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LNG Investment Conference 2014 - David Egan, PwC
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Global and Canadian LNG Opportunities
David EganPartner, Infrastructure and Project FinanceVancouver, BC
PricewaterhouseCoopers LLP 2
Table of Contents
Introduction
World Demand for Natural Gas
World Supply of Natural Gas
LNG Trade & Pricing
Implications for Canada & British Columbia
3PwC
Introduction
PricewaterhouseCoopers LLP 4
Introduction
The emerging Liquefied Natural Gas (LNG) industry in British Columbia is based on world class deposits of natural gas that have so far been developed for North American consumption only.
With worldwide demand increasing for LNG, significant overseas export opportunities are presenting themselves and the province is poised to take advantage.
This paper describes global trends with LNG demand, supply and pricing, and describes the implications for Canada and British Columbia.
Information is drawn from several sources including trade publications, mass media articles, internet sites, government publications, LNG conference presentations and discussions with PwC Energy experts.
5PwC
World Demand for Natural Gas
Source: U.S. Energy Information Administration (Annual Energy Outlook)PricewaterhouseCoopers LLP 6
Global Energy Demand by Source
Liquid Fuels37%
Natural Gas27% Coal
20%
Nu-clea
r8%
Hydro3%Bio
mass
3%
Other3%
Year 2014
Liquid Fuels34%
Natural Gas30%
Coal18%
Nuclear8%
Hydro3%
Biomass4%
Other4%
Year 2034
PricewaterhouseCoopers LLP 7
Source: BP Statistical Review of World Energy
Global Primary Energy Consumption
Nor
th A
mer
ica
South
and
Cen
tral
Am
erica
Europ
e an
d Eur
asia
Mid
dle Eas
t
Africa
Asia P
acifi
c0%
10%20%30%40%50%60%70%80%90%
100%
Consumption by Source (Oil-Equivalent), 2012
Oil Natural Gas Coal Nuclear Hydro Renewables
PricewaterhouseCoopers LLP 9
Map of Global Natural Gas Consumption Units in Tonnes Oil Equivalent, Per Capita
Image Credit: BP Statistical Review of World Energy
Image Credit: U.S. Energy Information AdministrationPricewaterhouseCoopers LLP 10
Global Natural Gas Consumption
2010 2015 2020 2025 2030 2035 20400
100
200
300
400
500
600
310 329360
393431
470507
Global Natural Gas Consumption (quadrillion Bcf/d)
Volu
me (
qu
adri
llio
n B
cf/
d)
11PwC
World Supply of Natural Gas
Source: BP Statistical Review of World EnergyPricewaterhouseCoopers LLP 12
Global Proved Natural Gas Reserves
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
10
20
30
40
50
60
70
80
90
Asia
Europe
Russia
Rest of the World
North America
Middle East
Proved Natural Gas Reserves by Region
Volu
me i
n T
rill
ion
Cu
bic
Metr
es
Source: BP Statistical Review of World EnergyPricewaterhouseCoopers LLP 13
Global Natural Gas Production
0
100
200
300
400
500
600
700
800
900
1000
Asia, Rest of
Europe
Middle East
Russia
Rest of the World
China
North America
Natural Gas Production by Region
Volu
me i
n B
illi
on
Cu
bic
Metr
es
14PwC
LNG Trade & Pricing
PricewaterhouseCoopers LLP 15
Regional LNG Importers and Import Origins
Source: BP Statistical Review of World Energy
North America Europe and Eurasia
Rest of the World
China Asia, Rest of0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Trinidad & Tobago
Trinidad & Tobago
Peru
Qatar
Qatar
Qatar
Qatar
Qatar
Yemen
Nigeria NigeriaNigeria
Algeria
Australia
Australia
Indonesia Indonesia
Malaysia Malaysia
LNG Import Sources, 2012
Volu
me (
in b
illi
on
cu
bic
metr
es)
Image Credit: BP Statistical Review of World EnergyPricewaterhouseCoopers LLP 16
Map of Major Gas Trade Movements in 2012 Units in billion cubic metres
Source: BP Statistical Review of World EnergyPricewaterhouseCoopers LLP 17
Global Natural Gas Prices
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
2
4
6
8
10
12
14
16
18
Natural Gas Prices
German Import Price (cif; LNG)
Japan Import Price (cif; LNG)
Canada (Alberta; Natural Gas)
U.K. National Balancing Point Index (Natural Gas)
U.S. Henry Hub (Natual Gas)
Average
US
D (
per
mil
lion
Btu
)
18PwC
Implications for Canada & British Columbia
PricewaterhouseCoopers LLP 19
Map of Canadian Natural Gas Reserves
Image Credit: Pacwest Consulting Partners
PricewaterhouseCoopers LLP
Source: U.S. Energy Information Administration
20
2010 2020 2030 2040
-1
0
1
2
3
2.5
1.21.1
0.3
-0.06
0.65
0.99
2.34
Canadian Net Natural Gas Trade
Pipeline LNG
Volu
me (
in t
rill
ion
cu
bic
feet)
Canadian Net Natural Gas Trade
Export volume is positive; import is negative
PricewaterhouseCoopers LLP
Investment Opportunities in B.C.
Investment opportunities exist throughout the LNG supply chain beyond the LNG Consortia that are dominated by major oil & gas companies and major offtakers:
• Exploration companies
• Engineering and construction
• Pipelines
• Camp providers
• Services
22
PricewaterhouseCoopers LLP
Source: U.S. Energy Information Administration
26
Canadian Market Share
2014 2020 2030 20400
10
20
30
40
50
60
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1.9 1.8 2.0 2.7
23.430.4
39.7
47.3
Global Natural Gas Export Volume and Canadian Market Share
Canada World Canadian Market Share
Volu
me (
in t
rill
ion
cu
bic
feet)
Mark
et
Sh
are
PricewaterhouseCoopers LLP 27
Opportunities and Challenges in B.C.
Challenges
• Engagement with First Nations bands, whose traditional lands are affected by projects
• Escalating competition from Australia and other exporting countries — worldwide liquefaction capacity may double over the next decade
• Large potential for marketable natural gas in Western Canadian Sedimentary basin but requires unconventional development —subject to regulatory and environmental approvals
Opportunities
• Western Canada is located close to the growing Asia-Pacific markets —transportation costs are thus minimized
• Proposed liquefaction capacities and export terminals will open access to new Asia — Pacific markets
• Large resource base in Western Canada
• Adequate access to capital to facilitate development of new capacities and export terminals
PricewaterhouseCoopers LLP
Contact Information
David Egan
Partner, Infrastructure and Project Finance
P: +1 604 806 7538 E: [email protected]