Oil and Gas Trends and

Challenges

Microsoft Global Energy Forum

January 21, 2010 • Houston, Texas USA

Presented by Jim Burkhard, Managing Director, Global

Oil Group, IHS CERA

CONFIDENTIAL
© 2009, All rights reserved, Cambridge Energy Research Associates, Inc., 55 Cambridge Parkway, Cambridge, Massachusetts 02142
No portion of this presentation may be reproduced, reused or otherwise distributed in any form without prior written consent.
 1

Crude Oil Price Trends 1970 – 2009

Annual averageAnnual
price forOilWTI
Average Crude in nominal
Prices In Nominal and Real US Dollars: and
1970 - 2009real 2008 US dollars

$125
Real (2008 US$)
The
Nominal US$ "Great
Recession
$100 Industry
costs
soar

Annual Little spare capacity,

Average $75 geopolitical worries
Price per Iranian
Barrel revolution
and Iran-Iraq
war
Iraq
$50 invades
Kuwait

Strong world oil

demand growth
$25

Oil embargo 1986 price collapse Asian financial crisis

$-
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Sources: IHS CERA, Platt’s. Real 2008 US$ figures based on GDP deflator from the US Bureau of Economic Analysis.
© 2009, Cambridge Energy Research Associates, Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
 2

Oil Consumption and Per Capita GDP

Will China and India approach developed country levels?

United States

China

Non-OECD
India

Source: IHS Cambridge Energy Research Associate, International Energy Agency, UN population statistics.
IHS_Energy Scenarios_120409
CONFIDENTIAL - Copyright © 2009 IHS Inc. All Rights Reserved
 3

Significant Investment Needed to Offset Oil

Field Production Decline
120
2008 oil production
High case world oil demand
Low case world oil demand
100

80 Amount of new oil production

relative to 2008 needed to
Million satisfy low and high case 76 mbd 90 mbd
projections for world oil
Barrels 60 demand in 2035
per Day

40

Existing production from the world's

20 oil fields declines at an annual
average of 4.5 percent annually.

0
2008 2012 2016 2020 2024 2028 2032

Source: IHS Cambridge Energy Research Associates.

CONFIDENTIAL - Copyright © 2009 IHS Inc. All Rights Reserved

 4

Oil and Gas Development Costs Remain High

CERA Forecast 3Q09
240
Upstream Index 223
Upstream Offshore 210
Index 210
200 Upstream Deepwater
Index 187
Cost Index (2000=100)

Upstream Land Index

176
Downstream Index

160

120

80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: IHS Cambridge Energy Research Associates.

© 2009, Cambridge Energy Research Associates, Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
 5

World Oil Demand: Flat OECD Demand and

Rising non-OECD Demand
100
90
80
70
Non-OECD
Million 60
Barrels
50
per
Day 40

30
20 OECD

10
0
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: IHS Cambridge Energy Research Associates and IEA.
SourExcludes
Note: ce: IHS Cambridge
demand for biofuels. Energy Research Associates and IEA.
90904-21
Note : Exclu des demand for biofuels.
© 2009, Cambridge Energy Research Associates, Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
90 904-21
 6

Iraq: Huge Prize at Stake for International Oil

Companies Field Winner Plateau Net Fee per
Production Addition bbl
(Mb/day) (Mb/day)

Rumalia BP, CNPC 2.85 1.85 $2.00

Qayara
15 Bai Hassan West XOM, Shell 2.325 2.045 $1.90
14 Kirkuk Qurna 1
16 Gullabat & Khashm al-Ahmar
Najma Zubair Eni, Oxy, 1.125 0.90 $2.00
18
Nauduman Sinopec,
17 Mansouriyah Kogas
Akkas 2
1. Baghdad Majnoun Shell, 1.8 1.75 $1.39
3 Petronas
Gharraf
Badra
13 Abu Ghirab Halfaya CNPC, 0.535 0.5 $1.40
10
4 Buzurgan Petronas,
11
Jabal Fauqi Total
9 5 Halfaya
Majnoon Qayara Sonangol 0.12 0.12 $5.00
12 7
Marjan
Zubair West Lukoil, Statoil 1.8 1.8 $1.15
Al Kifl 8 6
W Kifl
Siba
Qurna 2
Rumaila Badra Gazprom, 0.17 0.17 $5.50
TPAO,
W Qrna2 W Qrna1
Kogas,
Petronas

Gharaf Petronas, 0.23 0.23 $1.49

Japex

Najima Sonangol 0.11 0.11 $6.00

TOTAL 11.065 9.475

© 2009, Cambridge Energy Research Associates, Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Expanding Organizational Models
REMOTE REMOTE
REMOTE OPERATIONS ONSITE INTERNAL EXTERNAL
CENTER RESOURCES RESOURCES RESOURCES

JV Partners
Maintenance Staff,
Equipment Data & Models Drilling
Experts
Industry
Drilling Drilling Staff Databases
& Models
Maintenance
Production Specialized Niche
& Reservoir Engineering Service
Production Engineering, (e.g., subsea) Firms
Optimization G&G

OEM
Logistics Resources
Production and
Optimization Data
Production Data Experts
& Models E&P Service
Company
Expertise

Source: IHS Cambridge Energy Research Associates.

 8

Potential Growth in World Liquids

Productive Capacity

120
120 Non OPEC YTF

100 100 Other OPEC

Yet to find
Fields under
Total
appraisal
OPEC
80 80
Gulf OPEC
Million
Barrels 60
60 Fields in Fields under
per mbd
Day production
Other Non OPEC GTL in development
+ BioFuels

40 Asia Pacific 2009

Africa
40
Latin America
Non-
20 W Europe Canada OPEC
20 Nontraditionals
USA
0 Eurasia
0 2000 2005 2010 2015 2020 2025 2030
2000 2005 2010 2015 2020 2025 2030

Source: IHS Cambridge Energy Research Associates.

IHS_Energy Scenarios_120409
CONFIDENTIAL - Copyright © 2009 IHS Inc. All Rights Reserved
 9

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© 2009, Cambridge Energy Research Associates, Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
If you have any questions about this presentation or
CERA in general, please feel free to contact
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mmaddox@cera.com

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