CEDA Unconventional Energy Options 3 September 2012 Challenges and Opportunities for Unconventional Gas Professor Quentin Grafton Bureau of Resources and Energy Economics bree.gov.au Global Gas Resources and Production bree.gov.au Global Gas Resources bree.gov.au Projected Gas Production 2035 Conventional Russia United States Unconventional China Iran Qatar Canada Algeria Australia Saudi Arabia Turkmenistan 0 200 400 600 800 1 000 bcm Unconventional gas could represent 40% of total gas supplied Source: IEA 2011 bree.gov.au Mtoe Projected Primary World Energy Demand 5 000 Additional to 2035 4 000 2010 3 000 2 000 1 000 0 Oil Coal Gas Renewables Nuclear gas & renewables meet more than 60% of incremental energy demand Source: IEA 2011 bree.gov.au Australian Resources and Production bree.gov.au Australia’s Gas Resources 3.50 3.00 2.50 2.00 1.50 1.00 0.50 tcm 0.00 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 conventional gas Source: Geoscience Australia2011 coal seam gas bree.gov.au Australian Gas Production 60 50 40 30 20 10 0 bcm 1973-74 1977-78 1981-82 1985-86 Natural gas 1989-90 1993-94 1997-98 2001-02 2005-06 2009-10 Coal seam gas bree.gov.au LNG Exports (Volume & Value) 25 12 LNG exports Values 10 20 8 15 Mt 6 10 4 5 0 1989-90 2 A$b ($2011-12) 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 0 2010-11 bree.gov.au Queensland LNG Projects Under Constructio n QCLNG Investment Train (US$b) s Start Mt Date 20 2 2014 8.5 GLNG 19 2 2015 7.8 APLNG 23 2 2016 9 Total 62 6 25.3 bree.gov.au Unconventional Gas production bree.gov.au Unconventional Gas bree.gov.au Coal Seam Gas Source: Williams and Pittock 2012 bree.gov.au Risks that Require Monitoring • Well-bores and their integrity • Water injection (hydraulic fracturing), extraction and storage • Air quality and noise levels • Traffic of vehicles bree.gov.au Better Practices • Full community engagement over local concerns (land access protocolos, disclosure, etc.) • Effective risk management (venting of gas, water management, etc.) • International Energy Agency (IEA) estimates that adopting Best Practices would increase costs of production by only about 10% bree.gov.au Gas as a Transitional Fuel bree.gov.au CO2 Emissions during Electricity Generation (grams per kWh) Natural Gas CO2 emissions Crude Oil Coal 0 200 400 600 800 1000 Source: IGU 2012 bree.gov.au Reductions in CO2 Emissions • IEA estimates that with ‘Golden Rules’ in terms of unconventional gas production with adequate environmental practices in place global CO2 emissions would be 1.3% less in 2035. • Globally, substitution of coal and oil by gas would projected to reduce global CO2 emissions by 740 Mt in 2035 • In Australia, if gas substituted one-for-one for reductions in coal-fired electricity generation and based on BREE’s long-term energy projections by 2035 would have 15% less CO2 emissions in electricity generation sector. bree.gov.au Thank you Quentin.grafton@bree.gov.au bree.gov.au