supplies of oil and send prices higher, quickly.


This slide above from Lukoil states “The Price War is Almost Over” and predicts Brent oil price to rebound in 2H 2015 to levels near full recovery YOY.  Interestingly, Lukoil points to data suggesting that OPEC’s defense of market share is a repeat performance from the mid-1980s.  In fact, this slide shows that OPEC’s market share has grown from a low of 50% in the mid-1980s to roughly 60% today.  The slide further shows Saudi Arabia has a roughly $40/bbl cost advantage for oil production over US shales.


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Full Presentation

Full Presentation

Full Presentation