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Meeting the Challenges of a Volatile World

Challenges for the International Oil and Gas Markets:

A Business Perspective
Presented at IERES Russias Energy Policy: Domestic and Foreign Dimensions Scott M. Shemwell

Washington, D.C. March 16, 2012

Copyright 2012. The Rapid Response Institute, LLC. All rights reserved.

Disclaimer
The views, opinions, positions or strategies expressed by the author and those referenced organizations and/or individuals are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the Slavic Research Center, IERES and affiliated organizations, sponsors, The Rapid Response Institute LLC, or any employee thereof.
The author make no representations as to accuracy, completeness, suitability, or validity of any information contained herein and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its use. Moreover, the author does not endorse any of the organizations or products referenced in this discussion. Links to their web sites are provided only as a courtesy for those interested in additional information/research.

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About The Rapid Response Institute

Enables our clients to posture themselves in their market segments so that they can thrive in volatile markets and capitalize on uncertainty, not suffer because of it. Solution Set
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Rapid Response Management Thriving in the New World Order

White Paper available online - http://www.scribd.com/doc/11792098/RapidResponse-Management-Thriving-in-the-New-World-Order

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Systems Integration Company We Build and Operate Decision Support Solutions Enabling Our Customer to Attain and Maintain Operational Excellence

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Discussion Points
Macro Economics
Global / Regional Role of Shale

Operations in our Post-Deepwater Horizon World

US Rest of World

Implications for Russia

Role of Energy Emergence of Natural Gas Economic Development
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Key Global Macro Drivers

Modern societies demand available yet low cost energy sources World population is projected to grow to 8.9 billion by 2050
United Nations

Movement from West to East Climate Change issues remain unresolved Future role of nuclear unclear Operational challenges the oil & gas industry face
Reserve replacement slows from Majors Emergence of Shale Emergence of the National Oil Companies (NOCs) Safety & Environment issues Paramount

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Regional Concerns
Economic Stability of Europe Economic Recovery Winter Weather Libya et al Commodity Price Points

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Economic Development:
Some Interesting Points

In the United States

The Oil & Gas industry directly employees 2.1 million people Natural gas supports nearly 3 million jobs in 49 states Supports 9.2 million jobs

Worldwide
No reliable job figures US numbers can be extended?
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Shale Gas Will Rock the World

1,000 trillion cubic feet recoverable in North America aloneenough to supply the nation's naturalgas needs for the next 45 years Shale gas will revolutionize the industryand change the world - Amy Jaffe
Baker III Institute for Public Policy at Rice University

North Dakota Booms Video

http://online.wsj.com/article/SB100014240527023034 91304575187880596301668.html

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Types of Gas Production & Trends

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Known Shale Gas Reserves

Note: Study did not include Russia

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Post BP Macondo
Major Incidents
Montara, Australia Drilling RigAug 21, 2009 BP Deepwater Horizon aka MacondoApr 20, 2010 San Bruno Pipeline ExplosionSept 9, 2010 Fukushima Daiichi Nuclear IncidentMar 11, 2011

Global Focus on Safety/Equipment Integrity New Regulations

Emulated Globally Suppliers Included

Game Changer!
Just Released: Integrity Management Issues & Trends Facing the 21st Century Energy Industry Report

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Arctic Oil & Gas

U.S. Geological Survey estimates
90 billion barrels of oil 1,670 tcf of natural gas

Environment Concerns
Post BP Macondo Western Govt Oversight

Technology Challenges Territory Disputes

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Undiscovered Hydrocarbons

Sixty percent of the oil is concentrated in just six Assessment Units (AUs), predominately in Alaska, and two-thirds of the undiscovered gas is in just four AUs, predominately in Russia.

Source: Arctic Oil and Gas Potential

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Major Gas Trade Flow circa 2030

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Russian Exports

Russia holds the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest crude oil reserves. - EIA
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Infrastructure

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By 2035, the U.S. could import less than 20% of its oil from outside the continent. That means the country could be fairly independent from world oil supplies. Anadarko CEO, March 13, 2012 The Rapid Response Institute

Final Thoughts
Global Demand will Continue to Grow
Commodity Price Points Swings will Continue Appears to be Adequate Fossil Fuels Renewable Growth but Still Oil & Gas Dependencies

North America has the Potential to Become Self Sufficient

Change in Trade Flow & Balances Is there the Political Will?

China and India New Sources

Shale Arctic
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Implications for Russia

Europe Remains Major Market Asian Markets Emerge Russia Remains Major Exporter If USA is less dependent on foreign sources does the Political Landscape Change? If So, How?
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Appendices
Additional Resources Glossary of Terms S. Shemwell Bio Contact Information

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Additional Resources
Bibliography
BP Statistical Review of World Energy June 2011 BP Energy Outlook 2030 U.S. Energy Information Administration: Independent Statistics & Analysis The Blast Heard Around the World ExxonMobil2010 The Out look for Energy: A View to 2030 International Energy Agency Deloitte 2011 Russian Oil & Gas Outlook Survey EIA -- What is shale gas and why is it important? World Energy Council 2010 Survey of Energy Resources Rapid Response ManagementThriving in the New World Order Cross-Culture Negotiations NaturalGas.org American Petroleum Institute Houston Technology Center Russias Natural Gas Export Potential up to 2050

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Useful Organizations
BOERME
OECD OPEC CSIS

The Bureau of Ocean Energy Management, Regulation and Enforcement http://www.boemre.gov/

Organisation for Economic Co-operation and Development
http://www.oecd.org/

Organization of the Petroleum Exporting Countries

http://www.opec.org/opec_web/en/index.htm

Center for Strategic & International Studies http://csis.org/

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BioDr. Scott M. Shemwell

Dr. Shemwell is an acknowledged thought leader in the field of Integrated Operations, aka. Digital Oilfield of the Future. He has been actively addressing this issue since 1993 for both global S&P 500 organizations as well as start-up and professional services firms. Formerly, he was business unit head with P&L responsibility and member Executive Leadership Team for Halliburton Energy Services. He had led or been a key individual in the development of that firms Integrated Solutions, a forerunner of todays Integrated Operations models.
Dr. Shemwell was the CIO for the Terra Nova Alliance. Originally, the project price point was $1.9 billion and the final number was over $2 billion

Key member of internal Project GO, this effort consolidated and integrated Halliburton capabilities that was the precursor of initiatives such as discussed in Integrated Solutions (below) with the Terra Nova project one of the first of that category.
Integrated Solutions or (IS), Dr. Shemwell was the first Director of Business Development responsible for global business development activities--Halliburton expanded overseas in the 1990s, and since then Halliburton has grown from a second-tier player in the industry to the largest oilfield service, engineering, and construction company in the world. It offers more services to the oil industry than any of its competitors.

As the Managing Director for major consulting firm, he assisted clients transform themselves throughout the globalization process, including assuring online upstream systems remained viable during the Y2K transition. He is leading authority (frequently quoted & referenced) on Integrated Operations, process management and simulation as well as knowledge and information management, business processes and industry change, and organizational structure analysis with over 250 publications and speeches. Energy Advisor to the Houston Technology Centera technology accelerator
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Contact Us
The Rapid Response Institute Dr. Scott M. Shemwell www.theRRinstitute.com

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