COGA August, 2003
Decarbonization:
The Coming Natural Gas
Economy
Scott W. Tinker
Bureau of Economic Geology
John A. and Katherine G. Jackson School of Geosciences
The University of Texas at Austin
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
The four EEEEs — Energy,
Environment, Economy, and
Education — are inextricably
linked. We have a unique
opportunity to positively
impact the global 4-E balance
in the 21st century.
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Humanity’s Top Ten Problems
for next 50 years
1. ENERGY
2. WATER
3. FOOD
4. ENVIRONMENT
5. POVERTY
6. TERRORISM & WAR
7. DISEASE
8. EDUCATION
9. DEMOCRACY
10. POPULATION
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Nobel Laureate
Dr. Richard Smalley, 2003
Outline
• Global Decarbonization
• Why the Trend Towards Gas
• Creating a Global Gas Economy
• Challenge of Meeting Demand
• Opportunities
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
World Energy
Consumption
Solids
Oil Embargo
80
Solids (Wood, Coal)
40
Liquids (Oil)
U.S. Consumption
Gases (Natural Gas, Hydrogen, Nuclear, Renewables)
20
WW II
60
WW I
Percentage of total market
100
Liquids
Gases
0
1850
1900
1950
2000
QAc9841c
Year
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
U.S. Data: Annual Energy Review 1999 (EIA, 2000)
World Data: International Energy Annual 1999 (EIA, 2000)
after Hefner, 1993
Energy consumption (percent)
Energy Demand
50
World oil
40
World gas, nuclear,
hydro, renewables
30
World coal
20
1980
1985
1990
1995
Year
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
U.S. Data: Annual Energy Review 1999 (EIA, 2000)
World Data: International Energy Annual 1999 (EIA, 2000)
Historical
U.S. Energy
Consumption
U.S. Energy
Consumption
U.S. Energy
Energy
Consumption
Forecast
U.S.
Consumption
Forecast
U.S. Energy Consumption
100%
1973
120
1
160.00
0.9
140.00
100
80.00
0.5
10
60.00
0.4
40
90
0.3
20
40.00
20
20%
0.2 Solids
20.00Liquids
30
0.1
0
Gases + Renewables
0.00
0% 0
l
20
10
l
l
l
l
l
l
ll
100
Coal
Wood and Waste
Tinker
Forecast
2040
2025
2010
1995
1980
1965
1950
1935
1920
1905
1890
1 Quad
Btu Instability
~ 1 Tcf Gas
Supply
l
l
Solids
Solids Oil Produced
l 1910
40
l 1920
1915
1845 1850 1855 1860 1865 1870 1875 1880 1885 1890 1895 1900 1905 1910 1915
1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
l 1920
Data: EIA
l 1925
50
l 1930
Data: EIA
l 1935
l 1940
60
ll l
l
l 1945 l 1975
l
l
l 1950 l 1980
ll
ll
ll lll
l 1955 l 1985
70
ll
l 1960 l 1990
l
ll
l 1965 l 1995
l 1970 l 2000
80
50
30
Nuclear Energy
Liquids
Liquids Oil Imported
40%
60
40
Hydroelectric
Natural Gas
60
1845
70
Renewable Energy
Gases
and Renewables
Renewables
Gases and
100
1875
80
0.8
0.7
80
60%
Liquids (Oil)
100.00
0.6
120.00
1860
Total Market
% ofQuad
BTU
BTU Share
Quad
Percentage
of Market
80%
ll
Price Volatility
Governmental Policy
Technology
l
90
l
l
100
90
80
Scott Tinker, Director
Solids
(Wood, Coal)
Bureau of Economic Geology
August 4, 2003
70
60
50
40
30
20
10
Gases (Natural Gas, Hydrogen, Nuclear, Renewables)
QAd1023
Why the Long-Term Trend
Towards Natural Gas?
• Efficiency
• Economy
• Environment
• Availability
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Why Natural Gas?
Efficiency
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Why Natural Gas?
Economy/Efficiency
$30,000
World
Energy
Consum
ption
per
GDP
Share
World
Energy
Consum
ption
per
Capita
United
$25,000
Canada
Per capita income
4.5
400
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
France
Germany
United Kingdom
350
4.0 $20,000
300
Japan
Italy
250$15,000
3.5
200
World excluding U.S.
Saudi Arabia
U.S.
Mexico
Brazil
Russia
15
20
25
Per-capita oil consumption (bbl/yr)
30
20
00
10
19
90
5
19
88
0
119
9884
4
119
9882
2
0
19
86
China
India
2.00
19
98
Note: 15 largest World excluding U.S.
economies
U.S.
shown in red.
19
96
100
2.5
50 $5,000
19
94
Indonesia
19
92
3.0
150$10,000
119
9880
0
EnergyConumption
consumption(Quad
sharebtu)/Population
of the world
Energy
(Quad
btu)/GDP
(billions)
States
Source: JPT, May 2001
QAd1023
QAd1023
Why Natural Gas?
Economy
10.00%
$35.00
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Crude Oil Domestic Wellhead Price
8.00%
$30.00
6.00%
$25.00
4.00%
$20.00
2.00%
$15.00
0.00%
$10.00
-2.00%
$5.00
-4.00%
$0.00
Crude Oil Domestic Wellhead Price ($/bbl)
GDP Growth (% change from previous year)
GDP Growth
QAd1023
Why Natural Gas?
Environmental Quality
U.S. Electricity Generation by Fuel Source
U.S. Carbon Dioxide Emissions from Energy Consumption by End-Use Sector
Carbon Dioxide Emissions from Electricity Generation
Non-Electricity Generation in Residential, Commercial and Industrial
Transportation
Electricity Generation
1,600
3,000,000,000
3,500,000,000
3,000,000,000
2,500,000,000
Other Renewables
1,200
MM Metric Tons of Coal
Tons
Short
Mkwh
2,500,000,000
Hydro
2,000,000,000
Other Units
2,000,000,000
Nuclear
Gas-Fired Units
800
1,500,000,000
Natural Gas
1,500,000,000
Petroleum-Fired Units
Petroleum
Coal-Fired
Units
1,000,000,000
1,000,000,000
400
Coal
500,000,000
500,000,000
0
0
019491950
1989
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
1954
1990
1960
1959
1991
1964
1970
1992
1993
1969 19801974
1994
1995
1990
1979
1996
19842000 1989
1997
1998
1999
1994
1999
Data, EIA, 2000
Data,
EIA,
Data:
EIA,
20022000
QAd1023
Why Natural Gas?
Resource Availability
1999 NPC Study (NPC, 1999b)
Recoverable Portion of In-Place Gas Resource (Tcf)
Known Resources
Cumulative Production (811)
Reserves (157)
Reserve Growth (305)
Increasing development
Undiscovered, Unconventional
Reserves (1,004)
technology needs,
Historical U.S. Composition of Total Natural Gas Discoveriescosts,
(1977-2001)
U.S. Dry Gas Total Discoveries (Bcf)
Unassessed Unconventional25,000
Reserves (400)
Reserve Growth
New Fields
20,000
Geopressured Brine (Up to
24,000)
Data: EIA (2002)
uncertainty, and
decreasing concentration
15,000
10,000
Gas Hydrate (Up to 300,000)
Not Assessed by NPC
5,000
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
0
1977
1980
1983
1986
1989
1992
1995
1998
2001
QAd1023
Creating a
Global Gas Economy
• Enhance Reserves
• Create Resources
• Transport
• Sequester
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Enhance
U.S. Consumption Forecast
160.00
Natural Gas Decline for the Past Decade
140.00
Source: EOG, Baker Hughes
Quad BTU
120.00
100.00
80.00
60.00
Gases and Renewables
Enhance
Liquids
Solids
40.00
20.00
0.00
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Enhance
Key Technologies of the 90’s
Deepwater,
Sub-sea,
FPSO
3D Seismic,
Computer
Assisted
Exploration
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Horizontal
Drilling,
Geosteering, &
Rotary Steering
Systems
Source: Bates, 2002, GCAGS
Baker Hughes
Enhance
Enhanced Gas Recovery
Excellent
Insignificant
Portfolio of EGR Field Studies
Overall EGR technologies in these seven fields
yielded incremental production response of 231 Bcf.
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Create New
Resources
Create
U.S. Consumption
160.00
140.00
Quad BTU
120.00
100.00
80.00
60.00
Gases and Renewables
Enhance
Liquids
Solids
40.00
20.00
0.00
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Create
U.S. Natural Gas Production
“Conventional” Unconventionals
Shale
25,000
Deepwater+Subsalt Offshore
L48 Unconventional Onshore
Shallow Offshore
L48 Conventional Onshore
Tight Gas, Shale Gas, CBM
Coalbed Methane
$3
20,000
>50%
15,000
$2
10,000
“Unconventional” Unconventionals
$1
Deep (>15,000
ft)
Associated
and High-Perm
Gas
Subsalt
5,000
0
1949
Wellhead Price ($/mcf)
Annual Natural Gas Production (Bcf)
Tight30,000
(Low Permeability)
1953
1957
1961
1965
1969
1973
1977
1981 1985 1989 1993 1997 2001
Ultra-Deep
Water
2005
2009
2013
Year
EIA (1949-1990) and NPC (1991-2015)
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Methane Hydrates
QAd1023
Create
Tight Gas
*Advanced Stimulation Technology
*Greater Green River Basin Shale Gas
*Piceance Basin
Federal Alternative
State of Texas
Fuels Production Credit
Incentives
GRI Tight GasGas
for Unconventional
3,500.0
3,000.0
$3
Bcf
2,500.0
$2
DOE
2,000.0
1,500.0
11 Tcf Incremental Gas
1,000.0
Wellhead Price ($/Mcf)
4,000.0
$1
500.0
Private Sector
0.0
1970
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
1975
GRI, 1999, GRI’s Gas Resource Database.
1980
1985
DOE personal communication.
1990
1995
QAd1023
MAJOR PRODUCTIVE TIGHT GAS BASINS
(Technically Recoverable Resources)
Rocky Mountain
Foreland
(13.7 Tcf)
San Juan
(5.6 Tcf)*
Permian Basin
(19.5 Tcf)
0
400 m i
0
600 km
Midcontinent
(16.9 Tcf)
Appalachian
(18.3 Tcf)
Arkla-Tex
(29.8 Tcf)
N
78 Tcf
Texas Gulf
Onshore
(9.1 Tcf)
Bu rea u
of
Ec on o mi c
G eo lo g y
Data: NPC (2000), * Based on estimates of NPC (1993),
QAc9715c
San Juan Basin tight gas resource included with oil field reserve appreciation and new fields in NPC (2000)
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Create
Shale Gas
Antrim Shale Research
Appalachian Basin Shales
350.0
GRI
Bcf
250.0
$2
200.0
150.0
100.0
50.0
0.0
1980
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
2.2 Tcf Incremental Gas
DOE
(1976-1992)
Private Sector
1985
GRI, 1999, GRI’s Gas Resource Database.
1990
DOE personal communication.
Wellhead Price ($/Mcf)
300.0
$1
1995
QAd1023
MAJOR PRODUCTIVE DEVONIAN SHALE BASINS
Technically Recoverable Resources
Michigan Antrim
(16.9 Tcf)
Appalachian
(23.4 Tcf)
Illinois
New Albany
(2.9 Tcf)
Ft. Worth
Barnett Shale
(7.2 Tcf)
Bu rea u
of
Ec on o mi c
G eo lo g y
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
0
400 m i
0
600 km
Data: NPC (2000)
Cincinnati
Arch
(2.2 Tcf)
N
40 Tcf
QAc9712c
QAd1023
Create
Coalbed Methane
1,200.0
Private Sector
1,000.0
Bcf
800.0
DOE
600.0
Federal Alternative
Fuels Production Credit
for Unconventional Gas
$2
400.0
4.5 Tcf
Incremental Gas
200.0
$1
0.0
1980
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Wellhead Price ($/Mcf)
GRI
1985
GRI, 1999, GRI’s Gas Resource Database.
1990
DOE personal communication.
1995
QAd1023
MAJOR PRODUCTIVE COALBED METHANE BASINS
(Total Most Likely Resources)
Powder River
(24.0 Tcf)
Uinta & Piceance
(5.5 Tcf)
San Juan
(10.2 Tcf)
Bu rea u
of
Ec on o mi c
G eo lo g y
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
0
400 m i
0
600 km
Hanna-Carbon (4.4 Tcf)
Raton-Mesa (3.7 Tcf)
SW Coal Region
(5.8 Tcf) Black Warrior
(4.4 Tcf)
Data: PGC (2001)
Northern Appalachian
and PA Anthracite
(10.6 Tcf)
N
81 Tcf
Alaska
(Bering River, North Slope,
Chignik and Herendeen Bay)
(57.0 Tcf)
QAc9714c
QAd1023
MAJOR PRODUCTIVE DEEP (>15,000 FT) GAS BASINS
(Total Most Likely Resources)
Montana
Folded Belt
(5.2 Tcf)
Greater Green River
(8.4 Tcf)
Wind River
(5.0 Tcf)
San Joaquin
(9.0 Tcf)
Permian
(12.9 Tcf)
Bu rea u
of
Ec on o mi c
G eo lo g y
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
0
400 m i
0
600 km
Appalachian
(5.0 Tcf)
Anadarko, Palo Duro
(17.7 Tcf)
LA, MS, AL Salt
(15.8 Tcf)
Texas
Gulf Coast
(14.3 Tcf)
62 Tcf
N
Louisiana
Gulf Coast
(14.5 Tcf)
Data: PGC (2001)
QAc9713c
QAd1023
MAJOR PRODUCTIVE DEEP-WATER GAS BASINS
(Total Most Likely Resources)
Pacific Slope
(8.9 Tcf)
71 Tcf
Louisiana Slope
(12.4 Tcf)
Texas Slope
(4.3 Tcf)
0
400 m i
0
600 km
Gulf of Mexico OCS
(47.7 Tcf)
Bu rea u
of
Ec on o mi c
G eo lo g y
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Data: PGC (2001)
N
Eastern Gulf Slope
(7.6 Tcf)
QAc9716c
QAd1023
Technology Investment
= Resource Creation
Annual Natural Gas Production (Bcf)
Unc. Gas Major Basins
30,000
(Technically
Recoverable)
Deepwater+Subsalt Offshore
L48 Unconventional Onshore
Tight Gas
25,000
20,000
Shale Gas
78 Tcf
40 Tcf
15,000
CBM
170 Tcf
81 Tcf
10,000
Deep Gas
62 Tcf
5,000
Deep Water
0
1949
1953
1957
1961
71 Tcf
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
Year
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
332 Tcf
EIA (1949-1990) and NPC (1991-2015)
QAd1023
Transport
North
America
Natural Gas
25
Quadrillion Btu
20
17%
15
Transports
10
5
(Bcf)
U.S. Natural Gas
Natural Gas Consumption
Natural Gas Production
1 Tcf Gas = 1 Quadrillion Btu
0
Source: A. Anderson/
Cambridge
Energy Research Assoc.
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Data: EIA
Sequester
The sustainability of a hydrocarbon-fueled
economy requires that we support an
environment and energy win-win.
Capture carbon dioxide and return it to the
subsurface for the economic benefit of
enhanced hydrocarbon recovery and the
environmental benefit of reduced
atmospheric carbon dioxide.
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
Monitor
Injector
“A”
“B”
BEG Texas
Frio Pilot Project
100 ft
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
“C”
440 ft
Challenge of
Meeting Natural
Gas Demand
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Meeting Demand
Oil and Gas R&D Funding
Note Scale Difference
120
1998 $
4
80
Fuel Cells and Gas
Turbines removed from
1996-1999 for
comparison
3
60
40
20
2
1992
1994
Private Sector Data:
Chris Ross, World Energy (2001, v. 4, no. 2)
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
1996
1998
Year
2000
2002
2004
DOE O&G
Million $
100
Billion $
Private Sector
5
Meeting Demand
Number of employees (thousands)
Oil Company Employment
1,800
Largest 25 Oil Companies
1,400
1,000
600
1974
1978
1982
1986
Year
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
1990
1994
1998
Meeting Demand
UNIVERSITY ENROLLMENTS
20,000
10,000
Geoscience Graduate
Students
Petroleum Engineering
QAd1731c
Source: AGI
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
The Challenge
Demand, esp. Natural Gas
Technology Requirements
O&G R&D Funding
University Enrollments
O&G Employment
Time
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
160.00
140.00
Summary
Quad BTU
120.00
100.00
Gases and Renewables
80.00
Liquids
60.00
Solids
40.00
20.00
0.00
Global oil and coal consumption will remain at
current levels for 30-50 years.
Natural gas and other energy sources will need to fill
the global demand gap.
The global economy and environment will benefit
from a transition to natural gas.
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Global Opportunities
& Benefits
Research and technology for a gas industry are
different than for an oil industry.
Unconventional sources will require significant
geoscience and engineering advancements to be
economically viable.
Sequestration of greenhouse gases will be
required to handle atmospheric emissions, and
will need geoscience and engineering
understanding.
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003
QAd1023
Thank You!
Scott Tinker, Director
Bureau of Economic Geology
August 4, 2003