Cera Us Impact

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Global supply and market impacts of USunconventional oil production growth

Andrew Slaughter,

Vice-President, Energy Insight, IHS

Presentation to EIA 2013 Energy Conference

June 18th2013

Washington, DC

CONFIDENTIAL

2013, All rights reserved, IHS CERA., 55 Cambridge Parkway, Cambridge, Massachusetts 02142No portion of this presentation may be reproduced, reused or otherwise distributed in any form without prior written consent.


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Copyright 2013HS Inc. All Rights Reserved. 1

Todays Themes

US unconventional oil where, how, how much?

US position in global oil supply growthMarket implications

Can tight oil go global?


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Copyright 2013HS Inc. All Rights Reserved.

Tight Oil plays in North America

- diverse and distributed

IHS estimates that tight oil adds over 40 billion barrels to North American recoverable supply

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Step 1: Higher prices enabled investment in technology

Gas prices began to rise in early 2000s -- gas supply bubble worked off andconcerns grew over future gas supply

Tight gas sand work in the Rockies develops slick water fracturing Horizontal drilling rolled out in earnest and combined with hydraulic fracturing in

the Barnett Shale

Step 2: Technology transformed uneconomical and inaccessibleresources into viable large-scale unconventional plays

Shale gas boom unleashed in multiple basins New supply led to fall in gas prices Oil prices remained strong and supported migration of horizontal drilling and multi-

stage fracturing technology to tight oil plays, beginning with the North DakotaBakken

Multiple tight oil plays now developing

Price and technology drove success in US

unconventional oil and gas plays

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Regulatory frameworks in the main allow horizontal drilling andfracturing to safely proceed

Mineral ownership in the U.S. resides with private individuals, not

just government, allowing for access to resources on private landsMineral owners are stakeholders in successAcreage leaseholdings are distributed among many operators

Intense competition for leases and acreage price escalation

causes companies to develop plays very quickly to protect landinvestments

Infrastructure, human resources, rigs, services and fit-for-purposeequipment are all readily available

The US oil and gas business environment has

enabled a rapid pace of development to scale

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How big and how competitive is the US

tight oil resource?

Source: IHS CERA.

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Tight oil resourcesare larger than USproved oil reservesand much can beproduced at awellhead price of up

to $60


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Copyright 2013HS Inc. All Rights Reserved. 6

Unconventional natural gas and crude oil

has revitalised US hydrocarbon production

Thousandb/doilequivalent


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Tight Oil is driving US crude oil production

towards 8 mbd

Source: IHS CERA

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2005 2010 2015 2020 2025

ThousandBarrels

Per Day

U.S. Crude Oil Production Outlook

Other Lower 48

Gulf of Mexico

Alaska

Tight Oil

US crude oil production outlook

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United States is the largest source of new

liquids supply since 2008

0.0

0.5

1.0

1.5

2.0

2.5

3.0

UnitedStates

SaudiArabia

Russia

Iraq

Canada

Qatar

UnitedArab

Emirates

Nigeria

China

Colombia

Millionbarrels

perday

Total liquids growth 200812

Source: IEA, IHS CERA, national government data.

Note: Liquids includes ethanol and biodiesel for the United States and Canada, and ethanol for China and Columbia.

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North America will sustain its position as a

leading contributor to liquids growth

(500)

-

500

1,000

1,500

2,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Year-On-Year World Crude Oil Supply Growth

ROW Iraq North America Brazil

Thousandsof barrelsper day

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Sources: IHS CERA, with some historical data from International Energy Agency and US EIA.


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Growing supply contributes to higher

OPEC spare capacity

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-

1,000

2,000

3,000

4,000

5,000

6,000

2010 2012 2014 2016 2018 2020

OPEC Spare Crude Oil Production Capacity


10

Sources: IHS CERA


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Strong North American supply will reshape

trade patterns

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Latin America

Africa

Middle East

North Sea / CIS /Other

-

2,000

4,000

6,000

8,000

10,000

2000 2005 2010 2015 2020 2025 2030

North America Offshore Crude Imports

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Sources: IHS CERA, with some historical data from US EIA.



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Can lessons learned migrate to new regions of

unconventional oil development?

Source: IHS CERA.20412-2

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Many plays outside North America could be

sources of significant development

South

America14 play areas

Africa15 play

areas

Europe

27 play

areas

CIS

13 play areas

South Asia

20 play areas

North Asia

26 play areas

Australasia

17 play areas

Middle East

16 play

areas

Source: IHS CERA.

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148 play areas

~ 500 billion barrels potentially technically recoverable

U ti l il d E&P Ab


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Unconventional oil and gas E&P: Above

ground factors more challenging outside

North America

Source: IHS CERA.

20313-1

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In conclusion

North America has led the world in unconventional gas and oildevelopment

Uniquely favourable business environment factors helped acceleratedevelopment scale and timing

The rest of the world has high scope for both unconventional gas and oil

Above ground factors will limit the speed of development in most places relativeto North America but long-term prospects are positive

Expansion of supply options opens up new options for markets

and trade Shifting patterns of crude oil trade as US import needs decline

Spill over effects into refined products trade

Consolidates non-OPEC role in future investment and supply growth

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