YTD World Oil Consumption

Todays World Oil Consumption

World Oil Consumption Since You Arrived

Market

Continued geopolitical instability and ongoing global climate negotiations are witness to the dynamic nature of energy markets.  In a time of great changes, understanding the implications of a shifting energy landscape is vital for investors.  However, as supply and demand realign, Intrepid Drilling, along with major energy institutions foresee a return to rising and generally stable prices coupled with new and expanding markets.

The International Energy Agency projects that world energy consumption will increase 50 percent by 2040. Much of the growth in energy consumption occurs outside the Organization for Economic Cooperation and Development (OECD), where demand is driven by strong, long-term economic growth. Energy use in non-OECD countries increases by 90 percent; in OECD countries, the increase in 17 percent. Fossil fuels continue to supply almost 80 percent of world energy use through 2040, with natural gas being the fastest growing fossil fuel in the outlook. Global natural gas consumption increases by 1.7 percent per year. Crude oil consumption worldwide is averaging 99.84 million barrels a day in 2019, about 120,000 BOPD more than its previous forecast.

Oil price forecast

The U.S. Energy Information Administration on Wednesday lowered its 2019 and 2020 price forecasts on West Texas Intermediate and Brent crude oil prices in its monthly energy outlook report.  The government agency forecast an average WTI price of $56.31 a barrel for this year, down 2.7% from the forecast issued in August for 2020, it forecast $56.50, down 5% from the previous forecast.  The EIA also cut its average Brent forecast by 2.7% to $63.39 this year and by 4.6% to $62.00 next year.  The EIA lowered the domestic crude output forecast by 0.2% to 12.4 million barrels a day this year.  It sees average 2020 output at 13.23 million barrels a day, down 0.2%.

Natural gas forecast

The U.S. Energy Information EIA forecasts that U.S. dry natural gas production will average 91.4 billion cubic feet per day (Bcf/d) in 2019, up 8.0 Bcf/d from 2018.  EIA expects monthly average natural gas production to grow in late 2019 and then decline slightly during the first quarter of 2020 as the lagged effect of low prices in the second half of 2019 reduces natural gas-directed drilling.  However, EIA forecasts that growth will resume in the second quarter of 2020, and natural gas production in 2020 will average 93.2 Bcf/d.

Summary

A well-known Malthusian from Shell Oil and the U.S Geological Society, Dr. M. King Hubbert (1903-1989) famously predicted U.S. Crude production to peak about 1970. Then in 1972, his mathematic model adjusted the date to between 2001 and 2004. Yet, production potential continues to exceed its demand and is restricted only by price.  Intrepid Drilling reduces exposure to commonly price wings by not carrying debt in drilling programs, and pursuing comparatively low cost, high pressure, high gravity proven reserves.  Hence, Intrepid Drilling forecasts a net profit on our current Texas and Louisiana projects.  Oil and natural gas producers have evolved and operated in a more streamlined, efficient manner.  Intrepid Drilling looks forward to drilling in the current market due to rising commodity prices and to a windfall in the for of significantly reduced drilling costs on projects due to available labor and equipment.

Though enthusiastic, Intrepid Drilling encourages all investors to be knowledgeable of the economics and risks inherent to the energy market.

Sources:

  • United States Department of Energy (Energy Information Agency)
  • International Energy Agency (Paris, France)
  • LNG  Industry
  • Exxon Mobile
  • Barclays
  • Mordor Intellignece

 

Alternative Fuels

Natural Gas

LiquifiedNatural Gas (LNG) is cleaner than coal, more reliable than wind and solar, and cheaper than all three.  Production of this unique energy resource has skyrocketed since the U.S. shale boom took off nearly a decade ago.  And yet, the world still wants more.  Demand has risen as so steeply over the last few years the it's reached record highs within the U.S.  All over the world, countries are looking to replace dirty oil and expensive nuclear energy with cleaner, abundant natural gas.  It's now traveling via pipeline and over the ocean to some of the world's biggest energy consumers, including China, India, Japan and the U.K.  Still, we are only seeing the beginning of this clean energy revolution.

For example, Tellurian Inc. (Tellurian) (NASDAQ:  TELL) and Petronet LNG Limited INDIA (PLL) announced the two companies have signed a Memorandum of Understanding (MOU) wherein Petronet and its affiliates intend to negotiate the purchase of up to five million tons per annum (5 mtpa) of liquified natural gas (LNG) from Driftwood, concurrent with an equity investment.  The Driftwood project includes natural gas production, gathering, processing, and transportation facilities, along with Driftwood LNG, a proposed -27.6 mtpa liquefaction export facility that will be located near Lake Charles, Louisiana on the U.S. Gulf Coast.  In April, the U.s Federal Energy Regulatory Commission (FERC) issued the order granting authorization for Driftwood LNG and the 96-mile Driftwood Pipeline, which will inter-connect the LNG terminal to the U.S. natural gas market.

The U.S. Energy Information Administration's Annual Energy Outlook projects increased domestic natural gas production and stable prices for decades to come.  America has an opportunity to reap historic, economic, geopolitical and environmental benefits from LNG exports, while continuing to fuel a manufacturing renaissance at home.  The markets are signaling the same message while more American terminals currently importing/exporting LNG.  Presently Western Europe is highly dependent on Russia's Gazprom to keep the lights on and Asia has long been a huge importer from the Middle East.  With the U.S ramping up its export capability.  LNG producers in this country may soon see the opening of new lucrative markets for this American clean energy source.

Domestically, EIA reports on average between 2019 and 2035 total American end-use electricity expenditures as a result of added exports, to increase between $5 billion to $10 billion (between 1 to 3%).  And, with rapidly maturing LNG markets throughout Asia and Europe, total additional natural gas revenues to producers from exports are expected to increase on an average annual basis.  However, should depressed energy prices negatively impact unconventional shale play natural gas production, EIA shows  annual increase in revenues ranging from over $19 billion to $43 billion.

Methanol

One notable example of the useful, and profitable byproducts of natural gas is methanol.  Methanol is one of the largest manufactured trading commodities after oil, and has about half the energy value of gasoline, but its high octane rating pushes this up to 70 percent.  It is a liquid at room temperature and would therefore fit right into the global gasoline infrastructure, as opposed to compressed natural gas or electricity, which require new delivery systems. Most methanol fuel sold in America is sold as M85, a blend of 85% methanol with 15% unleaded premium gasoline. "Neat" (100%) methanol is a top contender as the near future's preferred means of storing hydrogen for fuel-cell electric vehicles, but this technology is still in the research and development stage.

The global methanol market is projected to be valued at 89.53 million metric ton, in terns of volume, in 2019.  The market studied is projected to be valued at 117.76 million to metric ton, in terms of volume, by 2024, along with an estimated GAGR of 5.64% over the forecast period.  One of the major factors driving the market's growth is the increasing demand for methanol-based fuel.  For instance, China has gained new momentum in the commercialization of methanol vehicles.  According to CNFIA statistics, in China , consumption of methanol increased to 69.5 million tons in year 2017, wherein total fuel consumption (direct fuel, DME, MTBE) accounted for around 25% of the total consumption in the year 2017.  This is likely to significantly drive the market to methanol.

Moreover, the expanding petrochemical sector in China, United States, and other Asian countries is also expected to drive the market growth.  However, hazardous impacts on health, as a result of exposure to methanol, are expected to hinder the market's growth.  Usage of substitutes such as bio-ethanol is also expected to hinder the market growth.

The methanol-to-olefins (MTO/methanol-to-propylene (MTP) sub-segment is estimated to witness the fastest CAGR of 6.92% between now and 2024.

* Institute of the Analysis of Global Security

* America's Natural Gas Alliance (ANGA)

* Energy Institute of America (EIA)

* Department of Energy

* Federal Energy Regulatory Commission (FERC)

* Fuel Freedom Association