LNG Market Fundamentals - October 2019
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LNG Market Fundamentals October 2019
Cautionary statements
Forward-looking statements
The information in this presentation includes “forward-looking statements” within the meaning of The forward-looking statements made in or in connection with this presentation speak only as of the
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange date hereof. Although we may from time to time voluntarily update our prior forward-looking
Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements, we disclaim any commitment to do so except as required by securities laws.
statements. The words “anticipate,” “assume,” “believe,” “budget,” “estimate,” “expect,”
“forecast,” “initial,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will,” “would,” and
similar expressions are intended to identify forward-looking statements. The forward-looking
statements in this presentation relate to, among other things, gas resources, production and costs,
infrastructure needs and costs, LNG export and pipeline capacity, LNG bunkering, LNG prices, future
demand and supply affecting LNG, and general energy markets and other aspects of our business
Reserves and resources
and our prospects and those of other industry participants. Estimates of non-proved reserves and resources are based on more limited information, and are
Our forward-looking statements are based on assumptions and analyses made by us in light of our subject to significantly greater risk of not being produced, than are estimates of proved reserves.
experience and our perception of historical trends, current conditions, expected future
developments, and other factors that we believe are appropriate under the circumstances. These
statements are subject to numerous known and unknown risks and uncertainties, which may cause
actual results to be materially different from any future results or performance expressed or implied
by the forward-looking statements. These risks and uncertainties include those described in the “Risk
Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and
our other filings with the Securities and Exchange Commission, which are incorporated by reference
in this presentation. Many of the forward-looking statements in this presentation relate to events or
developments anticipated to occur numerous years in the future, which increases the likelihood that
actual results will differ materially from those indicated in such forward-looking statements.
Disclaimer
Global LNG capacity call: ~100-250 mtpa
mtpa
800 Capacity required(1)
9.3% p.a. growth rate 9.3%(2)
700
~250 mtpa
600
5.0%(3)
500 ~100 mtpa
400
300 Possible FID projects(6)
Likely FID projects(5)
200
Under construction(4)
100
In operation
-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sources: Wood Mackenzie, Bernstein, Morgan Stanley and Tellurian Research. Freeport T1-3, PetronasFLNG 2, Portovaya, Prelude, Sengkang, Tangguh, Vysotsk and LNG Canada.
Notes: (1) Assumes 86.5% utilization rate. (5) Assumes ~40 mtpa of likely FID projects, including: Artic LNG T1-3, Mozambique Area 4 and new Qatar T1-3.
(2) Assuming sustained 2015-2018 demand growth rate of ~9.3% p.a. post-2019. (6) Assumes ~25 mtpa of possible FID projects, including: Cameron T4-T5, Freeport T4, PNG T3, Corpus Christi LNG Stage 3 and
(3) Assumes 5.0% p.a. demand growth rate post-2019. Papua LNG T1-T2.
(4) Assumes ~80 mtpa of projects under construction, including: Cameron T1-3, Calcasieu Pass, Elba Island T1-10,
3
Global LNG demand pull
Key drivers
800 Capacity required(1)
China
9.3%(2)
700
~250 mtpa
9.3% p.a. growth rate
600
5%(3)
India 500
Under construction ~100 mtpa
400
In operation
300
Europe
200
100
New
markets 0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sources: Wood Mackenzie, Tellurian Research.
Notes: (1) Assumes 86.5% utilization rate.
(2) Assuming sustained 2015-2018 demand growth rate of ~9.3% p.a. post-2019.
(3) Assumes estimate of 5.0% p.a. demand growth rate post-2020.
4
Emerging consumption: China and India
Population and economic growth imply significant upside to gas consumption in China and India
Size indicates relative Natural gas’ share of 2018 energy mix
GDP/capita
volume of gas
$80,000
consumed per capita in
2018 (mcf/capita)
$70,000
United States
$60,000 87 mcf/capita
$50,000
$40,000 European Union
38 mcf/capita 49%
$30,000
China 31%
$20,000
7 mcf/capita 23%
Argentina
$10,000 38 mcf/capita
India 6% 7%
2 mmcf/capita
$-
- 500 1,000 1,500 2,000 India China EU U.S. Argentina
Population (millions)
Sources: IHS Markit, SIA Energy, EIA, CIA World Factbook, BP Energy Outlook.
5
Growing demand in China
Economic growth and emerging environmental policy drives demand growth
Chinese gas demand
billion cubic meters per year
510
438
120 LNG 4.5% CAGR
(2018-2030)
108
277
74 Domestic
391 production 6.1% CAGR
(2018-2030)
330 & pipeline
203
imports
2018 2025 2030
Source: SIA.
6
India gas demand requires significant LNG imports
India natural gas demand – primary sources
mtpa
100 95
Domestic production
88
Contracted LNG
79
80 Uncontracted LNG
70
41
15 28 61
60
48
41 7 23 15 12
40
8
19 3
14
20
32 36 35 31
19 21
-
2018 2020E 2025E 2030E 2035E 2040E
Source: Wood Mackenzie.
7LNG required to offset Groningen declines
Netherlands capping production from the Groningen field requires ~10 mtpa of LNG
bcm
Groningen yearly production
54
Forecast
Netherlands
42 Mandated
production cap
28 28
24
22
15
12 12 12
8
4 3
Gas fields
2024
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2025
Earthquakes
Source: NAM, Energy Aspects.
8 Global LNGGrowing number of importers accessing LNG
The number of LNG importing nations has grown by ~60% in the last 7 years
33 total floating storage
and regasification units
(FSRUs) represent ~130
42
mtpa of global 40
regasification capacity as 39
of May 2019
34
30
29 868
Number of 850
830
importing
26 777
countries 751
721
Global regas
capacity 668
(mtpa)
2012 2013 2014 2015 2016 2017 2018
Source: GIIGNL, IGU (2019), IHS Markit.
Notes: Includes Lampung, Nusantara, and Tanjung Benoa (all in Indonesia) and Northeast Gateway (United States).
9U.S. emerges as the world’s largest LNG exporter
Based on firm capacity
30.6
Triangle of low-
cost supply
102
77.8
88.8
Current capacity (mtpa)
(producing and under
construction)
Source: Wood Mackenzie, Tellurian Research.
Notes: Includes existing and under construction projects.
10Plentiful, low-cost U.S. natural gas
Production growth and resource base from selected U.S. unconventional basins Resource
size, Tcf
Basin
Wellhead cost, $/mmBtu
411
Total U.S. lower-48 dry natural gas production
36.0
Bcf/d
29.2 135 53 RBN(1)
7.4
3.6 23
2018 2025
Anadarko 17 EIA
74 $0-$1.00 2018 2025
16.9
Marcellus-Utica
9.6
112 < $1.00
99
2018 2025 52 82
8.6 9.4
Permian 7.9
< $1.00 4.9
2018 2025
2018 2025 2018 2025 Production
Eagle Ford Haynesville
growth
$0 - $1.50 < $1.50
Source: EIA 2019 Annual Energy Outlook, DrillingInfo, RBN, Tellurian analysis.
Note: (1) RBN high case – extrapolated from 2024 to 2025 by Tellurian.
11Looming challenge of U.S. gas oversupply
U.S. natural gas must be exported
Legend 2018-2025:
Operating/under construction LNG +7
Future infrastructure required +22 Bcf/d total gas supply growth(1)
+X Incremental gas supply by 2025 (bcf/d)
+12 Bcf/d excess gas supply(2)
+4
+100 mtpa LNG capacity required(3)
+1
+7
~$150 - $225 billion(4) of investment
+3 required to build 100-150 mtpa of LNG
and supportive pipeline infrastructure
to export excess U.S. gas supply
Sources: DrillingInfo, EIA, Tellurian analysis.
Note: (1) Assumes $70/bbl oil price and $3/mmBtu Henry Hub price; incremental supply comes from Permian, Scoop/Stack, Haynesville, Eagle Ford, and Appalachia.
(2) Assumes U.S. natural gas demand grows 0.6% p.a. and that the 7.4 bcf/d of LNG terminals under construction produce at a 90% utilization rate.
(3) Assumes new LNG terminals produce at a 90% utilization rate.
(4) Assumes new liquefaction capacity costs $1,000 per tonne plus an additional $70 billion of pipeline infrastructure to transport gas supply to the terminal.
12U.S. must export ~30 bcf/d of LNG by 2025
…including an additional ~20 bcf/d of LNG export capacity over firm capacity
U.S. natural gas export requirements
29 bcf/d
~20 bcf/d
additional U.S. LNG export capacity required(1)
$150 billion
investment required for >150 mtpa of additional LNG capacity(2)
Firm LNG
4 bcf/d export
capacity(3)
2018 2025E
Source: RBN, Tellurian analysis. (3) Includes 86 mtpa (11.5 bcf/d) of operational and under construction liquefaction export capacity.
Notes: (1) Assumes U.S. domestic gas demand grows at 0.6% p.a. and liquefaction capacity utilization rate of 90%.
(2) Assumes $1,000 per tonne for liquefaction capacity.
13Thank you
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