The Impact of Shale Oil Production Growth in the US Presentation to IMSF, Copenhagen By Selena Yan, Senior Analyst www.clarksons.com
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What is Shale Oil Shale oil (Light Tight Oil) refers to light crude oil produced from shale, or other very low-permeability rocks, by using the same horizontal drilling and hydraulic fracturing technologies used in production of shale gas. Oil shale is a fine-grained sedimentary rock containing a waxy organic known as Kerogen. Shale oil and oil shale differs by the API gravity and viscosity of the fluids, as well as the method of extraction. Oil Shale www.clarksons.com 3
Hydraulic Fracturing & Horizontal Drilling Greater length of producing formation exposed to the wellbore in a horizontal well A than in a vertical well B Source: EIA www.clarksons.com 4
Source: EIA Includes both gas and oil plays www.clarksons.com 5
US Crude Oil Production Million bpd 1..9.8.7.6.5.4.3.2.1. Jan-2 Oct-2 28: 17kbpd 213: 858kbpd Jul-21 Apr-22 Jan-23 Oct-23 Data Source: EIA North Dakoda Jul-24 Apr-25 Jan-26 Oct-26 Jul-27 Apr-28 Jan-29 Oct-29 Jul-21 Apr-211 Jan-212 Oct-212 Jul-213 Million bpd 3. 2.8 2.6 2.4 2.2 2. 1.8 1.6 1.4 1.2 1..8.6.4.2. Jan-2 28: 1.1mbpd 213: 2.56mbpd Oct-2 Jul-21 Apr-22 Jan-23 Oct-23 Jul-24 Apr-25 Jan-26 Texas Oct-26 Jul-27 Apr-28 Jan-29 Oct-29 Jul-21 Apr-211 Jan-212 Oct-212 Jul-213 www.clarksons.com 6
US Crude Oil Production Annual Averages 1 EIA ESTIMATES 8 6 4 2 19 195 191 1915 192 1925 193 1935 194 1945 195 1955 196 1965 197 1975 198 1985 199 1995 2 25 21 215 Million bpd Data source: EIA. Updated May 214 www.clarksons.com 7
North American Oil Market U.S. & Canadian Supply, Demand and Refining Capacity 25 Demand Refinery Capacity Supply 2 Million bpd 15 1 5 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 211 Data source: EIA & BP Stats U.S. and Canadian Supply includes shale oil, oil from oil sands and NGLs, excludes biofuels www.clarksons.com 8
Oil Supply Growth* 213 214 North America 143 North America 137 Europe -19 Europe -1 FSU & Eastern Europe 11 FSU & Eastern Europe 2 Asia & Oceania -8 Asia & Oceania 9 Latin America 8 Latin America -1 Africa 9 Africa -4 OPEC -87 kbpd OPEC -38 kbpd -1 1 2 Updated to May 214 * Shaded Areas are Non-OPEC only Data source: EIA -5 5 1 15 www.clarksons.com 9
Million bpd US Crude Oil Imports 12 1 8 6 4 2 25-Q1 25-Q3 Middle East Africa Europe Latin America Canada RoW 26-Q1 26-Q3 27-Q1 27-Q3 28-Q1 28-Q3 29-Q1 29-Q3 21-Q1 21-Q3 211-Q1 211-Q3 212-Q1 212-Q3 213-Q1 213-Q3 Million bpd 1 9 8 7 6 5 4 3 2 1 US Crude Seaborne Imports by Type Heavy Medium Light Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Data Source: EIA www.clarksons.com 1
US Crude Spot Market Imports 2 Aframax Suezmax VLCC 18 16 14 Million tonnes 12 1 8 6 4 2 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Data source: Clarksons www.clarksons.com 11
Changing Crude and Fuel Oil Trade Patterns Million tonnes 2 18 16 14 12 1 8 6 Aframax Suezmax VLCC Crude / DPP Spot fixture volumes West to East 4 2 Jan- Jun- Nov- Apr-1 Sep-1 Feb-2 Jul-2 Dec-2 May-3 Oct-3 Mar-4 Aug-4 Jan-5 Jun-5 Nov-5 Apr-6 Sep-6 Feb-7 Jul-7 Dec-7 May-8 Oct-8 Mar-9 Aug-9 Jan-1 Jun-1 Nov-1 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Surplus Atlantic Basin crude and fuel oil moving to Asia Data source: Clarksons www.clarksons.com 12
Crude Prices 13 WTI LLS Bakken Dated Brent 12 11 1 9 8 7 Jan-13 Feb-13 Mar-13 US$/barrel Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Data Source: Reuters www.clarksons.com 13
US Refinery Utilisation US East Coast US Gulf Million bpd 2. 1.8 1.6 1.4 1.2 1..8.6.4.2 Operable Crude Oil Distillation Capacity Percent Utilization of Refinery Operable Capacity 95 9 85 8 75 7 65 6 55 % utilisation Million bpd 9.2 9. 8.8 8.6 8.4 8.2 8. Operable Crude Oil Distillation Capacity Percent Utilization of Refinery Operable Capacity 1 95 9 85 8 75 7 65 6 55 % utilisation. Jan-27 Jul-27 Jan-28 Jul-28 Jan-29 Jul-29 Jan-21 Jul-21 Jan-211 Jul-211 Jan-212 Jul-212 Jan-213 Jul-213 Jan-214 5 7.8 Jan-27 Jul-27 Jan-28 Jul-28 Jan-29 Jul-29 Jan-21 Jul-21 Jan-211 Jul-211 Jan-212 Jul-212 Jan-213 Jul-213 Jan-214 5 Data source: EIA www.clarksons.com 14
US Petroleum Products Trade Imports Exports Gasoline Kerosene Distillate Fuel Oil Ethanol Production Gasoline Kerosene Distillate Fuel Oil 2.5 2.5 2. 2. Million bpd 1.5 1. Million bpd 1.5 1..5.5. 2-Q1 2-Q4 21-Q3 22-Q2 23-Q1 23-Q4 24-Q3 25-Q2 26-Q1 26-Q4 27-Q3 28-Q2 29-Q1 29-Q4 21-Q3 211-Q2 212-Q1 212-Q4 213-Q3. 2-Q1 2-Q4 21-Q3 22-Q2 23-Q1 23-Q4 24-Q3 25-Q2 26-Q1 26-Q4 27-Q3 28-Q2 29-Q1 29-Q4 21-Q3 211-Q2 212-Q1 212-Q4 213-Q3 Data Source: EIA www.clarksons.com 15
US Gasoline Exports by Regions 7 Canada Mexico Latin America Europe Africa FSU Middle East Far East Oceania 6 5 Thousand bpd 4 3 2 1 Jan- May- Sep- Jan-1 May-1 Sep-1 Jan-2 May-2 Sep-2 Jan-3 May-3 Sep-3 Jan-4 May-4 Sep-4 Jan-5 May-5 Sep-5 Jan-6 May-6 Sep-6 Jan-7 May-7 Sep-7 Jan-8 May-8 Sep-8 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Data Source: EIA www.clarksons.com 16
US Distillate Fuel Oil Exports by Regions 1,4 Canada Mexico Latin America Europe Africa FSU Middle East Far East Oceania 1,2 1, Thousand bpd 8 6 4 2 Jan- May- Sep- Jan-1 May-1 Sep-1 Jan-2 May-2 Sep-2 Jan-3 May-3 Sep-3 Jan-4 May-4 Sep-4 Jan-5 May-5 Sep-5 Jan-6 May-6 Sep-6 Jan-7 May-7 Sep-7 Jan-8 May-8 Sep-8 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Data Source: EIA www.clarksons.com 17
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US Crude Oil Exports by Destination 14 12 1 8 6 4 2 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Thousand bpd Others U.S. Virgin Islands Taiwan Korea Japan China Canada Data Source: EIA www.clarksons.com 19
Exemptions to the US crude oil export ban Crude oil derived from fields under the State waters of Alaska's Cook Inlet; Alaskan North Slope crude oil; Certain domestically produced crude oil destined for Canada, for consumption therein; Shipments to U.S. territories; Up to an average of 25, bbl/d of California heavy crude oil; In connection with refining or exchange of Strategic Petroleum Reserve oil; Foreign-origin crude oil where, based on written documentation satisfactory to BIS, the exporter can demonstrate that the oil is not of U.S. origin and has not been commingled with oil of U.S. origin; Exports that are consistent with findings made by the President under an applicable statute; Source: EIA www.clarksons.com 2
US Spot Clean Loadings by Vessel Type 35 Handy MR Pmax/LR1 Other Cargo Volume 35 3 3 Million tonne-days 25 2 15 25 2 15 Million Tonnes 1 1 5 5 2 21 22 23 24 25 26 27 28 29 21 211 212 213 * Laden days based on 14 knots Data Source: Clarksons www.clarksons.com 21
US Crude Oil Production 9 8 7 6 Main Producing States/Areas Changes in Annual Output 8-13 Others Federal Offshore - Gulf of Mexico California Alaska Texas North Dakota Texas North Dakota Alaska Million bpd 5 4 3 2 1 Oklahoma New Mexico Offshore Gulf of Mexico Colorado California Jan-2 Oct-2 Jul-21 Apr-22 Jan-23 Oct-23 Jul-24 Apr-25 Jan-26 Oct-26 Jul-27 Apr-28 Jan-29 Oct-29 Jul-21 Apr-211 Jan-212 Oct-212 Jul-213 Data source: EIA Utah Wyoming bpd -5 5 1, 1,5 2, www.clarksons.com 22