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………… IN THE REAL WORLD

AMERICAN OIL ENERGY INDEPENDENCE. ………… IN THE REAL WORLD. Dr. John Anthony Scire, PhD, 6 February 2013. THE OPTIMISTS PREDICT US WILL BE INDEPENDENT OF OUR RELIANCE ON IMPORTED OIL IN TEN YEARS .

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………… IN THE REAL WORLD

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  1. AMERICAN OIL ENERGY INDEPENDENCE ………… IN THE REAL WORLD Dr. John Anthony Scire, PhD, 6 February 2013

  2. THE OPTIMISTS PREDICT US WILL BE INDEPENDENT OF OUR RELIANCE ON IMPORTED OIL IN TEN YEARS (IF WE OPEN UP ALL OF OUR FEDERAL LANDS FOR DRILLING, INCREASE FRACKING, AND BEGIN TO EXPLOIT THE OIL SHALES IN THE GREEN RIVER FORMATION.)

  3. SO PEAK OIL IS A THING OF THE PAST????

  4. REALLY?

  5. A REALITY CHECK ON PEAK OIL PRODUCTION

  6. THE WORLD PEAK OF OIL PRODUCTION IS NOW ESTIMATED TO BE BEYOND 2040 ….. BUT

  7. WHO CARES ?? THE US WILL NOT EXCEED ITS 1970 PEAK FOR THE FORESEEABLE FUTURE

  8. THE ENERGY INFORMATION AGENCY OF THE US DOE PREDICTS U.S. tight oil production leads a growth in domestic production of 2.6 million barrels per day between 2008 and 2019 U.S. crude oil production million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 Tight oil Other lower 48 onshore Lower 48 offshore Alaska Adam Sieminski January 5, 2013

  9. BP says US still imports 35% in 2030 DOE says US still imports 37% in 2040 IEA says US still imports 16% by 2035 • (but all of it from the Western Hemisphere, mostly from Canada) A REALITY CHECK ON IMPORTS

  10. AND WE WILL STILL IMPORT UP TO 37% OF OUR LIQUID FUELS in 2040 Source: EIA, Annual Energy Outlook 2013 Early Release

  11. BUT HOW IMPORTANT IS OIL TO OUR ECONOMY???

  12. HOW IMPORTANT IS OIL TO THE AMERICAN ECONOMY? PETROLEUM IS ONLY 35.28% OF TOTAL ENERGY CONSUMPTION BUT IN EXCESS OF 90% OF TRANSPORTATION’S ENERGY USE

  13. BUT THE FRACKING GAS WILL SAVE US!!!

  14. SHALE GAS DOUBLES GASPRODUCTION BY 2040 U.S. dry natural gas production in trillions of cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 Shale gas Tight gas Non-associated offshore Alaska Coalbed methane Associated with oil Non-associated onshore

  15. BUT CONSUMPTION IS GOING UP AND LNG EXPORTS WILL GO UP SOON

  16. NATURAL GAS CONSUMPTIONBY TRANSPORTATION QUADRILLION BTUs Note: Gas to liquids includes heat, power, and losses. Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 28% Gas to liquids Freight trucks 38% 1% 3% Buses 1% 1% Light-duty vehicles 3% Pipeline fuel 31% 95%

  17. NATURAL GAS CONSUMPTION BY ELECTRICITY GENERATION In 2005, 2,085 gigawatt hours per day In 2012 , 3,358 gigawatt hours per day This is a growth in Electricity Generation Use of 47% IN JUST 7 YEARS

  18. NATURAL GAS CONSUMPTION BYEXPORTATION U.S. natural gas exports trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release Exports to Mexico Exports to Canada Lower 48 LNG exports Alaska LNG exports

  19. AND THEN PRICES GO UP TO WORLD MARKET PRICES WHICH ARE 5 TO 9 TIMES HIGHER THAN THE US

  20. CONCLUSION: NATURAL GAS WILL NOT MAKE US ENERGY INDEPENDENT BUT IT WILL ……

  21. ....BUY US TIME…. TIME TO REDUCE OIL ENERGY CONSUMPTION BY INCREASING EFFICIENCY AND ALTERNATIVES

  22. BECAUSE EVEN THOUGH OUR DOMESTIC CONSUMPTION HAS DECLINED AND WILL CONTINUE TO DECLINE

  23. WORLD DEMAND FOR OIL WILL GO FROM 85 MBD TODAY TO OVER 103 MBD BY 2030 96% OF THAT GROWTH WILL BE FROM NON-OECD COUNTRIES. WORLD DEMAND WILL INCREASE DRAMATICALLY

  24. AND WORLD PRICES WILL NOT DECLINE 1. OPEC’S SHARE OF PRODUCTION GOES UP TO 45% (BP/IEA) 2. US WILL HAVE TO PAY WORLD PRICES …………AND…………. 3. NET IMPORT BILLS WILL NOT GO DOWN (OPEC will still have pricing power) SOOOOOOOOOO

  25. NO TOTAL INDEPENDENCE BUT THE GOOD NEWS IS…….

  26. NO NEED TO IMPORT ANY OIL FROM THE MIDEAST BY 2020

  27. SO LET’S DISCUSS THE NATIONAL SECURITY POSSIBILITIS

  28. JOHN.SCIRE@WELLSFARGOADVISORS.COM

  29. CENTCOM ROLE DIMINISHES VIS-À-VIS THE OTHER COMS • ISRAEL’S IMPORTANCE DIMINISHES • IRAN’S IMPORTANCE DIMINISHES • THE TRADE DEFICIT’S DRAIN ON AMERICAN CAPITAL DIMINISHES

  30. MORE SECURITY POSSIBILITIES • OIL DISRPUTIONS WORLDWIDE DUE TO DEMAND OR SUPPLY PROBLEMS WILL NOT CRUSH THE US ECONOMY • MORE SELECTIVITY IN SOURCING OIL WHEN SECURITY IMPLICATIONS ARISE • RISING IMPORTANCE OF WESTERN HEMISPHERE • COMPETION WITH CHINA FOR RESOURCES MAY ESCALATE

  31. MORE SECURITY CONSIDERATIONS • CHINA’S DEPENDENCY RISES TO 80% MOST OF WHICH WILL COME FROM THE MIDDLE EAST AND AFRICA • EURO DEPENDENCE ON RUSSIAN GAS DIMINISHES AS US LNG EXPORTS INCREASE • JAPANESE DEPENDENCE ON IMPORTED • LNG INCREASES AS NUCLEAR DECLINES

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