middle east shale: potential and implications - manaar co jordan middle... · middle east shale:...
Post on 13-May-2018
215 Views
Preview:
TRANSCRIPT
Middle East shale – overlooked, but important
“Middle East [was] not addressed by the current study. This was primarily because there [are] significant quantities of conventional natural gas reserves” (EIA 2011) “Shale gas is neither plentiful nor cheap” – Qatar Petroleum (2010)
Middle East Shale: Key points
• Most attention to date has focussed on impact of North American shale gas/oil on the Middle East
• But MENA shale raises important questions:
– Does MENA have shale oil/gas resources? Where and how much?
– Does the region need to develop its shale oil and gas?
– Can the region develop shale resources technically & economically?
– What are the challenges to be overcome?
0
100
200
300
400
500
600
700
800
900
Jan-04 May-05 Sep-06 Feb-08 Jun-09 Nov-10 Mar-12
Oil
pro
du
ctio
n (
kbb
l/d
ay)
Qatar
Ecuador
North Dakota
US shale boom – North Dakota (Bakken) overtakes smallest 2 OPEC members
5
Global gas resources
0
2000
4000
6000
8000
10000
12000
14000
Asia & Australia North America Former SovietUnion
Middle East &Africa
Latin America Europe
Gas
re
sou
rce
s (t
rilli
on
cu
bic
fe
et)
Tight gas
Shale gas
Coalbed methane
Conventional gas
Source: Rogner (1997), EIA (2011, 2013)
• Shale means a huge jump in global resources
• Detailed assessment of Middle East unconventional gas not publicly available
• MENA’s dominance in conventional gas challenged by unconventional gas
23/07/2015 6
Shale gas can reshape gas trade flows
• White: satellite imagery of lights = energy demand
• Purple Red: global gas basins, in increasing size of resources (USGS)
• Yellow: main current and future export routes for Middle East gas
Significant shale gas potential
Less LNG demand in Europe?
North African shale gas to Europe
Australian shale-to-LNG
Lower Chinese (and Indian?) LNG imports
North American shale-to-LNG
v
New conventional gas
More intra-MENA gas trade?
Abu Dhabi examples: Diyab, Shilaif
14 Source: Ahmed K. Taher (2010)
• Shilaif (Mid-Cretaceous)
• 31 billion bbl generated, most not migrated out of source rock
• Diyab (Late Jurassic)
• Well B1 tested 1000 bpd from natural fractures
Middle East shales compare favourably with USA
Country Shale Age TOC % Thickness (m)
Oman Athel Silicilyte Infracambrian-Cambrian
4-7 50-1500
Regional Qusaiba Silurian 4-12 20-70
Jordan, Iraq Mudawwara Silurian 4-7 50-1500
Turkey Dadas Silurian 2-8 30-61
Iraq Chia Gara Jurassic 2.5-7.5 30-300
Iraq, Iraq, Kuwait Nahr Umr Cretaceous 0.4-14 150-220
Iran, Iraq Pabdeh Palaeocene 3-7.5 150-220
USA Barnett Carboniferous 4.5 90
USA/Canada Bakken Devonian-Carboniferous
10-20 46
• Middle Eastern shales often deep (4000+ m) – but comparable to Haynesville
• Likely many are high liquids; carbonate rich (easier to fracture)
Numerous different Gulf unconventional gas plays
• Gulf unconventional plays varied, potentially large
• Sour and contaminated gas (CO2, H2S, nitrogen)
• Tight gas (sands & carbonates)
• Shale gas, condensate and oil
• Deep and ultra-deep
• Mixed resources (e.g. deep, tight and sour)
Source: PacWest; Manaar research
CURRENT ACTIVITY
• Also: Egypt, Tunisia, Algeria
MENA gas: Shale resources significant locally and globally
Sources: BP, USGS, EIA, Petrenel, Baker Hughes, Manaar research
0
200
400
600
800
1000
1200
1400
1600
1800
Gas
re
sou
rce
s (T
cf)
Shale gas (Tcf)
Exploration potential (Tcf)1
Gas reserves (Tcf)
Does Middle East need to produce shale oil?
0
20
40
60
80
100
120
2010 2015 2020 2025 2030 2035
Demand
Non-OPEC + NGLs
OPEC
Source: OPEC Bulletin & World Oil Outlook
• OPEC itself sees only slow
growth in call for its crude
• Forecasts a slowly-falling
market share from 34% today
to 32% by 2015-35
• Competition for new supplies
from Iraq, Iran, Libya, etc
• However shale oil can be
important for non-OPEC
producers
• Oman, Egypt, Tunisia, etc
• Algeria?
• Associated liquids - Kuwait
19
20
-5
0
5
10
15
20
25
2008 2015
Ga
s e
xpo
rts/im
po
rts (
Bcf/
da
y)
UAE Jordan
Bahrain Kuwait
Syria Iran
Lebanon Israel
Yemen Oman
Libya Egypt
Algeria Qatar
Source: Fattouh & Stern,eds. (2010)
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
2008 2015
Gas
exp
ort
s/im
po
rts
(Bcf
/day
) Jordan Bahrain
Kuwait Syria
Iran Lebanon
UAENet gas exports / imports Net importers only
Does Middle East need to produce shale gas?
Long-term global gas export balance
• Middle East and Africa are
the two major exporting
regions
• Asia is the major importing
region
• Russia supplies Europe
• Big change is the emergence
of North American gas exports
after 2015
• However, total Middle East
gas exports do not grow much
and it falls behind Africa
-35.0
-25.0
-15.0
-5.0
5.0
15.0
1990 2000 2010 2020 2030
Gas
exp
ort
s (B
cf/d
ay)
North America S & C America
Europe & Eurasia Middle East
Africa Asia Pacific
Abu Dhabi: gas supply squeezed to 2016
0
2
4
6
8
10
12
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Ga
s s
up
ply
/d
em
an
d (
Bcf/
da
y)
Bab Hail Shah
IGD AGD-II OGD-III
Imports Existing fields Demand
Oman: needs unconventional gas to maintain LNG exports
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Ga
s s
up
ply
/d
em
an
d
LNG exports
Oil sector
Industry
Power
Supply
Gas policy motivations vary by country
-10%
10%
30%
50%
70%
90%
-100% -50% 0% 50% 100%
% p
ow
er
gen
era
tio
n f
rom
oil
Net gas imports
Iran
Saudi Arabia
Yemen Iraq
Libya
Kuwait
Syria
Egypt
Oman
Algeria Qatar
Abu Dhabi Bahrain
Tunisia
UAE - Northern Emirates
Morocco
Jordan
Dubai
Lebanon
Bring gas to domestic consumers
Limit dependence on gas imports
Save domestic oil for export
Grow domestic gas to sustain exports
23/07/2015 24
Bubble size indicates market size
Implications of soaring MENA gas demand
• Need for improved efficiency and end to gas flaring
• Challenges to gas-based industrialisation & job creation
• Need for new gas exploration & development
• Power cuts and unrest
MENA unconventional gas SWOT analysis
Strengths Weaknesses
• Strong existing transportation networks and infrastructure
• Numerous organic-rich shale/carbonate horizons
• Carbonate-rich shales (easy to fracture)
• Preferential pricing for shale gas (Oman)
• Incentives for exploration and development (Algeria new Petroleum Laws)
• Fast-growing, gas-short domestic markets
• More expensive to produce than conventional gas
• Gas prices not high enough to support high costs
• Water scarcity
• Lack of drilling and exploration resources in North Africa at present as well as skilled labour
• Only 3 dominant pumpers in the MENA: Schlumberger, Baker Hughes and Halliburton
• Deep reservoirs
• Uneven distribution of gas reserves between countries
• Traditional mindset of NOCs
Opportunities Threats
• Adequate resources of shale gas and tight gas
• Gain to export in thriving gas industry
• Local market conditions - gas shortage countries have potential for long term gas supply contracts
• Many unexplored reserves in North Africa and Iraq
• Saline-water & non-water fracs such as CO2 and LPG to alleviate water shortages
• Insufficient increases in gas prices
• Lack of adaptation of fiscal regimes
• Environmental opposition in Egypt and Tunisia
• Political instability, particularly in North Africa
• Competition from exports from US, East Africa, East Mediterranean
Gas prices have to rise to support shale gas development
US shale break-even prices (source: Antero)
Saudi Arabia current: $0.75
Bahrain current: $2.25
Iran target: ~$6
Gas pricing reform slowly materialising
0
5
10
15
20
25
Gas
pri
ce e
qu
ival
en
t ($
/MM
Btu
)
29
LOW LEGACY PRICES
HIGH NEXT-GENERATION PRICES
INTERNATIONAL BENCHMARKS
HIGH-COST FUELS
HIGH NEXT-GENERATION PRICES
Source: Manaar research 29
Unconventional gas still competitive
• Alternative generation (solar, nuclear, coal CCS) is cheaper than LNG or oil
• However, high-cost domestic gas (e.g. unconventional) at ~$8/MMBtu is still
competitive against alternatives
30
Source: Manaar research
23/07/2015
Gas/oil fuel prices $/MMBtu
0
5
10
15
20
25
Ele
ctri
city
ge
ne
rati
on
co
st (
$₡
/kW
h)
Dubai retail rate
Kuwait retail rate
MENA frac capacity not insignificant today, but well behind China, Russia
Source: PacWest Consulting Partners; Manaar research
MENA to see fast growth in frac capacity, but still small in global terms
Source: PacWest Consulting Partners; Manaar research
Conclusions
• Shale oil and gas present both challenge and opportunity to MENA
• MENA likely to have large shale oil & gas resources, spread across many
countries
• Less immediate need for shale oil given market constraints
• But could be important in non-OPEC, second-tier producers
• Shale gas potentially important in meeting regional gas demand
• Relevant to almost every country
• Barriers to development
• Mainly: commercial terms, low gas prices
• Also: water, service companies, deep reservoirs
• Region gearing up to activity: Jordan, Saudi Arabia, Oman, Algeria, Abu
Dhabi, etc
Robin Mills,
Head of Consulting,
Manaar Energy Consulting,
Dubai, UAE
robin.mills@manaarco.com
+971 4 326 6300
+971 50 293 4668
www.manaarco.com
Contact Details
top related