natural gas to 2030 v17 - kepis & pobe · 2017-03-18 · 1 executive summary •global natural...

Confidential and Proprietary

Gas is not only a ‘bridge’ but truly a ‘destination’ fuel in a lower carbon world

March, 2017

Natural Gas to 2030

1

Executive summary

• Global natural gas consumption expected to increase 37% by 2030

• Longterm demand will be driven by emerging market energy needs and European imports

• Global recoverable reserves will become more plentiful due to unconventional drilling technologies (e.g. shale gas, tight gas)

• Significant stranded reserves will tie into global supply network with new transnational pipelines and liquified transport technologies

• Diversification of hydrocarbon trade dependencies will have a democratizing effect on global energy security

• Natural gas will play a key role in meeting global carbon reduction targets

• Improving shale gas economics while moderate to uneconomic returns in coal-bed methane developments

2

6,844 tcf

119 tcf

117 tcf

56 yrs

37%

60%

181%

220%

140%

60%

Global proved reserves 2012

Global gas production 2012

Global gas consumption 2012

Global reserves to production (R/P ratio)

Growth in global gas production to 2030

Growth in OECD European gas imports to 2030

Growth in gas consumption in China to 2030

Growth in global unconventional gas to 2030

Growth in LNG shipping to 2030

Reduction in carbon footprint of switching from coal to gas

Key facts and figures

Sources: BP Statistical Review; EIA

3

Natural gas composition and carbon footprint

Sources: Canadian Centre for Energy Information; UK Department for Environment, Food and Rural Affairs; XTO; IPCC

CO2 emissions per energy unitIndexed, coal = 100

Gas is “cleanest” hydrocarbon fuel

Energy components

Non-energy components

Methane (CH4)

Ethane (C2H6)

Propane (C3H8)Butane (C4H10)Condensates(C5H12–C10H22)Nitrogen (N2)Carbon dioxide (CO2)Hydrogen sulphide (H2S)Helium (He)

Unprocessed natural gas

Methane (CH4) is the simplest hydrocarbon molecule, with one atom of carbon and four of hydrogen

4

40

83

100

0 50 100

Gas (withcarbon

capture)

Gas

Oil

Coal

4

Natural gas value chain

Liquefaction Shipping RegasMarketing

• Exploration:Technical and economic assessment of hydrocarbon basins, e.g. seismic

• Development:building infrastructure to produce gas, e.g., drilling, pipe-laying,

• Production:operating production facilities

• Gas processing:removal of mercury, sulphur, carbon dioxide, and condensate from raw gas

• Loading:transfer of liquefied gas to an LNG tanker, usually able to carry more than 120,000 cubic meters of LNG

• Regasification:pumping LNG through vaporizers which use seawater to heat LNG to its gaseous form

• Storage: storing LNG in stainless steel tanks

• Wholesale: sales and transmission of gas

• Retail:distribution of gas to end-users,

• Pipeline transmission: compression of gas in pipelines moving at speeds of up to 40 km/hour

Refining and processing

Exploration and production Pipelines

• Liquefaction:cooling of pre-treated gas to -162ºC to convert it into liquid form at 1/600th of its gaseous volume

5

Local gas markets

1800s–1970

Regional gas markets

1970–2005

Globalized gas market

2005–2030

Major markets

• USA• Italy• Netherlands

• North America• FSU/Russia• Western Europe• North East Asia (Japan, Korea)

• North America• Russia• Western Europe• North East Asia (Japan, Korea,

China, India)

Main supply routes

• Local USA pipelines– SouthWest–Chicago– SouthWest–Appalachia– Texas–NorthEast

• Local European pipelines

• Intra-regional pipelines– Canada–USA– Russia–Central Europe– Norway/Netherlands–West

Europe– Algeria–Italy

• Regional LNG

• Long-distance pipelines– Russia–China– Middle East–India– Middle East–Europe– North Africa–Europe

• Global LNG arbitrage– Middle East– Atlantic Basin– Pacific Basin

Tech-nologies

• Basic pipelines • Long-distance pipelines• LNG liquefaction and shipping

• Arctic E&P/LNG• Unconventional gas• CNG

Gas value chain evolving into a globally integrated market with rise of new technologies and transport corridors

Sources: Natural Gas and Geopolitics from 1970–2040, Cambridge University Press; McKinsey

6

Proven gas reservesTrillion cubic meters

US9

Venezuela6

Canada2

1Argentina

48

3325

Russia

IranQatar

8

Saudi Arabia6

Nigeria5

Algeria 5

UAE

3Iraq 3Kazak.

4Indonesia

2Malaysia

1 Australia

2 Norway

3 China 2

Kuwait

1 Netherlands

1 India

1 Pakistan

1UK

Gap between “have’s” and “have not’s” in gas will drive long-term trade and investment dynamics

Sources: CIA World Fact Book – 2012 Data

8 Turkmen.

Russia and Middle East hold 70% of global gas reserves

Currently a 10 yr R/P ratio, but significant additional estimated recoverable reserves from shale gas sufficient to satisfy current US demand for 100 years

Europe’s low indogenous reserves make it dependent on piped Russian gas and LNG imports

Asian Pacific investment in LNG underway to satisfy emerging Asian demandNew Discoveries

Mozambique

Papua New Guinea

7

Natural gas landed price, USD/MMbtu

US$5

$1 Saudi Arabia

China $11 Europe

Sources: Platts, EIA, WSJ, Financial Express, Oil Egypt, Platts, Bloomberg, Federal Energy Regulatory Commission

US prices depressed as a result of recent shale gas glut

China natural gas prices pegged to crude oil

Prices reflect reserves: Europe and Asia willing to pay to satisfy energy needs

$15

$14$16

Japan

$7 Argentina

$15

Brazil$9Chile

European prices governed by supply of Russian and LNG imported gas

India$4Egypt

$3Russia

Domestic prices in Argentina artificially low due to regulation however have recently been increased by government to attract investment; LNG cargoes in line with rest of Latin America,

Atlantic Shipping Rates - $80k/day

Asia Pacific Shipping Rates - $85k/day

8

716

China/India

14 22

Middle East

4 6

Africa

Demand will remain strong through 2030 as Europe ups imports and emerging markets develop energy needs at home

Sources: EIA

Production, tcfConsumption, tcf

2011 2030

2011 2030

2011 2030

2011 2030

2011 2030

2011 2030

2011 2030

2011 2030

2011 2030

European consumption increases while production falls

Middle East production increase largely consumed by own energy needs

33% growth in Asian demand

50% growth in Latin American demand

28 32

US/Canada

8 12

Latin America

20 22

OECD Europe15 19

Russia

6 7

Japan/Koriea

9 13

Asia Other

9

Africa

Latin America

North America

Remaining Global Natural Gas Resource – 200+ Years (based on current demand)

Sources: IEA

Conventional, Thousand tcfUnconventional,Thousand tcf

4.0

2.8

Europe

1.6

Middle East

Russian/Caspian

Asia Pacific

3.1

4.84.8

World Total27.9

Unconventional

Conventional

10

Gas reserves-to-production (R/P) ratiosYears

2012 by Region History

Sources: BP Statistical Review 2013

11

Major gas trade movements 2012 Trade flows worldwide (billion cubic metres)

Sources: BP Statistical Review 2013

12

Drilling Technology: Unconventional drilling technologies such

as shale gas will have a multiplier effect on global gas reserves

and open new basins to exploration

Transporation: Expansion of liquified natural gas (LNG) and

transnational pipelines will provide new global supply routes

between the field and end-markets

Meanwhile, two disruptive factors will create significant opportunities upstream

1

2

13

Unconventional drilling technologies will increase global gas reserves by 3x: finding opportunities abundant

Trillion cubic meters

141

Proven reserves

Tight gas

Coal bed methane

Shale gas

Conventional gas Unconventional gas

179

455

255

210

643 920

“Stranded” non-economic reserves

Yet-to-find

50

Gas that is not recoverable using existing technologies

Discovered reserves that are economic to recover

Resources yet to be discovered

Discovered reserves currently uneconomic to recover

Methane gas contained in deep coal beds that cannot be directly mined

Gas produced from reservoirs mostly composed of shale with lesser amounts of fine-grained rock

Gas from tight reservoirs with low permeability (<0.1 millidarcy)193

Non-technically recoverable

Gas under unusual reservoir conditions

Gas found in conventional reservoirs

80

Produced

R/P =62 years

Sources: IEA; SPE; BP Statistical Review; Cedigaz; USGS; McKinsey

1

14

Overview of unconventional drilling technologies (1 of 2)

• Unconventional technologies access previously uneconomic formations

• Shale gas technology taps directly into the organic source rock

• Shut-in fields with the right formations can be reopened

• Significant opportunities abroad for players that possess technical know-how

1

15

Overview of unconventional drilling technologies (2 of 2)

Shale/tight gas

Description Pros/Cons

• Sweet gas stored within the pours of a coal resevoir, typically with low permeability

• Similar to conventional production except need for water removal– Wells are drilled into coal bed– Water is removed before gas

flows out

Coalbed methane

• High drilling success rates

• Inexpensive and quick well completion

• Environmental concerns on produced water disposal

• Moderate to uneconomic returns

• Shale: gas trapped in original shale source rock with insufficient porosity and permiability to flow

• Tight: gas trapped in unusually impermeable, hard rock, or non-porous sandstone or limestone

• Accessed by drilling horizontal well that intersects natural fractures and using pressurized liquids to fracture the rock and stimulate flow

• Significant basin potential globally

• Volume drilling effects reduce cost of drilling and fracing

• Improving & economic returns

• Drilling and fracing requires learning effects unique to basin

Frontiers

Marcellus

Sichuan basin

Perth basin

Baltic basin

Lower Saxony

Paris basin

Neuquen basin

Horn River

Powder River

Queensland

Erdos basin

Indonesia

1

16

LNG terminal network will expand as technology becomes increasingly in demand and cost competitive

LNG becoming more competitive…

• Increasing scale of Liquefaction and regasification plants

• LNG vessels: floating storage and regas unit, floating liquefaction unit , energy bridge

• Improved production process of building LNG vessels

• Larger share of offshore/sub-sea facilities (lower cost and building time)

Global LNG trade, tcf per year

Liquification terminals planned or under contstruction

Sources: Ocean Shipping Consultants; Energy Tribune

2

17

Transnational pipeline network reaching further to access stranded gas

Nabucco Pipeline

Description Construction

Iran-Pakistan-India Pipeline

• End-market: Europe

• Gas sources: Iraq, Azerbajan, Turkmenistan

• Capacity: 1.1 tcf / yr

• Consortium:

• Cost: $11 bn

• Length: 1,800 km

• Completion: 2015

Route

Central Asia-China Pipeline

• End-market: China

• Gas sources: Turkmenistan


• Consortium:

• Cost: $7 bn



Major projects new or in discussion

• End-market: India, Pakistan

• Gas sources: Iran


• Consortium:

• Cost: $8 bn



2

18

Natural gas backed by an emerging political will –old and new relationships in play

“We want the Southern Corridor to be ready by 2016-2017 … Research shows that energy production in Europe will decrease by then and the need for gas increase … If Azerbaijan cannot supply the Nabucco gas pipeline in full, other regional countries, for example Kazakhstan and Turkmenistan, can join too.”

Guenther Oettinger, European Union Energy Commissioner, Nov. 2010

“We are discussing [LNG] with other potential consumers in the Gulf, Canada, Argentina and Chile … We’re seeing new markets there. New customers there. Customers even if you talked about five years ago no one would believe you …”

Abdullah bin Hamad Al Attiyah, Qatar Deputy Premier, Nov. 2010

“Huge discoveries of natural gas promise to shake up the energy markets and geopolitics … Europe may have nearly 200 trillion cubic feet of its own shale gas … Resources are believed to extend into countries such as Poland, Romania, Sweden, Austria, Germany—and Ukraine. Once European shale gas comes, the Kremlin will be hard-pressed to use its energy exports as a political lever. Greater shale-gas production in Europe will also make it harder for Iran to profit from exporting natural gas.”

Amy Jaffe, Baker Institute, WSJ, Shale Gas Will Rock the World, May 2010

“The United States will promote the use of shale gas … natural gas is the cleanest fossil fuel available for power generation today, and a number of countries in the Americas may have shale gas resources. If developed, shale gas could make an important contribution to our region’s energy supply …”

Hilary Clinton, U.S. Secretary of State, April 2010

“The US and China will use experience gained in the United States to assess China’s shale gas potential, promote environmentally-sustainable development of shale gas resources, conduct joint technical studies to accelerate development of shale gas resources in China, and promote shale gas investment in China through the US-China Oil and Gas Industry Forum, study tours, and workshops…”

Barack Obama, U.S. President, Nov. 2009Hu Jintao, President of China, Nov. 2009

19

Appendix

20

Rank CountryTrillion Cubic Meters (TCM)


1 Russia 47.8 11 China 3.5

2 Iran 33.6 12 Iraq 3.2

3 Quatar 25.2 13 Indonesia 3.1

4 Saudi Arabia 8.2 14 Kazakhstan 2.4

5 United States 7.7 15 Malaysia 2.4

6 Turkmenistan 7.5 16 Egypt 2.2

7 UAE 6.1 17 Norway 2.1

8 Venezuela 5.5 18 Canada 1.9

9 Nigeria 5.2 19 Uzbekistan 1.8

10 Algeria 4.5 20 Kuwait 1.8

Proved gas reserves by country50% of global proven reserves

Sources: CIA World Fact Book / EIA Global Energy Outlook 2013

21


1 China 31.6

2 Argentina 22.7

3 Algeria 20.0

4 United States 18.8

5 Canada 16.2

6 Mexico 15.4

7 Australia 12.4

8 South Africa 11.0

9 Russia 8.1

10 Brazil 6.9

Technically Recoverable Shale Gas Resources

Sources: EIA Global Energy Outlook 2013

22

Hydrocarbon and energy unit Conversion table

To

Multiply by From

1 billion cubic meters(BCM)

1 billion cubic feet(bcf)

1 million tons oil equivalent (mmtoe)

1 million metric tons(mil MT)

1 trillion British thermal units (tbtu)

1 million barrels oil equivalent(mmboe)

billion cubic meters

1

0.028

1.111

1.38

0.028

0.16

billion cubic feet

35.3

1

39.2

48.7

0.98

5.61

million tons oil equivalent

0.90

0.026

1

1.23

0.025

0.14

million metric tons

0.73

0.021

0.805

1

0.02

0.12

trillion British thermal units

36

1.03

40.4

52.0

1

5.8

million barrels oil equivalent

6.29

0.18

7.33

8.68

0.17

1

Sources: BP Statistical Review

23

DefinitionTerm

• Coalbed methane

• Dry gas

• Natural Gas

• Natural gas liquids (NGLs)

• Sour gas

• Sweet gas

• Wet gas

• Natural gas generated during the coalification process and trapped within coal seams, commonly referred to as natural gas from coal

• Natural gas from the well that is free of liquid hydrocarbons, or gas that has been treated to remove all liquids; pipeline gas

• Gaseous petroleum consisting primarily of methane with lesser amounts of (in order of abundance) ethane, propane, butane and pentane, and heavier hydrocarbons as well as non-energy components such as nitrogen, carbon dioxide, hydrogen sulphide and water

• Liquids obtained during production of natural gas, comprising ethane, propane, butane and condensate

• Raw natural gas with a relatively high concentration of sulphur compounds, such as hydrogen sulphide

• Raw natural gas with a relatively low concentration of sulphur compounds, such as hydrogen sulphide

• Raw natural gas with a relatively high concentration of natural gas liquids (ethane, propane, butane, and condensates)

Gases

Source: Canadian Centre for Energy Information

Natural gas terminology (1 of 4)

24

DefinitionTerm

• Gas resevoir

• Geological trap

• Permeability

• Porosity

• Probable reserves

• Proved reserves

• Source rock

• Seismic survey

• A porous and permeable rock formation in which natural gas accumulates

• Any geological structure that stops the migration of hydrocarbons through subsurface rocks, causing an accumulation in the reservoir rock

• The capacity of a substance (such as rock) to transmit a fluid. The degree of permeability depends on the number, size, and shape of the pores and/or fractures in the rock and their interconnections. It is measured by the time it takes a fluid of standard viscosity to move a given distance

• The capacity of a reservoir to store fluids. The ratio of the aggregate volume of pore spaces in rock or soil to its total volume, usually stated as a per cent

• Reserves believed to exist with reasonable certainty based on geological information

• Reserves that can be economically produced with a large degree of certainty from known reservoirs using existing technology

• The rocks in which hydrocarbons are created or sourced from carbohydrates through heat and pressure. Source rocks are often black shales

• Running one or more 2-D or 3-D seismic lines over a large area and using the acquired data to create detailed models of underlying geological formations


Geology / Exploration


25


DefinitionTerm

• Completion

• Conventional gas

• Environmental assessment

• Fracing

• Gas cycling

• Horizontal drilling

• Stimulation

• Unconventional natural gas

• Preparing a newly drilled well for production; usually involves setting casing to prevent caving and protect against ground water contamination

• Natural gas that can be produced using recovery techniques traditionally employed by the oil and gas industry

• Planning and decision-making tool used by industry and regulators to identify the environmental impacts and costs of proposed energy projects

• A reservoir stimulation technique in which fluids are pumped into a formation under high pressure to create fractures allowing the gas to flow

• A petroleum recovery process that takes produced gas and condensate and injects it back into the reservoir to increase pressure and production of NGLs

• Drilling horizontally through a reservoir to increase the exposure of the well

• Enhancing the production of a well; includes acidizing and fracturing the reservoir as well as removing wax and sand from the wellbore

• Conventional gas found in reservoirs requiring special production methods such as natural gas from coal, natural gas from tight sands and shale gas

Production


26

DefinitionTerm

• Compression

• Floating liquified natural gas (FLNG)

• Gasification

• Gas transmission systems

• Liquefied natural gas (LNG)

• Trunk lines

• Increasing the pressure of natural gas to move it through pipelines or other facilities; natural gas in its gaseous state that has been compressed to about one per cent of its volume and stored at 20,000 to 27,500 kilopascals

• Method of liquifying gas for transport using ships capable of liquification

• Pipelines that carry natural gas at high pressure from producing areas to consuming areas

• The process of turning liquefied natural gas into a vaporous or gaseous state by increasing the temperature and decreasing the pressure

• Supercooled natural gas that is maintained as a liquid at or below -160°C; LNG occupies 1/640th of its original volume and is therefore easier to transport if pipelines cannot be used

• Large-diameter pipelines that transport crude oil, natural gas liquids and refined petroleum products to refineries and petrochemical plants; some trunk lines also transport refined products to consuming areas

Transport



natural gas to 2030 v17 - kepis & pobe · 2017-03-18 · 1 executive summary •global natural...

Documents