IV Congreso Anual Conjunto de Asociaciones del Sector Energético
y XII Congreso Anual de la AMEE Acapulco 2012
IS THERE A PEAK GAS AHEAD?
…and what would be its impact?
Jean-Marie BOURDAIRE
jmbourdaire@sfr.fr
ACAPULCO
May 25, 2012
OUTLINE
• A/ World generalities on reserves
• B/ The rise of shale gas in the US
• C/ US shale gas: future perspectives
• D/ And what about elsewhere?
• E/ Annex: Gas resources plays
A/ GENERALITIES
ON RESERVES AND PEAK
THE 2005 NATURAL GAS VISION
World production peaks at 130 Tcf/y in 2030
WORLD GAS RESERVES (TCM)
16,2
14,7
9,9
7,4
4,5
North America
S-C America
Europe OCDE
Eurasia (FSU)
58,6
Middle-East
Africa
Asia-Pacific
75,8
Total reserves: 187 Tcm or 6.6 Pcf
NATGAS RESERVES: ~200 TCM
EVOLUTION OF GAS PROVEN RESERVES (TCM)
200
AsiaPacific
180
160
Africa
140
MiddleEast
120
100
Eurasia
(FSU)
80
Western
Europe
60
40
S&C
America
20
0
1980
1985
1990
1995
2000
2005
2010
North
America
THE 2012 LAHERRERE’S VISION
Ultimate reserves: 13 Pcf = 10.4 Pcf conventional + 2.6 Pcf unconventional
World production peaks at nearly 150 Tcf/y
If unconventional
gas is > 2.6 Pcf,
the peak is not
changed but
the decline
is slower
B/ THE RISE OF SHALE GAS
IN THE UNITED STATES
MAIN SHALE GAS DEPOSITS
THE US SHALE GAS EARLY DAYS
• 1970-2000: Unconventional gas (on average 70% tight gas,
20% CBM and 10% gas shale up to 2008) has grown slowly
from less than 1 Tcf/y in 1970 to ~5 Tcf/y in 2000
• 2000-2008: Unconventional gas was foreseen to reach a 9
Tcf/y plateau in 2010-25, but the fall of conventional gas was
such that much increased LNG imports were to be needed
• 2008: Oil, natgas prices, and the US rig count, collapse. To
maintain their production, operators deploy new technologies,
which are at the origin of the shale boom
Because of their belief that LNG imports were set to grow,
many operators have developed LNG terminals now idle
THE PRE-2008 VISION
NORTH AMERICA NATURAL GAS
Productions and 23-year shifted conventional gas discoveries
30
25
Smoothed discoveries over 7 years
Tight gas,
shale gas,
and CBM
Marketed gas production
Marketed less unconventional
Tcf per year.
20
Unconventional gas AEO-2005
15
US unconventional
gas was forecast to
plateau at 9 Tcf/y
10
5
Jean Laherrere 2005
0
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
2030
AEO FORECASTS: 2000-2008
Year after year,
production
forecasts get
more pessimistic
USthe
DOMESTIC
PRODUCTION
(TCF)
30
25
AEO 2000
20
AEO 2001
AEO 2002
15
AEO 2003
AEO 2004
10
AEO 2005
AEO 2006
5
AEO 2007
AEO 2008
0
2000
2005
2010
2015
2020
2025
2008: THE TURNING POINT
Shale gas
contribution
overtakes the
decline
of conventional
WET
US GAS - SUCCESSIVE
EIA
FORECASTS
(BCF/D) gas
60
YEAR 2006
YEAR 2007
58
YEAR 2008
YEAR 2009
YEAR 2010
56
54
52
50
48
46
Jan-07
Mar-07
May-07
July-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
July-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
AEO SHOW A BREAK IN 2008…
Shale US
gasUNCONVENTIONAL
production jumps above
the former 9 Tcf/y
GAS PRODUCTION
(TCF)forecast
15
12
2009 & 2010 are
in discontinuity
with the 9 Tcf/y
plateau foreseen
before (2000-08)
AEO 2000
AEO 2001
9
AEO 2002
AEO 2003
AEO 2004
6
AEO 2005
AEO 2006
AEO 2007
3
AEO 2008
AEO 2009
AEO 2010
0
2000
2005
2010
2015
2020
2025
2008: THE RIG COLLAPSE…
NATURAL GAS RIGS NUMBER VERSUS HH PRICE
25
The rig count
closely follows
the price trend
Gas rig count divided by 100
Henry hub price in $/MBtu
20
Spot WTI price in $/MBtu
15
10
5
0
J-00
J-01
J-02
J-03
J-04
J-05
J-06
J-07
J-08
J-09
J-10
J-11
J-12
…BUT PRODUCTION GROWS
US NATURAL GAS MARKETED PRODUCTION (BCF/D)
70
Impressive
growth up
65
to 2012
60
55
50
45
40
J-80
J-82
J-84
J-86
J-88
J-90
J-92
J-94
J-96
J-98
J-00
J-02
J-04
J-06
J-08
J-10
J-12
C/ FUTURE PERSPECTIVES
FOR THE US SHALE GAS
THE VOICE AGAINST SHALE GAS
Contrary to the major limitations that Arthur Berman sees…
• High costs, poor economics and destruction of capital,
• Infrastructure limitations (pipelines and NGL-stripping plants),
• Physical fundamentals (small core areas, fast decline rates),
• Average break-even prices higher than current prices,
…One may be optimistic about the future of shale gas
• Shale gas development is not like a Ponzi scheme…
• …and US gas majors are not behaving like Madoff.
• Some operators may fool some analysts for a while but…
• …the entire industry cannot be wrong for ever
TRUE SHALE GAS REALITIES
• Shale gas is the last unconventional gas in development,
and still is at the beginning of its learning curve.
• The pace of technological improvement will continue
• Expected ultimate reserves critically depend on the type
of decline (exponential or hyperbolic)
• High costs plays: Liquids (oil or NGL) are essential for
the economics
• Core areas with good IP are small (a few %), but overall
reserves may be very large
• Good operators will manage environmental concerns
• Infrastructure (NGL plants and pipelines) is critical
US PRODUCTION GROWTH
Shale gas dominates the natural gas growth
WHAT CHESAPEAKE SAYS
WHAT THE US DOE-EIA SAYS:
US dry natural gas production forecast in the AEO-2012:
Growing from 5 Tcf in 2010 to 14 Tcf in 2035!
D/ AND WHAT ABOUT
ELSEWHERE IN THE WORLD?
UNCONVENTIONAL TRANSPORT
OF METHANE IN CHINA (1997)
CANADA SHALE RESOURCES
With resources of 1100 Tcf, 200-300 Tcf may be recoverable
A total of 1100 TCF
of which ~50% in
the Horn River Basin
AND WHAT ABOUT THE WORLD?
First feedbacks are good for Argentina, possibly
good for China (?), uncertain for Europe and Ukraine
6600 Tcf or 6.6
Pcf of which 2-3
recoverable?
CONCLUSION: WHAT FUTURE?
• In North America: Exports of a few % of production
as LNG will sustain a balanced price level (5-6 $/kcf)
which, in turn, will allow production to grow evenly.
• In Europe: Unconventional gas prospects are remote:
not only spot LNG imports push prices down but the
EU E&P legislation needs to be deeply redrafted
• In Asia-Pacific: Neither China unconventional (still far
away), nor Australian CBM-to-LNG (a few Bcf/d) will
be game changers and decouple LNG from oil soon.
E/ ANNEX:
GAS RESOURCES PLAYS
CBM RESOURCE PLAYS
Recoverable: 600-700 Tcf?
140–1,040
1,680
500 - 700
15-50
100
390-425
22-44
100
750
800 - 1,100
30280
30
335-450
60
220 - 350
5-10
75 CBG resource in-place (Tcf)
Other countries with significant exploration activity
0.5
29
CBM RESOURCE PLAYS
Production Summary
• USA - production commenced in San Juan Basin in 1953.
CBM production in 2007: 4.8 Bcf/d (9% of total US dry gas)
• Canada – since 2002: 208 Mcf/d in 2007. Could exceed 1.4
Bcf/d by 2015. Average new well on stream at 100 Mcf/d.
• Australia – since 1996; 215 Mcf/d in 2006; Queensland
produced 272 Mcf/d in 2007; planning up to 6 LNG schemes
near port of Gladstone.
• Minor production or approaching commercial production:
UK; China; India; Kazakhstan; Russia (Kuznetsk Basin).
• 13 coal-producing countries have CBM projects.
30
CBM (BCF/D)
Pierre Mauriaud, ASPO 9 Bruxelles
TIGHT SANDS RESOURCE PLAYS
Recoverable: ~1350 Tcf?
560
6,800
75 Tight sand gas resource in-place (Tcf)
Other countries / areas with known tight sand exploration activity
0.5
32
TIGHT SANDS RESOURCE PLAYS
Basin-Centered Gas
Gas dissolved in abnormally-pressured low-permeability
aquifers in the central (generally deeper) part of basins • over-pressured in subsiding basins
• under-pressured in uplifted and eroded basins.
Also known as “deep gas” and “tight sand gas” but these are
not necessarily restricted to continuous accumulations (and
BCG is not always deep).
Examples:
San Juan Basin & Greater Green River basins (USA);
Western Canada Sedimentary Basin (southern deep basin);
Northwest Europe Permian Basin; Pannonian Basin;
Algerian basins; Oman Basin; Ordos Basin, China.
33
TIGHT SANDS RESOURCE PLAYS
Resources of tight Sand Gas / Basin-Centered Gas
Enormous in-place resources in USA (all tight sands)
• 3,000-5,000 Tcf in the Greater Green River Basin;
• 900 Tcf in the Wind River Basin, Wyoming;
• Total in-place resource ~ 7,000 Tcf.
USA Ultimate Tight Sand Resource Estimate
• 380 Tcf: 140 produced, 60 proved, 180 unproved/undiscovered,
200 Tcf produced and proved considered as “conventional”
• USA unproved/undiscovered BCG resource estimates from other
sources range up to 340 Tcf.
No reliable global resource estimate available
34
TIGHT SANDS RESOURCE PLAYS
Production of tight Sand Gas / basin-centered gas
USA production from all tight sands
• Total US production estimated at >6 Tcf (16.5 Bcf/d) in 2007
• 5-6% recovery factor - but much higher from “sweet spots”:
- Pinedale: 56% (10-acre spacing);
- San Juan Mesaverde: 44% (160-acre spacing);
- Uinta Mesaverde (EOG): 37% (10-acre spacing);
- Jonah Lance: 30% (40-acre spacing).
Canada
• Canadian production from tight sands and carbonates:
- Alberta: ~3 Bcf/d;
- British Columbia: ~1 Bcf/d.
35
TIGHT GAS (BCF/D)
Pierre Mauriaud, ASPO 9 Bruxelles
SHALE GAS RESOURCE PLAYS
Recoverable: > 700 Tcf?
AB / BC
~ 1,000
1,900
600 Shale gas resource in-place (Tcf)
Other countries / areas with known shale gas exploration activity / potential
37
SHALE GAS RESOURCE PLAYS
USA Ultimate Fractured Shale Resource Estimate
• ~415 Tcf: 9 produced, 21 proved, 385 unproved/undiscovered
(ICF International). 30 Tcf produced + proved is considered
“conventional”.
• Unproved / undiscovered shale gas recoverable resource
estimates from other sources range from 32 Tcf to 125 Tcf but
predate recent improvements in recovery and assessment of
recent plays such as Haynesville and Marcellus.
Global Resource Estimates
• No reliable estimate available but considerable potential exists.
• Canada (BC; AB; QC; NB; NS) will be next significant player.
Estimated 860 Tcf IP in Western Canada (130 Tcf recoverable).
38
SHALE GAS (BCF/D)
Source: World gas profiles (2011)
Pierre Mauriaud, ASPO 9 Bruxelles
WORLD
RESOURCES
ALL
GASSHALE
RESOURCE
PLAYS
6600Tcf
Tcfof
of which
which 20-30%
20-30% may
6 622
maybeberecoverable
recoverable
UNCONVENTIONAL GAS
RECOVERABLE BY REGIONS
RANGE OF UNCONVENTIONAL
REGIONAL RECOVERABLE GAS