Ideal Gas Company of 2020Ideal Gas Company of 2020
GASTECH 2005GASTECH 2005
Joe Naylor, Vice President, Strategy, Planning and Business SuppJoe Naylor, Vice President, Strategy, Planning and Business Support ort ChevronTexaco Global GasChevronTexaco Global Gas
AndAnd
Rodney Schmidt, Managing DirectorRodney Schmidt, Managing DirectorPFC EnergyPFC Energy
March, 2005March, 2005
2GASTECH 2005
Outline
• Gas Company Definition
• Make-up of the “Ideal Gas Company”
• Hypothesis
• The Gas Industry – Past and Future
• Ideal Gas Company of 2020
• Conclusions
3GASTECH 2005
Provides a competitive return to its shareholders
Changes gas commodity to a customized solution on a global basis
Assembles (or secures) the avenues to move gas from its point of origination to a customer: scope and scale and repeatability
Gas is a commodityA “Gas” company is a company that
4GASTECH 2005
Make-up of the“Ideal Global Gas Company”
• Safest?
• Most socially responsible?
• Biggest reserves?
• Biggest gas production?
• Biggest balance sheet?
• Best ROCE?
• Best cash flow?
• Most integrated in its assets?
• Biggest marketer / trader?
• Most advanced in assembling new gas chains?
5GASTECH 2005
HypothesisIdeal global gas company of the future will
• Retain capabilities to vertically integrate
• Increasingly integrate horizontally, across:
– Multiple value chains
– Multiple market avenues
– Multiple fuels
• Be able to play selectively
• Adapt its position as markets change
• Leverage its global human capital
• Focus on country-and customer-specific needs
6GASTECH 2005
Asia Pacific Evolution ExampleImporter1985
Japan
Indonesia
AbuDhabi
Malaysia
Alaska
Source: PFC Energy
Exporter
7GASTECH 2005
Asia Pacific Evolution ExampleImporter2005
SouthKorea
TaiwanJapan
AbuDhabi
Brunei
Alaska
Australia
India
Europeand US
Qatar
Source: PFC Energy
Oman
Exporter
IndonesiaMalaysia
8GASTECH 2005
Gas Industry Past & Future
• Gas in Global Energy Demand
• Partnering - Role of NOCs
• Community Engagement
• Customers
• Technology
9GASTECH 2005
Gas in Global Energy Demand
• Gas demand growth drivers– Power generation– Industrial & commercial– GTL & GTChem– New, emerging gas markets
• Resource distance to market is significant
• Global gas trade is growing, creating opportunities for intermediaries
0
5
10
15
20
25
30
1985 1995 2005 2020
Number of LNG Importing Countries
bcm
GTLOtherResidential & ServicesIndustry
Power Generation
0
1000
2000
3000
4000
5000
2002 2010 2020 2030
World Natural Gas by Sector
10GASTECH 2005
PartneringTraditional Role of NOCs
NOCs owned the gas reserves
IOCs moved the gas reserves
Source: BP 2004 Statistical Review; PFC Energy estimates
Gas
~50% of Gas accessible WW TCF: 6,205
NOC Reserves (equity access)
Full IOC Access
Reserves held by new Russian companies
NOC Reserves(no equity access)
11GASTECH 2005
Partnering NOCs Going Forward
Self-Sufficientresource-rich
IOC-Likeresource-rich / resource-limited
Government Entity
SonatrachSonangolEGPCT-U-K
INOCLNOC
PertaminaOOCKMG
SaudiAramco
StatoilPetronasPetrobras
KOCQP
AdNOC
GAZPROMPdVSA
ONGCSINOPEC
CNOOCPetro-
China(CNPC)
Aggressive Expansionistresource-limited
12GASTECH 2005
Community Engagement
• Safety: maintain exemplary track record
• Environment
• Socially responsible
• Community engagement is critical– As new markets are opening– As new products are
introduced– As new entrants emerge
13GASTECH 2005
Customers
Customers and their needs are changing
• New countries emerging
• Multiple sectors
• Multi-sized customers
Customer ambitions are changing
• Impact on customer-supplier relationship
• Impact on the terms
• Impact on project structures
14GASTECH 2005
Technology
Technology-driven cost efficiencies making gas-based fuels increasingly competitive
Leader in advancing gas technology gains as the commercializer of either
• Third-party technology
• Technology developed in-house
• CO2 sequestration
• Hydrate productionCos
t
Time
GTL
LNG
15GASTECH 2005
Summary: Gas Industry – Past & Future
Past
Vertical integration; well-defined roles and limits
• Point-to-point trades• Illiquid, long-term arrangements• Government handled the public
interface• NOCs were resource owners• Most customers were monopoly
buyers • Technology concentrated on cost
efficiencies
16GASTECH 2005
Summary: Gas Industry – Past & Future
Past
Vertically integration; well-defined roles and limits
• Point-to-point trades• Illiquid, long-term arrangements• Government handled the public
interface• NOCs were resource owners• Most customers were monopoly
buyers • Technology concentrated on cost
efficiencies
Future
Vertical & horizontal optimization; boundaries disappearing, roles blurring
• Multiple supply, multiple market• Liquid, global trade• Global gas companies engage
community• NOCs have multiple roles• Customers needs / ambitions
changing• Technology expanding the gas
product slate
17GASTECH 2005
Conclusions
To play globally in 2020, the Ideal Gas Company will
• Selectively participate in, construct, manage all aspects of gas value chains – reconfigure over time
• Optimize across multiple gas value chains
• Successfully adapt to changing needs of
Customers PartnersCountries