IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Energy Intelligence Group
Briefing

Trump Presidency: Impact on the US
Economic Outlook and US Energy Policy

March 27, 2017

Copyright © 2017 Energy Intelligence Group1IEEJ：April 2017 © IEEJ2017

Energy Intelligence Group

AgendaIEEJ Seminar▪ Globalism in Retreat– US election accelerated recent trends– Global status quo under pressure▪ Trump’s Trade and Economic Policies– Economic nationalism– Trade agreements under threat▪ US Energy and Climate Policy Under Trump– Energy is central to economic message– Strong effort to reverse Obama’s climate legacy– Trump team likely to favor US LNG exports– Shale production stabilizing, and could return to growth

2

IEEJ：April 2017 © IEEJ2017

Energy Intelligence Group01

IEEJ Seminar

Globalism in Retreat▪ US election accelerated recent trends▪ Global status quo under pressure

3

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Globalism in Retreat: Trump’s Election Accelerates Recent Trends
Challenges for global cooperation▪ 2016’s Brexit and the election of Donald Trump are only the latest signals of a general retreat from a
globalist policy orientation.

▪ International norms and institutions are being questioned, particularly as the United States aims toreverse course on landmark agreements, such as the Paris climate accord and Iran nuclear deal.

▪ The result is widespread uncertainty over previous “givens”: US security policy, trade approach, andforeign relations.
Focus Issues

Developments and Implications▪ Systemic Economic Risks▪ Global Trade and Financial
Cooperation▪ Economic Openness▪ EU cooperation exposed during euro crisis.
▪ TPP and TTIP talks have stalled; revisions toexisting trade ties are possible.
▪ The UK’s future global trade ties are also uncertain.

▪ Climate Policy▪ Policy Orientation of Major Powers▪ Trump is unlikely to fulfill US climate goals, setting a
low bar for other countries.
▪ Populism could gain traction Europe this year.

▪ Great Power Relations▪ Managing Global Conflict▪ US-China relations are already in question.
▪ Global security concerns range from Trump’s vows
to defeat Islamic State to North Korea.
4

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Global Status Quo Under Threat: Challenges to World Order
Potential turning point in dominance of liberal democracy and capitalism▪ The events of 2016, especially the Brexit
vote and Trump’s election, are the latest
steps in a longer historical arc.

▪ Western, liberal ideas first rise toprominence shaping the post-WWII global
order, but have faced growing challenges
over the past few decades.

▪ In the West, lasting damage was done by the
2008-09 financial crisis. This, combined with
underlying trends in demography, migration,
globalization and automation, forms the basis of
the current political malaise.

▪ With the status quo under pressure indeveloped Western economies, alternatives are
gaining in prominence elsewhere. Authoritarianrule looks to be on the rise.

Rule-Based International Politics▪ A rule-based international order, built aroundinternational institutions.
▪ Confidence in liberal democracy, and a visionof a growing club of democratic nations.
▪ Support from the United States has played acentral role in promoting and defending thisorder, even if Washington has, at times, lost
patience.
Liberal Capitalist Economics▪ Characterized by free trade, globalization,technological innovation and accelerated
movement of ideas and labor.
▪ Globalization boosted in the 1990s by free
trade agreements such as NAFTA and thecreation of the WTO.
▪ Explosive growth in China and other Asian
economies has turbocharged globalization.
5

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Global Status Quo Under Threat: Western Model Under Pressure
Advanced Western economies face growing headwinds

widespread dissatisfaction with mainstream politics.

Japan

Euro area

US

UK

Source: World Bank

US Manufacturing Sector (2009=100)
160
140
120
100
80

Real Output

2016

60
2014

▪ Taken together, these trends have coalesced into a wave of

0

2012

automation and efficiency have reduced manpower
requirements (see US example to the right).

1

2010

▪ Even where manufacturing has stayed in place, increased

2010s

2008

globalization and its consequences. While adaptable, educatedemployees have often benefited, less-skilled manual workers
have seen jobs move to cheaper overseas locations.

2000s

2006

▪ Concerns over immigration are part of a broader critique of

1990s

2004

the Middle East, Latin America and Africa is creating hugemigration pressures.

1980s

2

2002

▪ The demographic mismatch with faster-growing populations in

1970s

3

2000

demographic change, especially in Japan and continental
Europe.

1960s

4

1998

▪ However, the economic malaise has deeper roots, starting with

5

1996

including a weak recovery in the United States, and economic
stagnation along with lingering debt crises in Europe.

9.1%

6

1994

▪ The 2008-09 global economic crisis cast a long shadow,(average %)1992

contributing to political dissatisfaction and radicalization.

GDP per Capita Growth, by Decade

1990▪ Key megatrends have constrained economic growth, while

Employment

Source: St. Louis Federal Reserve

6

IEEJ：April 2017 © IEEJ2017

Energy Intelligence Group

02

IEEJ Seminar

Trump’s Trade and Economic Policies▪ Economic nationalism▪ Trade agreements under threat

7

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Trump’s Worldview
Economic nationalism▪ Trump’s populist platform has resonatedTrump Worldview: Guiding Ideas

strongly with the white working class,
who feel their identities are under attack.
– Economic nationalism was a key themeof his campaign, and it comes acrossclearly in his policy priorities.
– He seeks to reverse the damaging
effects of globalization for the working
class, with trade viewed as a key factor.

▪ Trump appeals to the nativist andxenophobic impulses of his voters byfocusing on “radical Islam” and otherthreats coming from abroad.

AmericaFirst“Winning” indeal-making
and diplomacy

Art of the Deal
• In a zero-sum world,
deal-making is about
winners & losers• Belief in Trump’s own
deal-making skill– He also has adopted an isolationist
stance, with his “America First” message.

▪ Trump has criticized Obama’s climate
policy on economic nationalist grounds,
and sees stepped up fossil-fuelinvestment as a central priority.

Ideal of Trump
as only man
capable offixinggovernment• US interests
must come firstin international
dealings• Strength is the
key to peace

Make
America
Great
Again

Governmentis theProblem• Reduce taxes• End onerous
regulations• Not the role ofgovernment tochoose winners

Economic
nationalism

Revive US
Economic Power• Reverse damaging
effects of globalization• Booming economy toboost jobs, incomes

Policies tend tobenefitcorporations,rather thanworkers

8

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Trump is Centralizing Authority
Effort to cut funding and eliminate staff at government agencies▪ Trump’s first two months in office show that heis centralizing authority. He is keeping decisionmaking on key issues within a small circle of his
family members and several close advisors.

▪ The White House seems determined to limit thecapacity and autonomy of government
agencies.
– Trump’s first budget aims for enormous cuts atthe EPA, State Department and many otheragencies.
– The White House is deliberately under-staffing
various departments—with many vacancies atthe “under-secretary” level.
– There are still no press secretaries at many
government agencies, and no regular press
briefings. This reflects Trump’s efforts to freeze
out, and even delegitimize, the media.

▪ When a crisis occurs globally (for example awar or economic crisis), under-staffing andpolicy drift will make it harder to respondeffectively.

Trump's Proposed 2018 Budget(% change from current spending)DefenseHomeland Security

Veterans Affairs
Social Security*
NASA
Justice
Treasury**
Small Business Administration
EnergyOthersOverseas war ops./disaster relief
Interior
Transportation

Housing and Urban Development
Education
Commerce
Health and Human Services*
Corps of Engineers
Labor
AgricultureState and USAID
EPA

-40

-30

-20

-10

0

10

Source: Office of Management and Budget*Does not include spending on entitlement programs **Does not include interest payments on federal debt

9

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Trump vs. The Republicans
Trump essentially ran as a third party candidate, but must govern as a Republican▪ Trump has challenged traditional Republican
approaches on trade, social issues, foreign
policy and many other areas. But he isconstrained by the Republican agenda inCongress.

▪ Trump likely would prefer to focus on

Trump’s Challenges

Differingpriorities
between Trump
and Republicans

Deep internal
divides in
RepublicanParty

infrastructure, trade and jobs. Those were theissues that propelled him to the White House,
and won support from working class voters.

▪ Instead, Republicans in Congress areembroiled in trying to reform the US health caresystem. This is a risky endeavor, and if the
Republican health care plan turns out badly, it
will diminish Trump’s leverage and his
momentum.

▪ The same could be true with tax reform.

Trump’s Challenges

Near-zerosupport from
Democrats on
key issues

Trump
unpopularity
reducesleverage

10

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Trump Promises Rapid Growth, but Agenda Conflicts with His Party
Infrastructure spending is a lower priority for Republicans in Congress▪ Trump has promised to unleash breakneck economic growth and add 25 million jobs in the next
decade.

▪ But his policy prescriptions favor businesses, rather than workers, signaling a continued belief in“trickle down economics.” Priorities include cutting taxes and curbing regulations, and stimulating
infrastructure investment, but also challenging global supply chains through protectionist measures.

Trade Policy▪ Ties many lost blue collar jobs and declining
wages to expanding global trade.
▪ Calls for “fair” trade deals, by securing better
terms for US workers and punishing violators.

Infrastructure Investment▪ Spur $1 trillion in transport, water, power, and otherinfrastructure investment in 10 years, with aim ofadding millions of jobs.
▪ Offer tax credits and public-private partnerships tofund plan, although key areas will fail to attract
private investors.

Tax Policy

Financial Sector Regulation▪ Simplification of tax code, and large tax cuts forboth households and firms.
▪ Cut top tax rate from 39.6% to 33%. Corporate
tax rate would fall from 35% to 15%, and would
apply to partnerships and sole proprietorships.
▪ No changes to Medicare or Social Security.

▪ Overhaul Dodd-Frank Law regulating banks, to limit
regulations and oversight by the Federal Reserveand the Securities and Exchange Commission(SEC).
▪ Ease regulations for small banks and credit unions.

11

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Trump’s War on Trade
Trade policy will be a top priority for the Trump White House– Trade surpluses or deficits are not inherently good orbad.
– The US maintains its trade deficit because it has acapital account surplus, due to enormous capital
inflows.

▪ These mercantilist policies, combined with
Trump’s self-image as a master negotiator anddeal-maker, suggest the US is serious aboutattempting to re-negotiate Nafta and other tradedeals.

▪ Trump officials have attacked the trade policies
of China, Mexico, Japan and Germany—four of
its five largest trade partners.

Trade Balance

0
-100
-200
-300

Source: US Census

Trump
Worldview:
Why US is“Losing” inTrade

TaiwanIndia

France

-500

UK

-400
S. Korea

deficits drag down growth.

Exports

100

Germany▪ His advisors have a misguided belief that trade

Imports

200

Japan

manufacturing plants in the United States rather
than abroad, and eliminate the trade deficit.

300

Mexico▪ Trump wants to encourage firms to set up

US$ bnCanadahe could boost the US economy and protect
American jobs by renegotiating “bad” tradedeals and punishing trade cheaters.

United States' Top 10 Trade Partners in 2016

China

▪ Trump campaigned on the misleading idea that

Rank order of overall trade▪ States with Value Added
Tax (VAT) have unfair tax
advantage▪ Currency manipulation by
China, Japan, EU▪ “Cheating” under WTO
rules

12

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

The Risks of Trump’s Approach to Trade
More aggressive policies and shirking of rules create risk of trade wars

▪ Trump’s proposals have signaled that Washington may discard

Trump’s Trade Architects

long-established rules governing trade.

▪ Peter Navarro, head of Trump’s– Proposals in Congress for “border adjusted taxes,” as well assome of Trump’s proposals for “defensive tariffs,” may be illegal
under WTO rules.

new National Trade Council, isan unorthodox economist, who
was little-known before being
tapped by Trump. Most of his
recent writing has focused on
China, which he accuses ofcurrency manipulation and othertactics designed to boost exports
and undermine trade partners.
▪ Wilbur Ross, Commerce
Secretary, will play a key role intrade policy. A private equity
billionaire, Ross seems anunlikely figurehead for Trump’s
populist economic agenda.

▪ China and Mexico collectively account for 30% of total trade with
the United States. If a trade war erupted between the UnitedStates and “just” these two countries, the economic shockwaves
would likely result in a global recession.
– Even if a trade war is averted, a decision by Trump to step backfrom the US’s decades-long role of promoting trade liberalization
will limit medium-term global economic growth potential, andweaken US leadership on global economic policy.

▪ Abandoning the Trans-Pacific Partnership (TPP)—the regional
trade grouping that excluded China—has opened the door for
Beijing to emerge as a champion of trade liberalization.

▪ But replacing the United States with China—a juggernaut, but
still lacking the scale of the US economy—as the engine ofglobal trade flows could limit economic growth.

Some key Trump advisors,
especially Navarro, seem
unfazed about destabilizing theexisting global trade order.
Indeed, they think such a breakis necessary.
13

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Trade Agreements Under Threat
Growing obstacles to trade cooperation
Key Global Trade Initiatives Under Threat

TPP
Trans-PacificPartnership

Nafta
North American Free
Trade Agreement

TTIP
Transatlantic Tradeand Investment
PartnershipDays after taking office, Trump issued an executive order that withdrew the
US from TPP negotiations, and promised to pursue bilateral deals insteadthat will “promote American industry and protect American workers.” TPP
was signed in February 2016 but has not been ratified by the US Congress.
Asian economies may now look to the Regional Comprehensive Economic
Partnership (RCEP), including China and India.
Trump has pledged “to get a better deal for American workers,” potentially
including tariffs on some goods imported from Mexico and Canada. If they
do not agree, Trump threatens the United States will withdraw altogether.
Commerce Secretary Wilbur Ross says he wants to begin renegotiations in
the coming weeks.

The prospects for TTIP were already dimming after a 14th round ofnegotiations concluded in mid-July with major differences still to be worked
out. Public support for the deal has fallen with the rise of anti-trade rhetoric
on both sides of the Atlantic. Trump’s election is widely seen as the death
knell for TTIP.

14

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Questions over US Role in Pacific Security
Trump questions the core tenets of Pax Americana and maritime security in Asia

▪ Trump’s election has raised doubts over the US role in securityin Asia. But even before Trump, US commitment to Asian affairs was

Energy Security in Asia: The
Washington-Beijing Rivalry

called into question.

▪ There is a tendency to view

▪ The much-heralded “pivot to Asia” under Barack Obama failed totranslate into concrete policies.

▪ During his campaign, Trump criticized large US troop
deployments in South Korea and Japan, suggesting that Asianstates need to do more to ensure their own security.

▪ He has signaled that Washington is less committed to providing
global goods, including maritime security.

▪ The US-Japan alliance has anchored the regional security
framework for decades, but a reduced US commitment toJapanese security is a possibility.

▪ Freer US-Japan trade may be stifled. But Trump’s market
orientation and vows to cut regulations favor US oil and gas
output and exports. This could support Japanese energy
security goals, including diversified supplies and pricing.

Pacific security issues as a
zero-sum competition between
Washington and Beijing.
▪ It is quite possible that the
Trump administration will end up
following a path of greater
confrontation with China in tradeand security matters, raising therisk of escalations in the East
China Sea and South China
Sea.
▪ But if Pax Americana in the
Pacific appears to be eroding
over the medium to longer term,
the Asian states may find theyneed to work much more closelyon energy security issues.

15

IEEJ：April 2017 © IEEJ2017

Energy Intelligence Group03

IEEJ Seminar

US Energy and Climate Policy Under Trump▪ Energy is central to economic message▪ Strong effort to reverse Obama’s climate legacy▪ Trump team likely to favor US LNG exports▪ Shale production stabilizing, and could return to growth

16

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Energy Sector is Central to Trump’s Economic Message
Oil and gas companies have a strong ally in the White House▪ Trump is much more sympathetic to fossil-fuelindustries than the Obama administration. He
can also expect support for his agenda from a
Republican-majority Congress.
– Democrat and environmentalist opposition is
likely to flare up externally.
– Fierce hostility can be expected on the ground,and in the courts, in opposition to activity suchas drilling and pipeline construction.

▪ Market forces drove the last decade’s domestic
boom (and subsequent bust) first in gas andthen oil, and also lie behind the demise of coal.
The industry has been a victim of its own
success.
▪ Trump’s suggested reforms may allow the US
hydrocarbon sector to cut costs and boost
output, but in so doing will likely add to theabundance in the global opportunity set.
▪ The main challenge for the oil and gas
industry in the US today is economics, notaccess or excessive regulations.

Climate Policy Reversal▪ Trump wants to reverse Obama-era initiatives, andend or undermine the Paris Agreement and Climate
Action Plan, while weakening the EPA.
Regulatory Rollback▪ Trump has vowed to roll back regulations. But inreality, the federal government does not pose many
obstacles to access, and states regulate most
unconventional activity.
Infrastructure Approvals▪ Trump signed an executive order to speed up
Keystone XL and has backed the controversial
Dakota Access pipeline.
Opening Federal Areas▪ Trump has limited ability to open new federal areas(offshore the East Coast and Alaska, for example)
until the next five-year OCS plan (2022-2027).
17

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Climate Policy: Reversal of Obama Agenda
Congress expected to support broad attack on regulating emissions▪ It is clear that Trump intends to reverse
course on Obama-era climate measures. In
these aims he is very likely to enjoy the
support and encouragement of Republicans
in Congress.

Issue

Possible Actions

Paris
Agreement▪ Trump has promised to “cancel” the Paris
Agreement on Climate Change.
▪ The US will likely refuse to participate andimplement its pledges, and will cut funding for
decarbonization programs.

EPA
Powers▪ Trump’s budget proposal would cut EPA
funding by 31%, eliminating funding for nearly
all climate research and energy efficiency
programs.
▪ The new EPA head is a climate change
skeptic, who sued the agency numerous
times.

▪ Trump is likely to focus on what he dislikes
about climate policy: excessive regulation
imposed by bureaucrats at home (especially theEnvironmental Protection Agency, or EPA) andabroad (under the Paris Agreement).
– Trump wants the EPA to play a muchnarrower role in environmental protection.
– His stated desire to withdraw from the Paris
Agreement reflects his mistrust ofinternational agreements and bodies.

▪ Republicans in Congress have largely opposed
efforts to restrict emissions, and Congress may
even push for harder, faster action than the
White House.

▪ Trump and congressional Republicans arelargely united in their opposition to Obama’s
Clean Power Plan (CPP), which governs
Clean
power-sector emissions.
Power Plan
▪ Trump’s proposed budget would eliminate the
EPA’s funding for CPP implementation.

CAFE
Standards▪ CAFE standards, governing emissions for cars
and light trucks, are due to tighten (to 54.5
mpg by 2022-2025). But a recent White Housedecision gave the EPA a chance to review thistarget until 2018.

18

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

US LNG Exports: Political Support Should Remain Strong
General pro-export policies apply to the oil and gas sector as well

▪ The Trump administration seems unlikely to block efforts to export more US LNG. Trump, andEnergy Secretary Rick Perry, both have a pro-industry outlook, and certainly seem to favor exports.

▪ It is possible that the Department of Energy (DOE) could move back to a “conditional approval”
process for LNG exports to non-FTA countries.

▪ One potential challenge in the near term is staffing at the Federal Energy Regulatory Commission(FERC). Normally there are up to five commissioners, but at present there are only two. They do nothave quorum to issue final decisions.
Anticipated US LNG Export Capacity Additions, 2017-2020(million tons per year)
70

50
40
30
20
10

Jul-19Jun-19

May-19Apr-19Mar-19Feb-19Jan-19Dec-18

Nov-18Oct-18

Sep-18Aug-18

Jul-18Jun-18May-18Apr-18Mar-18

Feb-18Jan-18Dec-17

Nov-17Oct-17

Sep-17Aug-17

Jul-17

Jun-17May-170

Aug-19- Elba Island- Sabine Pass T5- Corpus Christi T2- Corpus Christi T1- Freeport T3- Freeport T2- Freeport T1- Cameron T3- Cameron T2- Cameron T1- Cove Point T1- Sabine Pass T4- Sabine Pass T3- Sabine Pass T2- Sabine Pass T1

60

Source: Energy Intelligence, based on company presentations

19

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

Tax Reform Could Have Deep Impact on Refiners
But support for the proposed “border adjustment” tax seems to be weak

▪ Proposals for a “border adjustment” tax could have a major impact on the oil sector. For US refiners,
imported crude would become more expensive, but exports of refined products would be exempt
from taxes.
– The goal is to reduce US crude imports, and to provide more incentives for domestic production.
– Those refineries that cannot export refined products will probably have to pass on the higher costs to theircustomers. So presumably, US pump prices will rise.

▪ Backing for this border adjustment tax in Congress appears to be fairly weak. Trump has not yet
committed to support it.

Impact of a “Border Adjustment Tax” on US RefinersMoredisadvantaged▪ East coast and West Coast refiners are dependent on crude
imports▪ Mid-continent refiners expanded coking capacity several years ago,and cannot export

Better able toadjust▪ Gulf Coast refiners with coking capacity are optimized to importheavy crude from countries like Venezuela, Mexico and the Middle
East.
▪ But the Gulf Coast refiners have more options: better access todomestically produced crude, and lots of export capacity.
20

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

US Shale: Production Begins to Stabilize
US output begins to stabilize due to the prolific Permian Basin and increasing rig efficiency

-200
-400
-600

PermianEagle Ford

BakkenNiobrara

Utica

HaynesvilleMarcellus

Total
Jan-17

Nov-16

Sep-16

Jul-16May-16

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15May-15Mar-15

Nov-14Jan-15-800

Source: EIA

US Shale Rig Counts
250

US Shale Productivity(b/d per rig)
600

WillistonEagle Ford
DJ-Niobrara
Cana-Woodford
Permian (Right)

200

500

300
100
200

Source: Baker Hughes

1000
800
600

200
Dec-16Jun-16

Sep-16

Mar-16

Dec-15

Sep-15Jun-15Mar-15

Dec-14Jun-140
Sep-14Mar-170
Nov-160
Jul-16(DUCs) has also helped to mitigate declines,
especially in the Bakken and the Eagle Ford.

BakkenEagle Ford
Niobrara
Permian

1400

400
100

Jul-14▪ The completion of drilled but uncompleted wells

50

1600

1200
400

150

Mar-16

plummeting costs have played a key role.
Increases in efficiency reflect using the bestcrews on the best rigs, but also durable
measures such increasing the use of proppants
and sand.

0

Nov-15▪ Soaring productivity rates per rig and200

Jul-15– Project economics in the Permian have held up
despite the price pressure.
– But the increase in January price levels was
sufficient to support increased activity in allbasins.

400

Sep-14

opportunity for producers to hedge forward
production.

600

Mar-15▪ Opec’s action to manage markets provided an

800

Jul-14is beginning to increase—but in response to
prices rather than policies.

US LTO: Cumulative Changes in Oil Output Since July 2014
(mb/d)

Nov-14▪ US shale production has stabilized and activity

Source: EIA21

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

US Shale: On the Cusp of a Return to Growth
Conditions appear ripe for shale to return to growth in 2017 at current price levels

Eagle Ford
PermianTotal DUCs

1000

Jan-17

Nov-16

Sep-16

Jul-16May-16

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15May-15Mar-15

Sep-14Jan-150
Nov-14-2000

Wells Drilled

Source: EIA

Cumulative Shale Rig Count
Changes Since Oct. 7
200

0

0

0
-50
3/10/1720

2/24/17100

2/10/1740

1/27/17200

50

1/13/1760

12/30/16

300

100

12/16/16

80

12/2/16400

150

11/4/16100

10/7/16500

Source: Baker Hughes, Reuters

PermianEagle Ford
Cana-Woodford
Williston
DJ-Niobrara

120

11/18/16

WTI ($/b, Right)
Permian Rig Count (Left)

600

10/21/16

Oil Prices and Permian Rig
Count

Mar-17(DUCs) provides further room for production
growth at current price levels.

-1500

Nov-16▪ The inventory of drilled but uncompleted wells

2000
BakkenNiobrara
Total

-1000

Jul-16– Project economics have improved moresignificantly than in other E&P play types.
– Hedging of future production guarantees
companies minimum needed returns.

-500

Mar-16

immune to any further price pressure, should oil
prices continue to weaken.

3000

Nov-15▪ US shale production for 2017 will be largely0

Jul-15should remain muted compared to the
production boom in 2011-2014.

4000

Jul-14▪ Activity in other basins is likely to increase, but

5000

1000

Mar-15strong performance.

6000

1500

Nov-14▪ Permian growth looks to build upon its recent

2000

500
Well Completions

to be on the precipice of a return to growth in2017, even at current or near current pricelevels.

US Shale Wells Drilled and Completed, and Total DUCs

Jul-14▪ Looking forward, US shale production appears

Source: Baker Hughes

22

IEEJ：April 2017 © IEEJ2017

Energy Intelligence GroupIEEJ Seminar

The Americas
270 Madison Avenue, Suite 302
New York, NY 10016
Tel: +1 212 532 1112
1401 K Street, NW , Suite 1000
W ashington, D.C. 20005
T: 1 202 662 0700
808 Travis Street, Suite 1014
Houston, TX 77002
T: 1 713 222 9700

Europe & Africa
7 D own S t reet , 3 rd Fl oor
London W 1J 7AJ, UK
T: 44 (0)20 7518 2200
Chaussée de la Hulpe 1201000 Brussels, Belgium
T: 32 (0)2 663 18 00
Daev pereulok 20, Office 509
107045 Moscow, Russia
T: +7 495 604 8279/78/77

Middle East & Asia-Pacific
15A Temple Street, #02-01
Singapore 058562
Tel: +65 6538 0363
Dubai Media City
Al Thuraya Tower 2 - 1907
P.O. Box 502803
Dubai - UAE
Tel: +971 4 364 2607/2608
1st floor, Freij Bldg, Sodeco
President Elias Sarkis Street
Beirut, Lebanon
T: +961 1 614282 & 3energyintel.com
23
Contact :report@tky.ieej.or.jp