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The Scenario Planning Service (SPS) defines and tracks the critical assumptions behind our worldwide oil and gas projections with a focus on our medium- and longer-term outlooks. Scenarios are developed as a supplement to our Reference Case projections, consistent with PIRA’s quantitative, no-nonsense approach to analyzing markets.
Anyone who has observed global energy markets over the decades recognizes that even the soundest forecast is surrounded by a wide range of uncertainty. Projections are developed on the basis of a series of assumptions — on economic growth, resource availability, government policies, technology, and the economic and political behavior of key energy suppliers. PIRA has a track record of being better than the consensus in getting these assumptions right through solid, tireless analysis and a detailed knowledge of market data. Nevertheless, there are inherent uncertainties that even the best analysis cannot eliminate.
While uncertainties can't be eliminated, they can be identified, quantified and their impact on business plans assessed. The objective of SPS is to define and track these alternative outcomes in a way that makes them useful to our clients in testing their business strategies.
SPS can help clients answer the following questions:
PIRA is not the first consultant to offer long-range oil and gas scenarios, but this service is different, taking advantage of PIRA’s no-nonsense approach to market analysis. SPS is:
The cornerstone of SPS is the Annual Scenario Guidebook, which is released each February. This comprehensive study assesses the outlook to 2030 for oil and gas markets. It provides not only the quantitative forecasts — for PIRA’s Reference Case and alternative high and low cases — but also the detailed assumptions that go behind the forecasts. These include views on the global economy, energy and environmental policy, technology, and producer strategies. Key “signposts” — developments that have the potential to fundamentally impact energy markets — are defined in the Guidebook. These signposts are subsequently monitored throughout the year by PIRA, to determine whether prices are tracking PIRA’s Reference Case outlook or deviating towards a scenario case.
View the 2015 SPS Guidebook Table of Contents
According to the 2015 Guidebook, the importance of examining alternative scenarios has certainly been reinforced over the past 12 months as the global oil market (along with and many international gas markets) has experienced a major price collapse, broadly in line with the low case scenario that we have put forward for the past several years. Whether this will prove to be a lasting change or simply a limited duration and self-correcting downturn is the key question being debated throughout the industry as budgets and plans are adjusted to reflect the new short term reality and evolving perceptions of the future. The changes to the North American gas outlook have been less dramatic but as we publish this Guidebook. Henry Hub prices are once again below $3/MMBtu and still awaiting the demand surge to match the increase in low cost supply.
We believe that at least some of the bearish developments we observed over the past year will have a lasting impact. Broadly speaking nearly all of our price outlooks, Reference and Scenarios, oil and gas, have been reduced compared to last year. As the impact on oil has been greater than gas, the case for oil-to-gas substitution, particularly in transportation has been weakened vs. last year's outlooks – at least over the medium term. The high and low scenario cases for both oil and gas continue to evolve and we now have closer ties between our low oil and gas cases.
In addition to our High and Low cases, we have examined additional scenarios including a medium term "Oil Supply Overreaction Cycle" case where actions today lead to a supply shortage within several years and a "High Permian" case where Permian liquids production exceeds expectations . We also examine a "No CO2 Price" case for North American natural gas where PIRA's assumed post-2020 CO2 market price never materializes.
For the 2015 Guidebook, the outlook horizon and all of the tables in the text and the statistical appendix have been extended to 2035.
For more details on the Annual Guidebook and other SPS deliverables, refer to the next tab ("Deliverables").
The Scenario Planning Service provides a fully consistent supplement to PIRA’s Reference Case retainer services. Specifically, clients benefit from the following service components:
Sent on an “as-events-dictate” basis, insightful assessments of specific events with the potential to alter long-term trends. Past news events that SPS has assessed include:
Clients receive two invitations to attend one of the annual roundtables, which provide an opportunity for attendees to:
Attend special in-depth presentations from senior PIRA staff on topical issues, such as:
View a sample Roundtable agenda
This dynamic database captures long-term demand, supply, pipeline shipments and LNG imports and exports at a country and regional level, providing a comprehensive and balanced global picture of natural gas. The gas demand outlook uses PIRA’s World Energy Demand Model, which calculates the total energy requirements for each of the four primary energy consuming sectors and determines which fuels are likely to meet those requirements. The gas supply outlook draws inputs from PIRA’s North American and European Natural Gas and Global LNG services.
Quarterly report that examines the latest U.S. policy developments at the local, state and federal level, including regulatory actions, legislative initiatives, court rulings, trends in public opinion, and scientific studies that influence future production activity. The analysis underpins PIRA’s fundamental assessments of future prospects for liquids and gas from fracking, which are critical to both short- and longer-term balances for North American gas and, to an increasing extent, North American and global oil.
Clients are entitled to request PIRA to use in-house tools to construct two (2) specific scenarios per year, tailored to their own views on key variables such as price, economic growth, and supply availability. When requested, we provide guidance and recommendations regarding how best to incorporate the conclusions of the scenario work into their decision-making process.
As with all PIRA services, phone and email access to PIRA’s Scenario Planning Group allows Clients to obtain timely analytical support, facilitating a more productive use of their time and maximizing the value of the written content delivered at the roundtables, via email and the Web. Clients can discuss defined scenarios or get feedback and guidance on concerns of their own.
All reports, data tables, and presentations associated with the SPS are available to clients on PIRA Online. As such, recent and archive material are easily searchable. Also available to SPS Clients on PIRA Online are PIRA’s regularly updated macroeconomic data (currencies, U.S. economy and manufacturing, world economies and air travel) and a weekly report that tracks the performance of equity markets in countries and regions around the world.
Nearly all PIRA analysts provide input to the SPS service in their respective areas of expertise. The group below are regular contributors and participants in the SPS Roundtables.
Mark A. Schwartz (President and Managing Director, Scenario Planning Group) oversees SPS. Dr. Schwartz was formerly Chief Economist of ExxonMobil Corporation where he was responsible for developing the company’s long-range economic and energy outlook. Dr. Schwartz designed and managed the implementation of the energy modeling system and database that allowed ExxonMobil to develop their base-case global energy outlook as well as alternative cases to capture the impact of changes in price, economic growth, environmental policy and other critical assumptions. Prior to this position, Mark spent five years in Exxon’s International Gas Marketing Company, where he developed the Asian gas supply/demand balance and led several multi-company studies of China’s gas pipeline and LNG options. During his 25 years at Exxon he also had assignments in Upstream Planning, Treasurers, and Corporate Planning functions. He holds a PhD in economics from the University of Pennsylvania.
Richard (Rick) Joswick (Managing Director, Global Oil) develops PIRA’s outlook for crude and products pricing, refinery margins, and inter-regional supply balances. He authors PIRA's monthly European Oil Market Forecast and participates in special projects and multi-client studies, including Bottom of the Barrel: An Updated Outlook for Residual Fuel Oil (2012). He joined PIRA in 2004 after a 20-year stint with ExxonMobil in supply logistics, planning, refining, and research. Most recently, he was responsible for Exxon's near-term oil market forecast. Prior to this position, he focused on trading and logistics, refining economics, and heavy oil upgrading and, as part of his work, developed information systems in these areas. Rick has MS and BS degrees from Rutgers University in chemical engineering.
Frederick W.A. (Bill) Fuller (Senior Director, International Oil) has over 35 years of energy forecasting and analytical experience. During his 30-year tenure with Exxon International, Bill was the Advisor to Exxon’s Industry Group, providing briefings to supply management, and analyzing and forecasting oil market trends. In sales and marketing, Bill negotiated oil prices on sales to Exxon affiliates, established posted prices in the Caribbean and Asia, and oversaw tanker operations. Bill holds a BS chemical engineering from Cornell University
Peter Jaquette (Senior Director, Global Oil) oversees PIRA’s World Energy Demand Model and is the coordinator of the Planning for Tomorrow study series. Peter joined PIRA in 2007 with more than 25 years of experience in corporate strategic planning and economic consulting, including 14 years with ARCO and nine years with Weyerhaeuser, where he was involved in evaluating cellulosic ethanol and other energy projects. Peter has a B.A. in economics from Swarthmore College and an M.A. in economics from Stanford University.
Ira B. Joseph (Executive Director, International Gas) manages PIRA’s European Natural Gas Service. Ira joined PIRA in 1999 after working as director of Business Development at SageMaker, Inc., an enterprise information portal that provides a platform for integrating internal and external energy content. Prior, Ira held positions at Energy Intelligence Group (EIG) for over a decade, as Senior Editor of Petroleum Intelligence Weekly and Editor-in-Chief of World Gas Intelligence. He has authored several books on crude oil marketing and natural gas, including versions of EIG’s International Crude Oil Market Handbook and World Gas Handbook. Ira holds an MA in International Economics from Johns Hopkins School of Advanced International Studies
Miriam Levy (Director, Political Risk) oversees the Global Political Risk Service and is responsible for forecasting OPEC oil production. She also leads PIRA's upstream modeling efforts, including play-by-play shale liquids models and PIRA’s new web-based World Oil Supply Data Portal. From 2006 to 2009, she consulted electric utilities on power procurement at NERA Economic Consulting. Prior to that, she worked at an emerging markets hedge fund. Miriam has a B.A. in Ethics, Politics, and Economics from Yale University and an M.A. from Columbia University in International Energy Management and Policy.
Ethan Groveman (Manager of Project Consulting) oversees PIRA’s project consulting practice. In addition, he built and currently manages PIRA’s North American rail and pipeline infrastructure databases and contributes to PIRA’s work on refining, supply/demand balances, and vehicle technologies. He led the rail cost and capacity modeling for PIRA’s 2013 North American Crude by Rail Study. From 2008 to 2011, he served in product strategy and corporate development roles at Better Place, an electric vehicle infrastructure provider. Ethan has a B.S. in Management Science and Engineering from Stanford University.
Dan Klein (Managing Director, International Coal) oversees PIRA’s International Coal Retainer Service. He is responsible for the International Thermal Coal Market Forecast and International Coal Markets Scorecard, and he contributes to the U.S. Coal Market Forecast. Prior to directing the International Coal Service, Mr. Klein was a member of PIRA’s North American Electricity team. He has a BA in economics from Calvin College.
Roman Kramarchuk (Managing Director, Emissions and Clean Energy) heads up PIRA's Greenhouse Gas Emissions and North American Environmental Markets services. He joined PIRA in 2005, coming from the U.S. EPA’s Clean Air Markets Division, where he was extensively involved in the development of the CAIR and CAMR (Mercury) Rules and the BART Guidelines. His previous experience includes work with PA Consulting / PHB Hagler Bailly, where he evaluated strategies regarding power sector fuel choice, allowance purchases, and capital investments in pollution control equipment and advised on power plant development and acquisition, transmission expansion and asset valuation. He has a MPP from the Kennedy School of Government at Harvard and a BA in economics and BSE in system engineering from the University of Pennsylvania.
Alan Struth (Director, Global Oil) is the author of PIRA’s Japan Weekly Oil Analysis and the Asia-Pacific Oil Market Forecast as well as various macro-economic reports. Prior to joining PIRA in 2002, he was Director of Oil Market Analysis at Honeywell in Houston. Previously, he served as Chief Economist for Phillips Petroleum and was responsible for forecasting and economic analysis. Alan has over 25 years of industry experience, focusing on financial and market analysis, economics, policy analysis, forecasting and planning. He received a B.A. in economics from Rice University and a M.S. from the University of Pennsylvania.
SPS can be purchased on its own or as an add-on to a company's existing license to Global Oil, North American Natural Gas, or European Natural Gas. When adding to an existing retainer, a discount applies. For prices and licensing options, please contact your PIRA account executive.