Our scenarios and forecasts can help you make better informed long and medium term strategic plans and guide medium term operational decisions.
SPI, formerly known as Boston Petroleum Research, started building a proprietary suite of algorithms, computer models and databases to forecast oil supply, demand and price in 2005. We have had an uniquely successful record of forecasting all of the major oil price movements from 2006 to date with a scenario approach. Over more than a decade, we have consistently out-performed all of the leading banks, consultancies and national and international energy agencies. We believe we have the only commercially available scenario forecasting models that fully integrate oil supply, demand and price. We have had major corporate clients since we started in 2005.
The forecasts are generated through a suite of computer models using proprietary calibrations, oil and gas field data and country-by-country input data. These models fully integrate supply and demand sides with price feedback on demand and supply. A road transport module for gasoline and diesel demand is used to model different scenarios of market penetration by hybrid-electric, battery-electric and fuel cell vehicles in different national markets.
Scenarios may be generated using single issues, which we prefer for clarity, as well as bundled issues. Issues range from: macro-economic developments; geopolitical events and disruptions on the supply and demand side; regulatory and technology impacts.
The models are maintained and run by SPI. Clients can opt to subscribe to our standard service package (described below) or to a more tailored service. With a tailored service there is complete flexibility. Clients may prefer to have the models run with different input datasets, assumptions and geopolitical and macro-economic scenarios. Reporting schedules and formats are also entirely flexible.
Standard Service Package
Our proprietary databases and outcomes of our 3 to 6 scenarios are reported quarterly together with special research topics on supply, demand, geopolitical and macro-economic issues. Reporting includes full commentary, digital tabulated and graphical output. These are reported on an aggregated and country basis (world, OECD, non-OECD, regional, countries, supply type – conventional crude oil, tar sands, light tight oil, NGLs etc.). The standard service also includes quarterly briefing and discussion meetings and a reasonable amount of video-conferencing and telephone briefing.
The scenario based forecasts from the road transport vehicle model are also available as a stand-alone service.
Tailored Service Options
If they wish, clients can have their own data, assumptions and/or views on future geopolitical developments deployed through the modeling software suite. The standard service can be tailored to a client’s requirements to any required degree and level and type of contract.
Principles
Our approach is based on two key principles:
-
Models should closely emulate real world behaviour
-
Data should be as accurate and as detailed as possible
The models simulate real world processes and are validated by history matching. The forecasting software consists of four interlinked computer models: conventional crude oil; light tight oil; road transport and gasoline/diesel demand; and supply-demand-price assembly and forecasting.
The assembly forecasting model is given a degree of autonomy to make decisions in critical supply-demand-GDP growth circumstances. The model autonomously forecast the global recessions in 2009, the oil price spike in 2008 and the oil price collapse in 2014-2016.
Unique, Detailed approach
- Simulation of real world processes at very detailed level. Oil fields and projects on supply side and individual country demand and GDP on demand side (not a mathematical abstraction nor broad brush global approach)
- Calibrated price impact on demand, GDP and supply (time dependent cost of supply curves, elasticities and oil intensities)
- Road transport fuel demand model for gasoline and diesel takes into account technology and regulatory developments leading to lower fuel consumption and ZEV penetration
- Model makes autonomous decisions
- Single issue scenarios to thoroughly analyse future pathways (not an amalgam of factors) as well as multiple factor scenarios
- Unique integrated supply-demand-price model (not demand only, not supply only). Model brings together more than 300 supply components and demand-GDP from 40 countries and groups of countries
- History matching (from 1860 for crude oil and 1980 for integrated model).
- Integrated forecast of natural gas demand and supply. Natural gas and NGL supply broken down into associated conventional oil, associated non-conventional oil, conventional non-associated, unconventional non-associated and coal bed methane.
- Uncertainties in input data carried through the modelling process using Monte Carlo approach.
Comprehensive Data
- Supply-side supported by comprehensive proprietary database of major oil and gas fields assembled from public domain information
- Future exploration success at basin level with exploration and development linked to oil price and cost of supply curves
- Light tight oil basins – geological data, well production data, history matched models. Drill out rate and production linked to cost of supply curves
- Tar sands and LNG projects databases and forecasts. tar sands development and production linked to cost of supply curves.
- Demand side supported by proprietary database of road vehicles
Results in Superior Performance
- Model scenarios have successfully forecast all of the major price movements since 2005
- The price plunge from mid 2014 onwards into 2016 was forecast in early 2013
- Long range (decades) and short range (2 quarters) capability
- Over more than a decade, consistently out-performed all of the forecasts made by the leading banks, consultancies and national and international energy agencies
- LTO model works on a monthly timescale and uses well-by-well drill out approach. This model can be used to evaluate basins, sweet spots and individual companies portfolios.