focus on the non-conventional · conventional vs non-conventional recoverable gas resources...
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Focus on the Non-ConventionalTransforming Gas Resources to SuppliesFocus on the Non-ConventionalTransforming Gas Resources to Supplies
Philip H. StarkIHS Energy
USAEE /IAEE: 25th Annual ConferencePlenary: Non-Conventional Energies: Probable to ProvenSeptember 20, 2005
Natural GasChange Dynamics from the 90’s
Natural GasChange Dynamics from the 90’s
•U.S. Price / Mcf: $ 1.72 $12.00
•Oil emphasis gas emphasis•Stranded gas marketable asset•Regional market global market•Pipelines tankers•Conventional non-conventional
Evolution of World Gas ResourcesDiscovered Conventional Gas Resources
Evolution of World Gas ResourcesEvolution of World Gas ResourcesDiscovered Conventional Gas ResourcesDiscovered Conventional Gas Resources
Source: IHS Energy IRIS21
0
500
1,000
1,500
2,000
2,500
Pre-19
0101
- 05
06 - 1
011
- 15
16 - 2
021
- 25
26 - 3
031
- 35
36 - 4
041
- 45
46 - 5
051
- 55
56 - 6
061
- 65
66 - 7
071
- 75
76 - 8
081
- 85
86 - 9
091
- 95
96 - 2
000
2001
-2004
Trill
ion
Stan
dard
Cub
ic F
eet
Gas in Gas-dominant DiscoveriesGas in Oil-dominant Discoveries
(excludes USA and Canada)
Hassi R'Mel
Zapolyarnoye
Urengoy
North Field
Astrakhan
Shah-Deniz
Mexilhao
South Pars
2001-04 Avg discoveries = 46 Tcf/yr 2005 Consumption (Est.) = 99 Tcf
0
500
1,000
1,500
2,000
2,500
Pre-19
0101
- 05
06 - 1
011
- 15
16 - 2
021
- 25
26 - 3
031
- 35
36 - 4
041
- 45
46 - 5
051
- 55
56 - 6
061
- 65
66 - 7
071
- 75
76 - 8
081
- 85
86 - 9
091
- 95
96 - 2
000
2001
-2004
Trill
ion
Stan
dard
Cub
ic F
eet
Gas Resources Discovered in PeriodGas Resources On-stream in Period
(excludes USA and Canada)
Gas Resources discovered vsGas Resources On-stream
Gas Resources discovered Gas Resources discovered vsvsGas Resources OnGas Resources On--streamstream
Remaining fallow gas = 1,710 Tcf
2001-04 Discoveries = 183 Tcf2001-04 On-stream = 911 Tcf
Produced & Conventional Gas Resources End - 2004
Produced & Conventional Gas Resources End - 2004
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
North America Latin America Europe Former SovietUnion
Africa Middle East Asia-Pacific
Trill
ion
Stan
dard
Cub
ic F
eet
Undiscovered Gas (USGS) at 1 Jan 2005 withResource GrowthGas Resource Growth
Remaining Discovered Gas at 1 Jan 2005
Cumulative Gas Production
49.0% 16.3% 4.9%
Ultimate: 14,845 tcfRemaining: 11,830 tcfDiscovered: 9,935 tcfDepletion: 20.3%
34.4%
Non-conventional 550 – 825 tcf
Recoverable Gas ResourcesConventional vs Non-conventional
Recoverable Gas ResourcesConventional vs Non-conventional
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
Conventional("Discrete") Gas
Coal-bed Gas "Tight" Sand /Basin-Center Gas
Shale Gas Gas Hydrates
Trill
ion
Stan
dard
Cub
ic F
eet
Cumulative ProductionRemaining Recoverable
2% RF oceanic 5% RF
permafrost North America
Assume 10% RF
In Place Resource9,250 tcf
7,000 tcf
90,000 tcf
Gas Resources SummaryGas Resources SummaryRemaining Recoverable Discovered Conventional GasRemaining Recoverable Discovered Conventional Gas•• 6,925 trillion 6,925 trillion cfcf
Ultimate Remaining Recoverable Conventional GasUltimate Remaining Recoverable Conventional Gas•• 11,830 trillion 11,830 trillion cfcf
Ultimate Recoverable Natural Gas from CoalUltimate Recoverable Natural Gas from Coal•• 1,000 trillion 1,000 trillion cfcf maximum; 550 trillion maximum; 550 trillion cfcf more likelymore likely
Ultimate Recoverable Tight Ultimate Recoverable Tight LithologiesLithologies plus Basinplus Basin--centred Gascentred Gas•• 550 550 –– 825 trillion 825 trillion cfcf (North America only)(North America only)
Gas Hydrate Resource InGas Hydrate Resource In--placeplace
•• 90,000 trillion 90,000 trillion cfcf (but only the (but only the 3,000 trillion 3,000 trillion cfcf inin--place place permafrost resource likely to be developed in near term)permafrost resource likely to be developed in near term)
EIA World Energy Use by SourceEIA World Energy Use by Source
Source: EIA International Energy Outlook 2005
+1.9%
+ 2.3%+ 2.0%
+ 1.9%+ 0.7%
U.S. Gas
Transforming Gas Resources to Supplies Transforming Gas Resources to Supplies Worldwide GasWorldwide Gas--toto--Liquids ProjectsLiquids Projects
GTL Project Capacities by Country and Status
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000
USA
Bolivia
Chile
Malaysia
South Africa
Nigeria
Egypt
Trinidad
Indonesia
Australia
Iran
Qatar
Barrels per Day Output
Online Capacity (45,500 b/d)
FEED / Construction (288,750 b/d)
Firm Projects (154,000 b/d)
Concepts / Feasibility (980,000 b/d)
2nd qtr. 2005
Projected GTL GrowthProjected GTL Growth
0200400600800
1000120014001600
2005 Qatar2011
2012 > 2012
2005 2005-12 > 2012
MbopdBased on 2nd Qtr 2005 data – 34 projectsBased on 2nd Qtr 2005 data – 34 projects
GTL FactorsGTL Factors
• Estimated contribution to transport fuels– World demand growth
2004 -2020 = 17,100 Mb/d– Est. 70% diesel output 2020 = 1,028 Mb/d
6%
• Economics: Estimated Capex / b/d− Historic: $52,000 - $27,000 − Planned: $45,000 - $11,000− Refining: ~ $15,000
U.S. Gas Production DeclineImplies Tight Supplies, High Prices & Increased Imports - LNG
U.S. Gas Production DeclineImplies Tight Supplies, High Prices & Increased Imports - LNG
Vintage Production Profile
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Year
MC
F/D
ay
200420032002200120001999199819971996199519941993199219911990<1990
Sum of Lower 48US Lower-48 Vintaged Gas Production
Source: IHS Energy gas business model
Decrease400 MMcf
2002 base decline = 2.53 TcfNeed ~ 24,000 gas wells to maintain production
North American Supply and DemandNorth American Supply and Demand
Source: IHS Energy gas business model
2% growth = 26 bcf/day of additional demand
Accelerated declines and lower volume discoveries will keep supply flat (IF we invest over $30B annually)
LNG is required to fill the gap
U.S. Natural Gas Imports 2001 - 2025U.S. Natural Gas Imports 2001 - 2025
-1
0
1
2
3
4
5
6
7
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Canada
LNG
Mexico
Source: EIA, Annual Energy Outlook 2005
Role of LNG in the Market
• 2002 5% of imports
• 2010 39% of imports
Tcf
Worldwide Gas GrowthLNG Liquefaction & Regasification End-2004
Worldwide Gas GrowthLNG Liquefaction & Regasification End-2004
LNG Liquefaction Operating LNG Regasification Operating
Source: IHS Energy Mid-stream Database End -2004
LNG Liquefaction Operating LNG Liquefaction Under Construction LNG Liquefaction Planned&Engineering
LNG Regasification Operating LNG Regasification Under Construction LNG Regasification Planned&Engineering Planned Pipeline
Under C. Pipeline
Globalization of Natural GasProposed LNG & Major PipelinesGlobalization of Natural GasGlobalization of Natural GasProposed LNG & Major PipelinesProposed LNG & Major Pipelines
Source: IHS Energy Mid-stream Database End -2004
Worldwide LNG Liquefaction ProjectsWorldwide LNG Liquefaction ProjectsLNG Liquefaction Project Capacities by Country and Status
0
10
20
30
40
50
60
70
80
90
Qatar
Nigeria
Indon
esia
Austra
lia Iran
Algeria
Malays
iaEgy
ptTri
nidad
OmanRus
siaBrun
eiYem
enBoli
viaAbu
Dhabi
Angola
Venez
uela
PeruUkra
ineNorw
ay
Equato
rial G
uineaLib
yaUSA - A
laska
Japa
nM
illio
n To
nnes
per
Yea
r
Concepts / Feasibility (110 Mt / Y)Firm Projects Awaiting FID (75 Mt / Y)FEED / Construction (101 Mt / Y)Online Capacity (156 Mt / Y)
Year 2000 LNG trade: 100 Mt (4.9 Tcf)
5.4 Tcf3.7 Tcf4.9 Tcf7.6 Tcf
LNG Oversupply - 2010?LNG Oversupply - 2010?
Can the projected demand growth be financed?
Source: Cambridge Energy Research Associates
Demand
Estimated LNG Project Finance 2005-2006Estimated LNG Project Finance 2005-2006
2004 Global Project Spend
~ $75 billion for LNG Projects 2005-2006
$ Bi
llion
LNG Liquefaction Supply OutlookLNG Liquefaction Supply Outlook
• Drivers:– Robust natural gas prices– Growing market opportunities– Need for IOCs to book gas reserves– Costs decrease – larger, efficient plants
• Outlook for adequate supplies• Scramble to match regas capability
2007 2020Demand mmt/yr 172.6 360 - 480Supply mmt/yr 188.9 490.2 (Potential)
LNG Tanker OutlookLNG Tanker Outlook
30 % increase – 45 ships 2004-2005- Surplus capacity to endure- Fierce competition
05
10152025303540
2002 2003 2004 2005 2006 2007 2008
Capacity Demand
Based on peak annual estimates: Cambridge Energy Research
MMCu.M
Deepwater Ports - RegasificationDeepwater Ports - Regasification
Gravity Based DW Terminal
“Energy Bridge”
Platform Conversion
Moving Forward – But Where?
Source: Cambridge Energy Research Associates.40302-3_012105
LNG Facilities in North America—Existing and Proposed (1st Qtr 2005)LNG Facilities in North America—Existing and Proposed (1st Qtr 2005)
Existing
Proposed
Approved
Everett
Cove Point
ElbaIsland
AltamiraPort Pelican
Bahamas
LakeCharles
Canaport
Freeport
EnergyBridge
Cameron
LazaroCardenas
Clearwater Port LongBeach
Main Pass Energy Hub
Somerset LNG
Weavers Cove
Sabine
Manzanillo
Corpus Christi
Bear Head
Cabrillo Port
GulfLanding
Vermilion179
PortWestward
Keyspan LNG
Crown Landing
Port Arthur
Quoddy Bay
Northeast Gateway
Compass Port
Pearl Crossing
Sonora Pacific
Coronado IslandsEnergia
Costa Azul
Strait of Canso
Kitimat
JordanCove
Prince Rupert
GrosCacouna
Keltic Petrochemical
Rabaska
Galveston
Calhoun LNG
Broadwater
PhiladelphiaGas Works RFP
Pascagoula
Tidelands
Creole Trail
Beacon Port
Astoria
Proposed Capacity BcfdNorth America – 61.92 United States – 51.96
Existing – 4.26 Approved – 11.51 Proposed – 28.00Potential – 8.23
Proposed Capacity BcfdNorth America – 61.92 United States – 51.96
Existing – 4.26 Approved – 11.51 Proposed – 28.00Potential – 8.23
Potential U.S. overbuild: 2010Demand ~ 13.5 BcfdCapacity ~ 15.7 bcfd
Expect LNG costs in$3.50 - $5.50 Mcf range
LNG Facilities in North America Issues & Concerns
LNG Facilities in North America Issues & Concerns
• Governing laws: Multiple international, federal (DW Port Act + 13 others) and state laws apply
• Complex permitting and regulatory processes– Maritime Administration, US Coast Guard + 14 other
federal agencies and state agencies have jurisdiction– One year time limit for DW approval process– Substantial public opposition outside of TX & LA– Governor of adjacent state has veto power
Public Opposition to LNG FacilitiesPublic Opposition to LNG Facilities• The Issues:
– Security– Environmental damage– Trafficking of large tankers– Aesthetic impairment– Social equity– Falling property values– LNG is catastrophically unsafe
» (The most effective and real objection)
• The Slogans:– NIMBY- Not In My Back Yard– NOPE – Not On Planet Earth– BANANA – Build Absolutely Nothing Anywhere Near Anything
SummarySummary• Non-conventional gas resources increasingly important to
grow supplies• GTL expanding but not expected to make large impact
mid-term global liquids supplies• LNG expanding as leading edge to globalization of natural
gas– Near-term tight supplies in some markets – Potential overbuild after 2007 – Imbalances in LNG supply chain = opportunities
• Complex legal and regulatory environment• Secure supplies to match facilities & demand• Decreasing costs: LNG competes: $3.50 - $5.50/mcf
Focus on the Non-ConventionalTransforming Gas Resources to SuppliesFocus on the Non-ConventionalTransforming Gas Resources to Supplies
Philip H. StarkIHS Energy
USAEE /IAEE: 25th Annual ConferencePlenary: Non-Conventional Energies: Probable to ProvenSeptember 20, 2005
Acknowledgements:Special thanks to Dr. Ken Chew, Irena Agalliu, Carl Garrison and Michael Stoppard for their invaluable contributions.