Transcript Meredith Miller Presentation

Click to edit Master title style
ENERGY EXPORTS SUMMIT
A REVOLUTION IN ASIA-PACIFIC
ENERGY MARKETS
Washington, D.C. | May 6, 2015
Meredith Miller
Senior Vice President
The National Bureau of Asian Research (NBR)
is a nonprofit, nonpartisan research institution
dedicated to informing and strengthening policy.
NBR conducts advanced independent research
on strategic, political, economic, globalization,
health, and energy issues affecting
U.S. relations with Asia.
The Opportunity of Asian Markets
Global Perspective:
Sources: BP Energy Outlook 2035; OECD/IEA World Energy Outlook 2014
Developing Asia will account for 65% of global energy demand growth –
four times the combined growth of Latin America and Africa
Asia’s Energy Mix (Regional Level)
Source: “Energy Outlook for Asia and the Pacific 2010-2035,” Asian
Development Bank. October 14, 2014.
Country and Sub-Regional Views
China
SE Asia
Japan
Sources: BP Energy Outlook 2035; OECD/IEA World Energy Outlook Special Report: Southeast Asia Energy Outlook; Nature
While China is looking to shift its mix from coal to gas, SE Asia will see the reverse.
Meanwhile: uncertainty in Japan continues to impact markets.
WHAT IS AT STAKE?
• Increasing access to electricity and to
energy overall is vital to sustaining the
region’s economic growth.
• Yet if current trends continue, the
Asia-Pacific’s CO2 emissions are
likely to more than triple by 2050
(ADB).
• Countries are looking for supplies that
best provide for three core needs –
Source: “Energy Outlook for Asia and the Pacific 2010-2035,” ADB. October 14, 2014.
economic security,
environmental security, and
geopolitical security.
“Climate change will cut agricultural crop yields
and hike food prices – every 10% rise will push
another 64 million Asians into poverty.”
Asia’s Search for Energy Supply Security
• Declining energy self-sufficiency is a regional
trend. By 2020, Asia will be a net importer of
fossil fuels.
• Japan, South Korea, and Taiwan are already
100% import dependent for oil, gas, and coal.
• Indonesia is seeing domestic demand rise steadily,
and is looking for strategies to sustain the role of
energy in promoting its economic growth.
• China is a top global producer of both oil and gas,
yet rising demand means that import dependence
will climb through 2035 (oil: 80%; gas: 40%).
• Australia, Russia, others continue as regional
suppliers, yet overall demand pushes Asian
consumers to also look outside of the region.
Source: BP Energy Outlook 2035
EVALUATING ENERGY OPPORTUNITIES
Index for evaluating Energy Security
A View from Japan’s Ministry of Economy, Trade and
Industry, Agency for Natural Resources and Energy
• The degree to which stable fuel procurement is possible
in the face of contingent/unforeseen risks that impact
supplies
• The extent to which an environment is in place that
allows the fuel to be stably supplied
• Specific variables:
•
•
•
•
Past production record of supplier country
Conflict frequency of supplier country
Disruption risk of transport routes
Overall portfolio of the importing country diversification of suppliers, transportation routes and
fuel mix
KEY PRIORITIES & QUESTIONS FOR ASIA
Strengthening Markets for
Energy and Environmental Security
• Expand energy access to the 700 million people in Asia
still without electricity
• Develop and strengthen infrastructure to avoid energy
becoming a bottleneck to economic growth
• Buffer against geopolitical and market shocks that can
disrupt access to supplies or increase price volatility
• Address rising environmental concerns with air quality and
pollution
• Pairing technology and policy to improve energy
consumption
What role can U.S. exports play in supporting these
goals?
What Role Might the U.S. Play in Meeting Asia’s Demand?
Asian Investments in U.S. Energy Resources
U.S. Energy Revolution:
A Major Reversal in a 40+ Year Energy Narrative
Selected transactions greater than $1 billion, 2008-2012
• Since 2006 hydraulic fracturing and horizontal drilling
technology has reversed the historical decline in U.S. oil and
gas production.
• Key factors fostered the necessary environment for this
breakthrough:
• Tight markets
• Innovation from industry
• Favorable investment and regulatory climate
• Infrastructure
• U.S. oil import dependence peaked in 2005; China
surpassed U.S. as largest importer in 2013.
Source: The National Bureau of Asian Research
GROWING SELF-SUFFICIENCY IN OIL
U.S. oil production has hit a 40+ year high,
and crude inventories are the highest on record
Total U.S. energy production & consumption in
the Reference case, 1980-2040 (quadrillion Btu)
U.S. net petroleum product imports in four cases,
2005-40 (million barrels per day)
Sources: U.S. Energy Information Administration, The Wall Street Journal.
AN EVEN MORE DRAMATIC STORY FOR GAS
• The United States has emerged as
the top producer of natural gas.
• Anticipated to maintain this
distinction for at least the next 20
years.
• By 2035, shale gas supplies will
account for 63% of North
American gas output, up from 2%
ten years ago (BP).
• Estimates continue to be revised up
Sources: U.S. Energy Information Administration.
A REVOLUTION WITH KEY IMPLICATIONS FOR COAL
• The United States is the second largest
producer of coal globally, and has the largest
reserves in the world.
• Cheap, abundant gas has led to a decrease in
U.S. consumption of coal, freeing up supplies
in global markets.
• Meanwhile, U.S. coal producers are also
looking for new markets.
RETHINKING U.S. ENERGY POLICIES
New Considerations for:
• Achieving reductions in CO2
emissions
• Assessing how big a role the United
States will play as an important
supplier
•
•
•
•
Crude oil export ban
LNG National Interest determination
Social license issues
Climate change policy
• Revitalizing global commitments to
energy and environmental security
Source: OECD/IEA World Energy Investment Outlook 2014
Stay informed with analysis from our network of experts
www.NBR.org
Join the NBR community
Twitter:
@NBRnews
Facebook:
facebook.com/NBRnews
Current Status of U.S. LNG Exports
• By the end of 2015 or early
2016, the United States will
begin exporting
• First batch will be to India,
Japan; other markets expected
to emerge
• Important consideration for
U.S. policy: Asian consumers
are combining their LNG
purchases, forming pacts for
securing supply
Source: U.S. Federal Energy Regulatory Commission