AAPG Distinguished Lecture Series
Presents the
J. Ben Carsey Lecture
Energy Trends of
the Future
Matthew J. Telfer
Border to Border Exploration, LLC
Austin, Texas
Three Themes
Getting Accurate Information
Rapid Advances in Technology
and Circumstances
Environment, Politics and
Economics
Quadrillions of BTUs per Year – U.S.A.
2005
2040
100
100
Oil and Gas
50
50
Coal
Hydro and Nuclear
Wind, Solar, Biomass
2005
2010
2015
2020
2025
2030
2035
EIA 2010
0
Quadrillions of BTUs per Year – U.S.A.
2005
2040
100
100
Oil - Liquid Fuels – (Ethanol)
and Natural Gas
Oil and Gas
50
50
Coal
Hydro and Nuclear
??
Wind, Solar, Biomass
2005
2010
2015
2020
2025
2030
2035
EIA 2010
0
AAPG Distinguished Lecture Series
1984
“In the oil business,
every ten years,
half of what you know is
obsolete”
Bob Weimer CSM
Environment
Economics
Politics
Free Market Supply and Demand
Cheap Commodities Lead to Inefficiency and Waste
Cost vs. Benefit
Cost Controls and Mandates Lessen Innovation and
Motivation
Republicans vs. Democrats
Polarization and Extremism, A Race to see who can
Handout the Most to Build Their Constituencies
Politics
Where’s the Balance?
CO 2
World Emissions
29.7 Billion Tons/Year 2010
42.4 Billion Tons/Year 2035
7 Billion People on the Planet
EIA 2010, National Geographic 2011
World Energy-Related Carbon Dioxide Emissions
By Fuel Type 1990-2035 Billion Metric Tons
Coal
Liquid Fuels
Natural Gas
Source: EIA Energy-Related Carbon Dioxide Emissions May 2010
International Energy Agency IEA – Forward View
World Energy Outlook 2010
Kyoto Protocol – 1997, Copenhagen Accord – 2009
Objective set: Limit change in Earth Temperature to
2 degrees Celsius = CO2 Concentration of 450 ppmv
Keeling Curve
1960
315 ppmv
•
•
•
2010 2011
385 391
2050
450 ppmv
Current Policy Scenario – 1.4 % Energy Growth
New Policies Scenario – 1.2% Energy Growth
(If present plans are implemented)
450 Scenario - .7% Energy Growth
450 Scenario would take: $18 Trillion between 2010-2035,
“rate of technological transformation would be unprecedented“
What Will the Effects of CO2 be on Climate?
How Long Will the Increase in CO2 Last?
Need Answers –
A Lot is at Stake
Sink 1
Sink 2
Sink 3
Sink 4
Sink 5
Wikipedia
CO2
Studies of Carbon Cycle from Pulsed Models
•
•
•
•
Various Sinks Work at Different Rates, with Different
Degrees of Effectiveness
Higher Concentrations of Atmospheric CO2 are Dissolved
into Ocean Surface Waters on the order of 200 to
2,000 years –
BUT, Leave the Atmosphere with Elevated CO2 Levels.
These are Drawn Down Further via Mixing with Deep
Oceanic Waters and Dissolution of Minerals on
Timescales of 3,000 to 10,000 Years.
Paleocene-Eocene Climate Event: 150,000 years to
Return to Pre-Event Levels
Archer, et al 2009 Annual Review of
Earth and Planetary Sciences
The Effects of CO2?
Shifts in vegetative zones, Regional climate changes,
Rise in sea levels, Stronger storms,
Ocean acidification, Buffer to climatic change
How Long Will the Increase in CO2 Last?
Thousands of Years
What Can Be Done???
Or, Do We Have to Live With, and Adapt to
Climate Change?
81,000,000 tons of CO2/day
Perhaps 800,000 tons Removed by US Efforts
If the US Replaces 5 Quadrillion BTUs of Energy use
with Renewables, out of 500 Quads used worldwide
each year, 1% of worldwide output of is CO2 Reduced
81,000,000 tons of CO2/day
Perhaps 800,000 tons Removed by US Efforts
Is That a Solution?
2012 – Drew Shindell, et al of NASA
2007 - Mark Jacobson of Stanford
Actual Global Warming –
CO2
48%
Soot
16%
Methane 14%
Halocarbons
9.7%
Ozone
8.6%
Nitrous Oxide 4.6%
US efforts controlling CO2 less impactful on Global
warming? Are Soot and Methane easier to contain?
Is The Quest to Prevent Climate Change?
Is the Agenda to Get Funding for Research?
Is the Agenda to Replace Oil Companies?
Is the Agenda to Build Constituencies to
Get Elected?
Is the Agenda to Provide Abundant Energy
Is the Agenda to Make Money?
Energy Sources
Oil
Natural Gas
Natural Gas Liquids
Coal
Nuclear
Hydropower
Geothermal
Renewable,
Biomass
Renewables
But not CO2 Neutral
Wind
Solar
Electricity???
Electricity is not Energy
Electricity only transports power
that was generated elsewhere
Renewables
Wind
Solar
Geothermal
Hydropower
Biomass/Ethanol**
Renewables
Government-Backed
•
•
•
•
•
•
30 States have Enforceable
Renewable Portfolio Standards (RPS)
Producers Earn Renewable Energy Credits
Sell to Energy Distribution Companies
Paid for in the Rate Base or by Surcharges, and
Federal Production Tax Credits - 1.1 – 2.2c/KwH
American Jobs Creation Act (2004) - renewables
Support Renewable Energy Act (2010) (DOE)
Wikipedia, DOE website
Federal Government
State Governments
Municipal Governments
Environmental Protection Agency
Power to Promulgate Regulations and Enforce Them
Based on Mandates and Authority Given to it by the
Federal Government
Environmental
Concerns
NOW – CO2
Private Industry
Rest of the World
Economic
Concerns
Federal Government
State Governments
Municipal Governments
Environmental Protection Agency
Power to Promulgate Laws Based on Mandates
and Authority Given to it by the Federal Government
Environmental
Concerns
Department of Energy
Los Alamos, Bell Lab-style R&D
Private Industry
Rest of the World
Economic
Concerns
Federal Government
State Governments
Municipal Governments
Environmental Protection Agency
Power to Promulgate Laws Based on
Mandates and Authority Given to it by the
Federal Government
Department of Energy
Environmental
Concerns, including
Global Warming
Private Industry
Rest of the World
Economic
Concerns
JOBS
Taxes
Wind
• Abundant Supply, Requires Significant
Infrastructure, Including Redundancy
• Currently 1.9% of Electric Supply
• Government Mandates, Subsidies
- Federal Production, Investment Tax Credits;
Interest Free Financing (via Energy Bonds to Gov.
Entities) and Loan Guarantees (Farmers, Ranchers
and Rural Businesses)
Source:
EIA
Wind Turbine Locations – Wind Power and Renewable Portfolio Supply Demand
Solar
•
•
•
•
•
Abundant Supply
Applications: Thermal and Direct to Electric
Lower Prices from Chinese Manufacturers
Competitive Weakness Against Cheap
Energy - Low Oil Price is Bad for Solar
Government Mandates, Subsidies
3 Recent Bankruptcies =
Culling High Cost Makers
Solyndra, Evergreen and Spectrawatt
GeoThermal
Better Plants at Existing
Sites
Hydroelectric
Best Sites in U.S. have
been Developed
More Foreign Sites Will Be
Developed
Source: IEA
Annual Energy Outlook
2011
Effect of Renewables
By 2035, Only 5 to 10% of all of
CO2 Input from U.S. has Been
Diminished
Is That a Solution to the
Problem of CO2?
Biomass
Corn to Ethanol
Cellulose to Ethanol
Wood Products Used in
Electric CoGen*
* Not CO2 Neutral, Based on Long Atmospheric Residence Times
Federal EPA
Clean Air Act, 1970, as amended
- RFG reformulated gasoline
- RVP Reid Vapor Pressure (Summer)
- Winter Oxygenated Fuel (CO control)
Energy Independence and Security Act 2007 - EISA
- Fuel Pathways to Provide
“Appropriate Greenhouse Gas Reductions”
- RFS 1 7.5 B Gallons by 2005
- RFS 2 36 B Gallons by 2022 (21 B Gallons non-corn starch)
- Expanded to include Diesel
2009 - Application by GrowthEnergy to increase E10 to E15
Granted October 2010 for model years 2001 and younger
Allows a Significant Expansion of Ethanol for Motor Fuel
Ethanol
Explosive Growth Industry
Located in Rural America
600,000 BEPD
Renewable Fuels Association
•
•
•
•
•
•
10% of Current Gasoline Market
Gearing up to Export Ethanol
70,000 Direct Jobs
Worldwide Asset Base is Rich and Complex
RFS – Renewable Fuel Standards
- Mandates by 2022 21 B Gallons of the 36 B Gallons of
Renewable Fuels use be from non-corn starch Feedstocks
• Grasses, Woody Biomass, Garbage and Algae
•
•
•
•
•
Volumetric Ethanol Excise Tax Credit (VEETC)
- .45c/Gallon – 1 Year Extension 2011 = $6 B
Agriculture Subsidies Counted?
Tariffs on Brazilian Ethanol - .54c/Gallon
2.3 Units of LIQUID Energy per 1 Unit Energy Input
Renewable Fuel Association Website
GrowthEnergy – Driver Behind Ethanol
• Goal: Replace 90% of US Gasoline Usage with
Ethanol
• Ethanol Boost Direct Engine (EBDE)
• “Live Green, Go Yellow”
• Well Organized, Politically Savvy
• Spokesman: General Wesley Clark
• USDA, Energy Department, Navy - $510 MM
Drop-in Aviation and Marine Biofuels
• White House Rural Council
GrowthEnergy.Org 2011
Ethanol = Liquid Energy
20 years
Source: GrowthEnergy.org
Coal (US)
6 Trillion Tons in Place
Recoverable US Reserves –
260 B Tons
222 Years Supply
at Present Rate
DOE, US Mining Association
American Coal Foundation Website
US – 260 Bn sTons - 222 Years at Current Production Levels
A Critical Resource
Nuclear
•
•
•
•
•
Siting Plants is Critical
Fukushima Earthquake and Tsunami
Refocused on Risk of Natural
Disasters: Earthquakes, Hurricanes,
Tornados, Terrorism
Also, Radioactive Waste Products
= No Significant Additions
Net
Manufacturing
Employment
1994-2007
-3,654,000
- Wikipedia
Nafta
Recessions
Energy Sources for Electrical Production
Nat. Gas
Petroleum
Wind
Nat. Gas
Nuclear
Coal
Hydro
Rural
Electrification
Trends of the Past give us Perspective for the Future
Source: NaturalGas.Org
Our Products
Oil
Natural Gas
Natural Gas Liquids
Production Stream
Gas Condensate Well
Oil
Refinery
Gasoline, Petrochemicals
Gas
Pipeline
Processing
Plant
Pipeline Quality Gas - Methane
Burnertip
Natural Gas Liquids
Fractionation Plant
Ethane
Butane
Propane
Pentane
Dew Point
Porous Rock Formation
Oil
99% of all Transportation
Runs on Oil
Liquid Energy
Oil
Petrochemicals
Detergents, Fertilizers, Medicine, Paints,
Synthetic Fibers, Rubber, Asphalt, Lubricants,
Roofing Compounds, Tars, Creosotes, High Viscosity
Liquids…………………………………………………….
Natural Gas
Energy in a Vapor
900 out of the next 1,000
Power Plants
Huge New Supplies
Transportation???
Natural Gas Liquids
•
•
•
•
Ethane – Plastics
Butane – Liquid Fuel
Propane – Liquid Fuel
Pentane – Solvents, Organic
Compounds
• Hexane – Solvents, Gasoline
The Five Reservoir Fluids
Black Oils
Volatile Oils
Retrograde Gases (Gas Condensates)
Wet Gases
Dry Gases
McCain, 1990
The Properties of Petroleum Fluids
The Five Reservoir Fluids
Volatile Oils
• Pressure Drop in the Reservoir,
• Bubble Point is Reached,
• Drive Mechanism results from Gas Expansion
• Relatively Low Recoveries
McCain, 1990
The Properties of Petroleum Fluids
The Five Reservoir Fluids
Retrograde Gases (Gas Condensates)
• Initially – Fluid is in a gas phase in the reservoir
• As pressure decreases – Volumetric Expansion,
Liquid condenses in the reservoir
• Initial Gas to Oil Ratios of 3,300 to 50,000 scf/STB
• 40 to 60 gravity API
McCain, 1990
The Properties of Petroleum Fluids
The Five Reservoir Fluids
Wet Gases
• Initially – Fluid is in a gas phase in the reservoir
• As pressure decreases - Liquid DOES NOT
condense in the reservoir
• Volumetric Expansion
• High Gravity Liquids at Surface
McCain, 1990
The Properties of Petroleum Fluids
All Reservoir Drive Mechanisms
are the Result of Pressure Drops
The Further the Distance
from the Pressure Drop, the
More Likely there will be a
Barrier to Flow
= Less Recovery
Horizontal Drilling With
Hydraulic Fracturing
Distributes the Pressure Drop Effectively
over Many Times the Volumes of
Reservoir Reached by Other Methods
Truly a “BlockBuster” Technology
Energy from
Shale.org
Porosity, Permeability and
Drive Mechanisms Hydrocarbon Phase is Just as
Important
Gas
Shale Reservoirs with
Gas-Condensate Phases are
Being Exploited Now = OIL
Thought it was
Over for Gas
Tight Gas
Conventional Gas
Offshore
Source:
NaturalGas
.Org; from
EIA 2011
Thought it was
Over for Gas
Source:
NaturalGas
.Org; from
EIA 2011
Marcellus Shale
Reserve Estimates
84 TCFG 3.4 BBO mean
144 TCFG 6.2 BBL high side
Other Estimates – 516 TCFG
USGS; Engeler, Penn State
EIA
Northeastern Pennsylvania
Drilling Results
Cabot Petroleum
13 MCFGPD
10 BCFG per well
AVERAGE!!?
3,189 Drillsites (400 acre spacing) =
32 TCFG – 2 Counties
Utica Shale
Partly in the Wet Gas and
Gas/Condensate Hydrocarbon Phases
Probably, the Entire Eastern Half of
Ohio will be an Oil/Gas Field.
12,000 Square Miles 160 acre spacing
48,000 wells
1,000,000 BOPD?
Source:
Chesapeake
Source: EnergyIndustryPhotos.com
Bakken Dolomitic Siltstone and Shale Play,
Along with Underlying Three Forks
North Dakota, Montana and Canada
• Continental Resources Estimates
24 B BO Recoverable
• Continuous Over-Pressured
Accumulation
• 1,000,000 BOPD?
“Guess and Guess Often” –
Jack Stark
Eagle Ford Horizontal Play
South Texas
Massive Continuous Accumulation
All Hydrocarbon Phases Represented
Estimated to Reach 750,000 BOPD
Energy Tomorrow
Canadian Bitumen and Heavy Oil Plays
1.7 Trillion BO in Place
Projected to Reach 5,000,000 BOPD
Pipeline Dependent –
Keystone XL to Gulf Coast
Gateway – Oil to Asia
IHS CERA, WEA
Canadian Bitumen and Heavy Oil Plays
Becoming More Environmentally
Friendly with “ A Wave of
Technological Advances”
In-Situ Recovery
Steam Assisted Gravity Drainage
SAGD – 60% Recovery
Source: Wikipedia
Shell Oil Company
Deep Water Gulf of Mexico
Eocene (Wilcox-age) Sands
New Discoveries and Extensions
Midcontinent, Permian Basin
Exploitation with Horizontal Drilling
Oil Shales
Piceance, Unita and Green River Basins
4.24 Trillion Barrels of Oil in Place
USGS
Polar Oil Rush
Arctic Riches Lure Explorers
Exxon, Rosneft, Shell Set to Pour Billions Into
Potentially Huge, Risky Prospects
The region encompasses about 12 million square miles—just
6% of the earth's land mass. But it is estimated to contain the
oil and natural-gas equivalent of 412 billion barrels of oil, about
22% of the world's undiscovered oil and gas.
“More recently, thinning ice has made it easier to work in some
parts of the Arctic. And the persistently high price of oil, ...”
Gas –
Alaska,
Canada
Oil Canada, North Dakota
Ethanol
Wind
Oil Mexico
Condensate Utica,
Marcellus
Eagle Ford
Oil –
Deep Water
Gulf of Mexico
Conclusions
On One Hand, We Have Lost
On the Other Hand We Have Won
Conclusions
1. CO2, is a Difficult Issue. We are Going to
Have to Live with Climate Change. If
Climate Change Happens at the Current
Level of CO2, We can Only Expect More.
2. We are Using Precious Resources of Time
and Capital to Fight CO2– Are we Better
Off Using that Capital Elsewhere and Let
Economics Dictate Energy Use - ?
Conclusions
4. North America can be Energy Independent.
- Just have to Include our most Strategic Trading
Partners in the Box.
5. Would Create a Huge Geopolitical Shift Away
from US Dependency on the Middle East and
Reverse the Connection to Global Markets.
6. This Creates a Major Strategic Advantage:
Economic Energy Allows for the Competitive
Re-Industrialization of the U.S. and Real Solutions
will be Found out of a Position of Economic Strength
Conclusions
The Stronger We Make Our Economy
the Faster We Solve Energy Issues
How are Sources of Energy Used???
To Generate Electricity
Electricity and Natural Gas are Used:
Industry, Residential, Commercial
Liquid Fuels are Used:
Transportation
Electricity, Heat or Transportation
Undiscovered Oil
Billions of Barrels
>10
1-10
<1
Source: Wikipedia
Source: Wikipedia
Natural Gas Liquids
Ethane
Butane
Propane
Pentane
Hexane
Highly Over-Pressured Oil Shales
• Pressure Drop Allows Oil to Migrate Out
• Bakken Shales In the Williston Basin
How is Energy Measured?
BTU = heat energy
Watt = power
Power is energy expended
through time, the rate it is
transferred
1 Kilowatt = 3,412 BTU/hr
How is Energy Measured?
302 GigaWatts =
1 BCFG
How is Energy Measured?
1,000 Watts = Kilowatt
1,000 Kilowatts = Megawatt
1,000,000 Kilowatts = Gigawatt
301 Kilowatts = 1 MCFG
1 Gigawatt = 3,311 MCFG
Structured Decision Making
Figure 4. Schematic representing various steps
included in a Structured Decision Making process.
Modified from U.S. Fish and Wildlife Service (2008).
Final Volumes for 2011
Actual Volume
Ethanol Equivalent Volume
Cellulosic biofuel
6.6 mill gal
6.0 mill gal
Biomass-based diesel
0.80 bill gal
1.20 bill gal
Advanced biofuel
1.35 bill gal
1.35 bill gal
Renewable fuel
13.95 bill gal
13.95 bill gal
= 393,000,000 Barrels of Ethanol?
600,000 Barrels of Ethanol per day
= less than numbers above 219 MM BE
Still a Lot!!
Source: Wikipedia
Public Perception
How Can This be Changed?
What do we Change it to and How?
Appreciation of Value, Conservation
and Efficiency
Change in Consumption Habits
USEPA, IPCC