outlook for international shale gas · pdf fileoutlook for international shale gas...

1

Outlook for International Shale Gas Development

Prepared for:Shale Exchange Workshop

Prepared by: Vello A. Kuuskraa, PresidentAdvanced Resources International, Inc.

October 29, 2014CONSOL Energy CenterPittsburgh, PA

Outlook for InternationalShale Gas Development

| JAF2014_086.PPT | October 22, 2014 | www.adv-res.com

2


Two countries - - notably the U.S. and Canada - - already draw on shale gas and shale oil for a major portion of their oil and gas production.

U.S. Shale and Unconventional Gas. With benefit of the “shale revolution”, the U.S. now obtains half of its 70 Bcf per day of natural gas production from organic-rich shales. Tight gas and coalbed methane provide 25%, leaving conventional gas with the remaining 25%.

U.S. Shale and Tight Oil. Shale and “tight” oil, from the Bakken, the Eagle Ford, the Permian and other plays and basins, provide 3.7 million barrels of crude oil per day, nearly half of today’s U.S. crude oil production.

Canada’s Shale Gas, Tight Gas and CBM. Strong growth from the Montney resource play plus development of tight gas, shale gas and coalbed methane, enables unconventional gas to provide over 60% of Canada’s natural gas production.

North American Shale Gas and Shale Oil Production


3


U.S. Shale Gas Production

With declines in conventional natural gas production, shale gas has been the engine of growth. Driven by the massive Marcellus and the “liquids-rich” Eagle Ford, U.S. shale gas production is now 34 Bcfd.


U.S. Shale Gas Production (Dry)U.S. Natural Gas Production (Dry)

2008 2014(Bcfd) (Bcfd)

Unconventional Gas

▪ Shale Gas 7.2 34.0

▪ Tight Gas 18.0 14.7

▪ CBM 5.4 3.5

Sub-Total 30.6 52.2

Conventional Gas 25.1 17.6TOTAL 55.7 69.8

Annual Dry

JAF2014_036.XLS

Gas ProductionSupply Source

*Includes L-48 onshore, offshore and Alaska. Source: EIA; Advanced Resources Int. Shale Gas Database, 2014.

4



U.S. Shale and “Tight Oil” Production

Source: Advanced Resources Int. “Tight Oil” Database, 2014.

JAF2014_032.XLS

U.S. “tight oil” production - - from shales (Eagle Ford), tight sandstones (Sprayberry), and tight carbonates (Bakken) - - has increased six-fold in five years.

From a base of 0.6 MMB/D five years ago (2009), shale and “tight oil” now provide 3.7 MMB/D.

With continued active drilling in the Bakken and Eagle Ford plus strong growth in the Permian, “tight oil” will provide 4.4 MMB/D in 2015.

*

U.S. “Tight Oil” Production

5


2013 2014(Bcfd) (Bcfd)

Unconventional Gas

▪ Tight Gas 7.0 7.7Montney 1.9 2.3Other Tight/Assoc. 5.1 5.4

▪ Shale Gas 0.5 0.5

▪ CBM 0.7 0.7

Sub-Total 8.2 8.9

Conventional Gas 5.8 5.5

TOTAL 14.0 14.4

Gas Production

JAF2014_036.XLS

Supply Source

Annual Dry

Even as Canada’s conventional natural gas production continues to decline, its unconventional gas is reviving growth. Tight formations, shales, CBM and the Montney resources play now provide 62% of Canada’s natural gas production.

Canada’s Natural Gas Production


Source: National Energy Board, Canada.

Canada’s Natural Gas Production (Dry) Marketable Natural Gas Production in Canada

Source: National Energy Board (NEB) Canada and Advanced Resources Int. Database, 2014.

6


Several other countries - - notably Argentina and Australia - - are also on the path of relying on shale and other unconventional resources for the majority of their oil and gas production.

Argentina. With declining production from conventional gas fields, Argentina is investing heavily in its tight and shale gas resources, particularly in the Neuquen Basin and its Vaca Muerta Shale.

Australia. Australia, with large shale gas and coalbed methane resources, anticipates a steady transition from “traditional gas production to CBM and other sources” as its LNG plants come on line. (Geoscience Australia, 2010).

Algeria, China, Colombia, Mexico and Poland. Significant leasing and exploration for shale gas and shale oil are underway in Algeria, China, Colombia, Mexico and Poland plus numerous other countries.

Shale Gas and Shale Oil Development in Other Countries


7


World Shale Gas and Shale Oil Resources

Advanced Resources Int’l, with sponsorships from the U.S. Energy Information Administration, conducted an assessment of shale gas and shale oil resources for 137 formations and 95 basins in 41 counties (ex. U.S.). For completeness, we added our internal assessment for U.S. shale gas and shale oil.

Shale GasIn-Place

ResourcesTechnically

Recoverable%

Recoverable(Tcf) (Tcf) (%)

35,800 7,795 22%

Shale OilIn-Place

ResourcesTechnically

Recoverable%

Recoverable(Billion Barrels) (Billion Barrels) (%)

6,600 335 5%

We recently completed assessments for four countries - - Chad, Kazakhstan, Oman and UAE - - that added 324 Tcf and 56 billion barrels of risked, technically recoverable shale gas and shale oil resources.


Source: EIA; Advanced Resources Database, 2014.

8


Technically Recoverable

(Tcf)1. U.S. 1,1612. China 1,1153. Argentina 8024. Algeria 7075. Canada 5736. Mexico 5457. Australia 4378. South Africa 3909. Russia 28510. Brazil 24511. Others 1,535TOTAL 7,795JAF2014_036.XLS

Country

World Shale Gas and Shale Oil Resources (41 Countries, including U.S.)

Russia, U.S., China and Argentina top the list for technically recoverable shale oil resources.

U.S., China, Argentina and Algeria top the list for technically recoverable shale gas resources.

Shale and Tight Oil Resources: Top 10 Countries Shale Gas Resources: Top 10 Countries

JAF2014_036.XLS| JAF2014_086.PPT | October 22, 2014 | www.adv-res.com

Technically Recoverable

(Billion Barrels)1. Russia 752. U.S. 48*3. China 324. Argentina 275. Libya 266. Australia 187. Venezuela 138. Mexico 139. Pakistan 910. Canada 911. Others 65TOTAL 335JAF2014_036.XLS

Country

*Updated in 2014 by Advanced Resources Int’l to 63 billion barrels.Source: Advanced Resources International Internal Shale Database, 2014. Source: Advanced Resources International Internal Shale Database, 2014.

9


Canada

Shale Gas (BC): Devonian marine shales in Horn River, Cordova and Liard basins.

Favorable geology, high resource concentrations, commercial production

Environmental and market challenges

Apache, EnCana and EOG using long Hz wells, pad drilling

Shale Gas Canada: Development on-hold.

Shale Gas and Shale Oil (Alberta/Sask.): Devonian through Jurassic marine shales.

Massive areas, moderate resource concentrations

Major activity in Canadian Bakken Shale; just starting in Duvernay Shale

Risked TRR: 573 Tcf and 8.8 Billion barrels


10


China

Shale Gas: Paleozoic marine source rocks in Sichuan Basin and southern China. Current focus of shale exploration Good rock quality; structurally complex drilling

problems, high stress Goal of 6 to 10 Bcfd by 2020

Shale Oil: Mesozoic lacustrine source rocks in Junggar, Tarim, and Songliao basins. Some early shale exploration Also structurally complex and faulted Will clay-rich non-marine shales efficiently

fracture?

Activity: >100 exploration wells, vertical and horizontal. PetroChina, Sinopec, Chinese startups Shell, ConocoPhillips, Chevron, others Promising but still low gas rates, high costs.



11


Mexico

Shale Gas: High quality Eagle Ford and Tithonian (Haynesville) marine shales in Burgos Basin. Sabinas Basin faulted; Tuxpan, Tampico, Veracruz less so Goal of ~2 Bcfd by 2025

Shale Oil: Same high quality rocks in thermally less mature areas.

Activity: Pemex drilled 6 Eagle Ford shale wells with modest results.

Expects commercial production by 2015

High well costs and modest production: IP 3 MMcfd (steep decline)



12


Longer, more precisely located horizontal wells plus advanced, more intensive hydraulic frac designs are the key to more efficient recovery of shale oil and shale gas.


Advances in Horizontal Well and Hydraulic Stimulation Technology

Source: Whiting Petroleum Investor Presentation

Operators are using more frac stages, along with cemented liners vs. sliding sleeves, to contact more of the reservoir.

However, oil recovery efficiencies from organic-rich shales is still only 5 to 10% of the resource in-place.

13


The economic viability of producing shale gas and shale oil resources rests on three factors:

Findings and establishing the quality of these resources - -particularly their higher quality “core areas” - - requires unconventional exploration and advanced resource characterization.

As important is developing and having access to technologies that support cost-efficient recovery of these resources.

The quality of the resource

The efficiency of extraction technology

Favorable oil prices

Technology Challenges for Challenging New Resources


14



The volumes of shale gas and shale oil resources of the world are massive. Advances in economically viable, sustainable extraction technologies would enable these resources to provide a platform for a “new age of hydrocarbons.”

Assuring favorable public acceptance for shale gas and shale oil will require placing greater emphasis on the environmental and climate effects of producing the resources:

Reduced land and environmental footprint,

Alternatives to use of fresh water, and

Lower emissions of greenhouse gases (methane, CO2).

Closing Thoughts

15


Office LocationsWashington, DC4501 Fairfax Drive, Suite 910Arlington, VA 22203Phone: (703) 528-8420Fax: (703) 528-0439

Houston, Texas11931 Wickchester Ln., Suite 200 Houston, TX 77043-4574 Phone: (281) 558-9200Fax: (281) 558-9202

Cincinnati, Ohio1282 Secretariat CourtBatavia, OH 45103Phone: (513) 460-0360

AdvancedResources

Internationalwww.adv-res.com


outlook for international shale gas · pdf fileoutlook for international shale gas...

Documents