NON-CONFIDENTIAL
FOR EXTERNAL USE
OIL AND GAS FACT PACK
USA
May 2014
Business Sweden USA
AGENDA
 U.S. market overview
 Upstream & downstream
 Business potential for Swedish companies
 Conclusions
 Appendix
BUSINESS SWEDEN
29 AUGUST, 2014
2
THE U.S. IS A GLOBAL LEADER IN THE ENERGY
PRODUCTION INDUSTRY
NATURAL GAS PRODUCTION
CRUDE OIL PRODUCTION
Global Market share, 2013
Global Market share, 2013
Saudi Arabia
13,1%
United States
19,8%
Russian Federation
12,6%
Russian Federation
19,1%
United States
9,3%
Peoples Rep. China
5%
Islamic Rep. of Iran
4,5%
0%
10%
20%
30%
World oil production increased by 1.9 million b/d in 2012,
more than double the growth of global consumption.
US output grew by 1 million b/d, the largest increase in
the world and in the country’s history
Qatar
4,7%
Islamic Rep. of Iran
4,6%
Canada
4,6%
0%
10%
20%
30%
In 2012, world natural gas consumption grew by a total
of 2.2%. Consumption growth was above average in
North America, where the US (+4.1%) recorded the
largest increment in the world
THE INCREASING GLOBAL DEMAND FOR ENERGY WILL BENEFIT THE U.S. OIL AND GAS INDUSTRY
SOURCE: EIA.GOV
BUSINESS SWEDEN
29 AUGUST, 2014
3
THE U.S. CRUDE OIL PRODUCTION IS FOCUSED AROUND
THE CENTRAL AND SOUTHERN PARTS OF THE COUNTRY
ANNUAL CRUDE OIL PRODUCTION BY STATE 2013,
THOUSAND OF BARRELS
2
 The US is the largest market for petroleum products in
the world
3
 U.S. dependence on imported oil has declined since
peaking in 2005. This trend is the result of a variety of
factors including a decline in consumption and shifts in
supply patterns
5
4
Top 5 States
CRUDE OIL PRODUCTION IN THE U.S.
 The US has almost 3.0% of the world's proven crude oil
reserves, and accounts for around 9% of production
and a quarter of world demand
1
Top 6-10 States
1
Texas
934 986Mb*
2
North Dakota
313 275Mb
3
California
199 475Mb
4
Alaska
187 910Mb
5
Oklahoma
111 623Mb
THE U.S. OIL PRODUCTION IS FORECASTED GROWN IN YEAR 2014 AND 2015
SOURCE: EIA.GOV
BUSINESS SWEDEN
*MB – THOUSDAND BARRELS
29 AUGUST, 2014
4
THE NATURAL GAS CONSUMED IN THE U.S. ORIGINATES
FROM DOMESTIC PRODUCTION
ANNUAL NATURAL GAS PRODUCTION BY STATE 2013,
MILLIONS CUBIC FEET
NATURAL GAS PRODUCTION IN THE U.S.
 Natural gas accounts for more than 50 percent of the
fuel used to heat U.S. homes
 In 2013, 88% of the natural gas consumed in the
United States was produced in the U.S.
4
 The state of Texas both consumes and produces the
most natural gas in the U.S.
5
2
Top 5 States
 Canada provides much of the rest (10.5 %), with
1.5% imported as liquefied natural gas (LNG)
1
3
Top 6-10 States
1
Texas
8 211 255MMCF*
2
Alaska
3 214 302MMCF
3
Louisiana
2 376 301MMCF
4
Pennsylvania
2 256 696MMCF
5
Oklahoma
2 143 999MMCF
NATURAL GAS SUPPLIES NEARLY ONE-FOURTH OF ALL THE ENERGY USED IN THE U.S.
SOURCE: AMERICAN GAS ASSOCIATION, EIA.GOV
BUSINESS SWEDEN
*MMCF:- MILLION CUBIC FEET
29 AUGUST, 2014
5
IT IS STILL NECESSARY FOR THE U.S. TO IMPORT OIL
AND GAS TO MEET CONSUMPTION DEMANDS
U.S. OIL CONSUMPTION AND PRODUCTION, MB/D*
20000
U.S. GAS CONSUMPTION AND PRODUCTION, BCM**
850
18000
16000
800
14000
12000
750
10000
8000
700
6000
4000
650
2000
0
600
2011 2012 2013 2014 2015 2016 2017 2018
(p)
(p)
(p)
(p)
(p)
Oil used
Oil produced
2011
2012
2013
2014
(p)
Natural gas used
2015
(p)
2016
(p)
2017
(p)
2018
(p)
Natural gas produced
THE U.S. WILL BE GAS SELF-SUFFICIENT BY 2017 IF PROJECTED PRODUCTION LEVELS ARE MAINTAINED
SOURCE: EMI, BMI UNITED STATES OIL AND GAS RAPPORT
BUSINESS SWEDEN
*MB/D: THOUSAND BARRELS PER DAY
**BCM: BILLION CUBIC METERS
29 AUGUST, 2014
6
THE OUTER CONTINENTAL SHELF (OCS) IS ESTIMATED
TO CONTAIN VAST OIL AND NATURAL GAS RESOURCES
U.S. OFFSHORE OIL AND NATURAL GAS RESOURCES
Pacific OCS
10.2 Bb*
16.1 Tcf**
Atlantic OCS
3.3 Bb
31.3 Tcf
Alaska OCS
26.6 Bb
131.5 Tcf
Offshore
Potential
The federal government estimates
88.6 billion barrels of oil and
398.4 trillion cubic feet of natural
gas have yet to be discovered on
the U.S. outer continental shelf
Seismic
Surveying
There are ongoing discussions
within the Obama administration on
whether to allow seismic surveying
off the Atlantic coast
Opportunities
for Swedish
companies
Expanded offshore leasing would
benefit the large oil companies with
the resources to finance the high
startup costs. These expansions
would create new opportunities
for Swedish oil and gas companies
Gulf of Mexico
10.2 Bb
16.1 Tcf
Off limits
Open
Under consideration for seismic survey
THERE ARE VAST POTENTIAL FOR DEVELOPMENT OF THE U.S. OFFSHORE RESERVES
SOURCE: API. NATIONAL OCEAN INDUSTRIES ASSOCIATION
BUSINESS SWEDEN
*BB BILLION BARRELS
**TCF TRILLION CUBIC FEET
29 AUGUST, 2014
7
THE U.S. RELIES 40% ON NET IMPORTS FOR THE
PETROLEUM THAT IS CONSUMED
REGIONAL SOURCES OF U.S. PETROLEUM IMPORT TRENDS INDICATE GROWTH FOR WHISKEY IN THE U.S.
PERCENT, 2012
Worlds Largest
Oil Consumer
The United States consumed 18.6
MMb/d of petroleum products during
2012, making it the world's largest
petroleum consumer
Leading
Supplier
Canada is the leading crude oil
supplier for the U.S. accounting for
28%
Less Reliance
on Imported Oil
U.S. dependence on imported oil
has declined since peaking in 2005.
Result are due to a variety of factors
including a decline in consumption
and shifts in supply patterns
3%
16%
53%
28%
Western Hemisphere
Persian Gulf
Africa
Other
Majority of U.S. crude oil and petroleum products
imports came from the Western Hemisphere
(North, South, and Central America, and the
Caribbean, including U.S. territories) during 2012
THE U.S. RELIANCE ON PETROLEUM IMPORTS IS STEADILY DECREASING
SOURCE: EIA.GOV
BUSINESS SWEDEN
29 AUGUST, 2014
8
SHALE GAS WILL BECOME INCREASINGLY IMPORTANT
FOR THE U.S. ENERGY CONSUMPTION
Shale Gas
 Shale gas is natural gas derived from shale
formations. The shale acts as both the source and
the reservoir for the natural gas. Older shale gas
wells were vertical while more recent wells are
primarily horizontal and need artificial stimulation,
like hydraulic fracturing to produce
 The most significant trend in the U.S. natural gas
production is the rapid rise in production from
shale formations. In large measure this is
attributable to significant advances in the use of:
 Horizontal drilling
 Well stimulation technologies
 Refinement in the cost-effectiveness of the
abovementioned technologies
SHALE GAS IS RESHAPING THE U.S. ENERGY MARKET
►
In the U.S., the discovery and exploitation of vast
shale gas reserves has resulted gas prices falling
by nearly 75% in from July 2008 to January 2013
►
Natural gas is expected to replace coal as the
largest source of U.S. electricity by 2035
“National and international oil companies will need
to review their business models and skills in light
of the very different demands of producing shale
gas rather than developing complex frontier projects
on which most operations and new investment is
currently focused”
Adam Lyons, Director
PWC
NATURAL GAS PRODUCTION ADVANCEMENTS IS INCREASING SUPPLY & RESHAPING THE U.S. ENERGY ECONOMY
SOURCE: API, PWC, IEHN.ORG
BUSINESS SWEDEN
29 AUGUST, 2014
9
HYDRAULIC FRACKING IS CONTROVERSIAL BUT HAS
UNVEILED VAST U.S. NATURAL GAS RESERVES
Hydraulic Fracturing
 Hydraulic fracturing, or fracking, involves the
injection of more than a millions gallons of water,
sand and chemicals that are pumped underground
to break apart the rock and release the gas. The
process is currently used in nine out of 10 natural
gas wells in the U.S.
 Natural gas developed through the use of hydraulic
fracturing is expected to rise to more than 75%
of the domestic supply by 2035
 Identified opportunities for foreign supplier
manufacturers include:
 Engineering and surveying
 Construction of the wells
 Equipment manufacturing
THERE ARE MIXED OPPINIONS REGARDING FRACKING
“There is a pall of ignorance that hangs over fracking.
Emissions data, monitoring data, exposure data —
these are the things you need in order to judge health
effects, and where are they”
Sandra Steingraber, Ph.D Biologist,
Ithaca College
“America has abundant natural resources and recent
innovations combined with horizontal drilling in shale
formations has unlocked vast new supplies of
natural gas, allowing the nation to get to the energy it
needs today, and transforming our energy future”
Daniel Yergin, Vice chairman
IHS
HYDRAULIC FRACTURING WILL CREATE NEW OPPORTUNITIES FOR SWEDISH COMPANIES WORKING WITH NATURAL GAS
SOURCE: API
BUSINESS SWEDEN
29 AUGUST, 2014
10
RISING PRODUCTION IN THE MARCELLUS SHALE BASIN
HAVE RESULTED IN SEVERAL PIPELINE PROJECTS
MARCELLUS SHALE
The multiple pipeline expansion projects on the Marcellus formation natural are expected to begin service this winter
to increase natural gas takeaway capacity. The Marcellus shale is the largest producing shale gas basin in the United
States, accounting for almost 40% of U.S. shale gas production and is poised to become the second-largest in the
world with an estimated 141 trillion cubic feet of natural gas
PRODUCTIVITY
GEOGRAPHY
Billion Cubic Feet/
Day
15
0
20
40
Natural gas production in the Marcellus region exceeded
15 billion cubic feet per day (Bcf/d) through July 2014
PROJECTS
The rising production in the Marcellus Region has
outpaced growth in the region's pipeline capacity,
which has resulted in multiple pipeline expansion
projects focused on removing bottlenecks in the
Marcellus Region
Example of Companies include: Antero Resources,
Chesapeake Energy
BUSINESS SWEDEN
The Marcellus gas trend stretches across
Pennsylvania, West Virginia, and into southeast
Ohio and upstate New York
29 AUGUST, 2014
11
THE BAKKEN SHALE IS THE MOST PROLIFIC SHALE
PLAY IN THE WORLD
BAKKEN FORMATION
Crude oil production from the Williston Basin which is primarily extracted from the Bakken formation now accounts for
approximately 90% of North Dakota's total oil production. The vast increase in production gains in the Bakken
formation are the result of enhanced development activity, higher crude oil prices and an increase in number of wells
all have contributed to higher production
PRODUCTIVITY
GEOGRAPHY
Thousand of Barrels/ Day
0
500
1000
1500
2000
The Bakken Shale is the most prolific shale play in the world,
with daily oil production exceeding 1-million b/d
PROJECTS
New planned projects are primarily focused on
pipeline expansion
Example of Operating Companies include: Whiting
Petroleum, Hess, Continental Resources
BUSINESS SWEDEN
The Bakken Formation is located in western North
Dakota, eastern Montana, and southern Canada, as a
subsurface formation within the Williston Basin
29 AUGUST, 2014
12
AGENDA
 U.S. market overview
 Upstream & downstream
 Business potential for Swedish companies
 Conclusions
 Appendix
BUSINESS SWEDEN
29 AUGUST, 2014
13
THE OIL AND GAS VALUE CHAINS CONTAIN FIVE STEPS,
SEPARATED INTO UPSTREAM AND DOWNSTREAM
EXPLORATION & PRODUCTION IS OFTEN CONSOLIDATED FOR OIL AND GAS
Oil Upstream
Exploration
 Use technology to
discover new
resources
Oil Downstream
Production
 Retrieve oil from
both on and off
shore sources
Transportation
 Transport crude oil
to refineries via
tanker, truck, or
pipeline
Gas Upstream
Exploration
 Use technology to
discover new
resources
Production
 Retrieve gas from
below the surface
Refining
Retail Channels
 Transform crude oil  Selling and
into petroleum and
distribution of oil
other finished
products from
products
refineries
Gas Downstream
Transportation
 Transport gas via
tanker, truck, or
pipeline
Processing
 Treat gas as per
consumer
specifications
Retail Channels
 Selling and
distribution of natural
gas
MANY OF THE LARGER OIL AND GAS COMPANIES HAVE OWNERSHIP IN MOST IF NOT ALL THESE FIELDS
SOURCE: BUSINESS SWEDEN ANALYSIS
BUSINESS SWEDEN
29 AUGUST, 2014
14
U.S. NATURAL GAS AND CRUDE OIL EXPLORATION IS
FORECAST TO GROW IN THE NEXT FEW YEARS
ANNUAL GROWTH OF U.S. NATURAL GAS EXTRACTION U.S. EXPLORATION DESCRIPTION AND TRENDS
& CRUDE PETROLEUM PRODUCTION OUTPUT, %
 Companies in this industry develop and operate fields to
extract crude oil and natural gas. Major industry players
9%
include companies such as:
8%
 Apache Corporation, ConocoPhillips, Exxon Mobil,
Chesapeake Energy Corporation, Anadarko
7%
Petroleum Corporation, Devon Energy, BP
6%
 Trends include:
5%
 Increased use of horizontal drilling using hydraulic
fracturing which is a newer drilling technique that has
expanded the available supply of oil and gas
4%
3%
2%
1%
0%
2013
2014
2015
2016
2017
 More deep sea drilling where many drilling
companies are drilling in deeper waters and to greater
depths through the use of drillships. Drilling in the Gulf
of Mexico has been successful at 25,000 feet from an
ocean floor under 10,000 feet of water; new deep
water drillships will be capable of 40,000 feet under
12,000 feet of water
DOMESTIC EXPLORATION AND PRODUCTION IS EXPECTED GROWTH AS DOMESTIC DEMAND IS GROWING
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION, FIRST RESEARCH
BUSINESS SWEDEN
29 AUGUST, 2014
15
CHEVRON LEADS U.S. OIL PRODUCTION BUT HAS
EXPERIENCED A SMALL DECREASE IN OUTPUT
PRODUCTION VOLUMES BY TOP COMPANIES, MB/D
500
450
THE OIL AND GAS MARKET IS FAIRLY CONSOLIDATED
 There are more than 560 000 oil wells currently
extracting crude oil in the U.S.
 There are about 12 000 players operating in the
extraction of oil, a number which has increased by
6% since 2006
400
350
 The extraction industry is consolidated despite the large
number of companies in the sector
300
250
 The 5 largest businesses generate between 5060% of the market turnover
200
150
 Chevron is the largest producer of crude oil with a
reported production of 449 Mb/d,
100
50
 The company has however experienced a slight
decrease in production output in recent years
0
2011
2012
2013
Chevron
BP
ExxonMobil
Conoco Phillips
Shell
Marathon Oil
 ExxonMobil is the second largest producer and has
grown its production output since 2011 and overtook BP
in 2012
THE MARKET IS DOMINATED BY A FEW GIANTS AND IT HAS REMAINED FAIRLY UNCHANGED IN RECENT YEARS
SOURCE: EUROMONITOR, RAPPORT, INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA, COMPANY ANNUAL REPORTS
BUSINESS SWEDEN
29 AUGUST, 2014
16
EXXONMOBIL IS THE CLEAR MARKET LEADER WITHIN
THE U.S. NATURAL GAS PRODUCTION
PRODUCTION VOLUMES BY TOP COMPANIES, MCF/D
5000
4500
30% OF PRODUCTION IS EXTRACTED BY 10 PLAYERS
 There are more than 480 000 gas wells currently
extracting natural gas in the U.S.
 The natural gas market is somewhat fragmented, with
independents* extracting up to 85% of natural gas in
the U.S.
4000
3500
3000
 Despite this fragmentation, the 10 largest drillers
account for almost 30% of all production
2500
2000
 The 40 largest producers extract more than half of all
domestic natural gas
1500
 ExxonMobil is by far the biggest producer of U.S.
gas with an estimated production rate of 3545 Mcf/d but
has decreased output by almost 20% since 2011
1000
500
0
2011
2012
2013
ExxonMobile
Devon Energy
BP
Conoco Phillips
Encana
Chevron
 The remaining large players have maintained their
extraction volumes
Shell
INDEPENDENT COMPANIES EXTRACT THE MAJORITY OF NATURAL GAS ACROSS THE U.S.
SOURCE: EUROMONITOR, RAPPORT, INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA, COMPANY ANNUAL REPORTS
BUSINESS SWEDEN
*INDEPENDENTS ARE PRIMARILY OIL AND GAS EXPLORATION AND PRODUCTION COMPANIES
29 AUGUST, 2014
17
FRACKING HAS CAUSED A BOOM IN NATURAL GAS
PRODUCTION LEADING TO LARGER PIPELINE NETWORKS
ANNUAL GROWTH FOR PIPELINE TRANSPORTATION
SERVICES, %
6%
5%
U.S. OIL AND GAS DOWNSTREAM TRANSPORTATION
SERVICES DESCRIPTION AND TRENDS
 Companies in this industry typically use tankers, trucks
or pipelines to transport crude oil, refined petroleum
products, and natural gas. Major industry players include
companies such as:
 Energy Transfer Partners, Enterprise Products
Partners, Kinder Morgan and Plains All American
Pipeline
4%
3%
 Trends include:
 Increased hydraulic fracturing has caused a boom
in natural gas production, lowering prices, and
increasing demand. Pipeline transporters are
increasing fleets and pipeline networks, through
building and acquisitions, to meet consumer demands
2%
1%
0%
2013
2014
2015
2016
2017
 Growth by acquisition is a strategy used by many
companies in the industry in part to expand into new
geographical regions
THE OVERALL GROWTH OF INFRASTRUCTURE IS A HEALTHY INDICATOR FOR THE ENTIRE DOMESTIC MARKET
SOURCE: DUN & BRADSTREET, FIRST RESEARCH
BUSINESS SWEDEN
29 AUGUST, 2014
18
OIL REFINERIES ARE SPREAD ACROSS THE U.S. BUT
THE MAJORITY ARE LOCATED NEAR LARGE OIL FIELDS
REFINERIES BELONG TO ONE OF FIVE DISTRICTS
THE U.S. CAN REFINE UP TO 18 MMB/D
 There are more than 140 refineries in the U.S. as of
2013, and less than 10 are currently idle
 The current oil refinery capacity is estimated to be
almost 18 million barrels per day*
 Output reached 16.7 million barrels per day in 2013
 Up to 3 new refineries are being constructed to meet
an increase in demand
 States with refineries are categorized into Petroleum
Administration for Defence Districts (PADD) 1 - 5
 PADD 3 has the most amount of refineries (56) and has
a capacity of 9 million barrels per day, more than half of
the total U.S. capacity
PADD 1
PADD 4
PADD 2
PADD 5
PADD 3
 Texas alone accounts for around 30% of U.S.
refining capacity and has a total of 27 refining
facilities
REFINERIES IN PADD 3 HAVE A REFINING CAPACITY OF MORE THAN HALF OF THE TOTAL U.S. CAPACITY
SOURCE: EIA, BMI RAPPORT
BUSINESS SWEDEN
*SEE APPENDIX A FOR BREAKDOWN OF REFINING CAPACITY PER COMPANY
29 AUGUST, 2014
19
NATURAL GAS PROCESSING IS FRAGMENTED WITH
COMPANIES THROUGHOUT THE U.S.
Company
Gas processing volume
DCP Midstream
6.10 Bcfd
Enterprise Products Partners
6.05
NATURAL GAS PROCESSING DESCRIPTION & TRENDS
 Companies in this category natural gas produced
typically contains contaminants and natural gas liquids
that must be processed, i.e., cleaned, before it can be
safely delivered to the consuming public
Williams Companies Inc.
4.45
 Estimates show U.S. natural gas processing capacity
Targa Resources
2.10
 climbed by 5.6 Bcfd* during 2013
Markwest Energy Partners
1.68
 is set to increase by an additional 2.8 Bcfd in 2014
Encana
1.63
Crosstex Energy Services
1.35
Western Gas Partners
1.19
Shell Oil Co.
1.06
Devon Energy
1.05
 While there are approximately 500 gas processing plants
in the U.S., the nations top 10 processing companies
seen on the left, many of which own pipelines and other
midstream infrastructure, lead the nation in processing
natural gas with around 35% of total domestic
processing capacity
ESTIMATED GAS PROCESSED BY U.S. TOP 10, 2012
NATURAL GAS PROCESSING FACILITIES ARE GETTING MORE EFFICIENT TO HANDLE INCREASED VOLUMES
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION, NATURALGAS.ORG, GAS PROCESSORS ASSOCIATION, GAS PROCESSING NEWS
BUSINESS SWEDEN
*BILLION CUBIC FEET PER DAY
29 AUGUST, 2014
20
AGENDA
 U.S. market overview
 Upstream & downstream
 Business potential for Swedish companies
 Conclusions
 Appendix
BUSINESS SWEDEN
29 AUGUST, 2014
21
SWEDISH COMPANIES ACTIVE IN THE U.S. ARE USUALLY
SUB-SUPPLIERS THROUGH INTERMEDIARIES
GIVEN THE COMPLEXITY OF THE SUPPLY-CHAIN, DIRECT SALES TO END CUSTOMER IS LESS COMMON
Suppliers
Entry Strategies
Subsidiary
Sales Agent
Swedish oil and gas
suppliers
Distributor / 3PL
Less common
Intermediaries
Upstream
suppliers
(to exploration
and production)
Contractors and
consultants
Industry end
customers
More common
INTERMEDIARY COMPANIES ARE TYPICALLY ESSENTIAL FOR FOREIGN COMPANIES ESTABLISHING A U.S. PRESENCE
SOURCE: INTERVIEWS
BUSINESS SWEDEN
29 AUGUST, 2014
22
THE INTERMEDIARIES ARE TYPICALLY MULTIPLE
LAYERED BELOW THE MAJOR END CUSTOMERS
SUPPLIERS TO PLAYERS IN THE VALUE CHAIN
CAPITAL EXPENDITURE BREAKDOWN
 Supply structure:
 In the supply chain for the U.S. oil industry,
B2B purchases accounts for 62,4% of the capital
spent of $81,532M in supply structure. Labor cost
accounted for 35,2% or $46 M and taxes less
subsidies amounted to 2,3% or $3M
Oil company
Primary supplier
Value chain
Contractor
“We sell our goods to suppliers to the major contractors
from a local subsidiary and this seems to be a pretty
common approach from my experience and has been
our modus operandi for the 15 years we have operated
as a private company in the U.S.”
Bo Birgerud, Vice President
MCT Brattberg
Sub-supplier
NEW ENTRANTS SHOULD INITIALLY FOCUS ON IDENTIFYING THE APPROPRIATE SUPPLIERS & CONTRACTORS
SOURCE: INTERVIEWS, EUROMONITOR
BUSINESS SWEDEN
29 AUGUST, 2014
23
THESE INDUSTRY B2B SUPPLIERS ARE PART OF A
BILLION DOLLAR INDUSTRY IN THE U.S.
B2B VALUE 2012, MUSD
Activity
SMALL COMPANIES FOCUS ON SUPPORT OPERATIONS
Value, MUSD
Extraction of oil and gas
16 340
Monetary Intermediation
15 701
Construction
8 480
Consultancies
3 569
Pumps, Compressors, Taps and Valves
2 494
IT
2 260
Iron and steel
2 031
Cement, Stone and Ceramic Products
1 894
Refined Petroleum Products
1 835
Others
26 928
Total
81 532
Intra-industry
trade
The oil and gas industry in itself is
amongst its greatest suppliers,
meaning that a lot of intra-industry
trade occurs
B2B value
stagnation
In 2012, the B2B trade was valued
at $81 532M, slightly down from
previous year’s value
Support
operations
Due to characteristics of the market,
which requires large capital
expenditure, small companies
continue to focus on support
operations for the larger
enterprises
THE LARGE INTRA-INDUSTRY TRADE PRESENTS GREAT POTENTIAL FOR SWEDISH SUB-SUPPLIERS
SOURCE: EUROMONITOR
29 AUGUST, 2014
24
A WELL ESTABLISHED DOMESTIC NETWORK IS KEY FOR
LONG TERM GROWTH IN THE U.S. MARKET
“The concentration in the market is strong. I
think that the 5 largest companies generate
the majority of the turnover within the
industry. It is a tough market for the smaller
companies as the competition to work with
these enterprises is highly competitive. For
that reason, it becomes key to be present
and seen here”
Lars Johansson, Project Manager
Apply Emtunga
“We currently have one customer in North America
and since we would like to gain customers, we
believe our presence here is essential. This will
allow us to be able to put our products and
expertise in front of the decision makers in this
field which we feel will gain us business in the
future”
Richard Stanfill, Sales Manager
Ovako North America, INC
Swedish industry
voices
“For our offshore business, the financial
strength and support of a large industrial
group such as Trelleborg is incomparable
with that of our competitors. This is a clear
competitive advantage that is becoming more
important within the subsea market as it
grows and gets more complex and
demanding”
Fredrik Meuller, Business Area President
Trelleborg Offshore & Construction
“Identifying new customers is easier when
you have actual presence in the market,
either through an incorporation or through
an agent acting as a representative office. If
the product can’t be sourced in the U.S.
it becomes a challenging”
Bo Birgerud, Vice President
MCT Brattberg
SOURCE: INTERVIEWS
BUSINESS SWEDEN
29 AUGUST, 2014
25
AGENDA
 U.S. market overview
 Upstream & downstream
 Business potential for Swedish companies
 Conclusions
 Appendix
BUSINESS SWEDEN
29 AUGUST, 2014
26
THE GROWING U.S. MARKET IS THE GLOBAL LEADER IN
ENERGY PRODUCTION AND CONSUMPTION
 The U.S. is considered a global leader in the energy production industry, leading global natural gas production and
trailing only Saudi Arabia and Russia in crude oil production
 Since 2005, U.S. domestic crude oil and natural gas production has been increasing as the country has a political goal
to be energy independent by 2035. This is expected to be reached by further utilizing shale oil and gas but also though
promoting wider use of alternatives such as ethanol fuel, methanol, biodiesel and other alternative propulsion. In 2013,
88% of the natural gas consumed in the U.S. was produced domestically and it is expected that the U.S. will be fully
self-sufficient for natural gas by 2017. The boost to the U.S. economy of ending all oil and gas imports is expected to be
significant
 Current new production of both oil and gas is focused around the central and southern parts of the country. Furthermore
the outer continental shelf is estimated to contain vast oil and natural gas resources, which is indicates a large potential
for future development needs if so desired
 Even as the country is approaching energy independence, the U.S. market presents great opportunities for domestic as
well as for foreign companies. Consumption and refining capacity for both oil and gas is increasing while products and
services that increase efficiency, safety, environmental friendliness etc. are sought after. and XXX
 Shale gas has recently become an increasingly important source of natural gas in the U.S. In 2000 shale gas provided
only 1% of U.S. natural gas production, however by 2010 it was over 20% and the U.S. government's Energy
Information Administration predicts that by 2035, 46% of the domestic natural gas supply will come from shale gas.
There are however political and environmental concerns as this production has challenged the adequacy of existing
regulatory regimes. Concerns include ground water contamination, risks to air quality, migration of gases and hydraulic
fracturing chemicals to the surface, mishandling of waste as well as destruction of landscape
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FEW LARGE COMPANIES DOMINATE MOST OF THE U.S.
OIL AND GAS PRODUCTION MARKETS
 Despite the large number of companies in the extraction sector, the oil industry is highly concentrated where the 5
largest oil production businesses generate around 60% of the market turnover. Companies such as Chevron and
ExxonMobil lead the U.S. oil production market. Within natural gas production the market is more fragmented however
ExxonMobil is the clear market leader and alongside 39 other companies they extract more than half of U.S. natural gas
 The oil and gas value chains are typically divided into two general categories and five sub-categories.
 Oil general categories include upstream and downstream
 Oil sub-categories include: exploration and production (upstream) as well as: transportation, refining, and retail
(downstream)
 Gas general categories also include upstream and downstream
 Gas sub-categories include: exploration and production (upstream) as well as: processing, transportation and retail
(downstream)
 Many of the large oil and gas companies have ownership in most if not all of the above general and sub-categories. The
often large exploration and production facilities are spread out in most parts of the country however the southern states
tend to be more prominent – where for example, Texas alone accounts for around 30% of U.S. refining capacity
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THERE ARE CONSIDERABLE OPPORTUNITIES FOR
SWEDISH COMPANIES WORKING WITH INTERMEDIARIES
 The majority of Swedish companies that have established presence in the U.S. act as sub-suppliers to other type of
suppliers as well as to contractors and consultants. Key will be to find the right partnering structure in a multi layered
value chain
 The oil and gas industry in itself is amongst its greatest suppliers, the intra-industry trade offers great potential for
domestic as well as foreign sub-suppliers. The U.S. oil and gas B2B suppliers market is a billion dollar industry. In 2012
for example, industry B2B trade was valued at almost $82BUSD of which the extraction of oil and gas (upstream) was
valued at $16BUSD
 With a high focus on domestic energy independence and trends moving toward increased shale gas extraction,
increased hydraulic fracturing and increased deep sea drilling, there are opportunities for new suppliers to be evaluated
by the domestic industry.
 As technology is evolving rapidly to increase production from existing wells and extend their service life. Often when a
well is originally brought into service, only about 15-20% of the reserve can be extracted. Over the projected service life
of 15 to 30 years, new technology, such as horizontal drilling or hydrofracture techniques, can be used to extract
another 15-20% of the estimated reserve
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BUSINESS SWEDEN CAN SUPPORT ESTABLISHMENT
AND GROWTH ON THE U.S. MARKET
Business Sweden can assist your business with a variety of services
U.S. Market Entry
Prepare U.S.
Entry Strategy
Establish Local
Presence
Develop U.S.
Business
 Evaluate if the U.S. is
the right market for
your business
 How to enter the U.S.
e.g. evaluation of
potential entry routes
 Establish a presence
swiftly and cost
effectively
 Examine opportunities
to develop and grow
your U.S. business
 Analyze top market of
interest
 Evaluate the U.S.
market potential
 Evaluate corp. structure
and create legal entity
 Analyze the U.S. growth
scenarios
 Initial U.S. market
analysis
 Build network through a
meeting program
 Set up business support
and functions
Business Sweden support can include evaluating the market potential, finding business partners, expert advisors,
coming into contact with policy makers or recruiting your country manager, as well as supporting the establishment of
your local presence
OUR OFFICES IN CHICAGO, NEW YORK AND SAN FRANCISCO CAN PROVIDE RECOMMENDATIONS ON HOW TO START
BUSINESS SWEDEN
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30
AGENDA
 U.S. market overview
 Upstream & downstream
 Business potential for Swedish companies
 Conclusions
 Appendix
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APPENDIX B: COMPANY PROFILE – BP
SUMMARY
BP in the U.S. produced 363,000 barrels of oil and 1,539 mcf of natural gas per day in 2013. The company’s capital
investments in the U.S. during 2012 exceeded $10bn, roughly 40% of BP’s global capital expenditure. Around 23,000
are employed by BP in the U.S. Since the Deepwater Horizon oil spill BP is still in court proceedings to determine
payouts to those effected by the spill
FINANCIALS - GLOBAL
GEOGRAPHY
Operating revenue: $379 136M
Headquarters
Main coverage
No. employees: 84 000
COMPARATIVE U.S. PROFILE
Oil
production
Refining
Gas
production
Retail
outlets
More than 7 500 retail outlets
SOURCE: ANNUAL REPORTS
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APPENDIX B: COMPANY PROFILE – CHEVRON
SUMMARY
Chevron is the third-largest hydrocarbon producer in the U.S. and a leading developer, manufacturer and marketer of
lubricant and fuel oil additives. It is one of the largest producers of crude oil and natural gas on the Gulf of Mexico
shelf. The company produced 449 000 barrels of oil and 1 246 mcf of natural gas per day in 2013 and Chevron also
operates more than 16 900km of pipelines in the U.S.
FINANCIALS - GLOBAL
GEOGRAPHY
Operating revenue: $379 136M
Headquarters
Main coverage
No. employees: 61 345
COMPARATIVE U.S. PROFILE
Oil
production
Refining
Gas
production
Retail
outlets
More than 8 000 retail outlets of which
around 500 are owned by Chevron
SOURCE: ANNUAL REPORTS
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APPENDIX B: COMPANY PROFILE – CONOCO PHILLIPS
SUMMARY
Conoco Phillip is one of the largest independent exploration and production companies in the world. In 2014 the
company expects to invest roughly $9Bn in its North American operations, with a majority going towards shale gas
projects. The company produced 330 000 barrels of oil and 1 533 mcf of natural gas per day in 2013
FINANCIALS - GLOBAL
GEOGRAPHY
Operating revenue: $58 248M
Headquarters
Main coverage
No. employees: 18 400
COMPARATIVE U.S. PROFILE
Oil
production
Refining
Gas
production
Retail
outlets
No downstream operations
SOURCE: ANNUAL REPORTS
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APPENDIX B: COMPANY PROFILE – EXXONMOBIL
SUMMARY
ExxonMobil engages in the exploration and production of crude oil and natural gas. The company is also involved in
the manufacture of petroleum products, as well as the transportation and sale of crude oil, natural gas and petroleum
products. In the U.S. the company produced 431 000 barrels of oil and 3 545 mcf of natural gas per day in 2013.
ExxonMobil is the largest natural gas producer in the U.S. after its acquisition of XTO Energy
FINANCIALS - GLOBAL
GEOGRAPHY
Operating revenue: $420 836M
Headquarters
Main coverage
No. employees: 75 000
COMPARATIVE U.S. PROFILE
Oil
production
Refining
Gas
production
Retail
outlets
Around 8 000 retail outlets though the
retail division is now sold and
ExxonMobil currently owns zero stores
SOURCE: ANNUAL REPORTS
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APPENDIX B: COMPANY PROFILE – SHELL
SUMMARY
Shell has been active in the US since 1912, is a major oil and gas producer in the Gulf of Mexico. Almost 50% of
Shell's oil and gas production in the U.S. comes from oil wells in the Gulf of Mexico.
The company produced 237 000 barrels of oil and 1 081mcf of natural gas per day in 2013
FINANCIALS - GLOBAL
GEOGRAPHY
Operating revenue: $451 235M
Headquarters
Main coverage
No. employees: 92 000
COMPARATIVE U.S. PROFILE
Oil
production
Refining
Gas
production
Retail
outlets
More than 14 000 retail outlets
SOURCE: ANNUAL REPORTS
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