is there a peak gas ahead?
DESCRIPTION
IS THERE A PEAK GAS AHEAD?. Jean-Marie BOURDAIRE [email protected]. IV Congreso Anual Conjunto de Asociaciones del Sector Energético y XII Congreso Anual de la AMEE Acapulco 2012. …and what would be its impact?. ACAPULCO. May 25, 2012. OUTLINE. A/ World generalities on reserves - PowerPoint PPT PresentationTRANSCRIPT
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IS THERE A PEAK GAS AHEAD?
Jean-Marie BOURDAIRE
May 25, 2012
…and what would be its impact?
IV Congreso Anual Conjunto de Asociaciones del Sector Energético
y XII Congreso Anual de la AMEE Acapulco 2012
ACAPULCO
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OUTLINE
• A/ World generalities on reserves
• B/ The rise of shale gas in the US
• C/ US shale gas: future perspectives
• D/ And what about elsewhere?
• E/ Annex: Gas resources plays
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A/ GENERALITIES
ON RESERVES AND PEAK
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THE 2005 NATURAL GAS VISIONWorld production peaks at 130 Tcf/y in 2030
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9,9 7,4
4,5
58,6
75,8
14,7
16,2
North America
S-C America
Europe OCDE
Eurasia (FSU)
Middle-East
Africa
Asia-Pacific
WORLD GAS RESERVES (TCM)
Total reserves: 187 Tcm or 6.6 Pcf
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NATGAS RESERVES: ~200 TCMEVOLUTION OF GAS PROVEN RESERVES (TCM)
0
20
40
60
80
100
120
140
160
180
200
1980 1985 1990 1995 2000 2005 2010
Asia-Pacific
Africa
Middle-East
Eurasia(FSU)
WesternEurope
S&CAmerica
NorthAmerica
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THE 2012 LAHERRERE’S VISIONUltimate reserves: 13 Pcf = 10.4 Pcf conventional + 2.6 Pcf
unconventionalWorld production peaks at nearly 150 Tcf/y
If unconventionalgas is > 2.6 Pcf,the peak is not
changed butthe decline
is slower
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B/ THE RISE OF SHALE GAS
IN THE UNITED STATES
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MAIN SHALE GAS DEPOSITS
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THE US SHALE GAS EARLY DAYS
• 1970-2000: Unconventional gas (on average 70% tight gas, 20% CBM and 10% gas shale up to 2008) has grown slowly from less than 1 Tcf/y in 1970 to ~5 Tcf/y in 2000
• 2000-2008: Unconventional gas was foreseen to reach a 9 Tcf/y plateau in 2010-25, but the fall of conventional gas was such that much increased LNG imports were to be needed
• 2008: Oil, natgas prices, and the US rig count, collapse. To maintain their production, operators deploy new technologies, which are at the origin of the shale boom
Because of their belief that LNG imports were set to grow, many operators have developed LNG terminals now idle
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THE PRE-2008 VISIONNORTH AMERICA NATURAL GAS
Productions and 23-year shifted conventional gas discoveries
0
5
10
15
20
25
30
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
Tcf
per
yea
r.
Smoothed discoveries over 7 years
Marketed gas production
Marketed less unconventional
Unconventional gas AEO-2005
Jean Laherrere 2005
Tight gas,shale gas,and CBM
US unconventionalgas was forecast toplateau at 9 Tcf/y
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AEO FORECASTS: 2000-2008US DOMESTIC PRODUCTION (TCF)
0
5
10
15
20
25
30
2000 2005 2010 2015 2020 2025
AEO 2000
AEO 2001
AEO 2002
AEO 2003
AEO 2004
AEO 2005
AEO 2006
AEO 2007
AEO 2008
Year after year, the production forecasts get more pessimistic
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2008: THE TURNING POINT
WET US GAS - SUCCESSIVE EIA FORECASTS (BCF/D)
46
48
50
52
54
56
58
60
Jan-07 Mar-07 May-07 July-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 July-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09
YEAR 2006
YEAR 2007
YEAR 2008
YEAR 2009
YEAR 2010
Shale gas contribution overtakes the decline of conventional gas
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AEO SHOW A BREAK IN 2008…US UNCONVENTIONAL GAS PRODUCTION (TCF)
0
3
6
9
12
15
2000 2005 2010 2015 2020 2025
AEO 2000
AEO 2001
AEO 2002
AEO 2003
AEO 2004
AEO 2005
AEO 2006
AEO 2007
AEO 2008
AEO 2009
AEO 2010
2009 & 2010 are in discontinuity with the 9 Tcf/y
plateau foreseen before (2000-08)
Shale gas production jumps above the former 9 Tcf/y forecast
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2008: THE RIG COLLAPSE…NATURAL GAS RIGS NUMBER VERSUS HH PRICE
0
5
10
15
20
25
J-00 J-01 J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 J-10 J-11 J-12
Gas rig count divided by 100
Henry hub price in $/MBtu
Spot WTI price in $/MBtu
The rig countclosely followsthe price trend
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…BUT PRODUCTION GROWSUS NATURAL GAS MARKETED PRODUCTION (BCF/D)
40
45
50
55
60
65
70
J-80 J-82 J-84 J-86 J-88 J-90 J-92 J-94 J-96 J-98 J-00 J-02 J-04 J-06 J-08 J-10 J-12
Impressive
growth up
to 2012
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C/ FUTURE PERSPECTIVES
FOR THE US SHALE GAS
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THE VOICE AGAINST SHALE GAS
• High costs, poor economics and destruction of capital,
• Infrastructure limitations (pipelines and NGL-stripping plants),
• Physical fundamentals (small core areas, fast decline rates),
• Average break-even prices higher than current prices,
Contrary to the major limitations that Arthur Berman sees…
• Shale gas development is not like a Ponzi scheme…• …and US gas majors are not behaving like Madoff.• Some operators may fool some analysts for a while but…• …the entire industry cannot be wrong for ever
…One may be optimistic about the future of shale gas
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TRUE SHALE GAS REALITIES• Shale gas is the last unconventional gas in development,
and still is at the beginning of its learning curve.
• The pace of technological improvement will continue
• Expected ultimate reserves critically depend on the type of decline (exponential or hyperbolic)
• High costs plays: Liquids (oil or NGL) are essential for the economics
• Core areas with good IP are small (a few %), but overall reserves may be very large
• Good operators will manage environmental concerns
• Infrastructure (NGL plants and pipelines) is critical
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US PRODUCTION GROWTHShale gas dominates the natural gas growth
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WHAT CHESAPEAKE SAYS
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WHAT THE US DOE-EIA SAYS:US dry natural gas production forecast in the AEO-2012:
Growing from 5 Tcf in 2010 to 14 Tcf in 2035!
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D/ AND WHAT ABOUT
ELSEWHERE IN THE WORLD?
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UNCONVENTIONAL TRANSPORT OF METHANE IN CHINA (1997)
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CANADA SHALE RESOURCESWith resources of 1100 Tcf, 200-300 Tcf may be recoverable
A total of 1100 TCF
of which ~50% in
the Horn River Basin
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AND WHAT ABOUT THE WORLD?First feedbacks are good for Argentina, possibly
good for China (?), uncertain for Europe and Ukraine
6600 Tcf or 6.6 Pcf of which 2-3
recoverable?
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CONCLUSION: WHAT FUTURE?
• In North America: Exports of a few % of production as LNG will sustain a balanced price level (5-6 $/kcf) which, in turn, will allow production to grow evenly.
• In Europe: Unconventional gas prospects are remote: not only spot LNG imports push prices down but the EU E&P legislation needs to be deeply redrafted
• In Asia-Pacific: Neither China unconventional (still far away), nor Australian CBM-to-LNG (a few Bcf/d) will be game changers and decouple LNG from oil soon.
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E/ ANNEX:
GAS RESOURCES PLAYS
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Recoverable: 600-700 Tcf?
500 - 700
750
75 CBG resource in-place (Tcf)
Other countries with significant exploration activity
335-450
220 - 350
800 - 1,100
1,680
390-425
140–1,040
30-280
60
0.5
15-50
5-10
100
100 22-44
30
CBM RESOURCE PLAYS
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Production Summary
• USA - production commenced in San Juan Basin in 1953. CBM production in 2007: 4.8 Bcf/d (9% of total US dry gas)
• Canada – since 2002: 208 Mcf/d in 2007. Could exceed 1.4 Bcf/d by 2015. Average new well on stream at 100 Mcf/d.
• Australia – since 1996; 215 Mcf/d in 2006; Queensland produced 272 Mcf/d in 2007; planning up to 6 LNG schemes near port of Gladstone.
• Minor production or approaching commercial production: UK; China; India; Kazakhstan; Russia (Kuznetsk Basin).
• 13 coal-producing countries have CBM projects.
CBM RESOURCE PLAYS
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Pierre Mauriaud, ASPO 9 Bruxelles
CBM (BCF/D)
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Recoverable: ~1350 Tcf?
560
6,800
75 Tight sand gas resource in-place (Tcf)
Other countries / areas with known tight sand exploration activity
0.5
TIGHT SANDS RESOURCE PLAYS
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Gas dissolved in abnormally-pressured low-permeability aquifers in the central (generally deeper) part of basins -• over-pressured in subsiding basins• under-pressured in uplifted and eroded basins.
Examples: San Juan Basin & Greater Green River basins (USA);Western Canada Sedimentary Basin (southern deep basin);Northwest Europe Permian Basin; Pannonian Basin;Algerian basins; Oman Basin; Ordos Basin, China.
Also known as “deep gas” and “tight sand gas” but these are not necessarily restricted to continuous accumulations (and BCG is not always deep).
Basin-Centered Gas
TIGHT SANDS RESOURCE PLAYS
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Resources of tight Sand Gas / Basin-Centered Gas
No reliable global resource estimate available
Enormous in-place resources in USA (all tight sands)
• 3,000-5,000 Tcf in the Greater Green River Basin;
• 900 Tcf in the Wind River Basin, Wyoming;• Total in-place resource ~ 7,000 Tcf.
USA Ultimate Tight Sand Resource Estimate
• 380 Tcf: 140 produced, 60 proved, 180 unproved/undiscovered, 200 Tcf produced and proved considered as “conventional”
• USA unproved/undiscovered BCG resource estimates from other sources range up to 340 Tcf.
TIGHT SANDS RESOURCE PLAYS
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Production of tight Sand Gas / basin-centered gas
USA production from all tight sands
• Total US production estimated at >6 Tcf (16.5 Bcf/d) in 2007
• 5-6% recovery factor - but much higher from “sweet spots”:- Pinedale: 56% (10-acre spacing);- San Juan Mesaverde: 44% (160-acre spacing);- Uinta Mesaverde (EOG): 37% (10-acre spacing);- Jonah Lance: 30% (40-acre spacing).
Canada
• Canadian production from tight sands and carbonates:- Alberta: ~3 Bcf/d;- British Columbia: ~1 Bcf/d.
TIGHT SANDS RESOURCE PLAYS
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TIGHT GAS (BCF/D)
Pierre Mauriaud, ASPO 9 Bruxelles
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Recoverable: > 700 Tcf?
AB / BC~ 1,000
600 Shale gas resource in-place (Tcf)
Other countries / areas with known shale gas exploration activity / potential
1,900
SHALE GAS RESOURCE PLAYS
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USA Ultimate Fractured Shale Resource Estimate
• ~415 Tcf: 9 produced, 21 proved, 385 unproved/undiscovered (ICF International). 30 Tcf produced + proved is considered “conventional”.
• Unproved / undiscovered shale gas recoverable resource estimates from other sources range from 32 Tcf to 125 Tcf but
predate recent improvements in recovery and assessment of recent plays such as Haynesville and Marcellus.
Global Resource Estimates
• No reliable estimate available but considerable potential exists.
• Canada (BC; AB; QC; NB; NS) will be next significant player. Estimated 860 Tcf IP in Western Canada (130 Tcf recoverable).
SHALE GAS RESOURCE PLAYS
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Source: World gas profiles (2011)Pierre Mauriaud, ASPO 9 Bruxelles
SHALE GAS (BCF/D)
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WORLD SHALE RESOURCES6 622 Tcf of which 20-30% may be recoverable
ALL GAS RESOURCE PLAYS6600 Tcf of which 20-30% may be recoverable
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UNCONVENTIONAL GAS RECOVERABLE BY REGIONS
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RANGE OF UNCONVENTIONAL REGIONAL RECOVERABLE GAS