McKinsey: How Unconventionals are Changing the Oil and Gas Market 

Check out a real Mckinsey presentation on the oil and gas market.

McKinsey Presentation: How Unconventionals are Changing the Oil and Gas Market

Key Learnings from the Presentation

The McKinsey report titled “How Unconventionals are Changing the Global Oil and Gas Markets,” presented to the Scottish Oil Club on November 7, 2013, provides a comprehensive analysis of the impact of unconventional oil and gas resources, particularly Light Tight Oil (LTO) and shale gas, on the global energy landscape. Here’s a structured summary capturing the essence of the report:

Overview

• Rapid Growth of Unconventionals: Unconventional oil and gas, particularly in the United States, have seen substantial growth. Light Tight Oil (LTO) production reached 2 million barrels per day by March 2013, indicating a significant shift towards unconventionals in the oil and gas supply mix.
• Impact on Global Supply and Demand
  • Oil: Demand for oil is expected to grow by about 1% per year, with unconventionals contributing significantly to the supply. Unconventionals are transforming the global oil supply cost curve, potentially affecting the viability of deepwater developments.
  • Gas: Global natural gas consumption is projected to grow by 2% per year, with Asia driving demand. In the U.S., shale gas production has led to a substantial decrease in gas prices, providing significant economic benefits and altering global gas market dynamics.
• Technological and Operational Challenges: The boom in unconventionals is not without challenges, including the need for high drilling activity, environmental concerns, regulatory uncertainties, and the development of necessary infrastructure.
• Global Potential and Uncertainties: While the U.S. has led in the development of unconventionals, significant resources exist globally. However, exploration outside North America is in early stages, and several factors could impact the pace and scale of development, including geoscience understanding, technology advancements, environmental concerns, and regulatory frameworks.

Actionable Insights

• Continued Innovation and Efficiency Improvements: To sustain the growth in unconventional production, continuous improvements in technology and operational efficiency are crucial. This includes addressing environmental and water use concerns, optimizing well designs, and enhancing recovery rates.
• Strategic Investments in Infrastructure: Developing the necessary infrastructure, from pipelines to export terminals, is vital for supporting the growth of unconventionals and maximizing their impact on global markets.
• Navigating Regulatory and Environmental Challenges: Engaging with stakeholders, adhering to best practices in environmental stewardship, and navigating the evolving regulatory landscape are essential for the sustainable development of unconventional resources.
• Monitoring Global Developments: Stakeholders should closely watch global exploration activities, technological advancements, and market dynamics to adapt strategies in response to the evolving role of unconventionals in the global energy mix.

About McKinsey

McKinsey & Company stands as a premier entity in the global management consulting sphere, initiated by James O. McKinsey in 1926. Anchored in New York City, this firm has carved a distinguished position in the consulting arena, offering strategic guidance across the globe to a diverse clientele that includes businesses, governments, and various institutions.

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