outlook for oil and gas and implications for biomass
TRANSCRIPT
Outlook for Oil and Gas and Implications for Biomass
John P. Martin, Ph.D. New York State Energy Research and
Development Authority
February 17, 2010
Misc. Pictures Here
Energy Choices
21st Century Energy Supply Choices
SUN - FUSION – Direct solar – PV, thermal – Indirect solar -- wind, waves, hydro – Chemical energy from photosynthesis (hydrocarbons)
Biomass – new (or very, very, very young coal) Fossil Fuels – ancient, sequestered energy
NUCLEAR - FISSION
EARTH - GEOTHERMAL – Primordial – Radioactive decay
MOON - GRAVITY – Tidal
Life Cycle Analysis of Energy Supply Choices: Decision-making Factors
Relative rankings in the perspective of factors important for decision-making: F = energy source in favourable position M = energy source in medium/neutral position D = energy source in disfavoured position O = Critical USA issues not in the bounds of the study (hydro siting, nuclear waste disposal)
The combustion of natural gas emits almost 30 percent less carbon
dioxide than oil, and just under 45 percent less carbon dioxide than
coal. (these numbers do not consider refining or mining
emissions) After the World Energy Council, Comparison of Energy Systems Using Life Cycle Assessment, 2004
Coal Oil Gas Biomass Nuclear Hydro Wind Solar
Energy accessibility
(related to the direct costs
of energy and expected
diffusion)
F M M M F F D D
Energy availability
(related to the
security/reliability
dimension)
F M F/M M F F D D
Energy acceptability
(environmental
externalities)
D D M F F /O F /O F F
Misc. Pictures Here
Energy Consumption
Energy Today: United States Primary Energy Consumption by Fuel, 2007
GWPC and ALL Consulting, MODERN SHALE GAS DEVELOPMENT IN THE UNITED STATES: A PRIMER, 20009
Energy Today: New York State Energy Consumption, 2007
29.2%
39.7%
6.1%
22.6%
Overall United States Energy Consumption Projections by Fuel Type
EIA, Annual Energy Outlook 2010 Early Release Overview
quadrilli
on B
tu
New York Overall Energy Consumption by Fuel Type, 2009 State Energy Plan
Misc. Pictures Here
Oil and Gas Supply
Oil and Gas Proved Reserves, USA
Average Depth to Drilling, USA
Worldwide Expenditures for Exploration, Form EIA-28 Companies
(27 major USA-based energy companies)
Finding Costs, Form EIA-28 Companies
Lifting Costs, Form EIA-28 Companies
Richard Newell, SAIS,
December 14, 2009 16
0
2
4
6
8
10
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Natural Gas Pricing Outlook Natural gas wellhead price is projected to rise from low levels
experienced during 2008-2009 recession 2008 dollars per thousand cubic feet
Projections History
AEO2010 reference case
Updated AEO2009 reference case
Source: Annual Energy Outlook 2010
Richard Newell, SAIS,
December 14, 2009 17
0
25
50
75
100
125
150
175
200
225
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Crude Oil Pricing Outlook Oil prices in the reference case rise steadily; the full AEO2010 will
include a wide range of prices 2008 dollars per barrel
Source: Annual Energy Outlook 2010
High oil price
Low oil price
AEO2010 reference
Projections History
AEO2009 reference
Misc. Pictures Here
Supply Implications: Risk and Security
Risk Assessment Model
Criticality
Import Dependence
Concentration
Vulnerability
Capacity
John Martin, 1991 (after Anderson, 1988)
Security of Supply and Critical Resource Dependence: USA
•Natural Gas
Represents 20% of USA primary energy production, 22% of demand.
North America supplies 99% of its natural gas demand.
Many natural gas competitors with limited concentration
Low supply vulnerability
•Petroleum
Represents 11% of USA primary energy production, 40% of demand.
65% is imported.
Controlled by large multinationals and national oil companies with small competitive fringe (the “independents”).
High supply vulnerability
Security of Supply and Critical Resource Dependence: NY
Only 13% of NYS total primary energy requirement was met from in-state resources – supplied by hydro (49%), biofuels (40%) and oil
and natural gas (11%)
For petroleum: – New York produced only 0.1%
– 88% imported (47.9% from OPEC)
Misc. Pictures Here
Outlook
Richard Newell, SAIS,
December 14, 2009 23
0
20
40
60
80
100
120
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Overall Energy Supply Outlook Non-fossil energy use grows rapidly, but fossil fuels still provide 78
percent of total energy use in 2035 quadrillion Btu
Coal
Liquid fuels
Natural gas
Projections History
Nuclear
Liquid biofuels
Renewables (excluding liquid biofuels)
Source: Annual Energy Outlook 2010
Richard Newell, SAIS,
December 14, 2009 24
0
5
10
15
20
25
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Liquid Fuel Supply Outlook Biofuels meet most of the growth in liquid fuels supply
million barrels per day
Projections History
Natural gas plant liquids
Biofuels including imports
Petroleum supply
Net petroleum imports
Source: Annual Energy Outlook 2010
Richard Newell, SAIS, December 14, 2009 25
Natural Gas Supply Outlook, Short Term Shale gas has been the primary source of recent growth in U.S.
technically recoverable natural gas resources
0
250
500
750
1000
1250
1500
1750
2000
2250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
AEO edition
Source: U.S. Geological Service, Mineral Management Service, private data, and EIA.
trill
ion c
ubic
feet
Unproved shale gas &
other unconventional
Unproved
conventional
(including Alaska*)
Proved reserves
(all types & locations)
* Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in
previously published documentation.
Richard Newell, SAIS,
December 14, 2009 26
0
5
10
15
20
25
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Natural Gas Supply Outlook, Long Term Shale gas and Alaska production offset declines in supply to meet
consumption growth and lower import needs trillion cubic feet
Alaska
Non-associated offshore
Projections History
Associated with oil
Coalbed methane
Net imports
Non-associated onshore
Shale gas
Source: Annual Energy Outlook 2010
USA Shale Gas Potential Resource Estimate
Potential Gas Committee (2009): 616 Tcf
Potential Resource: Appalachian Marcellus
Total Gas produced from Appalachian
Devonian Shales before Marcellus –
3.0 TCF.
Total Gas produced from 1,000s fields
from 100 separate horizons in the
entire Appalachian Basin is 40 TCF to
47 TCF.
Top 15 worldwide fields have projected
reserves of 50 TCF to 1,400 TCF.
1977 Schrider – 240 TCF
1985 Kuuskraa – 67 TCF
2005 USGS Milici – 2.1 TCF
2007 Engelder and Lash – 50 TCF
2008 Engelder – 168 to 363 TCF
2009 USGS – 262 TCF
2009 Engelder – 489 TCF
Marcellus Recoverable Resource Estimates
Some Perspective:
Sources: William Zagorski, PTTC Workshop, Erie, PA, 2009; Schrider, Leo A., Komar, C.A., Pasini III, J., Overbey Jr., W.K., Natural Gas from Eastern Shales , SPE Annual Fall Technical Conference and
Exhibition, 9-12 October 1977, Denver, Colorado.
Devonian Recoverable Resource Estimate
Estimated Potential Resource: New York Marcellus and Total Devonian Shale Gas
Total Devonian Shale Resource: 163-313 Tcf
Total Devonian Recoverable: 16.3-62.6 Tcf
Total Marcellus Resource: 92.8 Tcf
Total Marcellus Recoverable: 9.3-18.6 Tcf
Estimates of recoverable resources and the NYS Marcellus resource are estimates by the author. only Recoverable low estimate assumes 10% recovery factor of the lower value and high estimate assumes 20% recovery factor. Of the upper value.
Devonian Shale estimates from Hill, David G., Lombardi, Tracy E. and Martin, John P., “Fractured Shale Potential in New York,” Proceedings of the 2002 Ontario – New York Oil and Gas Conference, Ontario Petroleum Institute, London, Ontario, v. 41, 2002.
Marcellus Shale estimates derived from data provided in Milici, Robert C. Christopher S. Swezey , Assessment of Appalachian Basin Oil and Gas Resources: Devonian Shale–Middle and Upper Paleozzoic Total Petroleum System (version 1.0), U.S. Geological Survey Open-File Report 2006-1237, 2006 (calculated by 100% of plays 6, 15, 16, 19 and 50% of play 17)
Praxair Process: Natural Gas-Sourced H2 Addition to Increase Biofuel Yield
Gasification Biomass Syngas
conditioning Fuel synthesis
Product
recovery
Ethanol /
Diesel /
Hydrocarbon
Oxygen / steam
Tail gas
H2
Steam Methane
Reforming System
Natural Gas
Steam
Flue gas
• Praxair estimates that H2 addition – Increases biofuel yield by >40%
– Improves overall carbon footprint (Wells-to-wheels)
Reference: “Conversion of Natural Gas to Transportation Fuels via the Shell Middle Distillate Synthesis (SMDS)
Process”, Van Wechem and Senden, Natural Gas Conversion (1994), pp 43 - 71, Elsevier Science.
Concluding Thoughts
• Even realizing the state’s energy efficiency and renewable energy goals, New York State will continue to need a secure liquid fuel and natural gas supply.
• Shale gas will be a key part of this supply for decades to come.
• Biomass will continue to be an important source of heating but also can serve as a liquid fuel source.
• Ultimately, natural gas will serve as a bridge to the expected development and maturation of renewable energy sources.