The New Geopolitics of Energy: Challenges and Opportunities
July 24, 2014
1
Carlos Pascual Special Envoy and Coordinator for International Energy Affairs
U.S. Department of State Bureau of Energy Resources
0
100
200
300
400
500
600
700
800
1993 1997 2001 2005 2009 2013
Gas Supply and Demand (bcm)
Consumption
Shale Gas
Tight Gas
Lower 48 Offshore Conventional
Coalbed Methane Alaska
Lower 48 Onshore Conventional
U.S. Oil and Gas Production Growth
Source: EIA, Short Term Energy Outlook (2014)
Biofuels
Tight Oil Other Onshore
Offshore
Alaska Other
0
5
10
15
20
25
1994 1999 2004 2009 2014
2006 Imports = 60%
2014 Imports = >30%
Liquids Supply and Demand (mbd)
Consumption
U.S. CO2 emissions in 2012 dip as gas beats coal
Source: EIA Monthly, June 2014
U.S. Carbon Dioxide Emissions in the Electric Power Sector, 2004-2013
Mill
ion
met
ric
ton
s o
f C
O2
0
500
1000
1500
2000
25001
97
3
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
Coal Natural Gas
Source: EIA 2013 IEO, IEA 2014 WEIO
World Energy Consumption Forecast
4
0
100
200
300
400
500
600
700
800
900
2005 2015 2025 2035
TotalNon-OECDTotalOECD
Power investment in Asia (GW)
Ch
ina
Ind
ia
SE A
sia
EU USA
Mid
dle
Ea
st
Bra
zil
Jap
an
1600 1200 800 400 0 -400
Total Primary Energy (Quads)
0
5
10
15
20
25
30
35
40
45
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Energy Demand Energy Supply Energy Exports
Fossil Fuel Subsidies Distorting Signals for Demand and Supply
Source: BP Statistical Review 2014, BP Outlook 2035, 2014, : IEA World Energy Outlook 2013
Fossil fuel subsidies by fuel (USD billion) Fossil fuel production and exports in the Middle East (mboe/d)
10 20 30 40 50 60 70 80 90
0
5
10
15
20
25
30
35
40
45
50
0
10
20
30
40
50
60
70
80
90
100
1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013
Nu
mb
er
of
Pro
du
cin
g C
ou
ntr
ies
Mill
ion
Bar
rels
of
Oil
pe
r D
ay
OPEC and Non-OPEC Shares of Production
Source: BP Stat Review 2014.
Note: Prior to 1989, Russia, Turkmenistan, Azerbaijan, Uzbekistan were counted together as the Soviet Union
Oil production is diversifying
44 Producers in 2013
30 Producers in 1973
Non-OPEC
OPEC
Number of Suppliers
49%
51%
58%
42%
Disruptions at Historic Highs
Source: EIA
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Unplanned Global Oil Supply Disruptions (mbd)
Iran
Libya
Iraq
Nigeria
Syria
Yemen
Sudan/S.Sudan
Other Non-OPEC
Source: IEA 2013 WEO, New Policies Scenario
Iraq Leads Global Oil Production Growth
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Saudi Arabia
United States
Kazakhstan
Canada
Brazil
Iraq
mbd
Major contributions to global oil supply growth to 2035
32%
24%
44% Non-OPEC
Rest of OPEC
Iraq
Sub-Saharan Africa energy access and hydrocarbons production
Source: EIA, IEA WEO 2013
Nigeria
Angola
Mozambique
Tanzania
Oil Production (kbd) Gas Reserves (tcm) Electrification Rate
2013 2008 2013
5.1 5.1
0.27 0.37
0 2.8
0 0.57
48%
38%
20%
15%
2,370
1,830
0
0
0
20
40
60
80
100
120
140
160
180
Qatar Australia U.S. Canada
Bill
ion
Cu
bic
Met
ers
/ Y
ear
Additional LNG Export Capacity by 2020
Source: PIRA, BNEF, University of Calgary
Operational Under Construction Licensed Proposed
Diverging Gas Prices, Spot Deals Lead Growing LNG Trade
Source: EIA, PIRA, GIIGNL. Spot cargos are defined as deals that are done for four years or less.
Price ($/mmbtu) LNG Imports (bcm)
0
2
4
6
8
10
12
14
16
18
0
50
100
150
200
250
300Total Spot
Total Long-Term
HH
NBP
Asia - AverageSpot Price
Estimated Present Price
Europe gas imports by pipeline and LNG
Source: Gas Infrastructure Europe and IEA Medium-Term Gas Market Report 2010,2014
Trinidad and Tobago, others
LNG Terminals • Existing or Under Construction • Proposed Gas Flows • Pipeline • LNG
2010 2013 2019
bcm
OECD Europe Demand
567 504 504
LNG Imports 86.2 45.8 68
Pipeline Imports 301.2 296.3 270
Global Power Sector Investments, Cumulative (2014-2035)
More than 40% of global investment in the power sector goes to transmission and distribution. Nearly two-thirds of investment is in the non-OECD to meet growing demand.
New Investment in Electricity Generation, 2014-2035 ($ billion)
OECD Non-OECD World
Coal 367 1,162 1,528
Gas 471 583 1,054
Oil 14 38 295
Total Fossil 852 1,783 2,635
Total Nuclear 389 672 1,061
Bio-energy 371 268 639
Hydro 303 1,204 1,507
Wind 1,112 876 1,989
Solar PV 720 556 1,276
Other* 230 218 446
Total Renewable 2,736 3,122 5,857
TOTAL GENERATION 3,977 5,577 9,553
Source: IEA, WEO 2014, New Policies Scenario * Includes geothermal, concentrated solar, and marine
58% 11%
31%
Power:$16.4 Trillion
Generation
Transmission
Distribution
Global growth in coal demand from 2013 to 2018 is dominated by Asia
China 58%
India 20%
ASEAN 14%
Korea 3% Japan
2% ROW 3%
Source: IEA Medium Term Coal Report, 2013
Mtce Projections of coal demand 2013-2018
Growth in global in coal demand 2013-2018 (817Mtce)
Levelized Cost of Energy: Capital Costs, O&M, Performance and Fuel
Source: OpenEI, NREL, DOE
$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60
Wind-Onshore
Solar- PV
Hydro
Gas -CCGT
Coal- IGCC
Nuclear
USD/kWh
USD million
+1 year
+33%
20%
50 USD/MWh
-10%
26%
120 USD/MWh
-3 500 -3 000 -2 500 -2 000 -1 500 -1 000 - 500 0 500 1 000
Construction duration
Construction cost
Load factor
Electricity price
Wind- Onshore
2011 2030
2.7 Billion
Investment for Access
$1.5 Trillion
$48 Billion
1.3 Billion
People Investment
Source: IEA
600 Million
(3% of total investment needed by 2030)
De-risking Energy Access
INVESTMENT FUNDS
LARGE PROJECTS
LOCAL INTERMEDIARIES (e.g., BANKS)
SMALL PROJECTS
National
Global/Regional Currency Risk
PPAs
Capitalization Capacity
Repayment Risk
Quality Risk Utilities
Dynamic Global Energy Landscape
U.S. Energy Revolution
Structure of Demand
Diversity in Oil Supply
Energy Finance and
Poverty
Competition in Natural
Gas
Fuel Mix and Climate
Change