The document discusses the transportation crisis resulting from peak oil production and declining reserves. It notes oil production likely peaked in 2005, reserves are controlled by unstable regimes, and investment has been curbed by low prices and the financial crisis. This presents an opportunity for investments in electric vehicles, biofuels, hydrogen, and efficiency to transition from oil dependence. The crisis threatens energy security and causes unsustainable emissions growth.
2. Introduction
Size of the Opportunity
o
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
Source: IEA, EIA, company.
SOURCE: IEA, EIA, SIMMONS INTERNATIONAL, COMPANY ESTIMATES.
PROPRIETARY
2 & CONFIDENTIAL
3. Introduction
Crisis
Oil production likely peaked in May, 2005 *SIMMONS
Majority of remaining reserves are controlled by historically unstable regimes
o The financial crisis and low oil prices have curbed investment
The oil workforce and infrastructure is rusting
INTRODUCTION
THE CRISIS Oil is the single feedstock for 95% of transportation
TRANSPORTATION
OPPORTUNITY
CONTACT
PROPRIETARY
3 & CONFIDENTIAL
4. Introduction
Opportunity
Oil is temporarily mispriced as prices are based on short-term supply/demand. The markets
are missing the medium and longer term supply shortages.
o $50-60 oil is
Demand growth
After recent
price shock,
very cheap governments
from China, India,
(below cost of are seeking
and ME is massive
INTRODUCTION future supply) energy diversity
THE CRISIS
TRANSPORTATION
and security
OPPORTUNITY
CONTACT
Investment
Global mandates
community is Disruptive
for reduced
starting to technology is
emissions and
appreciate quickly emerging
alternative fuels
“peak oil”
PROPRIETARY
4 & CONFIDENTIAL
5. Introduction
Window of Opportunistic Investments
In the next 3-5 years, we will likely experience much higher and volatile oil prices.
Transportation provides the single most compelling investment opportunity.
o A transformation is occurring in electric vehicles, next generation biofuels,
hydrogen, and fuel efficiency. We see an opportunistic focus in:
INTRODUCTION
THE CRISIS ‣ New fuel resources
‣ Vehicles
TRANSPORTATION
OPPORTUNITY
CONTACT
‣ Fuel efficiency
PROPRIETARY
5 & CONFIDENTIAL
6. The Crisis
We are out of cheap oil
160
140 Remaining oil
reserves are largely
o 120
offshore, tar sands,
and oil shale all of
which are feasible
100 at US$80+
INTRODUCTION
THE CRISIS
TRANSPORTATION 80
OPPORTUNITY
CONTACT
60
40
20
0
02 2 3 3
04 4 05 6 06 07 7 08 09 X
0 00 00 00 00 0 00 20 0 00 20 20
X
-2 -2 r-2 t-2 -2
0
-2 l-2 2 -2 -2 - - 20
an g a c ay ec Ju b- p- pr ov un an
J Au M O M D Fe Se A N J J
"Current oil prices don’t take into account the medium and longer term supply
shortages and increasing cost of future production.“
PROPRIETARY Source: NYMEX.
6 & CONFIDENTIAL
7. The Crisis
The Oil Age
World Crude Oil Production, 1960 - 2007
Source: Simmons International.
mb/d 140
o
105
It is likely
INTRODUCTION that we reached
THE CRISIS peak production
TRANSPORTATION
in May 2005
OPPORTUNITY 70
CONTACT (Simmons)
35
2005
0
1960 1968 1976 1984 1992 2000 2007
"The term Peak Oil refers to the maximum rate of the production of oil in any area under
consideration, recognising that it is a finite natural resource, subject to depletion.“
-- Colin Campbell
PROPRIETARY
7 & CONFIDENTIAL
8. The Crisis
Rapid Fall Off in Production
120
MILLION BARRELS/DAY 100
o 80
INTRODUCTION
THE CRISIS
60
TRANSPORTATION
OPPORTUNITY
CONTACT We should
be investing
40
massively in
E&P!
20
0
1990 2000 2010 2020 2030
CRUDE OIL - FIELDS YET CRUDE OIL - FIELDS YET CRUDE OIL - CURRENTLY
TO BE FOUND TO BE DEVELOPED PRODUCING FIELDS
SOURCE: IHS, DELOITTE, USGS DATABASE, IEA, SIMMONS INTERNATIONAL.
PROPRIETARY
8 & CONFIDENTIAL
9. The Crisis
Despite High Oil Prices, Output Flat
Countries with Increasing Production vs. Rest of World Decline
Source: Simmons International.
o
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
Despite high oil prices and an increase in E&P spending from US$100 billion
to $400 billion (2000 to 2006), oil production has remained flat.
*Recently have also fallen into decline.
PROPRIETARY
9 & CONFIDENTIAL
10. The Crisis
Energy security
Proved reserves at end of 2007
(Billions of barrels)
Source: Statistical Review of World Energy 2008
o
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
PROPRIETARY
10 & CONFIDENTIAL
11. The Crisis
Consumption is patently unsustainable
Top Consuming Countries, 1960 - 2006
Source: http://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_20.pdf
24
o
MILLION BARRELS/DAY
UNITED STATES
INTRODUCTION 18
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
12
FORMER U.S.S.R.
6 JAPAN
RUSSIA
CHINA
INDIA
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
YEAR
PROPRIETARY
11 & CONFIDENTIAL
13. The Crisis
Rise of Resource Nationalism
Independents
(such as BP,
o ExxonMobil)
own or have
access to less than
10% of world oil
resources. RECENT EXAMPLES
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
Russia shutting off of natural gas supply to
CONTACT Ukraine and Europe
65% of reserves are ----------------------
held by state-owned
Venezuela’s nationalization of international oil
companies, mostly in
major projects
MENA.
----------------------
Indonesia cutting back on energy exports,
threatening to seize Natuna from ExxonMobil
----------------------
Remainder is located China developing Iranian oil field against
in countries such as international sanctions
Venezuela and Russia
where access is
difficult.
PROPRIETARY
13 & CONFIDENTIAL
14. The Crisis
Financial Crisis has Hit New Investment
Source: Energy Current:
“Global E&P Expenditures”
Wall Street Journal
o North America
US: -26%
2009 E&P BUDGETS DOWN 12% Canada: -23%
INTRODUCTION
FIRST DECLINE IN 9 YEARS
THE CRISIS (LARGE CUTS)
TRANSPORTATION
OPPORTUNITY
----------------------
CONTACT
Estimated 85% of new refining capacity has
been canceled or postponed. Unless oil prices
are higher than an estimated $80, deep water Russia
drilling, oil shale, and tar sands are not viable
Lukoil: -50%
Surgutneftegaz,
Gazprom Neft,
Rosneft, TNK:
-20% to -26%
Middle East /
Asia Pacific
Mixed results
(both increases
& decreases)
PROPRIETARY
14 & CONFIDENTIAL
15. The Crisis
Rusting of industry
Worldwide energy infrastructure is too old
Labor force is graying and retiring
o Past 4 months alone, 40,000 industry hires were fired
(likely more than all hires 2006 - 2008)
Average age of US pipeline is 80 years
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
80% of rigs must be replaced
CONTACT
Source: Simmons International.
PROPRIETARY
15 & CONFIDENTIAL
16. The Crisis
No end to Emissions
30,000
MTONS/YEAR
CARBON EMISSIONS FROM GAS FLARING
25,000 CARBON EMISSIONS FROM SOLID FUEL
o
CONSUMPTION
Massive
CARBON EMISSIONS FROM LIQUID FUEL
increase in global
CONSUMPTION
20,000 emissions post
CARBON EMISSIONS FROM GAS FUEL industrialization.
INTRODUCTION
THE CRISIS
CONSUMPTION
TRANSPORTATION
15,000
OPPORTUNITY
CONTACT
Transportation is
a major contributor
10,000
to climate change.
5,000
0
51
58
65
72
79
86
93
00
07
14
33
21
28
35
42
49
56
63
70
77
84
91
98
05
12
19
26
40
47
54
61
68
75
82
89
96
03
17
17
17
17
17
17
17
18
18
18
18
18
18
18
19
18
18
18
18
18
18
18
18
19
19
19
19
19
19
19
19
19
19
19
19
19
20
YEAR
Source: Deutsche Bank
PROPRIETARY
16 & CONFIDENTIAL
17. Transportation
History of Transport Fuels
CARBON NEUTRAL CARBON
TRANSPORTATION TRANSPORTATION
TRANSPORTATION DEMAND
o Key Drivers
Declining fossil fuel supplies
INTRODUCTION
Fuel supply security and
THE CRISIS diversification
TRANSPORTATION Global emissions
OPPORTUNITY Governmental regulations
CONTACT
TODAY TIME
Natural Fuel Fossil Fuel New Fuel
Wind Oil Carbon neutral fuels
Horsepower Gas Electricity (renewable)
17 PROPRIETARY Coal Synthetic fuels
& CONFIDENTIAL
Hydrogen
18. Transportation
Current Reliance on a Single Feedstock
TRANSPORTATION ELECTRICITY
OTHER
o
LIQUIDS
5% 6%
RENEWABLES
18% NUCLEAR
15%
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
GAS
20%
CRUDE OIL
95% COAL
41%
OIL PROVIDES 95% OF TRANSPORT FUEL NEEDS
(VS. ELECTRICITY WHICH IS WELL DIVERSIFIED)
Source: IEA World Energy Outlook Source: U.S. Energy Information Administration
PROPRIETARY
18 & CONFIDENTIAL
19. Transportation
75% of New Oil Demand
Incremental Oil Demand by sector 2006 - 2030
Source: IEA, World Energy Outlook 2008
Mtoe 800
o 600
INTRODUCTION
THE CRISIS
400
TRANSPORTATION
OPPORTUNITY
CONTACT
200
0
-200
TRANSPORT INDUSTRY NON-ENERGY USE OTHER*
*INCLUDES RESIDENTIAL, SERVICES, AGRICULTURE, POWER GENERATION AND OTHER SECTORS.
PROPRIETARY
19 & CONFIDENTIAL
20. Transportation
As Global Demand for Vehicles is Accelerating
Worldwide Number of Cars (Millions)
Source: IEA, World Energy Outlook 2008
1500
o
1125
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
750
375
0
1968 1985 2007 2020
PROPRIETARY
20 & CONFIDENTIAL
21. Transportation
...and Oil Growth
Growth from Asia & Middle East
Source: IEA, World Energy Outlook 2008
o
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
(mb/d)
PROPRIETARY
21 & CONFIDENTIAL
22. Opportunity
Spectrum of Potential Investments
o Upstream: Downstream:
Fuel Resources Vehicles
---------------------- ----------------------
INTRODUCTION
THE CRISIS
TRANSPORTATION Plantation Components
OPPORTUNITY Technology
Processing
CONTACT
Fuel generation Design
FUEL
Distribution Manufacturing /
EFFICIENCY
Conversion
Distribution
Fuel Type
----------------------
Carbon Neutral Synthetic Fuels
‣ Biodiesel Hydrogen
‣ Bioethanol Electricity
‣ Biogas
PROPRIETARY
22 & CONFIDENTIAL
23. Opportunity
New Propulsion Technologies
& Alternative Fuels
o
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
Source: Deutsche Bank, Company estimates.
PROPRIETARY
23 & CONFIDENTIAL
24. Opportunity
Growth in Biofuel Mandates & Production
o
INTRODUCTION
THE CRISIS
TRANSPORTATION
OPPORTUNITY
CONTACT
PROPRIETARY
24 & CONFIDENTIAL Source: REN21, Renewables 2009 Global Status Report.
25. Opportunity
China Leading with Electric
27.5
Automotive sales in China
SOURCE: CAMBRIDGE ENERGY RESEARCH ASSOCIATES.
Sales of electric
two-wheelers in
o
China recently
surpassed gasoline
powered
two-wheelers.
China is the
INTRODUCTION
18
world’s leading
VEHICLES/YEAR (MILLIONS)
THE CRISIS
producer
TRANSPORTATION
OPPORTUNITY of electric
16
CONTACT two-wheelers.
14
12
GASOLINE TWO-
WHEELERS 32
10
8
ELECTRIC TWO- 6.5
6 WHEELERS
4
2 LIGHT DUTY
VEHICLE
0
PROPRIETARY
25 & CONFIDENTIAL 1990 1995 2000 2005 2010
26. Contact us
Asia Cleantech Capital Pte Ltd
6 Eu Tong Sen Street, #07-06
The Central, Soho One
Singapore 059817
o T: (65) 6227 5940
F: (65) 6227 5945
INTRODUCTION W: www.asiacleantech.com
THE CRISIS
TRANSPORTATION
OPPORTUNITY Ron Mahabir, Managing Director
CONTACT
ron@asiacleantech.com
PROPRIETARY
26 & CONFIDENTIAL