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Oil & Gas Project Spending Outlook – 2015-16
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Industrial Info Resources
A provider of market intelligence, news, data, analysis and insights on trends anddevelopments within the industrial infrastructure market.
• Since 1983, we have been helping companies like yours with the most accurate and timelyproject and plant spending intelligence, based on the highest quality-assurance standards inthe industry. We provide fact-based insights on the market combined with the “1 ft view” ofactionable data on project opportunities.
We excel at Knowledge Management to Provide Value for Customers
• IIR provides value for our customers by reducing the complexity of gathering, confirming,disseminating and updating information about industrial plants and their spending activitiesaround the world so that they can make timely and intelligent business decisions.
• Ed Lewis, founder, president and CEO directs global strategy and organic growth initiatives andhas developed a research framework that provides a single global methodology supported byIndustry Research VPs with direct experience of industrial processes and technologies.
Data Analytics Insights
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Strategy
New Product Development
Go-To-Market Planning
Tactical Marketing
Sales Lead Management
Sales Lead Generation
Market Opportunities
Market Forecasting:• Capital & MRO spending projections &
forecasts: Industries, Equipment & Services and Labor.
Market Insights:• Customized market research projects
leveraging IIR Plant and Project data.
Target Marketing Solutions: • Global, 12 Industries• Niche Databases• Corporations, Assets, Plants, Units,
Equipment Profiles, Projects and Service Agreements
Multi Media Campaigns:• New product Releases, Client Webcasts/
Podcasts, Target Email Campaigns.
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Company Activities
IIR ServicePropositions
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Chemical Processing All Plants with 25+ employeesor $25 mn annual sales.
Metals & MineralsMines, Processing Plants, & Mills with 50+ Employees or $25 mn annual sales.
Pulp, Paper & WoodAll Pulp, Paper and Wood Mills, Saw Mills, Lumber Operations and Converting Plants.
Food & BeverageProcessing & Distribution Facilities with 50+ employees or $25 mn sales. Desalination Plants & Sugar Mills
12 Industries 44 Industry Sectors 1,070 SIC Codes 17,960 Product SIC Codes
Scope of Today’s Presentation
13,655 Active Projects
17,450 Active Projects 3,875 Active ProjectsNorth & South America,
Europe
Pharmaceutical & BiotechAll Major Processing Plants, Pilot Scale Plants, Distribution and R&D Laboratories.
1,413 Active Projects
Industrial ManufacturingHeavy Manufacturing of Durable/Non-Durable Goods, Transportation and Major Distribution Centers.
3,280 Active Projects
1,210 Active ProjectsNorth & South America,
Europe
Power (Generation)Generating Stations 5MW and greater, Substations and major transmission lines in NA only
39,167 Active Projects
Terminals (Bulk Oil, Gas & Chemical Storage)Independent bulk terminals with 20,000 BBL or 500 MM ft storage. Includes LNG Import Terminals
Production (Onshore O&G Processing)Processing Plants with min 5MM cubic ft/day or 10 tons/day sulfur removal. LNG Export Terminals & Shale Gas Processing
2,405 Active Projects
3,544 Active Projects
Petroleum RefiningPetroleum refineries, lube oil plants and coke calcinations plants.
5, 293 Active Projects
3,058 Active ProjectsPipelines (Oil, Gas & Refined Products)Interstate and Intrastate pipelines and stations
with a minimum length of 50 miles.
Global Research Multi Region/Niche Research
Alternative FuelsEthanol, Biodiesel and Coal Gasification with min output of 5 m/gal/yr. Includes Biofuel Processing
940 Active Projects
North &
South America
Oceania
O&G OffshoreProduction Platforms, Storage & TerminalsOffshore Pipelines Floating & Stationary Power
1,192 Active Projects
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• Global outlook across O&G supply chain
• LNG Deep Dive
• APAC Review
MethodologySince 1983 providing data, analysis and insights on trends and developments within the industrial infrastructure market
Grassroot Expansions/Unit Additions In-plant Capital MRO
Total Investment Value
Project Status (Planning, Engineering, Under Construction)
Project Milestones (AFE, RFQ, Bid Doc, KO, Completion)
Project Scope & Key Equipment Needs
Key Personnel Contacts – Plant Owners Plant Operators & Contractors
Our global research teams identify and monitor projectspending activity throughout the life-cycle of an industrialasset.
All our data is sourced and validated directly from PlantOwners, Contractors and Equipment Vendors.
Probability Factor assigned to each major capex project.
Maintenance, Repairs & Overhaul Spending ($1mn and above)
Annual MRO activity Outages/Turnarounds
$
$
$ $ $ $ $
$
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1
Latin America8,906 Projects$1.23 Trillion18% Growth
Africa2,804 Projects$695 Billion67% Growth
Oceania2,401 Projects$721 Billion33% Growth
Asia37,547 Projects$6.67 Trillion37% Growth
Europe14,719 Projects$2.15 Trillion34% Growth
North America20,190 Projects$2.95 Trillion15% Growth
Worldwide Coverage Represents a 29% increase (December 2013 to December 2014).Flags Represent IIR’s World Regional Research Offices
Our Global Reach – Across 12 Industries86,432 Projects in Progress worth $13.8 trillion
Based on active projects with future completion dates and QC’d in the last 12 months
Latin America10,664 Projects$1.3 Trillion17% Growth
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Global Oil & Gas Project OutlookTopline Investment Picture
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1,802 Under Construction Projects
>$552bn TIV
Total Active Projects4,981 Projects
>$1.7 trillion TIV
$2.6bn
$2.8bn
$5.5bn
$8.6bn
$10.2bn
$13.6bn
$19.6bn
$27.2bn
$28.8bn
$31bn
$46bn
$53.5bn
$68.6bn
$107bn
$126bn
Southern Europe
Eastern Europe
Western Europe
South Asia
North Africa
Central Asia
East Asia
Southeast Asia
Latin America
Rest of Africa
Northern Europe
Russia
North America
Middle East
Oceania
All Active ProjectsUnder ConstructionOnshore & Offshore
USA
$142 bn821 projects
Latin America
$63 bn648 projects
Oceania
$68 bn648 projects
Southeast Asia
$xx bn250 projects
Russia
$52 bn71 projects
Africa
$88bn257 projects
Middle East
$77 bn206 projects
South Asia
$19 bn239 projects
Central Asia
$17.7 bn23 projects
East Asia
$26 bn79 projects
24 Month Active Pipeline3,830 Projects
>$885 billion TIV
Europe
$129bn758 projects
Current Active Project PipelineProjects at Planning & Engineering Stages
Construction Start in 2015 - 2016
China
$15.6 bn50 projects
Indonesia
$xx bn54 projects
Source: IIR O&GProject Database
Canada
$130 bn353 projects
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Gas Infrastructure Investment OutlookGas Investments as a Share of Total O&G Spending
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Crude/Liquids
Crude/ Liquids
Crude /Liquids
$1.27 trillion2,576 projects
$330bn2,421 projects
O&G Production
O&G Pipelines
O&G Terminals
Gas
20
15
-2
03
0
$178bn
$93bn
$67bn $x0bn $47bn $47bn $x3bn$25bn $17bn $16bn $16bn
$1.3bn
Natural Gas Related Investment OutlookActive Projects
Production, Terminals & PipelinesConstruction Start 2015 / 201665%
72%98% 86% 56% 91% 56%
39%
97% 62% 82%43%
Gas Gas
$207bn1,740
$148bn1,855 projects
$113bn855
Gas
20
15
/16
$589bn1,347
Gas
$610bn of Gas related Capex investment in 2015-16
Power Generation
Chemicals Processing
Industrial/ Manufacturing
Gas Demand Drivers
Asia
Gas Supply Drivers
Historically high crude pricing /
indexing
Shale/Unconventional
supply boom
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Natural Gas Prices2005 – March 2015
World Bank
Series1 Series2 Series3
Source: World Bank Pink Sheets
LNG Market Competitive LandscapeIncreasing LNG Supply & Slower Gas demand Growth Leading to a Buyer’s Market
US Lake Charles
$3.5
UK$9.3
Belgium$8.9
India$14.3
Mexico$14
Brazil$14.2
Argentina$14.5
Japan$15
Korea$14.8
China$14.1
Spain$12.1
$7.16
Worldwide LNG Landed Prices Oct 2014Versus FERC March 2015 estimates
U$/MMBtu
US Cove Point
$2.8
Source: US FERC
$2.7
$2.36
$6.63
$6.51
$6.92
$7.2
$6.9
$6.6
$7
$7
$6.79
Japan LNGEuropeanNat Gas
US Nat Gas
Variable Trending
Divergent
• Falling crude prices resulting in falling LNG prices.
• Coupled with slowing demand growth, Japan swing back to nuclear, China/Russia pipeline …..but still decent in Asia.
• Capex cost escalation in Australian.
• Canadian LNG may be at risk need $110 BBL crude to be profitable.
US shale gas still providing some competitiveadvantage supported by relatively low capex costsand existing infrastructure … but the window maybe closing.
9
New LNG Capacity OutlookThe rush is on….........
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Current LNG GlobalExport
New NA Production
New AustralianProduction
250 MMT
125 MMT
77 MMT
34 MMT
24 MMT
23.9 MMT
23.8 MMT
Qatar
Indonesia
Australia
Malaysia
Algeria
21.9 MMT Nigeria
???
Other NewProduction
• Australia expected to lead growth in new liquefaction capacity in the near term –57 MMT Under Construction further 67 MMT being proposed.
• North America momentum continues to pick up with 335 MMT planned with 135 MMT as high probability.
335 MMT
335 MMT Volume of New LNG Capacity being developed
in North America
High Probability135 MMT to come online
15.5 MMT Trinidad70 MMT Others
Top 5 account for 2/3rds of global liquefaction capacity
10
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
LNG Global Investment WavesWhat’s the Timing of the Next Wave?
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Active LNG Projects$853bn still active
$690bn due to KO in 2015
$542bn LNG Grassroot Completions
$852bn Currently Active LNG Projects Based Completion Date
Major LNG wave of completing projects bringing new production capacity online
Peak in LNG Capex investment completing
• Australia, North America to lead onshore and offshore liquefaction capacity (volume & capex).
• Australasia, Africa and Middle East will account for 60% of total forecasted liquefaction capacity as planned.
• North America could become the largest exporter of gas within five years.
• Asia will lead and mainly made up of regasification / import infrastructure capex.
• Asia’s fastest capex growth rate from liquefaction /export capex.
• Western Europe also investing in import capacity to offset winter supply disruption.
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Australia LNG Wave
North America LNG Wave
Australia LNG Wave #2 ?
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2015 2016 2017 2018 2019 2020 2021 2022 2023
Active LNG Investment OutlookConstruction Start 2015 – 2035
Top 10 LNG Countries ($mns > $10bn)
LNG Investment WavesWho is Driving This Wave of Investment?
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$192bn - USA$121bn Grassroot (62%)
$180bn - Australia$82bn Grassroot (46%)
$88.7bn - Canada$56bn Grassroot (63%)
$63.7bn - Russia$30bn Grassroot (47%)
$86.8bn $97bn $117bn $69bn
Top10 LNG Markets = $616bn – Total Capex ~ $351bn – Grassroot
$23bn - Indonesia$11bn Grassroot (48%)
$16bn - Papua New Guinea$9bn Grassroot
$14.6bn - China$9.6bn Grassroot
$14.1bn - Mozambique$10.1bn Grassroot
$12.5bn - Nigeria$11.4bn Grassroot
$10bn - Tanzania$10bn Grassroot
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Capex move right?
Project Fallout RatesBiggest Gas Project Markets Also Experiencing Project fallout
$9.6bn $12bn $10bn$3bn
$55bn
$92bn
$65bn
$43bn
$4.6bn $4.7bn $3.3bn $1.2bn
2013 2014 2015 2016
Global Project Fallout TrendsOn Hold / Cancelled
Production, Terminals, Pipelines
Crude Gas Refined Product
Fallout Rate of the Top 15 Biggest Gas Project MarketsProjects with project KO in 2015-16
$mns Active Cancelled On-Hold Fallout All Statuses % Fallout
USA xx6,034 22,638 5,327 27,965 xxx,999 18%Australia xx,311 20,628 8,264 28,892 xx,202 32%
Canada xx,196 5,935 1,035 6,970 xx,165 12%
Russia xx,358 100 190 290 xx,648 1%Indonesia xx,538 506 275 781 xx,319 2%
Norway xx,000 64 6,641 6,705 xx,705 19%
Turkey xx,040 6,900 6,900 18,940 36%
Nigeria xx,624 16,624 0%Azerbaijan xx,510 16,510 0%
India xx,062 408 408 xx,470 3%China xx,432 326 326 xx,759 2%
Mozambique X,590 8,000 8,000 13,590 59%
UK xx,796 250 250 xx,046 2%Iran xx,585 450 450 12,035 4%
Israel xx,430 11,430 0%
Total xx1,504 57,021 30,916 87,937 x59,441 Gas Project
Total$622bn $69bn $39bn $108bn $730bn
$108bn
Fallout Rate Drivers – Crude
• OPEC protecting market share.
• IEA 2015 global demand forecast to grow 0.9 mb/d to 93.4 mb/d.
• 2014 global production growth was 0.6 mb/d.
• Drilling budgets slashed / drill counts decline.
• Oil prices recent rebounded off a 6 yr. low
Fallout Rate Drivers – Gas
• Lower gas demand growth rate from Asia contributed to the crash in LNG spot prices last year.
• 5% LNG demand out to 2020 (Goldman).
• Further volatility off falling crude prices.
• NA cost advantage eroding
13
Pan Regional Oceania & SE Asia Outlook 2015-16Almost $138bn worth of Capex Still Being Planned and Developed…. Gas… Gas…Gas
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14
O&G Production
O&G Pipelines
O&G Terminals
Crude Gas Crude Gas Crude GasRefined Product
Country Total
Australia $291mn $54.8bn $134mn $6.2bn $591mn $62bn
Indonesia $800mn $x4.6bn $503mn $3.2bn $2bn $x.8bn $45mn $44bn
Malaysia $x05mn $3.6bn $14mn $x34mn $1bn $3.4bn $x93mn $9.8bn
Papua New Guinea
$5.8bn $436mn $15mn $6.3bn
Philippines $335mn $x.9bn $x53mn $5bn
Vietnam $1.3bn $x20mn $340mn $x.4bn $1.3bn $4.6bn
Singapore $1.4bn $959mn $2.4bn
Thailand $x00mn $41mn $430mn $1.3bn $26mn $2.1bn
Myanmar (Burma)
$x20mn $x00mn $100mn $360mn $1bn
Brunei $500mn $500mn
New Zealand $63mn $6mn $133mn $18mn $221mn
SegmentTotal
$1.9bn $101bn $750mn $11.5bn $3.3bn $14.3bn $4.7bn $138bn
Spending Drivers:
• Domestic demand rising for powerand refined products.
• Appetite to switch to a cheaperfuel source is on the rise.
• Clean Fuel requirements.
• Government mandates for renewable energy.
• Government subsidiesdecreasing for fuels
Drilling & Commercial Production &
associated infrastructurerequired to meet demand
$5.3bn
$57bn
$87bn
$48bn
$xx.5bn$xxbn
$xxbn $x.xbn $xxxmn $xxxmn
2015 2016 2017 2018 2019 2020 2021 2022 2023 2031
Active ProjectsAustralia
Construction Kick off Year ($mns)
Australia Capex Project Spending TrendHealthy Forward Pipeline ….but it is constantly changing and being revised
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Data Analysis as at March 8th4 weeks after previous data
analysis for this presentation.
15
• Continued development of subsea and coal seam gas production to fuel LNG plans and power plant fuel conversions.
• Build out of pipeline infrastructure to move product into consumption areas.
• Expansion/Refurbishment of crude oil and refined products terminals due to refinery closures.
Production/Drilling Phase
LNG liquefaction phase
• Current planned (LNG liquefaction) projects expected to shift to the right.
• Expectation of 2018-2020 could be the next LNG capex wave.
Arrow LNG – KO in 2015$12.4bn – CANCELLED
Gorgon Phase II LNG$8.9bn – SCHEDULE SHIFT TO Q2 2018
Ichthys Phase III$10bn - SCHEDULE RECHECK
NOW KO 2027
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Contact the Presenter
There is anything you wish top discuss about the presentation please feel free to contact one of the presenters
Chris Paschall VP Global Oil & Gas Global
Research
Shaheen Chohan VP Global Analytics
