The document summarizes key themes from a 2016 energy outlook report, including: 1) Macroeconomic factors influencing energy markets, such as U.S. oil production growth outpacing Saudi Arabia and Russia; 2) The struggling state of oil and gas companies, with over $67 billion in bankruptcy debt and expected job losses; 3) Impacts on the upstream, midstream, and downstream sectors; 4) Increasing regulations and legislation hindering non-renewable energy expansion; 5) Growth in renewable energy supply and advances in technologies.
2. 5 Key Themes
Exploring:
• Macroeconomic Factors Influencing Energy Markets
• State of Oil and Gas Companies
• The Impact to Upstream, Midstream and Downstream
• Regulations and Legislation
• Trends in Renewable Energy
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• OPEC’s stance has allowed the U.S. to transition into a swing-producer of oil
- U.S. crude oil production has grown substantially year-over-year, though still behind Saudi Arabia
and Russia
• The U.S. has marked its fourth year as the world’s top producer of petroleum and natural gas in
2015
• There will be a substantial lag in response time as companies stem the losses of the downturn
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Macroeconomic Factors Influencing Energy Markets
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
M A J O R C O U N T R I E S ' P E T R O L E U M A N D N A T U R A L G A S P R O D U C T I O N
United States
Russia
Saudi Arabia
natural gas
petroleum
Source: U.S. Energy Information Administration (EIA). Note: Oil production reflects average annual barrels per day of crude oil including condensate
Quadrillion British thermal units Million barrels per day of oil equivalent
2009 2010 2011 2012 2013 2014 20152008
Theme 1
6. • 102 North American oil and gas producers
have filed for bankruptcy since 2015,
accounting for over $67 billion in debt
• Modest amount of M&A activity, though
Enbridge did buy Spectra Energy in $28
billion dollar deal
• More than 72,000 jobs are expected to be
lost globally by year’s end by 12 major
energy companies alone
• Look for energy tenants to seek flexibility
and efficiency when addressing their office
needs moving forward:
- Subleasing or ‘chalk-lining’ (less formal
sublease arrangements
- Co-working space an emerging trend
- Fewer enormous campuses
6
State of Oil and Gas Companies
T O T A L B A N K R U P T C Y D E B T ( b i l l i o n U . S . d o l l a r s )
Source: Haynes and Boone’s Oil Patch Bankruptcy Monitor
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June
July
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Sept
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2015
2016
Bankruptcy filings (2015-2016)
Texas 46 Oklahoma 2
Canada 17 Alabama 1
Delaware 17 Arizona 1
Colorado 5 Massachusetts 1
Louisiana 4 Utah 1
New York 4 Virginia 1
Alaska 2
Theme 2
8. Upstream
• Sector primarily focused on
exploration and production of oil
• Hardest hit sector of the recent
downturn, especially the oilfield
services
• Record amounts of sublease
space has been flooding various
markets, largely due to upstream
energy companies
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The Impact to Upstream, Midstream and Downstream
Midstream
• Operations surrounding energy
transportation and storage
• Fewer barrels flowing through the
pipelines results in distressed
companies – but midstream by and
large healthier than upstream
• Several midstream companies,
such as Enterprise Products
Partners and Magellan Midstream,
have posted earning gains
Downstream
• Includes the refining and
processing of oil and gas into
chemicals, plastics and other
products
• Has seen a boom in the
petrochemical industry thanks to
cheap feedstock (raw materials)
• 268 projects reported across the
U.S. with $170.0 billion currently
planned or underway
Theme 3
Office
market
Total energy
occupancy (m.s.f.)
Percent of
market inventory
Houston 61.5 30.0%
Calgary 31.7 46.8%
Denver 7.9 28.1%
Dallas 6.4 3.9%
Pittsburgh 2.1 4.2%
Fort Worth 1.9 4.7%
Edmonton 1.9 7.9%
E N E R G Y T E N A N T O F F I C E O C C U P A N C Y
B Y M A R K E T
Source: JLL Research
Company
Value
(billions)
Location Project
Cheniere Energy $9.5 Texas LNG Terminal
Sasol $8.9 Louisiana Ethane Cracker
Shell Chemical $6.0 Pennsylvania Ethane Cracker
Chevron Phillips
Chemical
$6.0 Texas
Low Viscosity Polyalphaolefins
(PAO)
PTT Global $5.0 Ohio Ethane Cracker
LyondellBasell $4.0 Texas Polyethylene
M A J O R P L A Y E R S – S L I C E S O F T H E P I E
Source: JLL Research
10. • Fracking continues to drive growth in
energy-linked office markets as it continues
to face opposition from local and state
legislatures
• The Colorado Supreme Court recently
ruled against a local government’s ability to
impede fracking, a major win for the
fracking industry there
• Keystone XL Pipeline successor, Dakota
Access Pipeline, has temporarily been
forced to come to a halt over environmental
concerns
• Investment and expansion in non-
renewable energy will be hindered as
companies face an increasingly regulated
market
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Regulations and Legislation
S T A T E S W I T H F R A C K I N G B A N S I N P L A C E
Source: JLL Research
Theme 4
12. • Since 2006, U.S. supply of renewable energy
has spiked by 51.4 percent, with solar and
wind making the greatest growth
• Wind turbine manufacturing is highly
decentralized, not a needle-mover in any
single commercial real estate market; there
has been some concentration of firms in the
greater Denver MSA
• Though headquarters of the top solar firms
are centered in California and Arizona, solar
panel manufacturing is equally sporadic
• Advances in renewable tech and legislation
are paving the way for further expansion of
the renewables industry, impacting various
property markets throughout the country
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Trends in Renewable Energy
D E P L O Y M E N T & C O S T F O R
L A N D - B A S E D W I N D
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CumulativeU.S.WindCapacity(GW)
EstimatedLCOE(Cents/kWh)
Levelized Cost of Energy (Cents/kWh)
Cumulative US Wind Capacity (GW)
Source: U.S. Department of Energy
Theme 5