Peak Oil & The Clean Transportation Opportunity
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INTRODUCTION THE CRISIS TRANSPORTATION OPPORTUNITY CONTACT o The Clean Transport Opportunity ASIA CLEANTECH CAPITAL
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Peak oil is becoming more of a reality, and an oil shock is very likely the next major macro crisis and opportunity. Ron Mahabir details the macro oil situation, oil alternatives and the clean transportation opportunity.
Transcript of Peak Oil & The Clean Transportation Opportunity
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
PROPRIETARY& CONFIDENTIAL
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The CleanTransport OpportunityASIA CLEANTECH CAPITAL
INTRODUCTION
THE CRISIS
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IntroductionSize of the Opportunity
SOURCE: IEA, EIA, SIMMONS INTERNATIONAL, COMPANY ESTIMATES.
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Source: IEA, EIA, company.
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IntroductionCrisis
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Oil production likely peaked in May, 2005 *SIMMONS
Majority of remaining reserves are controlled by historically unstable regimes
The financial crisis and low oil prices have curbed investment
The oil workforce and infrastructure is rusting
Oil is the single feedstock for 95% of transportation
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IntroductionOpportunity
Oil is temporarily mispriced as prices are based on short-term supply/demand. The markets are missing the medium and longer term supply shortages.
$50-60 oil isvery cheap
(below cost offuture supply)
After recentprice shock,
governmentsare seeking
energy diversityand security
Demand growthfrom China, India,and ME is massive
Investmentcommunity is
starting toappreciate“peak oil”
Global mandatesfor reduced
emissions andalternative fuels
Disruptivetechnology is
quickly emerging
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INTRODUCTION
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IntroductionWindow of Opportunistic Investments
In the next 3-5 years, we will likely experience much higher and volatile oil prices. Transportation provides the single most compelling investment opportunity.
A transformation is occurring in electric vehicles, next generation biofuels, hydrogen, and fuel efficiency. We see an opportunistic focus in:
‣ New fuel resources‣ Vehicles‣ Fuel efficiency
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INTRODUCTION
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The CrisisWe are out of cheap oil
"Current oil prices don’t take into account the medium and longer term supply shortages and increasing cost of future production.“
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140
120
100
80
60
40
20
0
Jan-2
002
Aug-2
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Mar
-200
3
Oct-20
03
May
-200
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Dec-2
004
Jul-2
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Feb-2
006
Sep-2
006
Apr-200
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Nov-2
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Jun-2
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Jan-2
009
20XX
Remaining oil reserves are largely offshore, tar sands, and oil shale all of which are feasible
at US$80+
Source: NYMEX.
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105
70
35
0
1960 1968 1976 1984 1992 2000 2007
2005
The CrisisThe Oil Age
"The term Peak Oil refers to the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion.“
-- Colin Campbell
World Crude Oil Production, 1960 - 2007Source: Simmons International.
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It is likelythat we reachedpeak production
in May 2005(Simmons)
mb/d
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120
100
80
60
40
20
0
MIL
LIO
N B
ARRE
LS/D
AY
1990 2000 2010 2020 2030
CRUDE OIL - FIELDS YETTO BE FOUND
CRUDE OIL - FIELDS YETTO BE DEVELOPED
CRUDE OIL - CURRENTLYPRODUCING FIELDS
The CrisisRapid Fall Off in Production
SOURCE: IHS, DELOITTE, USGS DATABASE, IEA, SIMMONS INTERNATIONAL.
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We shouldbe investingmassively in
E&P!
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The CrisisDespite High Oil Prices, Output Flat
Countries with Increasing Production vs. Rest of World Decline
Despite high oil prices and an increase in E&P spending from US$100 billion to $400 billion (2000 to 2006), oil production has remained flat.
*Recently have also fallen into decline.
Source: Simmons International.
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The CrisisEnergy security
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Proved reserves at end of 2007 (Billions of barrels)
Source: Statistical Review of World Energy 2008
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The CrisisConsumption is patently unsustainable
Top Consuming Countries, 1960 - 2006Source: http://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_20.pdf
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18
12
6
0
MIL
LIO
N B
ARRE
LS/D
AY
YEAR
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
UNITED STATES
FORMER U.S.S.R.
JAPAN
RUSSIACHINA
INDIA
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The CrisisDecline Rates in the Gulf of Mexico
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Select Gulf of Mexico oil fields. Cantarell, one of the world’s largest deepwater oil fields peaked in 2004, with collapsing production.Source: Simmons International.
Amberjack
1998
2000
2002
2004
2006
2008
YTD
1614121086420
Auger
1998
2000
2002
2004
2006
2008
YTD
100806040200
Baldpate
1998
2000
2002
2004
2006
2008
YTD
6050403020100
Brutus
1998
2000
2002
2004
2006
2008
YTD
6050403020100
Cognac
1998
2000
2002
2004
2006
2008
YTD
1086420
Hoover
1998
2000
2002
2004
2006
2008
YTD
50403020100
HornMtn/King
1998
2000
2002
2004
2006
2008
YTD
100806040200
Llano(GB 387)
1998
2000
2002
2004
2006
2008
YTD
403020100
Lobster/Oyster
1998
2000
2002
2004
2006
2008
YTD
6050403020100
Mars-Ursa
1998
2000
2002
2004
2006
2008
YTD
300250200150100500
Nansen(EB 602)
1998
2000
2002
2004
2006
2008
YTD
35302520151050
Neptune(VK 825)
1998
2000
2002
2004
2006
2008
YTD
302520151050 Phoenix
1998
2000
2002
2004
2006
2008
YTD
302520151050
Pompano
1998
2000
2002
2004
2006
2008
YTD
6050403020100
Ram-Powell(VK 956)
1998
2000
2002
2004
2006
2008
YTD
50454035302520151050
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The CrisisRise of Resource Nationalism
RECENT EXAMPLES
Russia shutting off of natural gas supply to Ukraine and Europe
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Venezuela’s nationalization of international oil major projects
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Indonesia cutting back on energy exports, threatening to seize Natuna from ExxonMobil
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China developing Iranian oil field against international sanctions
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Independents (such as BP, ExxonMobil) own or have
access to less than 10% of world oil
resources.
Remainder is located in countries such as
Venezuela and Russia where access is
difficult.
65% of reserves are held by state-owned companies, mostly in
MENA.
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Source: Energy Current:“Global E&P Expenditures”Wall Street Journal
The CrisisFinancial Crisis has Hit New Investment
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North America
US: -26%Canada: -23%
Middle East / Asia Pacific
Mixed results(both increases& decreases)
Russia
Lukoil: -50%Surgutneftegaz, Gazprom Neft, Rosneft, TNK: -20% to -26%
2009 E&P BUDGETS DOWN 12%FIRST DECLINE IN 9 YEARS
(LARGE CUTS)- - - - - - - - - - - - - - - - - - - - - -
Estimated 85% of new refining capacity has been canceled or postponed. Unless oil prices are higher than an estimated $80, deep water drilling, oil shale, and tar sands are not viable
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The CrisisRusting of industry
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Worldwide energy infrastructure is too old
Labor force is graying and retiring
Past 4 months alone, 40,000 industry hires were fired(likely more than all hires 2006 - 2008)
Average age of US pipeline is 80 years
80% of rigs must be replacedSource: Simmons International.
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YEAR
MTO
NS/YE
AR 30,000
25,000
20,000
15,000
10,000
5,000
0
1751
1758
1765
1772
1779
1786
1793
1800
1807
1814
1821
1828
1835
1842
1849
1856
1863
1870
1877
1884
1891
1898
1905
1912
1919
1926
1933
1940
1947
1954
1961
1968
1975
1982
1989
1996
2003
CARBON EMISSIONS FROM GAS FLARING
CARBON EMISSIONS FROM SOLID FUELCONSUMPTION
CARBON EMISSIONS FROM LIQUID FUELCONSUMPTION
CARBON EMISSIONS FROM GAS FUELCONSUMPTION
The CrisisNo end to Emissions
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Massiveincrease in global
emissions postindustrialization.
Transportation isa major contributorto climate change.
Source: Deutsche Bank
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TransportationHistory of Transport Fuels
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TRA
NSP
ORT
ATIO
N D
EMA
ND
Key Drivers
Declining fossil fuel suppliesFuel supply security and
diversificationGlobal emissions
Governmental regulations
TIMETODAY
CARBON NEUTRALTRANSPORTATION
CARBONTRANSPORTATION
New FuelCarbon neutral fuels
Electricity (renewable)Synthetic fuels
Hydrogen
Fossil FuelOilGasCoal
Natural FuelWind
Horsepower
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TransportationCurrent Reliance on a Single Feedstock
Source: IEA World Energy Outlook Source: U.S. Energy Information Administration
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CRUDE OIL95%
OTHER5%
COAL41%
RENEWABLES18%
LIQUIDS6%
NUCLEAR15%
GAS20%
TRANSPORTATION ELECTRICITY
OIL PROVIDES 95% OF TRANSPORT FUEL NEEDS(VS. ELECTRICITY WHICH IS WELL DIVERSIFIED)
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Transportation75% of New Oil Demand
Incremental Oil Demand by sector 2006 - 2030Source: IEA, World Energy Outlook 2008
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800
600
400
200
0
-200
TRANSPORT INDUSTRY NON-ENERGY USE OTHER*
*INCLUDES RESIDENTIAL, SERVICES, AGRICULTURE, POWER GENERATION AND OTHER SECTORS.
Mtoe
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TransportationAs Global Demand for Vehicles is Accelerating
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Worldwide Number of Cars (Millions)Source: IEA, World Energy Outlook 2008
1500
1125
750
375
0
1968 1985 2007 2020
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Transportation...and Oil Growth
Source: IEA, World Energy Outlook 2008
Growth from Asia & Middle East
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(mb/d)
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OpportunitySpectrum of Potential Investments
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Upstream:Fuel Resources
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PlantationProcessing
Fuel generationDistribution
Downstream:Vehicles
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ComponentsTechnology
DesignManufacturing /
ConversionDistribution
Carbon Neutral‣ Biodiesel‣ Bioethanol‣ Biogas
FUELEFFICIENCY
Synthetic FuelsHydrogenElectricity
Fuel Type
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OpportunityNew Propulsion Technologies& Alternative Fuels
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Source: Deutsche Bank, Company estimates.
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OpportunityGrowth in Biofuel Mandates & Production
24 Source: REN21, Renewables 2009 Global Status Report.
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LIGHT DUTYVEHICLE
ELECTRIC TWO-WHEELERS
GASOLINE TWO-WHEELERS
1990 1995 2000 2005
VE
HIC
LES/
YE
AR
(M
ILLI
ON
S) 18
16
14
12
10
8
6
4
2
0
2010
27.5
6.5
OpportunityChina Leading with Electric
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SOURCE: CAMBRIDGE ENERGY RESEARCH ASSOCIATES.
Automotive sales in China
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Sales of electrictwo-wheelers inChina recently
surpassed gasolinepowered
two-wheelers.China is the
world’s leadingproducerof electric
two-wheelers.
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Contact us
Asia Cleantech Capital Pte Ltd 6 Eu Tong Sen Street, #07-06 The Central, Soho One Singapore 059817
T: (65) 6227 5940 F: (65) 6227 5945 W: www.asiacleantech.com
Ron Mahabir, Managing Director [email protected]
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