international csg development & economics

International CSG Development & Economics | May 2007Bettina Pierre-Gilles

International CSG Development

& EconomicsBettina Pierre-Gilles, Principal, Phasis Consulting

5th Annual CSM - CMM Summit, Brisbane , May 2-4 2007

P phasis | consulting www.phasis.biz


» Energy » Environment » Sustainabilityphasis | consultingP

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{CBM = CSG = CBG = CSM = CMM}

“No matter how you call it, it’s still unconventional!”



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Introduction2006 CBM Drilling in CanadaDrilling Practices per formationOverview of CBM Development GloballyCBM EconomicsDiscussions / Conclusion

Agenda



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Colors Denote Age of Coal

Source: Canadian Society for Unconventional Gas (CSUG)

» Overview of North American ActivitiesAgenda



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www.phasis.bizOverview of North American Activities

0

10000

20000

30000

40000

Cum

ulat

ive

Rigs

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100

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400

500

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700

800

Num

ber o

f Rig

s

Jan 1999 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007Date

Cumulative Number of Rigs

© 2007 Phasis Consulting

Canada Rigs: 1999−2007Oil & Gas

Canadian Rigs 1999 to 2007



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20000

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120000

Wel

ls

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Mcf

/wel

l/da

y

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

Wells

Adapted from CAPP, 2005© 2005 Phasis Consulting

Natural Gas − Overall Production History

Overview of North American Activities

Canadian Natural Gas Production 1996 to 2004



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0

2,000

4,000

6,000

8,000

10,000

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Wel

ls

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Adapted from CAPP, 2005© 2005 Phasis Consulting

Overall Well History

Oil Gas Dry/Other


Canadian Wells Drilled by Type 1991 to 2005



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0

2

4

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10

Tcf

1990 1995 2000 2005 2010 2015 2020 2025

Year

Associated / Dissolved Alaska

Nonassociated Offshore Nonassociated Onshore on Conventional

Onshore on Conventional

Adapted from: EIA’s 2004 Annual Energy Outlook© 2005 Phasis Consulting

US Dry Natural Gas Production1990−2025




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www.phasis.biz» Canadian Coalbed Methane Potential

British Columbia Alberta (Alberta Geological Survey)

2.7 BCf/d1.8 BCf/d

d/fCM

M004

f

h

g

de

abc

Tsable River

Telkwa W & PC

Tulameen

GrahamIsland

Coalfields

Tuya RiverCoalfield~ 66 Bcf

Coal RiverCoalfield

~6 Bcf

East KootenayCoalfields

~19 Tcf(33 Tcf incl

mined areas)

Suquash Coalfieldup to 45 Bcf Comox Coalfield

up to 1 Tcf

Nanaimo Coalfieldup to 300 Bcf

Bowron RiverCoalfield

up to 50 Bcf

Klappan andGroundhogCoalfields

up to 8.1 Tcf

TelkwaCoalfield

up to 130 Bcf

Peace RiverCoalfield

60-200 Tcf

Hat CreekCoalfield

up to 0.5 Tcf MerrittCoalfield

TulameenCoalfield~42 Bcf

PrincetonCoalfield

80 Bcf

Prince Rupert

FortSt. John

Fort Nelson

Victoria

Vancouver

Sedimentary Basins

Gas Pipeline

Oil Pipeline

Alliance Pipeline

Anthracite

Coking

High Volatile Bituminous

Sub-bituminous to Lignite

Area Underlain by Coal(above 2000 m depth)

abcdef

gh

Fording River

Greenhills

Line Creek

Elkview

Coal Mountain

Bullmoose

Quinsam

Willow Creek

Wolverine+Perry Creek (W&PC)TulameenTsable RiverTelkwa

Mines

Properties

MMCf/d

BCf/d

Million Cubic Feet per day

Billion Cubic Feet per day

BcfTcf

= Billion Standard Cubic Feet= Trillion Standard Cubic Feet

Estimated Coalbed Methane Gas in Place(to maximum 2000 m depth)

Basin Outlines : Geological Survey of Canada, unpublished: P. Hannigan, P.J. Lee, K Osadetz et al., 1993-1998.

Coalfields and Coalbed Methane Potentialin British Columbia




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www.phasis.bizCanadian Coalbed Methane Potential

Key Indicators:

Alberta Horseshoe Canyon Mannville

Producing Wells 10,723 9,762 (91%) 822 (7.7%)

Water Variable Dry Saline

Resources Recovery -

60 - 118 Tcf 26% - 39%

239 Tcf 21 - 38%

Drilling 94.1% Vertical5.9% Horizontal/Directional

96.3% Vertical3.7% Horizontal/Directional

48.4% Vertical51.6% Horizontal/Directional

Median Daily Production Variable 94 Mcf/d 83 Mcf/d

Top Three Operators Encana, Quicksilver, Apache Encana, Quicksilver, Apache Trident/Nexen, Encana, Apache



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Key Indicators:



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Median Production Wells

Regression Line 95% Prediction Interval


Production Profile by Time on Production

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Active wells


Median Daily Production

Canadian Coalbed Methane Potential

Canadian CBM Production Profile



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Costs ($CAD)* Horseshoe Canyon Mannville (Horizontal)

Capital Costs (x1,000)

Drilling and Completion (including facilities) $475 $1.2 - 2.4 M

Operating Costs

Fixed (per well/m) $675 $5,000

Variable $0.20/Mcf $0.43/Mcf

Water Disposal $0 Varies

Canadian CBM Economics:

* 1 CAD ≈ 1.08 AUD



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www.phasis.biz» US Coalbed Methane PotentialCanadian Coalbed Methane Potential

Basin (State) Field Name Type of Resource Total Basin Gas Production

San Juan (New Mexico, Colorado) San Juan Basin Gas Area CBM/Tight Gas Sands 1.4 Tcf

Ft. Worth (Texas) Newark East (Barnett) Gas Shale 496.5 Bcf

Powder River (Wyoming) Wyodak/Big George Fairway CBM 336.1 Bcf

GGRB (Wyoming) Jonah Tight Gas Sands 273.1 Bcf

Denver (Colorado) Wattenberg/DJ Basin Tight Gas Sands 179.1 Bcf

East Texas (Texas) Carthage Tight Gas Sands 214.1 Bcf

Michigan (Michigan) Antrim Gas Shale 164.9 Bcf

Piceance (Colorado) S.Piceance Basin Gas Area Tight Gas Sands 5.9 Bcf

Gulf Coast (Texas) Giddings Tight Gas Sands/Chalk -

Major US Unconventional Gas Fields

Adapted from EIA 2005 Annual Reserves Report



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www.phasis.bizUS Coalbed Methane Potential

0 5,000 10,000 15,000 20,000

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

Adapted from EIA© 2006 Phasis Consulting

CBM Reserves vs. Production

Reserves ProductionBcf



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www.phasis.bizUS Coalbed Methane Potential

Advanced Resources(2004)

National Petroleum Council (2003)

US Geological Survey (1995-2003) Mean Estimate

Tight Gas Sands 350 Tcf 175 Tcf 186 Tcf 204 Tcf

Coalbed Methane 84 Tcf 58 Tcf 68 Tcf 70 Tcf

Gas Shales 77 Tcf 35 Tcf 71 Tcf 61 Tcf

Total 511 Tcf 268 Tcf 325 Tcf 368 Tcf

US Recoverable Unconventional Gas

Adapted from: Advance Resources International Inc. JAF02442



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Costs ($USD)* San Juan Uinta Powder River Raton

Drilling & Completion $275,000 $375,000 $75,000 $330,000

Average F&D costs in the US basins: $1.05/Mcf

US CBM Economics:

* 1 USD ≈ 1.26 AUD



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www.phasis.biz» International Coalbed Methane PotentialUS Coalbed Methane Potential

Countries with active CBM development:Australia

ChinaIndia

Others worth mentioning:

Southeast Asia Africa

Some European countries



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China:

World’s largest producer (and consumer) of coal.

CBM Resource estimates: 36.8 tcm (found at depth of less than 2,000 m).

CBM can be extracted from 14 basins with average per basin reserves of 500 bcm.

7 CBM basins have reserves above 1,000 bcm: Ordos, Quinshui, East Yunnan, West Ginzhu, Jungar, Tuha and Erlianhote Basins.

International Coalbed Methane Potential



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India:

3rd largest coal producer in the world.

CBM Resource estimates: 13.4 Tcf.

NELP-VI results: ONGC awarded 25 blocks (operator of 24), Reliance awarded 7 deepwater blocks, and 1 offshore block was awarded to Cairn Energy.

NELP-VII: to be announced April 2007. Expectations: 100 blocks to be offered.




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Other Countries Worth Mentioning: Southeast Asia:

Indonesia: Resource potentials: ~400 Tcf

Southern Sumatra will be the focus for ‘07

Africa:

Testing currently in progress to evaluate CBM potentials

Ukraine:

Actively promoting development of its CBM potentials

Donetsk area CBM pilot projects may be underway in ‘07




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Unconventional gas resources are now a necessary and permanent addition to the energy supply mix.

In the US, unconventional gas accounts for over 10% of natural gas production.

In Canada, more and more companies are looking at developing unconventional resources, as are many international countries.

Unconventional gas, whether CBM (CSG), shale gas or tight gas (sands) is here to stay. Whether in the US, Canada, Australia or any other basins, an understanding of the coal formations’ characteristics and the use/implementation of the proper drilling and completions technologies are necessary for successful and continued development, as well as to keep the projects economic.

International Coalbed Methane Potential» Conclusion

Short Title of Presentation. To edit: A-Master | Month YearBettina Pierre-Gilles

Thank you!

P phasis | consulting

Pphasis | consulting

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Canada

Tel 403.542.3557Fax [email protected]

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