outlook for natural gas and co2 infrastructure recent studies and analysis

8/11/2019 Outlook for Natural Gas and CO2 Infrastructure Recent Studies and Analysis

1/19

2009 ICF International. All rights reserved.

Outlook for Natural Gas and CO2

InfrastructureRecent Studies and Analysis

Outlook for Natural Gas and CO2

InfrastructureRecent Studies and Analysis

Contact:Contact:

Geoffrey N. Brand PhDGeoffrey N. Brand PhD

Senior Project Manger, Gas Market ModelingSenior Project Manger, Gas Market Modeling

ICF InternationalICF International

703703--218218--27422742

[email protected]@icfi.com


2/19

Information in this presentation is proprietary and confidential.Do not distribute to third parties.

2

Recent INGAA Infrastructure Studies

Natural Gas Availability, Economics, and Production Potential of

North American Unconventional Natural Gas SuppliesNovember 2008

Natural Gas Pipeline and Storage InfrastructureProjections Through 2030 October 2009

CO2 Developing a Pipeline Infrastructure for CO2 Capture

and Storage: Issues and Challenges February 2009


3/19


3

Unconventional Gas Supplies

Driver of future North American natural gas production. Changes in production (location or volume) drive infrastructure

needs.

Definition

Relative to conventional supplies - Unconventional natural gas

resources are lower in resource concentration, are more dispersed,and require well stimulation or other technologies to produce.

Most common types:

Tight (sandstone or carbonate)

Shale

Coal bed methane


4/19


4

Historical U.S. Unconventional Gas Production

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

BcfperYe

ar

Coalbed

Shale

Tight

Strong Production Growth since the Mid-1990s


5/19


6/19


6

Unconventional Fraction of U.S. Gas Production

0

5

10

15

20

25

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

TcfperYear

Conventional Tight Coalbed Shale

2007 Unconventional9.1 Tcf

48% of total

2020

Unconventional

15.9 Tcf

69% of total

U.S. Lower-48

Growing TotalProduction

Growing

Fraction ofUnconventional

Unconventional productiongrowth projected to continue


7/19


7

Unconventional Resources are Widespread

Haynesville

Marcellus

Eagleford

Major Coalbed Methane Areas

Shale Basins

Major Tight SandsAreas


8/19


8

Increases in Interregional Flow, 2008 to 2030INGAA Base Case Infrastructure Report

Increases ininterregional flowmainly driven by

shifting gassupply locations.

New pipeline

infrastructure willbe needed tomake theincremental

transportpossible.

49

230

497

1398

669

(79)

1442

1277

306

893

211

1391

1905

1189

475

1683

1655

453

279

3

150

1542

2883

534

361

428

126

699

146

444

326

118

69

1763872

860

264

40

68

264

192

Elba Island

Cove Point

Everett

Blue Lines indicate LNG

Gray Lines indicate an increase

Red Lines indicate a decrease

1554

< Freeport and

Golden Pass

55

1051 Gulf LNGEnergy

478CostaAzul

< Lake Charles, Gulf Gateway,

Sabine Pass and Cameron

Canaport

Alt amira

Florida

(Offshore)

749

2560

207NE Gateway

453

228

Lazaro

Cardenas

Manzanillo

7149 Units: Million cubic feet per day


9/19


9

Base Case Miles of New PipelinePipeline Mileage Added Each Year

From 2009 through 2030, about 1,700 miles of gas transmission pipeline will be addedeach year. These additions are fairly consistent with recent levels.

Construction of laterals will likely account for a greater share of the incremental mileage inthe future. Much of the new pipeline in the future is likely to rely on and add to recentlybuilt projects.

Arctic projects and associated downstream pipes account for 5,000 miles of new pipeline.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

MilesofPipe

Alaska / Arctic

New

Expansion

Lateral

MacKenzie

Project

Alaska Pro ject

1

2Pipeline added to new basins


10/19


10

Capital Expenditures for New Pipeline CapacityMillion Dollars (Nominal$) Spent Each Year, Including the Cost of Compression

From 2009 through 2030, the annual expenditures will average about $6 billion. Somewhat above recent expenditures that have averaged $4 to $5 billion per year.

Arctic pipeline projects will account for 30 to 40 percent of the total expendituresover the period.

Without the Arctic projects, expenditures would only average $3 to $5 billion per year,more closely aligning with recent averages.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

MillionsofDollars

Alaska / Arctic

New

Expansion

Lateral

1Includes cost of downstream expansions on existing corridors in the U.S. and Canada in addition to the cost of arctic Canada

and Alaska frontier projects.2

Lateral is defined as a spur off the main transmission line, normally used to connect production, storage, power plants, LNG

terminals or isolated demand centers.

MacKenzie Project

Alaska Pro ject

1

2


11/19


11

Summary of Pipeline and Storage DevelopmentFrom 2009 Through 2030

U.S. and Canada Gas Market Growth

(Tril lion Cubic Feet)+4.9 (+18%)

Interregional Gas Transport Capabil ity

(Billion Cubic Feet Per Day)+25 (+20%)

Storage Working Gas Capacity (Billion

Cubic Feet)+453 (+10%)

Added Pipeline Mileage37,700 Total Miles

1,700 Miles Per Year

Added Horsepower of Compression for

Pipelines

8.1 Million HP

370,000 HP Per Year

Capital Expenditures for New Pipeline

and Storage Capacity

~ $135 Billion~ $6 Billion Per Year

Base Case


12/19


12

Other Midstream DevelopmentFrom 2009 Through 2030

Gathering Line Mileage+18,200

miles$13.8 Billion

Gas Processing Capacity +15.6 Bcfd $10.1 Billion

LNG Import Capacity +3.0 Bcfd $1.5 Billion

Base Case

Capital Expenditures for All MidstreamInfrastructure Development for the INGAA BaseCase was $160 Billion from 2009 through 2030.


13/19

CO2


14/19


14

Carbon Capture and Sequestration Steps and Costs


15/19


15

Potential CO2 Pipeline Network


16/19


16

Pipeline Requirements are between 5,900 and 36,000 Miles

91040

91040

2,950

470

4,080

430

20,610

5,900

36,050

7,900

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

High CCS Case: Less

EOR

Low CCS Case: Less

EOR

High CCS Case:

Greater EOR

Low CCS Case:

Greater EOR

Miles

2015

2020

2030

By 2030 Annual CO2 Sequestration Rates

High Case 1,000 million tonnes

Low Case 300 million tonnes


17/19


17

Costs Range between $8.5 and $65.6 billion

1,04438

1,04438

4,256

543

6,699

453

32,234

8,512

65,622

12,836

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

High CCS Case: Less

EOR

Low CCS Case: Less

EOR

High CCS Case:

Greater EOR

Low CCS Case:

Greater EOR

MillionDo

llars

2015

2020

2030

Most Costs Post 2020


18/19


18

Key Issues Identified by Industry and Government Experts

Liability for performance of both the pipelines and thesequestration reservoirs in short term and long term

ensuring pipeline deliverability and the permanence of storage

Financing of pipeline and sequestration facilities corporate balance sheet financing, to project financing, to hybrid

approaches including some public financing

Siting and right-of-way acquisition whether federal eminent domain is desirable

how to address overlapping federal, state, and local sitingauthorities and processes


19/19


19

Need for a National Approach

Future CO2, unlike in EOR applications, will have noeconomic value outside what a GHG carbon policy (cap

and trade or tax) confers on it Creates special challenges for financing

CO2 transport and sequestration will be continent wide

Involving large investment Requiring standard operating capabilities and rules, e.g., CO2

quality standards

Ensure access and performance

Future pipelines will be in more heavily populated areaswith more siting and construction challenges

outlook for natural gas and co2 infrastructure recent studies and analysis

Documents